Title: ELCA Publisher's 2001 Financial Losses Heavy but Situation Improving
ELCA NEWS SERVICE

November 2, 2001

ELCA PUBLISHER'S 2001 FINANCIAL LOSSES HEAVY BUT SITUATION IMPROVING
01-277-JB

     MINNEAPOLIS (ELCA) -- Augsburg Fortress, the publishing house of
the Evangelical Lutheran Church in America (ELCA), incurred an operating
loss of $4.22 million for the first nine months of 2001, said George W.
Poehlman, Augsburg Fortress vice president for finance.  However, the
company showed operating profits for August and September, the result of
this summer's reorganization, reduced staff and tight spending controls,
he said.
     Poehlman made the comments in his report to the Augsburg Fortress
board of trustees, which met here Oct. 25-27.
     Sales for the first nine months of 2001 have dropped 6.3 percent
from the same period in 2000, Poehlman said.  Drops in academic,
consumer and education sales contributed to the decline, he said.  The
publisher had hoped for a "giant leap" forward in sales this year and
invested heavily in marketing and developing new resources, Poehlman
said.  When the sales increase did not occur, the company reorganized in
July, consolidating its sales effort and reducing staff by 42 people,
including some senior company leaders.
     "Significant damage has been done to our financial position in the
last two years," Poehlman said.  The company's cash and investment funds
have declined some $10 million, said Michael E.  Carscaddon, board
member, Americus, Ga., who reported to the board in his role as chair of
the board's audit and finance committee.
  Augsburg Fortress is presently negotiating with a bank for a loan
that will be secured by the company's assets, Poehlman said.
  "Our nine-month statement is not pretty, but things are getting
better," Poehlman said of this fall's early reports.  In August the
company's operating profit was $582,000.
  The terrorist attacks of Sept. 11 caused sales to slow
considerably.  After Sept. 11 the company initiated a series of
austerity measures.  These included a hiring freeze and a freeze on
salary increases, said the Rev. Marvin L. Roloff, Augsburg Fortress
president and chief executive officer, a report to the board.  The
company was able to show a $100,000 operating profit for September,
Poehlman said.
  Augsburg Fortress is planning a $54.8 million sales forecast for
2002 that is basically "flat" compared to this year's expected sales of
$54.1 million, Carscaddon said.
  "It is critical that we stabilize the financial condition of the
(publishing) house," he said in his report.
  The 2002 projected budget is a plan to "stabilize the business,'
Poehlman said.  Expenses have been reduced nearly five percent to $30.4
million in the 2002 budget, he said.  In addition, management hopes to
recover some losses in the capital reserve fund, Poehlman said.  The
company also wants to reduce its inventory, which was increased earlier
this year in anticipation of better sales.
  Goals for the 2002 operating budget for Augsburg Fortress are to
achieve forecast sales, control expenses and reduce inventory, Poehlman
said.  Key to sales improvements are meeting sales forecasts for
education and worship resources -- two areas which must perform well for
the overall health of the company, he said.
  If projections hold, the company is expecting to report a positive
cash flow for 2002 estimated at $3.1 million, Poehlman reported.


For information contact:
John Brooks, Director (773) 380-2958 or [log in to unmask]
http://listserv.elca.org/archives/elcanews.html