new.stockwatch.com 2003-01-28 04:06 - News Release

CINCINNATI, Jan. 28 /PRNewswire-FirstCall/ -- The Procter & Gamble Company announced another period of strong business growth for the quarter ended Dec. 31, 2002. This is the fourth consecutive quarter of double-digit core earnings progress -- and attainment of long-term growth objectives.

For the quarter ended Dec. 31, 2002, unit volume grew eight percent over the prior year, behind double-digit growth in the health care and beauty care businesses, as well as very strong results in the baby and family care business. Excluding acquisitions and divestitures, unit volume increased seven percent. Reported net sales were $11.01 billion, up six percent versus year-ago, as strategic pricing investments and mix partially offset volume growth. The net foreign exchange impacts increased sales by one percent, reflecting the benefits of the Euro offset by Latin American devaluations.

"This was a strong quarter where we exceeded expectations despite a very challenging global economic and competitive environment," said AG Lafley, chairman, chief executive and president of P&G. "At the midpoint of our fiscal, we are well positioned to meet our growth goals for the year. We have the right strategies and we're making the necessary systemic interventions to sustain long-term top- and bottom-line growth objectives."

Net earnings for the quarter were $1.49 billion or $1.06 per share, up 14 percent versus year ago. Results included a $98 million after tax ($0.07 per share) restructuring charge related to the company's program to streamline its operations and business portfolio. This restructuring program charge for the quarter included employee separation costs of $54 million before tax and asset-related charges of $73 million before tax. Net earnings in the year-ago quarter were $1.30 billion or $0.93 per share, including a $146 million after tax ($0.10 per share) restructuring charge.

Core net earnings, which excludes restructuring charges, grew ten percent to $1.59 billion for the quarter. On a per share basis, core earnings grew ten percent to $1.13.

Key Financial Highlights * Core gross margin expanded 140 basis points; this excludes $84 million before tax in restructuring charges in the current quarter and $82 million before tax in the prior quarter. This marks another quarter of significant improvement, consistent with the strong results delivered over the preceding six quarters. This expansion primarily was driven by base business savings, which includes both systemic material price improvements and volume benefits. Restructuring program savings and improved margin mix also contributed. * Core Marketing Research and Administration (MR&A) as a percent of sales decreased about 40 basis points behind reductions in overhead costs partially offset by increased marketing spending, primarily in beauty care. This excludes $57 million before tax in restructuring charges in the current quarter and $121 million in the prior quarter, year-ago. * Core operating income growth was robust, up 16 percent, versus the prior year. Core net earnings increased ten percent despite non-operating gains from the divestiture of Comet in the base period. * The company's free cash flow before dividends for the second quarter was $1.98 billion, representing a $0.45 billion (+29%) increase over the same quarter year-ago. Free cash flow before dividends for the first half of the year was $3.71 billion, representing a $1.20 billion (+48%) increase over the same period last year. This increase was driven primarily by improved earnings growth. Business Segment Discussion:

The following provides additional perspective on the company's October - December results by business segment. Double-digit earnings progress was achieved by each business segment, despite the economic challenges in Latin America.

