Contact:

Carol Crane Chris Allen Jim Gray

TowersGroup FEI Duke-Fuqua

212.354.5020 973.898.4658 919.660.2935

carolcrane@towerspr.com callen@fei.org jigray@mail.duke.edu

CFO OUTLOOK: PROFITS UP, CAPITAL EXPENDITURES FLAT,

EMPLOYMENT DOWN

__________________________________________

Predict Stock Market and GDP Rise

DURHAM, N.C. and MORRISTOWN, N.J., March 28, 2001 —Chief Financial Officers expect corporate profits will rise 10% on average at their companies during the next 12 months. Most companies will reduce or hold capital expenditures constant over the next year, and most do not have plans to increase employment during that period.

The findings are from the most recent quarterly “CFO Corporate Outlook Survey” conducted by Financial Executives International and Duke University. Participating in the survey were 153 CFOs at companies with median revenues of $100 million to $500 million. Revenues at 15% of the participating companies were over $1 billion. Of the total companies, half were manufacturers.

On the national economic front, the CFOs surveyed foresee only small growth in Gross Domestic Product, 1.6% in 2001, down a third from the 2.4% they expected just three months ago. And looking at the stock market, despite its loss year-to-date, the surveyed CFOs expect the S&P 500 to gain 5% over the next 12 months.

Regarding employment, 31% of companies plan on reducing employment this year, and another 20% will hold employment steady. This is the first time in the 5-year history of this survey that the majority of companies surveyed do not have plans to increase employment in the next 12 months. Last quarter, only 13% of firms said that they would reduce employment, and 12% would hold employment constant.

(MORE)

10 madison avenue, box 1938, morristown, NJ 07962-1938 973.898.4621 fax 973.898.1207 www.fei.org

CFO OUTLOOK/Page 2

Forty-one percent of companies in the survey plan to cut overtime in 2001, and another 38% will hold overtime constant. Among those cutting overtime, the average change will be –17.8%. Across all firms (including the 21% that will increase overtime), the average change in overtime will be –8.5%.

"CFOs in our survey are foreseeing a growth recession rather than an economic recession,” says John Graham, finance professor at Duke University's Fuqua School of Business and the director of the survey. “They’re saying inflation will stay in check due to restraints in pricing and higher productivity. Also, employees shouldn’t expect much of raise this coming year and getting a new job will not be easy. The good news is that CFOs predict that corporate earnings and the stock market will be in positive territory over the next 12 months.”

Spending, productivity, pricing outlooks

Other selected survey highlights include:

· Capital spending: 34% of companies will cut capital expenditures and another 17% will hold them steady. In contrast, last quarter nearly two-thirds of firms said that they would increase capital spending. Across all companies, capital spending will increase by an average of 5%, down from an expected increase of 12% last quarter.

· Productivity is expected to increase by 4.2% on average in 2001, with a 3% increase for the median firm.

· Pricing: Weighting the responses by firm revenues, CFOs expect the prices of their companies' products to increase only 0.6% during the next year, in comparison to an increase of 3% predicted last quarter. Among the 64% of firms that expect to boost prices, the average price increase will be 5.1%.

· Wages: Wages and salaries are expected to increase 3.9% at the average firm during the next 12 months, down from an expected growth of 7.2% in last quarter’s survey.

· Health care costs continue to escalate, with an average increase of 11.2% expected during the next 12 months.

(MORE)

10 madison avenue, box 1938, morristown, NJ 07962-1938 973.898.4621 fax 973.898.1207 www.fei.org

CFO OUTLOOK/Page 3

Technology Spending

Even with a slowing economy, firms will continue to pump money into technology. Two-thirds of firms expect to increase technology spending in the next 12 months (relative to last year’s spending). The weighted average increase will be 4.4% (“weighted average” meaning weighted by company revenues).

“Technology spending is defying gravity,” said Graham. “Despite companies’ almost across-the-board attempt to control expenses, technology is not an area where they’re cutting back.”

Stock market

The business leaders expect the S&P 500 to return 5.3% over the next 12 months. "This represents a market 'risk premium' of less than 1% over the yield on Treasury bills and notes,” notes Graham. “This is much lower than the historical risk premium of closer to 8% over T-bills." The CFOs also think that there is a 1-in-10 chance that the market could lose 5% or more. And the “optimistic scenario” is that there is only a 1-in-10 chance that the market will return 9% or more. The prospects are brighter in the long-run. Over the next 10 years, the stock market is expected to return about 9.4% annually, according to the survey.

About the Survey

The CFO Corporate Outlook Survey is conducted quarterly by Financial Executives International and Duke University’s Fuqua School of Business. Each survey polls a cross-section of CFOs from more than 5,000 U.S. companies on macro and company-specific economic and business issues. This survey was completed on March 19, 2001. In addition to the data provided here, this most recent survey polled CFOs about accounting and financial reporting issues and recommendations for the new SEC. Prior survey results are available at www.duke.edu/%7ejgraham.

(MORE)

10 madison avenue, box 1938, morristown, NJ 07962-1938 973.898.4621 fax 973.898.1207 www.fei.org

CFO OUTLOOK/Page 4

Financial Executives International (FEI) is the leading advocate for the views of corporate financial management. Its 15,000 members hold policy-making positions as chief financial officers, treasurers, and controllers. FEI enhances member professional development through peer networking, career planning services, conferences, publications, and special reports and research. Members participate in the activities of 86 chapters, 75 of which are in the United States and 11 in Canada. For more information about FEI, visit www.fei.org.

The Fuqua School of Business at Duke University was founded in 1970. Fuqua’s mission is to educate thoughtful business leaders worldwide and to promote the advancement of business management through research. For more information, visit www.fuqua.duke.edu.

###

10 madison avenue, box 1938, morristown, NJ 07962-1938 973.898.4621 fax 973.898.1207 www.fei.org