EXPLANATION OF TERMS

=>GENERAL

This appendix is in two sections. Section 1 includes items requested of all
establishments mailed census of manufactures forms including annual survey
of manufactures (ASM) forms. Note that this section also includes several
items (number of establishments and companies, value added, classes of
products, and specialization and coverage ratios) not included on the
report forms but derived from information collected on the forms. Section 2
covers supplementary items requested only from establishments included in
the ASM sample.  Results of the supplementary ASM inquiries are included in
file MC92F3C.dbf of this report.

=>SECTION 1.  ITEMS COLLECTED OR DERIVED BASED ON ALL CENSUS OF
  MANUFACTURES (INCLUDING ASM) REPORT FORMS

->Number of establishments and companies.

A separate report was required for each manufacturing establishment (plant)
with one employee or more. An establishment is defined as a single physical
location where manufacturing is performed.  A company, on the other hand,
is defined as a business organization consisting of one establishment or
more under common ownership or control.

If the company operated at different physical locations, even if the
individual locations were producing the same line of goods, a separate
report was requested for each location. If the company operated in two or
more distinct lines of manufacturing at the same location, a separate
report was requested for each activity.

An establishment not in operation for any portion of the year was requested
to return the report form with the proper notation in the "Operational
Status" section of the form. In addition, the establishment was requested
to report data on any employees, capital expenditures, inventories, or
shipments from inventories during the year.

In this report, data are shown for establishments in operation at any time
during the year. A comparison with the number of establishments in
operation at the end of the year will be provided in the Introduction of
the General Summary subject report.

->Employment and related items.

The report forms requested separate information on production workers for a
specific payroll period within each quarter of the year and on other
employees as of the payroll period which included the 12th of March.

->All employees.

This item includes all full-time and part-time employees on the payrolls of
operating manu- facturing establishments during any part of the pay period
which included the 12th of the months specified on the report form.
Included are all persons on paid sick leave, paid holidays, and paid
vacations during these pay periods. Officers of corporations are included
as employees; proprietors and partners of unincorporated firms are
excluded. The "all employees" number is the average number of production
workers plus the number of other employees in mid-March. The number of
production workers is the average for the payroll periods including the
12th of March, May, August, and November.

->- Production workers.

This item includes workers (up through the line-supervisor level) engaged
in fabricating, processing, assembling, inspecting, receiving, storing,
handling, packing, warehousing, shipping (but not delivering), maintenance,
repair, janitorial and guard services, product development, auxiliary
production for plant's own use (e.g., power plant), recordkeeping, and
other services closely associated with these production operations at the
establishment covered by the report.  Employees above the working-
supervisor level are excluded from this item.

->- All other employees.

This item covers nonproduction employees of the manufacturing establishment
including those engaged in factory supervision above the line-supervisor
level. It includes sales (including driver salespersons), sales delivery
(highway truckdrivers and their helpers), advertising, credit, collection,
installation and servicing of own products, clerical and routine office
function, executive, purchasing, financing, legal, personnel (including
cafeteria, medical, etc.), professional, and technical employees. Also
included are employees on the payroll of the manufacturing establishment
engaged in the construction of major additions or alterations to the plant
and utilized as a separate work force.

In addition to reports sent to operating manufacturing establishments,
information on employment during the payroll period which included March 12
and annual payrolls also was requested of auxiliary units (e.g.,
administrative offices, warehouses, and research and development
laboratories) of multiestablishment companies. However, these figures are
not included in the totals for individual industries shown in this report.
They are included in the General Summary and geographic area reports as a
separate category.

->Payroll.

This item includes the gross earnings of all employees on the payrolls of
operating manufacturing establishments paid in the calendar year 1992.
Respondents were told they could follow the definition of payrolls used for
calculating the Federal withholding tax. It includes all forms of
compensation, such as salaries, wages, commissions, dismissal pay, bonuses,
vacation and sick leave pay, and compensation in kind, prior to such
deductions as employees' Social Security contributions, withholding taxes,
group insurance, union dues, and savings bonds. The total includes salaries
of officers of corporations; it excludes payments to proprietors or
partners of unincorporated concerns. Also excluded are payments to members
of Armed Forces and pensioners carried on the active payrolls of
manufacturing establishments.

