Earnings Reports for Feb. 1

Colgate-Palmolive Q4 Net Profit Climbs 12 Percent

Colgate-Palmolive, maker of toothpaste, soap, pet food and a host of other household products, said today net income per share rose 12 percent in the fourth quarter, topping Wall Street estimates by a penny.

Net income was 46 cents a share for the quarter, compared with 41 cents a year ago, the maker of Colgate toothpaste, Hill's Science Diet pet foods and Ajax dishwashing liquid said.

Analysts on average had forecast earnings of 45 cents a share, according to market research firm First Call/Thomson Financial.

Global sales rose 8 percent in the quarter to $2.4 billion, excluding currency effects.


Reebok Turns A Profit, Sales Essentially Flat

Reebok International, the world's No. 2 shoemaker, said today it turned a profit in the fourth quarter, reversing a year-ago loss, even though sales were essentially flat.

Canton, Mass.-based Reebok, whose brands include Rockport and Ralph Lauren, said it earned $6.2 million, or 11 cents a share, during the fourth quarter. That compares with a net loss of $14.7, or 26 cents a share, in the year-ago quarter, which included a $15.1 million charge for settling a lawsuit and restructuring.

Analysts, on average, were looking for Reebok to earn 7 cents a share, according to research firm First Call/Thomson Financial.

Reebok's fourth-quarter sales remained about even at $622.5 million, compared with $622.8 million in the year-ago quarter. BACK TO TOP

Sales of Gatorade Push Up Quaker Oats

Cereal and Gatorade sports drink maker Quaker Oats said today that fourth-quarter operating income rose 23 percent as strong sales of Gatorade helped boost results.

The Chicago-based company, which agreed to be bought by No. 2 U.S. soft drink maker PepsiCo in December, said it had operating income of $102.0 million in the quarter versus $82.6 million one year ago.

Fourth-quarter earnings per share before unusual items were 37 cents compared to 33 cents one year ago. The results matched the recent poll of analysts by First Call/Thomson Financial, which tracks earnings estimates.

Net sales rose to $995.9 million compared to $949.1 million one year ago. BACK TO TOP

Verizon Meets Estimates

Verizon Communications, the No. 1 U.S. local telephone company, reported today fourth-quarter profits in line with Wall Street forecasts as data and wireless sales surged and its long-distance subscriber base grew.

The company also repeated its outlook for 2001 earnings.

"Our solid operating performance in 2000 confirms both the validity of our business model and our ability to execute on it," said Verizon Chairman and Co-Chief Executive Charles Lee.

Verizon, formed through last year's merger of Bell Atlantic and GTE , said profits rose to $1.9 billion, or 77 cents a share, compared with $1.7 billion, or 63 cents a share, a year ago.

The results were in line with company and Wall Street forecasts per share, according to research firm First Call/Thomson Financial.

The company said its fourth-quarter results were 70 cents per diluted share, on net income of $1.9 billion, an 11.1 percent rise from 63 cents, or $1.7 billion, in the same period the year before.

Verizon said fourth-quarter revenues rose to $16.9 billion from $15.8 billion for the year-ago period. The reported results for all periods incorporate the net after-tax effect of gains, charges and other adjustments.

Shares of Verizon have gained about 21 percent in the past three months. They have outperformed the Standard & Poors 500-stock index by about 34 percent.

Total adjusted U.S. telecom revenues grew 3.3 percent for the fourth quarter, to $10.9 billion.

Verizon said it expected its 2001 earnings to be in the range of $3.13 to $3.17 a share. The company made a similar forecast in December.

Verizon said it added 190,000 digital subscriber lines in the fourth, 46 percent more than in the third quarter. The lines allow high-speed Internet access through regular telephone wires.

The 540,000 lines in service at the end of the year represent an increase of more than 500 percent over the number in service at the end of 1999.

The company said it was "well positioned in 2001 to further transform our growth profile and move into our target ranges of 8-10 percent revenue growth and $3.13-$3.17 earnings per share."

The company made a similar earnings forecast in December.

Verizon's long-distance unit ended the year with 4.9 million customers nationwide, 44 percent more than the year before. Verizon is the fourth-biggest U.S. provider of

long-distance services.

Verizon Wireless added 1.2 million net new customers during the fourth quarter, 5.9 percent more net additions than in fourth-quarter 1999. The total number of customers grew 15.6 percent year-over-year to 27.5 million.

Wireless revenues for the quarter grew to $4.1 billion, up 16.7 percent from fourth-quarter 1999.

Verizon said it added 190,000 digital subscriber lines in the fourth quarter, 46 percent more than in the third quarter. The lines allow high-speed Internet access through regular telephone wires.

