2008 Annual Report by Coastal Villages Region Fund

Coastal Villages Region Fund Pollock Provides

2008 Annual Report

2008 Annual Report Table of Contents Page 2 Community Map 3 CVRF Strategic Mission Statement 4 2008 CVRF Board of Directors 6 Message from the President 7 Message from the Executive Director CVRF REGION BENEFITS 8 2008 CVRF Region Staff 9 Fisheries Support Centers (FSCs) Coastal Villages Seafoods (CVS) 10 CVS - 2008 Fisheries Summary 12 CVS - Fleet 13 CVS - Plants & Plant Managers 14 CVS - Goodnews Bay Regional Seafood Plant in Platinum Fisheries Development 15 Collaborative (Applied) Fisheries Research Program Development 16 4-SITE 18 CDQ Project Fund 18 Community Mapping 19 Project HaullyWOOD 19 Pollock Provides Heating Oil 20 Marine Safety 20 Youth Leadership 21 Fishermen Advances 21 Tax & Permit Assistance CVRF INVESTMENTS 22 Bering Sea Fleet 24 2008 Financial Report 29 10-Year Earnings and Benefits Summary

CVRF COMMUNITIES 20 Communities - 8,700+ Residents Strong 2

Coastal Villages Region Fund STRATEGIC INTENT (VISION) Continuous focus on balancing growth in commercial fishing and sustainable development of CVRF communities.

STRATEGIC MISSION Provide the means for Development of our communities by creating sensible, tangible, and longterm opportunities that generate hope for all people who want to fish and work.

CORE VALUES • Effective Strategic Leadership • Trust, Integrity & Teamwork • Respect for and Understanding of all PEOPLE • Active Community Participation • Respect for and Understanding of the Land, Sea, and the Resource • Growth & Sustainability through Maximum Return on Capital • Industrious People + Job Opportunities = Self Determination

CORE COMPETENCIES • Balance the needs, wants, and expectations of all – Now and 7 generations from now • Understand risks/rewards, develop a plan of action, support it and execute on it • Deliver efficient and equitable economic benefits to our communities • Develop and deploy successful business models and adapt as needed for future use • Support bold thinking and continuous innovation • Deliver disciplined, purposeful & sensible initiatives to sustain and stimulate new economic growth in our region

Photo: The sun is rising in Goodnews Bay

2008 CVRF Board of Directors Message from the Executive Director CVRF Member Community Chefornak Chevak Eek Goodnews Bay

2008 CVRF Board Member

Officer/ Executive Committee

Walter Tirchik Andrew Boyscout Johnny Hawk Walter Brown Evan S. Evan

Term 2007-2009 2007-2009 2007-2008 2008-2011 2005-2009

Hooper Bay

Eric Olson Sr. Edgar Hoelscher

Secretary

2008 2008-2011

Kipnuk Kongiganak Kwigillingok Mekoryuk Napakiak

Timothy Samson James Lewis Oscar Evon Daniel Olrun Sr. Nicholas Paul Richard Jung Helen Kaganak Peter John Paul Tulik Frank Berezkin John Bright Wassilie Bavilla Homer Hunter Jr. Sanky Ulak Harry Tulik Gabriel Olick Felix Albert

Vice President

2008-2011 2008-2011 2004-2008 2005-2009 2005-2008 2008-2009 2004-2008 2004-2008 2005-2009 2008-2011 2004-2008 2007-2008 2005-2008 2008-2009 2008-2011 2004-2008 2004-2008

Napaskiak Newtok Nightmute Oscarville Platinum Quinhagak Scammon Bay Toksook Bay Tuntutuliak Tununak

President Executive Committee Executive Committee

Treasurer

Executive Committee

2008 CVRF Board of Directors

2008 CVRF Board of Directors Top Row (left - right): Oscar Evon, Nicholas Paul, Gabriel Olick, Paul Tulik, Harry Tulik, Homer Hunter Jr., Evan S. Evan, Felix Albert, Johnny Hawk Wassilie Bavilla, Eric Olson Sr., Timothy Samson, Andrew Boyscout, Morgen Crow Bottom Row (left - right): John Bright, Helen Kaganak, Daniel Olrun Sr., James Lewis, Peter John, Frank Berezkin, Walter Tirchick

2008 CVRF Executive Committee

Top Row (left - right): Nicholas Paul, Gabriel Olick, Paul Tulik, Wassilie Bavilla, Morgen Crow Bottom Row (left - right): Timothy Samson, Oscar Evon, Eric Olson Sr.

Message from the President We are proud to have completed another year of working and providing benefits for our communities and region residents. It has been gratifying to see our youth begin their work experience, students traveling to participate in AFN, graduates receiving scholarships and training credentials, residents able to fish, and many others benefitting from our participation in the Bering Sea Pollock fishery. Without question, that is the rewarding part of our work. It is something that we want to perpetuate for our future generations. As residents, we place extreme value on the subsistence way of life. As board members of CVRF, that is one of our tenets. At this stage in our life, we know all the necessities that are needed to go out on subsistence activities, items such as boats, motors, snowmachines. These all come at a price, in addition to energy, medical, and other costs. Our communities also still need hundreds of million dollars in infrastructure work and improvements. That is where the importance of jobs, fishing, and other opportunities come in. These job and fishing opportunities augment and help our subsistence way of life. There has to be a facilitator, a mechanism, or a way for any economic activity to reach our residents. As a company, CVRF, we recognize the importance of functioning in that role. No single organization is big enough to be the answer for any and all social and economic needs. Currently, we do not have the luxury of oil, timber, or other local natural resources to bridge those gaps. However, we have been given an historic chance to participate in the Bering Sea fisheries to benefit our region. Our work has been to maximize, leverage, and strengthen our position in the Bering Sea industry. Our accomplishments in this area have now made our presence as Alaska communities respectably known in the Bering Sea fisheries. The Chinook salmon bycatch issue has touched our heart strings. This has been a difficult concern with no easy answer. We continue to expend a lot of time and energy to study and gather as much information as possible so that we can take an informed and balanced approach to the matter, with the best science and thinking for that time. We seek and work hard to communicate this approach to our region residents. It was and will continue to be a learning and maturing experience for our economy and region. There are areas of our existence over which we have no control, such as the nature of the oceans and the fish species that thrive in them. We can however, choose how we interact with the Bering Sea fisheries, and the issues that affect them -- we can choose balance, integrity, understanding, and the best possible information for the given time. As the governing body for this organization we are seeking to choose this path, ever mindful of the sensitivities and economic needs of our region, communities, and residents.

