Books Program Performance Review

Books Subcommittee Meeting5 January 2010Aerospace Sciences Meeting, Orlando, Florida

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Points of Review

• Key Indicator Update• Financial Performance

Revenue Expenses Margin

• Looking Forward

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Book Sales

• Although net books sold declined by 8% in FY09, overall, sales have grown 6% since FY04.

• The increase in FY08 was due in large part to two contracted titles with NASA (Peebles and Merlin).

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Sales Mix

• Since FY04, the average mix of net Books sold by series is:

• Education: 53%• Progress: 18%• Library of Flight: 29%

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New Books Published

• In FY09, 20 new books were published:

• Education: 5• Progress: 6• Library of Flight: 9

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Reprints Published

• During FY09, the number of reprinted titles reached a peak of 42.• In FY08, changes in Publications staff caused some delays in monitoring book inventory and issuing reprints.• Of the 10,300 units reprinted in FY09, the breakdown by series is:

• Education: 67%• Progress: 5%• Library of Flight: 28%

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Revenue Trends

• In FY09, Books experienced a 17% decrease in sales, led by Library of Flight.

• However, if the revenue impact from the Pratt & Whitney contract is removed for FY08 from the Library of Flight series, total Books revenue would have declined just 4%.

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Direct Expenses

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

• Overall, Books direct expenses declined 14% versus FY08, although Library of Flight expenses actually increased in FY09 due to the large number of new books published, which included three co-publications and a more complex design for the Howe-Sherwood title.

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Direct Margin

• Direct Operating Margin equals Revenue less Direct Expenses.

• In FY09, in total, Books generated a positive direct margin of $558K.

• In FY09, both Education and Progress series generated positive direct margins. Library of Flight had a negative direct margin, due to the number, nature and timing of new titles published.

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Indirect Expenses

• Indirect expenses include salaries, benefits, general/administrative costs and shared services allocations.• The comparison of indirect expenses is not consistent year to year due to modifications in financial reporting practices to allocate all indirect cost to all projects.• Fulfillment expenses are those processing, storage, and postage fees associated with Books International (BI).• Publications Process is an expense account under VP Publications and is allocated to Books and Journals.• In FY09, a total of $851K in expenses was charged to Publications Process. That was down from $1.3M in FY08. The FY09 charges consisted of $31K in direct costs that covered staff travel ($13K), committee expenses ($15K) and miscellaneous expenses like postage, society dues, and professional subscriptions. Remaining charges included Labor/Benefits ($358K) and allocations ($462K), which included office services and IT, in addition to the allocations in the graph above.

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Put It All Together…Net Margin

• Net Margin equals Revenue less Direct Costs less Indirect Costs (salary+allocations).

• In FY09, Books in total had a negative net margin of $1.3M.

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Looking Forward

• Focus on returning Education Series titles to previous levels• Leverage e-Book investment.• Reduce percentage of co-publications• Maintain number of Progress and reduce number of new Library

of Flight • Continue refining new book selection criteria and optimal series

mix

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