Contact: Mark Panus, Duke-Fuqua, (919) 660-2903 or Chris Allen, FEI, (973) 898-4658

CFO SURVEY: ECONOMY WILL SLOW TO A STANDSTILL IF INTEREST RATES JUMP;

WAGES TO RISE 4.7%; HEALTHCARE COSTS BY 7%

DURHAM, N.C., June 28 — A new poll of 321 companies indicates that the economy will continue to grow at a good pace for the rest of 1999. The results are from the latest Financial Executives Institute/Duke University Corporate Outlook Survey, conducted the week of June 14. The CFOs who responded to the survey expect earnings growth to average 12.9% for 1999 (median earnings growth of 10%). This is down slightly from the prediction of last quarter's survey, when earnings growth of 15% was predicted. "The small reduction in earnings growth probably occurred because it is now widely believed that the Federal Reserve Bank will increase interest rates by 1/4% in the near term," says Duke University finance professor John Graham, director of the survey.

"The economy will slow to a standstill, however, if interest rates increase by 1% or more," continued Graham. "We asked the executives what they expect their earnings to be if the Fed raises rates by between 1% and 2% during 1999. Under this scenario, earnings are expected to shrink by 10% during 1999, averaged across all firms. The median firm would have zero growth in earnings in 1999 if interest rates increase by 1% to 2%."

Last quarter's Corporate Outlook Survey accurately predicted 15% earnings growth for the year, which is in line with actual earnings growth of approximately 4% for U.S. firms in the first quarter. "CFOs remain confident about earnings prospects," notes FEI President and CEO Phil Livingston. "Seventy-one percent expect earnings to increase in this year over last, while just 21% expect earnings declines."

Other findings from the FEI/Duke survey include:

Capital Expenditures and Employment

Tight Labor Market

Federal Budget Surplus

Productivity

Inflation

Wages/Salaries

Health Care Costs

Earnings

About the Survey

The survey is conducted quarterly by FEI and Duke University’s Fuqua School of Business. Each survey polls a broad cross-section of CFOs from over 3,000 U.S. companies. The current survey was conducted during the week of June 14, 1999. Complete survey results are available on the Internet at:

www.duke.edu/%7ejgraham

About FEI and Fuqua

Financial Executives Institute is the leading advocate for the views of corporate financial management. Its 14,000 members hold policy-making positions as chief financial officers, treasurers and controllers at 8,000 companies throughout the United States and Canada. For more information, visit www.fei.org.

The Fuqua School of Business at Duke University was founded in 1970. Fuqua’s mission is to provide the highest quality education for business and academic leaders and to promote the advancement of the understanding and practice of management through research.

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