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									El-Hi Sales and Operating Data
Association of American Publishers Annual Sales Statistics Questionnaire
For Submitting Data of the Year 2008
RETURN BY: Friday, February 27, 2009
Instructions & Definitions
All data are received in strict confidence by Management Practice, Inc. and only combined data will be released. Excel Data File should be emailed to: aapmailbox@mpiweb.com; fax: 866-749-6826 Should you have any questions, please contact Richard Barclay at (203) 979-8710 or rbarclay@mpiweb.com. The AAP Industry Statistics Annual Report is divided into four sections: Consumer, El-Hi (K-12), Higher Education, and Professional. This questionnaire collects data on materials in the El-Hi category, which includes instructional materials created and marketed primarily (50% or more) for K-12 classroom adoption for use in formal educational settings. Unlike Trade and Professional Books, they are not normally marketed to the general juvenile or adult consumer. Do not duplicate data furnished on any other questionnaire in this survey.      Please furnish as much information as possible – actual data or good estimates. Indicate estimates by a lower case “e” following entry. Round dollars and units to the nearest thousand (omit 000). All data should be reported on a calendar year (January-December basis). If you are unable to provide details, please furnish totals. Sales and cost of sales data includes all sales of U.S. product to third parties, including sales to international subsidiaries.

If your firm undertook a merger, acquisition, or sale of part of its business during this reporting year, please treat the resulting increase or decrease in sales data schedules as follows: The seller should omit current and prior year results related to property sold. The purchaser should include the full year results (current and prior year) related to the acquired property even if the acquired property was not owned for the entire year.

General Instructions:
1. Net Sales: Actual billings to customers with all discounts, returns, and allowances deducted, and exclusive of transportation charges. Do not include consignments except of products recorded as sold. Allowances made for books taken under exchange terms should be reported or estimated. Fees paid to depositories for warehousing, shipping, and related services should not be deducted from sales but should be shown as expenses on Schedule 9. Include sales of editions or sheets abroad or to book clubs or prebinders, and remainder sales. Do not include income from subsidiary rights or from non-publishing activities such as printing plants, sales representation, or fulfillment service operations. 2. Sales to/by Foreign Subsidiaries or Affiliated Companies: Include sales to foreign subsidiaries or affiliated companies, but exclude sales by such companies.
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3. Interdivisional Sales: Include sales of El-Hi products produced or marketed by other divisions of your company, as follows: In instances where materials originated by one division are marketed (in whole or in part) by another, the originating division should be credited with the sales and charged with the cost of materials sold, as well as all other expenses. However, the division undertaking the marketing should be credited with a sales "commission" comparable to the selling expense the originating division would incur were it to use its own facilities or an outside agent. Accordingly, report the sales, cost of goods sold, and all related expense (including the appropriate selling expense) on the form used for the originating division. The "commission" should be credited to the selling division and should be shown under "Other Income" on its operating data record. 4. Co-Publication: Include sales consummated as part of your share of co-publication arrangements with other U.S. publishers. In instances where two U.S. publishers co-publish a work, each marketing a portion of the same edition or different editions, each publisher should report the income and applicable costs resulting from its share of the arrangement. 5. Distribution: Include sales of materials you distribute for other U.S. publishers. Distribution is defined as the acquisition of an edition from another publisher and the assumption of full marketing and fulfillment costs and responsibilities. The inventory remains the property of the originating publisher, who receives all income from sales and meets all publishing expenses. In such cases, the originating publisher should report all sales and related costs and expenses; the publisher rendering the distribution service should show the income from it net of related expenses under "Other." Distribution should not be confused with publisher-to-publisher sales in which one publisher purchases an edition of a work from another and markets and distributes the work under its own auspices (usually as the originating publisher's official distributor to a certain market area). In such cases, each publisher should report its sales and related costs and expenses. 6. Dual Editions: In instances where a text and trade, or a mail order and trade, or any similar dual edition arrangement exists, each edition should be reported separately in the divisional area for which it was prepared. 7. Editorial, Production, or Packaging Services: In instances where one publisher creates, edits, produces, or packages products for another, receiving a commission or service fee for so doing, such income net of all related expenses should be shown under "Other."

