Analysis of FY 2005 Financial Conditions and Results

Composition of Assets and Assets by Responsibility Segment

The composition (by percentage) and distribution (by responsibility segment) of the Department’s assets remained consistent from FY 2004 to FY 2005.

Total assets amounted to $12.73 billion at September 30, 2005. Fund Balance with Treasury of $7.04 billion is the aggregate amount of funds available to make authorized expenditures and pay liabilities. General Property, Plant, and Equipment, Net of Accumulated Depreciation (General PP&E) of $4.93 billion includes $2.83 billion of Construction-in-progress, primarily of satellites and weather measuring and monitoring systems, $842 million of satellites and weather systems, $711 million of structures, facilities, and leasehold improvements, and $547 million of other General PP&E. Loans Receivable and Related Foreclosed Property, Net of $418 million primarily relates to NOAA’s direct loan programs. Accounts Receivable, Net of $127 million resulted primarily when the Department performed reimbursable services or sold goods. Other Assets of $217 million primarily includes Inventory, Materials, and Supplies, Net of $97 million, and Advances and Prepayments of $102 million.

Trends in Assets

Total Assets increased $794 million or seven percent, from $11.94 billion at September 30, 2004 to $12.73 billion at September 30, 2005. Fund Balance with Treasury increased $389 million or six percent, from $6.65 billion to $7.04 billion, which primarily resulted from Appropriations Received, net of reductions, increasing by $444 million or eight percent. General PP&E increased $275 million or six percent, from $4.65 billion to $4.93 billion, mainly due to an increase of $270 million in NOAA’s Construction-in-progress, primarily for satellites. Loans Receivable and Related Foreclosed Property, Net increased $101 million or 32 percent, from $317 million to $418 million, primarily due to NOAA’s issuance of $97 million of Crab Buyback direct loans in FY 2005.

Composition of Liabilities and Liabilities by Responsibility Segment

The composition (by percentage) and distribution (by responsibility segment) of the Department’s liabilities also remained consistent from FY 2004 to FY 2005.

Total liabilities amounted to $3.76 billion at September 30, 2005. Unearned Revenue of $1.29 billion represents the portion of monies received from customers for which goods and services have not been provided or rendered by the Department. Federal Employee Benefits of $569 million is composed of the actuarial present value of projected benefits for the NOAA Corps Retirement System ($350 million) and the NOAA Corps Post-retirement Health Benefits ($45 million), and Actuarial FECA Liability ($174 million), which represents the liability for future workers’ compensation benefits. Accounts Payable of $400 million consists primarily of amounts owed for goods, services, or capitalized assets received, progress on contract performance by others, and other expenses due. Accrued Grants of $389 million, which relates to a diverse array of financial assistance programs and projects, includes the Economic Development Administration’s (EDA) accrued grants of $254 million for their economic development and assistance funding to state and local governments. Debt to Treasury of $358 million consists of monies borrowed primarily for NOAA’s direct loan programs. Accrued Payroll and Annual Leave of $352 million includes salaries and wages earned by employees, but not disbursed as of September 30. Other Liabilities of $407 million primarily includes Downward Subsidy Reestimates Payable to Treasury of $108 million, Loan Guarantee Liabilities of $82 million, Environmental and Disposal Liabilities of $73 million, and Resources Payable to Treasury of $44 million.

Trends in Liabilities

Total Liabilities increased $512 million or 16 percent, from $3.25 billion at September 30, 2004 to $3.76 billion at September 30, 2005. Unearned Revenue increased $200 million or 18 percent, from $1.09 billion to $1.29 billion, primarily due to increased unearned revenue from patent and trademark application and user fees that are pending action. Debt to Treasury increased $84 million or 30 percent, from $274 million to $358 million, mainly due to net borrowings in FY 2005 of $113 million for NOAA’s direct loan programs, less the repayment to Treasury in FY 2005 of $29 million by the Emergency Steel Loan Guarantee Program. Accounts Payable increased $75 million or 23 percent, from $325 million to $400 million, primarily due to increased delivered orders in FY 2005 resulting from higher Appropriations Received, net of reductions. Downward Subsidy Reestimates Payable to Treasury increased $105 million, from $3 million to $108 million, primarily because of a downward subsidy reestimate of $85 million, as of September 30, 2005, on the defaulted guaranteed loan receivable of the Emergency Steel Loan Guarantee Program, made possible by better-than-expected actual and anticipated cash flows.

