Ho•Chunk, Inc. 2016 Annual Report · We may never know. What we do know is the little girl of the...

WINNEBAGO TRIBE OF NEBRASKA

Ho•Chunk, Inc. 2016 Annual Report

IMPACTING THE LIVES OF THE

1 2016 Annual Report

A GIRL PAST AND PRESENT…Who is the mystery Winnebago girl standing in the street in the late 1800s or early 1900s? What kind of life did she have? We may never know.

What we do know is the little girl of the present is Elicia Roberts, age 5. The daughter of Felicia and Eli Roberts, Elicia will be attending kindergarten at St. Augustine’s Indian Mission School. Someday, Elicia dreams of being a musician…singing and playing guitar.

Her mother, Felicia, works at Ho-Chunk, Inc. as Office Manager and Education Coordinator. She hopes Elicia and her other 3 children all have more – and better – opportunities than she did.

“With all the community development progress and efforts for self-sufficiency that Ho-Chunk, Inc. has created since 1994, I believe my children will be able to achieve their goals and provide for themselves,” said Roberts.

Roberts thinks the future for her children – and all the children of the Winnebago Tribe – includes a good education, plenty of career opportunities, the ability to own their own home, learn their language, culture and tradition, and most importantly, being able to help their people here in the Winnebago community.

12016 Annual ReportWINNEBAGO TRIBE OF NEBRASKA


OUR MISSION Ho-Chunk’s ongoing mission is to use the Tribe’s various economic and legal advantages to develop and operate successful business enterprises and provide job opportunities for Tribal members.

The long-term mission of Ho-Chunk, Inc. is to provide the Tribe with a large enough income stream from its business operations to enable the Tribe to reach economic self-sufficiency.

OUR VISION To be a world class tribal company driving the social-economic development of the Winnebago people.

LETTER TO THE SHAREHOLDER & TRIBAL MEMEBERS2015 was by far the most profitable year in our history. Our profits jumped 46 percent to $15.8 million, which really is all that needs to be said on the subject.

LETTER TO THE SHAREHOLDER & TRIBAL MEMBERS2016 was a solid year for Ho-Chunk, Inc. Our revenue and profits were both down from our record 2015 year, but by comparison it was still the third best year in our 22 year history. In short, a lot of things went right and a few things didn’t go as planned.

Our government contracting companies continue to do well. The All Native Group continues to be a star performer, but lost a major international contract in the middle of the year, which came as a bit of surprise and hurt our second half of the year financial performance. We also had a few big opportunities delayed, but the All Native Group is a machine in their field and their success speaks for itself.

The Flatwater Group spent a year going after a major contract opportunity. They were a finalist for the contract, but finished second. At Ho-Chunk, Inc. we have a phrase when it comes to government contracting: “Second might as well be last.” However, a few weeks later they submitted for an even larger contract and were awarded it several months later. Flatwater’s continued transition to more service oriented contracts paints a bright picture for the group’s future.

Two years ago, we made the strategic decision to invest large amounts of our capital in local and regional real estate development and Ho-Chunk Capital was born. We have spent the last two years creating an organization, learning the ropes and developing projects. We have learned some valuable lessons and have started some very interesting projects that are just starting to create significant revenue. We love this business because it creates local jobs, long-term income and provides projects for our construction company, our two housing companies (Dynamic Homes and BluStone Homes), our real estate broker (Keller Williams), and our two banks (Liberty National and the Native American Bank). We will continue using our capital to build our real estate company for the next several years and expect that company to become a major player for years to come in our region.

HCI Construction had a great year, helped in part by our real estate investment activities, but they have also developed a more diversified client base.

Lance MorganPRESIDENT & CEO

5www.hochunkinc.com


LETTER TO THE SHAREHOLDER & TRIBAL MEMBERS Cont.Dynamic Homes had a decent year, but it was also helped by Ho-Chunk Capital building an apartment building from 96 modules built in Dynamic Homes factory. Each of these companies provide a high-quality service and have established track records of 20 and 45 years respectively.

Our tobacco factory, tobacco distribution, tobacco importation, and retail store operations all operate under the Ho-Chunk Trading Group. The stores are doing very well, helped by our tribally-manufactured tobacco. The rest of the business is struggling with various legal and regulatory issues being pushed by our competitors and their deep financial ties to the state governments. A variation of this problem has been going on for 20 years and I am constantly amazed at how large corporations can have such a sinister influence on our state, and in some cases federal government. This business is important, but is constantly at risk of some attempt to hurt it and it is tough to bank our future on it. This is why we have used the profits from this area to expand our government contracting, construction and real estate activities.

We have always done various smaller things that impact our community. We sell used cars, which has helped people fix their credit. We built storage units, which we had to expand because they are always full. We build homes at cost. We rent housing at several hundred dollars below market in the Winnebago area. We have taken a small ownership interest in a local bank which gives people access to credit. We also own 32 percent of the national Native American Bank, headquartered in Denver. The investment is doing very well and we consider it a long-term seed that will bear some significant fruit in the future.

We now donate $150,000 per year to the Ho-Chunk Community Development Corporation, a non-profit we started 15 years ago to help find supplemental capital to build up our community. We have contributed approximately $1.8 million to the entity and they in turn have helped raise almost $50 million for our community. We are very proud of the investment and what it has produced.