Oscar Evon, President COASTAL VILLAGES REGION FUND 6

Message from the Executive Director Two words: Pollock Provides. These two words not only summarize 2008 for our region, but the past 10 years. Our earnings in the Bering Sea Pollock fishery pay for more than 80% of EVERYTHING that CVRF does: the construction and operation of seven (and soon to be eight) salmon and halibut plants in our region, the construction and operation of 14 (and soon to be 16) fisheries support center (FSC) facilities in our region, the purchase and operation of fish tenders and barges (with more tenders coming) to serve hundreds of fishermen, the wages for the hundreds of our residents who work in the seafood plants and FSCs each year, the fish ticket payments to 600+ salmon and halibut fishermen who deliver to our in-region plants each year, the $500,000 we provide to our youth annually for scholarships, the fire wood that we have delivered to our villages through the HaullyWOOD program, the emergency heating oil that we provide through the Pollock Provides Heating Oil Program, the trail markers and trail shelters that make travel safer for residents, the ice machines that allow our fishermen to produce the highest quality salmon in the market, the life jackets we give away each year, the welding machines and other tools that allow our 12 professional mechanics at our FSCs to fix boats, four-wheelers and outboards, the airline tickets for youth that CVRF sponsors to come to the AFN Elders conference each year, and much more. Pollock provides all these things. Since its emergence from financial ruin 10 years ago, CVRF has been able to spend tens of millions of dollars annually to create economic opportunity for our people. In the recent past, as federal and state programs have declined, CVRF has actually been increasing its activities, including through the construction of the largest seafood plant ever built in our region which will provide another 125 jobs. An epiphany for CVRF in 2008 was realizing that most of our 9,000 residents know about CVRF’s offerings, but few know what’s paying for it all. We’ve been so busy creating opportunity that we have not taken time to explain the revenue source. “Pollock Provides” sprang up in 2008 to fill this information gap. The Bering Sea Pollock fishery is the largest single-species fishery in the world, widely seen as a model for sound fishery management. The fishery has been rigorously scrutinized and determined by the international Marine Stewardship Council to be “sustainably” managed. It has a bycatch rate of less than one percent -- meaning that more than 99% of everything caught gets used and not wasted. By comparison, the average bycatch rate around the world is in the double digits, and even in the other Alaska fisheries is considerably higher than in the Bering Sea Pollock fishery. The Pollock fishery uses almost everything that comes on the boat, similar to our subsistence ideals. The Bering Sea Pollock fishery has also been producing a steady harvest for almost 50 years. The fishery began to be “Americanized” in 1976 and was opened up to participation by western Alaska villages through the CDQ Program in 1992. Wasteful fishing practices by primarily foreign vessels (500,000 chinook killed in 1970 alone and 700,000 chinook killed in 1980 alone) were ended during the 1980’s and early-1990s. CVRF began to invest heavily in the Bering Sea pollock fishery about 10 years ago. We chose to buy into the offshore catcher/processor sector because it was already the cleanest sector of the fishery in terms of bycatch and waste. At great expense, we continue to push our vessels to avoid bycatch, salmon in particular, and our vessels have been among the cleanest in the cleanest sector. The federal fisheries management system also continues to adapt, including by taking action to help curb the excessive chinook bycatch that occurred on other vessels in the Pollock fishery in 2007. We are grateful that Pollock Provides. We are grateful that the Pollock fishery and our chinook fishery have co-existed for the past half-century. We are grateful that we can reasonably expect this co-existence to continue into the future. The two-word CVRF motto that was born in 2008 is both the truth and critical information for every resident of our region: Pollock Provides.

C. Morgen Crow, Executive Director COASTAL VILLAGES REGION FUND

Region Staff CVRF Region Benefits

2008 Community Liaison Staff & Mechanic / Welders

Chris Dock Kipnuk

Abraham Rivers

Staci Atti

Kwigillingok

Anna John Toksook Bay

Kenneth Henry Toksook Bay

Joe Joseph Kongiganak

Scammon Bay

Nellie Abraham Clifford Paniyak Steven Stone Amanda Hoelscher Chefornak

Marianne Williams Mekoryuk

Nick David Jr. Tuntutuliak

Della Carl

Lloyd Black Napakiak

Stella Alexie Eek

Herman Beaver Kwigillingok

Tununak

Lindgren Mathlaw Mekoryuk

Nightmute

Hooper Bay

Laura Evan

Napakiak

Marjorie Post Theodore Angaiak Tununak

Hooper Bay

Eleanor Miller

Newtok

George Joe

Chevak

Jennifer Anthony

Napaskiak/Oscarville

Minnie Roberts

Goodnews Bay/Platinum

Darlene Daniel

Nightmute

Lisa Charles Newtok

Billy Chagluak

Morris Aguchak

Patrick Black

Jackie Larson

Jacob Rivers

Napakiak

George Smith Scammon Bay

Chefornak

Napaskiak

Jamin Tom Tununak

Chevak

Scammon Bay

Mary Hill Quinhagak

Darren Cleveland

Theodore Brown Eek

Kongiganak

Quinhagak

Paul Joe Jr. Hooper Bay

Vincent Maxie Napaskiak

Fisheries Support Centers (FSCs) CVRF Region Benefits

Fisheries Support Centers (FSCs) CVRF operates 14 Fisheries Support Centers (FSCs) in our region which provide numerous services to region residents. At the end of 2008, the CVRF Board of Directors approved funding for 2 more new FSCs in Kipnuk and Tununak. Residents can utilize the FSCs to gain access to virtually all of the programs that CVRF offers (jobs, scholarships, heating oil, tax assistance information, youth employment, funeral assistance, etc.), as well as for mechanic/welder services, meeting rooms, and bunk services. Each FSC is staffed by a CVRF Community Liaison (CL) and by a Mechanic/Welder (M/W). Community residents are encouraged to visit these facilities to initiate their participation in many of CVRFâ&#x20AC;&#x2122;s programs or simply to gather more information about CVRF and its operations. We are grateful that the Bering Sea Pollock fishery has provided these facilities for our region, and we continue to look for new ways to use the facilities and to expand the services we provide. Let us know if you have any ideas, and please also visit your local CVRF staff to say hello!

