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Smithsonian's private finances have now been closely reviewed to determine the effect of proceeding with the West Court project at this increased cost. Financial projections for fiscal year 1975 and 1976, including balance sheets and projects changes in fund balances and cash balances are shown in the attached Exhibits A and B.

It may be seen from these projections that despite the expenditure required for the West Court project ($1,900,000) and for completion of new Museum Shops in the Museum of Natural History ($500,000) and in the National Air and Space Museum ($100,000 of private funds), the total cash balance of the private funds of the Institution should increase somewhat over the next one to one and one-half years to June 30, 1976, to around $8.7 million. The balance of our unrestricted private funds (corresponding to "net worth" of these funds) should also increase to about $5,000,000 at the end of FY 1976 from a figure of $3,067,000 at the beginning of this current fiscal year 1975. Thus, these projections would indicate that if our assumptions are reasonably correct, the West Court project can be funded without strain to our private side finances.

The assumptions used in these projects are believed to be conservative. It must be recognized, of course, that they depend to a great extent upon the continued success of the Magazine and our Museum Shops. In both cases, however, very substantial gains are being realized up to the present moment with no sign of adverse effects of reduction in advertising, subscriptions or change in the substantial sales gains of our Museum Shops. Despite this highly satisfactory outlook for continued growth, only nominal increases are being assumed in the net profits of these two activities in FY 1975 and fY 1976. Additional revenues from renegotiation of the NMHT restaurant contract next June and from the scheduled opening of the National Air and Space Museum parking lot at about the same time have been held to less than expected levels.

One factor which might adversely affect cash and net worth projections would be additional construction or operating requirements for the Cooper-Hewitt Museum, since the projection includes only sufficient funds to complete basic renovation of the Carnegie Mansion; opening of the Museum at the end of this calendar year will undoubtedly require federal support or a substantial increase in private donations.

A safety factor in these projections is the fact that if conditions at the beginning of fiscal year 1976 appear less satisfactory, the proposed $500,000 expenditure of the Natural History Building Museum Shop can be deferred to some future date. In any case, it should be recognized that essentially we have the total required funds already on hand to complete this project, in the form of advance magazine subscriptions (total as of December 31, 1974 - $5,346,000) which is currently being held in the form of cash and short-term investments, but could be used to finance this construction if necessary.