2016 was the first full year of the 100-house plan. The Winnebago Tribe was generous and foresighted enough to allow Ho-Chunk, Inc. to retain one-third of its dividend each year with the goal of building 100 housing units and the infrastructure for 100 more homes within 5 years. We will end 2017 with approximately 50 housing units built and have been taking actions to ensure that we will have the infrastructure in place for at least 100 more.

Our local tribal member employment numbers had stalled out over the last few years. At our strategic retreat in 2016, we set a goal of hiring 20 more tribal members in our community. To date, we have hired 17 more and continue to try and find ways to create opportunity for our members to join our company.

Ho-Chunk, Inc. is complicated. We do things other corporations would never consider. We always know who owns us and why we do what we do. Our goal has always been the same—make our tribe economically self-sufficient and provide job opportunities to our members. Along the way we added a more socially-oriented approach, which resulted in us building the Ho-Chunk Village, our 40 acre mixed use community, which will double in size in the next year.

When you run any company, you have to think big and you have to think very small sometimes, too. We are pretty good at understanding our big issues and implementing large plans targeted at the problems, but we are also getting much better at the details of how to grow our company and our community in a way that balances our version of capitalism with our inherent desire to share our success across a broad spectrum of our membership. My goal is not to be the best capitalist corporation ever. My goal is to be a world class Tribal company, and successfully manage all of the complications that such a goal includes.

I always end these letters the same way. I love my job and consider it an honor to be able to pursue my dream on behalf of the Winnebago People.

Pinagigi!

Lance Morgan, President and CEO

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7www.hochunkinc.com

AlabamaArizonaCaliforniaColoradoFloridaGeorgiaHawaiiIowaKansasLouisianaMarylandMinnesota

MississippiMissouriNebraskaNevadaNew MexicoNorth CarolinaOklahomaSouth DakotaVirginiaWashingtonWest VirginiaWashington. D.C.

AfghanistanCanadaEgyptGuamIraqJapanJordanMexicoSaipanSaudi Arabia

GLOBAL OPERATIONS

Government ContractingHousing/ConstructionSupport Services

DynamicHomes

Ho-ChunkConstruction Group All Native Group Flatwater Group

All Native, Inc. All Native Solutions

ExecutiveOperations

Ho-Chunk Shared Services

Blue EarthMarketing

Indianz.com

Ho-Chunk, Inc.

HCIConstruction

Ho-Chunk ConstructionManagement

Ho-ChunkBuilders

All Native Managed Services Flatwater, Inc.

All Native Services Flatwater Metals

All Native Systems Flatwater Solutions

HCI Management Services Flatwater Trading Co.

Ho-Chunk Technical Solutions Flatwater Transportation

Protégé Health Services HCI Logistics

All Native Synergies Three Rivers Energy

All Native Federal Systems Flatwater Logistics Co.

All Native Tech Services Co. Flatwater Healthcare Solutions

2016 ORGANIZATIONAL CHART


HO-CHUNK, INC. BOARD OF DIRECTORS

Commercial Markets

PaySAFEEscrow, Inc. Pony Express Ho-Chunk

FarmsHo-Chunk Trading Group Ho-Chunk Capital

HCI Distribution 4th Street Centre LLC SweetWater CaféSIOUX CITY, IA

Capital Development Local

WINNEBAGO TRIBAL COUNCIL

Rock River MFG BluStone HomesPony Express Market

WINNEBAGO, NE

SweetGrass Trading HCI Investment Company

Woodlands Distribution Titan Motors

Ho-Chunk Real Estate

Titan Storage

9www.hochunkinc.com

Pony ExpressROSALIE, NE

Pony ExpressSLOAN, IA

Pony ExpressSOUTH SIOUX CITY, NE

Pony ExpressWINNEBAGO, NE

Pony ExpressEMERSON, NE

Pony Express MarketWALTHILL, NE

FINANCIAL OVERVIEWMy first year as Chief Financial Officer is complete. It was an exciting year and we have many initiatives started. Based on our recently released audited financial statements, we had our third largest year of net profits totaling $9.5 Million. In July 2017, our board will declare a company dividend of $1.9 Million. 30% of this dividend will be directed towards year 2 of our 5 year housing plan.

There are many successes to highlight regarding the management teams of our profit-generating subsidiaries this year. Two divisions grew their net profits significantly from 2015 to 2016. The HCI Construction Group grew net income by 81% to $950,000. This marked one of their most successful years in the history of Ho-Chunk, Inc. The

Pony Express Group contributed almost $410,000 in net income which correlated to 73% growth in 2016. All Native Group continues to be our number one net income producing division. This division accounts for approximately 80% of our net income. In July 2016, Flatwater Transportation finalized our acquisition of a trucking company, Riedemann Transport Inc., which is located in Paullina, Iowa. This has opened new opportunities for Ho-Chunk, Inc. in northwest Iowa.

Our net worth increased just over 10% to $79 Million. In 2016, our company strategy was focused on asset generation. For the last three years, we have increased our working capital by 20%. Because we could accumulate these capital resources, we could invest large

All Native Group continues to be our number one net income producing division. This division accounts for approximately 80% of our net income.

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amounts of working capital into the company. This includes investing significant capital into real estate development. We accumulated total assets just over $150 Million at the end of 2016.

In 2016, we made a significant investment in our operating systems. We added a new human resources and payroll information system that went live in October. Our new system has created an environment where we can maximize effectiveness and efficiency through one employee record, one user experience and zero interfaces with outside systems. It is a single software application that handles all aspects of human resources, payroll processing, and group benefits. We believe this investment will go a long way in the management of our human capital resources.

