FY2016 has been a very tough year for our companies involved in the oil industry . Oil prices have fallen far and fast , from a peak of $ 115 per barrel in June 2014 to under $ 35 at the end of February 2016 .

NDC Board Chairman Ely Cyrus said , “ A large part of NDC ’ s businesses supports the oil and gas industry , and it is no secret that companies operating in these markets have been impacted by the lower prices of oil . The board and management are focusing our efforts on reducing the risk to NDC , as these companies face much lower revenues than we expected .”

DIVERSIFIED INVESTMENTS

NDC acquired GIS in 2011 – a major acquisition to strengthen our capabilities to serve the oil sector , and to better balance our business investments . With GIS as part of NANA ’ s business portfolio our company now has the ability to take on much larger projects , and to serve natural resource companies all across the world . NDC did take on debt to make this acquisition . Debt financing is a tool used by many companies , large and small , to grow their business .

NDC ’ s debt is rated by two different companies : Standard & Poor ’ s and Moody ’ s . Both of those companies recently lowered NDC ’ s debt rating , mostly because low oil prices have brought about a slowdown in work . Our Oil & Gas

Sector revenue has dropped in the past year . We are not alone . Many companies in the oil sector have also had their debt ratings lowered , and even the State of Alaska ’ s debt rating was lowered because of the state ’ s budget deficit tied to the low price of oil .

“ While GIS has not yet delivered the financial returns we expect , we believe the company is a good investment for NANA over time ,” said Helvi Sandvik , NDC President . “ We have a long term view – business opportunities in the oil and gas industry will increase as oil prices improve , and GIS is well positioned to deliver critical services to the producers , both onshore and offshore , domestically and internationally .”

While the oil & gas sector remains challenged , more than half of NDC ’ s revenues come from the federal sector , which is holding strong throughout 2016 . “ NANA has made many investments in its history . Some have been very successful , while others have been more challenging . As our work in the federal government shows , we believe we have the right balance of skills and diversity of companies to meet the conditions we face ,” said Cyrus .

NDC BOARD FOCUS ON CORE BUSINESS

The NDC Board completed its annual strategy session in June . Within the last few years , the board has redefined its strategies and approach to focus on the company ’ s core lines of business . “ We have taken steps

to improve the financial contributions of investments made in the past to protect the company as we move forward during the current economic climate ,” said Cyrus . These include closing some businesses , like our investments in the entertainment industry , and restructuring others . The board also decided to sell NOSI , a successful business that was facing increasing competition at a time when business opportunities on Alaska ’ s North Slope are in a decline .

When business is in a decline , it is important to look for ways to make adjustments to match the current business environment . NDC has aggressively cut costs from top to bottom , throughout the company . Unfortunately , this has meant several rounds of layoffs in many of our companies , as well as at the corporate level . “ At times like these , we have to be as aggressive as possible , yet also be cautious . We are closely watching oil prices , and reducing our costs where we can , without compromising our ability to serve our customers . The lower cost structure will position us well for growth when oil prices rise ,” said Sandvik .

STRONG FINANCIAL POSITION

NDC expects a net loss for FY2016 , despite good performance from the Federal Sector , because of the large drop in business in the Oil & Gas Sector , as well as some decline in business in our primarily Alaskabased , Commercial Sector companies .

However , NDC ’ s financial position remains strong . We have adequate cash flow to support the company ’ s debt payments . NDC ’ s Chief Financial Officer , Jamie Clark , said , “ While no one is happy with the company ’ s financial performance , we are meeting all of our financial obligations . We have reduced capital expenses and cut overhead , which will position us well when oil prices recover .”

Board Chairman Cyrus said , “ The board of directors of NDC has been committed to ensuring the strategic focus of the company delivers to performance expectations . We continually track the performance of each of our companies , and the board is kept up-to-date as staff monitor global economic and financial developments . The board has tasked our company leadership to find the best path forward in this challenging environment , and we expect to see our margins to improve as the oil markets begin to recover .”

“ Given the challenges we face , it is understandable that shareholders are concerned ,” said Cyrus . “ We will present more information at this fall ’ s informal shareholder meetings , so they can learn more about NANA and the work we do . We fully expect to deliver on the strategic goals we set on behalf of all of our shareholders .”