Schedule 1 – Total Net El-Hi Sales by Product Category
Line-by-line specific instructions: I. Basal Materials: This category includes all stand-alone instructional products and programs (including their components) designed to cover an entire course of curriculum (i.e. K-5 reading instruction). Materials sold by supplemental units but sold as basal, often referred to as “Alternative Core Basal” materials, should be reported in this category. The following grade-level breakdowns should be used when reporting basal materials:    1. Pre-K-6: Business units engaged primarily in publication of materials intended chiefly for elementary schools. While this is predominately grades Pre-K-6, any Pre-K-8 series should be included in this category. GRADES 6-12: Business units engaged primarily in publication of materials intended chiefly for the middle school market (grades 6-8). NON-SPECIFIED: This category is to be used if sales cannot be segregated into the above grade-level categories.

Basal Print Materials: a. b. Textbooks: Include all non-consumable hardbound and paperbound books, except Teacher’s Editions, which should be entered on line c. Workbooks: Include ONLY those workbooks that are part of a basal program. Paperbound and consumable. Also include here “Textbook-Workbooks” which are partially consumable, as well as practice sets and activity books in printed format. Other Basal Print Products: Include ONLY those materials that are part of a basal program. Includes Teacher’s Editions (including teacher’s editions of workbooks); Objective Tests (if sold separately, but if they are sold in combination with a textbook or workbook as one unit, the combined sales income should be shown under the textbook or workbook category); Duplicating Masters, and Teaching Aids (but exclude such items if distributed free or in combination with other products as one unit); and Advanced Placement text materials.

c.

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2.

Basal Instructional Systems Kits: This product category is for stand-alone instructional systems kits that typically contain all of the instructional materials for a complete classroom in a given subject (i.e., kindergarten kits). Basal Electronic and Audiovisual Media: Includes all basal instructional materials, which are principally non-print electronic products, such as diskettes, CD-ROMs, video disks, films and audio and video tape, but not including revenues from On-line Materials, which should be reported in item III. Such products may contain teacher guides, content lists or other printed items, provided the printed items are not among the principal components of the product. On-line Materials: This category includes revenues from instructional materials or content delivered via the Internet, on-line services or other electronic transmission. It does not include products delivered on diskette, CD-ROM or other tangible medium. Other Basal: This category should be used for sales of products that are part of a basal program and do not fit into the categories listed above.

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II. Supplemental Materials: This category includes all instructional products not designed to cover an entire course or curriculum as stand-alone materials. It does not include materials that are components of a basal program or materials that are considered “Alternative Core Basal” as defined above. 1. 2. Supplemental Print: Includes all supplemental materials in any print format. Supplemental Electronic and Audiovisual Media: Includes all supplementary instructional materials that are principally nonprint electronic products, such as diskettes, CD-ROMs, video disks, films and audio and video tape, but not including revenues from On-line Materials, which should be reported in item III. Such products may contain teacher guides, content lists or other printed items, provided the printed items are not among the principal components of the product. On-line Materials: This category includes revenues from instructional materials or content delivered via the Internet, on-line services or other electronic transmission. It does not include products delivered on diskette, CD-ROM or other tangible medium. Other Supplemental Products: Includes supplemental products that do not fit into any of the above categories.

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III. Total Instructional Materials: Sum lines I-5, II-4, and III (automatic calculation). IV. Net Sales of Spanish Language Materials: Report sales of Spanish-language Pre-K-12 basal and supplemental materials for 2007. Include materials written in Spanish, as opposed to materials on the subject of Spanish language, which should be reported on Schedule 2, Line 8.

Schedule 2 – Net Sales of Basal and Supplemental Materials by Subject Category
Net sales should be reported by discipline and grade level. Use the same criteria as used in Schedule 1 to report information by basal grade levels or supplemental. Additionally, the total net sales should agree to the amount reported on Schedule 1.

