REVOLVING AND MANAGEMENT FUNDS-Con. Intragovernmental funds-Continued ARMY INDUSTRIAL FUND-Continued The net gain of $1.1 million, primarily in the Munitions and Missile Commands, reflects an operating variance resulting principally from the use of standard costs and the pricing of customer billings at predetermined rates. Revenue and expense are projected to break even in 1963 and 1964, with the objective of avoiding either augmentation or overcharging of customer appropriations. Collections exceeded expenditures by $6.3 million in 1962, and are forecast to exceed expenditures by $73.8 million in 1964 with implementation of new policies for billing for work to be performed. In 1962, $100 million was transferred to Military personnel, Army and $650 thousand to the Defense industrial fund. The Government equity at the end of 1964 is estimated at $70.6 million, composed of $56.9 million in reappropriations and $13.8 million in capitalized assets, less an accumulated operating loss of $0.1 million. Revenue, Expense, and Retained Earnings (in thousands of dollars) Revenue: Manufacturing and assembly. 214,378 -650 Transportation.. Printing.. 72,912 886 70,993 Supply services. 39.707 Capital additions and improvements. 12,141 Support of nonindustrial activities. 42,709 69,364 1,014 1,011 35,915 40,063 18,384 15,993 49,027 50,789 12,830 13,924 113,854 113,942 Unbilled costs... Material and supplies.. -766 -837 Working capital, net. Assets capitalized or decapital ized (-)- Material and supplies transferred to "National Aeronautics and Space Administration" (42 U.S.C. 2473) (-). Liabilities assumed (-) or cancelled, net.. Number of employees at end of year. 60,417 56,994 58,479 874 57,479 58,422 Applicable receipts.......... Budget expenditures... 1,854,713 2,034,178 2,222,375 20,484 399-144,314 Average GS grade.. 7.8 Average GS salary. $6,969 7.8 $7,279 Average salary of ungraded positions.. $5,745 $5,973 7.8 $7,193 $5,897 1 Balances of selected resources are identified on the statement of financial condition. 2 Adjustments in selected resources consist of: Materials and supplies capitalized, net, $299 thousand; inventory adjustments credited to prior year revenue, -$584 thousand; and accrued leave assumed. $7.273 thousand in 1962; and accrued leave assumed. $6,305 thousand, and materials and supplies decapitalized, $49 thousand in 1963. This fund finances 67 industrial and commercial type Budget program. The Navy Industrial Fund was ex- Printing. There are 30 printing plants, 6 of which are -2,000 -20,000 862,383 -90,000 REVOLVING AND MANAGEMENT FUNDS-Con. sciences, the shapes and forms of naval vessels, and other Intragovernmental funds-Continued NAVY INDUSTRIAL FUND-Continued in the production of missile launchers, torpedoes, avionics equipment, guns and mounts, propellants, and other items of ordnance and ammunition. The cost of goods and services produced in 1963 is expected to exceed that of 1962 by $11.7 million, primarily as a result of the completion of torpedoes at Naval Ordnance Plant, Forest Park, which were ordered in 1962. Shipyards. The shipyard program includes 11 shipyards and 1 ship repair facility engaged in the construction, overhaul, repair and alteration of active and reserve fleet vessels. The shipyard workload for 1963 will be gradually reduced, from the heavy workload experienced during the second half of 1962, to a level which will provide for implementation of the congressional restriction in the 1963 Department of Defense Appropriation Act requiring placement of a minimum of 35% of the Navy repair, alteration, and conversion work in private shipyards. This reduction in workload will require approximately 2% reductions in naval shipyard employment during the first and second quarter of 1963. During 1964 the shipyard workload and employment is expected to continue at approximately the 1963 level. Military Sea Transportation Service. This organization provides ocean transportation of dry cargo, passenger, and petroleum products, and provides the ocean platforms for scientific and other special projects. The estimates include the costs of operating Government-owned ships and the procurement of commercial augmentation. The cargo and petroleum workload for 1962 was abnormally high as a result of increased military activity. The volume of business for 1964 reflects increases in passenger transportation and other categories of shipping. A summary of workload and costs is provided in the following table (dollars in thousands): ship design problems, and into guided missile fuzes. The slight increase in the workload assigned to these activities continues the trend of the last several years, and is reflected in the estimates of the three activities. Base services. With the addition of the public works centers at Guam and Subic Bay, this program includes six activities engaged in providing utility, maintenance, custodial, and transportation services for customers in their geographic areas. The increase in the workload for this program is directly related to the two activities added during 1962 and 1963. Aircraft maintenance.