A RIS- ING TIDE

Bristol Bay Native Corporation Annual Report Two-Thousand and Fifteen FY TWO- THOUSAND AND FIFTEEN AT A GLANCE

"Corporate Marketer of the Year" Scholarships

BBNC RECEIVED THE AMERICAN MARKETING ASSOCIATION’S ALASKA CHAPTER’S Awarded by “CORPORATE MARKETER OF THE YEAR” PRISM AWARD FOR THE 3RD YEAR IN A ROW the Education Foundation Ranked Over $160 157 HIGHER EDUCATION/ # VOCATIONAL EDUCATION million 2 SCHOLARSHIPS, TOTALING $468,000 DIVIDENDS DISTRIBUTED BY BBNC TO SHAREHOLDERS BY ALASKA BUSINESS SINCE INCEPTION MONTHLY ON THEIR TOP 49ER LIST 72 SHORT-TERM VOCATIONAL EDUCATION SCHOLARSHIPS, BBDF ADESCO, LLC TOTALING $34,207

CREATION OF BRISTOL BAY BRISTOL BAY DEVELOPMENT FUND'S FIRST DEVELOPMENT FUND INVESTMENT IN A BRISTOL BAY-BASED BUSINESS

229 Get Out the Native total 3 Years Vote Effort BBNC SUBSIDIARY KAKIVIK EVERY BRISTOL BAY VILLAGE HAD AN INCREASE IN COMPLETED 3-YEARS OF TOTALING BEING INCIDENT FREE VOTER TURNOUT AT THE GENERAL ELECTION—WITH IGIUGIG HAVING NEARLY 100% VOTER TURNOUT $502,607 3 BBNC Annual Report Two-Thousand and Fifteen | A Rising Tide

Often attributed to President John F. Kennedy, the saying implies that improvements within a community are a benefit to everyone who is part of that community. As we began to reflect back on FY15, this adage came to mind quite There’s often. It seemed to embody Bristol Bay Native Corporation’s commitment to the economic and cultural wellbeing of every shareholder, and it reflects the truism that if we provide new opportunities here at home and throughout the BBNC an old family of companies, each of us is stronger. This has been a guiding principle for us over the past year. One of the ways we help strengthen the Bristol Bay community is through unique partnerships—both those that saying— BBNC creates with individuals and other organizations, and those we make possible through initiatives like our shareholder development efforts and partnering with programs like Get Out the Native Vote. Partnerships took center stage this year as part of our effort to “A rising “lift every boat,” and this year’s annual report is a celebration of the cooperation, ingenuity, and successes those partnerships bring about. tide lifts Some of this year’s standout partnerships have been with Bristol Bay village corporations. BBNC has been navigating the world of government contracting since the 1990s, and in those years we’ve learned a thing or two. First and foremost, it’s a complicated landscape. all boats.” Smaller companies, who often lack the staffing, resources, patience, and proper context, can run into challenges when trying to procure these contracts. This causes some to lose now houses three of our own subsidiaries—CCI Industrial Services, in building capacity for smaller businesses, while providing benefits hope quickly. That’s why BBNC partners with village corporations—through agreements Kakivik Asset Management, and Peak Oilfield Service Company. to our subsidiaries, as well. Finally, we’ll take a deeper look at our and joint ventures, or by simply serving as a mentor and resource—to help guide them These real estate partnerships help guarantee success by providing partnerships in the state capitol and get you up to speed on our through what can be an intense process. This gives smaller businesses, especially those our subsidiaries and other Native corporations the space they need to efforts to Get Out the Native Vote in the last election cycle. village corporations that have just received 8(a) certification, a real shot at landing these conduct necessary business in the heart of Anchorage. Looking ahead at FY16, we’re in a fantastic position to focus on coveted government contracts. Keep in mind, this is work some of these businesses may not In the pages that follow, you’ll read even more about partnership new acquisition opportunities. We’ll be looking closely at oil and have otherwise been able to get. And once our village corporations do land these contracts, as a means to lift us all. You’ll get a glimpse into the Bristol Bay gas companies; leveraging our foothold there and thinking more BBNC stands beside them to make sure they perform and have what they need to succeed. Development Fund, the first—and to date, only—Alaska Native strategically about partnerships, growth, and the Alaskan economy. Another exceptional partnership from FY15 is the relationship BBNC has formed with owned private equity fund. We’ll cover the unique role BBDF fulfills It’s part of our larger commitment to invest in the region. We have the administration of Governor Walker, which gives us a much stronger voice in Juneau. in the region and introduce you to the Fund’s first investment. We’ll high hopes that FY16 will be productive when it comes to new The partnership gained momentum after last year’s election, when two members of our also take you behind the scenes of some of our recent shareholder business investments in the region. And, as always, we’ll continue to senior leadership and a member of our board were invited to join Walker’s transition team. development efforts and introduce you to a handful of shareholders connect with our shareholders and look for new ways to strengthen Since then, we’ve spent time in the state capitol helping both the Governor and the state who have benefitted from the strides we’re making to help shareholder development efforts. legislature better understand what the Bristol Bay region is all about and what’s most shareholders, descendants, and spouses achieve their career goals. Until then, thank you for your ongoing support. We look forward to important to our shareholders and region. And, like any partnership, it’s been a two-way You’ll learn about an exciting and unique collaboration between our hearing from you and seeing you out in our communities. street. We’ve gained a much clearer understanding of policy and the political process, and subsidiary MedPro and Three Star Enterprises, a Bristol Bay village have learned about the governor’s priorities statewide. We’ll continue to make sure BBNC corporation subsidiary. This partnership is a real-world example of In partnership, has a seat at the table when it comes to important and sometimes difficult decisions the how partnerships with village corporations can make a difference Walker administration will make about the future of Alaska. We’ll continue to press for diversification in the state economy so all of Alaska can remain vital. An exciting side note about our relationship with Governor Walker: in his first State of the State speech, the governor borrowed our “Fish First” approach as an illustration of how he intends to run things throughout Alaska. Joseph L. Chythlook Chairman of the Board Of course partnership comes in many forms. An example: over the last year, BBNC has increased our investments in commercial real estate holdings. And how does this relate to partnership? BBNC is developing and redeveloping commercial real estate in the Anchorage

market that we can then make available to our subsidiaries and even to other Native corporations and their subsidiaries. BBNC is a minority owner of a midtown building that Jason Metrokin President & Chief Executive Officer Inspiration Innovation Investment t BBNC, we know that our strength as a leader depends on our capacity to be an outstanding partner. And BBDF's Inaugural Investment

being a partner requires trust, bold commitment, and BBDF made its inaugural investment in ADESCO, LLC, a limited liability corporation founded by sustained investment—qualities that define the Bristol Randy Zimin of South Naknek, Alaska. Formed in 2005, ADESCO’s original line of business has been ABay Development Fund (BBDF) to a T. Though we launched BBDF general contracting, and has recently expanded its marine transportation business line to include less than a year ago, its benefits are already tangible in the region. fish tendering services and cargo transport to local communities outside of the commercial fishing And as the fund continues to support more regional businesses, season—a service that brings welcome cost-savings for residents. With the addition of its fourth its potential for greater positive effect grows. vessel, the Miss Rebecca, and a staff that now reaches nine during the summer months, the positive impact of BBDF’s investment in ADESCO is already evident. Our commitment to our shareholders is what inspires us to innovate on every level. That commitment also motivated us to launch the Bristol Bay Development Fund in October 2014. The initiative is a first for BBNC: Inspiration Although we’ve provided other forms of support to shareholders for many work of BBDF—principles that work to work, providing them with potential sales liquidated, or monetized. By then, it’s years, as fund manager Cameron Poindexter explains, “Entrepreneurs counteract systemic obstacles to economic platforms they can research as they seek likely the Fund will have invested in the haven’t had the opportunity to partner with BBNC individually in the success in our region. to expand their markets. And Poindexter energy, transportation, and other sectors— way that BBDF is now offering.” emphasizes that “While BBDF may not be areas where the cost lowering benefits Historically, companies from outside As one of our proudest innovations, BBDF is a first of even broader able to fund every opportunity that comes to shareholders are direct and dramatic. Innovation Bristol Bay have provided services like significance: It’s the first program of its kind—not just in Alaska, but knocking, we are able to provide assistance What does the future look like for the construction, accounting, maintenance, throughout Indian Country as a whole. As the only Native Corporation to through connections and planning.” Fund? According to Poindexter, “More and more. This reality is less than ideal: Not create a “nurture capital” fund for the region, BBNC can be a model for other economic activity, more employment Investment only do these services cost more in many BBDF’s Facebook page shows a Native corporations that want to spur sustainable economic opportunities for shareholders, and more cases, but the money locals spend on them steady stream of links, resources and growth in their communities. access to abundant goods and services at drains resources from the region. But when opportunities to connect with Poindexter better prices.” local entrepreneurs find the backing they and learn more about the Fund. And, to need to offer these vital services, money reach even more people, we’ve built an BBNC’s corporate return on investment During its first four years, remains in Bristol Bay. And the funds that app for iPhone and Android, available in is important because it allows us to circulate in the region produce a multiplier the Apple Store and Google Play Store. As share vital financial resources with our effect, raising both spending and income Poindexter said, “We have moved to a very shareholders. But that’s only part of our BBDF plans to inject $5 million in the region. With ADESCO as a case in mobile world. Access to mobile technology investment practice. There’s no stronger into the Bristol Bay economy. point, BBDF aims to keep jobs, services and is very present in Bristol Bay as well.” expression of our blended approach to dollars in Bristol Bay—and strengthen the Through the app, entrepreneurial-minded investment than BBDF: Through the region’s economy. shareholders can contact Poindexter Fund, we back the entrepreneurial dreams directly and access resources that can help of our shareholders, triggering a host of Since taking the helm of BBDF late last It’s challenging to start a business. Managing an existing business through answer questions about starting a business. benefits throughout our region. When we year, Poindexter has been traveling a period of growth can be just as difficult—especially in rural Alaska, where a invest directly in the economy, education through the region, networking with A BBNC shareholder, Poindexter combines financial supply gap makes needed capital scarce. Yet so many shareholders and sustainability of our communities, organizations like the Small Business a background in business with deep have great ideas and promising companies that could have a positive impact we experience a cultural return on Development Center, University of Alaska knowledge of life in Bristol Bay. He’s a on life in Bristol Bay. With BBDF, start-ups and companies throughout the investment that is every bit as crucial as Center for Economic Development, Bristol former banker and commercial lender in region can find the partner they need to transform their business hopes and the profit margins of our businesses. dreams into long-term successes. Bay Economic Development Corporation, rural Alaska, and brings approachability and the Bristol Bay Native Association and business acumen to his role at BBDF. During its first four years, BBDF will inject $5 million into the Bristol Bay among many others. Poindexter is there to provide support, economy through $20,000 - $500,000 investments in small businesses that coaching and advice to any shareholder Just as important, Poindexter has also been benefit the region. Fisheries, transportation, energy, agriculture, technology who asks—whether a full-fledged business speaking directly with shareholders about and wellness are among the Fund’s targeted pillars, but BBNC knows that owner or an individual with a great idea. Get the BBDF our shareholder community is brimming with business potential across a their needs, questions and entrepreneurial Mobile App ideas. He’s reached out in areas where This is just the beginning of BBDF. After broad spectrum of areas—so all ideas are welcome. Give your start-up business ideas a infrastructure projects could spur four years of investments in Bristol lift with resources, tips, and expertise Zimin’s commitment to keep money in the regional economy and help entrepreneurial activity. He’s spoken with Bay, we’ll begin a seven-year period from the Apple Store or Google Play. shareholders advance their careers mirrors the principles that drive the artists who are interested in selling their during which those initial amounts are 6 BBNC Annual Report Two-Thousand and Fifteen | A Rising Tide BBNC Annual Report Two-Thousand and Fifteen | A Rising Tide 7

Shareholder Nondalton Firefighter Crew Wages While the focus of our work is to help shareholders attain education, Shareholder wages soared from training, and employment, we also want to make sure our working just over $4.4 million in 2011 shareholders have everything they need to succeed. So when the to more than $12.4 million this Nondalton firefighting crew needed new gear for the 2015 summer fire year—an increase of about 180%. season, we didn’t hesitate to help. We provided new tents, boots, socks, We’ve also added to our ranks and bandanas for a group of 25 firefighters. “A lot of the first time SHAREHOLDER of shareholder hires. In FY15, we Roger Fischer firefighters would be unable to go if they didn’t have this gear,” said averaged 159 shareholder hires firefighter Curtis Joseph. “This gear is vital and we appreciate BBNC Roger Fischer, BBNC shareholder throughout the company and for helping out.” DEVELOPMENT our subsidiaries. and CCI Alliance employee: "When first working with BBNC’s shareholder development 2011 program, I assumed that getting A PARTNERSHIP a job was the end point. But M $4.4 BBNC fosters interests that include continuing education, 2015 professional opportunities, and THAT WORKS real career goals. To say that $12.4 M I am hugely impressed with BBNC is an understatement. The internship I have now with CCI Alliance has already changed my life, and is beyond what I ever Photo: The Nondalton firefighting crew in Anderson, AK thought possible for my career." RoxAnn Roque Shareholder Advancement RoxAnn Roque started working as an intern at CCI Solutions in June 2014, as a summer Project Manager Shareholder Intern at CCI’s Fort of which Wainwright, Alaska location. She was offered a full-time permanent SHAREHOLDER HIRES position with CCI in January of 2015 as Assistant Project Manager. HAVE INCREASED FROM 7 ne of BBNC’s leading strategic Ours is a highly personal approach. We In the past year, we’ve focused our efforts in ARE EXECUTIVES “It’s important to note how comfortable and inspired I feel coming to goals is to help shareholders partner with you to create a customized the region. Bristol Bay is where our people 61 IN FY11 TO 169 work every day. One of my fears prior to interning was that my work as well as descendants plan based on where you want to go in your come from; it’s part of our collective culture AT THE END OF FY15 would not be relatable to my field, but I was elated to get hands-on engineering experience. I feel like an equal; what I am doing is valued and spouses attain career career. We can help place shareholders in and tradition. And it’s still where a large 11 ARE MANAGERS and my coworkers are just as passionate as I am about working for CCI.” opportunities.O Through education, training, internship programs, enroll in school or percentage of our shareholders reside. resources and counseling, we strive to put training programs, and secure financial Yet the vast majority of employment and every shareholder on a career path that best aid. We offer career counseling to help you internship opportunities are out of region. fulfills their interests and matches their narrow your choices and hone in on the By creating opportunities for people to Our Latest Efforts unique skill sets. Whether you live in the best possible job for you, whether it’s with make a living in Bristol Bay, we’ll ensure our Bristol Bay region, elsewhere in Alaska, or BBNC, one of our subsidiaries, or even region thrives economically and that our This year, we launched a number of new programs to bolster our shareholder development efforts. A new somewhere in the Lower-48, we’re here to with companies not affiliated with us. What traditions and way of life are preserved. Shareholder Employment Support Program helps shareholders identify training opportunities, sharpen make sure you know what opportunities are matters most is your aspiration—that you’re resume skills, and seek out employment opportunities that meet their interests and career goals. We also available and how to attain them. engaged in meaningful work and earning teamed up with the Bristol Bay Native Association to match 20 youth from the Bristol Bay region with the best living possible. Photo: The SCA Alaska High School Crew at employment opportunities. And we partnered with GCI to sponsor a Student Conservation Association Lake Clark National Park. Crew at Lake Clark National Park, which will help develop the next generation of conservation leaders. 8 BBNC Annual Report Two-Thousand and Fifteen | A Rising Tide BBNC Annual Report Two-Thousand and Fifteen | A Rising Tide 9 Partnerships for Rural Alaska