Schedule 3 – Net Sales of Basal Materials by Geographic Category
Net sales should be reported by geographic location and grade level. Use the same criteria as used in Schedule 1 to report information by basal grade levels or supplemental. Additionally, the total net sales should agree to the amount reported on Schedule 1 and 2. For supplemental sales, only totals by territory need be reported. Every reasonable effort should be made to place sales into the geographical area of final destination. Therefore, sales of Depositories should, where necessary, be redistributed, utilizing good estimates if need be, and drop shipments such as to jobbers’ regional branches, should be shown in the area shipped to rather than the central billing address used. Sales to the Armed Forces should be listed on the Military line and sales to U.S. Possessions (including Puerto Rico) should be listed in the proper geographical region.

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Schedule 4 – Operating Data
All Operating Data tables represent total combined basal and supplemental sales. Line-by-line specific instructions: 1. 2. Gross Sales: Include net sales as defined in Schedule 1 plus returns and allowances (as defined in line 2 below). Returns and Allowances Total: Credits against gross sales issued for merchandise returned or to make adjustments. Include “exchange allowances” as a reduction of sales. Do not show amounts reserved, but actual, credited totals only. Exclude all transportation charges. (Do not include credits for billing and shipping errors which should be eliminated by adjusting gross sales.) a. Actual Returns b. Provision for Returns Net Sales: As defined in Sales Questionnaire Schedule 1. The net sales reported here should agree to the net sales reported in Schedules 1, 2, and 3. Shipping & Handling and Other Charges to Customer EITF 021 Deferral Total Revenue Cost of Goods Sold: The sum of manufacturing costs and royalties applicable to goods sold, including accompanying teaching aids, as well as landed cost of imports and acquisition cost of distributed editions from Schedule 5, Line 5. Gross Margin: Line 3 less Line 4 (automatic calculation). Plant Expense/Amortization: Data requested here are on an accrual basis. Report only that amount of plant cost charged to P&L, written off or amortized during the reporting year. Other Income a. General: Income received from subsidiary rights, reprints and book club royalties, sales of English language rights or translations abroad (except for item b below) and permission fees, after deduction of authors’ shares. Also income from mailing list rentals, from sales representation or fulfillment service operations on behalf of other publishers (net of related expenses), etc. Include profit contribution of commissions earned for selling or fulfillment services provided to other divisions in your company. Commissions so earned should first be shown as offsets to expenses on the appropriate Schedules (7, 8, 9, 10) and only the profit should be shown here. b. From Foreign Subsidiaries: For publishers operating subsidiary companies abroad. Should not be used by others, who should report income from foreign rights sales under item a above. Include here rights income from sales of major or minor adaptions (i.e. translations, bilingual editions, or foreign country editions of the original text) sold through or by foreign agents, subsidiaries, or affiliates. Publishing and Operating Expense a. Editorial Expense: From Schedule 6, Line 5. b. Production Expense: From Schedule 7, Line 5. c. Marketing Expense: From Schedule 8, Line 3. d. Fulfillment Expense: From Schedule 9, Line 5. e. General and Administrative Expense: From Schedule 10, Line 4. Income (Loss) from Operations: Line 5 less Line 6 plus Line 7 less Line 8 (automatic calculation).

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Schedule 5 – Cost of Goods Sold
All Operating Data tables represent total combined basal and supplemental sales.
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Line-by-line specific instructions: 1. Paper, Printing and Binding a. Paper, printing and binding costs of items sold: Include the cost of paper, printing and binding of the products and the charges for the original cartons and containers supplied by the manufacturer. b. Inbound Freight: The cost of shipment of products from the manufacturer to the publishers’ first storage location. c. Inventory Writedowns: The cost of inventory that has been devalued during the reporting year and charged to the reporting year as an expense. Desk and Gratis Copies: Product furnished at no charge with orders, including cost of transportation. Complementary copies and samples should be reported on Schedule 8, Line 2ei. Royalties: Royalties resulting from sales during the reporting year, to authors, other publishers, etc. Include cost of advances written off during the reporting year. Total Cost of Goods Sold: The sum of lines 1 through 3. This total automatically transfers to Schedule 4, Line 4.

