wfn.org | ELCA Publishing House Board Hears Positive Financial News

[News News <NEWS@ELCA.ORG>]

ELCA NEWS SERVICE

May 9, 2000

ELCA PUBLISHING HOUSE BOARD HEARS POSITIVE FINANCIAL NEWS
00-128-JB

     COLUMBUS, Ohio (ELCA) -- The board of trustees of Augsburg
Fortress Publishers, Minneapolis, heard positive financial news and a
series of optimistic plans for the future at its meeting here April 27-29.  
The meeting followed a six-month period in which the company
reorganized and put a new management team in place.  Augsburg Fortress
is the publishing house of the Evangelical Lutheran Church in America
(ELCA).
      The meeting location was selected to give board members an
opportunity to visit the company's distribution center at nearby Grove
City, Ohio.
     The publisher is financially strong, its inventories are under
control and sales for the first quarter of 2000 are better than
anticipated, said the Rev. Marvin L. Roloff, president and chief
executive officer.
     "I believe the spirit within the publishing house is very positive
and there is eagerness to move ahead," he said in his report to the
board.
     The optimistic news for 2000 follows a year of significant change
for the company, in which it reorganized into a series of specifically
targeted business units, adopted a market-driven philosophy and
announced several staff reductions as part of the changes. Augsburg
Fortress finished 1999 with an operating loss, though the company's
balance sheet remains strong, Roloff said.
     In 1999 the board endorsed a reorganization plan for Augsburg
Fortress, based on recommendations from an outside consulting firm the
company retained. Timothy I. Maudlin, board member, Eden Prairie, Minn.,
presented to the board results of an independent audit for 1999,
conducted by Deloitte & Touche, Minneapolis.  Maudlin, who chairs the
board's Audit and Finance Committee, reminded trustees the publisher was
"virtually insolvent" in the mid 1990s.
     The 1999 audit report showed "hope and encouragement for the
future," and the publisher "is being transformed for the future,"
Maudlin said.  The report also showed considerable improvement in the
financial practices of the company, he said.
     "There is great reason for celebration," Maudlin said.  He
credited the company's new management team, put together in the last
seven months as the company reorganized.
     Financial news for the first quarter of 2000 was also positive,
said George W. Poehlman, Augsburg Fortress vice president for finance
and treasurer.  First quarter sales were at $13.5 million compared to a
budgeted figure of $13.2 million, he said.
     "These are wonderful early indicators," Poehlman said to the
board. "The report for the first quarter is probably the best financial
news you've had in four years."
      Augsburg Fortress projects a $127,000 operating profit for 2000;
it ended 1999 with a $467,000 operating loss, he reported.  Revenue for
2000 is projected at $56 million, up from $54 million in 1999, Poehlman
said.  The differences in operating expenses and sales can be attributed
to the company's reorganization, he added.
     Poehlman also sounded a note of caution.  While early 2000 numbers
are positive, he said the company is still hiring people to meet its
reorganization goals and there are some significant expenses expected in
the future.  Among them are costs for starting a new Christian magazine
for women, "Sunday/Monday WOMAN," and plans to develop Internet sales.
     "In my mind, the full year is a challenge," he said. "We're in a
good place, we've got a great start, and we're in a good position to
really make it this year."
     Poehlman also told the board that nearly one-third of its
inventory in the Grove City distribution center is "excess or obsolete"
and is still being stored in the warehouse.
  Richard E. Lodmill, board chair, Seattle, said the board would be
more comfortable if a "plan of action" could be developed regarding the
obsolete inventory. Following a brief discussion, Poehlman invited board
members to submit ideas for use of the obsolete inventory.
  The board heard an update on the company's reorganization from
Charles S. Halberg, Augsburg Fortress executive vice president and chief
operating officer.
  "A lot has been on our plate the last six months,' Halberg said.
There have been many changes in the company, and the company's employees
have handled the changes well, he said.  He also said the company has
been "aggressively" recruiting new people to fill key roles since Jan.
1.  Augsburg Fortress is making an "aggressive effort" to establish new
business partnerships, Halberg added.
  "I'm enthused about what's happening at Augsburg Fortress," he
said. "This company is on the right course.  We need this board to
support the management team."
  Board members heard a detailed report on overall marketing
strategy from Kenneth G. Hartwell, senior vice president and chief
marketing officer.  Vice presidents for each of the strategic business
units and other company units discussed their plans with the board.
  Board members and staff recognized Dr. Leonard G. Schulze, Seguin,
Texas, who resigned from the Augsburg Fortress board following his
election in March as executive director of the ELCA Division for Higher
Education and Schools.  In early April, the ELCA Church Council elected
Michael E. Carscaddon, Americus, Ga. to complete Schulze's unexpired
term.
  Board members also participated in anti-racism training prior to
their business sessions.
 The board's next meeting was rescheduled to Oct. 12-14, in Minneapolis.

For information contact:
John Brooks, Director (773) 380-2958 or NEWS@ELCA.ORG
http://listserv.elca.org/archives/elcanews.html