The census definition of payrolls is identical to that recommended to all
Federal statistical agencies by the Office of Management and Budget. It
should be noted that this definition does not include employers' Social
Security contributions or other nonpayroll labor costs, such as employees'
pension plans, group insurance premiums, and workers' compensation.

The ASM provides estimates of employers' supplemental labor costs, both
those required by Federal and State laws and those incurred voluntarily or
as part of collective bargaining agreements. (Supplemental labor costs are
explained later in this documentation.)

As in the case of employment figures, the payrolls of separate auxiliary
units of multiestablishment companies are not included in the totals for
individual industries or industry groups.

->Production-worker hours.

This item covers hours worked or paid for at the plant, including actual
overtime hours (not straight-time equivalent hours). It excludes hours paid
for vacations, holidays, or sick leave.

->Cost of materials.

This term refers to direct charges actually paid or payable for items
consumed or put into production during the year, including freight charges
and other direct charges incurred by the establishment in acquiring these
materials. It includes the cost of materials or fuel consumed, whether
purchased by the individual establishment from other companies, transferred
to it from other establishments of the same company, or withdrawn from
inventory during the year.

The important components of this cost item are (1) all raw materials,
semifinished goods, parts, containers, scrap, and supplies put into
production or used as operating supplies and for repair and maintenance
during the year, (2) electric energy purchased, (3) fuels consumed for
heat, power, or the generation of electricity, (4) work done by others
on materials or parts furnished by manufacturing establishments (contract
work), and (5) products bought and resold in the same condition.  (See
discussion of duplication of data below.)

->Specific materials consumed.

In addition to the total cost of materials, which every establishment was
required to report, information also was collected for most manufacturing
industries on the consumption of major materials used in manufacturing. The
inquiries were restricted to those materials which were important parts of
the cost of production in a particular industry and for which cost
information was available from manufacturers' records. Information on the
establishments consuming less than a specified amount (usually $25,000) of
a specific material were not requested to report consumption of that
material separately.  Also, the cost of materials for the small
establishments for which either administrative records or short forms were
used was imputed as "not specified by kind." (See Census of Manufactures
for the importance of administrative records in the industry.)

->Value of shipments.

This item covers the received or receivable net selling values, f.o.b.
plant (exclusive of freight and taxes), of all products shipped, both
primary and secondary, as well as all miscellaneous receipts, such as
receipts for contract work performed for others, installation and repair,
sales of scrap, and sales of products bought and resold without further
processing. Included are all items made by or for the establishments from
materials owned by it, whether sold, transferred to other plants of the
same company, or shipped on consignment. The net selling value of products
made in one plant on a contract basis from materials owned by another was
reported by the plant providing the materials.

In the case of multiunit companies, the manufacturer was requested to
report the value of products transferred to other establishments of the
same company at full economic or commercial value, including not only the
direct cost of production but also a reasonable proportion of "all other
costs" (including company overhead) and profit. (See discussion of
duplication of data below.)

->Individual products.

As in previous censuses, data were collected for most industries on the
quantity and value of individual products shipped. In the 1992 census
program, information was collected on the output of almost 11,000
individual product items. The term "product," as used in the census of
manufactures, represents the finest level of detail for which output
information was requested. Consequently, it is not necessarily synonymous
with the term "product" as used in the marketing sense. In some cases, it
may be much more detailed and, in other cases, it is more aggregative. For
example, "pharmaceutical preparations" was distributed into over 100 terms;
whereas, "motor gasoline" was reported as a single item.

Approximately 6,300 of the product items were listed separately on the 1992
census report forms. Data for about 4,500 products were obtained in the
monthly, quarterly, or annual surveys comprising the Current Industrial
Reports series of the Census Bureau. Totals for the year 1992 for these
items, as derived from the commodity surveys, are shown in the "products
shipped" table.