• Fabric and home care delivered strong results this quarter. Unit volume growth was broad-based, increasing eight percent on continued strength across most regions. Net sales were $3.10 billion, up five percent. Sales growth trailed volume due to pricing adjustments to restage the North American Cheer(R) brand. Also, negative mix in laundry was driven by a strong performance on mid-tier brands, growth in developing markets and larger sizes. Net earnings increased 18 percent to $514 million, driven by higher volumes and gross operating margin expansion from ongoing base business savings projects and lower material prices from systemic purchasing improvements. * Baby and family care quarterly volume, sales and earnings results also were very strong. Unit volume increased eight percent behind global strength in both baby care and family care, driven primarily by the Baby Stages of Development(R) initiative, Charmin(R) in Western Europe and Mexico and in U.S. Bounty(R). Net sales were $2.53 billion, up seven percent. Temporary pricing adjustments in response to competitive activity in both the baby and family care segments were partially offset by a positive one percent foreign exchange impact and positive mix behind strength in premium tier diapers. Earnings increased 21 percent to $276 million, reflecting volume growth and continued cost reductions. * Health care delivered excellent results this quarter with unit volume, sales and earnings all up double-digits. Unit volume increased 18 percent, driven by strong results in oral care and continued strength in pharmaceuticals. Net sales were $1.57 billion, up 17 percent including a one percent positive foreign exchange impact partially offset pricing investments. Crest Whitestrips(R) and Actonel(R) both delivered particularly strong volume and sales growth. Health care's net earnings increased 47 percent to $253 million, reflecting volume growth and positive mix toward high-margin products, partially offset by marketing investments to fuel future growth. * Beauty care posted strong results with double-digit volume, sales and earnings growth. Unit volume was up 14 percent. Excluding the impact of acquisitions and divestitures, volume was up six percent behind strength in hair care, on Pantene(R) and Head & Shoulders(R), and fine fragrances. Sales grew ten percent, including a positive one percent foreign exchange impact, reaching $3.00 billion. Sales trailed volume growth due to mix impacts driven by the Clairol business and the repositioning of the company's hair care portfolio of brands into multiple price tiers to deliver better consumer value. Net earnings were $507 million, up 15 percent behind the strong volume growth, which also funded increased marketing investments. * Snacks and beverages results were mixed. Unit volume was down one percent. Sales grew one percent to $881 million, including a positive two percent foreign exchange impact, as increased merchandising investments in beverages was offset by positive category mix. Net earnings grew 15 percent to $110 million behind positive mix and a continued focus on reducing costs. Third Quarter and Fiscal Year Estimates

For the March quarter, volume is expected to be up six to eight percent versus year-ago, behind continued core business strength. The net volume impact from acquisitions and divestitures in the quarter is expected to be a negative one percent due to the Jif/Crisco spin merge. Sales, excluding foreign exchange, are expected to be up in the mid single-digits versus year-ago. At current rates, foreign exchange is expected to have a positive two percent impact on the topline. As a result of the strong topline growth, core earnings per share is expected to grow eleven to thirteen percent, despite a difficult base period comparison.

For the fiscal year, sales growth is expected to be at the top end of the company's four to six percent target range. At current rates, foreign exchange is expected to have about a one percent positive impact on the topline. Earnings per share are expected to be in the twelve to thirteen percent range for the full fiscal year.

All statements, other than statements of historical fact included in this presentation, are forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995. In addition to the risks and uncertainties noted in this release, there are certain factors that could cause actual results to differ materially from those anticipated by some of the statements made. These include: (1) the achievement of expected cost and tax savings associated with changes in the company's organization structure; (2) the ability to achieve business plans, including growing volume profitably, despite high levels of competitive activity, especially with respect to the product categories and geographical markets in which the company has chosen to focus; (3) the ability to maintain key customer relationships; (4) the achievement of growth in significant developing markets such as China, Turkey, Mexico, the Southern Cone of Latin America, the countries of Central and Eastern Europe and the countries of Southeast Asia; (5) the ability to successfully manage regulatory, tax and legal matters, including resolution of pending matters within current estimates; (6) the ability to successfully implement, achieve and sustain cost improvement plans in manufacturing and overhead areas; (7) the ability to successfully manage currency (including currency issues in Latin America), interest rate and certain commodity cost exposures; and (8) the ability to manage the continued political and/or economic uncertainty in Latin America (including Venezuela) and the Middle East, as well as any political and/or economic uncertainty due to terrorist activities or war (including Korea). If the company's assumptions and estimates are incorrect or do not come to fruition, or if the company does not achieve all of these key factors, then the company's actual results might differ materially from the forward-looking statements made herein.

