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of J.K. Lasser and Co. In this manner, full responses were received from 13 firms. As spelled out in Exhibit 5-D in the main report, these 13 firms represented 16 of the 19 firms in the Glover report of 1965, as three had merged in the interim period. This overlap provides acceptable reliability for year-to-year comparisons.

The questionnaire itself was designed with great care, in consultation with financial executives of various recording firms. In this way, it was assured that proper financial categories and definitions were employed, and that the questions asked could be answered. The questionnaire was similar to the one employed for the survey reported in the 1965 Glover report.

Representativeness of the Sample

• For years 1967 to 1974, inclusive, financial survey data was provided, as follows:

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All 13 companies reporting for years 1971-74 were unable to report for the full period 1967-74 because some were not in business for the full period; some did not maintain the requisite historical data; and still others were participants in vergers and acquisitions rendering historical data misleading or unavailable.

The survey en compasses firms which account for a low of 43.08 of industry sales in 1968 and a high of 63.81 in 1974. Such large sample size works to make sample results representative of the universe even when the sample is not known to be random in a scientific sense, as is the case here. Moreover, the data presented are as representative as it was possible to

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More press of the Survey

The purvey, as conducted, is the most thorough and comprehensive study of the financial condition of the recording industry that has ever been under. tai (w the aception of the earlier survey we conducted for the 1965 hearing) or that is available from any source.

The materials associated with this lengthy financial survey are provided in the following pages in four parts:

PART 1:

PART II:
PART 111:

Instructions to companies Responding to the
1973 Survey.
The 1973 Questionnaire Foras.
The 1974 Update of the Survey · Questionnaire
Forns.

PAXT IV:

Consolidated Financial Statement of the
Surveyed Companies.

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Exhibit S, cont'd

PART I
1973 SURVEY OF RECORDING COMPANIES:
INSTRUCTIONS FOR COMPLETING QUESTIONNAIRE

MEMORANDUM

January 15, 1973

TO:

Companies in the Record and Tape Manufacturing Industry

FROM:

Cambridge Research Institute, Cambridge, Massachusetts
Telephone: (617) 864-1350

SUBJECT: Instructions for Completing Financial Reporting Forms

The purpose of gathering financial data from your firm and others is to develop a detailed financial picture of the record and tape manufacturing industry as a basis for analyzing the economic effects of proposed changes in the copyright law. This analysis will be presented during Congressional hearings concerning the copyright law, in order to prepare properly for hearings in mid-March, we need these forms to be completed and returned by February 9th. Many companies partici. pated in a similar survey in 1905, preparatory to Congressional hearings At that time.

The following procedure has been established so your company financial data will be handled in a confidential manner:

Alter you have completed the enclosed forms, keep one
set for your files and send one se: to the CPA firm of
J. K. Lasser & Company. 1790 Broadway. New York, New
York 10019. (You may use the preaddressed envelope
that is enclosed. )

As you will notice, your forms have been pre-coded
with a company number known oniv to Cambridge
Research Institute. The CPA firm of J. K. Lasser k
Company will not know the name of your company. In
this way, your company's name will not be associated
with your financial data,

The financial data you send to the accountants will be combined with data from other firms, which will preve nt disclosure of individual company information. Your reporting forms wil be destroyed, although you may wish to save your copy of the forms.

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In filing out the forms, please follow these two basic requests:

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Informaton houd be provided on a calendar year basis, If possible. 1..mat.sa.. avat.ab.e only on a fiacal year basis, please indicate on w date your t... a year enda, Aiso, indicate any change. in fiscal years that in tred during the 1965. 72 periud.

II you were sot in busines for any year between 1965 and 1972, en sto fact under the appropriate year(*). II for any other tant. 1 p .tie to report data for a year... !nabert .... but ... Suase try of cours...write in the reason diner the a

Car 4. to develop a con.itont financial picture of record and tas mandatar ng sperations in the l'nited States. For this purpose, Para ampmanla«t**ing 1. defined a. the production and manuto *..& wring, whether on recordo or tape., and their ... to €.**.9. ST4.att . To anti. Ipate ume at your questions,

*****, ****are incoded from account on the financla: reporting far . .. ar. attached.

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SUMMARY REPORT and (2) COST of GOODS SOLD REPORT

(Comments on Accounts)

Gross Sales

(Gross sales should include all domestic and export sales of records and tapes. Since record clubs are being considered as "retailing" or "distributing" operations for our purposes, sales to, not by, record clubs will be reported in gross sales just as sales made to any other type of distributive organization. If your company sells through a wholly owned sales subsidiary, sales, as well as the expenses of your sales subsidiary, should be included in your financial reporting of record manulacturing operations. If your company sells or markets records through partially or wholly owned distributors, financial results of the distributor organization would not be reported, although sales to distributors would be. In addition, income from activities other than record manu. facturing, such as publishing, should not be included in the financial reporting forms, although income from leased facilities or custom pressing of records for others will be accounted for in other accounts. )

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(Include all returns on shipments regardless

of whether the returns are then durnped or destroyed. ) Exchanges, Allowances, Cash Discounts, Bad Debia, State Exu.se Taxes

(These items will be deducted from Gross
Sales to arrive at a net sales figure.)

(Bad debts arising from record club
operation should be included in this
account. Record club bad debt, are
included in record manufacturing opera-
tions so as to avoid a misleading picture
of bad debts in those cases where record
manufacturers sell to their own record
clubs and hence avoid the bad debts
associated with these sale.. )

(Also, for 1965 include any Federal excise
taxes paid and footnote the amount.)

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