Chefornak

Fisheries Support Center

Hooper Bay

Fisheries Support Center

Napakiak

Fritz Willie Memorial FSC

Chevak

Fisheries Support Center

Kongiganak

Fisheries Support Center

Napaskiak

Fisheries Support Center

Toksook Bay

Fisheries Support Center

Eek

Steven White Memorial FSC

Kwigillingok

Fisheries Support Center

Nightmute

Fisheries Support Center

Goodnews Bay

Fisheries Support Center

Mekoryuk

Fisheries Support Center

Scammon Bay

Fisheries Support Center

Tununak

Fisheries Support Center

Coastal Villages Seafoods CVRF Region Benefits

Coastal Villages Seafoods (CVS): In 2008, we continued to steam forward in the construction of the new Goodnews Bay Regional Salmon Plant in Platinum, Alaska. The new plant will not only be the largest CDQ project in the 17-year history of the CDQ Program, it will be the largest seafood plant ever built in our region, and one of the largest economic development projects in our region in the past 30 years. The new plant is another giant step forward for the CVRF subsidiary named Coastal Villages Seafoods (CVS). CVS has already provided a steady and reliable market to commercial salmon fishermen from our region for 10 years, as well as provided hundreds of jobs each year to village residents in our seven existing CVS salmon and halibut plants. The new regional plant will take CVS to a whole new level -- more tenders, no limits on fishermen, state-of-theart processing lines, high-quality employee housing, better pay, and higher salmon quality. The new plant is the come-true dream of the CVRF Board, CVS fishermen, CVS processors, and many of the 1,000+ residents of our region who participate directly or indirectly each year in the mini-economy that CVS has created. As of the end of 2008, CVRF and CVS expected to complete the construction of the nearly $40 million new plant ahead of schedule by June of 2009 -- and the construction continues to be paid for almost entirely with CVRF earnings from the Bering Sea Pollock fishery. As we have said a few times, Pollock Provides!

Coastal Villages Seafoods Halibut Plant Production Location

2002

2003

2004

2006

2007

2008

Chefornak

2,874

1,024

5,548

6,974

12,993

21,233

43,920

Mekoryuk

156,432

83,531

96,784

117,270

86,658

140,328

100,852

Quinhagak

1,534

766

1,034

1,505

966

2,161

5,328

Toksook Bay

59,801

65,302

17,580

62,726

90,110

132,358

110,723

Tununak

33,580

20,009

8,176

18,696

34,067

44,842

34,850

22,864

11,701

63,365

80,111

S. Nunivak Tender Hooper Bay Kipnuk TOTAL (lbs)

1,747

1,627

418

3,745

2,475

112

4,750

1,745

1,146

4,061

7,470

13,444

254,333

177,129

153,774

209,944

*240,974

**415,502

**391,703

* All of the 4E halibut quota was taken for this season ** All of the halibut quota from 4D and 4E was taken for this season

2005

Coastal Villages Seafoods CVRF Region Benefits

In 2008, we not only made great strides in the construction of the new plant, but CVRF and CVS notched many other successes, including big increases in jobs created, more than 600 fishing permit holders out on the water (not counting their crew!), training and scholarship opportunities, and continuation of many other CVRF programs. Highlights of 2008 - CVS • CVS had a third year of record salmon production at the CVS Quinhagak plant (2008’s 2.3 million pounds is up from 2.2 million in 2007 and 1.8 million in 2006). • For the second year in a row, our fishermen harvested our entire halibut quota. • Fishermen and processors prioritized quality in doing their work—and the price of Chinook rose from 60 to 75 cents, Sockeye went from 55 to 60 cents, and Coho rose to 55 cents, up from 40 cents. • Quinhagak plant workers from all over the region earned $950,000. • Fishermen delivering in District W4 & W5 earned more than $1 million dollars this season. • The CVS Bethel “Buy & Fly” program had an exception 2008 -- we purchased and flew out 1.7 million pounds of high quality salmon from our region. • District W1 fishermen earned almost $600,000 cash in 2008 • The halibut plants were up and running by early June, and the grounds price reached $2.95, up from $2.80 in 2007. • Halibut plant workers earned almost $400,000 while more than 200 halibut fishermen earned almost $1.2 million.

Vessels / Barges CVRF Region Benefits

Vessel Summary - CVS Bulk Transportation Fleet The F/V Kelly Mae arrived in Quinhagak in early May, making several trips from Dillingham through July to bring in plant supplies and ship out vans of frozen fish. The Kelly Mae also assisted with halibut tendering in S. Nunivak in June, and then, near the end of the month, tendered for three Kuskokwim River king openers. In July the Kelly Mae tendered fish freight for Quinhagak, going back to tender on the Kuskokwim in August. Over the season the Kelly May purchased 22,100 lbs of King, 33,962 lbs of Sockeye, 65,104 lbs of Chum, and 204,423 lbs of Coho, for a total of 325,589 lbs. The M/V Leo arrived in Toksook Bay and Mekoryuk in mid-May to deliver supplies to the halibut plants, then spent the month of June tendering halibut in S. Nunivak. July through September, the Leo worked on Haullywood, then assisted in laying the Platinum outfall line. The F/V Eider tendered in Goodnews Bay. It began on the first opener (June 14) and continued until the 29th of August. CVS used the Eider to purchase 23,334 lbs of Kings, 190,058 lbs of Sockeye, 77,649 lbs of Chum, and 182,685 lbs of Coho for a total of 473,726 lbs of salmon. The F/V Scoter tendered in Quinhagak and the lower Kuskokwim River. From June through July, the Scoter tendered at Quinhagak and moved on to the Kuskokwim in August. CVS used the Scoter to purchase 23,802 lbs of Kings, 40,035 lbs of Sockeye, 31,813 lbs of Chum, and 99,219 lbs of Coho.