The list of products for which separate information was collected was
prepared after consultation with industry and government representatives.
Comparability with previous figures was given considerable weight in the
selection of product categories so that comparable 1987 information is
presented for most products.

Typically, both quantity and value of shipments information were collected.
However, if quantity was not significant or could not be reported by
manufacturers, only value of shipments was collected.

Shipments include both commercial shipments and transfers of products to
other plants of the same company. For industries in which a considerable
portion of the total shipments is transferred to other plants of the same
company, separate information on interplant transfers also was collected.
Moreover, for products that are used to a large degree within the same
establishment as materials or components in the fabrication of other
products, total production and often consumption of the item within the
plant was collected. Typically, the information on production also was
collected for products for which there are significant differences between
total production and shipments in a given year because of wide fluctuations
in finished goods inventories. Other measures of output of products with
long production cycles were used as appropriate and feasible.

->Classes of products.

To summarize the product information, the separate products were aggregated
into classes of products that, in turn, were grouped into all primary
products of each industry. The code structure used is a seven-digit number
for the individual product, a five-digit number for the class of product,
and a four-digit number for the total primary products in an industry. (See
Census of Manufactures, Industry Classification of Establishments, for
application of the coding structure to the assignment of SIC codes for
establishments.)

In the 1992 census, the 11,000 products were grouped into approximately
1,500 separate classes on the basis of general similarity of manufacturing
processes, types of materials used, etc. However, the grouping of products
was affected by the economic significance of the class and, in some cases,
dissimilar products were grouped because the products were not sufficiently
significant to warrant separate classes.

->Duplication in cost of materials and value of shipments.

The aggregate of the cost of materials and value of shipments figures for
industry groups and for all manufacturing industries includes large amounts
of duplication since the products of some industries are used as materials
by others. This duplication results, in part, from the addition of related
industries representing successive stages in the production of a finished
manufactured product.  Examples are the addition of flour mills to bakeries
in the food group and the addition of pulp mills to paper mills in the
paper and allied products group of industries. Estimates of the overall
extent of this duplication indicate that the value of manufactured products
exclusive of such duplication (the value of finished manufactures) tends to
approximate two-thirds of the total value of products reported in the
annual survey.

Duplication of products within individual industries is significant within
a number of industry groups, e.g., machinery and transportation industries.
These industries frequently include complete machinery and their parts. In
this case, the parts made for original equipment are materials consumed for
assembly plants in the same industry.

Even when no significant amount of duplication is involved, value of
shipments figures are deficient as measures of the relative economic
importance of individual manufacturing industries or geographic areas
because of the wide variation in ratio of materials, labor, and other
processing costs of value of shipments, both among industries and
within the same industry.

Before 1962, cost of materials and value of shipments were not published
for some industries which included considerable duplication.  Since then,
these data have been published for all industries at the U.S. level and
beginning in 1964, for all geographic levels.

->Value added by manufacture.

This measure of manufacturing activity is derived by subtracting the cost
of materials, supplies, containers, fuel, purchased electricity, and
contract work from the value of shipments (products manufactured plus
receipts for services rendered). The result of this calculation is adjusted
by the addition of value added by merchandising operations (i.e., the
difference between the sales value and the cost of merchandise sold without
further manufacture, processing, or assembly) plus the net change in
finished goods and work-in-process between the beginning- and end-of-year
inventories.

For those industries where value of production is collected instead of
value of shipments (see footnote in table 1a), value added is adjusted only
for the change in work-in-process inventories between the beginning and end
of year. For those industries where value of work done is collected, the
value added does not include an adjustment for the change in finished goods
or work-in-process inventories.

"Value added" avoids the duplication in the figure for value of shipments
that results from the use of products of some establishments as materials
by others. Value added is considered to be the best value measure available
for comparing the relative economic importance of manufacturing among
industries and geographic areas.

->New and used capital expenditures.

For establishments in operation and any known plants under construction,
manufacturers were asked to report their new expenditures for (1) permanent
additions and major alterations to manufacturing establishments, and (2)
machinery and equipment used for replacement and additions to plant
capacity if they were of the type for which depreciation accounts were
ordinarily maintained.

