American Greetings spending slows, plans to invest excess cash in process improvements

By Lisa Kerner

Charlotte, N.C., Dec. 21 - American Greetings Corp. chief executive officer Zev Weiss said he is "pleased with our fiscal 2007 third quarter performance as it was ahead of our internal earnings expectations, despite the company falling short of its internal sales plan" in a call Thursday to investors and analysts.

The Cleveland-based greeting card company realized a $20 million gain in the quarter due to retailer consolidation and its effect on several long-term supply agreements, Weiss noted.

"We expect a cash inflow of $60 million in the fourth fiscal quarter," Weiss said. In addition, American Greetings is on target to meet its projected earnings per share goal of $0.80 to $1.00.

The company is projecting cash flow from operating activities less capital expenditures of about $200 million, compared with earlier guidance of $100 million to $130 million.

According to Weiss, American Greetings will wrap up its stock repurchase program and look for other areas in which to invest its cash, including improving its internal and decision-making processes.

"We are analyzing our information systems and will consider additional investments in this area over time," Weiss said.

Chief financial officer Stephen J. Smith addressed American Greetings' capital spending to date of $30 million, down $2.7 million from last year. According to Smith, the company is investing in capital projects at a slower rate than originally anticipated.

"We're now estimating a capital expenditure range of $45 million to $50 million for fiscal 2007, a reduction from the original estimate of $30 million." Smith said. "Approximately $20 million will be shifted to fiscal 2008."

American Greetings under spent due in part to improved equipment purchasing and delaying information technology spending until next year, according to Smith.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.