Vessel

CVRF Ownership

Type

Length

Gross Tonnage

Draft

Hailing Port

Crew

M/V Kelly Mae M/V Blarney M/V Leo M/V Amak

100% 100% 100% 100%

Landing Craft Tug Boat Pusher Tug Tug Boat

135’ 103’ 73’ 65’

146 194 64 34

4’8” 13’ 3’6” 9’

Quinhagak, AK TBD Anchorage, AK Platinum, AK

4-10 4-10 4-5 4

Gildy Logger NP1

100% 100%

Barge Barge

155’ 110’

2’-8’ 18”-5’6”

TBD Napakiak, AK

N/A N/A

M/V Kelly Mae

Coastal Villages Seafoods

M/V Amak

Coastal Villages Seafoods

M/V Blarney

Coastal Villages Seafoods

Gildy Logger

Coastal Villages Seafoods

M/V Leo

Coastal Villages Seafoods

NP1

Coastal Villages Seafoods

CVS Plants & Plant Managers CVRF Region Benefits

Salmon Plant

Salmon Buy & Fly

Quinhagak

Bethel

Halibut Plant Chefornak

Halibut Plant

Hooper Bay

Halibut Plant Mekoryuk

Toksook Bay

Kipnuk

Tununak

Jim Sartelle

Perry Hendricks

Dora Mathew

Lester Wilde

John Hinz

Marianne Williams

Adrian Kailukiak

Gregory Angaiak

Quinhagak

Kipnuk

Bethel

Mekoryuk

Chefornak

Toksook Bay

Hooper Bay

Tununak

Fisheries Development CVRF Region Benefits

Construction - Goodnews Bay Regional Plant ($24.8 Million)

Projected to take five years to construct, the CVRF Board of Directors pushed for an accelerated timeline of three years to complete the Goodnews Bay Regional Seafood Plant in Platinum, AK. As of the end of 2008, the plant was on schedule to help fishermen deliver more fish and to provide more jobs for processors in summer 2009. Our 2008 efforts included construction of the 17,000 square foot salmon processing building, the 4,000 square foot maintenance building, installation of the electrical power plant modules and complete installation of the 160,000 gallon bulk fuel farm. We were able to install all underground utilities for potable water piping systems serving the dorms, the kitchen and maintenance buildings. We also completed installation of the septic and sewer systems, along with the electrical underground distribution systems. Key to our success was obtaining the U.S. Fish and Wildlife Service (USFWS) Section 7 reviews, which allowed the U.S. Army Corp of Engineers to issue our permits for our site work and the civil work and installation of the outfall discharge line and barge dock ramps before the fall freeze up. With the completion of the buildings and utilities, we will concentrate over the winter on the interior finishes, potable water reverse osmos equipment, and the refrigeration and fire detection systems. We have been told that achieving such a feat in such a short amount of time is almost unheard of for a project of this scale -- especially in a western Alaska where logistical barriers, unpredictable weather, and unanticipated costs often delay construction projects. Fishermen, processors and residents were pleased to hear that the new processing plant is expected to begin operating and buying fish in June 2009 -even earlier than the aggressive August 2009 target. Maintenance and Improvements - Various The Chefornak, Chevak, Nightmute, and Kwigillingok FSCs all received geoblock trails to make these facilities more accessible for residents to transport their vehicles and motors for mechanic/welder services. The Chevak geoblock trail had an added benefit of adding another accessway for students attending the Chevak school. 14

Fisheries Development CVRF Region Benefits

The Scammon Bay FSC received a new ramp to help fishermen haul their boats and vehicles for mechanic/welder services. The ramp was constructed for durabilty and to avoid erosion near the river bank. In addition, the Scammon Bay FSC received connection to the water and sewer service. Fisheries Research CVRF provided funding to the Native Village of Kwinhagak, Kuskokwim Native Association, and Takotna Tribal Council for fisheries research projects in 2008. CVRF also contributed funds for a coho salmon reconstruction project run by ADF&G in 2008. CVRF believes that fisheries research is important for successful fisheries management. We provided a total of $109,000 in 2008 to help the dedicated fishery managers and scientists continue to conserve and manage our fishery resources.

4-SITE

CVRF Region Benefits

PROGRAM REPORT

Scholarships Internships Training Employment

Byron Paul of Kipnuk attended AVTEC and received his certificate in Welding Technology

Scholarships A total of $503,968 was awarded to 93 residents to help them pursue a higher education. Of these 93 residents, 73 went to universities and 20 went to vocational schools. Our residents used CVRF scholarships to pursue many fields of study in 2008: University: Accounting, English, Mathematics, Aviation Maintenance, Information Technology, Nursing, Elementary Education, Dental Hygiene, Occupational Safety, Fisheries Biology, Computer Science, Pharmacy, Business Management , History, Psychology, Human Services, Civil Engineer, Mechanical Engineering, Industrial Welding, Technology, Justice Vocational: Aviation Piloting, Construction Trades, Aviation Mechanics, Welding Technology, Aircraft Dispatching With help from the CVRF Pollock earnings that pay for more than 80% of these scholarships, our residents are not only improving themselves, but setting a positive example for the younger generation! If we continue to be successful in developing sustainable economic development projects with Pollock earnings, we will also have jobs in our villages for these students when they complete their studies!