The totals for new expenditures include expenditures leased from
nonmanufacturing concerns through capital leases. New facilities owned
by the Federal Government but operated under contract by private companies,
and plant and equipment furnished to the manufacturer by communities and
nonprofit organizations are excluded. Also excluded are expenditures for
used plant and equipment (although reported in the census), expenditures
for land, and cost of maintenance and repairs charged as current operating
expenses.

Manufacturers also were requested to report the value of all used buildings
and equipment purchased during the year at the purchase price. For any
equipment or structure transferred for the use of the reporting
establishment by the parent company or one of its subsidiaries, the value
at which it was transferred to the establishment was to be reported.
Furthermore, if the establishment changed ownership during the year, the
cost of the fixed assets (building and equipment) was to be reported under
used capital expenditures.

Total expenditures for used plant and equipment is a universe figure; it is
collected on all census forms. However, the breakdown of this figure
between expenditures for used buildings and other structures and
expenditures for used machinery and equipment is collected only on the ASM
form. The data for total new capital expenditures, new building
expenditures, and new machinery expenditures, as well as the data for total
used expenditures, are shown in file MC92F3B.dbf.

->End-of-year inventories.

Respondents were asked to report their 1991 and 1992 end-of-year
inventories at cost or market. Effective with the 1982 Economic Census,
this change to a uniform instruction for reporting inventories was
introduced for all sector reports. Prior to 1982, respondents were
permitted to value inventories using any generally accepted accounting
method (FIFO, LIFO, market, to name a few). In 1982, LIFO users were asked
to first report inventory values prior to the LIFO adjustment and then to
report the LIFO reserve and the LIFO value after adjustment for the
reserve.

Because of this change in reporting instructions, the 1982 through 1992
data for inventories and value added by manufacture included in the tables
of this report are not comparable to the prior-year data shown in table 1a
of this report and in historical census of manufactures and annual survey
of manufactures publications.

In using inventory data by stage of fabrication for "all industries" and at
the two-digit industry level, it should be noted that an item treated as a
finished product by an establishment in one industry may be reported as a
raw material by another establishment in a different industry. For example,
the finished-product inventories of a steel mill would be reported as raw
materials by a stamping plant.  Such differences are present in the
inventory figures by stage of fabrication shown for individual industries,
industry groups, and "all manufacturing", which are aggregates of figures
reported by establishments in specified industries.

->Specialization and coverage ratios.

These items are not collected on the report forms but are derived from the
data shown in file MC92F5B.dbf. An establishment is classified in a
particular industry if its shipments of primary products of that industry
exceed in value its shipments of the products of any other single industry.

An establishment's shipments include those products assigned to an industry
(primary products), those considered primary to other industries (secondary
products), and receipts for miscellaneous activities (merchandising,
contract work, resales, etc.).  Specialization and coverage ratios have
been developed to measure the relationship of primary product shipments to
the data on shipments for the industry shown in files MC92F1.dbf through
MC92F5A.dbf and data on product shipments shown in files MC92F6A.dbf and
MC92F6b.dbf.

Specialization ratio represents the ratio of primary product shipments to
total product shipments (primary and secondary, excluding miscellaneous
receipts) for the establishments classified in the industry.

Coverage ratio represents the ratio of primary products shipped by the
establishments classified in the industry to the total shipments of
such products that are shipped by all manufacturing establishments wherever
classified.

=>SECTION 2. ITEMS COLLECTED ONLY ON ASM REPORT FORMS

The following items were collected only from establishments included
in the ASM sample:

->1. Supplemental labor costs.

Supplemental labor costs are divided into legally required expenditures and
payments for voluntary programs. The legally required portion consists
primarily of Federal old age and survivors' insurance, unemployment
compensation, and workers' compensation.  Payments for voluntary programs
include all programs not specifically required by legislation whether they
were employer initiated or the result of collective bargaining. They
include the employer portion of such plans as insurance premiums, premiums
for supplemental accident and sickness insurance, pension plans,
supplemental unemployment compensation, welfare plans, stock purchase plans
on which the employer payment is not subject to withholding tax, and
deferred profit-sharing plans. They exclude such items as company-operated
cafeterias, in-plant medical services, free parking lots, discounts on
employee purchases, and uniforms and work clothing
for employees. While the excluded items do benefit employees and all or
part of their cost generally is similar to the items covered in the ASM
labor costs statistics, accounting records generally do not provide
reliable figures on net employee benefits of these types.