About Procter & Gamble

P&G is celebrating 165 years of providing trusted quality brands that make every day better for the world's consumers. We market nearly 300 brands -- including Pampers(R), Tide(R), Ariel(R), Always(R), Whisper(R), Pantene(R), Bounty(R), Pringles(R), Folgers(R), Charmin(R), Downy(R), Lenor(R), Iams(R), Crest(R), Actonel(R), Olay(R) and Clairol Nice 'n Easy(R) - in more than 160 countries around the world. The P&G community consists of nearly 102,000 employees working in almost 80 countries worldwide. Please visit www.pg.com for the latest news and in-depth information about P&G and its brands.

P&G will webcast its conference call on Tuesday, January 28, 2003, at 8:30 a.m. to review its second quarter 2002/03 results. The call will last approximately one hour. You may receive the web cast by going to our web site at: www.pg.com

We suggest you check in at least ten minutes in advance of the start time to complete the brief registration process and ensure you are set up to receive the webcast.

            THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
            (Amounts in Millions Except Per Share Amounts)
                  Consolidated Earnings Information


                                 Three Months Ended December 31, 2002

                              % Change  Earnings  % Change      % Change
                                Versus   Before    Versus         Versus
                          Net   Year    Income      Year    Net    Year
                         Sales   Ago     Taxes      Ago   Earnings  Ago

FABRIC & HOME CARE $3,102 5% $768 16% $514 18% BABY AND FAMILY CARE 2,526 7% 443 16% 276 21% BEAUTY CARE 2,997 10% 731 19% 507 15% HEALTH CARE 1,567 17% 374 42% 253 47% SNACKS AND BEVERAGES 881 1% 168 17% 110 15% TOTAL BUSINESS SEGMENT 11,073 8% 2,484 20% 1,660 21% CORPORATE (excluding restructuring costs) (77) n/a (173) n/a (68) n/a TOTAL COMPANY - CORE 10,996 6% 2,311 10% 1,592 10% RESTRUCTURING COSTS 9 n/a (132) n/a (98) n/a TOTAL COMPANY - REPORTED $11,005 6% $2,179 14% $1,494 15%

                                    Six Months Ended December 31, 2002

                              % Change  Earnings  % Change      % Change
                                Versus   Before    Versus         Versus
                          Net   Year    Income      Year    Net    Year
                         Sales   Ago     Taxes      Ago   Earnings  Ago

FABRIC & HOME CARE $6,234 7% $1,577 19% $1,061 20% BABY AND FAMILY CARE 4,952 6% 843 13% 517 15% BEAUTY CARE 6,120 18% 1,535 22% 1,055 19% HEALTH CARE 2,977 18% 649 37% 449 44% SNACKS AND BEVERAGES 1,703 2% 290 13% 201 18% TOTAL BUSINESS SEGMENT 21,986 11% 4,894 21% 3,283 21% CORPORATE (excluding restructuring costs) (189) n/a (294) n/a (114) n/a TOTAL COMPANY - CORE 21,797 8% 4,600 14% 3,169 14% RESTRUCTURING COSTS 4 n/a (283) n/a (211) n/a TOTAL COMPANY - REPORTED $21,801 8% $4,317 22% $2,958 23%

            THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
               OCTOBER-DECEMBER NET SALES INFORMATION
                   (Percent Change vs. Year Ago) **

                         Volume
                     With       Without                            Total
             Acquisitions/ Acquisitions/                    Total Impact
             Divestitures  Divestitures  FX Price Mix/Other Impact Ex-FX

FABRIC AND HOME CARE 8% 7% 0% -2% -1% 5% 5% BABY AND FAMILY CARE 8% 8% 1% -4% 2% 7% 6% BEAUTY CARE 14% 6% 1% -2% -3% 10% 9% HEALTH CARE 18% 19% 1% -2% 0% 17% 16% SNACKS AND BEVERAGES -1% -1% 2% -2% 2% 1% -1% TOTAL COMPANY (CORE) 8% 7% 1% -2% -1% 6% 5%

