Alaska Native Regional Corporation overview: record revenues, profits reported in 2007 by many of Alaska's Native Regional Corporations.

• Author: Liles, Patricia
• Position: NATIVE BUSINESS - Company overview - Financial report

Despite a flagging economy in the Lower 48, a number of Alaska Native regional corporations posted record revenues and profits for fiscal year 2007 reports, thanks to strong crude oil prices, increased activity related to a potential gas pipeline project and strong market prices for metals mined in Alaska.

"Alaska's economy is strong, so our Alaska-based businesses did very well in 2007," said Helvi Sandvik, president of NANA Development Corp., the operating arm for the regional corporation that represents the Inupiat of Northwest Alaska. "Our businesses that support the oil industry had the best year ever."

Cumulatively, the 13 Alaska Native regional corporations reported $5.693 billion in total revenues for their fiscal year 2007 reporting periods, growing more than 10 percent over total revenues posted in 2006. Most of the 13 regional corporations reported substantially increased revenues in 2007, with the top percentage of growth from Bering Straits with a nearly 75 percent increase in revenues, followed by Calista Corp., with more than 46 percent growth.

Total net profits decreased slightly in 2007, compared to the prior year. Net income for all 13 regional corporations totaled $468.1 million in 2007, a decline of slightly more than 4 percent from the $488.5 million reported for 2006.

That reduction in profits reflects slim margins for some operations, as well as the nation's real estate crisis, which Sandvik said had a negative impact on NANA's operations in the Lower 48. "They had a tough year this year," Sandvik said m a telephone interview in early July. "That's one of the advantages and strategic reasons to have a diversified portfolio of businesses, so that some will be strong and weak at different times. You're not entirely out of the business when something dries up in one particular part of the sector."

Some of the markets in the Lower 48 are "really struggling," she added. "As that economy remains weak, we expect to see not as great of a contribution from our businesses in the Lower 48. And they really carried us from 2002 to 2006- the strongest part of our portfolio."

Securing financing for large-scale projects in Alaska also could be a new challenge, hindered by the nation's troubled financial industry, Sandvik said. Borrowing funds will likely cost more and be more difficult to finalize. "The financial condition of the U.S. economy as a whole affects how investments are made."

ARCTIC SLOPE REGIONAL CORP.

In terms of the number of employees and the amount of revenues reported in 2007, Alaska's largest Alaska Native corporation is the Barrow-based Arctic Slope Regional Corp. Again in 2007, ASRC reported increases in both total revenues and net income, compared to the prior year, thanks in part to crude oil prices.

"Several key factors contributed to our revenue and profit increases in 2007. Although no new resource development took place on our lands, the high price of oil was a key contributing factor," said Roberta "Bobbie" Quintavell, president and CEO of ASRC, in an e-mail response. "In addition ASRC benefited from higher refining margins, increased contracting opportunities with the federal government, and disciplined expense management."

The corporation reported total revenues of $1.777 billion in 2007, an increase of 4.5 percent over the $1.7 billion reported in 2006. Net income also increased in 2007 to $207.7 million, up 5.9 percent from the $196.1 million reported in 2006.

"The price of oil certainly has a positive impact on our business, so our refinery margins and royalties see a greater return, but the high price of oil also increases the cost for us to do business in such a large and remote state. Again, it goes back to a disciplined approach to managing your business," Quintavell said.

The Native regional corporation has significant business operations outside Alaska, including several subsidiaries that provide government technical services. Revenues for this segment of ASRC increased in 2007 to $470 million, up from $374 million in 2006.

"ASRC Federal Holding Company strengthened its missile defense contracting capabilities through the acquisition of a company in Huntsville, Alabama called Analytical Services Inc.," Quintavell said. "We also realigned our internal structure to continue and improve our customer service to our shareholders through the creation of our Shareholder and Community Programs Department."

ASRC also operates energy services and construction subsidiaries, which together provided about...