When members of a small business loans, CFI partners community come together with its clients to build a solid to find answers to shared foundation of financial know-how problems, good things and skill in each individual. happen. Since the mid- CFI also partners with Alaska 20th century, the concept of 70 Housing Finance Corporation, community development has CDFIs which funds the mortgages that made a positive difference serve communities allow shareholder individuals and around the globe, leveraging in Indian Country families to become homeowners. As shared investment to CEO Cindy Mittelstadt explained, overcome disadvantage and nationwide when borrowers repay their loans, build stronger communities. community benefits multiply. One key community development tool is the “Over time, CFI can re-lend to assist another family community development financial institution purchase a home. Or assist another entrepreneur. It is (CDFI), a non-governmental entity that provides important for borrowers to know that they are part of lending services to underbanked communities. something greater in their community.” Community Financial, Inc. (CFI) is Southwest The backstory of CFI reveals yet another, Alaska’s own CDFI, formed in partnership with the groundbreaking partnership—our alliance with the Aleutian region, Bristol Bay Native Association, Aleut Corporation. CFI began in 2007 as Aleutian Bristol Bay Economic Development Corporation, Financial, Inc. Seven years later, after much and Bristol Bay Housing Authority. CFI delivers loans consideration and dialogue, the Aleut Corporation and financial support to communities throughout joined with BBNC in a move that would expand the the region—Native and non-Native alike. All CDFIs CDFI’s footprint—and increase its positive impact in are certified by the United States Treasury, which the region. Not only is this a historical first, but the allows organizations like CFI access to treasury funds alliance is also an expression of the strong affinity and technical assistance—and requires adherence to between our two Native regions: “Our cultures for stringent lending standards. both regions are inherently giving, helpful, and Of the nearly 1,000 CDFIs across the country, caring,” said Thomas Mack, president of the Aleut approximately 70 bring a blend of financial expertise Corporation. “The Aleut Corporation and BBNC and knowledge of Native culture to communities in have many similarities, as our regions rely heavily Indian Country. In rural Alaska, homeownership and on the fishing industry in the State of Alaska. Our entrepreneurial activity are two pivotal elements of constituents know the dynamics of living off the community development. As such, these are CFI’s lands and caring for one another for the betterment main priorities. But funding is only the beginning of of everyone. When we work together, we all succeed.” CFI’s mission. Along with providing mortgages and

Photo: The Wayner family 10

perryville, ak

bristol bay region BBNC AnnualReportTwo-ThousandandFifteen|ARisingTide two entitiescouldbegreater thanthesumoftheirparts. strengths andcompetenciescomplementedoneanother. Together, synergies andthecombinedcapacityofseparate companieswhose guidance andmentorshiptovillagecorporations. We lookedfor developed agovernment contracting initiative thatprovides training, desire toenterintothegovernment contracting arena, BBNC With anabundanceofvillagecorporations withinBristol Bay who patience. and performance, knowledge, expertise, on depends success where program), (8(a) Program Development Business 8(a) Administration Business Small the of arena regulated and competitive highly complex, the focus: of area One region. government contracting runsdeep. within thosefacilities.MedPro’s expertise intheintricaciesof information technologyservices usedtomanagepatientinformation with healthcare providers inmilitarytreatment facilities aswellthe the globe,MedPro’s servicesare twofold,supplyingthegovernment by acore staff ofsixin SanAntonio,Texas, with140employees across well asstateandlocalgovernmentscommercial clients.Powered Department ofDefenseandotherfederalgovernmentagencies, as Martin, MedPro provides integratedservicestotheUnitedStates MEDPRO TECHNOLOGIES,LLC A CloserLook S joint venture of a Directors passed a resolution in 2014 that called called that 2014 in resolution a passed Directors of Board BBNC’s part, our For Alaska. throughout air the in is partnerships regional trengthening for expanded investments in the Bristol Bay Bay Bristol the in investments expanded for

LedbyGeneralManagerCraig THREE STAR ENTERPRISES,LLC an obstacleforruralworkers. longer no are employment to constraints geographic which in world a envisions Star Three technologies, emerging exploring rigorously By agencies. federal and state for assistance technical and training with along training, management delivery distance and management workforce remote and virtual in specializes corporation Native Alaska certified 8(a) SBA The nine. of staff their leads decade, a nearly for company the with been has who Caole, Anthony CEO 2003. in required by federal agencies. contracts—a difficultfeat,especiallyonthetighttimetablesoften the process of “onboarding,” onproject stafffor orbringing MedPro, Three Star hasacquired newtechnologiesthatstreamline their backgrounds complementoneanother. For example, through andbecause because ofthespecialtiesandcapacityother; canexpanditscompetencies agencies have multiplied.Eachpartner to pursuebothdirected andcompetitive awards from federal market. By comingtogetherinajoint venture, theiropportunities Three Star hasbeeninterested inbreaking intothefederal further MedPro hasaproven track record ingovernment contracting, and Administration (SBA)inOctober 2014. between thesetwocompanieswasapproved by theSmall Business the economicself-sufficiencyofPerryville, AK. The 8(a)jointventure ofOceanside subsidiary CorporationVillage thatwascreated todrive management andtraining consultingcompanyandwhollyowned of BBNC;and Three Star Enterprises, LLC, an8(a)certified government provider services andwholly-owned subsidiary shared our vision:MedPro Technologies, LLC, an8(a)certified Our outreach ledtoamatchbetween twocompaniesthat efforts Three Star Enterprises was founded founded was Enterprises Star Three BBNC AnnualReportTwo-ThousandandFifteen|ARisingTide

these contracts forthefirsttime. for compete to Star Three allow will venture joint The communities.” the know we language, the speak we experience, of decades with people have “We effective: more far be could Star Three like company It’s a how see to overwhelmed.” are easy “and Caole, said village,” a in plane the off get “They succeed. to need they knowledge the without job the on arrive consultants those Often, Alaska. from far companies to awarded are contracts many region, our in work award to seeks government federal the when But tribal. military,medical, civil, States governmentissuescontractsforprojects across allsectors: US GOVERNMENTCONTRACTINGINOURREGION but alsotoahostofbenefitswithintheircommunities. CorporationVillage canlookaheadnotonlytogreater dividends— proud that,asaresult, shareholders ofbothBBNCandOceanside with suchsuccess, lessthanayear afterjoiningforces. Andwe’re see MedPro and Three Star pursuing—andattaining—newbusiness momentum ofthisjointventure inspires usdeeply. We’re proud to shareholders benefitfrom thoseprofits. ofbothparties The entity cantapintonewsources ofrevenue. Asthatrevenue flows, When twocompaniescometogetherinajointventure, thenew easily advance thesegoals. toexcel.drive Andasajointventure, theorganization canmore and languagepreservation—all thesevalues underlie Three Star’s to strengthen theircapacities, encouraging cultural development mission.” Increasing sustainabilityinthevillage, working withtribes we have economicgoals, we’re alsoabletoachieve oursocial financial. AsAnthonyCaole, CEOof Three Star, explained, “Although For bothcompanies, thegoalsofjointventure gobeyond the

The United United The 11 BBNC Annual Report Two-Thousand and Fifteen | A Rising Tide 13

PART OF A NEW START BBNC Representatives on Governor Walker’s Transition Team

When Governor Our shareholders are spread far and wide across the Bristol Bay showing up at the polls on Election Day just isn’t feasible for some. region and the state. Considering how distant many rural communities So early voting is an essential tool because it allows shareholders Bill Walker took office are from the seat of government, advocacy is one of our most vital a two-week window to cast their votes. Throughout rural Alaska, last year, he both responsibilities. BBNC’s involvement in Get Out the Native Vote however, early voting sites have been closed. In response, GOTNV (GOTNV) shows how our commitment—brought to life in the work of launched an aggressive, two-week calling campaign last fall, personally BNC is proud to have had representatives serve as part of Governor took on challenges groups and individuals—makes a difference in how well-represented contacting every single village in Bristol Bay, along with villages across Walker's team, one that also includes members from other Bristol our shareholders are at the state capitol. the state. The result? Over 100 additional early voting sites were and welcomed Bay entities. The transition team was unique in that it reflected the added statewide. In fact, the village of Igiugig reached nearly 100 diversity of the citizens of our great state. Governor Walker actively There’s no location in the nation where voting isn’t important. In big opportunities that percent voter turnout. soughtB the involvement of Native organizations from throughout the state. It’s cities, small towns, and rural areas alike, too many citizens’ voices every newly elected exciting and powerful that the administration recognizes the singular value of our are missed—or woefully silent—when Election Day rolls around. And In many areas of the state, Yup’ik is still the first language; in Bristol leader faces. To combined voices and, importantly, is listening to the concerns of rural Alaska. voting is on a downward trend: according to the Bipartisan Policy Bay alone, there are several villages that use Yup’ik as the primary Center, national voter turnout dropped from 62.3 percent in 2008 language of business. Through GOTNV’s efforts, younger voters The people of Bristol Bay come from millennia of subsistence economics, chart a path forward, to an estimated 57.5 in 2012. But two defining characteristics of have been invigorated. In turn, these younger voters play a vital role relying on land and water for our livelihoods. Yet we also live in the reality of a our region make voter turnout an even trickier challenge for Bristol in convincing other members of their community that their voices Gov. Walker needed dynamic 21st century economy, one subject to the ebbs and flows of an often Bay. Through GOTNV, BBNC has leveraged both creativity and are important—that their votes will make a difference. And through unpredictable market. Members of the governor’s transition team are joining the support of a determination to address these key issues. GOTNV, BBNC continues to help push for the translation efforts that forces—engaging in conversations and developing proposals that will lead to will make voting more accessible for the Native language speakers strong and dynamic creative approaches to our state’s economic booms and busts. Ultimately, this Autumn is election season. In Bristol Bay, it’s also hunting season. For among our shareholder community. transition team. will ensure that Bristol Bay remains economically sound. shareholders who are off hunting and gathering before winter comes, The dialogue that takes place around the table of the governor’s transition team affects us all. Sharing our conversations at the state capitol with our shareholder community is crucial. We want to make sure you have every possible advantage at For more information about GOTNV, visit AKNATIVEVOTE.COM. the state level and to know that your voices are being heard. BBNC Annual Report Two-Thousand and Fifteen | Management's Discussion and Analysis 15

MANAGEMENT’S FINANCIALS DISCUSSION AND ANALYSIS Management’s Discussion and Analysis (MD&A) is intended to provide readers of the financial statements with a narrative of the company’s financial FISCAL condition as seen through the eyes of management. The MD&A should be read together with the Consolidated Financial Statements and accompanying Notes included in this Annual Report. Within the MD&A, we make certain statements YEAR 2015 that are forward-looking in nature. In making these statements we use current information and our expectations of future events. These are subject to assumptions, risks and uncertainties that could change at any time and could cause actual results to differ materially from those expressed or implied by such statements, and these should be considered with the understanding of their inherent uncertainty. Forward-looking statements included in the MD&A are made only as of the date of this MD&A, and we assume no obligation to update any written or oral forward-looking statements made by us or on our behalf as a result of new information, future events or other factors.

CORPORATE PROFILE

FISCAL YEAR

2015 2014 2013

BBNC revenues $ 1,736,084,000 1,835,894,000 1,961,780,000

BBNC earnings before interest, $ 76,227,000 84,220,000 70,819,000 taxes, and noncontrolling interests Photo: Casey Coupchiak BBNC earnings after interest, taxes, $ 44,891,000 49,150,000 41,318,000 and noncontrolling interests

Cash provided by operating $ 89,618,000 120,534,000 30,489,000 activities

Regular dividends paid $ 16,204,000 14,583,000 13,502,000 table of contents Regular dividends per share $ 30 27 25 Regular shares outstanding 540,100 540,100 540,100

Elder dividends paid and elders $ 11,109,000 398,000 381,000 settlement trust funding

Average shareholder hire 159 139 90 15 24 25 26 MANAGEMENT DISCUSSION TEN YEAR FINANCIAL INDEPENDENT CONSOLIDATED Bristol Bay Native Corporation (BBNC or the Corporation) is an Alaska Native AND ANALYSIS SUMMARY AUDITORS’ REPORT FINANCIAL STATEMENTS Regional Corporation created pursuant to the Alaska Native Claims Settlement Act of 1971 (ANCSA). Congress enacted ANCSA to resolve longstanding conflicts surrounding aboriginal land claims in Alaska and to stimulate economic development throughout Alaska. The Corporation was incorporated as a for- profit corporation to benefit Alaska Natives with ties to the Bristol Bay region and at March 31, 2015, the Corporation had 9,942 shareholders. ANCSA provided 44 45 46 48 the Corporation with a monetary entitlement from the federal government of AUDIT COMMITTEE REPORT STATEMENT BOARD OF DIRECTORS ABOUT BBNC $32.7 million and the right to 3,079,553 acres of federal lands. At March 31, 2015, OF MANAGEMENT AND SENIOR stockholder’s equity retained by the Corporation has grown to $348.5 million, RESPONSIBILITY MANAGEMENT TEAM and cash distributions to shareholders have exceeded $164.4 million. 16 BBNC Annual Report Two-Thousand and Fifteen | Management's Discussion and Analysis BBNC Annual Report Two-Thousand and Fifteen | Management's Discussion and Analysis 17

