Long range forecast of maximum cash requirements as of Mar. 31, 1962 [Assumptions: 1. Maximum deliveries from contracts ine ffect as of Mar. 31, 1962. 2. Estimated sales under approved programs. 3. Payment of interest at note maturity for procurement activities under sec. 303 and currently for lending activities under sec. 302]

Senator MUSKIE. What does that show with respect to the two dates that I have referred to in this table?

Mr. BROOKS. I do not have with me the table for the comparable dates, but I do have the earlier estimate of December 31, 1961. Based on that estimate, we would just about run out of cash at the end of this fiscal year, based on a maximum obligation.

Senator MUSKIE. If I am looking at the right table, as of the end of this fiscal year, the current fiscal year, the amount available would be $3,764,000.

Mr. BROOKS. That is the figure I was referring to.

Senator MUSKIE. And at the end of the next fiscal year it would be $101 million under your requirement.

Mr. BROOKS. That is correct.

Senator MUSKIE. Of course, when we talk about current fiscal year, we are talking about a period that is only 25 days away.

Mr. BROOKS. That is true.

Senator MUSKIE. So let me ask you, with respect to that date, which of these tables is accurate? In other words

Mr. BROOKS. The first table that you have referred to we think more nearly approaches what will actually occur.

Senator MUSKIE. The $126 million figure?

Mr. BROOKS. Yes, sir.

Senator MUSKIE. If that is so, then we can add the $126 million figure to the figure for the end of fiscal year 1963 in the second table, or is that good mathematics?

Mr. BROOKS. No, sir; I do not believe it would be, sir.

Senator MUSKIE. Let me put it this way: Let me put the monkey on your back. If the $126 million figure as an availability figure is an accurate one for the end of this fiscal year, then how does that affect your projection for the end of the next fiscal year on the maximum cash basis?

Mr. BROOKS. The difference between the two, of course, is $123 million. And this, if it were added to the projected deficit on a maximum basis at the end of 1963, would reverse the field to produce a surplus of 20-some million dollars.

Senator MUSKIE. Let me make this clear for the record. The first table to which I referred when I started this line of questioning is dated March 31, 1962. The other table, which showed a less optimistic result, was dated December 31, 1961, 4 months earlier. Is that correct?

Mr. BROOKS. Three months earlier.

Senator MUSKIE. Yes, you are right.

Mr. KENDALL. Mr. Chairman, I should point out that it is not only less optimistic, it is entirely on a different basis.

The maximum cash exposure table is not computed on the same basis as the forecast of actual cash requirements.

I simply wanted to call your attention that it is possible under the contracts, if all deliveries that could be made were made to the Government, to run out of funds earlier than our forecast liability. Senator MUSKIE. Let me see if I understand what that means. The purpose of the table in each case is the same. That is, it is to try to estimate the cash that will be available on those dates?

Mr. KENDALL. The forecast of probable cash requirements is an attempt to estimate the availability of cash. The other simply points

out what could happen if perhaps we went into a depression or something like that and all of these producers exercised all of their rights to put materials to the Government.

Senator MUSKIE. It still affects the figure of cash available at those two target dates?

Mr. KENDALL. That is correct.

Senator MUSKIE. Let me ask you this: Since the figure of cash available at the end of this fiscal year is more optimistic than the December 31 table would show, does this necessarily mean that the figure for the end of the next fiscal year will be more favorable than the December 31 table shows?

Mr. KENDALL. Not necessarily, sir. It would depend on what happens in the market meanwhile, what materials are put to the Government. Also

Senator MUSKIE. In other words, if the very worst happens, which is what the December 31 table assumed, you can have maximum exposure in the next fiscal year of a larger amount or to a greater degree than is indicated by the December 31 table?

Mr. KENDALL. It would be a question of how many rights would carry over beyond the 30th of June this year.

Mr. CASTO. That is right.

Mr. KENDALL. In some contracts, if they have not delivered by June 30, they might be cut off. This would be favorable to us. If a contract provides that they have up to the end of the calendar year to make all the puts that the contract allows for, then, you see, it would not be favorable. They could still make a greater put to us than is assumed in the December table, because the December table assumed that they have exercised all their rights, all their available rights, in the year before.

Senator MUSKIE. So that even though the fiscal year 1962 is almost over, and the assumptions made by the December table have not proven out in our experience in this fiscal year, we still could end up at the end of the next fiscal year in as poor a position cashwise as is suggested by the December table?

Mr. KENDALL. I do not think so. I think there has been some improvement in the situation. All I was trying to point out is that you cannot subtract one figure from the other and say that is where we would end up.

We would have to determine what has happened under the existing contracts, what rights have been exercised, and what rights remain exercisable.

Senator MUSKIE. Is it fair to suggest from this discussion that at the end of the next fiscal year, or the 1963 fiscal year, you can still end up in a favorable cash position?

Mr. KENDALL. I think we could through next year. Mr. Brooks, do you agree?

Mr. BROOKS. I would agree that we could.

Senator MUSKIE. Is it probable?

Mr. BROOKS. Our present estimates indicate that it is probable;

yes, sir.

Senator MUSKIE. That is a relief.

I think it might be well if that December table, if it is not already in the record, be included at this point, since we have been referring to it rather freely.

(The tables referred to follow :)