In closing, I truly appreciate this opportunity to serve the Winnebago Tribe of Nebraska. Thank you for allowing us to create a world-class tribal corporation.

Sincerely,

Angel DerochieChief Financial Officer

Angel DerochieCHIEF FINANCIAL OFFICER

11www.hochunkinc.com

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50

25

0

$180M

$160M

$140M

$120M

$100M

$80M

$60M

$40M

$20M

$

HO-CHUNK, INC. PERFORMANCE

Ho-Chunk, Inc. Consolidated Net Income Trends

(1994-2016)$300M

$250M

$200M

$150M

$100M

$50M

$1M

$

Consolidated Revenue Net Income

2016

Ho-Chunk, Inc.Total Reservation Employees

2016 TOTAL YEAR END HEADCOUNT

10 Year Total Asset Growth

Total WorldwideEmployees

Total ReservationEmployees

1,120

133


Winnebago Other Tribe

NonNative

2016


SUBSIDIARY PERFORMANCEAnnette HamiltonVICE PRESIDENT & COO

Ho-Chunk, Inc.’s subsidiaries companies had another great year of providing a diverse range of revenue streams for the corporation. Their combined efforts produced a very profitable 2016, with All Native Group again leading the way. This is an accomplishment considering it was a challenging year from an operational perspective, as many of our subsidiaries faced regulatory and governmental hurdles. We found ways to meet these challenges head on, devising strategies to overcome immediate and long-term threats.

We are confident that the process and strategic improvements All Native Group, Flatwater Group and Ho-Chunk Trading Group made will continue to grow revenue and profits. HCI Construction, Dynamic Homes, Pony Express, and Blue Earth Marketing continue to perform well as they adapt to changing economic and market demand. Ho-Chunk Capital grew steadily as it worked on building real estate for long-term revenue.

All of our subsidiaries’ efforts benefit the Winnebago Tribe of Nebraska with a higher dividend, as well as increase the corporation’s overall assets. Both of which enables Ho-Chunk, Inc. to continue to fulfill our mission of helping the Tribe achieve economic self-sufficiency. Our employees are committed to our mission and work hard every day knowing the impact it has.

Subsidiary Revenue Performance$120M

$100M

$80M

$60M

$40M

$20M

$All NativeGroup

CommercialMarkets

FlatwaterGroup

Housing &Construction

PonyExpress

CapitalDevelopment


SUBSIDIARY PERFORMANCE

FEDERAL GOVERNMENT CONTRACTING

ALL NATIVE GROUPIt is an amazing time to be a part of All Native Group. In 2016, their impressive record of growth continued, resulting in another successful year. Customers awarded ANG with multiple new contracts across core business lines. All Native Group is a strong company with enormous potential thanks to its employees’ enthusiasm, talent, collective knowledge, commitment, and willingness to do what it takes to succeed. This year was one of noteworthy change for All Native Group signifying the beginning phases of implementation for several key initiatives:

> All Native Group grew their total number of companies to ten, and added a new office in Huntsville, Alabama in 2016. > The Ho-Chunk subsidiary introduced strategies and systems that enable them to be more agile and responsive, while providing solutions and excellent service for customers. > Started the initial phases of restructuring for better integration of sales and operational teams within each line of business> Plans to enhance its portfolio in the upcoming years with acquisitions to strengthen its current core services and expansion into other business markets> Focus on All Native Group’s business lines for federal government across Information Technology, Training, Telecommunications, Integrated Health, Logistics and Professional Services capabilities

All Native Group has achieved a great deal in a relatively short time and is ready to leverage its potential to create an even stronger platform for growth and deliver greater value to its customers.

OFF-ROAD DRIVER TRAINING IN MADAGASCAR “The efforts of the All Native Group staff resulted in an overwhelming mission success for the pilot team. Please thank everyone involved for their dedication and support.”

HUNTSVILLE, AL RIBBON CUTTING

All Native Group Revenue PercentagesHCI ManagementServices 4%

Other2%

All Native Managed Services 14%

Ho-ChunkTechnicalSolutions14%All Native, Inc.

66%



“Mike what you and the ANI Alexandria team pulled off was incredible. It was not lost on me or the senior Agents here that we were told no Contract company could get this accomplished. You guys at ANI did it on such short notice with all these obstacles and more. Thanks again.”

Firearm Training

All Native staff worked very closely during hurricane Matthew to ensure the evacuation plan was executed successfully.HUNTSVILLE, AL RIBBON CUTTING

FISCAL YEAR 2016 PROGRAM HIGHLIGHTS: In the past year, All Native Group was successful in providing services to the Federal Government in the following areas:

Administrative and Human Resource Support

Migrating and modernizing telephone infrastructure systems overseas

IT and Program Management Support Services

Providing year around Landscaping, Grounds Maintenance, Snow and Hazard removal support for thousands of personnel across more than 40 buildings

Conferences and Public Relations – coordination of symposium activities to include multinational registration processes for thousands of participants, planning, execution and event coordination with subject matter experts across 47 countries and 5 continents.