BBNC is primarily a holding company and, as such, derives substantially all of Management expects profits from the Petroleum Distribution business line in Corporation’s debt load remains modest and we continue to enjoy access to low operating business lines were $87.5 million lower than the prior year primarily its cash flow from its subsidiaries and its portfolio of passive investments which FY2016 to be somewhat lower than in FY2015 but still above historical levels cost debt financing. Both factors enable the Corporation to take on additional due to the effect falling fuel prices had on the revenues of PetroCard. PetroCard’s are the Corporation's primary two asset allocations. We rely on profits from of profitability. Some portion of the earnings from this business line may be debt for acquisitions if, and when, deemed appropriate by management. decrease in revenue was partially offset by increased revenues in the Oilfield and both to repay our creditors, to fund shareholder dividends, to fund shareholder reinvested in the form of acquisitions in FY2016 and beyond. Management Industrial Services business line with the inclusion of Peak for the first full year. education opportunities and to fund corporate general and administrative intends to be very selective in evaluating potential acquisition targets and Revenues from our portfolio investment earnings were less than the prior year costs. BBNC’s ability to service each of these cash uses and to simultaneously intends to make acquisitions only where the acquisition is accretive to the by $13.7 million and were primarily due to lower than expected returns from the grow the Corporation’s assets is subject to the profitability of our subsidiary business line’s profitability and where above average returns can be earned RESULTS OF OPERATIONS Corporation’s liquid alternative holdings and non-US equity holdings. businesses and the portfolio. on our capital. Costs of the operating business lines were less than the prior year by $91.5 Fiscal Year 2015 (FY2015) was the fourth year of BBNC’s current, five-year The largest subsidiary in the Oilfield and Industrial Services business line is CONSOLIDATED RESULTS million, which was primarily due to the effect of lower fuel prices experienced strategic plan. The plan and the Corporation’s efforts focus on the pursuit of the Peak Oilfield Service Company, LLC (Peak). FY2015 was BBNC’s first full year of The following table displays consolidated results for the fiscal year ended, (in by PetroCard for its inventory purchases. BBNC’s net earnings were $4.3 million following five strategic goals: ownership of Peak. Peak and the other subsidiaries in this business line conduct thousands except earnings per share and weighted average shares outstanding): less than the prior year for the reasons described above, which equates to a substantially all of their operations within the State of Alaska. Uncertainty in the decrease in earnings per share of $8 from the prior year. • Build the value of the Corporation’s assets by increasing its profitability Alaska oil and gas industry driven by the precipitous drop in oil prices during Following are comments specific to each business line. and financial strength for the future. FY2015 will negatively affect earnings of our companies in this business line in FISCAL YEAR • Pay predictable and increasing dividends to BBNC shareholders. the coming year. To what extent we will see decreased revenues and margins remains to be seen. However, risks have been somewhat mitigated by the strong • Promote improved employment and education opportunities for 2015 2014 2013 PETROLEUM DISTRIBUTION BBNC shareholders. positioning of our subsidiaries within the industry. Our companies are some The following table displays results of Petroleum Distribution earnings, before of the safest and most efficient contractors working in Alaska providing many • Position BBNC so that it will have a major voice in economic Revenues interest and taxes for the fiscal year ended (in thousands): services that are essential to our customers. Our large fleet of exceptionally development in the region. maintained equipment stands ready to serve the needs of our customers, Operating business lines $ 1,713,693 1,801,217 1,938,750 • Endorse a Fish First policy for land and resource management in and our customer base includes some of the strongest oil and gas companies Investment earnings 11,442 25,167 14,254 FISCAL YEAR Bristol Bay. operating in the state. Natural resources 10,186 8,396 6,524 In order to meet the strategic goals, the Corporation must generate sufficient The Construction business line is expected to generate earnings that exceed Other 763 1,114 2,252 earnings. To that end, BBNC’s assets have been allocated to a variety of 2015 2014 2013 those seen in FY2015, but that are consistent with the longer term trend businesses that operate throughout Alaska and across the United States. As of decreased profitability in the business line. The federal government is Total revenue 1,736,084 1,835,894 1,961,780 noted above, the Corporation’s assets are primarily allocated in two key areas: Revenues the largest customer in the business line. Downward pressure on earnings to a passive portfolio of investments (the Portfolio) and to our operating continues to come from a variety of sources including continued negative Costs and expenses Petroleum Distribution $ 811,253 1,011,443 1,097,607 subsidiary companies. There is also a small allocation to corporate assets which changes to the Small Business Administration’s 8(a) program and from an Cost of operating business lines $ 1,638,130 1,729,585 1,871,766 includes the Corporation’s headquarters building in Anchorage, Alaska. operating environment where competitors are willing to work for slim margins. Cost of investment management 2,333 928 1,392 Costs and expenses The Portfolio is comprised of a variety of assets including marketable securities, Our goal is to provide work for our customers at a price that results in the overall Corporate general and Cost of Petroleum Distribution 801,702 1,005,338 1,091,582 and liquid and non-liquid alternative investments. Management classifies the best value to the customer, but also provides a profit for our shareholders. 16,167 16,830 12,686 administrative expense operating subsidiaries into five distinct business lines which are: The federal government is the primary customer for the Government Services Interest 2,391 1,987 1,560 Earnings from Petroleum Distribution $ 9,551 6,105 6,025 • Petroleum Distribution business line. Declines in federal spending, as well as the challenges to the 8(a) program previously mentioned, combine to form headwinds in the Other 3,227 4,331 5,117 • Oilfield and Industrial Services industry. Earnings in FY2016 are expected to decline from levels seen in recent The Petroleum Distribution business line consists of one subsidiary company, 1,662,248 1,753,661 1,892,521 • Construction years. BBNC recently made certain changes to the strategic alignment and PetroCard. PetroCard, a reputable fuel distributor in the Pacific Northwest, is • Government Services management team within the business line in order to respond to the needs of based in Kent, Washington, and distributes fuel products through cardlock sites, our customers. Earnings from operations 73,836 82,233 69,259 • Tourism mobile fueling, and wholesale sales, to commercial customers through facilities Income tax expense 28,000 33,047 27,941 located primarily in Washington and Oregon. Though Petroleum Distribution The Corporation also has earnings from natural resource activities that are In order to increase the footprint of the benefits afforded by 8(a) contracting revenues declined primarily due to a decline in the price of fuel, earnings primarily comprised of certain revenue sharing payments received from other opportunities to our shareholders, and the shareholders of our affiliated improved substantially in FY2015 resulting from the completion of a multi- Alaska Native corporations as required under ANCSA. village corporations and residents of the Bristol Bay region, the Corporation Net earnings 45,836 49,186 41,318 year restructuring plan aimed at increasing profit margins, gaining operating is currently implementing a strategic initiative that includes establishing joint Less income attributable to The following pages are management’s outlook for FY2016 and view of the (945) (36) — expense efficiency, and reducing overhead expense. ventures and mentor protégé arrangements with village corporations within noncontrolling interest Corporation’s FY2015 results in total, for the Portfolio and of the business lines. the BBNC region to pursue government contracting opportunities. In these In order to improve readability, in some cases these results are presented in a arrangements, BBNC typically brings its experience to bear in aiding the village different format than the Consolidated Financial Statements. corporations to prepare to bid, win and perform contracts all while providing a Net earnings attributable to Bristol $ 44,891 49,150 41,318 level of quality to our customers that is consistent with BBNC’s long history of Bay Native Corporation being a valued contractor to the federal government.

FY2016 OUTLOOK Investment earnings from the Portfolio are expected to exceed those of FY2015. Earnings per share $ 83 91 77 Our asset allocation strategy within the Portfolio is meant to accomplish a Management expects FY2016 to bring both challenges and opportunities across Weighted average shares outstanding 540,100 540,100 540,100 desired rate of return with the least risk possible. Nonetheless, the returns we the broad landscape of BBNC’s business activities. Management expects overall will experience will be reflective of broader trends in world financial markets. earnings to be slightly lower in FY2016, primarily due to lower profits in the BBNC’s FY2015 earnings were less than experienced in the previous fiscal year Government Services, and Oilfield and Industrial Services business lines. BBNC continues to seek out attractive investments in the form of new but remained strong on a historical basis with FY2015 being the second best acquisitions and “bolt-on” acquisitions to our existing business lines. We year in the Corporation’s history on a pre-tax earnings basis. Revenues from the anticipate financing acquisitions through a mix of equity and debt capital. The 18 BBNC Annual Report Two-Thousand and Fifteen | Management's Discussion and Analysis BBNC Annual Report Two-Thousand and Fifteen | Management's Discussion and Analysis 19

OILFIELD AND INDUSTRIAL SERVICES CONSTRUCTION GOVERNMENT SERVICES TOURISM The following table displays results of Oilfield and Industrial Services earnings, The following table displays results of Construction earnings, before interest The following table displays results of Government Services earnings, before The following table displays results of Tourism earnings, before interest and before interest and taxes for the fiscal year ended (in thousands): and taxes for the fiscal year ended (in thousands): interest and taxes for the fiscal year ended (in thousands): taxes for the fiscal year ended (in thousands):

FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR

2015 2014 2013 2015 2014 2013 2015 2014 2013 2015 2014 2013

Revenues Revenues Revenues Revenues Oilfield and Industrial Services $ 257,826 142,154 39,030 Construction $ 414,033 404,907 517,799 Government Services $ 228,720 240,823 282,821 Tourism $ 1,861 1,890 1,493

Costs and expenses Costs and expenses Costs and expenses Costs and expenses Oilfield and Industrial Services 235,667 122,754 35,451 Construction 399,522 385,243 487,077 Government Services 199,336 214,223 256,019 Tourism 1,903 2,027 1,637

Earnings from Oilfield and Earnings from Construction $ 14,511 19,664 30,722 Earnings from Government Services $ 29,384 26,600 26,802 Earnings from Tourism $ (42) (137) (144) $ 22,159 19,400 3,579 Industrial Services

The Construction business line is comprised of three separately managed Currently, the Corporation’s single subsidiary in the Tourism business line is The Government Services business line is comprised of four separately The Oilfield and Industrial Services business line consists of Peak, Kakivik Asset company groups: the Bristol Companies, the CCI Companies (excluding CCI Mission Lodge on Lake Aleknagik near Dillingham in Bristol Bay. Mission Lodge managed company groups: the SpecPro Companies, the Eagle Companies, Management (Kakivik), and CCI Industrial Services (CIS). Significant increases Industrial Services) and the SpecPro Environmental Services Companies. is an all-inclusive seasonal fishing lodge. In FY2015, Mission Lodge experienced the STS/Glacier Companies, and the Vista Companies. In addition, Bristol in revenue and earnings are related to the acquisition of Peak. However, other Also included within the Construction business line is Bristol Bay Resource another strong year with nearly 100% occupancy. In addition, the operation Resource Solutions, LLC, based in Huntsville, Alabama, is the administrative companies within this business line had organic growth through additional Solutions, LLC, an Anchorage-based shared service company that provides also provides opportunity for shareholder hire and development in the region. shared service company supporting the Government Services business line. contract work. Peak, acquired by the Corporation in November 2013, provides administrative services to the entire group. The Construction business line Management continues to seek opportunities to grow the Tourism business line Companies in this business line provide a broad range of services including specialty services to the oil and gas industry in locations including Prudhoe companies provide civil and structural engineering, civil construction and through targeted acquisitions throughout the Bristol Bay region. engineering and technical services, information technology management Bay, Anchorage, Kenai, Valdez, Palmer, and to a small extent, North Dakota. environmental remediation services, water and sewer line construction, and services, environmental services, operational testing and evaluation services, Peak provides a wide variety of services including crane services, rig moving, ice industrial and nonresidential construction and energy services for federal, state medical and applied science projects, medical staffing, and biomedical research road construction, drilling support, general civil work, construction, trucking, and local government agencies as well as commercial clients throughout Alaska PORTFOLIO INVESTMENTS and development primarily for the federal government. The following table displays results of the Portfolio for the fiscal year ended facility operations and maintenance support, tank cleaning, and power systems. and the continental United States. (in thousands): Kakivik specializes in nondestructive testing and inspection. CCI Industrial Earnings decreased by $5.2 million from FY2014 and decreased by $16.2 million Though the Government Services business line experienced a 5% decline Services provides a diverse array of specialty services to the oil and gas industry. from FY2013. This trend was primarily attributable to certain unanticipated in revenue, earnings increased by $2.8 million over FY2014, primarily as a The success of Oilfield and Industrial Services can be attributed to the focus on firm fixed price contract costs resulting from a combination of project result of general and administrative, indirect, and direct cost containment quality safety programs that customers demand in this industry. FISCAL YEAR delays, and cost overruns on certain projects within the Bristol Companies. and reductions. The Oilfield and Industrial Services business line is the Corporation’s largest Bristol management has taken a number of significant steps to improve the As with the Construction business line, the Corporation’s Government Services source of shareholder hire. Average shareholder hire for this business line group’s profitability including changes in senior staff, redesigned bidding and business line provides services to the federal government, and in some cases, 2015 2014 2013 was 94 individuals with wages in excess of $5.2 million paid to shareholders estimating practices and better project management. participates in contracts offered by the government solely to small businesses. in FY2015. The Oilfield and Industrial Services business line is expected to Revenues The Corporation’s Construction business line provides services to the Some of the Corporation’s Government Services companies have received continue to play a key role in pursuit of the goals established within the Investment earnings $ 11,442 25,167 14,254 federal government, and in some cases participates in contracts offered Section 8(a) certifications from the SBA. Section 8(a) certifications allow these Corporation’s strategic plan. by the government solely to small businesses. Some of the Corporation’s subsidiaries to bid on contracts set aside specifically for Section 8(a) certified construction companies have received Section 8(a) certifications from the U.S. entities as well as other small business contracts. While the Corporation may Costs and expenses take advantage of contract opportunities under the Section 8(a) program, Small Business Administration (SBA). Section 8(a) certifications allow these Cost of investment management 2,333 928 1,392 subsidiaries to bid on contracts set aside specifically for Section 8(a) certified government contracting opportunities that are not dependent upon the sole- entities as well as other small business contracts. While the Corporation may source provision of Section 8(a) are also pursued. Earnings from Investments $ 9,109 24,239 12,862 take advantage of direct contract opportunities under the Section 8(a) program, In 2015, the Corporation’s Government Services businesses generated 63% of government contracting opportunities that are not dependent upon the sole- revenue from Section 8(a) sole source contracts, 19% of revenue from Section source provision of Section 8(a) are also pursued. 8(a) competitive bid contracts, and 18% of revenue from non-8(a) full and open The Corporation recognizes Portfolio earnings primarily from investments In 2015, the Corporation’s Construction businesses generated 51% of its bid contracts. A majority of Section 8(a) revenue within the business line was in public and private passive investments including marketable securities, revenue from Section 8(a) sole source contracts, 23% from Section 8(a) generated from the United States Department of Defense. private equity placements, and a number of commercial real estate investments competitive bid contracts, and 26% from non-8(a) full and open bid contracts. located primarily in Anchorage, Alaska. The Portfolio provides the Corporation A majority of Section 8(a) revenue was generated from the United States with a stable and consistent source of earnings and cash flow in support of the Department of Defense. Corporation’s strategic objectives. In FY2015, the Construction business line continued to provide employment The Portfolio is managed pursuant to an investment policy which calls for an opportunities for BBNC shareholders with an average of 12 shareholder asset allocation as follows: 50% equity securities, 5% fixed income securities, employees throughout the year. 20% real estate and 25% alternative investments. Real estate and alternative 20 BBNC Annual Report Two-Thousand and Fifteen | Management's Discussion and Analysis BBNC Annual Report Two-Thousand and Fifteen | Management's Discussion and Analysis 21

investments are often private, non-publicly-traded equity interests. The GENERAL AND BALANCE SHEET LIQUIDITY AND CAPITAL allocation to each of these four investment classes was developed with the help of the Corporation’s external investment advisor using modern portfolio theory. ADMINISTRATIVE EXPENSES The following table displays key Balance Sheet data as of March 31, for the fiscal RESOURCES The established policy allocation to different investment classes is designed Corporate general and administrative expenses (G&A) decreased from $16.8 year ended (in thousands): The following table displays total Liquidity and Capital Resources as of March to achieve a target annual return of 8.2% while exposing the Corporation to million in FY2014 to $16.2 million in FY2015. G&A expenses are incurred by 31, for the fiscal year ended (in thousands): the lowest level of risk possible. At March 31, 2015, the total market value of the Corporation in its efforts to provide corporate governance and oversight the Portfolio was $167.3 million compared to $158.3 million at March 31, 2014. of its increasingly complex subsidiary operations, pursue new investments, FISCAL YEAR Portfolio holdings in private, non-publicly traded investments were $33.9 protect the Corporation’s assets and provide shareholder services. G&A as a FISCAL YEAR million at March 31, 2015, compared to $21.5 million at March 31, 2014. The percentage of revenue was 0.9%, 0.9%, and 0.6% in FY2015, FY2014 and FY2013, 2015 2014 2013 Corporation’s Portfolio appreciated in value during 2015 by $11.4 million, which respectively. represents a return on investment of 6.8%. The Corporation’s Portfolio returns 2015 2014 2013 Cash and cash equivalents $ 62,464 49,471 38,214 are benchmarked against a custom index that approximates our investment allocation targets. The Portfolio performed under its target custom benchmark Marketable securities 133,445 136,807 176,781 Available funds of 10.4% during 2015. TAXES Investment in unconsolidated affiliates 27,822 15,114 7,524 Cash and cash equivalents $ 62,464 49,471 38,214 The following table displays our income tax expense for the fiscal year ended Property, plant and equipment, net 170,630 174,337 70,263 Marketable securities 133,445 136,807 176,781 (in thousands): NATURAL RESOURCE MANAGEMENT Goodwill and intangible assets 46,235 47,923 50,128 Less: collateral on (44,136) (35,355) (28,531) The following table displays results of Natural Resource earnings for the fiscal Total assets 656,621 629,922 559,034 marketable securities year ended (in thousands): Current liabilities 184,688 185,180 206,437 FISCAL YEAR Long term liabilities 122,557 113,845 55,865 Total available funds $ 151,773 150,923 186,464