Alice Smith of Scammon Bay received her Bachelorâ&#x20AC;&#x2122;s degree in Psychology in 2008

Internships CVRF provided opportunities for six residents to the form of internships in 2008. Two residents worked at the American Seafoods corporate office in Seattle (CVRF owns 46% of American Seafoods), two residents worked at the Lake Union Drydock shipyard in Seattle (where CVRF was having work done to its tenders), one resident worked at the Quinhagak processing plant, and one resident worked for the CVRF Youth-to-Work Program in Kipnuk. CVRF looks forward to providing many more internship opportunities for our residents in the future - and to finding or creating new full-time jobs for our interns thereafter!

Theodosious Paul and Tom Paniyak earned a Welding Operator Qualification (WPQ) from the US Coast Guard

4-SITE

CVRF Region Benefits

Training CVRF provided training opportunities for 9 residents in the areas of construction equipment service, heavy equipment operation, and licensed mariner training. Residents seeking training opportunities to further their career and employment goals should contact their local CVRF representative.

Steven Stone of Hooper Bay recruiting in Newtok during a basketball game

Employment CVRF provided incredible employment opportunities for our village residents in 2008. The 580 people who used CVRF’s employment program earned a total of $4,444,126 in wages. When you combine these 580 residents with the 629 fishermen that deliver to CVS, it means that CVRF provided jobs to about 1 out of every 8 residents of our entire region! It is no wonder that CVRF is now considered the largest private-sector employer in our region. As with everything discussed in this annual report, these jobs are only possible because of our earnings in the Bering Sea Pollock fishery. Pollock Provides, again.

CVRF Em mployment Prograam Earnin ngs 2008 8 vs 2007 $4,451,348 $5,,000,000 $4,,000,000 $3,,000,000 $2,,000,000

$3 3,213,617

39% Incre ease in Earnings

$1,,000,000 $0

Of these 580 people who used CVRF’s employment program, 360 worked right in our villages at our local salmon and halibut processing plants! A total of 78% of these processors were from a CVRF member community and 16% were from surrounding communities, for an overall rate of 98% Alaskan hires at our seafood plants in 2008!

# of Employees 360

$1,605,866

Blarney

328,355

Kelly Mae

226,893

Leo

180,252

Sea Boats

131,599

CVRF Projects

131,294

American Seafoods

1,452,405

BC Contractors

205,677

Deep Sea Fisheries

91,977

Yard Arm Knot

28,505

Westward

26,579

Salamatof Seafoods

17,172

MegaWatt

15,300

Icicle Seafoods

2,251

580

$7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0

Processors Fishermen

Earnings

CVS

TOTALS

CVSS Fishermen and d Processsor Earn nings 2001 1Ͳ2009

CV VS Fisherrmen and Processsor Job bs 2001Ͳ2 2009 Jobs

Company

2 2008

Earnings

The founding fathers (and mothers!) of the Western Alaska CDQ Program can be thrilled by the fishing jobs that have been created in the CVRF region with CDQ revenue from Bering Sea Pollock fishery. Here is a summary of the 2008 employment success:

2007 7

1200 1000 800 600 400 200 0

Processssors Fisherm men

$4,444,126

CDQ Project Fund CVRF Region Benefits

CDQ Project Fund

Newtok used a portion of their CDQ Project Fund allocation to repair this boardwalk

Newtok also used a portion of their CDQ Project Fund allocation to pick up trash

The CVRF CDQ Project Fund provides each CVRF member village with the opportunity for economic development projects identified by the village. Priority is given to fisheries-related projects, though other projects that benefit the community may be pursued as well. The Project Fund was created as a three-year program in 2006, and from 2006 through 2008 it paid for community projects such as: Trail Survival Shelters & Markers; Building Renovations; Community Clean-up Events; Dump-Site Renovations; Boardwalk Construction; Law Enforcement Team/Supplies; 4th of July Workers; Potlatches; Public Information Coordination; Tribal COPS; Community Plans; and Community Multi-Use Facility Funding Leverage. The program has helped our communities attract funding from other sources as well. In 2008, the CVRF Board approved an extension of CDQ Project Fund into 2009 and also began work on new rules for 2009 that will make it even easier for CVRF member villages to utilize the program. The program is expected to continue to provide around $300,000 per year for projects in our communities.

Community Mapping Project In 2008, CVRF continued to provide funding to help map and plat our member villages, a project headed by the State of Alaska. The 2008 effort was primarily in Chevak, Hooper Bay, and Scammon Bay. A total of $50,395 was spent in 2008. This project was completed in mid-2008 and finalizes the comprehensive mapping of all 20 CVRF communities that began in 2004. The mapping will make it easier to complete economic development projects in our region for many years ahead. Goodnews Bay made much needed repairs for their local church building

A side wall was repaired for the Goodnews Bay local church

Map of Toksook Bay

Project HaullyWOOD CVRF Region Benefits

HaullyWOOD In 2008, CVRF delivered another 1,200 tons of fire wood logs to CVRF’s communities through the HaullyWOOD program. Arriving in the Fall of 2008, this firewood was welcome help against the skyrocketing heating oil costs. The HaullyWOOD program provided a grand total of 2,265 tons (4,530,000 lbs) of fire wood to CVRF member communities in 2006, 2007 and 2008. While the HaullyWOOD program has been a welcome benefit for the past three years, 2008 will be the last year for the program. CVRF has been using the CVS barge GILDY LOGGER to carry the fire wood to our region from the Kenai Peninsula each year after the GILDY LOGGER has finished delivering early-summer supplies to our seafood plants. The GILDY LOGGER will continue to supply our seafood plant, but has been modified to serve as the dock for the new Goodnews Bay Regional Salmon Plant starting in the summer of 2009 and each summer thereafter. CVRF’s primary focus must continue to be on sustainable economic development projects such as Coastal Villages Seafoods, a focus that is required by the federal CDQ statute.

