are in distinctly varying states of financial health. To a person, however, the CFOs

say that their growing responsibilities for corporate performance beyond the financial realm put a greater burden on their treasurers to keep

the cash flowing and the financing flexible day-to-day.

Rolling with the Punches

At Federal-Mogul, a car parts manufacturer in Southfield, Mich., David

Bozynski's role as treasurer has changed radically since he joined the 100-year-old company in 1996. As its revenues burgeoned to more than $6

billion by the end of the decade from $1.8 billion in 1997, reflecting an aggressive acquisition drive, Bozynski won plaudits for designing clever

acquisition finance structures and negotiating flexible bank lines.

Today, the company is stretched to its limits, and CFO Michael Lynch

expects his treasurer to provide financial lifelines by renegotiating bank lines and finding cash wherever he can.

"The financial structure Bozynski put together was tremendous for us, in

retrospect," says Lynch, "but the important requirements for the treasurer today have changed dramatically."

The turning point was Federal-Mogul's 1998 purchase of T&N, a British

auto parts manufacturer that the U.S. company belatedly discovered had asbestos-related liabilities. Federal-Mogul expects to pay an estimated $350

million in legal settlements this year, one reason that both Moody's Investors Service and Standard & Poor's downgraded $4.7 billion of the

company's debt and bank credit in late June. (S&P and Moody's cut their ratings to B and B3, respectively, for senior secured debt and

CCC+ and Caa2, respectively,for senior unsecured debt.)

Federal-Mogul's shares have plunged from about $70 a share three years

ago to under $2 a share today. The company has cut more than 8% of its salaried workforce this year and is reducing its white-collar workforce by

2,800 positions over the next 12 months.

But Lynch, who joined Federal-Mogul in 2000 after serving as controller of

Dow Chemical, credits Bozynski with emerging from tense negotiations

with the company's 40-member bank group earlier this year with $500

million worth of extra liquidity.

The credit facility, led by J.P. MorganChase, was increased to $2.2 billion

from $1.7 billion. To be sure, Federal-Mogul likely is paying up for its new commitments. The company wouldn't comment on its financing costs, but

Hayes Lemmerz–another auto parts supplier with a similar rating–paid a

startlingly high LIBOR plus 250 basis points for a $150 million term-loan

deal in late June, according to Loan Pricing Corp.

Federal-Mogul's increased borrowing capacity, along with the sale of its

Aviation Products division for $160 million in May, is responsible for the company averting a cash crisis, S&P analyst Lisa Jenkins wrote in a recent

commentary.

Bozynski's ability to renegotiate at all, given the company's woes, the tight

credit environment and the condition of the automotive sector, scored him points with his boss. But he remains on the hot seat.

He spends much of his time today running a "cash committee" charged

with reviewing all vendor contracts and purchasing operations. He also is working closely with Lynch to squeeze profits out of joint ventures and to

keep expenses associated with closing unprofitable plants within budget.

Taking Risks

Companies don't have to be on the ropes for their CFOs to demand

continuously creative financing structures from their treasurers, of course.

"We don't want to build ourselves into financing and capital structure

models that may have worked historically but may not work going forward," says Ken Jaeggi, senior vice president and CFO of Symbol

Technologies, a $1.4 billion-revenue maker of bar code scanners in Holtsville, N.Y. "I look to the treasurer to finance our capital investments

to provide greater flexibility for what's ahead."

Symbol boasts of having met or exceeded earnings estimates for 31

consecutive quarters (its second-quarter results were released the last week of July, after T&RM went to press), and Jaeggi concedes that he

has extremely high expectations for Symbol treasurer Cary Schmiedel. He says he expects

Schmiedel to be vigilant about anything that could change the risk profile of the business.

"There's nothing to be gained for a corporation that seems to do something

clever in the treasury area only to end up having to write off a derivative

instrument or record a loss associated with a foreign exchange hedging

transaction," says Jaeggi. "People don't expect treasury to be the bearer of

bad news even though they expect the treasurer to generate a positive contribution to the P&L. It's a very difficult mandate."

