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EXHIBIT B

Statement of changes in net assets available for plan benefits for the year ended

December 31, 1976
Additions:
Contributions from employers (notes 1 and 2)

$1,476,765
Interest income

2,647

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114,321 - 104,757

Net additions
Net deficiency in assets available for plan benefits at beginning of year.

Net assets available for plan benefits at end of year.....
Note. See notes to financial statements.

9,564

STANFORD

NOTES TO FINANCIAL STATEMENTS, DECEMBER 31, 1976
General.-In January, 1974, a new agreement was executed by the National
Maritime Union of America and various maritime companies and agents whereby
the NMU Joint Employment Committee was established under an Agreement and
Declaration of Trust. Previously, the committee had been established under a stipu-
lation by the same parties dated March 1, 1968. Under the provisions of the
Agreement, as amended, the trustees are authorized to use the assets of the Fund to
help defray the costs and expenses of the on and maintenance of en pymer
offices from which the employers obtain unlicensed seamen.

Under the terms of the latest collective bargaining agreement, employers are
obligated to contribute at set rates to the NMU Joint Employment Committee for
the three contract years from June 16, 1975 through June 15, 1978. For the year
1976 employer contribution rates were 60 cents per man-day.

The Plan is non-contributory for employees and is funded mainly from contribu-
tions received from employers. In the event of termination of the Trust, the trust
funds are to be used to continue the payment of expenses provided for in the Trust
and to otherwise effectuate the purpose of the Trust.

Note 1.- The Joint Employment Committee's significant accounting policies are summarized as follows:

The Joint Employment Committee uses the accrual method of accounting for
financial statements. The balance sheets include as contributions receivable
amounts received subsequent to balance sheet dates which were applicable to the
periods under review. These amounts are also included in contributions from em-
ployers on the statements of operations for the applicable years,

KIPNIS KARCHMER,
CERTIFIED PUBLIC ACCOUNTANTS,

New York, N. Y., May 2, 1977.
Board of Trustees, NMU Joint Employment Committee.

GENTLEMEN: The basic financial statements of NMU Joint Employment Commit-
tee, namely, the statements of assets and liabilities at December 31, 1976 and
December 31, 1975 and the related statement of changes in net assets available for
plan benefits for the year ended December 31, 1976, and our Accountants' Report on
these financial statements are included in the section preceding this letter.

The data in Schedules “1” through "z” which follow this letter are presented
primarily for supplementary analysis purposes and are not considered necessary for
a fair presentation of the Fund's financial position at December 31, 1976 and
December 31, 1975 and the results of its operations for the year ended December 31,
1976. Our examination, which is set forth in our Accountants' Report, was made
primarily for the purpose of formulating an opinion on the aforementioned financial
statements, taken as a whole. Although our examination included tests of revenues
and expenses, these tests were not extended in such detail as to enable us to express
an opinion as to the fair presentation of the individual items of revenue and
expenses as shown in Schedules “1” through “3”. Accordingly, we do not express an
opinion thereon.
Very truly yours,

KIPNIS & KARCHMER.

Supplemental schedule for the year ended December 31, 1976Contributions from

employers

Employer, city, and State:

Academy Tankers, Inc., Houston, Tex....
Alaska Bulk Carriers, Philadelphia, Pa.
American Bear Steamship Co., Inc., San Francisco, Calif.
American Condor Corp., New York, N.Y.
American Eagle Tanker Corp., New York N.Y.
American Export Lines, Inc., New York, N.Y.
American Foreign Steamship Corp., New York, N.Y.
American Trading Transportation Co., Inc., New York, N.Y.
Amoco Shipping Co., Chicago, Ill...
Baldbutte Shipping Co., Philadelphia, Pa.
Burco Shipping Corp., New York, N.Y....
Central Gulf Steamship Corp., New Orleans, La.
Dover Shipping Co., Philadelphia, Pa....
Eagle Terminal Tankers, Inc., New York, N.Y.
El Taino Operating Co., Philadelphia, Pa......
Farrell Lines, Inc., New York, N.Y...
Great Neck Operating Corp., New York, N.Y.
Gulf Trading & Transportation Co., Pittsburgh, Pa.
Hess Oil & Chemical Corp., Woodbridge, N.J.
Keystone Shipping Co., Philadelphia, Pa......
Keystone Tankship Corp., Philadelphia, Pa..
Chas. Kurz & Co., Inc., Philadelphia, Pa.
Lykes Bros. Steamship Co., Inc., New Orleans, La.
Margate Shipping Co., Philadelphia, Pa.
Marine Transport Lines, Inc., New York, N.Y.
Mathiasen's Tankers Industries, Inc., Philadelphia, Pa...
Mediterranean Marine Lines, Inc., New York, N.Y.
Moore-McCormack Lines, Inc., Stamford, Conn.
Nautilus Petroleum Carriers Corp., New York, N.Y.
Panama Canal Co., Balboa, Canal Zone
Prudential Lines, Inc., New York, N.Y.
Puerto Rico Marine Management, Inc., Elizabeth, N.J..
Sound Shipping Corp., Philadelphia, Pa.
States Marine International, New York, N.Y.
Sunexport, New York, N.Y..
Texaco, Inc., New York, N.Y..
Transamerican Trailer Transport, Inc., New York, N.Y.
Trinidad Corp., Philadelphia, Pa..
Union Carbide Corp., New York, N.Y.
Union 76 Division, Union Oil Co. of Cal., Palatine, Ill.
United States Lines Co., New York, N.Y.
United Transporter, New York, N.Y.

