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C H A I R M A N ’ S R E P O R T

On behalf of the Board of Directors I want to welcome you to the 42 Annual Shareholders’
nd
Meeting of FGM Architects. This year, for the first time, we welcome an independent ESOP Trustee
to the meeting- Mr. Michael New, from Invictus Fiduciary Services. We have retained the services
of an independent trustee to ensure the interests of the ESOP are well represented, particularly
amid a number of Principal divestitures that will be in progress for the next several years.
I usually try to begin my report by trying to provide an
overview of the national and local economy. On a “There are known knowns. These
national level, the economy is humming by almost every are things we know that we know.
measure. The stock market has been breaking records There are known unknowns. That is
almost every week, it seems, unemployment rates are the to say, there are things that we
lowest in recent memory, most economists would call this know we don't know. But there are
“full employment”. Corporate profits are healthy and also unknown unknowns. There are
consumer optimism is solid. The housing market is things we don't know we don't
recovering, although not evenly around the country, and know.”
certainly more robustly in urban areas versus suburban
and rural areas. At the State level, and to some extent at Donald Rumsfeld, former Secretary of
Defense
the Federal level, it seems at times as if our political
leaders are trying to hurt rather than help things. It’s often
said markets hate uncertainty, and I believe the same is true regarding clients considering large
capital expenditures especially building projects. The Federal Government is currently operating
under a “continuing resolution” translated to plain English, this means Congress has not passed an
annual budget. We all know about the State of Illinois’ political gridlock. For the first time in a
couple of years, the Illinois Legislature actually passed a budget over the Governor’s veto. But
recently, he partially vetoed the spending distribution rules applied to local school districts. The
political uncertainty results in many of our public markets, both federal and local, including
agencies, municipalities, and schools deferring projects until they have budgets they can depend
on. Once the State passed a budget, we saw an immediate upswing in solicitations for
Architectural services coming from State Universities, who have operated without funding
commitments for several years. We have seen an increase in local and federal solicitations as well.
These are positive signs, and we hope to see more marketing opportunities in 2018, but they also
confirm the need to pursue continued market diversification.
Our financial performance in FY17 is best understood by beginning in FY16. As you will recall, last
year we began strong and then ran into several mid-year project interruptions which required
reductions in force and other expense reductions. We were able to stay profitable because of our
quick response to conditions. FY17 is almost a mirror of the previous year. The project slow-downs
persisted into the first quarter of this year, but then things turned around in the spring leading to
an extremely busy summer and fall. Overall, our net revenue for the year fell, but our profitability
better than tripled from the previous year and we achieved an operating profit of 7% or $833,900.
Our success this year required herculean efforts on the part of many of the folks in the room here
today as well as the rest of the staff to achieve our 31 year of profitability.
st

Our valuation this year received two levels of scrutiny. As we mentioned above this year we
engaged the services of an independent Trustee to look after the interests of the ESOP. Invictus