Pollock Provides Heating Oil The CVRF Board created a new program in the fall of 2008 called the Pollock Provides Heating Oil Program. It was created in response to the extremely high oil prices and the difficulty faced by our region, particularly by those in our villages with the least financial resources. Though CVRF’s main mission is sustainable economic development, the CVRF Board could not just stand by given the seriousness of the situation. The 2008 Heating Oil program was intended to provide hope to at least some of the most hard-hit house-holds in our region. A total of 100 drums were made available between August and December of 2008, with recipients selected by the governing body in CVRF member villages. CVRF asked each village governing body to select the heating oil recipients based on who they thought could most use relief, compassion and a helping hand. A total of 65 households received a drum of heating oil in 2008. At its annual meeting in December 2008, the CVRF reviewed the Pollock Provides Heating Oil Program and voted to extend it through June of 2009 and to provide an additional 498 drums of heating oil. Between August of 2008, and June of 2009, the Bering Sea Pollock fishery will therefore have provided our residents with more than $200,000 in emergency heating oil relief. Without Pollock, the CVRF Board would have been unable to even consider helping in this manner.

Marine Safety & Youth Leadership CVRF Region Benefits

Marine Safety CVRF provides marine safety training each year in its villages and also provides our salmon and halibut fishermen with marine safety kits and jackets. CVRF hopes that this program raises the awareness of residents in practicing safe habits while boating. Pollock provides the training and equipment that we hope will save lives for many generations. Safe boating is a critical habit to develop at a young age. In 2008, the marine safety training crew consisted of Chris Dock (Coast-Guard-approved instructor), Clifford Paniyak, Abraham Rivers, and Nick David Jr. These CVRF employees were accompanied by AMSEA member Steven Campbell, and provided training in Toksook Bay, with teams of two thereafter traveling to Napaskiak, Tuntutuliak, Mekoryuk, and Chefornak.

Marine Safety training in Chefornak

A total of 50 fishermen received marine safety kits and lifejackets, and an additional 50 fishermen received just lifejackets. The fishermen who received safety kits and/or lifejackets have a history of fishing for Coastal Villages Seafoods and we appreciate their continued hard work. The kits included: • First Aid Kit – Marine • Electronic Flares • Fire Starters • Spare Food/Water • Flash Light • Water Proof Carrying Case • Fire Extinguisher • Water Proof Matches • Signaling Device • Compass • Personal Floatation Devices

Marine Safety Kit and Jacket recipient from Quinhagak

Youth Leadership CVRF provided numerous opportunities for youth to gain valuable work and other experience and to prepare for the future. These opportunities included: the CVRF Contribution/Donation Program, CVRF’s support for participants in the AFN Elder and Youth Conferences, and the CVRF Youth-to-Work Program. Through the Contribution/Donation program, CVRF assisted the following groups in participating in a variety of activities and experiences: • Chevak Cross-Country Team $4,000 • Nelson Island Consortium $576 • Nuniwarmiut School $1,000 • Lynn Church – MEHS Student $390 • Chevak HS Girls Team $2,500 • Quinhagak Moravian Youth $1,160 • Native Village of Goodnews Bay $3,000 • Chefornak Traditional Council $7,796

2008 AFN Elder and Youth Conference participants

Youth To Work employees in Chefornak

Loan - Tax & Permit CVRF Region Benefits

â&#x20AC;˘ Kipnuk Youth Group â&#x20AC;˘ Toksook Bay Boys and Girls Basketball

$350 $3,119

CVRF also selected 20 youth who applied to attend the 2008 AFN Elder and Youth Conference in Anchorage in October. These youth came in from our villages to participate in the conference and to meet elders and fellow youth from throughout Alaska. Many of the online photos posted on Anchorage Daily News website included youth from our region whose trip was sponsored by CVRF! CVRF will recruit once again to bring another 20 youth in 2009! Applications are available in July. Youth To Work employees in Kongiganak

The Youth-to-Work program provided employment opportunities for 41 youth between the ages of 14 and 18 in the communities of Kipnuk, Chefornak, and Kongiganak. This 8-week program helps youth gain actual work experience that will help prepare them for future employment. They work on a range of projects, most of which also help directly improve their own communities.

Fishermen Advances

Kipnuk Youth To Work participants

There are times when commercial fishermen need starting capital for supplies and/or gas to begin fishing and delivering their catch to CVS. In 2008, 109 fishermen took advantage of the Fishermen Advance program and received a total of $46,144. Each fisherman may receive up to $500 to help begin his/her fishing season, and pay back their balance during the fishing season.

Tax & Permit Assistance In 2008, CVRF again provided funding for the Alaska Business Development Center (ABDC), enabling ABDC to travel to all 20 CVRF member communities between February and March and provide free tax assistance to interested residents. A total of 1,423 tax returns were completed with ABDC assistance. The 3,233 residents who were given help with their tax returns received $1,892,151 in tax refunds. Pollock even provides help with the IRS! ABDC volunteers conducting Tax assistance in Chefornak

Tax assistance at the CVRF office in Newtok Quinhagak residents getting tax assitance

Bering Sea Investment Summary Investments

Vessel

Pollock

CVRF Ownership

Length

Crew

C/P American Dynasty C/P American Triumph C/P Katie Ann C/P Ocean Rover

46% 46% 46% 46%

272 285 296 256

120 130 80 140

C/P Northern Eagle C/P Northern Jaeger C/P Northern Hawk C/P Highland Light

46% 46% 46% 46%

341 336 341 270

108 112 108 110

C/P American Dynasty

C/P American Triumph

American Seafoods

C/P Northern Eagle

C/P Northern Jaeger

American Seafoods

Vessel C/V Arctic Sea C/V Bering Sea C/V North Sea C/P Alaskan Enterprise C/V Silver Spray