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Schedule 6 – Non-Capitalized Editorial Expense
All Operating Data tables represent total combined basal and supplemental sales. Line-by-line specific instructions: 1. Salaries: Include payroll costs such as salary, vacation and holiday pay, bonuses, and current profit sharing for procurement, soliciting, manuscript and copy editors, readers and all other editorial staff. Include salaries for all members of the editorial department including editorial management and clerical staff. Benefits: Pensions, deferred profit sharing, hospitalizations and group insurance, payroll taxes and payroll insurance. Outside Editorial Expense: Compensation to freelance and procurement editors, copy and manuscript editors, indexers, readers, etc. Include fees paid to experts for manuscript evaluation. Outside editorial expense should include payments made for manuscript writing and all fees in lieu of royalty. Travel and Entertainment: All editorial travel and entertainment expense, including attendance at professional meetings, by staff or freelance editors. Other: Reference and research materials, stationery and supplies, outside editorial expense (non-capitalized) etc. Do not include occupancy expense, or maintenance, overhead, utility or telephone charges, which are reported in Schedule 10. Total: The sum of lines 1 through 5. This total automatically transfers to Schedule 4, Line 8a.

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Schedule 7 – Non-Capitalized Production Expense
Production Expense in general is defined as the cost of labor incurred by the publisher in having products manufactured. It is distinguished from Manufacturing Expense which involves the materials cost of the products themselves. All Operating Data tables represent total combined basal and supplemental sales. Line-by-line specific instructions: 1. Salaries: Include payroll costs such as salary, vacation and holiday pay, bonuses, and current profit sharing for all members of the art/production/purchasing departments including management and clerical staff. Staff positions involved would be those of the production manager, his or her assistants, art editors, in-house artists and designers, as well as of personnel engaged in purchasing paper, printing and binding, and in maintaining liaison with manufacturers and suppliers.

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2. 3.

Benefits: Pensions, deferred profit sharing, hospitalizations and group insurance, payroll taxes and payroll insurance. Non-Capitalized Outside Production Expense: Compensation to freelance designers and production personnel. If you employ an outside production service, include its charges here. Also include production services provided by your printer or manufacturer. Other: Reference materials, art and other supplies, stationery, travel and entertainment by departmental and freelance staff, etc. Do not include occupancy expense or maintenance, overhead, utility or telephone charges, which are reported in Schedule 10. Total: The sum of lines 1 through 4. This total automatically transfers to Schedule 4, Line 8b.

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Schedule 8 – Selling and Marketing Expense
All Operating Data tables represent total combined basal and supplemental sales. Line-by-line specific instructions: 1. Selling Expense a. Salaries and Benefits: Include payroll costs such as salary, vacation and holiday pay, bonuses, and current profit sharing for sales representatives, consultants, departmental managers, and direct sales office staff. b. Bonuses and Commissions: Include sales representatives, staff and outside consultants, and departmental managers. c. Travel and Entertainment: Include sales representatives, consultants, departmental managers, and departmental staff. d. Other: Selling expenses not enumerated in lines a through c above. Do not include occupancy, overhead or telephone charges which are to be reported in Schedule 10. Also do not include depository expense which is shown in Schedule 9. Promotion Expense a. Salaries and Benefits: Include marketing manager, product managers, market research and other professional staff, advertising manager and staff, publicity and exhibit staff. b. Exhibits: Costs of national, state and local exhibits, including set-up, travel, shipping, space rental and related entertainment costs. c. Space Advertising: The cost of space and preparation of advertising in consumer and specialized media. Report TV and radio advertising here also. Include fees paid to advertising agencies, outside artists and freelance copywriters. d. Catalogs and Brochures: Cost of preparing, printing, and mailing catalogs and brochures. Also the cost of promotional materials used by salesmen and consultants. However, if copies of entire books or complete products are given away, include the cost under item e below. Teaching aids, which normally accompany products, should also be excluded here because they are considered to be parts of the products sold. e. Pre-Sale Free Copies i. Cost of Complimentary Copies and Samples: Products furnished pre-sale at no charge, including those for review, for examination, and/or as desk copies, and to exhibits. (Gratis products should be shown on Schedule 5, line 2.) ii. Transportation: Enter the delivery charges incurred in shipping the free copies shown on line i immediately above. f. Other Promotion: The cost of promotional activities not covered above. Do not include occupancy, overhead, or telephone charges, which should be reported in Schedule 10. Total Sales and Marketing Expense: This total automatically transfers to Schedule 4, Line 8c.

