COVERAGE AND METHODOLOGY______________________________ENTERPRISE STATISTICS =>TECHNICAL NOTES: STRUCTURE & METHODOLOGY => MULTIESTABLISHMENT COMPANIES Since 1971, the Bureau of the Census has conducted an annual report of organization survey of multiestablishment companies. For the 1992 Economic Censuses, every multiestablishment company with more than 50 employees or 10 or more establishments was required to complete census form NC-9901, Report of Organization, to determine its organizational and industrial structure. (For this data set this was completed as of the end of 1992). Specifically, each company was asked to update and correct a list of individual establishments owned or controlled by either the parent company or its subsidiaries. From the response, the Bureau of the Census was able to select and preaddress the appropriate 1992 census report for each establishment of each company. A company received a separate establishment report form for each physical location at which industrial and business activities within the scope of the 1992 Economic Censuses were conducted. As described by the Standard Industrial Classification (SIC) Manual/1, companies engaged in distinctly different lines of activity at one location were required to submit a separate establishment report for each activity if separate records were maintained and if the various activities were economically significant. Also, when more than one business (legal entity) was operated at a single location, each was regarded as a separate establishment for the censuses. In addition to preparing a separate census report for each establishment producing or distributing goods or providing services to the general public or other business firms, each company covered in the economic censuses was asked to identify and report separately all auxiliaries. The primary functions of these establishments are to manage, administer, service, or support the activities of the operating establishments of the company. During the actual censuses, information on company-establishment relationships and parent-subsidiary affiliations was confirmed or revised by including inquiries requesting information from firms either owning or controlling other companies or owned or controlled by another company in order to identify all subsidiary or parent firms. => SINGLE-ESTABLISHMENT COMPANIES Single-establishment companies are classified as either: employer firms or nonemployer firms. Employer firms--The Bureau of the Census created a mailing list of all employer firms engaged in industrial activities operating within the scope of the economic censuses by using a name and address computer file of all active businesses listed in the records of the Internal Revenue Service (IRS) as having one or more paid employees, and a comparable name and address file of employers from the records of the Social Security Administration (SSA) containing the industry codes assigned to each business. The mailing list of single-establishment firms was developed by deleting from the initial list the records of all multiestablishment companies identified in the annual survey of multiestablishment companies. In an effort to reduce both the costs of the censuses and the reporting burden on small businesses, single-establishment employers with payrolls below specified values, which varied by industry, were excused from filing 1992 censuses reports. (The quarterly payroll data reported on IRS form 941 was used to determine whether a firm was to receive a report form.) Instead, data on employment, payrolls, and sales were obtained from Federal payroll and income tax returns filed with the IRS. For minerals, construction, and manufacturing industries, other data items normally collected on the individual establishment reports were estimated either from industry averages or from sample data collected from other small companies. Based on the IRS data and any estimated items, a substitute census establishment report was generated for each "nonmail" single-establishment employer company. This procedure relieved the censuses reporting burden for many small business employers. Nonemployer firms--The mailing list of employer firms does not include all single-establishment firms; excluded are firms with no paid employees/2. Since these small businesses (usually operated by sole proprietors or working partners and their unpaid family members) are not subject to payroll taxes, they were not included in either the IRS file of business firms or the SSA file of industry classifications used to prepare the single-establishment mailing list. Because of the statistical significance of these small businesses in the construction, retail trade, and selected service industries, special arrangements were made with the IRS to obtain business receipts, industrial classifications, and geographic locations of these firms from their Federal income tax returns. In retail trade and selected service industries, only the returns reporting annual receipts of $1,000 or more were tabulated. The construction industries did not employ any such cutoffs. =>COMPANY DATA In presenting data on company-establishment relationships in this report, two distinct types of statistics are shown: company data and establishment data. Company data refer to consolidated company-wide statistics which may represent either statistical aggregates of reported establishment data, or net, unduplicated totals reported by companies only at the enterprise level, as explained below. Establishment data in this report refer to statistical aggregates compiled from the individual establishment reports collected in the economic censuses. Each multiestablishment company that had 500 employees or more was mailed form ES-9100, Enterprise Summary Report, to obtain unduplicated, consolidated company totals of selected statistics. As in the 1987 Enterprise Statistics program, there was complete coverage for those multiestablishment economic companies with 500 employees or more. The company totals collected on form ES-9100 represent consolidated domestic totals for the parent company and all of its subsidiaries as of the end of 1992. The data reported on merged or acquired companies varied because of differing accounting practices. When an acquisition or merger was treated by the company as a "pooling of interest," the data reflected