Crab

C/V Arctic Sea Sea Boats

C/P ALASKAN ENTERPRISE

C/P Alaskan Enterprise Sanko Fisheries

CRAB FISHING/PROCESSING VESSEL

C/V Bering Sea Sea Boats

C/P Katie Ann

C/P Ocean Rover

C/P Northern Hawk

C/P Highland Light

American Seafoods

CVRF Ownership

Length

Crew

100% 100% 100% 50% 50%

135 110 126 150 116

8 7 8 20 7

C/V North Sea Sea Boats

C/V Silver Spray Silver Spray Seafoods

Bering Sea Investment Summary Investments

Vessel

CVRF Ownership

Length

Crew

46% 46% 46% 50% 20% 20% 20%

125 141 125 166 124 124 155

20 22 20 20 18 18 18

F/L Deep Pacific F/L Lilli Ann F/L North Cape F/L Pavlof F/L Prowler F/L Bering Prowler F/L Ocean Prowler

Cod

F/L Deep Pacific

American Seafoods/Pacific Longline

F/L Lilli Ann

American Seafoods/Pacific Longline

F/L North Cape

F/T OCEAN PROWLER

F/L Bering Prowler

F/L Prowler

Pavlof Fisheries

F/L Ocean Prowler LONGLINE COD FISHING VESSEL

Prowler Group

F/L Pavlof

American Seafoods/Pacific Longline

Prowler Group Vessel specs Length: 155’ Holds: 12,500 cases

Vessel

Groundfish

C/P Arica Iquique

C/P Arica C/P Cape Horn C/P Rebecca Irene C/P Unimak

C/P Cape Horn Iquique

CVRF Ownership

Length

3.64% 3.64% 3.64% 3.64%

186 158 140 185

C/P Rebecca Irene Iquique

Crew Size: 18 Management: Prowler Group

Crew 35 32 33 36

C/P Unimak Iquique

CVRF pays for the benefits it provides to the region and residents with earnings from the Bering Sea groundfish fisheries (pollock, crab, cod & flatfish). CVRF’s earnings come in the form of both CDQ royalities and distributions we receive from our investments in the companies and vessels on these pages. 23

Financial Overview Importance of Pollock

Pollock continued to provide the substantial majority of CVRF royalty income and CVRF investment income in 2008. Crab, $12,997,294

Groundfish, $254,357

Cod, $1,120,241

Pollock, $65,636,285

Pollock Cod Crab Groundfish 24

Royalty 12% 65% 33% 99%

Investment 88% 35% 67% 1%

Financial Overview Statement of Financial Position

COASTAL VILLAGES REGION FUND AND SUBSIDIARIES Consolidated Statement of Financial Position December 31, 2008 and 2007 2008

Assets

Current assets: Cash and cash equivalents Investments in marketable securities Investments in marketable securities - pledged Accrued interest on investments Other receivables less allowance for doubtful accounts of $60,000 Short-term notes receivable Short-term notes receivable from affiliated parties less allowance $26,754 in 2006 Deposits Prepaid expense Inventory Total current assets Noncurrent assets: Buildings & leasehold improvements Vessels Equipment Accumulated depreciation Organization costs, net Notes receivable less allowance for of $177,419 Notes receivable from affiliated parties Restricted cash – on deposit for operation of fishing plants Investments in individual fishing quotas Investments in fishing affiliates Total noncurrent assets Total assets Liabilities and Net Assets Current liabilities: Accounts payable

2007

26,362,290 2,536,976 — —

2,438,812 2,804,768 — —

4,953,692 36,092

2,869,104 317,657

404,157 8,194 251,487 794,102 35,346,990

612,434 2,630 181,103 136,747 9,363,255

7,950,122 19,081,138 3,924,151 (9,023,438)

7,684,195 18,930,314 3,456,862 (7,100,647)

— 875,566 81,000 35,332,253 5,282,760 63,503,552 98,850,542

249,234 784,095 70,000 30,461,485 30,188,561 84,724,099 94,087,354

4,096,794

2,302,997

21,258

24,973

— 492,357 139,058 4,749,467

24,710 262,694 9,133,815 11,749,189

2,719,674 7,469,141 22,740,894

2,791,272 14,540,461

68,540,507 100,000 68,640,507 98,850,542

79,471,893 75,000 79,546,893 94,087,354

Security deposits Deferred revenue Accrued payroll liabilities Short-term portion of notes payable Total current liabilities Noncurrent liabilitiesLong-term portion of note payable Total liabilities Accumulated distributions of unconsolidated fishing affiliate in excess of investment Net assets: Unrestricted net assets Temporarily restricted net assets Total net assets Total liabilities and net assets $

Financial Overview Statement of Activities

Financial Overview General and Administrative Expenses

Total Revenue Total Revenue by Category Offshore Crab Sales 44%

COASTAL VILLAGES REGION FUND G&A Expenses Detail For the Twelve Months Ending December 31, 2008

Fisheries Support Centers 0% Rent Revenue 1% Contributions & Donations 1% Grantt and G d Other Oth Revenue 0%

Inshore & Nearshore Seafood Sales 23%

CDQ & IFQ Royalties 31%

Total Expenses by Category General & Admin 6% Plant and Vessel Construction 35%

Inshore and Nearshore Operations 19%

FSC Construction 0%

4-SITE 4%

Offshore Crab Operations 26% FSC Operations 1%

Outreach 2% CDQ Quota & Retention 1%

Fisheries Support 6%

General and Administrative Expenses as a percentage of total expenses G&A 6%

Total G&A expense detail Advertising Bad debt expense Bank charges Board stipends Board travel CDQ fisheries facilities grant Computer expense Construction expense Depreciation expense Donations & contributions Dues, permits, taxes & license Electric fees Elevator contract Employee education assistance Fire protection / inspection Freight Fuel HVAC contract Insurance Interest expense Interior plants and fooliage Internet fees Janitorial Landscaping Management fee expense Mapping grant expenses Meals and food expenses Misc. expense Payroll Per diem Printing and production costs Professional fees and services Quickbooks fees Realestate taxes Refuse Rental expenses Repairs and maintenance Security Sewer & water Snow Removal / Sweeping Stipends Supplies Tax expense Telephone Training Transportation and parking Travel expenses Vehicle expense Total Expenses

$26,021 460,358 2,204 302,494 222,298 75,000 16,539 1,686 252,764 52,833 (48,634) 28,110 12,198 12,926 10,176 7,622 56,806 4,548 170,060 114,865 2,970 6,446 33,207 2,803 34,435 50,395 31,856 7,938 1,237,382 105,315 5,121 128,292 1,432 72,074 5,035 50,007 56,034 5,772 2,891 21,092 1,225 60,393 18,906 28,497 18,072 78,463 229,346 250 -------------------4,076,523 ===========

Note: The bad debt expense is an estimated amount of non-collectible fisherman and fuel loans.