Schmiedel, who joined Symbol as treasurer in 1998, says he's feeling the

pressure.

"The business is more complex because of the speed at which you have to

react to change," he says, noting that his responsibilities keep growing and that his average workweek has expanded to between 60 and 70 hours.

Jaeggi recently put Schmiedel in charge of investor relations.

"I meet with bankers on a regular basis about the business to give them

confidence about lending us money," Schmiedel says. "It's the same message in IR, but with a lot more verbally delivered detail behind it.

Sell-side analysts want information about how the business is running and the financials."

Jaeggi also has deputized Schmiedel to execute a key part of Symbol

Technologies' financial strategy for integrating Telxon, a company it bought last December. (Symbol offered $900 million for Telxon in April 1998, but

ended up paying $458 million in stock after revenue reporting-irregularities at Telxon led to an SEC investigation and a restatement of 3 1/2 years of

its earnings.)

Telxon owned a large block of stock in Cisco Systems. Jaeggi's

assignment to Schmiedel: Cash out the position but avoid a tax-triggering direct liquidation of the shares.

Working with Credit Suisse First Boston, Schmiedel structured a

transaction earlier this year that used the Cisco shares as collateral for an exchangeable debt offering at a below-market interest rate. Symbol retains

beneficial ownership of the shares, which reside in a collateral trust.

Schmiedel also purchased a collar that is shielding Symbol from the tumble

in Cisco's stock price. It guarantees a price of $42 a share on the downside and gives Symbol a ride back up as far as $53 a share, the

treasurer says. As of mid-July, Cisco was changing hands on the Nasdaq at $18.74, down

from a 52-week high of $70 a share.

Schmiedel also says he's increasingly involved in acting as the gatekeeper

who screens and analyzes potential merger or acquisition candidates before introducing them to senior management.

Sticking to Basics

Even as they stretch their treasurers to the limit, CFOs are quick to point

out that treasury's primary responsibility is to ensure that cash flows at all

times.

"My expectation is that the treasurer will make sure we have liquidity

where we need it and do so in the most cost-effective manner," says Robert Mahoney, CFO of Molex, a $2.2 billion-revenue manufacturer of

electrical plugs in Lisle, Ill. But he adds that he expects treasurer Patrick O'Brien to be a prudent risk-taker.

"Too often treasurers are so protective of the downside that they don't

advocate the upside," says Mahoney, noting that he expects a treasurer to suggest profitable hedging opportunities when "natural accounting hedges"

are in place.

Cash balances and foreign currency exposures are dynamic throughout a

given month, he explains, but treasurers must have enough confidence in

their forecasting methodologies to take advantage of slight movements in

currencies before actual intercompany settlement of overseas transactions. Mahoney also encourages O'Brien to get much more involved in tax

issues.

"There's an artificial distinction between tax and treasury that needs to be

broken down," the CFO says. "The treasurer has to spend half his time thinking with his tax hat on and the other half of his time with his treasury

hat on to come up with solutions that deal with both sides of the issue."

Indeed, even as CFOs demand that treasurers keep on top of market

conditions, they also are increasingly impatient with treasurers who isolate themselves in a finance cocoon. All CFOs we talked to say that treasurers

must reach out to the operational trenches.

"It is important to understand business needs across the company, whether

from a business expansion need or?? 1/2 to aid operations," says Dawson Cunningham, executive vice president and CFO of Roadway, the $3.1

billion-revenue holding company for Roadway Express in Akron, Ohio. "In our case, one of the most important things for a treasurer is to be viewed

as a valued member of the team who is openly welcomed in the decision-making process. It's very important that the treasurer be viewed

as adding value, and not as an obstacle in the process."

One of Joseph Boni's first tasks after being named treasurer of the

trucking company last January was to meet with executives from Roadway's Canadian and Mexican subsidiaries to ensure that an

international finance project he was overseeing met their particular operational needs.

