Economic Confidence Softens Among Northwest CEOs; 'Y2K Bug' Not Viewed as Significant Performance Threat.

SEATTLE--(BUSINESS WIRE)--March 10, 1999--Northwest chief executive officers are anticipating mild slowing for the region's economy and it is beginning to impact their hiring and capital spending plans, according to a recent survey released today.

While the region's CEOs remain generally upbeat, U.S. Bancorp Piper Jaffray's sixth annual Economic Confidence Survey(R) reveals further tempering of business optimism in core areas. Seventy-seven percent of CEOs surveyed peg prospects for the Northwest economy over the next 12 months at "somewhat good" to "very good." That represents a 14 percent drop from prospects one year ago, and is well off from the 95 percent level of 1997.

When asked about hiring and capital spending plans, participating CEOs continued to suggest a modest downshifting. In the hiring area, 18 percent of CEOs expected a "significant increase" over the next 12 months, compared to 27 percent last year and an average of 26 percent over the past five years. Still, the trend is toward adding personnel. Sixty-four percent of CEOs suggest there will at least "some hiring" during the period.

"Hiring intentions by our large regionally based companies are always a good barometer of economic health," said U.S. Bancorp Piper Jaffray Equity Strategist Robert Toomey. "While responses this year support overall hiring levels similar to last year, we're keeping a close eye on the erosion we've seen in terms of extreme optimism."

As for capital expenditures, those CEOs predicting either a "significant increase" or "modest increase" in capital spending dropped to 54 percent this year, versus 64 percent in 1998 and a survey-high of 73 percent in 1997. Those suggesting there will be "no change" in capital spending jumped to 46 percent this year compared to 33 percent last year.

A telling result of this year's survey relates to CEO confidence in overseas markets for the next 12 months, particularly in Southeast Asia. When asked to assess their companies' abilities to expand business overseas, 71 percent of respondents replied either "very good" or "somewhat good" (on a scale of 1 to 7 with "very good" being the highest response and "very poor" the lowest).

That is up 14 percent from responses to the same question last year.

In the context of the depressed economies of Southeast Asia, conditions also seem to be improving. With respect to the past 12 months, 15 percent of CEOs surveyed believe the Asian downturn has had a "very negative" impact on their businesses. Forty percent of respondents felt the impact had been "moderate," while the largest group (45 percent) have seen "little" or "no impact."

Looking forward, 20 percent of survey participants believe it is "very likely" that continuing weakness in Southeast Asia will adversely affect business this year. Forty-three percent believe it is "somewhat likely" to have an impact, while 37 percent suggest it is "unlikely" or "very unlikely" to have an impact.

"It appears from our survey that the Asia Factor has impacted regional companies, but not to the degree many were forecasting a year or two ago," Toomey said. "Our regional economy has weathered the Asian crisis relatively well."

With growing public and investor concern about the likely impact of the Year 2000 computer problem, U.S. Bancorp Piper Jaffray asked CEOs in this year's survey to comment on the issue and how their companies are addressing it.

Participants were queried on the degree to which they expect Y2K to impact their ability to conduct business, and the extent to which they expect increased spending on information technology as a result.

The vast majority (69 percent) responded "none" or "very little" adverse impact, with just 11 percent indicating there would be a "mild impact." None of the CEOs saw a significant impact from the Y2K issue, suggesting to Toomey that most companies are well along in developing solutions.

In terms of additional Y2K spending, 26 percent of the companies saw a "substantial" or "somewhat substantial" increase, with 54 percent anticipating a "moderate" increase and 20 percent predicting "little" or no increase in related spending.

This year's Economic Confidence Survey(TM) polled 55 chief executives from Washington, Oregon and Idaho. The results were announced at U.S. Bancorp Piper Jaffray's Thirteenth Annual Pacific Northwest Investor Conference held today in Seattle.

U.S. Bancorp Piper Jaffray, a subsidiary of Minneapolis-based U.S. Bancorp, provides a full range of investment products and services to individuals, institutions and businesses. Founded in 1895, the company has grown to become the 11th largest brokerage in the nation with more than 100 offices in 17 states. The company also has a national reputation for its expertise in fundamental and technical research as well as debt and equity financing for growth companies in key industries. Through U.S. Bank, U.S. Bancorp Piper Jaffray clients can access a full range of commercial and retail banking products. For more information, visit our Web site at www.piperjaffray.com. -0-

                      U.S. BANCORP PIPER JAFFRAY
                  1999 ECONOMIC CONFIDENCE SURVEY(TM)
                                RESULTS

     1) How do you feel about the prospects for your business over the
       next 12 months?

        1       2       3       4       5       6       7
        0%      0%      6%      3%      23%     43%     26%

        Very Pessimistic       Neutral       Very Confident

     2) How optimistic are you about the business outlook for your
        industry over the next 12 months?

        1       2       3       4       5       6       7
        0%      0%      6%      14%     43%     31%     6%

        Very Pessimistic       Neutral       Very Confident

     3) What are the hiring plans at your company over the next 12
        months?

        1       2       3       4       5       6       7
        0%      3%      3%      31%     46%     9%      9%

        Significant Layoffs    No Change     Significant Hiring

     4) What are your capital spending plans over the next 12 months?

        1       2       3       4       5       6       7
        0%      0%      6%      40%     40%     11%     3%

        Substantial Reduction   No Change   Substantial Increase

     5) How confident are you about the prospects for the Northwest
        economy over the next 12 months?

        1       2       3       4       5       6       7
        0%      0%      0%      23%     31%     40%     6%

        Very Poor Prospects    Neutral      Very Good Prospects

     6) How confident are you about the prospects for the national
        economy over the next 12 months?

        1       2       3       4       5       6       7
        0%      0%      6%      23%     54%     14%     3%

        Very Poor Prospects    Neutral      Very Good Prospects

     7) How do you assess your company's opportunities for expanding
        business in overseas markets during the next 12 months?

        1       2       3       4       5       6       7
        6%      3%      9%      11%     17%     40%     14%
        Nil                  Moderate               Excellent

     8a) To what degree has the Southeast Asian economic downturn
         adversely affected your business during the past 12 months?

        1       2       3       4       5       6       7
        3%      9%      3%      26%     14%     26%     20%

        Very Negative Impact    Moderate Impact       No Impact

     8b) How likely is it that a continued Southeast Asian downturn
     will adversely affect your business during the next 12 months?

        1       2       3       4       5       6       7
        0%      0%      20%     23%     20%     23%     14%

        Very Likely         Somewhat Likely          Unlikely

     9a) To what degree do you anticipate that Y2K-related issues will
     adversely impact your ability to conduct business over the next
     12 months?

        1       2       3       4       5       6       7
        0%      0%      9%      11%     11%     46%     23%

        Very Negative Impact     Mild Impact      No Impact

     9b) To what extent do you expect increased information technology
     expenditures tied to Y2K compliance over the next 12 months?

        1       2       3       4       5       6       7
        0%      6%      20%     31%     23%     17%     3%

        Substantial Increase  Moderate Increase   No Increase

     10a) How much impact do you expect the Internet/e-commerce to
     have on the overall efficiency of your business by the end of
     1999?

        1       2       3       4       5       6       7
        0%      11%     26%     43%     11%     6%      3%

        No Impact        Moderate Impact       Substantial Impact

     10b) What percentage of your anticipated sales do you expect to
     derive from Internet/e-commerce by the end of 1999?

        0-20%        20-40%        40-60%       60-80%        80-100%
         94%           3%            3%           0%            0%