It's a very informal/slang way of saying they are in a lot of trouble and in a very difficult situation which will be difficult/impossible to improve. A screw-up (n) is a big mistake and to screw up (v) is to make a big mistake. "I screwed up at work today and got fired." "To be screwed" is to be in a situation that will be hard to get out off. "After Germany scored 3 quick goals, Brazil were screwed." Your sentence is a version of this idea.

that's a peculiar way of saying "we're very screwed up", but it's not really the norm. Saying "we're significantly screwed" makes sense, but "significantly screwed up", although it makes sense, is not really used in everyday American slang. Personally, it sounds a bit off. ('screwed up' is equivalent to 'dysfunctional' in this case, a mother who says that her family is 'screwed up' implies that the family is abnormal in some way. "Screwed" refers to being in a difficult or dangerous situation; "oh my god, we're so screwed!" is equivalent to "oh my god, we are in serious trouble". Both expressions are currently used, but the second one is very informal) Hope that helps. -Alex

This phrase is from an American movie.Thank you for the perspective from England.I really appreciate it.:)

Hi Iris. I missed your question because it was still quite early in the UK when you posted it, but I just wanted to give you the perspective from this continent. I agree with the views from Australia and the US : here as well, 'They're screwed' means they're in trouble/ in a hopeless situation (like Brazil after the first few goals!), whereas 'screwed up' means dysfunctional (possibly emotionally damaged in some way). By the way, this is quite informal language, mainly because 'screw' also means to have sex. It's an informal, but not a vulgar term, and certainly more acceptable than the 'f' word.