** These sales percentage changes are approximations based on quantitative formulas that are consistently applied.

          THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
          (Amounts in Millions Except Per Share Amounts)
                Consolidated Earnings Information

                                          OND QUARTER
                                                  W/O Restructuring Chgs
                          OND 02   OND 01  % CHG  OND 02   OND 01  % CHG

NET SALES $11,005 $10,403 6 % $10,996 $10,389 6 % COST OF PRODUCTS SOLD 5,490 5,339 3 % 5,406 5,257 3 % GROSS MARGIN 5,515 5,064 9 % 5,590 5,132 9 % MARKETING, RESEARCH & ADMINISTRATION 3,267 3,200 2 % 3,210 3,079 4 % OPERATING INCOME 2,248 1,864 21 % 2,380 2,053 16 % TOTAL INTEREST EXPENSE 143 150 143 150 OTHER NON-OPERATING INCOME, NET 74 200 74 200 EARNINGS BEFORE INCOME TAXES 2,179 1,914 14 % 2,311 2,103 10 % INCOME TAXES 685 615 719 658

NET EARNINGS $1,494 $1,299 15 % $1,592 $1,445 10 %

EFFECTIVE TAX RATE 31.4 % 32.1 % 31.1 % 31.3 %

PER COMMON SHARE: BASIC NET EARNINGS $1.13 $0.98 15 % $1.20 $1.09 10 % DILUTED NET EARNINGS $1.06 $0.93 14 % $1.13 $1.03 10 % DIVIDENDS $0.41 $0.38 $0.41 $0.38 AVERAGE DILUTED SHARES OUTSTANDING 1,402.6 1,401.5 1,402.6 1,401.5

COMPARISONS AS A % OF NET Basis Basis SALES Pt Chg Pt Chg COST OF PRODUCTS SOLD 49.9 % 51.3 % 49.2 % 50.6 % GROSS MARGIN 50.1 % 48.7 % 140 50.8 % 49.4 % 140 MARKETING, RESEARCH & ADMINISTRATION 29.7 % 30.8 % (110) 29.2 % 29.6 % (40) OPERATING MARGIN 20.4 % 17.9 % 250 21.6 % 19.8 % 180 EARNINGS BEFORE INCOME TAXES 19.8 % 18.4 % 21.0 % 20.2 % NET EARNINGS 13.6 % 12.5 % 14.5 % 13.9 %

          THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
          (Amounts in Millions Except Per Share Amounts)
                Consolidated Earnings Information

                                          FYTD
                                                W/O Restructuring Chgs
                        12/31/02 12/31/01 % CHG 12/31/02  12/31/01 % CHG

NET SALES $21,801 $20,169 8 % $21,797 $20,131 8 % COST OF PRODUCTS SOLD 10,979 10,450 5 % 10,812 10,248 6 % GROSS MARGIN 10,822 9,719 11 % 10,985 9,883 11 % MARKETING, RESEARCH & ADMINISTRATION 6,395 6,093 5 % 6,275 5,758 9 % OPERATING INCOME 4,427 3,626 22 % 4,710 4,125 14 % TOTAL INTEREST EXPENSE 287 307 287 307 OTHER NON-OPERATING INCOME, NET 177 222 177 222 EARNINGS BEFORE INCOME TAXES 4,317 3,541 22 % 4,600 4,040 14 % INCOME TAXES 1,359 1,138 1,431 1,253

NET EARNINGS 2,958 $2,403 23 % $3,169 $2,787 14 %

EFFECTIVE TAX RATE 31.5 % 32.1 % 31.1 % 31.0 %

PER COMMON SHARE: BASIC NET EARNINGS $2.23 $1.81 23 % $2.39 $2.10 14 % DILUTED NET EARNINGS $2.10 $1.71 23 % $2.25 $1.99 13 % DIVIDENDS $0.82 $0.76 $0.82 $0.76 AVERAGE DILUTED SHARES OUTSTANDING 1,404.9 1,401.0 1,404.9 1,401.0

