CEO Report
March 2008

My fellow shareholders, as we near the end of our fiscal year 2008 on March 31 st, all indications are The Aleut Corporation is heading towards another successful year in terms of financial performance. While we should take time to celebrate after the final results are in, it is imperative that we continue to be diligent and critical in assessing our ability to continue to produce these types of results far in to the future. For that reason, management and the Board of Directors have undertaken a new strategic and financial planning process for fiscal year 2009.

I want to share a little-known quote that helps me to keep perspective on success and the need for developing and managing a good plan. It goes like this:

“Good results without good planning comes from good luck,
not good management.”
- David Jaquith, former president of Vega Industries

At TAC, we define “good luck” as preparation meeting opportunity. With that understanding, TAC will continue to take full advantage of any luck that we encounter by being prepared. We will continue to review the strengths our management team, improve our corporate infrastructure, tighten our internal controls, and enhance reserves to build TAC’s capacity for the future.

Throughout its history, TAC has been defined by perseverance and resilience, a strong personal connection with our shareholders, niche expertise, and entrepreneurial energy.

In the future, the corporation’s success will be defined by the same characteristics plus the outstanding employees we recruit, nurture, and retain; the new business lines and investments we make; and the significant and measurable impact of our newly adopted strategic and financial plan.

TAC has grown into a complex organization with 3 major subsidiaries, 12 lower-tier LLC’s, a growing investment portfolio and several joint ventures. Our businesses focus on a diverse range that includes government contracting, fuels, real estate, fisheries, and natural resources. We currently employ over 900 people across Alaska, the lower 48 and around the world. Our employees make significant contributions in such critical areas as US military mission support, base operations support, fuels trade, and fishing trade, all the while spreading communication across cultures on who the Aleut people are and what our unique culture is all about.

Managing such a complex organization as TAC requires a comprehensive, integrate plan. A plan that is developed with a broad base of input and has deep buy-in from everyone involved.

In October 2007, we created a strategic planning core team with corporate and subsidiary members. The team solicited input from Board members, employees, management and business partners. We conducted corporation-wide formal meetings and held informal brain storming sessions. To develop the details of the plan, multiple steering groups were formed. Each steering group held a series of meetings as they developed their respective strategies and projects in support of the overarching core strategies and budget of the parent company, TAC. Once the strategies and projects were developed, each steering group developed more detailed business plans, including identifying key assumptions and operational/financial due diligence and sensitivities.

An ambitious timeframe has been set for actions this coming year. Yet the vision extends beyond that immediate horizon to 2012. To maintain perspective, our future planning is guided by the corporation's core purpose, values, and long-term aspirations.

In the long term, we envision The Aleut Corporation will be widely recognized as being among the best of the Regional Corporations. TAC will build upon its historical focus on financial success, growth, shareholder benefits, and Aleut language & cultural preservation. It will foster new thinking among its shareholders, Board of Directors, management, staff, business partners, and government to support the corporation in ever increasing success in all our endeavors.

Professional competence, creativity, commitment, and cultural understanding will be the hallmarks of our corporation’s directors, management, employees, and business partners. TAC’s collective “stakeholders” will influence government, businesses, national & international organizations and educational institutions for the betterment of our shareholders and employees. They will form a powerful leadership group through professional and social networks and virtual communities.

Top-ranked employees and business partners from all parts of the globe will be drawn to the corporation. The passion and enthusiasm of these new employees and business partners will fuse with the energy of the corporation's world-class governance, operations and management to create a “community” known for designing effective, sustainable solutions to the challenges of the future.

Our strategic and financial plan describes where TAC is heading, how to get there, and how fast to travel. While the timeline for the plan runs through 2012, our strategic planning must be a continually dynamic endeavor. Creativity, innovation, and entrepreneurial spirit are crucial to our success, and we must remain alert to emerging opportunities, trends and needs. TAC leadership embraces the possibility that the strategic plan may shift over the coming years to include new initiatives or even different short-term objectives if conditions change. For that reason, the plan will be reviewed and revised each year, with an annual budget & projects and a forward-looking 3 year strategic vision.

On behalf of TAC’s strategic planning core group, I need to take a minute to gratefully acknowledge the contributions of our respective Board members, management, employees and external stakeholders in the development of the strategic and financial plan. The efforts of these individuals have helped ensure that TAC is fully equipped to meet the challenges of the future.

The Aleut Corporation faces many challenges in the months and years to come, such as potential changes in the 8(a) government contracting industry, volatile fuel and energy markets, fluctuating real estate markets, difficult transportation logistics, volatile stock markets for our investments, negative legislation, and uncertainty in our natural resources. Our responses will be in many areas as we work to solve the numerous complex problems we face. It is safe to assume that there are no ‘silver bullet’ solutions, but there is a potential to leverage and build on our past success while being open to new approaches to meet the challenges of the future.

For day-to-day business, these trends may be viewed as an unfortunate reality that will force us to continually face circumstances that are difficult to influence. If we buy in to this view, our success or failure would then be largely the result of a numbers game; we’ll win some and lose some. Some might call that view relying on “luck”. But I believe that if we are to continue to succeed on purpose, we must define and drive our own future with a well designed plan and good management of its execution. This is the purpose of our new planning process; this is what TAC leadership and employees are dedicated to delivering for the corporation.

It coming issues, I will share some details on the three core strategies and how they will be used to as guiding principles to help us reach our goals.

Troy Johnson
CEO