ELCA NEWS SERVICE November 9, 2004 ELCA Publisher Puts 2005 Hopes In New Resources, Budget Controls 04-209-JB MINNEAPOLIS (ELCA) -- The board of trustees for Augsburg Fortress, the publishing ministry of the Evangelical Lutheran Church in America (ELCA), adopted an operating budget which projects a net income loss that could reach $2.3 million for 2005. The trustees met here Oct. 21-23. However, the trustees are hoping the plan -- combined with a series of new resources for sale, spending reductions and close budget control -- will propel the ELCA publisher toward break- even or better for the first time in several years. Board members and staff expressed many concerns about the ELCA publisher's financial situation. Augsburg Fortress' management projects an operating loss of $1.85 million and a net loss of $2.2 million for 2004, said George W. Poehlman, Augsburg Fortress vice president for finance, in a report to the board. In 2003, the company's net loss was $3.5 million. "My message is this: we've made progress, but we have not made as much as we hoped for or as much as we needed to make," Poehlman said to the board. "We cannot continue to do this on a loss basis. We have to find a way to generate revenue to stop the losses." Some trustees spoke in support of the budget and management team, saying they believe the company is in its best position in years to get its finances in the black. In adopting the 2005 budget proposal, the trustees asked the board's audit and finance committee to work closely with the company's management and to keep the full board informed regularly about the company's financial progress. One member voted against the budget proposal, saying he was "not comfortable" in adopting a budget with a projected net income loss of $2.3 million. Sales are behind forecasts in such key resource areas as basic church supplies, Sunday School materials and worship materials, Poehlman said. By contrast, Fortress Press, the company's academic book line, its operation in Canada, The Lutheran magazine and the "Lutheran Voices" book series, are doing well this year, he said. Beth A. Lewis, Augsburg Fortress president and chief executive officer, said the company's lack of financial progress is puzzling because she frequently hears from ELCA members and leaders about the company's improved resources and customer service. Particularly frustrating, she said, is that many congregations are not buying "staple" items from Augsburg Fortress, such as offering envelopes, communion supplies, candles and other necessities, yet Augsburg Fortress prices are competitive with other suppliers. "We are so frustrated because we know, based on affirmations and accolades, that we're doing a lot of things well. And it (higher sales) is not happening," she told the board. Now in her third year as Augsburg Fortress president and chief executive officer, Lewis said she has worked in publishing "turnaround" situations before. The staff is "pretty stressed" that the company's financial situation is still lagging, she said. Most board members agreed that Lewis and the company's staff have done everything they could to turn things around. Lewis emphasized that for 2005 the publisher will focus on sales of new resources, spending reductions and greater advocacy for Augsburg Fortress materials by key leaders in the church. Board members Must be Advocates, Lewis Urges In her report to the board, Lewis asked the trustees to be advocates for Augsburg Fortress. She gave them written examples of how the company has changed, and how it has improved its resources and services. Lewis said the ELCA publisher is positioning itself as the church's "publishing ministry" versus the long-used phrase "publishing house." The use of "house" seemed to separate the publisher from the ELCA, Lewis said. As a ministry of the church, Lewis said "it sends a very strong message about who we are." Among the other examples she cited were: + Augsburg Fortress sales of its 2004 Vacation Bible School (VBS) resource, "Davey and Goliath's Camp Creation," were up 26 percent over the previous year's offering, marking a success in VBS resources for the first time in several years for the company. Meanwhile, sales of VBS materials offered by many other church denominations declined in 2004, Lewis said. + More than $212,000 has been raised through a Camp Creation unit aimed at providing funds for deep tube wells in Bangladesh, emphasizing the ministry the publisher can provide. + More than 99 percent of orders Augsburg Fortress receives are shipped within 24 hours from the company's distribution center in Grove City, Ohio. That beat the service offered by companies from which many people order books, clothing and others goods, Lewis said. + In the past 15 months Augsburg Fortress has made more than 700 downloadable resources available for sale at http://www.augsburgfortress.org on the Web, a direct response to customer requests. + The company will offer a speakers' bureau consisting of staff and authors for synod assemblies in 2005. "We need more people to speak who will help us tell the story of what we've done," James Myers, board chair, Kailua, Hawaii, told the trustees. "That's a critical role for you as board members." Less Spending, New Resources Planned for 2005 By December 31, Augsburg Fortress will leave the customized ecclestical arts business, Lewis reported. The custom studio, located in Philadelphia, is for sale, she said. Very low margins forced the management team to make the announcement in September, Lewis said. Augsburg Fortress will continue to offer paraments, robes and other ecclesiastical arts materials made by other companies, she said. Augsburg Fortress is combining multiple databases to support subscription fulfillment, another cost-cutting move, Poehlman said. The savings, combined with new sources offered now and next year, is important to the company's future. New resources available include: + "Davey and Goliath's Circus Spectacular," a new VBS offering for 2005 that builds on the company's successful 2004 offering. + "No Experience Necessary," a Bible study resource authored by the Rev. Kelly A. Fryer, assistant professor of congregational leadership, Luther Seminary, St. Paul, Minn., and author of the first book in Augsburg Fortress' "Lutheran Voices" series, "Reclaiming the 'L' Word," published in 2003. The new Bible study will be released March 28, 2005, and will be introduced at 2005 ELCA synod assemblies. + Beginning Nov. 29 "Splash!" resources will be available for early faith formation in children from birth to age 3. A Splash! newsletter is offered to families of young children to help maintain church connections. + The "Lutheran Handbook" -- available in spring 2005 -- is a field guide for all things Lutheran and will be available for congregation members and prospective members. The handbook will be a component of a new Web and print-based Confirmation resource available in August 2005. + Provisional worship resources are available to congregations, and if the 2005 Churchwide Assembly approves a plan for the church's "Renewing Worship" project, a new ELCA worship book is expected to be available in the fourth quarter of 2006. "I am most excited about these new resources," Myers said in an interview with the ELCA News Service. "That's exciting, and they have long been needed. We're into new territory, and that's what Augsburg Fortress should be doing." Board members discussed proposals to restructure the ELCA's churchwide organization and governance as most churchwide boards have done this fall. They also discussed a preliminary report on a churchwide communication plan, requested by the Rev. Mark S. Hanson, ELCA presiding bishop. Hanson is expected to discuss the report with a committee of the ELCA Church Council when the council meets this month in Chicago. For information contact: John Brooks, Director (773) 380-2958 or [log in to unmask] http://www.elca.org/news