COMPARISONS AS A % OF NET Basis Basis SALES Pt Chg Pt Chg COST OF PRODUCTS SOLD 50.4 % 51.8 % 49.6 % 50.9 % GROSS MARGIN 49.6 % 48.2 % 140 50.4 % 49.1 % 130 MARKETING, RESEARCH & ADMINISTRATION 29.3 % 30.2 % (90) 28.8 % 28.6 % 20 OPERATING MARGIN 20.3 % 18.0 % 230 21.6 % 20.5 % 110 EARNINGS BEFORE INCOME TAXES 19.8 % 17.6 % 21.1 % 20.1 % NET EARNINGS 13.6 % 11.9 % 14.5 % 13.8 %

          THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
                        (Amounts in Millions)
                 Consolidated Cash Flows Information

                                          Six Months Ended December 31
                                               2002              2001

OPERATING ACTIVITIES NET EARNINGS $2,958 $2,403 DEPRECIATION AND AMORTIZATION 844 784 DEFERRED INCOME TAXES 166 115 CHANGES IN: ACCOUNTS RECEIVABLE (117) (397) INVENTORIES (89) (139) ACCOUNTS PAYABLE, ACCRUED AND OTHER LIABILITIES 73 876 OTHER OPERATING ASSETS & LIABILITIES 151 (542) OTHER 340 77

TOTAL OPERATING ACTIVITIES                     4,326             3,177

CAPITAL EXPENDITURES (616) (668)

FREE CASH FLOW BEFORE DIVIDENDS $3,710 $2,509

            THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
                        (Amounts in Millions)
                Consolidated Balance Sheet Information

                                      December 31, 2002    June 30, 2002

CASH AND CASH EQUIVALENTS $5,106 $3,427 INVESTMENTS SECURITIES 218 196 ACCOUNTS RECEIVABLE 3,240 3,090 TOTAL INVENTORIES 3,610 3,456 OTHER 2,017 1,997 TOTAL CURRENT ASSETS 14,191 12,166

NET PROPERTY, PLANT AND EQUIPMENT 13,125 13,349 NET GOODWILL AND OTHER INTANGIBLE ASSETS 13,446 13,430 OTHER NON-CURRENT ASSETS 1,680 1,831

TOTAL ASSETS $42,442 $40,776

ACCOUNTS PAYABLE $2,021 $2,205 ACCRUED AND OTHER LIABILITIES 5,352 5,330 TAXES PAYABLE 1,839 1,438 DEBT DUE WITHIN ONE YEAR 3,491 3,731 TOTAL CURRENT LIABILITIES 12,703 12,704

LONG-TERM DEBT 11,534 11,201 OTHER 3,369 3,165 TOTAL LIABILITIES 27,606 27,070

TOTAL SHAREHOLDERS' EQUITY 14,836 13,706

TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $42,442 $40,776

The Procter & Gamble Company

CONTACT: Media - P&G Corporate Media Center, Inside US, +1-866-776-2837, or Outside the US, +1-513-945-9087, or Investors - John P. Goodwin, of The Procter & Gamble Company, +1-513-983-2414

Web site: www.pg.com

www.vheadline.com Posted: Tuesday, January 28, 2003 - 2:15:17 AM By: Robert Rudnicki

Support for the opposition-led national work stoppage appears to be waning as many of the nation's schools, shopping malls and fast food franchises look set to reopen as they look to recover from the crippling effects of the stoppage, which commenced on December 2, and has so far failed in its objective of removing President Hugo Chavez Frias and his government from office. 

Shopping malls will decide over the next couple of days whether to reopen their doors, but the early signs seem to point to a reopening, under the guise of aiding the opposition's mini referendum of February 2. 