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Schedule 9 – Warehouse and Fulfillment Expense
Warehouse and Fulfillment Expense is defined as the direct or amortized cost of filling a customer’s order after it has been placed. All Operating Data tables represent total combined basal and supplemental sales. Line-by-line specific instructions: 1. Order Fulfillment and Customer Service: Direct and allocated costs associated with order editing, data entry, invoicing and handling customer inquiries and complaints, including salaries, benefits and information technology/systems expense related to such activities.

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2.

Net Transportation Charges: All shipping charges except those to first point of shipment (be it warehouse or bindery), which are reported in Schedule 5 as part of manufacturing cost. Depository Expense: Fees or charges made by depositories for warehousing, shipping and related services. Should be shown here even if they are deducted from remittance made by depositories, in which case they should also not be deducted from sales. Other: All warehouse and fulfillment expense not listed in lines 1, 2, or 3 above, including salary and benefits, rental and depreciation of equipment, cost of packing materials and supplies, and occupancy costs (including rent, mortgage expense, depreciation, real estate taxes, insurance, light and power, maintenance and repair) related to warehousing and shipping activity, other than fees or charges paid to depositories. Total: The sum of lines 1 through 4 above. This total automatically transfers to Schedule 4, Line 8d.

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Schedule 10 – General and Administrative Expense
All Operating Data tables represent total combined basal and supplemental sales. Line-by-line specific instructions: 1. Occupancy (Except Warehousing): Expenses (whether direct or allocated) associated with facilities used in business (other than warehouses), including rent, mortgage expense (including interest), depreciation, real estate taxes, insurance, light and power, maintenance and repair. Occupancy costs of warehouses should be included shown in Schedule 9. Information Technology (IT): Report that portion of expense (whether direct or allocated) for IT-related systems devoted to general and administrative activities. Include both internal costs and amounts paid to independent contractors. Other: Include all G&A Expense not reported in lines 1 and 2 above, including: management salaries and benefits; accounting salaries and benefits (excluding amounts reported as fulfillment expense in Schedule 9 or as IT expense on line 2 above), general office salaries and benefits not reported elsewhere; general travel and entertainment expense not reported elsewhere; taxes, other than payroll and income taxes; other general and administrative expense such as audit fees, legal fees, payment to management consultants, telephone charges, stationery and supplies, bad debts written off or additions to bad debt reserve, collection expense, legal settlements, insurance (except as related to occupancy or reported elsewhere as employee benefits) and depreciation of office equipment. Total: The sum of lines 1 through 3 above. This total automatically transfers to Schedule 4, Line 8e.

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Schedule 11 – Days Sales Outstanding
Starting at December 31 and working backwards, add the daily net sales until the total equals the December 31 gross accounts receivable (excluding provision for returns and doubtful accounts). Count the number of days and enter in the appropriate section.

Schedule 12 – Inventory Turnover
Inventory turnover equals December year-to-date manufacturing costs divided by average inventory. December year-to-date manufacturing cost equals PPB costs, costs of samples, free with order costs, and manufacturing costs to foreign subsidiaries. Average inventory equals sum of inventory for twelve month-ends (January through December) divided by twelve. Include the reserve for obsolescence and exclude the inventory impact of reserve for returns.

Schedule 13 – Productivity Measures
Report Revenue per Headcount. Headcount is defined as the number of employees on the payroll as of December 31, 2007.

Schedule 14 – Prepublication Investment
Prepublication costs are thoses costs/expenses incurred during the development of a product or program that are capitalized to the balance sheet and amortized over the life of the product or program.
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