BBNC shareholders equity 349,376 330,897 296,732 FISCAL YEAR 2015 2014 2013 Available line of credit Total line of credit 60,864 54,645 61,469 2015 2014 2013 Current income tax expense $ 19,388 24,687 27,269 Cash and cash equivalents continue to increase primarily due to the Deferred income tax expense 8,612 8,360 672 Less: outstanding letters of credit (825) (825) (825) Corporation’s continued profits. The primary reason for the decrease from Revenues FY2013 to FY2014 in marketable securities was the sale of certain marketable Total available line of credit 60,039 53,820 60,644 Natural Resources Total income tax expense $ 28,000 33,047 27,941 securities for purposes of partially funding the Peak acquisition. Investment in 7(i) revenue sharing $ 9,609 7,796 6,424 unconsolidated affiliates continues to increase as the Corporation increases its Total liquidity $ 211,812 204,743 247,108 Natural Resources 577 600 100 investments in real estate and other alternative investments held in partnership and partnership like entities where the Corporation owns less than 100% Total tax expense is comprised of current and deferred federal and state taxes of the entity. Property, plant and equipment, net of depreciation increased which are primarily income based. To a lesser extent, the Corporation is subject Earnings from Natural Resources $ 10,186 8,396 6,524 significantly from FY2013 to FY2014 due to the Peak acquisition. Peak owns and To meet both our short and long-term liquidity requirements, we look to a to certain foreign income tax expense. Current tax expense represents expected operates a significant fleet of equipment and vehicles. variety of funding sources, both internal and external. Our primary source of taxes the Corporation will pay to taxing authorities on taxable income generated liquidity is cash generated from operating activities and from Portfolio earnings. Natural Resource earnings consist primarily of 7(i) revenue sharing, net of within the fiscal year plus or minus any prior year tax adjustments. Deferred tax Long-term liabilities increased significantly from FY2013 to FY2014 as the In order to meet additional liquidity needs at the parent level, the Corporation the 50% distribution to village corporations and at-large shareholders that expenses represents the current year change in deferred tax assets net of changes Corporation utilized debt financing to partially fund the Peak acquisition. BBNC has two lines of credit with which it may draw upon to fund cash needs. The the Corporation receives from other regional Alaska Native Corporations. 7(i) in the Corporation’s deferred tax liabilities. Deferred tax assets and liabilities shareholders equity continues to grow as a result of increased earnings, net of primary line of credit has a ceiling of $75.0 million and is secured by marketable receipts received are primarily from NANA Regional Corporation and Arctic arise in the normal course of business and represent future differences between dividends paid to shareholders. securities, and the secondary line has a ceiling of $30.0 million and is secured Slope Region Corporation. The Corporation distributes 50% of these receipts to taxable income and book income reported in the Corporation’s annual report. by the receivables of certain subsidiary companies. If further acquisition village corporations and at-large shareholders as 7(j) payments. These differences exist because of a lack of parity with respect to when certain opportunities arise, the Corporation will consider the costs and benefits of items of income and expense are recognized under the tax code, compared additional debt sources. Our cash flow from operations, and access to short Revenue from the sale of the Corporation’s Natural Resources, primarily sand to treatment under Generally Accepted Accounting Principles. Our average term debt, gives management confidence that the Corporation’s liquidity needs and gravel, is driven largely by resource development and infrastructure blended tax rate is approximately 40% of earnings from operations. can be met in both the short and longer terms. improvement activities in the Bristol Bay region. Revenues from the sale of natural resources tend to fluctuate from year-to-year.

The Corporation continues to advocate for responsible development of natural resources on BBNC lands and other lands within the BBNC region. We are committed to supporting a strong business climate that encourages investment in natural resource activities throughout the entire State of Alaska. Nevertheless, BBNC continues to oppose the proposed Pebble project because of its potential to harm the region’s commercial and subsistence fisheries, communities, and cultural heritage. The proposed project also lacks regional or shareholder support. In summary, BBNC opposes the proposed Pebble project because it is inconsistent with the Corporation’s responsible resource development criteria and Fish First policy. 22 BBNC Annual Report Two-Thousand and Fifteen | Management's Discussion and Analysis BBNC Annual Report Two-Thousand and Fifteen | Management's Discussion and Analysis 23

SIGNIFICANT SOURCES FINANCING ACTIVITIES both higher education degrees and vocational certifications. CRITICAL ACCOUNTING Financing activities include transactions involving shareholder dividends, AND USES OF CAPITAL In 1992, BBNC formally incorporated the BBNC Education Foundation (the ESTIMATES noncontrolling interests and borrowings and repayments of debt. Cash used by Foundation) as a 501(c)(3) entity and has continued to invest in education The following table displays sources/uses of capital and capital structure for the financing activities in FY2015 includes shareholder dividends of $27.3 million. The Corporation’s consolidated financial statements are prepared in and training through the Foundation. Scholarship recipients have graduated fiscal year ended (in thousands): The increase in cash provided by financing activities in FY2014 is mainly due accordance with generally accepted accounting principles. Significant with bachelors, masters, and other advanced degrees, such as a Ph.D. in to $60.0 million of long-term debt proceeds used to partially fund the Peak accounting policies are discussed in (note 1) Nature of Operations and anthropology, doctorates of medicine, veterinary medicine, law, and degrees in acquisiton. FY2015 and FY2013 are more reflective of uses of cash for financing Summary of Significant Accounting Policies accompanying the consolidated engineering, business administration, education, nursing, guidance counseling, activities on a year-to-year basis, absent any large acquisitons. financial statements of this report. In connection with the preparation of FISCAL YEAR environmental science, economics and philosophy, and associate degrees and the financial statements, management is required to make assumptions and other vocational certifications in dental therapy, culinary arts, professional Our total capital structure consists of the original monies received by the estimates about future events, and apply judgments that affect the reported piloting, health and human services, occupational safety and health training, 2015 2014 2013 Corporation under ANCSA on behalf of its shareholders, funds provided by debt amounts of assets, liabilities, revenues, expenses, and related disclosures. and medical assistant training. Providing increased support for these types of financing arrangements, and accumulated earnings that have not been paid out Amounts recognized in the financial statements from such estimates are programs is one of the Foundation’s long-term objectives. Sources/uses of capital in dividends. The overall increase in total capital in FY2015 is comprised of the necessary based on numerous assumptions involving varying and potentially fisal year earnings offset by dividends paid. Cash flows from operating activities $ 89,618 120,534 30,489 Recognizing the value of job skills that do not require four-year college degrees, significant degrees of judgment and uncertainty. Actual results may differ from management’s assumptions and estimates. Cash flows from investing activities (32,073) (141,115) (30,119) We continue to monitor the Corporation’s debt to equity ratio and intend to the Foundation also awards scholarships to help pay for vocational training and provides assistance for shareholders to attend various vocational training Cash flows from financing activities (44,552) 31,838 (8,291) maintain an appropriate balance of debt and liquidity. Management expects Areas in which accounting estimates could be different from the final results programs. This program specifically assists those that are in need of specialized that doing so will enable us to both meet our financial obligations and ready the include estimates of total contract costs for fixed price contracts, the fair value certification or training in order to enhance their employment or career Corporation to take advantage of strategic opportunites in the future. of investments, intangibles and goodwill, and the tax valuation of oil and gas Increase (decrease) in cash and opportunities. In many instances, vocational assistance recipients, who are also $ 12,993 11,257 (7,921) rights, and deferred tax assets. cash equivalents BBNC retains ownership of approximately 3.1 million acres of subsurface and shareholders, have used their certifications to be eligible for employment by the approximately 100,000 acres of surface real estate. BBNC shareholder’s equity Corporation and its subsidiaries. The Corporation funded over $2.3 million in does not include the value of lands conveyed as a result of ANCSA, which contributions to the BBNC Education Foundation in FY2015. Capital structure: cannot be readily estimated. Consistent with most Alaska Native Corporations, Short and long-term debt $ 111,144 112,006 49,155 the Corporation did not record a value for such lands due to the inability The Corporation further hosts the Bristol Bay Leadership Forum (formerly the Village Leadership Workshop), a two-day session that provides Bristol Bay BBNC shareholders' equity 349,376 330,897 296,732 to establish the value of those lands at the time of conveyance, especially considering the time and expense of obtaining appraisals. area village corporation, village council, borough, and city council leaders with an opportunity to meet with business, government, and Native leaders, to Total capital $ 460,520 442,903 345,887 share experiences, discuss issues affecting the people they represent, explore solutions to common problems, and to consider new opportunities that may Debt to equity ratio 31.81% 33.85% 16.57% DIVIDENDS AND help lead to economic, educational and cultural benefits. SHAREHOLDER BENEFITS In FY2012, the Corporation initiated an Elder’s Benefit Program. Eligible OPERATING ACTIVITIES The following table displays total dividends paid in each of the fiscal years original shareholders age 65 or older began receiving a benefit of $125 per quarter beginning in the third quarter of FY2012. In October 2013, shareholders The operating activity section of the statement of cash flows reconciles net ended (in thousands): approved establishment and funding of an elders’ settlement trust, which was income to the amount of cash provided by operating transactions. Cash flows funded with a $10.8 million contribution from the Corporation in FY2015. from operating activities was $89.6 million which was primarily comprised of Distributions from the trust to eligible shareholders are not taxable to the net income of $45.8 million plus depreciation expense of $24.9 million and FISCAL YEAR shareholders to the extent they are paid out of the current year or cumulative other changes in working capital. For FY2014, in addition to $49.2 million in undistributed income of the trust. cash flows from net income, there was $60.3 million of cash generated from the 2015 2014 2013 sale of marketable securities which was used to partially fund the acquisition The Corporation’s operations allow BBNC to provide meaningful career of Peak. opportunities for our shareholders. During FY2015, our average number of Regular dividends paid $ 16,204 14,583 13,502 shareholder employees increased by 20 for an average of 159 shareholders Elder dividends paid and elders 11,109 398 381 employed throughout the year. Total shareholder wages paid in FY2015 were settlement trust funding INVESTING ACTIVITIES $12.4 million. We continue to focus on expanding opportunities for shareholder Investing activities include our acquisition and divestiture activities including employment and beginning in FY2016, will form a new shareholder development portfolio related investment activity and other capital transactions. The increase Total dividends paid and elders department dedicated solely to shareholder development programs. $ 27,313 14,981 13,883 in cash used from investment activities from FY2013 to FY2014 was primarily settlement trust funding related to the $135.9 million cash outflow for the acquisition of Peak. Net cash activity from investment activity is typically consistent unless significant Cummulative dividends paid, since $ 164,377 137,064 122,083 acquisition activity occurs during a fiscal year. FY2015 and FY2013 are reflective inception of the Corporation’s more normalized uses of cash for investing activities on a year-to-year basis. Many of the benefits provided to our shareholders are a result of revenues derived from federal government contracting. The Corporation’s long-term strategy is to enhance its financial strength while paying increasing shareholder dividends and promoting educational and employment opportunities. The core of our success is our focus on education and protecting our cultural heritage. We are committed to training our future generations. Since 1986, the Corporation has provided educational scholarships to its shareholders pursuing 24 BBNC Annual Report Two-Thousand and Fifteen | Ten Year Financial Summary BBNC Annual Report Two-Thousand and Fifteen | Independent Auditors' Report 25

TEN YEAR FINANCIAL SUMMARY INDEPENDENT AUDITORS’ REPORT (In thousands except share data, ratios, and percentages) The Board of Directors and Stockholders 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Bristol Bay Native Corporation:

We have audited the accompanying consolidated financial statements of Bristol Bay Native Corporation and its Revenues: subsidiaries, which comprise the consolidated balance sheets as of March 31, 2015 and 2014, and the related Investment income $ 11,442 25,167 14,254 5,537 14,935 23,282 (34,293) 2,334 7,503 18,631 consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the three- Petroleum sales operations 811,253 1,011,443 1,097,607 1,173,249 948,873 791,736 994,918 993,676 796,558 601,977 year period ended March 31, 2015, and the related notes to the consolidated financial statements. Contract Services — — — — — — — 290,569 195,747 137,545 Oilfield Services 257,826 142,154 39,030 39,360 37,637 33,923 46,775 — — — Management’s responsibility for the financial statements Construction 414,033 404,907 517,799 449,868 401,608 375,776 268,503 — — — Management is responsible for the preparation and fair presentation of these consolidated financial statements Government Services 228,720 240,823 282,821 287,186 256,247 152,199 102,296 — — — in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, Tourism 1,861 1,890 1,493 — — — — — — — and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial Natural Resources 10,186 8,396 6,524 9,877 7,648 3,965 12,706 7,331 5,538 3,369 statements that are free from material misstatement, whether due to fraud or error. Other income (1) 763 1,114 2,252 430 252 1,515 666 944 793 892

Total operating revenue 1,736,084 1,835,894 1,961,780 1,965,507 1,667,200 1,382,396 1,391,571 1,294,854 1,006,139 762,414 Auditors’ Responsibility

Costs and expenses (1) 1,662,248 1,753,661 1,892,521 1,898,335 1,597,930 1,346,170 1,394,362 1,285,723 983,611 734,424 Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Earnings (loss) from operations 73,836 82,233 69,259 67,172 69,270 36,226 (2,791) 9,131 22,528 27,990 Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Income tax benefit (expense), net consolidated financial statements are free from material misstatement. (28,000) (33,047) (27,941) 3,054 (26,253) (4,289) 8,853 (3,500) (5,358) (5,809) of extraordinary benefit An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Earnings applicable to minority interests (945) (36) — — — — (888) (608) (1,074) (924) consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the Net earnings $ 44,891 49,150 41,318 70,226 43,017 31,937 5,174 5,023 16,096 21,257 assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s Cash flow data: preparation and fair presentation of the consolidated financial statements in order to design audit procedures Net cash provided by operating activities $ 89,618 120,534 30,489 36,975 17,484 5,631 56,439 19,483 15,370 13,534 that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the Net capital expenditures 19,552 7,215 18,014 16,992 5,669 5,750 8,548 3,988 3,267 11,675 appropriateness of accounting policies used and the reasonableness of significant accounting estimates made Addition (reduction) to long-term debt (862) 62,851 18,974 (11,648) (2,731) 6,884 (11,146) (3,787) 7,128 8,806 by management, as well as evaluating the overall presentation of the consolidated financial statements. Dividends paid 27,313 14,981 13,883 12,070 7,453 6,913 6,481 5,941 5,185 4,568 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Shareholder data: Earnings per share $ 83.00 91.00 76.51 130.02 79.65 59.13 9.58 9.30 29.80 39.36 Dividends per share 30.00 27.00 25.00 22.00 13.80 12.80 12.00 11.00 9.60 8.60 Opinion Return on average stockholders’ equity 12.9% 15.7% 14.6% 29.2% 22.2% 19.6% 3.4% 3.3% 10.9% 15.9% In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Bristol Bay Native Corporation and its subsidiaries as of March 31, 2015 and 2014, and the results of their operations and their cash flows for each of the years in the three-year period ended March 31, Financial position: 2015, in accordance with U.S. generally accepted accounting principles. Cash and equivalents $ 62,464 49,471 38,214 46,135 35,118 25,521 26,170 21,687 9,822 7,522 Working capital (1) 83,572 59,827 37,931 71,655 10,469 27,479 34,340 24,650 19,304 9,496

Marketable equity securities at fair market 133,445 136,807 176,781 115,202 97,830 84,820 59,645 89,431 98,112 103,925 value

Property, plant and equipment, at cost 170,630 174,337 70,263 56,940 46,481 46,748 47,170 44,387 45,027 40,484 Total assets 656,621 629,922 559,034 518,703 448,322 370,456 305,896 327,600 293,578 253,982

Long-term debt (including current 111,144 112,006 49,155 30,181 41,829 44,560 37,676 48,822 52,503 45,370 maturities) Anchorage, Alaska Stockholders’ equity 349,376 330,897 296,732 269,297 211,141 175,577 150,553 151,860 152,778 141,867 June 9, 2015