• Some schools have already restarted classes, and more look destined to follow as many Venezuelans begin to consider the long term costs of failing to provide education to their children. 

The vast majority of Venezuela's many fast food franchises have remained shut since the now eight-week-old stoppage began, but most are now set to reopen as they face the prospect of going bankrupt.

However, despite claims that workers in the all important oil industry were returning to work, striking Petroleos de Venezuela (PDVSA) management insist they will continue to support the stoppage. 

www.rochesterdandc.com By Joseph Spector Democrat and Chronicle

(January 28, 2003) — Sen. Charles Schumer on Monday renewed calls for the Bush administration to consider using the federal government’s oil reserves to help Americans cope with the rising cost of gasoline and home heating oil.

Rochester already has seen a 34 percent increase in gasoline prices and a 23 percent spike in home heating oil costs from last year, Schumer said.

Releasing millions of gallons from the federal government’s Strategic Petroleum Reserve -- or even just threatening to do it -- would spur global oil producers to sell more on the open market and stop the increase in oil and gasoline prices, Schumer said as he stood in 2-degree weather near gas pumps at a Brighton gas station.

“Even if the president were to tell the OPEC nations that he was thinking of using it, the price would come down immediately,” he said.

The reserve, a cache of some 600 million barrels of oil, was created in 1975 to help America respond to oil emergencies. Schumer said former President Clinton checked prices in 2000 by releasing 30 million barrels.

The average gas price in Rochester was $1.18 per gallon last year. On Monday, the average price was $1.58 per gallon. The average cost of residential heating oil was $1.44 per gallon last week, a 33-cent increase from last year, according to the Department of Energy.

With the oil strike in Venezuela and the uncertainty of a war with Iraq, Schumer said now is the time to look to the reserves.

But others disagreed, saying the reserves should be used only in emergencies.

“It’s something we should use in light of a national fuel emergency,” said Gary Tschaepe, regional public affairs manager for the AAA Western and Central New York.

“It’s not the right time for us to release the fuel reserves based on an economic decision.”

White House spokesman Ken Lisaius said the administration is constantly monitoring changes in the world oil market and the amount of reserves. He said the country’s reliance on foreign oil is the reason Bush wants Congress to pass an energy bill that would further explore domestic energy resources.

Moreover, Bush last week released $200 million -- including $36 million for New York -- to a federal home heating aid program to help millions of people with low incomes pay their heating bills, Lisaius said.

In Rochester, the American Red Cross/RG&E Heating Fund is still accepting applications. For those who qualify, the program provides heating assistance to low-income families who need oil, propane, kerosene or help with paying a utility bill when a disconnect notice has been issued.

E-mail address: jspector@DemocratandChronicle.com

www.vheadline.com Posted: Tuesday, January 28, 2003 - 2:18:57 AM By: Robert Rudnicki

Splits continue to appear in the Coordinadora Democratica opposition grouping as less hard-line members insist support for the strike is voluntary and cannot be forced on people. Primero Justicia deputy Julio Borges says "people have held on for in excess of 50 days and they have made a great sacrifice ... some people plan to reopen certain commercial, industrial and business activity. We must respect that the strike is voluntary." 

Borges' comments come as many shopping malls, fast food franchises, schools begin to consider reopening, and following the Caracas Stock Exchange's plan to do the same after supporting the work stoppage since December 2. 

Rumors of discontent began several weeks ago when some opposition leaders began to question the long term affects of the strike and a possible popular backlash that come come as food supplies remain in doubt and many schools remain closed. 

However, one sector that still appears to be holding firm is the petroleum industry. Despite government claims that many workers were now returning, it appears as if resolve may have been hardened by the approximately 3,000 firings that have been carried out since Petroleos de Venezuela's (PDVSA) restructuring was announced. 

boston.com By Fabiola Sanchez, Associated Press, 1/28/2003 12:29

CARACAS, Venezuela (AP) Striking Venezuelan oil executives acknowledged Tuesday that daily production surpassed 1 million barrels, signaling that President Hugo Chavez may be regaining control of the nation's key industry.