Contributions received

Schedule 1 $9,859 1,361 6,874 1,382

5,932 133,723

4,418 29,835 27,229 5,414

17 38,587

2,208 13,837

2,652 110,229

2,940 78,416

5,732 21,433 16,268 29,896 232,093 11,487 73,265

7,858 25,486 85,699

29 10,251 80,066 5,157 1,335

6 5,748 101,748

1,967 29,323 16,252 12,370 196,830

1,420

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NOTE.—Reference is made to the accompanying accountants' letter related to data contained in this schedule.

Supplemental schedules for the year ended December 31, 1976

Cost of operating employment offices:

Salaries and related costs...
Maintenance..

Schedule 2 $888,798 105,724

46-188 0

79 - 12

Cost of operating employment offices:

Schedule 2 Real estate taxes.

28,386 Fixed asset rental (equal to depreciation).

94,550 Telephone

58,600 Rent...

126,128 Insurance.

9,246 Travel

1,296 Share of publication expenses—“The Pilot".

12,099 Stationery and supplies.

10,632 Rental and repairs--office equipment

2,553 Postage..

6,416 Research

458 Personal property taxes.

422 Total

1,345,308 NOTE.- Reference is made to the accompanying accountants' letter related to data contained in these schedules. Administrative expenses:

Schedule 3 Administrative services

$11,000 Auditing fees..

4,300 Legal fees.....

2,000 Insurance.

1,947 Miscellaneous

536

Total

19,783 NOTE.- Reference is made to the accompanying accountants' letter related to data contained in these schedules.

NMU PENSION AND WELFARE PLAN, WELFARE PLAN REPORT FOR THE YEAR ENDED DECEMBER 31, 1977

MARTIN E. SEGAL Co.,

New York, N. Y., July 26, 1978. Board of Trustees, National Maritime Union Pension and Welfare Plan, New York,

N. Y GENTLEMAN: Here is our Annual Report for the year ended December 31, 1977. This Report reviews the experience of the Welfare Plan in 1977 and projects the expected experience in 1978.

For the third consecutive year the Plan experienced an operating deficit.

Man-days of contributions continued to decline as did the number of covered seamen but benefits paid increased substantially.

The prospects for 1978 are for an operating deficit. But as you will see, that's because the increased contributions called for by the new Memorandum of Understanding are effective only for a little more than half the year. On a full year basis, beginning July 1, 1978 the projection shows an operating surplus, including the dental plan improvement. Sincerely,

SIDNEY BRAVERMAN,

Senior Vice President.

A. HIGHLIGHTS OF 1977 The following are some of the highlights of 1977: Employer contributions decreased 2 percent as compared to 1976. Man-days of contributions declined from 2.2 million in 1976 to 2.1 million in 1977. Unassigned net assets and reserves decreased by $2,257,500.

Total benefit payments were $6,137,000 and this was $443,700 percent) greater than benefit payments in 1976.

The number of seamen covered for the full benefit program declined from 10,100 in 1976 to 9,900 in 1977.

Total annual employer contributions in 1978 are projected at about $6.99 million and investment income is projected at $0.44 million for total income of about $7.43 million.

Total expenses are projected at $8.03 million. Matched against the expected total income an operating deficit of $0.60 million is projected for 1978. On the basis of 2.1 million man-days, this is equivalent to an operating deficit of 28¢ per man-day.

As the result of the new Memorandum of Understanding effective June 16, 1978 which calls for additional contributions of $1.60 per man-day, total income will exceed total expenses beginning July 1, 1978. A "spot” budget as of that date indicates a projected operating surplus of 37.8¢ per man-day.

B. INCOME AND EXPENSES

Table 1 is a summary of the Plan's income and expenses for the year ended December 31, 1977.