Ratios: Current ratio (1) 1.4 1.3 1.2 1.3 1.1 1.2 1.3 1.2 1.2 1.1 Long-term debt to equity ratio 0.35 0.34 0.17 0.11 0.20 0.25 0.25 0.32 0.34 0.32

NOTES: (1) Marketable equity securities have not been included as part of current assets for this computation 26 BBNC Annual Report Two-Thousand and Fifteen | Consolidated Financial Statements BBNC Annual Report Two-Thousand and Fifteen | Consolidated Financial Statements 27

BRISTOL BAY NATIVE CORPORATION AND SUBSIDIARIES BRISTOL BAY NATIVE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS CONSOLIDATED BALANCE SHEETS MARCH 31, 2015 AND 2014 MARCH 31, 2015 AND 2014

(In thousands, except shares) (In thousands, except shares)

ASSETS LIABILITIES AND STOCKHOLDERS’ EQUITY

2015 2014 2015 2014

Current assets Current liabilities Cash and cash equivalents $ 62,464 49,471 Notes payable (note 9) $ 780 17,113 Marketable securities (notes 5, 7, and 10) 133,445 136,807 Accounts payable 67,246 59,965 Accounts receivable: Accrued liabilities (notes 9, 10, 11 and 12) 83,250 73,965

Trade, net (note 8) 166,727 166,492 Billings in excess of costs and earnings (note 1(l)) 17,619 17,184

Natural resources (note 1(k)) 9,895 8,545 Unclaimed dividends 512 710

Inventories 3,968 4,460 Current maturities of long-term debt (note 10) 9,718 9,705

Costs and earnings in excess of billings (note 1(l)) 23,104 14,476 Deferred tax liability (note 12) 5,563 6,538

Prepaid expenses and refundable taxes (note 12) 2,102 1,563 Total current liabilities 184,688 185,180 Total current assets 401,705 381,814 Long-term debt, less current maturities (note 10) 101,426 102,301 Deferred tax liability (note 12) 21,131 11,544 Investments in unconsolidated affiliates (note 6) 27,822 15,114

Other assets 10,229 10,734 Total liabilities 307,245 299,025

Property, plant, and equipment, at cost (notes 1(h) and 10): Stockholders’ equity Land 12,333 12,333 Class A common stock, no par value. Authorized, 1,000,000 Buildings 39,097 38,463 shares; issued and outstanding, 488,500 shares (note 2) 29,571 29,571 Leasehold improvements 19,963 19,963 Class B common stock, no par value. Authorized, 300,000 Machinery and equipment 176,950 161,083 shares; issued and outstanding, 51,600 shares (note 2) 3,124 3,124 Retained earnings 315,784 298,206 248,343 231,842

Less accumulated depreciation 77,713 57,505 Total stockholders’ equity attributable to Bristol Bay Native Corporation 348,479 330,901 170,630 174,337 Noncontrolling interest 897 (4) Intangible assets, net (note 4) 9,442 11,130

Goodwill (notes 1(i) and 4) 36,793 36,793 Total stockholders’ equity 349,376 330,897

Total assets $ 656,621 629,922 Commitments and contingencies (notes 6, 9, 10, 11, 12, 13, and 14)

Total liabilities and stockholders' equity $ 656,621 629,922

See accompanying notes to consolidated financial statements. 28 BBNC Annual Report Two-Thousand and Fifteen | Consolidated Financial Statements BBNC Annual Report Two-Thousand and Fifteen | Consolidated Financial Statements 29

BRISTOL BAY NATIVE CORPORATION AND SUBSIDIARIES BRISTOL BAY NATIVE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY YEARS ENDED MARCH 31, 2015, 2014, AND 2013 YEARS ENDED MARCH 31, 2015, 2014, AND 2013

(In thousands, except shares and per share data) (In thousands)

2015 2014 2013 Total shareholders’ Revenues equity attributable Petroleum Distribution $ 811,253 1,011,443 1,097,607 to Bristol Total Oilfield and Industrial Services 257,826 142,154 39,030 Retained Bay Native Non controlling stockholders’ Construction 414,033 404,907 517,799 Common Stock Earnings Corporation Interests equity Government Services 228,720 240,823 282,821 Class A Class B Tourism 1,861 1,890 1,493 Balance, April 1, 2012 $ 29,571 3,124 236,602 269,297 — 269,297 Investment Earnings (notes 5 and 6) 11,442 25,167 14,254 Dividends ($25.00 per share) — — (13,883) (13,883) — (13,883) Natural Resources 10,186 8,396 6,524 Net earnings — — 41,318 41,318 — 41,318 Other 763 1,114 2,252

1,736,084 1,835,894 1,961,780 Balance, March 31, 2013 29,571 3,124 264,037 296,732 — 296,732 Dividends ($27.00 per share) — — (14,981) (14,981) — (14,981)

Costs and expenses Net earnings — — 49,150 49,150 36 49,186

Cost of Petroleum Distribution 801,702 1,005,338 1,091,582 Distributions to noncontrolling interest — — — — (40) (40) Cost of Oilfield and Industrial Services 235,667 122,754 35,451

Cost of Construction 399,522 385,243 487,077 Balance, March 31, 2014 29,571 3,124 298,206 330,901 (4) 330,897

Cost of Government Services 199,336 214,223 256,019 Dividends ($30.00 per share) — — (27,313) (27,313) — (27,313)

Cost of Tourism 1,903 2,027 1,637 Net earnings — — 44,891 44,891 945 45,836

Cost of Investment Management 2,333 928 1,392 Distributions to noncontrolling interest — — — — (44) (44) Corporate General and Administrative Expense 16,167 16,830 12,686

Interest 2,391 1,987 1,560 Balance, March 31, 2015 $ 29,571 3,124 315,784 348,479 897 349,376

Other 3,227 4,331 5,117 See accompanying notes to consolidated financial statements.

1,662,248 1,753,661 1,892,521

Earnings from operations 73,836 82,233 69,259

Income tax expense (note 12) 28,000 33,047 27,941

Net earnings 45,836 49,186 41,318

Less income attributable to noncontrolling interest (945) (36) —

Net earnings attributable to Bristol Bay Native Corporation $ 44,891 49,150 41,318

Earnings per share $ 83 91 77 Weighted average shares outstanding 540,100 540,100 540,100

See accompanying notes to consolidated financial statements. 30 BBNC Annual Report Two-Thousand and Fifteen | Consolidated Financial Statements BBNC Annual Report Two-Thousand and Fifteen | Consolidated Financial Statements 31

BRISTOL BAY NATIVE CORPORATION AND SUBSIDIARIES BRISTOL BAY NATIVE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED MARCH 31, 2015, 2014, AND 2013 MARCH 31, 2015 AND 2014 (in thousands) 2015 2014 2013 (1) NATURE OF OPERATIONS Bristol Site Contractors, LLC Cash flows from operating activities: AND SUMMARY OF SIGNIFICANT Bristol Prime Contractors, LLC Net earnings $ 45,836 49,186 41,318 ACCOUNTING POLICIES CCI Construction Services, LLC Items not affecting cash: CCI Energy and Construction Services, LLC Undistributed income from unconsolidated affiliates (187) (331) (279) (A) NATURE OF OPERATIONS Loss of disposition of business unit — 2,417 — The operations of Bristol Bay Native Corporation (Corporation) include the CCI Group, LLC Unrealized depreciation (appreciation) of marketable securities 3,164 (9,956) 712 following: Depreciation and amortization 24,896 16,399 10,393 CCI, Inc. Gain (loss) on disposal of property plant and equipment 51 (1,509) (18) • Petroleum Distribution CCI Mechanical, LLC Gain on sale of marketable securities (9,816) (10,351) (10,424) • Oilfield and Industrial Services CCI Solutions, LLC Gain on interest rate swap (50) (1,183) (93) • Construction Deferred tax expense 8,612 8,360 672 • Government Services CCI General Contractors, LLC Bad debt expense 765 305 654 • Tourism Changes in operating assets and liabilities that provided cash, net of acquisitions: Aerostar SES LLC • Portfolio of public and private passive investments, some of which are Accounts receivable (2,350) 27,339 6,574 SES Construction and Fuel Services LLC managed by outside investment managers Costs and earnings in excess of billings (8,628) 2,588 (1,286) Billings in excess of costs 435 (5,916) (449) • Subsurface and other natural resource management SpecPro Environmental Services LLC

Recognition of forward losses on construction contracts 444 522 45 Workforce Resources, LLC Net sale (purchase) of marketable securities 10,014 60,281 (51,867) (B) PRINCIPLES OF CONSOLIDATION Inventories 492 (688) 717 The accompanying consolidated financial statements include the accounts of SES Engineering & Design LLC the Corporation and its wholly, and majority owned, subsidiaries: Accounts payable 7,281 (21,792) 844 SES Electrical LLC Accrued liabilities and other 8,659 4,863 32,976 Bristol Resources, Inc. SES Civil Contractors LLC Net cash provided by operating activities 89,618 120,534 30,489 Bristol Bay Corporate Services, Inc. SES Installation Support LLC Cash flows from investing activities: Bristol Bay Architects, Inc.* Badger Technical Services, LLC Acquisition of businesses, net of cash acquired — (135,854) (11,365) Bristol Bay Parking, LLC Proceeds from sale of business unit — 9,213 — Business Resource Solutions, LLC Investment in unconsolidated affiliates (12,521) (7,259) (740) Bristol Bay Development LLC DefendSafe, LLC Additions to property, plant, and equipment (19,552) (7,215) (18,014) Bristol Bay Private Equity Investments, LLC Eagle Applied Sciences LLC Net cash used in investing activities (32,073) (141,115) (30,119) Bristol Bay Development Fund LLC Eagle Medical Services, LLC Cash flows financing activities: AN-AN, C, LLC Glacier Technical Solutions, LLC Proceeds from long-term debt 27,506 98,946 30,783 PetroCard, Inc. Repayment of long-term debt (28,368) (36,095) (11,809) Glacier Technologies LLC Notes payable (16,333) (15,992) (13,382) Bristol Bay Petroleum Properties, LLC JL-BBNC, LLC * Distributions to noncontrolling interests (44) (40) — Bristol Bay Mission Lodge, LLC Dividends paid (27,313) (14,981) (13,883) MedPro Technologies, LLC Bristol Bay Resource Solutions, LLC Net cash provided by (used in) financing activities (44,552) 31,838 (8,291) SpecPro Asset Management, LLC Bristol Construction Services, LLC Increase (decrease) in cash and cash equivalents 12,993 11,257 (7,921) SpecPro, Inc. Cash and cash equivalents: Bristol Design Build Services, LLC SpecPro Professional Services, LLC Beginning of year 49,471 38,214 46,135 Bristol Environmental Remediation Services, LLC SpecPro Technical Services LLC End of year $ 62,464 49,471 38,214 Bristol Engineering Services Corporation SpecPro Management Services, LLC Supplemental disclosure of cash flow information : Bristol Fuel Systems, LLC Cash paid (received) during the year for: STS Systems Integration, LLC Interest $ 3,319 2,607 2,248 Bristol General Contractors, LLC STS Solutions & Training, LLC Income taxes (22,164) (23,987) (11,882) Bristol Industries, LLC TekPro Services, LLC See accompanying notes to consolidated financial statements. 32 BBNC Annual Report Two-Thousand and Fifteen | Consolidated Financial Statements BBNC Annual Report Two-Thousand and Fifteen | Consolidated Financial Statements 33