-During 1962 and 1963 this program increased from one to seven activities. These activities overhaul and repair aircraft and missiles, and manufacture aircraft parts and assemblies. The substantial increase reflected for 1963 relates primarily to the addition of the six activities to the Navy Industrial Fund program. The workload for these activities was abnormally high during 1962 as a result of the accelerated rework program under the third amendment defense buildup. The estimates for 1964 indicate higher workload as a result of customer requirements for aircraft and engine rework and repairable material. Financing the budget program. This program is financed by orders citing the customers' appropriations. Costs are initially financed by the working capital of the fund and subsequently billed to the customers' appropriations by periodic progress payments or upon completion of the work. During 1962 customer orders placed at the ordnance plants, shipyards, MSTS and aircraft maintenance activities were abnormally high as a result of the military buildup and related events. The 1963 and 1964 customer orders for these activities are expected to return to more normal levels. In addition, the shipyard orders reflect the assignment of 35% of the Navy repair, alteration, and conversion work to private shipyards. The increase in orders for the base service and aircraft maintenance activities results primarily from the work to be performed by the additional activities chartered under the Navy industrial fund during 1962 and 1963. Operating results and financial condition. The following table shows 1962 net revenue and expense by activity (in thousands of dollars): 12,497,449 5,056 $256,181 1962 actual 1963 estimate 12,255,714 3,140 $240,423 12,036,969 3,048 $253,252 Cost $96,156 15,394,278 943 $90,595 16,650,252 943 $97,692 Gain of Shipyards Military Sea Transportation Service Marine clothing and equipment.. Research Base services. Aircraft maintenance. Total..... 1,048,778 1,054,919 -6,141 429,278 424,812 4,466 5,531 88,626 88,378 5,540 -9 248 48,359 48,520 -161 56,165 57.270 -1,105 1,889,171 1,891,786 -2,615 Retained earnings decreased $1.5 million in 1962, the net result of the $2.6 million operating loss being offset, in part, by prior year revenue, expense, and inventory adjustments. During 1962 expenditures exceeded collections by $20.5 million primarily as a result of a lag in the collection of accounts receivable. Expenditures are expected to exceed collections in 1963 by $0.4 million, and in 1964 collections are expected to exceed expenditures by $144 million with implementation of new policies for billing for ferred to Military personnel, Navy; during 1963, $921 work to be performed. During 1962, $2 million was transthousand has been transferred to the Defense industrial fund, and $20 million is planned to be transferred to Shipbuilding and conversion, Navy. In 1964, a transfer of $90 million to Military personnel, Navy, is proposed. The significant decrease, between 1961 and 1962, in work in process and progress billings results from a change in the method of reporting shipyard work in process. The scope of the customer orders issued to the naval shipyards for construction and conversion type of work extends beyond the completion of the ship to include essential post delivery work, and these orders were held in work in process until all work was completed. This method of reporting has been revised and the cost of completed ships will not be included in work in process until the post delivery work has been accomplished. Government investment on June 30, 1964, is expected to decrease to $165 million representing $190 million in reappropriations and $25.3 million in retained earnings, offset, in part, by $50.7 million representing the excess of liabilities assumed over assets capitalized. Activity allocations on June 30, 1963 and 1964, are estimated at $186 million, with $4.4 million held available at the total corpus level as a modest reserve for emergency, short term requirements for additional working capital. In order to extend the Navy Industrial Fund program without an additional appropriation, cash allocated to the then existing activities was reduced by $27 million and reallocated to the new activities. Revenue, Expense, and Retained Earnings (in thousands of dollars) Provision for subsequent estimate Revenue: Deferred credits (undis tributed receipts) ....... Construction and conversion of ships. Overhaul and repair.. Alteration and modification.. Research and development.. 115,235 Quality evaluation.. 8,286 Transportation.. 421,524 Printing... 15,573 Utility and sanitation services. 15,477 Receipt, stowage, and issue of ammunition.. Supply services 29,998 Support of nonindustrial activities. Capital additions and improvements. Other revenue.. 119,805 124,114 Government equity: Non-interest-bearing to 1,405 544 Assets capitalized or decapitalized (-).. Liabilities assumed (-) or canceled.......... Analysis of retained earnings: -2,615 Retained earnings, start of year.. Adjustment of prior year expense. Adjustment of prior year revenue.. ited to prior year revenue.... Inventory adjustments charged (-) or cred 376 584 Retained earnings, end of year. 1 The changes in these items are reflected on the program and financing schedule as changes in selected resources. Includes accrued annual leave liability not currently payable. of: $67,308 thousand in 1961; $78,220 thousand in 1962; $86,813 thousand in 1963; and $89,621 thousand in 1964. 171,393 1963 1964 estimate estimate Revenue and other receipts (customer orders Unbilled customer orders. Budget expenditures....... -3,719 -16,842 -3,510 -1,160 This fund finances industrial and commercial type activities on a reimbursable basis (10 U.S.C. 2208). Budget program-Printing and duplicating service.There are nine plants financed under this program. These plants provide area support to the Air Force and other military services on a reimbursable basis. Production in 1962 was 2.3 billion printing units and is estimated to increase to 2.4 billion in 1963 and 1964. The increased production is due to increased requirements of consumer appropriations and increased productivity per press unit due to upgrading of equipment and production techniques. Laundry and dry cleaning service. At June 30, 1962, there were 41 plants operating under this fund. Two 10,177 plants will be added during 1963, with no further changes 7.519 projected for 1964. Total production in 1964 is esti mated at 108 million pieces of laundry and dry cleaning as compared with 105.8 million for 1963 and 101.9 million 418,946 405,779 433,230 436,642 in 1962. 10 |