->2. Retirements of depreciable assets.

Included in this item is the gross value of assets sold, retired, scrapped,
destroyed, etc., during 1992. When a complete operation or establishment
changed ownership, the respondent was instructed to report the value of the
assets sold at the original cost as recorded in the books of the seller.
The respondent also was requested to report retirements of equipment or
structures owned by a parent company that the establishment was using as if
it were a tenant.

->3. Depreciation charges for fixed assets.

This item includes depreciation and amortization charged during the year
against assets. Depreciation charged against fixed assets acquired since
the beginning of the year and against assets sold or retired during the
year are components of this category. Respondents were requested to make
certain that they did not report accumulated depreciation.

->4. Rental payments.

Total rental payments is collected on all census forms. However, the
breakdown between rental payments for buildings and other structures and
rental payments for machinery and equipment is collected only on the ASM
forms. This item includes rental payments for the use of all items for
which depreciation reserves would be maintained if they were owned by the
establishment, e.g., structures and buildings, and production, office, and
transportation equipment.  Excluded are royalties and other payments for
the use of intangibles and depletable assets, and land rents where
separable.

When an establishment of a multiestablishment company was charged rent by
another part of the same company for the use of assets owned by the
company, it was instructed to exclude that cost from rental payments.
However, the book value (original cost) of these company-owned assets was
to be reported as assets of the establishment at the end of the year.

If there were assets at an establishment rented from another company and
the rents were paid centrally by the head office of the establishment, the
company was instructed to report these rental payments as if they were paid
directly by the establishment.

->5. Depreciable assets.

Total value of gross depreciable assets is collected on all census forms.
However, the detail for depreciable assets is collected only on the ASM
forms. The data encompass all fixed depreciable assets on the books of
establishments at the beginning and end of the year. The values shown (book
value) represent the actual cost of assets at the time they were acquired,
including all costs incurred in making the assets usable (such as
transportation and installation). Included are all buildings, structures,
machinery, and equipment (production, office, and transportation equipment)
for which depreciation reserves are maintained. Excluded are nondepreciable
capital assets, including inventories and intangible assets, such as timber
and mineral rights.

The definition of fixed depreciable assets is consistent with the
definition of capital expenditures. For example, expenditures include
actual capital outlays during the year, rather than the final value of
equipment put in place and buildings completed during the year.
Accordingly, the value of assets at the end of the year includes the value
of construction in progress. In addition, respondents were requested to
make certain that assets at the beginning of the year plus new and used
capital expenditures, less retirements, equalled assets at the end of the
year.

->6. New and used capital expenditures.

The data for total new capital expenditures, new building expenditures, new
machinery expenditures, and total used capital expenditures are collected
on all census forms. However, the breakdown between expenditures for used
buildings and other structures and expenditures for used machinery and
equipment is collected only on the ASM form. (See further explanation
on capital expenditures in section 1.)

->7. Quantity of electric energy consumed for heat and power.

Data on the cost of purchased electric energy are collected on all census
forms. However, data on the quantity of purchased electric energy are
collected only on the ASM forms. In addition, information is collected on
the quantity of electric energy generated by the establishment and the
quantity of electric energy sold or transferred to other plants of the same
company.

->8. Breakdown of new capital expenditures for machinery and equipment.

ASM establishments were requested to separate their capital expenditures
for new machinery and equipment into (1) automobiles, trucks, etc., for
highway use, (2) computers and peripheral data processing equipment, and
(3) all other.

The category "automobiles, trucks, etc., for highway use" is intended to
measure expenditures for vehicles designed for highway use that were
acquired through a purchase or lease-purchase agreement.  Vehicles normally
operating off public highways (vehicles specifically designed to transport
materials, property, or equipment on mining, construction, logging, and
petroleum development projects) are excluded from this item.

