The 13 regional corporations in review: in 2004, the generated $3.4 billion and all but one reported revenue increases.

• Author: Liles, Patricia
• Position: Alaska Native: BUSINESS NEWS

Whether calculating operating revenues, work opportunities or social-economic impacts such as education scholarships, cultural programs or dividend payments, Alaska Native corporations are becoming financial powerhouses in the Last Frontier's economy.

In 2004, the 13 corporations generated $3.4 billion. Ten of the corporations posted profits, with Chugach Alaska Corp. providing the largest net income of $37.5 million to its shareholders. All except Sealaska reported revenue increases in 2004.

"We all know that their influence, their employment and their effect on the economy has been growing pretty dramatically over the last 10 to 15 years," said Neal Fried, an economist with the state Department of Labor.

Trying to track the Native corporations' portion of Alaska's job market is next to impossible, he said. "Most of the employment is not with the regional corporations but with subsidiaries and joint ventures."

Diversified business operations has been a mantra for many Native corporations. Investments range from traditional natural resource development to financial management entities, to research and development of high-tech industry.

Unlike many of the other large business entities doing business in Alaska, Native corporation revenues return to headquarters in the Last Frontier. Any profits or dividend payments go mostly to Alaska residents.

"More and more of the Native corporations are doing business outside of the state and bringing the profits back to Alaska, which is opposite of the normal business model here," Fried said.

For example, of the $700 million in revenues earned by Chugach Alaska Corp. in 2004, only 18 percent-$126 million-came from work completed in Alaska, according to President Barney Uhart.

ARCTIC SLOPE REGIONAL CORP.

By far the largest of the 13 regional corporation in terms of revenues and number of employees in its subsidiaries, Arctic Slope Regional Corp. found itself in an unusual position in 2004. The company earned more than $1.3 billion in total revenues, but posted a $17 million loss for the year, thanks mostly to a federal ruling regarding ASRC's petroleum refining and marketing division in Alaska. (See sidebar story).

That $37 million quality bank judgment came the same year as ASRC recorded an $8.6 million non-cash impairment charge in the company's Omega Natchiq division operating in the Gulf of Mexico and an $8.5 million negative charge as a result of litigation against Puget Plastics Corp, a business that has been discontinued.

Without those three financial hits, ASRC "would have been profitable in 2004," said Kristin Mellinger, chief financial officer.

She points to the corporation's growing numbers in Earnings before Interest and Taxes as a more accurate measure of operating performance. In 2004, ASRC posted $38 million, compared to $13 million the year prior.

Neverless, the company has continued to post thin margins for the amount of revenues, even without impacts from taxes, interest and the quality bank judgment. That is a trend ASRC management is striving to change, she said. "We understand it's unacceptable to have large revenues and low earnings," Mellinger said. "We've been telling the shareholders for several years that we're on our way."

Early results from the 2005 fiscal year prove the tide is turning, she said, with net income estimated to be more than $59 million for just the first six months. ASRC will post more revenue and profits in 2005, "more than any other year in the history of the corporation," she added.

AHTNA INC.

Similar to ASRC but on a smaller scale, Ahtna's bottom line suffered from a one-time financial hit due to court action. The corporation paid $9.5 million in 2004 to settle a court case involving a construction project completed by a subsidiary. "Previous management got us into a bad project in San Francisco," said Ken Johns, president and CEO of Ahtna. "It was a mistake.... I'm very confident we will be able to weather some storms and do quite well."

Without that settlement figure, Ahtna would have posted $2 million in net income in 2004, about the same as the prior year, although revenues increased nearly 20 percent in 2004 to $83.8 million. The settlement loss dropped Ahtna's bottom line to a $7.5 million net loss.

Johns is looking forward, describing a halt to...