MINNEAPOLIS (ELCA) -- Augsburg Fortress, the publishing house of the Evangelical Lutheran Church in America (ELCA), incurred an operating loss of $4.22 million for the first nine months of 2001, said George W. Poehlman, Augsburg Fortress vice president for finance. However, the company showed operating profits for August and September, the result of this summer's reorganization, reduced staff and tight spending controls, he said.
Poehlman made the comments in his report to the Augsburg Fortress board of trustees, which met here Oct. 25-27.
Sales for the first nine months of 2001 have dropped 6.3 percent from the same period in 2000, Poehlman said. Drops in academic, consumer and education sales contributed to the decline, he said. The publisher had hoped for a "giant leap" forward in sales this year and invested heavily in marketing and developing new resources, Poehlman said. When the sales increase did not occur, the company reorganized in July, consolidating its sales effort and reducing staff by 42 people, including some senior company leaders.
"Significant damage has been done to our financial position in the last two years," Poehlman said. The company's cash and investment funds have declined some $10 million, said Michael E. Carscaddon, board member, Americus, Ga., who reported to the board in his role as chair of the board's audit and finance committee. Augsburg Fortress is presently negotiating with a bank for a loan that will be secured by the company's assets, Poehlman said. "Our nine-month statement is not pretty, but things are getting better," Poehlman said of this fall's early reports. In August the company's operating profit was $582,000. The terrorist attacks of Sept. 11 caused sales to slow considerably. After Sept. 11 the company initiated a series of austerity measures. These included a hiring freeze and a freeze on salary increases, said the Rev. Marvin L. Roloff, Augsburg Fortress president and chief executive officer, a report to the board. The company was able to show a $100,000 operating profit for September, Poehlman said. Augsburg Fortress is planning a $54.8 million sales forecast for 2002 that is basically "flat" compared to this year's expected sales of $54.1 million, Carscaddon said. "It is critical that we stabilize the financial condition of the (publishing) house," he said in his report. The 2002 projected budget is a plan to "stabilize the business,' Poehlman said. Expenses have been reduced nearly five percent to $30.4 million in the 2002 budget, he said. In addition, management hopes to recover some losses in the capital reserve fund, Poehlman said. The company also wants to reduce its inventory, which was increased earlier this year in anticipation of better sales. Goals for the 2002 operating budget for Augsburg Fortress are to achieve forecast sales, control expenses and reduce inventory, Poehlman said. Key to sales improvements are meeting sales forecasts for education and worship resources -- two areas which must perform well for the overall health of the company, he said. If projections hold, the company is expecting to report a positive cash flow for 2002 estimated at $3.1 million, Poehlman reported.
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
