1000 of the Largest U.S. Companies Squeeze $21 Billion From Operations, but at What Cost?: States CFO Magazine.

Business Editors/High-Tech Writers

BOSTON & PURCHASE, N.Y.--(BUSINESS WIRE)--Sept. 3, 2003

Muscling Suppliers and Cutting Capital Expenditures

Makes for Modest Gains, According to CFO Magazine's

Annual Working Capital Survey Conducted by REL Consultancy Group

Desperate times called for desperate measures this year. U.S. companies slashed capital expenditures by nearly 13 percent and squeezed meager amounts of cash from operations on the backs of suppliers, according to the annual CFO Magazine / REL Consultancy survey. The survey, which benchmarks the working capital performance of the largest 1000 U.S. companies by sales, revealed that companies on average improved day's working capital (DWC) by only 2.1 percent. This year's most noticeable improvement--3 percent--was for days payable outstanding (DPO), which is evidence that companies withheld payments to suppliers longer.

"When companies come knocking for more favorable payment terms at the first signs of a sustainable upturn, suppliers won't forget they were the hardest hit during the downturn," said Eric Wright, president of REL's Americas region. "Squeezing suppliers is a short-term solution with long-term ramifications."

One kink in the supply chain causes a ripple reaction with different members feeling varying degrees of financial pain. U.S. companies pushed their collection problems to suppliers. Days sales outstanding deteriorated by 0.8 percent, suggesting that companies were having trouble collecting their receivables.

"There's no room for complacency," said Julia Homer, editor-in-chief of CFO Magazine. "Perhaps companies were distracted by the demands of complying with Sarbanes-Oxley this year. But improving working capital efficiency is crucial, especially when credit is hard to come by."

Since REL began conducting this survey, European firms have caught up to their U.S. counterparts in managing their working capital. While the United States has improved average DWC by just 2.1percent, in Europe, where REL and CFO Europe carry out a similar benchmark every year, DWC improved by a significant 7.6 percent. Now, average DWC in both the United States and Europe is around 56 days.

The full article from CFO can be found at www.cfo.com.

NOTES TO EDITORS:

About the survey

1. The CFO Magazine/REL Consultancy survey takes a sector-based approach to rank companies in four categories--Days Sales Outstanding (DSO), Days Payable Outstanding (DPO), Days Inventory Outstanding (DIO) and Days Working Capital (DWC).

2. Working capital performance is calculated using the latest publicly available financial statements through the most recent 12 months. Data is adjusted to provide true, consistent and comparable figures. Average DSO, DIO, DPO and DWC for each sector are calculated on a weighted basis by sales.

3. Our ranking is based on an analysis of Year-End Net Working Capital (trade receivables, plus inventory, minus accounts payable) divided by Sales and by the number of days in a year.

Key areas include:

-- Unbilled and uncollected debts

-- Suppliers paid too early

-- Unsold inventories

ABOUT REL Consultancy Group Limited

REL is the world leader in increasing corporate cash flows through implementation of best practices in working capital management. By reducing costs, improving cash flow and increasing clients' customer service quality, REL helps global corporations attain their strategic objectives. For more than 28 years, REL's expertise and detailed implementation approach has generated billions of additional cash from better working capital management. This has allowed REL's industry-leading clients to make acquisitions, launch new products, implement new IT initiatives and complete organizational restructuring projects, thereby delivering value through accelerated achievement of strategic goals. Further details on REL can be found at www.relconsult.com.

About CFO Magazine

As an Economist Group business, the CFO family of publications (CFO, CFO US, CFO Asia, CFO China and CFO.com) provides a global readership of over one million senior finance executives with the practical information they need on a range of topics, from treasury and risk management, to information technology and investor relations.