The 540,000 lines in service at the end of the year represent a rise of more than 500 percent over the number in service at the end of 1999, it said. BACK TO TOP UPS' global volume — a key measure of financial health in the package delivery industry — averaged 14.7 million pieces a day in the quarter, up 3.6 percent from the same period last year.

UPS averaged volume of about 1.3 million pieces a day for its entire international service, a 13.3 percent gain from last year. Volumes for the company's U.S. domestic package business averaged about 13.5 million pieces a day, a 2.8 percent rise over the year-earlier period.

UPS, which was recently awarded a new China route, said it "remained bullish" on its international markets. BACK TO TOP

Schering-Plough Reports Healthy Earnings

Drug maker Schering-Plough said today that fourth-quarter profits rose 13 percent, in line with estimates, on strong sales of its allergy drug Claritin and its Rebetron therapy for Hepatitis C.

The Kenilworth, N.J.-headquartered firm said it earned $571 million, or 39 cents per share in the quarter, compared with $506 million, or 34 cents per share, in the year-ago period.

Schering-Plough was expected to earn 39 cents a share during the quarter, said First Call/Thomson Financial, which compiles securities analysts' profit expectations.

Fourth-quarter sales rose 6 percent to $2.4 billion from $2.3 billion a year ago.

U.S. pharmaceutical sales rose 11 percent to $1.3 billion.

The company said Claritin sales rose 15 percent in the quarter to $662 million, while Rebetron sales grew 9 percent to $324 million.

Global fourth-quarter sales of the company's nasal-inhaled asthma drugs, led by Nasonex, jumped 12 percent to $151 million. Its anti-clotting drug Integrilin saw sales of $50 million, up from $20 million in the 1999 quarter.

Sales of Remicade for rheumatoid arthritis and Crohn's Disease were $21 million in the quarter, compared with $6 million in the year-ago period.

Claritin is scheduled to lose its U.S. marketing exclusivity next year — an event which would usher in competition from cheaper generics. It is awaiting U.S. marketing approval for a closely related compound, desloratadine, that the company claims is superior to Claritin.

Schering-Plough received approval on Monday, Jan. 22, for a longer-acting version of its Intron-A treatment for hepatitis C.

From the start of the year to Jan. 24, Schering-Plough shares have underperformed the S&P 500 by roughly 12 percent. The company, however, has outperformed the American Stock Exchange Pharmaceutical Index by 3.5 percent.


Starbucks Beats Wall Street Forecasts

Starbucks Corp. reported its profits rose 41 percent in its fiscal first quarter, beating Wall Street forecasts, as the company continued its rapid global expansion, and raised its profit goal for 2001.

The Seattle-based coffee-shop giant said net earnings for the quarter ending Dec. 31 totaled $49 million, or 25 cents per diluted share, up from $34.7 million, or 18 cents, a year earlier.

Analysts on average had expected Starbucks to earn 23 cents per share, according to First Call/Thomson Financial. As previously reported, Starbucks's consolidated net revenues rose 26 percent to a record $667 million in the first quarter, from $529 million in the same period a year earlier.

Starbucks operates more than 3,800 coffee shops, including 3,200 in North America.


The company said fourth-quarter revenues with special items rose 8 percent to $8.1 billion compared with $7.5 billion a year ago. Reported global sales of prescription drugs in the United States rose 19 percent to $4.2 billion, excluding the impact of foreign exchange and the company's withdrawal last year of diabetes drug Rezulin following safety concerns.

Outside the U.S., pharmaceutical sales jumped 20 percent to $2.3 billion in the quarter on the same basis.

Shares of Pfizer have flourished in 2000 along with those of the rest of the pharmaceutical industry, as investors took money out of slumping technology stocks in favor of defensive areas like the drugs sector — an area seen as safe haven because the economy does not affect how many pills people take.

The stock has outperformed its peers on the American Stock Exchange Pharmaceutical Index by nearly 5 percent over the last 52 weeks, and out-paced the benchmark Standard & Poor's 500 index by about 20 percent over that period.

Pfizer said its so-called "alliance" revenues from combined sales of two drugs it co-markets with other companies — Pharmacia Corp.'s Celebrex and Eisai Inc.'s Alzheimer's disease treatment Aricept — soared 63 percent to $348 million in the quarter.

Global sales of Lipitor jumped 26 percent to $1.43 billion and grew 33 percent in the year to $5 billion — reaching the company's previously stated goal.

Global Viagra sales in the period rose 37 percent to $380 million in the fourth quarter.

Regarding its acquisition of Warner-Lambert, Pfizer said it achieved $430 million in savings in 2000 and sees merger savings in 2001 of $1.2 billion, growing to at least $1.6 billion in 2002. BACK TO TOP

International Paper's Earnings Fall 36 Percent

International Paper, the world's largest paper and forest products company, said today its fourth-quarter earnings fell 36 percent due to rising energy costs and the slowing U.S. economy.