Vista International Operations, Inc. determined either by its respective ownership percentage or, when appropriate, the first-step of the two-step impairment test. Under the first-step, the fair (L) REVENUE AND COST RECOGNITION by using the hypothetical liquidation at book value method (HLBV). When value of the reporting unit is compared with its carrying value (including In general, the Corporation recognizes revenue when the following criteria are Vista Technical Services, LLC using the HLBV, the Corporation evaluates at each balance sheet date, the goodwill). If the fair value of the reporting unit is less than its carrying value, an met: services have been performed or delivery has occurred, collection of the Vista Defense Technologies, LLC amount it would receive or be obligated to pay if the investee were liquidated. indication of goodwill impairment exists for the reporting unit, and the entity receivable is probable, persuasive evidence of an arrangement exists, and the The difference between this amount at the beginning of the period compared must perform step-two of the impairment test (measurement). Under step- sales price is fixed and determinable. Peak Oilfield Service Company LLC to end of the period plus cash received from the investments during the period two, an impairment loss is recognized for any excess of the carrying amount and less amounts contributed to the investment during the period, represents of the reporting unit’s goodwill over the implied fair value of that goodwill. The Corporation’s oilfield service, government service, and construction revenues CCI Industrial Services, LLC the Corporation’s earnings or losses for the period from such investment. The implied fair value of goodwill is determined by allocating the fair value of are derived from fixed price, time and material, and cost plus contracts to provide Kakivik Asset Management, LLC Cost method investments are reviewed for impairment in the occurrence of the reporting unit in a manner similar to a purchase price allocation, and the services under various federal, state, and commercial contracts. Revenue on fixed a triggering event indicating impairment. Equity method investments are residual fair value after this allocation is the implied fair value of the reporting price contracts is recognized by the percentage of completion method based on Bristol Bay Alaska Tourism, LLC * analyzed for impairment on an ongoing basis. An impairment charge is recorded unit’s goodwill. Fair value of the reporting unit is determined using a discounted the proportion of costs incurred to date to management’s best estimate of total whenever the fair value of the investment is considered to be less than the cash flow analysis. If the fair value of the reporting unit exceeds its carrying contract costs. Revenues from time and material contracts and cost plus contracts Bristol Earth Sciences, LLC * carrying amount and the impairment is considered other than temporary. value, step-two does not need to be performed. are recognized currently as the work is performed. Change orders are not KAM Resources Group, LLC * included in contract revenue until agreed upon and approved by the customer The Corporation performs its annual impairment review of goodwill at March and Corporation regarding both scope and price. Claims are not included in *No significant activity in 2015, 2014 or 2013. (F) TRADE ACCOUNTS RECEIVABLE 31, and when a triggering event occurs between annual impairment tests. contract revenue until it is probable that the claim will result in additional Trade accounts receivable are recorded at the invoiced amount and do not No impairment loss was recorded in 2015, 2014 or 2013. The reporting units contract revenue and the amount can be reliably estimated or when amounts The Corporation consolidates majority owned subsidiaries that are not bear interest. The allowance for doubtful accounts is management’s best assessed for impairment include PetroCard (PC), SpecPro Technical Services have been received. Contract costs include all direct costs and any indirect, considered variable interest entities for which the Corporation exercises estimate of the amount of probable credit losses in existing accounts receivable. (STS) group, and SpecPro Environmental Services (SES) group. or overhead, costs allocable to contracts. Included in indirect or overhead are operational control. The Corporation will also consolidate any variable interest The Corporation determines the allowance based on its historical write off allocable general and administrative to the extent such costs are allowable under entities of which it is the primary beneficiary. The Corporation consolidates Intangible assets with finite lives are recorded at cost and are primarily experience and current economic conditions. Past due balances over 60 days government procurement regulations and recoverable under the contract. AN-AN, C, LLC as the primary beneficiary of a variable interest entity. Included amortized on a straight line basis over the estimated period of economic in a specified amount are reviewed individually for collectibility. All other Revisions in cost and profit estimates are made during the course of work and are in the Corporation’s consolidated balance sheet as of March 31, 2015, is benefit. The Corporation reviews intangible assets with finite lives for balances are reviewed in aggregate. Account balances are charged off against the reflected when facts that require revision become known. Provision for losses on $19,935,000 of assets and $14,057,000 of liabilities of AN-AN, C, LLC, consisting impairment whenever events or changes in circumstances indicate that the allowance after all means of collection have been exhausted and the potential for uncompleted contracts is made in the period in which such losses are identified. primarily of a building and the associated long term loan payable for the carrying value of the assets may not be recoverable. Recoverability of these recovery is considered remote. The Corporation does not have any off balance- building. The Corporation contributed $6,463,000 of equity and guarantees the intangible assets is assessed based on the undiscounted future cash flows sheet credit exposure related to its customers. The allowance for uncollectible The costs and estimated earnings on contracts in progress include costs and long term loan payable of AN-AN, C, LLC. expected to result from the use of the asset. If the undiscounted future cash accounts was $1,260,000 and $725,000 at March 31, 2015 and 2014, respectively. estimated earnings on firm fixed price contracts. The following table reconciles flows are less than the carrying value, the purchased intangible assets are costs incurred, earnings, and billings to date on contracts in progress at March All significant intercompany accounts and transactions have been eliminated considered to be impaired. The amounts of the impairment loss, if any, is 31 (in thousands): in consolidation. (G) INVENTORIES measured as the difference between the carrying amount of these assets and the fair value based on a discounted cash flow approach, or when available and Inventories, which consist primarily of petroleum products, are stated at the 2015 2014 (C) CASH AND CASH EQUIVALENTS lower of cost (principally, first-in, first-out) or market. appropriate, to comparable market values. The Corporation has not acquired intangible assets with indefinite lives. Costs incurred on contracts in Cash and cash equivalents include cash and investments with initial maturities, $ 1,060,508 1,045,059 progress to date at the time of purchase, of three months or less. (H) PROPERTY, PLANT, AND EQUIPMENT Estimated earnings to date 131,581 142,780 Property, plant, and equipment are recorded at cost. Depreciation of property, (J) IMPAIRMENT OF LONG-LIVED ASSETS Long-lived assets are reviewed for impairment whenever events or changes (D) MARKETABLE SECURITIES plant, and equipment is provided based on the estimated useful lives of the Contract revenue earned to date 1,192,089 1,187,839 in circumstances indicate that the carrying amount of an asset may not be Marketable securities are used to supplement cash provided by operations in respective assets using the straight-line method. Estimated lives for buildings recoverable. Recoverability of assets to be held and used is measured by a Less billings to date (1,186,604) (1,190,547) order to fund corporate overhead and shareholder dividends. The marketable are 10 to 40 years, and for machinery and equipment, 3 to 10 years. Leasehold improvements are amortized straight-line over the shorter of the lease term comparison of the carrying amount of the assets to the future undiscounted net securities are recorded at fair value and are classified as trading. The Contracts revenue adjustment cash flows expected to be generated by the asset. If such assets are considered Corporation includes net unrealized gains and losses as a part of investment or estimated useful life of the asset. The Corporation recorded depreciation required to reflect percentage of $ 5,485 (2,708) to be impaired, the impairment to be recognized is measured by the amount earnings. Realized gains or losses resulting from the sale of securities are also expense of $23,208,000, $14,088,000 and $8,320,000 for the years ended March completion by which the carrying amount of the assets exceeds the fair value of the assets. included in investment earnings. Cost of securities is determined using the first- 31, 2015, 2014 and 2013, respectively. Assets to be disposed of are reported at the lower of the carrying amount, or in, first-out method. Included in the consolidated balance sheets are costs and estimated earnings The cost of current repairs and maintenance is charged to expense, while the fair value less the cost to sell. on contracts in progress compared to billings and consist of the following, at cost of betterment is capitalized. March 31 (in thousands): (E) INVESTMENTS IN UNCONSOLIDATED (K) NATURAL RESOURCE REVENUES AFFILIATES (I) GOODWILL AND INTANGIBLES Natural resource revenues are derived from sand and gravel quarry operations, 2015 2014 Investments in unconsolidated affiliates are accounted for using the cost or Goodwill is an asset representing the future economic benefits arising from and natural resource revenues distributable to the Corporation from other Costs and earnings in excess of the equity method, depending on whether the Corporation has the ability other assets acquired in a business combination that are not individually $ 23,104 14,476 Alaska Native Regional Corporations, under Section 7(i) of the Alaska Native billings on uncompleted projects to exercise significant influence over operating and financial policies of an identified and separately recognized. Goodwill is reviewed for impairment Claims Settlement Act. Revenues distributable under Section 7(i) are recorded investee. Under the cost method, investments are carried at acquisition cost at least annually. The Corporation has an option to assess qualitative factors when received or when the amount is determined and receipt is assured. Natural Billings in excess of costs and and distributions are recognized as income when received. Under the equity (17,619) (17,184) to determine whether the existence of events or circumstances leads to a resource revenues are recorded net of amounts distributable under Section 7(j). earnings on uncompleted contracts method, the Corporation’s share of affiliate earnings is included in income when determination that it is more likely than not that the fair value of a reporting earned, and distributions are credited to the investment when received. For unit is less than its carrying amount. If after assessing the totality of events $ 5,485 (2,708) flow-through entities (i.e., partnerships, limited liability companies, subchapter or circumstances, the Corporation determines it is not more likely than not S corporations, etc.), the ability to exercise significant influence is presumed that the fair value of a reporting unit is less than its carrying amount, then Costs and earnings in excess of amounts billed are classified as current assets to exist if the percentage of ownership is equal to or greater than 5%. For other performing the two-step goodwill impairment test is unnecessary. However, if under “costs and earnings in excess of billings.” Billings in excess of costs and entities, significant influence is presumed to exist if the percentage of ownership the Corporation concludes otherwise, the Corporation is required to perform earnings are classified under current liabilities as “billings in excess of costs and is equal to or greater than 20%. The Corporation’s share of earnings or losses is earnings.” Contract retentions are included in accounts receivable. 34 BBNC Annual Report Two-Thousand and Fifteen | Consolidated Financial Statements BBNC Annual Report Two-Thousand and Fifteen | Consolidated Financial Statements 35

Where the Corporation acting in an agency capacity, by agreement, has (O) USE OF ESTIMATES (2) ALASKA NATIVE CLAIMS In June 1982, an agreement was reached among the Native regional transferred all significant risk to vendors, manufacturers, or purchasers, the The preparation of consolidated financial statements in conformity with SETTLEMENT ACT corporations settling several years of litigation concerning the meaning and Corporation records only the net profit in contract services revenues. Gross U.S. generally accepted accounting principles requires management to make application of Section 7(i). The settlement agreement sets past liabilities volume from such activity excluded from the financial statements totaled estimates and assumptions that affected the amounts reported in the financial The Corporation is a regional corporation organized pursuant to the Alaska and establishes rules for the future by which distributable revenues will $11,297,000, $8,780,000 and $30,486,000 for fiscal years 2015, 2014 and statements. These estimates are based on management’s current judgment Native Claims Settlement Act of 1971 (ANCSA). be determined. These consolidated financial statements comply with the 2013, respectively. and may differ from actual results. Significant items subject to estimates settlement agreement. ANCSA provided for a monetary entitlement to be disbursed through the Alaska and assumptions include investments, accounts receivable, estimates of Revenue from petroleum sales is recognized when the related goods are sold Native Fund to the regional and village corporations created under ANCSA total contract costs for fixed price contracts, the fair value of investments, and all significant obligations of the Corporation have been satisfied, which and to certain regional corporation shareholders. The Corporation received intangibles, and goodwill, and the tax valuation of oil and gas rights, and generally occurs at time of delivery. Petroleum revenues and the cost of $32,694,953 as its total proportionate share of the monetary entitlement. deferred tax assets. (3) ACQUISITIONS petroleum operations, generated from purchases outside the PetroCard (PC) network, are recorded gross of state and federal fuel taxes. PC is not responsible The Corporation is also entitled under ANCSA to select and receive approximately three million acres of land, primarily subsurface estate. PEAK OILFIELD SERVICE COMPANY LLC for collecting or remitting fuel tax for petroleum revenues from fuel directly (P) RECENTLY IMPLEMENTED ACCOUNTING acquired by the Corporation. Included in petroleum sales operations and costs Stockholders’ equity includes net cash receipts from the U.S. government and In November 2013, the Corporation acquired 100% of Peak Oilfield Service of petroleum sales operations is $87.3 million, $103.7 million and $107.8 million PRONOUNCEMENTS the State of Alaska under ANCSA. Land and subsurface rights conveyed under Company LLC (Peak), an oilfield services company, for total consideration of In April 2014, the FASB issued Accounting Standards Update (ASU) No. of state and federal fuel taxes for the years ended March 31, 2015, 2014 and ANCSA are not recorded because it is not reasonably possible to determine the $137,890,000 funded through cash and debt financing. 2014-08 Reporting Discontinued Operations and Disclosures of Disposals of 2013, respectively. value of the assets conveyed at this time. Of the Corporation’s entitlement of The purchase price was allocated as follows (in thousands): Components of an Entity, which changes the criteria for reporting discontinued 3,079,553 acres, the Corporation has received interim conveyance to 434,874 operations. The Corporation early-adopted ASU No. 2014-08 in fiscal year acres of subsurface estate and has received patent to 2,593,893 acres. The (M) INTEREST RATE SWAP 2014. In December 2013, PetroCard (PC) disposed of its lube business unit. Corporation has also received interim conveyance to 115,349 acres of surface Assets: From time to time the Corporation enters into interest rate swaps as a means This disposal does not represent a strategic shift that will have a major effect and subsurface estate. to hedge against the uncertainty of future increases in interest rates on the on the Corporation’s operations and financial results and does not qualify for Cash $ 2,036 Corporation’s long-term debt. The Corporation applies Financial Accounting discontinued operations reporting under ASU No. 2014-08. The pre-tax net The Corporation’s Articles of Incorporation, in accordance with the Accounts receivable 24,481 requirements of ANCSA, provided for the issuance of 100 shares of common Standard Board (FASB) Accounting Standards Codification (ASC) Topic 815, income (loss) of the PC lube's business unit was $(1,989,000) and $(70,000) for Inventory 417 years ended March 31, 2014 and 2013, respectively. stock at the inception of the Corporation to each Alaska Native enrolled in the Derivatives and Hedging, which among other provisions requires that all interest Cost and earnings in excess of billings 5 rate swaps be recognized as either assets or liabilities in the consolidated Bristol Bay region as follows: In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Other assets 1,162 balance sheet and measured at fair value. Gains and losses resulting from Customers (Topic 606). ASC Update 2014-09 provides guidance for the • Class A shares to Alaska Natives enrolled in the Bristol Bay region who changes in the fair value are recorded in other comprehensive income when Property, plant and equipment 111,988 recognition, measurement and disclosure of revenue related to the transfer of are also enrolled in one of the village corporations in the region. the swaps qualify for hedge accounting. The change in the fair value of swaps Intangibles: promised goods or services to customers. This update is effective for fiscal years that do not qualify as a hedge must be included as part of earnings. The fair • Class B shares to Alaska Natives enrolled in the Bristol Bay region who beginning after December 15, 2016, for which early application is prohibited. Trade names (amortized over 11 years) 1,122 values of interest rate swaps are included in accrued liabilities with the effect are not enrolled in one of the village corporations in the region. The The Corporation will begin application of ASC 2014-09 on April 1, 2017. The Customer relationships (amortized over 5 years) 1,683 on earnings included as part of interest expense. Notes 6, 9 and 10 on fair value, stockholders of Class B stock are referred to as “at large” shareholders. Corporation is evaluating the effect on its results of operations, financial notes payable and long-term debt contain a description of any current interest This stock, stock dividends or distributions, and any other stock rights may not Noncompete agreements (amortized over 5 years) 701 position, and cash flows. rate swaps. be sold, pledged, assigned, subjected to a lien or judgment execution, treated In April 2015, the FASB proposed deferring the effective date of ASC Update as an asset in a bankruptcy proceeding or otherwise alienated except in limited Total Assets 143,595 circumstances by court decree, by gift to certain relatives and by death. All (N) INCOME TAXES 2014-09 by one year and also proposed permitting early adoption of this update, but not before the original effective date. holders of stock have the same economic rights. The Corporation and its subsidiaries file consolidated federal and state income Liabilities: tax returns. The Corporation accounts for income taxes on the liability method. In April 2015, the FASB issued ASC Update 2015-03, Interest – Imputation of During the period that restrictions on stock alienation are in effect, the stock Accounts payable 2,414 Income tax expense includes income taxes currently payable and those deferred Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. carries voting rights only if the holder is an Alaskan Native or a descendant of because of differences between the financial statement and tax basis of assets ASC Update 2015-03 revises the presentation guidance for debt issuance costs an Alaskan Native, as defined in the amended ANCSA. As of March 31, 2015 Accrued liabilities 3,291 and liabilities. The Corporation records a valuation allowance to reduce the related to a recognized debt liability. The effect of this update is to present the and 2014, there were 9,213 and 8,949 holders of Class A stock and 918 and 872 amount of the gross deferred tax assets to the amount that is more likely debt issuance costs as a direct deduction to the liability on the balance sheet holders of Class B stock, respectively. Among these stockholders, 9,067 and Total liabilities 5,705 than not to be realized. Factors considered in determining the amount of the and retrospective application is required. This update does not change the 857 hold voting stock at March 31, 2015, and 8,798 and 811 hold voting stock at valuation allowance include historical levels of taxable income, projected levels recognition and measurement guidance for debt issuance costs. This update is March 31, 2014. Net assets acquired $ 137,890 of taxable income in future years, expected future Corporation trends in results effective for fiscal years beginning after December 15, 2015, with early adoption The outstanding stock of the Corporation will remain subject to restrictions on from existing operations, and the scheduled reversal of deferred tax liabilities. permitted. The Corporation will begin application of ASC 2015-03 on April 1, The Corporation incurred $3,100,000 of acquisition related costs, which are alienability unless a decision is made by shareholders pursuant to ANCSA to Deferred tax liabilities are recorded as they arise. 2016. Adoption is not expected to have any incremental effect on results of included in corporate general and administrative expense in the Consolidated terminate the restrictions. operations, financial position, and cash flows. Statements of Operations for the year ended March 31, 2014. The Corporation recognizes the effect of income tax positions only if those A quarterly distribution in the amount of $125 is made to each Elder that is an positions are more likely than not of being sustained. Recognized income tax Peak’s operating results are included in the consolidated statement of original shareholder and age 65 and older. positions are measured at the largest amount that is greater than 50% likely operations in the Oilfield and Industrial Services line of business. of being realized. Changes in recognition or measurement are reflected in the Under Section 7(i) of ANCSA, the Corporation is required to distribute period in which the change in judgment occurs. annually 70% of the net resource revenues received from the Corporation’s timber and subsurface estate to all 12 Alaska Native Regional Corporations The Corporation records penalties and interest related to unrecognized tax organized pursuant to ANCSA. Under Section 7(i) of ANCSA, the Corporation benefits as part of interest expense. also redistributes 50% of revenues received under Section 7(i) of ANCSA to the Corporation’s village corporations and at-large shareholders. 36 BBNC Annual Report Two-Thousand and Fifteen | Consolidated Financial Statements BBNC Annual Report Two-Thousand and Fifteen | Consolidated Financial Statements 37

(4) GOODWILL AND INTANGIBLES (5) MARKETABLE SECURITIES The change in the carrying amount of goodwill for the years ended March 31, 2015 and 2014 are as follows (in thousands): The cost and fair value of marketable securities included in the trading portfolio at March 31 are as follows (in thousands):

2015 Balance as of March 31, 2013 40,193 GROSS GROSS Disposition of PC lube’s business unit (3,400) UNREALIZED UNREALIZED COST GAINS LOSSES FAIR VALUE Balance as of March 31, 2015 and 2014 36,793

Money market mutual funds $ 12,154 — — 12,154 Equities: The changes in the carrying amount of intangibles for the years ended March 31, 2015 and 2014 are as follows (in thousands): Domestic 47,955 20,150 (1,662) 66,443 SES PC ASL BBML PEAK TOTAL International 24,404 5,073 (1,728) 27,749