The statement by dissident executives at the state monopoly Petroleos de Venezuela S.A., or PDVSA, came as opposition leaders debated whether to ease the 57-day-old strike against Chavez. Some fear Venezuelans' discontent with strike-induced food and fuel shortages could undermine their objective of removing Chavez from office.

Negotiations, mediated by the Organization of American States, have focused on whether to hold early presidential elections.

Also Tuesday, the Finance Ministry extended a freeze on foreign currency sales until Feb. 5. The suspension is designed to give the government more time to stem the slide of Venezuela's bolivar currency, which has lost a quarter of its value this year.

Dissident PDVSA executives said Tuesday that output by the world's fifth-largest exporter was 1.05 million barrels. Chavez claimed last week that daily production topped 1 million barrels.

That remains well below pre-strike levels of 3.2 million barrels per day, but well above the 150,000 barrels per day produced during the strike's early days.

The oil industry provides half of government income and 70 percent of export revenue.

The government has fired more than 5,000 PDVSA workers, corporation president Ali Rodriguez told state news agency Venpres on Tuesday.

Rodriguez, a Chavez ally, said more dismissals are forthcoming as the government takes advantage of the strike to downsize the company and eliminate dissent. PDVSA had almost 40,000 employees and the government claims most have returned to work.

Strike leaders deny this, saying the government has increased output by focusing on new oil wells, where it is easier to extract crude oil. They insist the strike, called Dec. 2, will continue in the oil industry despite the government's progress on bring operations back online.

''The protest by oil workers will continue because this is the path we are taking to find a solution to the crisis,'' dissident oil executive Juan Fernandez said.

But several business leaders said schools, restaurants and malls should reopen amid concern that discontent with food and fuel shortages and financial losses caused by the strike could undermine the objective of removing Chavez.

Julio Brazon, president of the Consecomercio business chamber, which represents about 450,000 stores and retailers, said businesses need ''to recover earnings and avoid labor problems.'' He said shopping malls and franchises may be permitted to open part-time next week.

Carlos Avila, executive president of Subway de Venezuela, said fast-food franchises were considering opening four days a week. Each of Subway's 76 branches in Venezuela have lost an average of $30,000 during the strike.

The National Association of Private Education, which represents 911 private schools, convoked assemblies this week to decide whether schools should open Feb. 3.

Strike organizers, who accuse Chavez of dragging this South American country into political and economic chaos, warned that easing the work stoppage would be counterproductive.

''If some sectors of the opposition, business sectors or political sectors, think they can save themselves from this regime by easing the strike, they are totally mistaken,'' said Carlos Ortega, president of the Venezuelan Workers Confederation, the country's largest labor union with 1-million members.

The government is struggling with the strike's impact on the economy. The strike has cost Venezuela at least $4 billion so far and the Santander Central Hispano investment bank has warned that the economy could shrink by as much as 40 percent in the first quarter of 2003.

The Finance Ministry's extended freeze on foreign currency sales is meant to give the government more time to implement a new policy of foreign exchange controls, which will limit the amount of dollars and other foreign currencies Venezuelan can buy.

The exchange controls would stem the slide of Venezuela's bolivar currency but hurt businesses dependent on dollars to buy imported goods.

The strike was called to pressure Chavez to accept a referendum on his rule. The opposition hoped a referendum, though nonbinding, would embarrass Chavez into leaving office.

But Venezuela's Supreme Court ruled last week balloting must be postponed indefinitely, prompting opposition parties to organize a massive signature collection campaign on Feb. 2.

Government adversaries hope to amend the constitution to allow early elections.

Chavez, a former paratrooper, was elected in 1998 and re-elected two years later. His term in office ends in 2007.