Providing physical and virtual library and information management support

Development and maintenance of a SharePoint site for the Department of State

Providing Staffing Service Support for various military trainings at many diffuse, leased, and contracted facilities nationwide

Providing scientific technical writing expertise regarding protocols for human testing

Server maintenance to avoid unscheduled downtime, ensuring security and backups, and assisting staff’s connection to the server

Video production for Human Resource and work policy support



FEDERAL CONTRACTING/COMMERCIAL/BUSINESS

FLATWATER GROUP

In 2016, the Flatwater Group continued to work on strategically expanding companies, business lines and personnel to enable themselves to successfully capitalize on government and commercial opportunities and serve customers with comprehensive solutions, as well as unparalleled service and quality. This changes have resulted in multiple awards from current customers and contract wins from new customers. Flatwater Group’s business lines focus on:

FLATWATER SOLUTIONS/FLATWATER INC./ALL NATIVE SOLUTIONS/FLATWATER HEALTHCAREProfessional Services / Office Solutions / Information Technology / Furniture/Design / Healthcare SolutionsOperations & Maintenance

FLATWATER TRANSPORTATION/HCI LOGISTICSTruckload & LTL Dry / Truckload & LTL Refrigerated / Flatbed / Special Handling / Intermodal

FLATWATER METALS/FLATWATER LOGISTICSRaw & Fabricated Metals / Warehousing / Storage / Order Fulfillment / RFID Tagging Inventory Control

THREE RIVERS ENERGYFuel Distribution

2016 ACCOMPLISHMENT HIGHLIGHTS:

United States Air Force - Personal services support of the Wounded Warrior Program for the 55th Medical Group at Offutt AFB, NE. The contract provides case management, care coordination and discharge/disposition planning for inpatient and outpatient care setting.

United States Air Force - Preventive maintenance, inspection and repairs of Computer Room Air Conditioning (CRAC) Units and Heating, Ventilation and Air Conditioning (HVAC) Units. Work is performed for nine (9) squadrons in multiple facilities at Offutt AFB, NE.

Federal Aviation Administration - Removal and disposal of current storage systems and replacement with new storage system in the Aerospace Medical Certification Division (AMCD) Airmen Medical Records Storage System Replacement Project area in the Civil Aerospace Medical Institute (CAMI) Building.

Bureau of Engraving and Printing - Provide workstations layout, design and installation at their Washington, DC Currency facility.

Fond du Lac Development Corporation (Commercial) – Purchasing, receiving, warehousing and installation of medical equipment for their CAIR Clinic expansion project.

Defense Logistics Agency - Refresh multi-function devices in support of the Navy and Marine Corps in multiple locations.

Logistics Acquisition – The acquisition of a regional transportation company expanded Flatwater Transportation’s fleet and personnel capabilities across the country.

BIA FURNISHINGS CONTRACT FLATWATER TRANSPORTATION TRUCK

VILLAGE POINTE INTERIOR

Flatwater Group Revenue Percentages

FlatwaterTransportation23% Flatwater

Solutions44%

Flatwater Metals 4%

ThreeRiversEnergy29%



HOUSING/CONSTRUCTION

HO-CHUNK CONSTRUCTION GROUP2016 was a hugely successful year for Ho-Chunk Construction Group. The Group worked with various government agencies, including the 55th Contracting Division, Iowa and Nebraska Air National Guards, the Veterans Administration, and General Services Administration. They also worked on projects for CF Industries, Winnebago Public Schools, Winnebago Housing Authority, and more.

The Group was key to the construction success of Ho-Chunk Capital’s intercompany multi-million developments in Iowa, Nebraska, and South Dakota, including Dakota 303, Virginia Square, Pearl Street, Flatwater Crossing, and Ho-Chunk Village.

DYNAMIC HOMESDynamic Homes had a steady year in 2016, despite a slow economy and construction labor shortage. The long-term demand for the efficiency of system-built units for both single-family and multi-family homes remains strong. Dynamic continued to play an integral role in Ho-Chunk Capital’s growth by building and shipping all the modules for Dakota 303, the 47-unit apartment complex in Dakota Dunes, South Dakota, as well as the homes in Ho-Chunk Village.

Dynamic Homes teamed up with a Twin Cities start-up construction company in an effort to fill hundreds of vacant lots in north Minneapolis, Minnesota — remnants of the city’s predatory lending and foreclosure crisis — with system-built homes that Dynamic Homes worked with urban architects to design. The homes will be made in Dynamic’s Detroit Lakes facility and shipped to Minneapolis. The houses will be sold for far less than the cost of an average new house in the Twin Cities’ market.

Ho-Chunk Construction GroupRevenue Trends$50M

$45M

$40M

$35M

$30M

$25M

$20M

$15M

$10M

$5M

$

2016

2015

2014

DYNAMIC HOMES MINNEAPOLIS PROJECT

HCI CONSTRUCTION HOTEL PROJECT

DYNAMIC HOMES MINNEAPOLIS PROJECT

DYNAMIC FACILITY

DYNAMIC HOME GOING UP

HO-CHUNK CONSTRUCTION GROUP EMPLOYEES

FLATWATER TRANSPORTATION TRUCK


SUBSIDIARY PERFORMANCE COMMERCIAL MARKETS

HO-CHUNK TRADING GROUP

Ho-Chunk Trading Group ended 2016 with a positive sales trend after successfully managing several regulatory challenges. The positive momentum was spurred in part by the increased manufacturing activity of Silver Cloud cigarettes due to the expansion of sales into new markets across the country. HCI Distribution has worked hard to increase market share with current customers, while growing its distributor network.

In 2016, Rock River Manufacturing launched KOHU, a line of e-cigarettes, e-liquids and vape pens. They also began the process of developing FireDance cigarettes and One Spirit cigarettes, with both brands launching for distribution in 2017.

SweetGrass Trading Company added to its line of quality Native products of coffees, teas, wild rice, and Indian corn by introducing Nina bottled spring water and a line of artisan wood wick candles.