Balance as of March 31, 2013 $ 881 4,290 4,588 176 — 9,935 Mutual Funds 13,226 307 (428) 13,105 Fixed income securities Acquisitions Government 3,866 30 — 3,896

Customer relationships — — — — 1,683 1,683 Government-sponsored 3,592 20 — 3,612

Noncompete agreements — — — — 701 701 International government 255 — (1) 254

Tradenames — — — — 1,122 1,122 Mortgage-backed 460 17 — 477

Amortization Corporate – domestic 5,120 108 (30) 5,198 Customer relationships (881) (399) (234) (43) (140) (1,697) Corporate – international 618 — (61) 557

Noncompete agreements — — (309) — (59) (368) 111,650 25,705 (3,910) 133,445 Tradenames — — (91) — (42) (133) $

Contractual backlog — — (113) — — (113) 2014 Balance as of March 31, 2014 — 3,891 3,841 133 3,265 11,130 GROSS GROSS UNREALIZED UNREALIZED Acquisitions COST GAINS LOSSES FAIR VALUE Customer relationships — — — — — —

Noncompete agreements — — — — — — Money market mutual funds $ 14,544 — — 14,544

Tradenames — — — — — — Equities: Domestic 48,020 22,226 (866) 69,380 Amortization International 17,285 3,796 (967) 20,114 Customer relationships — (319) (234) (43) (337) (933)

Noncompete agreements — — (309) — (140) (449) Mutual Funds 18,279 1,002 (327) 18,954

Tradenames — — (91) — (102) (193) Fixed income securities

Contractual backlog — — (113) — — (113) Government 224 12 — 236 Government-sponsored 3,276 — — 3,276

Balance as of March 31, 2015 $ — 3,572 3,094 90 2,686 9,442 International government 369 — (34) 335

Mortgage-backed 1,770 — (1) 1,769

Corporate – domestic 7,256 145 (13) 7,388 Estimated amortization expense for the next five years is $2.3 million in 2016, $2.2 million in 2017, $1.8 million in 2018, $1.7 million in 2019 and $1.4 million in 2020. Corporate – international 825 — (14) 811

$ 111,848 27,181 (2,222) 136,807 38 BBNC Annual Report Two-Thousand and Fifteen | Consolidated Financial Statements BBNC Annual Report Two-Thousand and Fifteen | Consolidated Financial Statements 39

The Corporation’s revolving note agreement, disclosed in note 10, requires a not to exceed $3,825,000. The Corporation accounts for this investment using In March 2014, the Corporation purchased a 99.99% interest in JL-BBNC, LLC, The following tables present the balances of assets and liabilities measured at fair money market value of 95% plus marketable equity securities in an amount the equity method, and reports its share of earnings or losses within other which owns a 16.67% interest in JL-FX Hotel Development, LLC, for $4,000,000. value on a recurring basis as of March 31, 2015 and 2014 at each hierarchical level: greater than 75% of the outstanding loan balance maintained in a custodian revenue. The purpose of the LLC is to construct and operate a hotel in Orlando, Florida. account administered by the bank. JL-BBNC, LLC accounts for their interest in JL-FX Hotel Development, LLC MARCH 31, 2015 In June 2013, the Corporation purchased a 5% interest in JL Office Tower, using the equity method. Accordingly, the Corporation consolidates the results Investment earnings consist of the following (in thousands): LLC for $2,075,000. The purpose of the LLC is to operate a commercial of the equity method, and reports its share of earnings and losses within TOTAL LEVEL 1 LEVEL 2 LEVEL 3 office building in Anchorage, Alaska. As of March 31, 2015, the equity for JL other revenue. As of March 31, 2015, the equity of JL-FX Hotel Development, YEAR ENDED MARCH 31 Office Tower, LLC was $32,692,000, net income was $786,000, and partner LLC was $19,880,000. No income has been generated from operations as the Assets distributions were $500,000 for the fiscal year ended March 31, 2015. As of Development is currently under construction. 2015 2014 2013 March 31, 2014, the equity for JL Office Tower, LLC was $32,406,000, net income Trading securities: was $740,000, and partner distributions were $600,000 for the fiscal year ended In November 2014, the Corporation purchased a 50% interest in JL-BBNC Mezz Money market funds $ 12,154 12,154 — — March 31, 2014. The Corporation accounts for this investment using the equity Utah, LLC for $2,500,000. The purpose of the LLC is to make loans to an entity. As Dividends $ 1,854 2,199 2,590 Equities: method, and reports its share of earnings or losses within other revenue. of March 31, 2015, the equity for JL-BBNC Mezz Utah, LLC was $5,003,000, net Interest 503 664 809 income was $153,000 and partner distributions were $150,000 for the fiscal year Domestic 66,443 66,443 — — In June 2013, the Corporation purchased a 17.5% interest in JL Denali Tower, ended March 31, 2015. The Corporation accounts for this investment using the International 27,749 27,749 — — Gain on sale of marketable securities, net 9,816 10,351 10,424 LLC for $1,750,000. The Corporation is a Class B member of which no profit equity method, and reports its share of earnings or losses within other revenue. Mutual funds 13,105 13,105 — — or loss is allocated to the Corporation. As a Class B member, the Corporation Unrealized (depreciation) appreciation of Fixed income securities: (3,164) 9,956 (712) does not have the ability to exercise any influence over operating and financial Investment earnings include the following (in thousands): marketable securities policies of the LLC. Class B members receive a preferred distribution of 8% Government 3,896 3,896 — — of the Corporation’s capital contributions. The Corporation accounts for this YEAR END MARCH 31 Government – sponsored 3,612 3,612 — — $ 9,009 23,170 13,111 investment using the cost method. International government 254 254 — — 2015 2014 2013 Mortgage-backed 477 — 477 — In July 2013, the Corporation made a $5,000,000 commitment to invest in the KKR North America Fund XI Limited Partnership, of which it owns less than Corporate – domestic 5,198 5,198 — — Earnings on cost method investments $ 547 280 — a 1% interest. As of March 31, 2015 and 2014, the Corporation has funded Corporate – international 557 557 — — (6) INVESTMENTS IN $2,480,000 and $2,165,000, respectively, of the commitment. The Corporation Earnings from unconsolidated affiliates 164 331 279 UNCONSOLIDATED AFFILIATES accounts for this investment using the cost method. Lease revenue from portfolio 1,722 1,386 457 Total trading securities $ 133,445 132,968 477 — Gain on sale of unconsolidated affiliates — — 407 In July 2010, the Corporation made a $5,000,000 commitment to invest in the In September 2013, the Corporation made a $4,000,000 commitment to invest Liabilities Siguler Guff Distressed Opportunities Fund IV, Limited Partnership, of which in the KKR Asian Fund II, Limited Partnership, of which it owns less than a 1% it owns less than a 1% interest. As of March 31, 2015 and 2014, the Corporation interest. As of March 31, 2015 and 2014, the Corporation has funded $1,162,000 $ 2,433 1,997 1,143 Interest rate swaps $ (501) — — (501) has funded $4,175,000 and $3,600,000, respectively, of the commitment. The and $514,000, respectively, of the commitment. The Corporation accounts for Corporation accounts for this investment using the cost method. this investment using the cost method. In March 2009, the Corporation purchased a 10% interest in CenterPoint In August 2013, the Corporation purchased an initial 10% interest in MARCH 31, 2014 West, LLC, for $2,229,000. The purpose of the LLC is to construct and operate International Office Building, LLC and subsequently, in October 2014, the (7) FAIR VALUE MEASUREMENTS a commercial office building in Anchorage, Alaska. In connection with the Corporation purchased an additional 10% interest for a total purchase price of FASB ASC Topic 820 establishes a fair value hierarchy that prioritizes the TOTAL LEVEL 1 LEVEL 2 LEVEL 3 purchase, during 2010, the Corporation contributed an additional $1,221,000 $3,538,000. The purpose of the LLC is to operate a commercial office building in inputs to valuation techniques used to measure fair value. The hierarchy to the LLC, bringing its total investment contributions to $3,450,000. The Anchorage, Alaska. As of March 31, 2015 and 2014, the equity for International gives the highest priority to unadjusted quoted prices in active markets Assets Corporation accounts for this investment using the equity method, and reports Office Building, LLC was $14,468,000 and $13,059,000, respectively. For the for identical assets or liabilities (Level 1 measurements) and the lowest Trading securities: its share of earnings or losses within other revenue. year ending March 31, 2015, net losses for International Office Building, LLC priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: 14,544 14,544 — — Summarized financial information for CenterPoint West, LLC is as follows (in was $532,000. There was no income for the year ended March 31, 2014, as Money market funds $ the building was still under construction. The Corporation accounts for this thousands): • Level 1 inputs are quoted prices (unadjusted) in active markets for Equities: investment using the equity method, and reports its share of earnings or losses identical assets or liabilities that the Corporation has the ability to Domestic 69,380 69,380 — — within other revenue. YEAR END MARCH 31 access at the measurement date. International 20,114 20,114 — — In April 2014, the Corporation purchased a 24% interest in JL-LFGTE, LLC for a • Level 2 inputs are inputs other than quoted prices included within Mutual funds 18,954 18,954 — — 2015 2014 2013 total $3,000,000 commitment. In September 2014, the LLC operating agreement Level 1 that are observable for the asset or liability, either directly or Fixed income securities: was amended to include an additional member, reducing the Corporations indirectly. Government 236 236 — — Net income $ 388 565 2,787 interest to 20%. As of March 31, 2015, the Corporation has funded $2,579,000 • Level 3 inputs are unobservable inputs for the asset or liability. Government – sponsored 3,276 3,276 — — Partner distribution 450 5,800 2,100 of the commitment. The purpose of the LLC is to partially fund an entity to acquire, build, and operate landfill gas to energy projects in various locations. International government 335 335 — — Equity 25,540 25,602 30,837 The LLC’s year end is December 31, 2014. As of December 31, 2014, the equity FAIR VALUE MEASUREMENTS ON A Mortgage-backed 1,769 — 1,769 — for JL-LFGTE, LLC was $11,445,000, net losses were $1,537,000, and partner RECURRING BASIS Corporate – domestic 7,388 7,388 — — In September 2011, the Corporation purchased a 45% interest in First Alaska distributions were $175,000 for the fiscal year ended December 31, 2014. Financial assets and liabilities are classified in their entirety based on the Corporate – international 811 811 — — Capital Partners – Gas Storage, LLC for $1,740,000. Total net income for First Pursuant to the operating agreement partner distributions differ from the lowest level of input that is significant to the fair value measurements. The Alaska Capital Partners – Gas Storage, LLC was $1,100,000 during fiscal year ownership interest including liquidation, and accordingly, the company is using Corporation assessment of the significance of a particular input to the fair value Total trading securities $ 136,807 135,038 1,769 — 2015. There was no income during fiscal year 2014. Total Partner distributions the HLBV method to recognize earnings or losses from this investment, and measurements requires judgment, and may affect the valuation of the assets for First Alaska Capital Partners – Gas Storage, LLC was $1,100,000 and reports its share of earnings or losses within other revenue. and liabilities being measured and their level within the fair value hierarchy. $1,202,000 during fiscal years 2015 and 2014, respectively. Total equity for First Liabilities Alaska Capital Partners – Gas Storage, LLC was $2,665,000 at March 31, 2015 and Interest rate swaps $ (551) — — (551) 2014, respectively. The Corporation’s total capital contribution requirement is 40 BBNC Annual Report Two-Thousand and Fifteen | Consolidated Financial Statements BBNC Annual Report Two-Thousand and Fifteen | Consolidated Financial Statements 41

