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

[News News <NEWS@ELCA.ORG>]

ELCA NEWS SERVICE

November 2, 1999

ELCA PUBLISHING HOUSE BOARD HEARS MIXED FINANCIAL NEWS
99-267-JB

     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