Ho-Chunk Trading GroupRevenue Percentages

WoodlandsDistribution3%

HCIDistribution51%

Rock RiverManufacturing46%

HO-CHUNK TRADING GROUP EMPLOYEE

SUBSIDIARY PERFORMANCE LOCAL

PONY EXPRESSThe Pony Express convenience store chain with locations in Winnebago, Rosalie, Emerson, Walthill and South Sioux City, Nebraska and Sloan, Iowa, began their transition to a new look in 2016. The fresh new store design and look that started with Rosalie continued with the Winnebago locations. As part of the rebrand, Pony Express Market was introduced in Winnebago as a one-stop shop for food and household items, hot and cold deli selections, and fuel. The Walthill location will be expanded into a Pony Express Market in the future. The chain also launched the Pony Rewards Club, with exclusive savings on fuel, in-store merchandise, and tobacco for Rewards members.

BLUE EARTH MARKETINGIn 2016, Blue Earth Marketing had a successful year with client growth and a move to new expanded offices in the Ho-Chunk Centre in Sioux City, Iowa. They continue to provide strategy, marketing, advertising and public relations services to all Ho-Chunk, Inc. subsidiary companies. In addition, they work with many clients on a local, regional, and national level.

PONY EXPRESS SMOKE SHOP: ROSALIE, NEBRASKA

BLUE EARTH MARKETING - HO-CHUNK CENTRE - SIOUX CITY, IOWA

Pony Express Revenue Percentages by Store Location

Pony Express S. Sioux City 12%

Pony Express Winnebago30%Pony

Express Emerson10%

PonyExpress Sloan25%

PonyExpress Rosalie3%

PonyMarketWalthill11%

PonyMarketWinnebago9%

PONY EXPRESS MARKET - WINNEBAGO, NEBRASKA




DEVELOPMENT/CAPITAL

HO-CHUNK CAPITALAfter its launch in 2015, Ho-Chunk Capital hasn’t slowed down. 2016 saw significant progress made on many of their multi-million real estate developments. VIRGINIA SQUAREThis $29 million development located in the historic warehouse district in downtown Sioux City, Iowa, just off a major exit from Interstate 29 features the renovation of two existing historic buildings, with plans for renovating a third historic building and construction of a fourth building in 2018.

100 Virginia Square opened in December 2016 featuring 20 one and two bedroom apartments on the second and third floors, a roof top patio, and a restaurant set to open in 2017. Demand has been strong at 100 Virginia Square and the property is nearly 100% leased. 103 Virginia Square features 82,500 square feet of living and commercial space. 20 one and two bedroom apartments and 7 premium condominiums are set to open in late summer of 2017. The first major commercial tenant has moved in as of July 2017 and 17,000 square feet of remaining space will be completed based on

Ho-Chunk Capital Revenue Trends$9M

$8M

$7M

$6M

$5M

$4M

$3M

$2M

$1M

$

2016

2015

2014

100 VIRGINIA SQUARE

103 VIRGINIA SQUARE

DAKOTA 303Dakota 303, a 47-unit modern apartment complex located in the master planned community of Dakota Dunes, South Dakota, opened in December 2016 and is more than half leased. Built in modules at our Dynamic Homes facility in Minnesota, the units were shipped down to Dakota Dunes and finished by HCI Construction. The 3-story complex features 2-bedroom, 2-bathroom apartment homes with high-end fixtures, stainless steel appliances, quartz countertops, large kitchen island, a balcony or patio, indoor pool, garages, and fitness and community rooms.



In 2016, Titan Storage revenues have remained strong, with the expanded storage facilities in North Sioux City, South Dakota and South Sioux City and Winnebago, Nebraska performing well. Plans are underway to expand boat and RV storage facilities for the North Sioux City location, opening in 2017.

Titan Motors in Winnebago, Nebraska continues to move pre-owned vehicles off its lot at a strong pace and is seeing success with its expansion into boats and RV sales, too. They continue to offer quality vehicle maintenance services, including oil changes, tires servicing and sales, brakes, and more.

Flatwater Crossing is our $75 million master-planned community being developed along the Missouri River in South Sioux City, Nebraska. Much of the initial work on the 200-acre tract was completed in 2016 with final work being completed thru the summer of 2017. Working in conjunction with the city of South Sioux City, construction crews are completing site infrastructure including grading, installation of water, sewer, and electric utilities, and the paving of roads throughout the development. This means we can begin the sale of lot sales, and actual home and apartment construction starting in late 2017.

The community will have a carefully planned mix of 600 apartments and 400 single-family homes in a variety of townhomes and cottages, village homes, standard homes, and estate homes, as well as a Village Center perfect for retail, restaurants, and office space. When finished, it will be a walkable urban neighborhood, offering residents a vibrant community intertwined with a network of trails, greenways, public plazas, natural landscaping, wildlife, and breathtaking river views.

Ho-Chunk Capital introduced BluStone Homes early in 2016 to significant community interest and is now having a positive impact on the home construction market in the Iowa, Nebraska, and South Dakota region. Their showroom in South Sioux City, Nebraska offers customers to ability to select all the interior and exterior fixtures and amenities in one location, including countertops, flooring, siding, lighting, painting, and more. In 2016, 11 homes were built, with plans for 40 more in 2017, making BluStone Homes one of the largest home builders in the area.