FAIR VALUE OF FINANCIAL INSTRUMENTS totaled $31,248,000. This amended line of credit expires on August 31, 2017, and Scheduled principal payments on long-term debt are as follows: (11) BENEFIT PLANS The Corporation, using market information and appropriate valuation includes financial covenant requirements that PC maintain a minimum tangible The Corporation maintains a 401(k) savings plan that contains a safe harbor methodologies, has determined the estimated fair value of financial net worth and a minimum fixed charge coverage rate. 2016 $ 9,718 matching contribution up to 5% of covered wages for all contributing instruments. However, the estimates are not necessarily indicative of the On April 27, 2009, PC entered into a swap agreement on a $15,000,000 notional 2017 57,021 employees. In addition, at the discretion of the Corporation’s Board of Directors, amounts that the Corporation could realize in a current market exchange. amount on its line of credit with a fixed interest rate of 2.43% with a maturity 2018 9,010 the Corporation may make a profit sharing contribution to the plan. Employee The carrying amounts of cash and cash equivalents, marketable securities, date on July 1, 2012. This swap agreement was amended effective August 1, contributions were matched up to 5% of the employees’ salaries in 2015, 2014 2019 23,307 notes payable, accounts payable, accrued liabilities, unclaimed dividends, and 2011, to 1.60% and a maturity date on January 1, 2015. The termination liability and 2013, respectively. Amounts expensed for the plan for the years ended 2020 12,088 long term debt are considered a reasonable estimate of their fair value. Variable of this swap as amended at March 31, 2014, was $172,000, and is included in March 31, 2015, 2014 and 2013 were $11,736,000, $12,739,000 and $12,505,000, interest rates that are currently available to the Corporation for the issuance of accrued liabilities. The change in the fair market value of the swap decreased Thereafter — respectively. Kakivik maintained a separate contributory 401(k) savings plan for debt were used to estimate the fair value of long term debt and notes payable. interest expense by $172,000, $176,000 and $71,000 in fiscal years 2015, 2014 its employees through December 31, 2012. At January 1, 2013, the Kakivik 401(k) and 2013, respectively. Total $ 111,144 savings plan was frozen and subsequently merged into the Corporation 401(k) savings plan. Amounts expensed for the Kakivik plan for the year ended March On September 30, 2010, PC entered into a swap agreement on a $10,000,000 31, 2013, were $568,000. notional amount on its line of credit with a fixed interest rate of 2.74%. This The revolving note agreement requires a money market collateral value be (8) ACCOUNTS RECEIVABLE, TRADE 95% plus marketable equity securities in an amount greater than 75% of the swap agreement matured on January 1, 2014. The termination liability of this The Corporation is self-insured for healthcare, which covers the majority of outstanding loan balance maintained in a custodian account administered swap at March 31, 2013, was $214,000 and was included in accrued liabilities. employees of the Corporation and its wholly owned subsidiaries. The cost of YEAR END MARCH 31 by the bank. The revolving note has an issued letter of credit in the amount of The termination liability of the swap decreased interest expense by $214,000 in providing the benefits for employees and dependents is limited to agreed- 2014 and by $222,000 in 2013. $825,000. 2015 2014 upon stop-loss levels of $500,000 per claim. At March 31, 2015 and 2014, the The $14,700,000 term loan payable has certain financial loan covenants that Corporation had accrued liabilities of approximately $2,885,000 and $3,083,000. consists of a minimum basic fixed charge coverage ratio, unencumbered liquid Accounts receivable, trade (in thousands) The Corporation has a large deductible insurance plan for workers’ assets, and debt service coverage ratio. Billed accounts receivable $ 163,931 164,471 (10) LONG-TERM DEBT compensation covering all employees except foreign employees and employees in the states of Washington, North Dakota, Wyoming and Ohio. At Unbilled accounts receivable 3,625 2,066 Long-term debt consists of the following (in thousands): The $60,000,000 term loan payable has certain financial loan covenants that March 31, 2015 and 2014, the Corporation had accrued liabilities recorded of Contract retainage 431 680 consists of a minimum basic fixed charge coverage ratio, debt service coverage MARCH 31 ratio, current ratio, funded debt to borrower EBITDA ratio, net worth ratio, and approximately $2,879,000 and $2,067,000, of which $2,538,000 and $1,632,000, funded debt ratio. respectively, was for workers’ compensation claims incurred but not reported. 167,987 167,217 Accounts receivable, trade At March 31, 2015 and 2014, the Corporation had a $3,200,000 letter of credit 2015 2014 In March 2012, the Corporation entered into a revolving note payable to a Less allowance for doubtful accounts (1,260) (725) balance held by its workers’ compensation insurer pursuant to the terms of a bank, amended and restated in May 2014, for $30,000,000, interest based upon $75,000,000 revolving note payable to bank, interest based collateral agreement with the insurer. Total accounts receivable, trade, net $ 166,727 166,492 LIBOR in effect, as draws are made, plus a margin ranging from 1.10% to 1.45%, upon the London Interbank Offering Rate (LIBOR) in effect secured by accounts receivable of the Corporation, commitments expire on as draws are made plus 0.3% (0.57% at March 31, 2015), $ 44,136 35,355 October 1, 2016. There is no outstanding amounts payable on this revolving collateralized by marketable securities, commitments expire June 1, 2016 note at March 31, 2015 and 2014. (12) INCOME TAXES (9) NOTES PAYABLE The components of income tax expense (benefit) for the years ended $11,120,000 term loan payable to bank, interest On June 5, 2009, through an interest rate swap agreement, the Corporation March 31, 2015, 2014 and 2013 are as follows (in thousands): Notes payable consists of the following (in thousands): based upon LIBOR in effect at month-end plus 0.65% (0.92% at changed the interest rate on a portion of the outstanding revolving note to fix March 31, 2015) payable in monthly payments of $62,000 for 10 the floating LIBOR. Through August 1, 2012, the fixed rate was 1.755%. This 4,633 5,313 MARCH 31 years starting July 2006, the balance remaining due July 2016, swap matured on August 1, 2012. The change in the fair market value of the 2015 2014 2013 secured by a deed of trust on the Bristol Bay Building and swap decreased interest expense by $25,000 in 2013. 2015 2014 guaranteed by the Corporation On June 24, 2005, through an interest rate swap agreement, the Corporation Currently payable federal and state taxes $ 19,388 24,687 27,269 changed the interest rate on the $11,120,000 term loan to a fixed rate. Through $60,000,000 bank line of credit, interest $14,700,000 term loan payable to bank, interest based upon the June 30, 2016, the term loan bears a fixed interest rate of 5.01%. The swap’s fair Deferred tax expense 8,612 8,360 672 based at PC’s option at LIBOR plus 0.80% $ — 16,333 LIBOR in effect plus 1.70% (1.97% at March 31, 2015) payable in value of the estimated termination liability of $247,000 and $469,000 at March (1.07% at March 31, 2015), secured by PC’s monthly amortizing payments for 8 years starting December 13,803 14,195 31, 2015 and 2014, respectively, is included in accrued liabilities. The change accounts receivable $ 28,000 33,047 27,941 2012, the balance remaining due December 2019, secured by a in the fair market value of the swap decreased interest expense by $222,000 in deed of trust on a building and assignment of rents $780,000 short-term notes payable by PC to 2015, $273,000 in 2014 and $205,000 in 2013. village corporations, interest at 2.25%, notes 780 780 $60,000,000 term loan payable to bank interest based On December 1, 2012, through an interest rate swap agreement, the due on September 30, 2015, and October 31, upon the LIBOR in effect plus a margin ranging from Corporation changed the interest rate on the $14,700,000 term loan to fix the 2015 guaranteed by the corporation 1.75 to 3.50% based on a quarterly ratio of funded debt floating LIBOR. Through December 1, 2019, the fixed rate is 1.716%. The swap’s to EBITDA (2.52% at March 31, 2015) payable in monthly 48,572 57,143 fair value of the estimated termination asset (liability) of $(254,000) at March 31, $ 780 17,113 payments of $714,000 for five years starting November 2013, 2015 and $90,000 at March 31, 2014, is included in accrued liabilities and other the balance remaining due October 2018, secured by assets of assets, respectively, increasing interest expense by $344,000 in 2015, decreasing Peak and guaranteed by the Corporation interest expense by $520,000 in 2014, and increasing interest expense by PC entered into the Third Amendment to the September 30, 2010 Wells Fargo line $430,000 in 2013. 111,144 112,006 of credit as amended, effective in September 2014. The maximum borrowings Less current maturities (9,718) (9,705) available under the facility are $60.0 million, and borrowing capacity was determined on a borrowing base of 80% of eligible accounts receivable which $ 101,426 102,301 secures the line of credit. As of March 31, 2015, PC’s eligible accounts receivable 42 BBNC Annual Report Two-Thousand and Fifteen | Consolidated Financial Statements BBNC Annual Report Two-Thousand and Fifteen | Consolidated Financial Statements 43

Income tax expense (benefit) differs from the amounts computed by applying $11,000,000. Approximately $24,700,000 of net operating loss carryforwards At March 31, 2015, the minimum future rental revenues under this (15) CREDIT RISK the U.S. federal income tax rate of 35% for 2015, 2014 and 2013 to pretax income were available and used to offset taxable income for the year ended March noncancelable operating lease are as follows (in thousands): as a result of the following (in thousands): 31, 2013. In July 2013, the Corporation was notified by the IRS of its intent The Corporation maintains its cash in accounts with third party financial to examine the Corporation’s consolidated federal income tax return for the Minimum Rentals institutions which, at times, may exceed federally insured limits. The Corporation has not experienced any losses in such accounts. 2015 2014 2013 year ended March 31, 2012 and the amount of net operating loss available for carryback to the March 31, 2011 and 2010 tax years. The examination is 2016 $ 1,455 currently underway with the primary focus being the loss recognized on the sale Computed expected tax expense $ 25,509 28,768 24,241 of the oil and gas rights in 2012. The Corporation and its subsidiaries are open 2017 1,499 State income tax (benefit) expense, 2018 1,544 (16) CONCENTRATION OF 3,504 4,229 2,453 to examination for tax years March 31, 2010 through March 31, 2015. net of federal effect 2019 1,590 REVENUE AND RECEIVABLES It is not practicable to determine the tax basis of most of the Corporation’s Benefit of permanent differences (385) (529) (365) 2020 1,667 ANCSA lands and it is not known if they will provide future tax benefits. During 2015, 2014 and 2013, 87%, 86% and 93%, respectively, of the Thereafter 9,692 Change in net operating loss estimates Therefore, no tax value has been assigned to them consistent with the Corporation’s government and construction services revenues were derived — — 1,832 and carryforward items accounting treatment for financial reporting. from contracts with U.S. government agencies. A significant portion of these Total $ 17,447 contracts were granted under the Small Business Administration (SBA) 8(a) Other (628) 579 (220) In assessing the realizability of deferred tax assets, management considers program that exempts U.S. government granting agencies from certain federal whether it is probable that some portion or all of the deferred tax assets procurement regulations when awarding contracts to 8(a) participants. The SBA $ 28,000 33,047 27,941 will not be realized. The ultimate realization of deferred tax assets depends further exempts awarding agencies from certain contract size limitations when upon the generation of future taxable income during the periods in which awarding contracts to 8(a) participants owned by Alaska Native Corporations. (14) CONTINGENCIES those temporary differences become deductible. Management considers the Changes in U.S. government spending, the 8(a) program, or both, could have In the normal course of business, the Corporation may be a participant in legal The income tax effects of temporary differences that give rise to significant scheduled reversal of deferred tax liabilities, projected future taxable income, a significant positive or negative impact on the liquidity, results of financial proceedings related to the conduct of its businesses that will result in contingent portions of the deferred tax assets and deferred tax liabilities at March 31, 2015 and tax planning strategies in making this assessment. operations, and financial condition of the Corporation. As of March 31, 2015 liabilities or contingent assets that are not reflected in the accompanying and 2014 are presented below: and 2014, 40% and 49%, respectively, of trade accounts receivable are due from consolidated financial statements. In the opinion of management, the financial government agencies. position, results of operations or liquidity of the Corporation will not be 2015 2014 (13) LEASES materially affected by any such current legal proceeding. PC leases most of its fueling sites and administrative office space under Deferred tax assets The Corporation has entered into contracts to provide services to commercial noncancelable operating leases, which expire at various times through and government agencies. The majority of these contracts are subject to audits (17) SUBSEQUENT EVENTS Net operating loss – federal and state $ 182 242 2024. Peak Oilfield Service Company leases most of its operational sites and and potential adjustments by the respective customer. At this time, there On May 29, 2015, the Board of Directors of the Corporation declared an $8.10 Forward contract losses/impairments 693 1,025 administrative office space under noncancelable operating leases which expire are no pending audits or audit adjustments on the government contracts. share dividend payable to shareholders of record of Class A and B stock as Accounts receivable allowance 518 301 at various times through 2025. CCI Industrial Services leases a warehouse and Management believes that any adjustments that could potentially be made of May 15, 2015. The dividend was paid on June 5, 2015. The total dividend Interest rate swaps 101 264 administrative offices under leases that expire through 2025. Some of the PC under the contract will not have significant impact on the Corporation’s amount was approximately $4,375,000. Incurred-but-not-reported claims 1,118 952 leases also require a contingent rent based upon gallons of fuel sold. Included financial position, results of operation, or liquidity. in total rental expenses are contingent rents of $290,000, $317,000 and $124,000, The Corporation has evaluated subsequent events from the consolidated Accrued liabilities 1,186 1,449 respectively. At March 31, 2015, the minimum rental commitments under balance sheet date through June 9, 2015, the date at which the consolidated noncancelable operating leases payable over the remaining lives of the leases financial statements were available to be issued, and determined there are no Total gross deferred tax assets 3,798 4,233 are as follows (in thousands): other items to disclose.

Deferred tax liabilities Minimum Rentals Fixed assets (16,703) (8,803) Intangibles (2,140) (1,804) 2016 $ 7,643 Unrealized gain on investments (8,960) (10,261) 2017 6,675 Prepaid expenses and other (291) (236) 2018 5,689 Investment in joint ventures (2,398) (1,211) 2019 5,031 2020 3,961 Total gross deferred tax liabilities (30,492) (22,315) Thereafter 10,065

Net deferred tax liability $ (26,694) (18,082) Total $ 39,064

Total rental expense charged to operations in 2015, 2014 and 2013 was The Corporation has an income tax receivable at March 31, 2015, of $530,000 $8,378,000, $6,992,000 and $6,654,000, respectively. and an income tax payable at March 31, 2014, of $2,168,000 included in Commencing in November 2012, the Corporation entered into a refundable taxes and accrued liabilities, respectively. noncancelable operating lease of a building and land with a tenant expiring During 2012, the Corporation sold the oil and gas rights to 37,000 acres for in 10 years. This building under lease had an aggregate cost and accumulated $1,000 and recognized a loss of approximately $153,400,000 for tax purposes. depreciation of $15,695,000 and $903,000 at March 31, 2015, and an aggregate The tax loss offset taxable income and generated a net operating loss that cost and accumulated depreciation of $15,695,000 and $500,000 at March 31, was carried back to its March 31, 2011 and 2010 tax returns for a refund of 2014, respectively. 44 BBNC Annual Report Two-Thousand and Fifteen | Audit Committee Report BBNC Annual Report Two-Thousand and Fifteen | Statement of Management Responsibility 45

AUDIT COMMITTEE REPORT STATEMENT OF MANAGEMENT JUNE 9, 2015 RESPONSIBILITY

Management is responsible for the fairness, integrity and objectivity of the Corporation's financial statements Bristol Bay Native Corporation Shareholders: including all related information included in this Annual Report. The statements and related information are The BBNC Audit Committee, consisting of four directors, is pleased to issue this report. The primary prepared in accordance with generally accepted accounting principles. responsibilities of the Audit Committee are to ensure that the Corporation’s accounts are properly maintained We believe that fostering an environment conducive to good internal control is a basic responsibility. and adequately verified by the Company’s public accountants, to review and approve major changes in the Management maintains a system of internal accounting controls which provides reasonable assurance Corporation’s accounting policies and to report to the full Board of Directors upon the foregoing. that assets are safeguarded and transactions are properly executed and recorded in accordance with the To fulfill our duties, we met with the public accountants and the Corporation's chief financial officer on two Corporation's policies for conducting business. This system includes policies which required adherence to occasions during the 2015 fiscal year. ethical business standards and compliance with laws to which the Corporation is subject. The internal controls process is monitored by direct management review as well as independent review. Among other matters discussed and reviewed at the meetings were the scope of the audit to be performed by the public accountants and the associated work plan, areas of identified risk and focus, the results of the The Board of Directors, through its Audit Committee, is responsible for determining that management fulfills public accountant’s audit, the adequacy of the Corporation’s system of internal controls, the appropriateness of its responsibility with respect to the Corporation's financial statements and the system of internal accounting the Corporation’s accounting policies and the public accountant’s opinion regarding the financial statements controls (see the Audit Committee's report on the previous page). prepared by the Corporation. Management acknowledges its responsibility to provide financial information that is reliable, representative of We believe that the committee has been informed fully by management and the public accountants regarding the Corporation's operations, and relevant for a meaningful appraisal of the Corporation. We believe that our the accounting and financial aspects of the Corporation. Nothing of any material nature has come to our control process meets this responsibility. attention.

We thank all those involved for their cooperation and assistance in our efforts to fulfill our Audit Committee responsibilities.

Joseph L. Chythlook

Chairman, Board of Directors

Daniel P. Seybert Committee Chairman

Jason Metrokin President and Chief Executive Officer

Jeffrey E. Sinz Senior Vice President & Chief Financial Officer 46 BBNC Annual Report Two-Thousand and Fifteen | Board of Directors and Senior Management Team BBNC Annual Report Two-Thousand and Fifteen | Board of Directors and Senior Management Team 47

BBNC BOARD OF DIRECTORS AND SENIOR MANAGEMENT TEAM

BOARD OF DIRECTORS (TOP PHOTO)

Back row: Karl Hill, Daniel P. Seybert, Russell S. Nelson, H. Robin Samuelsen Jr., Everette Anderson, Peter Andrew Jr., Melvin C. Brown, Robert Clark, and Shawn Aspelund Front row: Dorothy M. Larson, Joseph L. Chythlook, and Marie Paul

SENIOR MANAGEMENT TEAM (BOTTOM PHOTO)

Daniel Cheyette, Sara Peterson, Andria Agli, Jeffrey Sinz, Nancy Schierhorn, Ryan York, Greta Goto, Jason Metrokin, April Ferguson, William Gornto, Rick Baird, and Scott Torrison BRISTOL BAY NATIVE CORPORATION

Corporate profile

Bristol Bay Native Corporation (BBNC) is a responsible Alaska Native investment corporation dedicated to the mission of “Enriching Our Native Way of Life.” Established through Alaska Native Claims Settlement Act of 1971 (ANCSA), BBNC works to ensure the continuation of the life and culture of its more than 10,000 shareholders—the Eskimo, Indian, and Aleut Natives of Southwest Alaska’s Bristol Bay region.

Mission Values

Enriching our Native way of life. To protect the best interests of our shareholders.

To maintain or grow total dividends paid annually by providing a solvent corporation.

Vision To celebrate and preserve the Alaska Native culture and linkage with land that provides the basis of our style of life. To be a corporation that protects the past, present and future of the Natives from Bristol Bay.

Goals A special thanks Build the value of the Pay predictable and Promote improved Position BBNC so that Endorse a Fish Corporation’s assets increasing dividends employment it will have a major First policy for to Misty Nielsen Photography and increase its to BBNC shareholders. and educational voice in economic land and resource for providing photography featured financial strength for opportunities for development in the management in on the inside front cover, pages 3, 7, 11, 12, 14 and the inside back cover. the future. BBNC shareholders. region. Bristol Bay.

www.mistynielsenphotography.com A RIS- ING TIDE

111 West 16th Avenue, Suite 400 Anchorage, AK 99501 907.278.3602 | www.bbnc.net