the combined full-year activities of both acquiring and acquired companies regardless of the date of acquisition. In these cases, the company data corresponded with the establishment data, since the establishment reports represented full-year activities, all of which were tabulated as part of the new parent company. However, when an acquisition or merger was treated by the acquiring company as a purchase, the company data normally reflected the operations of the acquired company only after the acquisition took place. Since the acquired company's establishment reports, representing a full year's activities, were credited to the acquiring company in the tabulations, the summary data supplied by the acquiring company information on form ES-9100 had to be restated to provide comparable company and establishment totals. The restatement was based on information obtained either from the new parent company or from the ES-9100 filed by the acquired company. The company data in this report are primarily of the "pooling of interest" sort; the exact extent of the "purchase" accounting method is not known. =>ASSIGNING INDUSTRY CODES => Establishments Each establishment covered in the 1992 Economic Censuses was assigned an industry or kind-of-business code according to the 1992 Standard Industrial Classification (SIC) Manual issued by the Office of Management and Budget, Executive Office of the President. Codes were chosen on the basis of the principal products made, lines of merchandise sold, type of construction activity performed, or services rendered by the establishment, as measured by the reported dollar volume of shipments, sales, or receipts during the census year. In some instances, the code was based on the principal materials or processes used. (For a comprehensive description of the Bureau's establishment classification procedures, see the introductory texts and appendixes of the various publications of the 1992 Economic Censuses.) => Companies Each company covered in the 1992 Economic Censuses was classified in one of 146 enterprise industry categories (see also, Appendix C). The two-digit SIC codes of companies shown in this publication are an aggregation of the detailed enterprise industry category codes. Single-industry companies--For single-establishment and multiestablishment single-industry companies, the industry category classification was simply the enterprise category that was the equivalent of the single census industry (four-digit SIC code) in which the company's one or more establishments were primarily engaged. Multi-industry companies--For the remaining multiestablishment, multi-industry companies, the enterprise industry classification was determined by first ascertaining the largest census industry division (manufacturing, wholesale trade, etc.) of each company; then, the primary enterprise industry category was selected from within that division. The determination of the largest census industry division and the primary enterprise industry category was made from establishment annual payroll data. Establishment payroll data were chosen to be the determining factor for enterprise industry classification of multiestablishment, multi-industry companies because they were found to be the most meaningful economic measure common to all economic and agriculture censuses divisions. There are only three data items common to all economic and agriculture censuses establishment reports. They are: employment, annual payroll, and receipts or sales (dollar volume of business). The employment data item covers different time periods for different industries and is affected by seasonality. Sales and receipts may not accurately reflect the relative economic impact of companies in different industries. For example, sales and receipts of a wholesale broker represent gross sales made rather than commissions received and might be greater than that of a hotel--yet a hotel's sales and receipts would have more of an impact. Annual payroll, then, has been determined to be the best economic measure, i.e., the item represents a full calendar year and is a good indicator of relative economic impact. Integrated petroleum extraction and refining companies--Because of the widespread practice of the larger petroleum extraction and refining companies in vertically integrating their activities, Industry Category 291, Petroleum Refining (including integrated), was defined to include census (SIC) industries which cut across industry division lines. A company was classified in category 291 if it: (1) operated establishments both in SIC industry 1311, Crude Petroleum and Natural Gas, and in Industry 2911, Petroleum Refining, and; (2) was primarily engaged in both industries, as reflected by its payroll. A company engaged in both industries 1311 and 2911, but primarily engaged in another industry category, was classified in that other category. Nonintegrated petroleum companies primarily engaged in extracting or refining activities (industry 1311 or industry 2911, but not both), were classified in either the mineral industry category 131 or the manufacturing industry category 291, using the standard classification procedure for coding multi-industry companies. =>CLASSIFICATION The 1992 classifications have expanded coverage (scope) and reflect new industries (see "New Items by Year" below) EIC codes were derived by adapting the four-digit Standard Industrial Classification (SIC) system to relate more meaningfully to consolidated company structure. Appendix C (in the publication) compares 1992 Enterprise Industry Categories with 1992 Standard Industrial classifications. The SIC system was most recently revised in 1987; The 1992 data utilizes the 1987 classifications. Historical comparability of data in each enterprise industry category is also affected by the large diversified companies which significantly changed their industrial activities "mix" between census years through internal company growth or merger, acquisition, or disposal of subsidiaries with resulting shifts in their industry category classifications. Such classification "transfers" of company aggregates (e.g., tabulated in one industry in 1987, but in another industry in 1992) may constitute a significant part of the observed net historical changes in the company totals of some industry categories shown in this report. =>OUT-OF-SCOPE