GROUNDWORK - FLATWATER CROSSINGSOUTH SIOUX CITY, NEBRASKA

TITAN MOTORS - WINNEBAGO, NEBRASKA

BLUSTONE HOME - DAKOTA CITY, NEBRASKA

TITAN STORAGE - NORTH SIOUX CITY, SOUTH DAKOTA

22

WARRIOR APARTMENTS

LIVE/WORK BUILDING

Ho-Chunk Village

The goal of Ho-Chunk Village is to be a thriving community of commercial, industrial, and residential developments to create a better way of life for Tribal members. Each year, more progress is made to provide Tribal members with the opportunity to own their own home and have shopping and eating options – all within a safe, modern community in which to raise their families. 2016 was no exception:

WARRIOR APARTMENTS – This complex with 27 units of 1, 2, and 3 bedroom apartments opened, serving the needs of individual Tribal members and families with quality housing.

LIVE/WORK BUILDING – This 2-story mixed-use building opened in Summer 2016, providing 7 modern 1 and 2 bedroom apartments with high-end finishes, stainless steel appliances, in unit washer/dryer, and more. The lower level provided much needed office and retail space in the community.

SINGLE-FAMILY HOMES – 3 new single-family homes were built in Ho-Chunk Village.

Housing has been a major challenge on the Winnebago Reservation. Ho-Chunk, Inc. is committed to addressing this challenge on several fronts.

2016 Annual Report

COMMUNITY PROGRESS

HOME OF CLINT FREE AND BRENDA PAYER


WARRIOR APARTMENTS

LIVE/WORK BUILDING

COMMUNITY PROGRESS

The 100-Home Pledge

In 2016, Ho-Chunk, Inc. made a pledge to the Winnebago Tribe to build another 100 homes within five years and develop the infrastructure for 100 more. We are proud to report that we are already halfway toward fulfilling this goal in the first year:

27 housing units in the Warrior Apartments

7 housing units in the Live/Work Building

3 single-family homes were built in Ho-Chunk Village

40 acres purchased for Ho-Chunk Village 2.0 expansion

Construction started on 9 new single-family homes and a 4-plex condominium/apartment complex

The Ho-Chunk Village expansion rendering, pictured to the left, illustrates the potential for up to 40 more single-family homes and three additional apartment and/or townhome buildings for up to 80 more housing units.

In addition to Ho-Chunk Village housing activity, we are working on developing a series of up to 30 single-family homes on the Reservation with mortgages of approximately $500 per month. This development, called Thunder Way, holds great promise in 2017.

EAGLE VIEW HOME NTERIOR - WINNEBAGO, NEBRASKA

SINGLE FAMILY HOME - WINNEBAGO, NEBRASKA

CONCEPTUAL VISUAL MAP & RENDERING OF HOCHUNK VILLAGE EXPANSION

COMMUNITY PROGRESS

Down Payment Assistance

We are proud to continue to donate $150,000 per year to the Ho-Chunk Community Development Corporation (HCCDC), a non-profit we started 15 years ago to help find supplemental capital to build up our community. Since its start, we have contributed $1.8 million to this entity and they in turn have helped raise almost $50 million for our community.

A key to homeownership is having the money for a down payment. HCCDC’s manages the Down Payment Assistance Fund, which helps families get the jump start they need to own their own home. In 2016, HCCDC assisted 7 families with the dream of homeownership, by awarding $395,000 in down payment funds.

First Time Home Buyer Education

Ho-Chunk, Inc. hosted seminars to educate Tribal members on navigating the process of buying their first home. The free seminars provided information about understanding credit and budgeting, applying for a mortgage, shopping for a house, the closing process and more. Over 30 attended the seminars and more are planned for 2017.


HOME OF JOI LONG

HOME OF DELIAH AND ROCKY KEARNES HOME OF ISAAC SMITH HOME OF DAWNITA BLACKHAWK

HOMEBUYER SEMINAR

Education Development

Ho-Chunk, Inc.’s Academic Development Program is designed to provide students with an opportunity to attend educational events to boost their academic learning, provide exposure to colleges, schools, and other academic organizations outside of Winnebago, and help gap the summer learning loss.

Our Higher Education Program provides scholarships for four candidates selected for a two-year scholarship to a four-year institution, a two-year college or a technical college. Selected candidates also have the potential for part-time employment with Ho-Chunk, Inc. or one of its subsidiaries during this period.

To date, Ho-Chunk, Inc. has awarded 30 scholarships to Winnebago junior high and high school students to attend academic enrichment camps and Winnebago college students to attend university.

Career Development

From our Internship Program to creating job opportunities, Ho-Chunk, Inc.’s desire is to bring out the best in our young tribal members. In 2016, we celebrated our 22nd year of providing valuable career development opportunities for over 100 tribal college students with our Internship Program.

2016 was also a hallmark year for hiring and/or promoting 82 tribal members into all levels of jobs, from entry and mid-level to professional and management positions throughout the corporation and our subsidiaries around the country.

82

Ho-Chunk, Inc., working together with the Winnebago Tribe of Nebraska, is continuing to focus on investing in our community – and our community’s greatest asset, our people.

2017 HO-CHUNK, INC. INTERNS

JORDANA BASSPRODUCTION ARTISTBLUE EARTH MARKETING

COMMUNITY PROGRESS


Hired and/or PromotedTribal Members

HOMEBUYER SEMINAR

The Internship Program provides valuable work experience within a business environment to outstanding college students ranging from the first year through the master ’s level. The purpose of the program is to provide summer employment with positive work/training experience, as well as to identify and track potential Tribal members for possible regular full-time employment. Internships are available across all Ho-Chunk, Inc. subsidiaries in Winnebago, South Sioux City and Bellevue, Nebraska; Sioux City, Iowa and Alexandria, Virginia.