->9. Foreign content of cost of materials.

Establishments included in the ASM sample panel were requested to provide
information on foreign-made materials purchased or transferred from foreign
sources. This includes materials acquired from a central warehouse or other
domestic establishment of the same company but made in an operation outside
of the 50 States, District of Columbia, Puerto Rico, or U.S. territories.

->10. Cost of purchased services.

ASM establishments were requested to provide information on the cost of
purchased services for the repair of buildings and other structures, the
repair of machinery, communication services, legal services, accounting and
bookkeeping services, advertising, software and other data processing
services, and refuse removal. Each of these items reflect the costs paid
directly by the establishment, and exclude salaries paid to employees of
the establishment for these services.

Included in the cost of purchased services for the repair of buildings and
machinery are payments made for all maintenance and repair work on
buildings and equipment, such as painting, roof repairs, replacing parts,
and overhauling equipment. Such payments made to other establishments of
the same company and for repair and maintenance of any leased property also
are included. Extensive repairs or reconstruction that were capitalized are
considered capital expenditures for used buildings and machinery and are,
therefore, excluded from this item. Repair and maintenance costs provided
by an owner as part of a rental contract or incurred directly by an
establishment in using its own work force also are excluded.

Included in the cost of purchased advertising services are payments for
printing, media coverage, and other advertising services and materials.

Included in the cost of purchased software and other data processing
services are all purchases by the establishment from other companies.
Excluded are services provided by other establishments of the same company
(such as by a separate data processing unit).

Included in the cost of purchased refuse removal services are all costs of
refuse removal services paid by the establishment, including costs
for hazardous waste removal or treatment. Excluded are all costs
included in rental payments or as capital expenditures.

->Approaches utilized to produce ASM-only statistics.

>>A. For items 1 through 6, data were estimated (imputed) for all non-ASM
establishments using the available data in the establishment record and
industry-based parameters. The statistics were then generated by simply
tabulating all census records including the imputed value for non-ASM
establishments and the unweighted value for ASM establishments.  Separate
imputation rates were developed and are shown in the table.  For quantity
of purchased electricity for heat and power (item 7), a similar procedure
was used; however, the imputation parameters were geographically-based
instead of industry-based. For quantities of generated less sold
electricity, no imputation was performed for non-ASM establishments. The
estimates for these items are simply tabulations of unweighted ASM values.

Since the published statistics for these items were developed from the
complete census universe and not just the ASM establishments, there are no
sampling variances associated with these statistics. However, there is an
unknown level of bias for each of the items due to the imputation of the
non-ASM establishments. This bias is felt to be small due to the strong
correlation between the items being imputed and the collected items that
were used to generate the impute values.

>>B. For items 8 and 9, the estimates were developed using a ratio
estimation methodology. For item 8, an estimate of the breakout of new
capital expenditures for machinery and equipment into the three categories
was made from ASM establishments reporting these categories.  The estimated
proportions were then applied to the corresponding census value for new
capital expenditures for machinery and equipment to produce the estimates.

The estimates for item 9, foreign content of cost of materials, were
developed in a similar manner based on costs of parts, supplies, and
components (item 5a) as the control total for the three categories.

For items 8 and 9, an adjustment ratio of the following form was computed:

    Rj = NMc/TMEasm

where:

    NMc = the census value of new capital expenditures for machinery
          and equipment

    TMEasm = the weighted ASM value of new capital expenditures for
             machinery and equipment from reporters of the detailed
             breakout data

>>C. For item 10, cost of purchased services, the estimates were made by
simply tabulating weighted data for all the ASM records that reported
the item. A response coverage ratio (a measure of the extent to which
respondents reported for each item) is shown in file MC92F3C.dbf for the
three types of services. It is derived for each item by calculating the
ratio of the weighted employment (establishment data multiplied by sample
weight, see appendix B) for those ASM establishments that reported the
specific inquiry to the weighted total employment for all ASM
establishments classified in the industry.