The company said net earnings for the quarter, before special items, were $145 million, or 28 cents per share, compared with $227 million, or 55 cents per share in the 1999 quarter.

After special items, including pre-tax, one-time charges for Union Camp and Champion merger-related costs, IP posted a loss of 85 cents for the fourth quarter.

After IP warned a month ago of an earnings shortfall, the average consensus of analysts polled by First Call/Thomson Financial was lowered from 44 cents to 30 cents per share.

Fourth-quarter net sales were $7.2 billion, compared with $6.3 billion for the same period in 1999.

John Dillon, chairman and chief executive officer, said the slowing economy and rising energy costs occurred when the weather turns colder and demand drops for lumber and other wood products.

"As demand fell, we maintained our commitment to keep our production in line with customer orders, which negatively impacted overall sales," he said. "While many of these factors are continuing into the opening months of 2001, the steps we are taking will lead to a stronger International Paper for the long term."

International Paper said it has nearly completed its previously announced plan to adjust capacity as the wood products industry continues to battle lower demand and higher energy costs.

The company has closed its Mobile, Ala. and Camden, Ark. mills, and completed the downsizing of the Courtland, Ala. mill. The closure of the Lockhaven, Pa. mill is proceeding on schedule, IP said.

It also said asset sales are progressing rapidly as International Paper focuses on its three core businesses — paper, packaging and forest products. The company has increased its asset sales target to $5 billion, including timberlands, to be completed by the end of 2001.

It said it aims to reduce capital spending to $1.2 billion in the year 2001, which is about 60 percent of depreciation and amortization. The capital expenditure program in 2001 is 20 percent below the $1.4 billion spent in the year 2000, it said.

International Paper makes paper, packaging and wood and building products, as well as being the largest private forest landowner in the world. It has operations in nearly 50 countries, employs more than 117,000 people and exports its products to more than 130 nations. BACK TO TOP

Mad Cow Takes a Bite out of McDonald's

Fast food giant McDonald's said today its fourth-quarter earnings fell 7 percent as an outbreak of mad cow disease in Europe pushed the region's sales down 10 percent and threatened to weaken the company's first quarter results.

Net income at the Oak Brook, Ill.-based hamburger maker, the largest restaurant company in the world, fell to $452 million, or 34 cents a share, from $486.2 million, or 35 cents a share, a year earlier. McDonald's was expected to earn 35 cents a share, according to a recent poll of analysts by First Call/Thomson Financial.

McDonald's, which operates nearly 5,500 restaurants in Europe, its second-largest market behind the United States, has since November seen sales erode amid an outbreak of mad cow disease, or bovine spongiform encephalopathy, on the continent.

BSE is a chronic degenerative disease affecting the central nervous system of cattle and is believed to be contracted through feed containing animal by-products. It has been linked to a similar brain-wasting disease in humans.

CEO Jack Greenberg said in a statement that he expects a difficult first quarter of 2001 due to continued mad cow concerns, tough comparisons from last year, and an extra trading day in 2000.

"We expect the first quarter to be very challenging, due to outstanding results and an extra trading day in 2000, and continuing consumer confidence issues about European beef," he said.

The company has been battling public fears with stepped up advertising and greater promotion of non-beef products.

Sales to Europe, the company's second-largest market behind the U.S., fell 10 percent in the quarter to $2.21 billion from $2.45 billion one year ago. Operating income fell 17 percent to $267.3 million from $322.2 million.

"Europe got hit pretty hard," said Bear Stearns analyst Joe Buckley, who in June lowered his rating on McDonald's shares to neutral due to broader international concerns, including fluctuations in the euro. "The problem with mad cow is that it is an unknown. No one knows how long these concerns last."

Systemwide sales, which include sales from restaurants owned by franchises and those owned by the company, rose to $9.92 billion from $9.75 billion a year ago.

Sales in the United States, McDonald's largest market, rose 3 percent to $4.82 billion, from $4.68 billion one year ago. Operating income rose 14 percent to $385.3 million from $338.9 million. Sales in Asia Pacific, McDonald's third-largest market, rose 3 percent to $1.75 billion from $1.70 billion a year ago.

"Despite a number of operating challenges, our worldwide comparable sales were positive and systemwide sales increased seven percent in constant currencies for the year," Greenberg said.

The company plans to add about 1,700 restaurants in 2001, he said. The company said that 2001 per share earnings were expected to grow between 10 percent to 13 percent, excluding the impact of foreign currency translation.

In the year, it plans to buy back about $1.2 billion in stock, the remainder of a three-year $4.5 billion plan. In 2000, it purchased $2.0 billion worth. BACK TO TOP

Qwest Tops Wall Street

Telephone and data services provider Qwest Communications today posted a better-than-expected 44 percent jump in fourth-quarter profits, propelled by robust growth in Internet, data and wireless telephone revenues.