Since its start, the Internship Program has graduated over 100 Tribal college students, with 28 Tribal interns accepting jobs at Ho-Chunk, Inc.

2017 INTERNS (LEFT TO RIGHT)ASPEN LAPOINTE (Winnebago) – Flatwater Metals, South Sioux City, NE

CHRISTIAN BIRD (Omaha) – Blue Earth Marketing, Sioux City, IA

ISAIAH ST. CYR (Winnebago) – Ho-Chunk Capital/Maintenance, Sioux City, IA

JORGE SUAREZ III (Winnebago) – BluStone Homes, South Sioux City, NE

ANGELICA SOLOMON (Winnebago) – BluStone Homes, South Sioux City, NE

KARINA VALDIVA – Ho-Chunk, Inc./Accounting, Winnebago, NE

TANESIA WOLFE-RICEHALL (Winnebago) – Ho-Chunk Capital, Winnebago, NE

ANNA SINGHARTH – Ho-Chunk, Inc., Winnebago, NE

SHANNON BEAR (Winnebago) – Flatwater Metals, South Sioux City, NE

ROSA ESCOBAR – Ho-Chunk, Inc./Community Relations, Winnebago, NE

INTERNS NOT PICTURED:NOAH COMINSKY (Ojibwe) – All Native Group, Alexandria, VA

WILLIAM BASS (Winnebago) – Ho-Chunk, Inc./Community Relations, Winnebago, NE

SANDY SCOTT (Winnebago) – HCI Distribution, Winnebago, NE26 2016 Annual Report

HO-CHUNK, INC. INTERNSHIP PROGRAM

Aaron LaPointe – Agribusiness Specialist, Ho-Chunk Farms

As a former Ho-Chunk Farms intern, Aaron LaPointe (Winnebago) feels the program prepared him in many different ways. He said, “It taught me how to present myself in a professional manner and built my confidence. Being exposed to different functions in the company prepared me for my position today, as well as helped me understand Ho-Chunk, Inc. as a whole.”

Hired by Ho-Chunk Farms after he graduated from the University of Nebraska at Lincoln, LaPointe said, “I have been able to design projects and pursue them with full support from upper management. That commitment from our executives for Ho-Chunk Farms has inspired me to seek more and diverse opportunities for our agricultural operations. The ability to control the next steps for Ho-Chunk Farms is what I enjoy the most,” LaPointe said.

He recommends the Ho-Chunk, Inc. internship program to all tribal members who want to take their career to the next level. LaPointe feels like the things interns are exposed to can help them decide the next stage in their lives and prepare them for the real world and how to work in the corporate world.

His final thoughts? “What you put into it, is what you will get out of it…you have to come with a positive attitude to learn and apply your skills.”

Danielle Gutierrez – Director of Retail Operations

Danielle Gutierrez (Winnebago) interned with Ho-Chunk, Inc. in 2007 and has been here ever since. She said, “This program is a great way to get your foot in the door…and I needed all the help I could get. The program also helped me realize what I needed to work on in order to keep moving forward.”

Currently, Gutierrez is Director of Retail Operations, a position she has held for over two years. She worked her way up through the ranks after being hired when she finished her internship. Of her job, Gutierrez said, “I love to learn and I do that every day. This position is very challenging and there is never a dull moment.”

Gutierrez has this advice for those students in the program or thinking about applying: “Take advantage of every opportunity, ask questions, listen, leap outside of your comfort zone, and don’t be afraid of failure or making mistakes. If you’re considering applying for the program; do it!”

True to her dedication to learning, Gutierrez is currently working on her Masters of Science in Organizational Management.

“It taught me how to present myself in a professional manner and built my con-fidence. Being exposed to different functions in the company prepared me for my position today, as well as helped me understand Ho-Chunk, Inc. as a whole.”

“This program is a great way to get your foot in the door…and I needed all the help I could get. The program also helped me realize what I needed to work on in order to keep moving forward.”


CATCHING UP WITH FORMER INTERNS...


AUDIT LETTER

BALANCE SHEET



INCOME STATEMENT


Lance Morgan is President and Chief Executive Officer of Ho-Chunk, Inc. Morgan launched Ho-Chunk, Inc. in 1994 as the economic development corporation of the Winnebago Tribe of Nebraska. Under Morgan’s leadership, Ho-Chunk, Inc. has been recognized by a variety of national organizations including: Innovations in Government Award, sponsored by Harvard University and the Ford Foundation; Honoring Nations Award, also sponsored by Harvard; Minority Business Magazine, Entrepreneurial Spirit Award; Distinguished Alumni Speaker, Harvard Law School; Small Business Administration; U.S. Department of State; U.S. Department of Commerce; and the White House.

Morgan was selected as a “Champion of Change” by the White House in 2011. In 2012, he was awarded the Nebraska Builder Award by the University of Nebraska and the keynote speaker for commencement ceremonies. Morgan was appointed to the Board of Trustees of the Smithsonian’s National Museum of the American Indian in 2013. In 2014, he was honored with the Advocate of the Year Award by the U.S. Department of Commerce’s Minority Business Development Agency. In 2016, Morgan was named Advocate of the Year at National RES as well as Chair of the Siouxland Chamber of Commerce.

