Three years into the European debt crisis, with the likelihood of the euro's demise still remote, U.S. multinationals are making preparations for a number of grim scenarios that include the worst: the collapse of the euro.

They have been actively looking to lower their hedging costs by taking advantage of the weak euro, while others have been moving money daily to other financial centers to reduce eurozone exposure, consulting firms and banks that hedge for large U.S. corporations say.

"Almost all companies have a committee in some shape or form to prepare to deal with the euro crisis," said Martin Donovan, deputy policy and technical director of the London-based Association of Corporate Treasurers, which advises corporate finance departments.

"The larger companies have been thinking about this for a long time. And it's really gone beyond just a pure housekeeping exercise," Donovan said.

Fireapps, a provider of FX hedging software in Arizona and an adviser to several Fortune 500 companies, did a poll of 800 corporations last month, most of which are U.S.-based. The survey revealed that 88 percent of the companies have or are developing plans to deal with the euro's end.

Minnesota-based medical device maker Medtronic said its cash is actively being transferred out of countries to a central depository to minimize risk.

"We continue to work with every country in Europe to ensure our receivables are being paid. These are normal ongoing procedures to minimize risk, and we believe adequate in the circumstances," said Medtronic spokeswoman Amy von Walter. The company generates about a quarter of its revenue from Europe.

St. Jude Medical, which gets about 25 percent of sales from Europe, said it has cash concentration systems in place in order to minimize the amount of cash held in euros.

U.S. beverage maker PepsiCo has also been doing daily euro sweeps, according to the Financial Times. Calls and e-mails seeking comment were not returned.

"Sweeping" cash is a normal strategy carried out by international companies with bank accounts in different countries. A company takes out cash in each eurozone country where it has a subsidiary and deposits it nightly in a stable financial center. The company then returns the funds to each country the next day.

Medtronic's and Pepsi's strategy mirrors that of European companies, which have been sweeping euros on a daily basis in case of an overnight currency devaluation.

European companies such as British drugmaker GlaxoSmithKline and Diageo have also been sweeping euros daily for the last several months, the companies said.

Fast-food giant McDonald's said it is closely "monitoring" these strategies, though it is not yet sweeping.

Other U.S. companies have opted to revise the currency denomination of their contracts from euros to dollars.

One U.S. electronic components distributor with annual revenues of $25 billion, for instance, has informed its vendors in the eurozone that it will pay for supplies in dollars instead of euros, according to Wolfgang Koester, president and chief executive officer of Fireapps.

Other U.S. businesses are opting to keep their cash in the United States and those with funds overseas are keeping the funds in liquid and very short-term instruments.

HEDGING FX EXPOSURE

Many companies deriving sales from the eurozone have hedged against the decline in the euro, which is down more than 12 percent over the last three years.

Fireapps' Koester, who advises corporations on hedging, said about 97 percent of U.S. companies have protected against currency volatility, having learned their lesson in 2008. "They are not risking any currency exposure at all," he said.

Heavy equipment maker Caterpillar Inc. said it has protected itself against euro weakness, which is necessary as its dealers have reported a sharp slowdown in Europe for a three-month period ended in May.

"We have an even balance for worldwide currency exposure that limits and hedges our risks," said Jim Dugan, Caterpillar's chief corporate spokesperson.

Whitehouse Station, New Jersey-based drugmaker Merck & Co. Inc., which derives about 30 percent of sales from Europe, has an active hedging program in place to protect against the euro's weakness, although company spokesman Ron Rogers said it would be difficult to predict how exchange rates would impact its bottom line.

"At 2011 exchange rates, sales are expected to be at or near 2011 levels. Full-year 2012 sales may be unfavorably affected by foreign exchange, depending on the exact exchange rates," said Rogers.

As more U.S. companies hedged, U.S. banks saw a surge in volume in May as the euro fell below the $1.30-$1.35 range.

Chris Fernandes, senior corporate adviser for Bank of the West in San Ramon, California, said last month's FX hedging volume at his bank was the highest in five to six years.

"Many of our customers with euro payables had assumed an exchange rate of $1.30 per euro on their budgets at the beginning of the year, so now they've locked in FX margins of five to six cents lower (through forward contracts)" than their previous hedges, Fernandes said. That's a good thing for those clients.

Those with euro income, however, are partly hedged because they are hoping the euro will rebound, which would help profits.

"It's just human nature to think that the euro is going to come back," Fernandes said. "These customers are waiting for a rebound in the euro so they can hedge their euro receivables at a higher level."

A major concern among corporate hedgers, Fernandes said, is what would happen to their euro hedges if the eurozone breaks up.

"Ultimately, both sides are obligated to honor the contract," Fernandes said. "The customer is still obligated to deliver the U.S. dollars that they owe us for purchasing a forward contract whether it's for three or six months. And obviously we're obligated to deliver the euro."