Composition of and Trends in Financing Sources

Most of the Department’s Financing Sources, shown on the Consolidated Statements of Changes in Net Position, are obtained from Appropriations Received, net of reductions. Other typical Financing Sources include net transfers to and from other federal agencies without reimbursement, imputed financing sources from costs absorbed by other federal agencies, and Downward Subsidy Reestimates Payable to Treasury (a negative Financing Source).

The composition (by percentage) of the Department’s financing sources remained consistent from FY 2004 to FY 2005.

Total Financing Sources increased $360 million or six percent, from $6.23 billion for FY 2004 to $6.59 billion for FY 2005. Appropriations Received, net of reductions, increased by $444 million or eight percent. Downward Subsidy Reestimates Payable to Treasury increased $(105) million, from $(3) million in FY 2004 to $(108) million in FY 2005, as previously discussed in the Trends in Liabilities section.

FY 2005 Net Cost of Operations by Strategic Goal

In FY 2005, Net Cost of Operations amounted to $6.31 billion, which consists of Gross Costs of $8.44 billion less Earned Revenue of $2.13 billion.

Strategic Goal 1, Provide the Information and Tools to Maximize U.S. Competitiveness and Enable Economic Growth for American Industries, Workers, and Consumers, includes Net Program Costs of $764 million (Gross Costs of $1.01 billion less Earned Revenue of $248 million) for the Census Bureau. Census carries out the Decennial Census, periodic censuses, and demographic and other surveys, and prepares and releases targeted data products for economic and other programs. ITA’s programs and activities also support Strategic Goal 1, with Net Program Costs of $410 million (Gross Costs of $422 million less Earned Revenue of $12 million). ITA assists the export growth of small and medium-sized businesses, enforces U.S. trade laws and trade agreements, monitors and maintains trading relationships with established markets, promotes new business in emerging markets, and improves access to overseas markets by identifying and pressing for the removal of trade barriers. Strategic Goal 1 also includes Net Program Costs of $389 million (Gross Costs of $407 million less Earned Revenue of $18 million) for EDA. EDA helps distressed communities address problems associated with long-term economic distress, as well as sudden and severe economic dislocations including recovering from the economic impacts of natural disasters, the closure of military installations and other federal facilities, changing trade patterns, and the depletion of natural resources.

Strategic Goal 2, Foster Science and Technological Leadership by Protecting Intellectual Property, Enhancing Technical Standards, and Advancing Measurement Science, includes Net Program Costs of $55 million (Gross Costs of $1.25 billion less Earned Revenue of $1.20 billion) for the U.S. Patent and Trademark Office’s (USPTO) patents program, which includes processing patent applications and disseminating patent information. Through issuing patents, USPTO encourages technological advancement by providing incentives to invent, invest in, and disclose new technology. Strategic Goal 2 also includes Net Program Costs of $509 million (Gross Costs of $607 million less Earned Revenue of $98 million) for the National Institute of Standards and Technology’s (NIST) Measurement and Standards Laboratories. These laboratories are the stewards of the nation’s measurement infrastructure, and provide measurement methods, reference materials, test procedures, instrument calibrations, fundamental data, and standards that comprise essential tools for research, production, and buyer-seller transactions.

Strategic Goal 3, Observe, Protect, and Manage the Earth’s Resources to Promote Environmental Stewardship, includes Net Program Costs of $1.29 billion (Gross Costs of $1.37 billion less Earned Revenue of $86 million) related to NOAA’s stewardship of ecosystems, which reflects NOAA’s mission to conserve, protect, manage, and restore fisheries and coastal and ocean resources. The Department has a responsibility for stewardship of the marine ecosystem and for setting standards to protect and manage the shared resources and harvests of the oceans. The Department strives to balance sustainable development and healthy functioning marine ecosystems, and to conserve, protect, restore, and better manage resources.