Morgan earned a Bachelor’s Degree in Economics from the University of Nebraska (B. S. 1990) and graduated from Harvard Law School (J.D. 1993). He is a member of the Minnesota Bar Association. Morgan is an enrolled member of the Winnebago Tribe of Nebraska.

Lance Morgan

Annette Hamilton is Vice President and Chief Operating Officer of Ho-Chunk, Inc. Annette Hamilton joined Ho-Chunk, Inc. in 2001 as Chief Financial Officer and was promoted to Chief Operating Officer in 2004. Hamilton oversees the daily operations of more than 30 Ho-Chunk subsidiary companies. She is responsible for strategic planning, budgeting, forecasting, and corporate business plans. She also appraises and makes executive decisions on prospective corporate acquisitions and expansion.

Her previous experience includes a position as Manager of Financial Reporting for Gateway, Inc., an international computer manufacturer and finance positions in both private industry and certified public accounting. She serves on the Board of Directors for the following: the District-10 Kansas City, Omaha Branch of the Federal Reserve Bank; Mercy Medical Center-Sioux City; Mercy Medical Center Diversity and Inclusion Committee; and Vice-Chairperson of the Native American Contractors Association (NACA).

Hamilton holds a Bachelor’s Degree in Business Administration from Washburn University of Topeka, Kansas and a Master’s Degree in Business Administration from the University of Minnesota. She is an enrolled member of the Kickapoo Tribe of Kansas.

Annette Hamilton

CORPORATE STAFF

Angel Derochie is Treasurer and Chief Financial Officer for Ho-Chunk, Inc. Derochie joined the company as Divisional Chief Financial Officer for Ho-Chunk Shared Services in 2013. She was promoted to CFO in September 2015. Derochie’s responsibilities include: all financial and fiscal management aspects of the corporation; leadership and coordination in the administrative, business planning, accounting and budgeting responsibilities. Derochie’s previous experience includes a management role as a CPA in public accounting. She was an accounting/audit manager with a local certified public accounting firm prior to joining Ho-Chunk, Inc.

Derochie holds a Bachelor’s Degree in Accounting and Business Administration from Morningside College, Sioux City, Iowa and a Master’s Degree in Business Administration from Drake University, Des Moines, Iowa.

Angel Derochie


Dennis Johnson is Chief Investment Officer for Ho-Chunk, Inc. Johnson joined Ho-Chunk, Inc. as Controller in 2007 and was promoted to Chief Financial Officer in 2008. In 2015 he became Chief Investment Officer. In his role as Chief Investment Officer, he is responsible for developing a long-term investment model and strategy for Ho-Chunk, Inc., as well as leading Ho-Chunk Capital; the division that identifies and capitalizes on investment opportunities that align with the company’s growth strategies and investment profile. His previous experience includes management roles within the automotive industry.

Johnson holds a Bachelor’s Degree in Business Administration with a major in Accounting and a Master of Professional Accountancy degree from the University of South Dakota. He is an enrolled member of the Red Lake Band of Chippewa Indians of Minnesota.

Dennis Johnson

Erin Morgan is Vice President Strategic Development and Operations of Ho-Chunk, Inc. Morgan joined the company in 1995 as Accounting, Design and Construction Coordinator. Currently, she oversees the daily operations of three divisions and multiple subsidiaries of Ho-Chunk, Inc. Morgan is responsible for setting the overall strategic direction and guiding current and future growth for the divisions. Morgan serves on the Board of Directors for the following: Howard G. Buffett Foundation and Winnebago Public School Foundation. She is also a member of the National Contract Management Association and the Armed Forces Communications and Electronics Association.

Morgan holds a Bachelor’s Degree in Interior Design from the University of Nebraska, Lincoln and has received training in Project Management from the University of Nebraska, Omaha Business Development Center and Contract Management from the National Contract Management Association.

Heath Rist is the Vice President of All Native Group, the government services division of Ho-Chunk, Inc. Rist joined Ho-Chunk, Inc. in 2012. He directs the oversight and financial responsibility of 10 subsidiaries companies with a multiple government contract portfolio of $100MM+ and a workforce of 800+ employees across the U.S. and overseas. Rist is responsible for strategic long-term planning, as well as annual plan development, and day to day group operations, including staffing, business development, financial forecasting, and budgeting.

Rist serves on the advisory board to SpinApp Mobile.com. From 1993-2001, Rist served in the U.S. Marine Corps where he led a team of individuals from a variety of cross disciplines in operations in highly fluid environments. Rist holds a Bachelor’s Degree in Organizational Management from Robert Wesleyan College of New York and a Bachelor’s Degree in Engineering from Alfred State College of New York.

Erin Morgan Heath Rist

34 www.hochunkinc.com

CORPORATE STAFF


BOARD OF DIRECTORS

TRIBAL COUNCIL

Brian ChamberlainCHAIRMAN

Frank WhiteCHAIRMAN

Coly BrownMEMBER

Vincent BassVICE CHAIRMAN

Curtis St. CyrMEMBER

Victoria KitcheyanSECRETARY

Isaac SmithMEMBER

Kenneth MalloryMEMBER

Darla LapointeMEMBER

James SnowMEMBER

Vincent BassVICE CHAIRMAN

Lauren BuchananMEMBER

Kenneth MalloryMEMBER

Pat MedinaMEMBER


OWNED BY THE WINNEBAGO TRIBE OF NEBRASKA

1 Mission DrivePO Box 390 Winnebago, NE 68071 402.878.2809 FX 402.878.2560

www.hochunkinc.com

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