wfn.org | ELCA Publishing House Financial Outlook Improves, Board Told

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ELCA NEWS SERVICE

November 1, 2000

ELCA PUBLISHING HOUSE FINANCIAL OUTLOOK IMPROVES, BOARD TOLD
00-257-JB

     MINNEAPOLIS (ELCA) -- The financial outlook for Augsburg Fortress,
the publishing house of the Evangelical Lutheran Church in America
(ELCA), is generally improved in 2000, its board of trustees was told at
its Oct. 12-14 meeting here.  The company expects to achieve its sales
goal, its expenses are under budget and its balance sheet remains
strong, said George W. Poehlman, vice president for finance and
treasurer.
     The improved financial news was reported one year after the
company enacted a significant reorganization plan affirmed by the board
that focused the publisher on specific markets.  The company reduced its
work force and expenses in an effort to improve its financial health,
which had been declining for several years.
     Sales through September were nearly $41 million, about $600,000
more than last year, Poehlman said.  Augsburg Fortress has had increased
sales only once in 12 years, he said.  The 2000 sales figure through
September is less than the company's forecast, but Poehlman said
Augsburg Fortress' management is "confident" it will achieve its goal of
a $2 million sales increase over 1999.
     Operating expenses are about $23.6 million through September, $2
million less than budgeted.  "Expenses are under control," Poehlman
said.
     Poehlman told the trustees the company will likely fall short of
its operating profit goal of $500,000.  Augsburg Fortress published a
new catalogue of its resources, the cost of which is responsible for the
drop in anticipated operating profit, said Kenneth G. Hartwell, senior
vice president and chief marketing officer.
     "This is not the end of the world," Poehlman said of the expected
operating profit revenue. "It is more significant for us to end the year
finally showing a turnaround on the sales end."
     The board spent a full day listening to and discussing three-year
business plans for all of Augsburg Fortress' small business units
(SBUs).  When it reorganized in 1999, the company formed several SBUs to
serve specific publishing markets.  The SBUs consist of an ELCA group,
an ecumenical group, a professional development group, a consumer group,
a Canadian operations group and a new ventures group.
     "The reorganization we undertook 12 months ago is complete," said
Charles C. Halberg, chief operating officer.  He reviewed how the
publisher has changed in one year.  "This has been an extensive
exercise," he added.
     Through September, sales of consumer publications and academic
publications were ahead of forecast, while sales to the ELCA and
ecumenical markets were behind forecast, Halberg said.  SBU vice
presidents reviewed with the board extensive plans for their publishing
groups.  Many board members expressed optimism following the
presentations.
     "I thought we'd be going to a wake today," said Fred J. Korge,
board member, Houston. "Because of the 'guts' of management to hire new
blood and be open-minded, we're not at a wake today.  We're at a
celebration."
     "It was an honor for us as a board to know of your commitment and
see the work that's been done," said Dr. Mary E. Hughes, board member,
Columbus, Ohio, following the discussion.
     "Today showed a definite shift in the organization," said James
Myers, board member, Kailua, Hawaii. "I feel very good about the
organization."
     The board also discussed several other matters:
     + This fall Augsburg Fortress launched its new magazine,
"Sunday/Monday Woman," intended to reach Christian women. The magazine
has generated 10,000 subscribers, and the publisher hopes to have 71,000
subscribers by the end of 2001, said Tia Simons, vice president,
consumer group.  By the end of 2001 the magazine should be close to
breaking even on expenses versus revenue, she reported.  Sunday/Monday
Woman is developing a Web site and editorial advisory council, Simons
said.
     + Augsburg Fortress should expand its pool of Lutheran writers to
include more people of color and women, said the Rev. Barbara R.
Rossing, board member, Chicago.  "It is really important we represent
the best of ELCA scholarship more broadly," she said.   Rossing and
others also cautioned the staff not to abandon publication of Christian-oriented 
materials related to hunger and justice issues, as the publisher focuses more on 
consumer markets and its market-driven philosophy.
     + The publisher will unveil a new Web site design later this fall,
and will introduce a concept known as the "Virtual Church Store."
Individual congregations will be able to create their own virtual online
church store through the Web, which will connect users to the Augsburg
Fortress Web site, Simons said. Virtual church sites will offer a broad
range of consumer products.  A percentage of the revenue from sales will
be shared with the congregation that has an online virtual store, she
said.
     + The company celebrated the fifth anniversary of its centralized
order and distribution systems.  The systems were implemented in October
1995 as part of a series of company-wide changes to provide more timely
fulfillment of customer orders.  Bruce Keil, vice president of
operations, said in a recent survey of customers conducted by a
Minnetonka, Minn., firm, 90 percent were either "very satisfied" or
"satisfied" with the service they receive.  The order system is
headquartered in Minneapolis and the distribution center is in Grove
City, Ohio.
     + The board adopted a resolution commending Augsburg Fortress'
management and staff for their work in implementing the company's
strategic plan.  The board also suggested an employee appreciation day
be designated.
---
     Augsburg Fortress' Web site is http://www.augsburgfortress.org.

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