Boni has also made it a point to work closely with regional managers to

help them understand the tax implications of their actions. For example, he toured the company's freight docks to stress to managers the importance

of lightening truck loads and accurately reporting equipment since trucking taxes are keyed to weight loads. The job was not as simple as it sounds,

says Cunningham, because the change in loads required significant shifts in daily operations.

Cunningham knows firsthand the difficulties treasurers can have in

reaching out. He held the titles of both CFO and treasurer until Boni took the post last year. Boni, meanwhile, says he has a certain luxury in being

the company's first full-time treasurer.

"I am pretty much defining how the treasurer will function in the

organization and, at the same time, educating senior management about what treasury can do," he says.

For example, when Roadway reorganized itself into a holding company last

spring and became an equity partner in Integres Global Logistics, it was Boni who evaluated the investment and worked out the deal's financials.

"Those types of activities historically fell to the CFO," he says. "Because

of how complicated business has become over the past 10 years, the pressures on the CFO have increased dramatically, creating a lot of

opportunity for treasurers to step in."

Mixing with the Troops

Clarence Otis, senior vice president and CFO of the $4 billion-revenue

Darden Restaurants, is another boss who believes that the best way for a treasurer to add value is to learn first-hand how a company operates.

"We're working to find ways to bring additional clarity to the handful of

things that really create financial value for the company," he says. "The treasurer can build the nexus that helps drive decision-making at the

operations level."

Darden, which owns Red Lobster, Olive Garden and other restaurant

chains, has asked treasurer Bill White to develop financial performance metrics for all areas of the company. Darden uses conventional discounted

cash flow analyses to evaluate incremental investments, such as new restaurants,

restaurant relocations and restaurant remodeling. But the traditional method didn't make sense as a way to help individual restaurant

managers with their value decisions. As a result, White has developed a customized total business return model that allows the company to

determine returns on a regional basis as well as on a global basis.

White has identified value drivers at the regional and restaurant level,

including asset growth and net restaurant-level cash flow as a percentage of sales.

Because restaurant managers can drive returns through improved margins,

the performance measures are designed to help them focus on labor and food-cost management. Regional managers, on the other hand, are valued

on how they make high-return reinvestment decisions, such as whether to do major remodeling of existing restaurants in their territories.

Mapping Risk

Otis adds that treasurers must also incorporate their theories of risk into a

company's operational guidelines.

"The treasurer needs both an analytical and intuitive feel for how risks

interrelate and what that means for our ability to forecast cash flows and earnings," he says. "A lot of business risks belong to the business unit

managers, but the treasurer has to bring them together and monitor them to start to think about which ones to hedge."

Risk mapping also aids the Orlando, Fla.-basedcompany in devising

appropriate capital structures, says Otis.

"The treasurer is providing a lot of thought leadership on the capital

structure, helping us to determine our weighted average cost of capital and the cost of the different pieces of capital," Otis observes. "The capital

structure analytic is not new, but integrating that and the risk-mapping with the capital structure thought process is certainly new."

This type of collaboration will only become more important in the future,

meaning that treasurers must be ambassadors to other departments at all times, Otis and others say. That is the only way to promote prudent

balance-sheet thinking, and for treasury to understand what the line managers need and can deliver.

"It is important that operations people understand both the questions and

the possible answers necessary to put the most cash in their hands with the

least amount of foreign currency risk and tax cost," agrees Molex's

Mahoney.

Many companies are formalizing the process by which treasurers and their

staffs reach out.

Federal-Mogul, for example, is moving up-and-coming treasury

professionals to its "customer financial services" department to provide opportunities for customer contact.

Looking ahead, the company is also considering moving certain individuals

out of finance and treasury into a sales or operations assignment for a period of time to give them a chance to experience the company from a

completely different role.

"In addition to the technical knowledge required of the treasurer, we also

want our people to have some experience in operations," says Lynch. "We're also toying with the idea of running some non-treasury people

through treasury."

Even if their current workload doesn't require getting out of the office,

treasurers should look for opportunities to break out of their usual grind, chief financial officers advise.

"Recognizing opportunities or solving problems or creating answers are not

necessarily done within a routine," says Roadway's Cunningham.