MINNEAPOLIS (ELCA) -- Through the first eight months of 1999, Augsburg Fortress Publishers has experienced an operating loss of $211,000; however, the company's general financial position is strong as it prepares to reorganize its operations, said George W. Poehlman, vice president for finance and treasurer.
The financial news was reported to the Augsburg Fortress Board of Trustees during its regular meeting here Oct. 21-23. Augsburg Fortress is the publishing house of the Evangelical Lutheran Church in America (ELCA).
"I expect this loss will grow though the rest of the year," Poehlman said. "We will wind up with an operating loss of about $1 million."
Sales have declined from $36 million for the first eight months of 1998 to $34.8 million for the same eight-month period this year. On top of the sales decline, the company's expenses increased $1.8 million for the first eight months of 1999 compared to 1998.
Book sales are down this year, a decline that was expected, Poehlman said. Subscription sales of The Lutheran, the magazine of the ELCA, are down this year as are sales of worship products, he said. Sales of the publisher's educational resources are flat. Sales of ELCA resources and sales in the company's Canadian operations are up, Poehlman said.
Expenses in all of the company's operations are up this year, except for the expenses at Augsburg Fortress retail stores, he added.
During the same eight month period in 1998, the company showed a $1.9 million profit and concluded the year with a $200,000 profit, he said.
Poehlman explained that the company's sales decline -- which began nearly 10 years ago -- looks bad, but other problems in the company's operations had to be fixed first. They included closing printing operations, centralizing distribution, investing in new technology, gaining better control of inventory and dealing with the leadership change of its president and chief executive officer in 1996.
Despite the loss for the first eight months of 1999, the company's present balance sheet is "very strong," Poehlman said. The company's inventory and receivables are under control, it has a strong cash position and credit ratios are good, he reported.
"Today's strong financial condition must not make us complacent about the seriousness of our continued poor operating performance," Poehlman said in his written report to the board. "Management of the balance sheet can only temporarily offset our operating losses."
"Now is the time to take hard actions needed to solve the operating problems that have long been evident," his report continued, noting that the board and company management have prepared action plans as part of a strategic business plan it adopted this spring.
"As we start to implement these plans, it is clear that some of the actions will be unpopular. When you consider that some of the issues that we now face have existed since the merger of the Fortress and Augsburg publishing houses, it is inevitable that some of these changes will be painful."
Poehlman also said, "it is our duty as stewards of the resources that God has given" to the publisher to make whatever changes are necessary, otherwise the publishing house may squander its current strong financial position.
For information contact:
John Brooks, Director (773) 380-2958 or NEWS@ELCA.ORG
http://listserv.elca.org/archives/elcanews.html
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About the Evangelical Lutheran Church in America:
The ELCA is one of the largest Christian denominations in the United States, with 2.8 million members in more than 8,500 worshiping communities across the 50 states and in the Caribbean region. Known as the church of "God's work. Our hands.," the ELCA emphasizes the saving grace of God through faith in Jesus Christ, unity among Christians and service in the world. The ELCA's roots are in the writings of the German church reformer Martin Luther.
For information contact:
Candice Hill Buchbinder
Public Relations Manager
Candice.HillBuchbinder@ELCA.org