In that year there was a net decrease in unassigned funds of $1,624,200 and this was about 28 percent of total income. In 1976 there was a net decrease of $690,000 which was about 11 percent of total income in that year.

Table 9 in the 1976 Annual Report projected income and expenses for 1977. In that table we projected an operating deficit of $1,702,000. As you will see in table 1, the “operating deficit” was in fact $1,971,200 but the $347,100 dividend from the Equitable Life Insurance Company reduced it to the net decrease referred to previously.

The following paragraphs discuss the various items of income and expenses: Employer contributions

In 1977, employer contributions decreased $131,200 (2 percent) as compared to employer contributions received in 1976. In 1977, there were 2,113,500 (we had projected 2,200,000) man-days of contributions as compared to 2,154,300 in 1976. This was a 2 percent decline. In turn, 1976 had 5 percent fewer man-days than 1975.

During 1977, 47.1 percent of the total man-days of contributions was attributable to Dry Cargo type employment, 50.3 percent to Tanker and Container type employment and 2.6 percent to Diesel Tankers. In 1976, the ratio was 46 percent Dry Cargo and 54 percent Tanker and Container. Based on the 1977 breakdown, the composite rate was $2.46 per man day. This is simply based on the ratios referred to, applied to the Dry Cargo rate of $2.35, the Tanker and Container rate of $2.59 and the Diesel rate of $1.77. The composite rate in 1976 was $2.48. 1976 was higher because the Diesel Tanker rate did not enter into the computation of the composite rate in

that year.

It is clear that for at least the last three years the previous sharp declines in man days have ceased although there was a 12 percent decline in the three year period. Nevertheless, the average annual decline between 1969 through 1974 was 16 percent and as you have seen, only an average of 4 percent in the last 3 years. Investment income

Gross investment income was $515,000 and this was $90,200 (15 percent) less than the investment income in 1976. This was due to a decrease in the average assets available for investment-in point of fact, the yield increased from 7.63 percent in 1976 to 7.82 percent in 1977.

The net investment income (gross income less the investment custodian fee of $14,500) was $500,500. In addition, there as a net gain on the sale of equipment and investments of $52,400. Benefit expenses

Benefit expenses are discussed in detail in Section C. Administration and professional expenses

A breakdown of the administration expenses for the past two years is given in table 2 and a breakdown of professional expenses for the past two years is given in table 3.

You will see that administration expenses in 1977 increased by about $108,000 (11 percent) and that the total of $1,079,600 was 18.4 percent of total income in 1977. In 1976, administration expenses were 15 percent of total income.

Professional expenses decreased by about $15,300 (14 percent).

Administration and professional expenses together totaled $1,174,600 and this was about 20 percent of total income. In 1976, these expenses totaled $1,081,300 and that was just under 17 percent of total income.

TABLE 1.-Statement of income and expense for year ended Dec. 31, 1977
Income:
Employer contributions,

$5,303,443

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202,500

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Annual level cost of welfare benefits for pensioners and their de

pendents.....
Less: Welfare benefits paid for pensioners and their dependents

– 452,753

(included in benefits paid above).. Net decrease in reserves for welfare benefits for pensioners (–4.3

percent) Administration expense (18.4 percent) Professional expense (1.6 percent).

Total expense (133.6 percent).....

-250,253 1,079,593

95,024

7,834,803

Operating decrease in unassigned funds for year ended Dec. 31, 1977 (33.6 percent)...

-1,971,235 Dividend from Equitable Life Assurance Society........

347,075 Net decrease in unassigned funds for year ended Dec. 31, 1977....... -1,624,160

TABLE 2.-ADMINISTRATION EXPENSES FOR YEARS ENDED DECEMBER 31, 1977 AND DECEMBER 31,

1976

Amount

Expenses

1977

1976

Salaries...........
Rent
Pension plan-employees.
Employees' welfare benefits..
Payroll taxes......
Depreciation of furniture, fixtures and equipment...
Stationery, printing and office supplies
Amortization of leasehold improvements.
Insurance..
Travel and conference expenses
Telephone and telegraph.
Service and maintenance-IBM.
Machine rentals—other than IBM.
Machine rentals—IBM..
Postage and express..
Repairs and maintenance.
Microfilming

$607,863

83,843 58,910 48,634 43,119 42,182 27,981 26,853 20,349 18,544 17,623 16,177 14,369 13,151 13,041 3,969 3,527

$532,054

79,532 57,161 43,919 38,053 36,020 27,046 29,257 19,107 20,260 18,156

8,366 14,215 13,327 13,908 3,596 2,639

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