Books Program Performance Review

Karen RosenblumBooks Subcommittee Meeting6 January 2009

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Points of Review

• Key Indicator Update• Financial Performance

Revenue Expenses Margin

• Looking Forward

3

Book Sales

Net Books Sold

20000

21000

22000

23000

24000

25000

26000

27000

FY04 FY05 FY06 FY07 FY08

Net Books Sold

• Overall, net Book sales have grown 15% over the past five years, with 8% growth in FY08 alone.

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Sales Mix

• From FY04 to FY07, the average books sold by series was:

•Education: 55% Progress: 17% Library of Flight: 28%

• In FY08, the average books sold by series was:

•Education: 46% Progress: 15% Library of Flight: 39%

Net Books Sold

0%

20%

40%

60%

80%

100%

FY04 FY05 FY06 FY07 FY08

Library of Flight

Progress

Education

5

New Books Published

New Books by Series

0

5

10

15

20

25

30

FY04 FY05 FY06 FY07 FY08

Library of Flight

Progress

Education

• On average, 17 new books have been published per year over the last five years.

• In both FY07 and FY08, 16 new books were published.

• The number of new Education Series titles introduced has fallen to its lowest level since FY05, with only four published in FY08.

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Reprints Published

Reprints

0

5

10

15

20

25

30

35

40

FY04 FY05 FY06 FY07 FY08

Reprints

• During FY08, changes in Publications staff caused some delays in monitoring book inventory and issuing reprints.

• FY09 reprint levels are expected to return to normal.

• During FY09, we will begin tracking number of reprinted units to get another perspective on reprint activity, particularly as we use print-on-demand, short-run printing, and e-versions to fulfill specialty and/or legacy demand.

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Revenue Trends

Books Revenue by Series

0200,000400,000600,000800,000

1,000,0001,200,0001,400,0001,600,0001,800,0002,000,000

FY04 FY05 FY06 FY07 FY08

$

Library of Flight

Progress

Education

• Books experienced a 17% growth in revenue in FY08, led by significant increase in the Library of Flight series.

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Revenue Impact of Pratt & Whitney

Books Revenue without Pratt & Whitney Sales

0

200,000

400,000

600,000

800,0001,000,000

1,200,000

1,400,000

1,600,000

1,800,000

FY04 FY05 FY06 FY07 FY08

LibraryofFlight - no P&W

Progress

Education

• Without the Pratt & Whitney sales:

• Library of Flight series revenue would have still grown by 26% over prior year led by NASA collaboration titles of Peebles and Merlin.

• Total Books FY08 revenue would have been at the same levels as FY07.

• Although Net Books Sold (which excludes the Pratt & Whitney bulk sale) grew 8% in FY08, revenue is flat due to the series sales mix in FY08. In general, Library of Flight books sell at a lower average price than Education and Progress books.

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Direct Expenses

• Direct expenses include costs for printing, reprinting, freelance editors, outside production, shipping, promotion and royalties.

• Direct expenses increased 20% in FY08 over prior year and are 10% higher than spending levels in FY04.

• However, removing eBook development, overall direct expenses would have been just 4% higher than in FY07.

• When Pratt & Whitney expenses are also removed, overall expenses would be 6% less than FY07, due to lower reprint expenses and lower mix of Education series books.

Books Direct Expenses

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

FY04 FY05 FY06 FY07 FY08

$

eBook Development

Library of Flight

Progress

Education

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Direct Margin

Direct Margin by Series

0100,000200,000300,000400,000500,000600,000700,000800,000900,000

1,000,000

FY04FY05

FY06FY07

FY08

FY08no

PW

Library of Flight

Progress

Education

• Library of Flight experienced a 265% increase in direct margin in FY08. Even without Pratt & Whitney book, direct margin for Library of Flight grew 79% led by strong sales from the Peebles & Merlin title.

• In FY08, Progress series direct margin increased 26% led by strong backlist sales.

• Education series direct margin decreased 11% in FY08 due to fewer new books published and higher co-publication costs and currency fluctuation challenges.

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All Expenses

Books Expense Breakdown

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

FY04 FY05 FY06 FY07 FY08

$

Indirect Expenses

Direct Expenses

• When evaluating the performance of the Books program, indirect expenses must also be considered.

• For this analysis, indirect expenses include salaries, payroll taxes, benefits, and allocations for fulfillment, catalog, and publications and service center.

• Overall, indirect expenses grew 10% in FY08 and are equal to 75% of direct expenses in FY08.

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Indirect Expenses

Indirect Expenses

0

100,000

200,000

300,000

400,000500,000

600,000

700,000

800,000

900,000

FY04 FY05 FY06 FY07 FY08

$

Fulfillment Alloc

Catalog Alloc

PSC Alloc

Salaries/Benefits

• Salaries and Benefits for Books experienced a 17% growth in FY08, primarily due to increases in benefit premiums across the Institute.

• Publications and Service Center (PSC) and Catalog continue to monitor and control direct costs.

• Fulfillment expenses are directly related to sales managed through Books International.

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Put It All Together…Net Margin

• The Books program improved its net margin by 28%, even after absorbing expenses for eBook development.

• If eBook expenses are removed, Books Net Margin would have been positive in FY08.

All Books

(250,000)

(200,000)

(150,000)

(100,000)

(50,000)

0

50,000

100,000

150,000

200,000

FY04 FY05 FY06 FY07 FY08 FY08noEB

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Putting It All Together: By Series

Net Margin by Series

(250,000)

(200,000)

(150,000)

(100,000)

(50,000)

0

50,000

100,000

150,000

200,000

FY04 FY05 FY06 FY07 FY08

Education

Progress

Library of Flight

eBook

ALL

• Congratulations to Library of Flight in FY08!

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Looking Forward

• Focus on returning Education Series titles to previous levels• Reduce percentage of copublications• Maintain number of Progress and Library of Flight new titles• Continue refining new book selection criteria and optimal series

mix• Monitor and assess eBook impact

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