ACTIVITIES To present meaningful company data encompassing all economic activities, data on out-of-scope activities have been included in this publication if a majority of the owning company's payroll was classified as primarily within the scope of the 1992 censuses. On the other hand, if the firm was primarily engaged in activities outside the scope of the 1992 censuses, based on payroll, the data for its predominantly out-of-scope activities were excluded while the data for its in-census-scope establishments were included/1. For example, in handling companies primarily engaged in agricultural service activities, data on their primary activities were excluded, while data on their retail stores were included. A large number of industries that were out-of-scope for 1987 which were in-scope for 1992. Companies may have been classified in a different category in 1987. Classification is solely based on the scope of company activity. As a result, some companies may have been classified in a different category for 1992. =>COMPARABILITY OF THE DATA\*1,*2 => COMPARABILITY TO PREVIOUS RELEASED ENTERPRISE STATISTICS The 1992 and 1987 censuses were conducted under similar conditions and procedures. However, strict comparability of the data for the two censuses is limited by the following factor: Scope--In the 1987 program, agricultural industries were no longer part of this census program. The scope of the 1987 (and later) enterprise program was enlarged by including companies/establishments who report Federal income tax and are classified in the following industries: Trucking and Courier Service, Water Transportation, and Transportation Services, as well as Hospitals. (Health services except hospitals were included in 1982.) The census of service industries also covered these industries and, in addition, included (in separate tables) establishments not subject to Federal income tax in the above industries plus museums, art galleries, and botanical and zoological gardens; membership sports and recreation clubs; fairs; and selected membership organizations. These tax-exempt establishments were not included in scope of the 1992 enterprise program. => NEW ITEMS BY YEAR The general changes for 1992 include selected additions to "Transportation, Communication, and Utilities", an all new "Financial, Insurance & Real Estate" division, and "Auxiliaries" has been expanded. {See "Classification" section for details.} The following are specific new industry classifications for 1992 floowed by general 1987 and 1982 additions. 1992 Transportation, Communication, and Utilities: (expanded from Selected Transportation) 41 Local and interurban passenger transit 45 Transportation by air, except scheduled 48 Communications 48.1 Telephone and telegraph communication 48.3 Radio and television broadcasting stations 48.9 Cable and other communication services 49 Electric, gas, and sanitary services 49.1 Electric services 49.2 Gas production and distribution 49.3 Combination utility services 49.9 Water, steam, and sanitary services Finance, Insurance and Real Estate Industries: (all new) 60 Depository institutions 60.1 Central reserve depository institutions 60.2 Commercial banks 60.3 Saving institutions 60.6 Credit unions 60.9 Depository related services 61 Nondepository credit institutions 61.1 Federal credit agencies 61.9 Other credit institutions 62 Security and commodity brokers 63 Insurance carriers 63.1 Life insurance 63.2 Medical service and health insurance 63.9 Other insurance 64 Insurance agents, brokers and service 65 Real estate 65.1 Real estate operators and lessors 65.3 Real estate agents and managers 65.9 Other real estate 67 Holding and other investment offices 1987 Agricultural production, excluded Trucking and Courier Service Water Transportation Transportation Services Hospitals 1982 Agricultural production Health services, except hospitals 1992 Auxiliaries only (including above industries) 423 Trucking terminals 479 Other transportation services 495 Water supply 496 Sanitary supply 551 Automotive dealers and supply stores 636 Title insurance 637 Pension, health and welfare funds (combined in 1992) 422, 423 Public warehousing and trucking terminals 496, 497 Steam and air-conditioning supply and irrigation systems 601, 608, 609 Depository banking and foreign banking => COMPARABILITY TO OTHER ECONOMIC CENSUS PUBLCIATIONS Since both the concepts and the coverage of the economic censuses were generally applicable to these tabulations, the comparable totals appearing in this report and the various 1992 Economic Censuses publications are virtually the same. It is important to note that establishment figures in this publication are based on the company classification of their owning firms, and are not directly comparable with any of the regular economic censuses totals, which were tabulated only on an establishment classification basis. Data totals--It was necessary to bring together, from each of the 1992 Economic Censuses, the computer records for all establishments under common ownership or control. Both single-establishment and assembled multiestablishment companies underwent various data edits and consistency checks. Specifically for multiestablishment companies, various editing checks were routinely made to verify the internal consistency of each company's establishment records when aggregated to company data totals. Checks of the establishment data were also made against the totals available from the ES-9100. Significant errors in the establishment or company data records revealed by these edits also were corrected. The company edit operation came after the census industry totals had been publsihed. Conversely, many of the corrections made during the review of the final censuses publication tables were made too late to be reflected in establishment computer records used as the basic source for this report. --------------------------------------------------------------------------- Footnotes: *1. Standard Industrial Classification Manual: 1987. For sale by Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402. *2. The "Company Summary" report includes an all companies tabulation. This table includes most non-employers and some industries not covered in other tables of the report. See footnotes on table 1, "United States--Company Statistics", for further explanation. ###