Qwest, which acquired regional phone company U S West Inc. last year in a $36 billion deal, said in a statement it was on track to meet its targets for 2001 revenues and earnings before interest, taxes, depreciation and amortization, or EBITDA, a key measure of a company's performance.

Andrew Hamerling, an analyst with Banc of America, called the results "terrific."

"Everything is as expected," he said. "Overall I'd say it's a great quarter."

The Denver-based company said pro forma profits excluding one-time items rose to $270 million, or 16 cents a diluted share, compared with $188 million, or 11 cents a share, a year ago.

The results beat Wall Street expectations of 14 cents a share, according to research firm First Call/Thomson Financial.

"With the initial integration of the [U S West] merger successfully completed, we are on track to meet our expected growth rates," Chairman and Chief Executive Joseph Nacchio said in a statement.

Qwest said revenues rose 9.9 percent to $5.02 billion. The increase was driven by growth of almost 40 percent in Internet and data services.

Wireless revenues rose 90 percent to almost $150 million. The number of wireless customers increased to more than 805,000, above the company's target of 800,000 for the end of 2000.

Fourth-quarter EBITDA was up 19.7 percent, to $1.99 billion.

Shares of Qwest have fallen about 10 percent amid sharp declines throughout the telecom sector over the past year. Its stock has underperformed the Standard & Poor's 500 index by about 4 percent.

The company also said it expected to double the number of customers for its digital subscriber line (DSL) service, which provides high-speed Internet access over conventional phone lines, to 500,000 by the end of the year.

Qwest said it ended 2000 with more than 255,000 DSL customers, above its target of 250,000.

It also said it expected to file with the Federal Communications Commission to enter long-distance service in several states by the end of 2001.

It expects to apply to reenter long-distance business in one of the states in its local service area by the summer.

Tavis McCourt, an analyst with Morgan Keegan & Co. Inc. in Memphis, Tenn., said entry into long-distance markets was vital for Qwest's growth.

"Certainly they are going to be as aggressive as possible to make that a reality," he said.

Qwest reiterated that it expected 2001 revenues to be in the range of $21.3 billion to $21.7 billion and EBITDA to be $8.5 billion to $8.7 billion.

Hamerling, the Banc of America analyst, said the biggest challenge facing Qwest was to meet its target of 20 percent long-term EBITDA growth.


Whirlpool Reiterates Job Cuts

Appliance maker Whirlpool met Wall Street's lowered fourth-quarter earnings expectations and affirmed its global restructuring plan will mean up to 6,000 jobs cut in the coming year.

The company said today it expects to trim more than 2,000 jobs worldwide as part of the restructuring's first phase, with more details to be announced within two weeks.

All told, the company shake-up — which will pare 10 percent of Whirlpool's 60,000-member work force — will result in pre-tax charges of $300 million to $350 million, with annualized savings of $225 million to $250 million, the company said.

"This will be a year of challenge and opportunity," David R. Whitwam, Whirlpool's chairman and chief executive, said in a statement. "We believe that our strong brands, global platform, innovative products and consumer focus — combined with our restructuring efforts and the associated lower cost structure — will produce a strong operational performance and solid financial results in 2001."

Whirlpool said its fourth-quarter net earnings were $67 million, or $1 per share, compared with $113 million, or $1.51 per share, during the year-ago period.

Analysts surveyed by First Call/Thomson Financial were expecting 99 cents per share, having lowered their estimate from $1.42 a share after Whirlpool issued an earnings warning last month. At the time, Whirlpool blamed intensified price competition, rising material costs, and slowing or declining demand.

The company said sales during the three months ended Dec. 31 were $2.58 billion, down 4 percent from $2.69 billion in the year-ago period.

It added that it expects its first-quarter performance, excluding charges, to be in line with fourth-quarter earnings of $1 per share. Analysts surveyed by First Call/Thomson Financial had been expecting $1.02 per share.

The North American appliance industry has been expected to be down 7 percent to 8 percent in the fourth quarter versus the same period in 1999, Whirlpool said last month. Earlier company estimates forecast a fourth-quarter decline in industry shipments of 2 percent to 3 percent.

Whirlpool has said its restructuring involves a reduction and reconfiguration of global operations, including the closure of some plants.

For the year, Whirlpool earned $367 million, or $5.20 per share, on sales of $10.33 billion. In the previous year, the company earned $347 million, or $4.56 per share, on sales of $10.51 billion.

Whirlpool is the world's largest manufacturer and marketer of major home appliances. It sells products under 11 brand names in more than 170 countries. The Benton Harbor-based company has major operations in seven states — Arkansas, Indiana, Michigan, Mississippi, Ohio, Oklahoma and Tennessee — and 12 countries, including Canada and Mexico.