Home
/
News
 /
ELCA Publisher Reports Financial Health Improved

ELCA Publisher Reports Financial Health Improved

May 5, 2003



PHILADELPHIA (ELCA) -- The financial health of Augsburg Fortress, the publishing house of the Evangelical Lutheran Church in America (ELCA), has improved, and the company's management team is focused on achieving a "break even" financial year in 2003. The information was part of a financial report to the board of trustees which met here April 24-26.
The board met here so members could tour the company's Ecclesiastical Arts Studio, which specializes in making clergy clothing and paraments, and offers consulting services to help congregations design or refurbish worship spaces.
Expressing guarded optimism, George W. Poehlman, Augsburg Fortress vice president for finance, said the company's first quarter financial report was better than forecast. Augsburg Fortress recorded a first quarter operating loss of $473,000. That was $260,000 better than budgeted and $142,000 less than the loss reported in the first quarter of 2002, he said. Better-than-expected sales of educational materials, plus expense and inventory controls, resulted in the "promising" first quarter report, Poehlman said. Company management is focused on a "break even" financial goal for 2003, he said.
The first quarter report suggests "we can see that we can make our budget," Poehlman said. He emphasized that the company's performance must improve further if it is to achieve management's break even goal.
For 2002, the company recorded an audited net loss of $4.3 million, $3.5 million better than the previous year, Poehlman said. For 2001 the company's auditors restated the net loss to $7.8 million from the originally reported $7.2 million. Results were restated when it was discovered that two information systems projects had been completed and put into service in 2001 rather than 2002, causing an increase in depreciation expenses for 2001, Poehlman said. In addition, two annual service contracts included in the capitalized cost of the project were reclassified as operating expenses, he said.
In response to questions from board members, Poehlman said he was "not happy" about the 2001 financial reporting errors and said the company is reviewing its procedures to prevent similar errors in the future.
The board also discussed or heard about several other company matters:
+ In a session on strategic planning, it directed the company management team "to develop a strategic plan for 2006" and provide the plan for review and action by the board at its October meeting in Minneapolis. The session was "closed" under provisions of the ELCA's policy on open meetings.
+ The board discussed the company's "defined benefit" pension plan. It learned that the company will need to make a cash contribution of $798,000 to the plan in 2003 because of declines in investment returns. For 2004 the company is expected to put an estimated $950,000 into the pension plan. As a possible alternative, some board members suggested the publisher consider joining the ELCA Board of Pensions plan. Sandy Middendorf, Augsburg Fortress vice president for human resources, said the company is analyzing the possibility of joining the Board of Pensions plan. She also said employees are aware the company is making cash contributions to the current pension plan.
+ The board discussed but took no action on a decision of the ELCA churchwide organization to drop an annual subsidy to The Lutheran, the magazine of the ELCA. The $100,000 subsidy was dropped as part of a series of recent churchwide budget reductions. Half of the subsidy was invested by the magazine in an endowment fund, and half was sent to Augsburg Fortress to help offset production costs. This year the publisher will lose about $37,500, the amount of its annual share remaining when the subsidy was dropped April 1, Poehlman explained.
Janice M. Bowman, board member, Thousand Oaks, Calif., and board representative to the magazine's advisory committee, said the committee objected to the decision primarily because of its "symbolic" meaning. The loss of the funds will not make a difference in the quality of service Augsburg Fortress can provide for the magazine, responded Beth A. Lewis, Augsburg Fortress president and chief executive officer. To avoid "damaging relationships," she recommended the board not take any formal action and defer possible action to the magazine's advisory committee.
+ The board discussed declining subscriptions for The Lutheran, which fell to 463,000 this spring. James M. Huber, publishing director for The Lutheran and Lutheran Woman Today, the magazine of Women of the ELCA, said The Lutheran lost nearly 25,000 subscribers in April. Most congregations report they cannot maintain the financial commitment to pay for subscriptions for members, he said. The Rev. Steven L. Ullestad, bishop of the ELCA Northeastern Iowa Synod, Waverly, said the publisher must "find a way for members to find out what's going on in this church." The Rev. Richard F. Bansemer, board member, Salem, Va., suggested there be an examination of the magazine itself which may include publication of a resource "secondary" to The Lutheran. Some congregations don't subscribe because pastors are concerned some information reported by the magazine "stirs up" members, he said.
+ The board was introduced to the first of a possible 10-volume "Lutheran Voices" series focusing on core Lutheran values and traditions. The company hopes to publish most of the volumes in the new series in time for the the ELCA Churchwide Assembly, Aug. 11-17 in Milwaukee, Lewis said. The first book is "Reclaiming the 'L' Word: Renewing the Church from Its Lutheran Core" by the Rev. Kelly A. Fryer, Cross of Glory Lutheran Church, Lockport, Ill.
+ A promising new book, "Executive Values: A Christian Approach to Organizational Leadership," by Kurt Senske, sold out its first printing a few days after it was introduced, said J. Michael West, acting general manager, Augsburg Books.
+ In her report to the board, Lewis said she "loves" her work and is "having fun every day." The company is reviewing products that are or are nearly out of print and is considering selling them through the Augsburg Fortress Web site, she said. Testing is under way.
Augsburg Fortress is building relationships within the churchwide organization, especially with the ELCA Division for Congregational Ministries (DCM), Lewis said. In 2001 the DCM board questioned its relationship with the publisher and suggested the ELCA explore publishing alternatives. Following a lengthy inquiry, the ELCA Church Council was told in April that leaders of Augsburg Fortress and DCM had done considerable work to solve publishing concerns and that no further action was needed. "There is a new spirit of cooperation and coordination between DCM and Augsburg Fortress and other units in the churchwide organization," Lewis told the board. "Many units of the church have worked hard at this."
The company announced it will host congregations needing off-site space for meetings or retreats at its Minneapolis offices, as part of its "ministry of hospitality," Lewis said.
Overall, Lewis said she and others in the church are optimistic and hopeful about the company's future, though she acknowledged "some people believe we will fail in our turnaround of Augsburg Fortress."
+ Ullestad, representing the ELCA Conference of Bishops, affirmed Lewis' work and said she had led the organization through "important changes and the right changes."
"I wonder if Augsburg Fortress should see itself as a new organization and not a merger of two publishing houses?" he said.
+ The board elected James Myers, Kailua, Hawaii, to a two-year term as board chair, succeeding Timothy I. Maudlin, Eden Prairie, Minn., whose board term ends this year. "I am personally very encouraged by management's vision and strategic directions. This gives us great

- - -
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

ELCA News

You can receive up-to-date ELCA news releases by email.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.