Programs & Projects 94%

Financial Overview Notes

Auditor: KPMG LLP prepared the audited report upon which the financial information presented in this annual report is based. Compensation to Key CVRF Employees: The CVRF Board of Directors continues to set aggressive goals and objectives for CVRF and therefore seeks to hire, retain, and motivate the highest caliber employees at every level of operation. In 2008, the top five highest paid employees earned the following in salary: Executive Director Morgen Crow ($375,000), Fisheries Manager Joe Hall ($210,000), Operations Director Trevor McCabe ($183,000), Investments Director Richard Monroe ($151,000), and Finance Director Larry Warner ($135,000). A total of $529,000 was also paid by CVRF subsidiary Sea Boats Crab LLC to Kris Poulsen and Associates, LLC (Kristian E. Poulsen and Edward Poulsen) to manage crab vessels and crab quota. The Board follows Rebuttable Presumption of Reasonableness guidelines in determining the compensation for its Executive Director, a process which includes comparisons with compensation levels at other similar companies. In 2008, the CVRF Board unanimously approved an annual bonus for Executive Director Morgen Crow in the amount of $350,000, in recognition of CVRF’s highly successful efforts to employ region residents and deliver economic opportunity to the CVRF region, as well as its successful royalty negotiations, and its impressive continued returns on investments made by CVRF with Mr. Crow’s guidance. In 2008, the following bonuses were also paid to key CVRF staff: Fisheries Manager Joe Hall ($50,000) and Finance Director Larry Warner ($30,000). Board Compensation Policy and 2008 Board Fees: CVRF board members receive a daily stipend during meetings and an additional monthly stipend for the CVRF-related work that occurs between CVRF meetings. The CVRF Board compensation policy was adopted in June of 2004 after consultation by CVRF with independent experts and the policy stipulates that any changes must be approved by an independent body as well. The CVRF board compensation policy is consistent with Rebuttable Presumption of Reasonableness guidelines. During 2008, CVRF paid its board members a total of $279,000 in stipends and benefits. Related Party Transactions: CVRF board members disclosed the following related-party transactions in 2008: Community

Board Member

Relations

Community

Board Member

Relations

Community

Board Member

Relations

Chefornak

Walter Tirchick

Kongiganak

James Lewis

Oscarville

Frank Berezkin

Chevak

Andrew Boyscout

Kwigillingok

Oscar Evon

Platinum

John Bright

Eek

Johnny Hawk

Mekoryuk

Daniel Olrun Sr.

Quinhagak

Wassilie Bavilla

Walter Brown

Napakiak

Nicholas Paul

Scammon Bay

Homer Hunter Jr.

Goodnews Bay

Evan S. Evan

Richard Jung

Sanky Ulak

Hooper Bay

Eric Olson Sr.

Napaskiak

Helen Kaganak

Toksook Bay

Harry Tulik

Edgar Hoelscher

Newtok

Peter John

Tuntutuliak

Gabriel Olick

Timothy Samson

Nightmute

Paul Tulik

Tununak

Felix Albert

Kipnuk

Legal Proceedings Involving Directors: CVRF was not engaged in any litigation with any of its directors during 2008. Professional Fees: In 2008, CVRF paid the following fees for professional services: (1) $480,853 in legal fees; (2) $153,260 in consulting fees; and (3) $115,278 in accounting fees. Auditor Relationship: CVRF did not have any disagreements with its auditors in either 2007 or 2008. CVRF received non-audit services from its auditor (KPMG) in 2008, paying KPMG a total of $106,918 to prepare CVRF’s 2008 tax returns. Committees: The CVRF Bylaws create a CVRF executive committee consisting of seven members: the CVRF President, Vice President, Secretary, Treasurer and three at-large CVRF board members. The CVRF executive committee is authorized in the Bylaws to exercise all authority of the full CVRF Board in managing CVRF except for the selection of CVRF officers and executive committee members. The CVRF Bylaws also authorize the President, with approval of a majority of the CVRF board, to appoint other CVRF committees with such functions, powers and duties as determined by the President and CVRF board. Using this authority, CVRF has established a Policy Committee to make recommendations to the board on CVRF policies, including as related to: investments, employee compensation, in-region fisheries, donations, artwork, board travel, participant eligibility, and other matters. CVRF has additionally established a Scholarship Committee (to select recipients of CVRF scholarships), a Finance Committee (to advise the board on budgeting and financial matters) and a Loan Committee (to select recipients of loans to resident fishermen for vessels and gear). During 2008, CVRF committees met on the following dates: Committee

Meeting Dates

Members/Attendees

CVRF Executive Committee

January 30, 2008

Oscar Evon, Timothy Samson, Eric Olson Sr., Paul Tulik, Wassilie Bavilla, Gabriel Olick, Nicholas Paul

February 19, 2008

Oscar Evon, Timothy Samson, Eric Olson Sr., Paul Tulik, Wassilie Bavilla, Gabriel Olick, Nicholas Paul

March 4, 2008

Oscar Evon, Timothy Samson, Eric Olson Sr., Paul Tulik, Wassilie Bavilla, Gabriel Olick, Nicholas Paul

April 11, 2008