New York Cash Exchange 2011 Pall Corporation Approach to Managing Global Liquidity Kevin Kilkelly Assistant Treasurer Bank Mendes Gans N.V. Mrs. K.I. Kombrink Executive Vice President

Global Liquidity Management - Notional Cash Pooling

Financial Statistics –F ‘10 Pall Overview Financial Statistics –F ‘10 Revenue: $2.4B Profits: $241.2M Operating Cash Flow: $377.9M Credit Rating: Moody’s: Baa1 / P2 S&P : BBB / A2 Operational Overview Pall (NYSE: PLL, S&P500 company) is a leading supplier of filtration, separation and purification technologies across the broad spectrum of life sciences and industry. The company’s engineered products enable process and product innovation and minimize emissions and waste. Pall conducts business in over 30 countries worldwide

Treasury Principles Cash is a corporate asset Protect this asset Enhance shareholder value Centralized control with decentralized execution Strategic direction from Corporate Treasury Tactical execution on transactional level Execution via Regional Financial Service Centers Macro level overview of responsibilities Sound control environment governing all cash movements Optimizing cash resources

Requirements for Operational Success Visibility & Transparency Daily Cash Reporting Working Capital Needs Cash Flow Forecasting (Pool Participants) Centralized Liquidity Management Global Cash Pooling In-Country Target Balances Global Settlements Global Funding Centralized control Decentralized execution Sound Control Structure Effective & standardized global policies and procedures Consistent administration & execution Procedures always in place before execution Sarbanes Oxley compliant Internal Audit reviews Information Technology Eliminate redundancies Real-time activity reporting Consistent application of controls Increased productivity Transcends time zones Internet based portal : Account opening/closing Self Service Portal

Objectives - Centralized Liquidity Management Create a global account structure, while streamlining & maintaining a local banking infrastructure Obtain centralized visibility and control to access global cash to fund business growth Eliminate all in-country borrowing facilities Enable multi-currency off-set and eliminate FX transactions to manage liquidity Improve returns on overnight deposits/reduce costs on borrowings Establish global reporting capabilities of all global bank accounts Adopt a solution that complies with internal standards and security requirements Manage overall Cash Pool position via a single currency Overcome local resistance to a global solution

Centralized Liquidity Management Solution Implement a Global Multi-Currency Cash Pool Meets Treasury’s requirements Global Cash Pool keeps local infrastructure intact but has the flexibility to enable changes as dictated by business needs Criteria for participation Currency is freely convertible Legal entity is permitted to open an account (local and/or foreign currency) offshore

Pall’s Cash Pool Began operations in July 2008 Pall Global Treasury, Port Washington, New York Current number of Cash Pool participants: 29 Current number of Cash Pool accounts: 34 Countries: 19 Pooled currencies: 12

Global Cash Pool Benefits Provides visibility and control of global cash Provides high flexibility to meet short & long term cash needs Multiple currencies can be pooled daily from every region of the globe Automated connectivity between Cash Pool accounts and local bank accounts All cash in excess of working capital no longer remains idle in-country Short-term funding vehicle for participating group companies Eliminated most non-US external debt Simplified new revolving credit facility Treasury can invest/borrow in currency of choice

Global Cash Pool Benefits (cont’d) Bank “Pledge” as opposed to “Cross-indemnities” thus avoiding inter-company loans Intercompany loans eliminated Legal entities own bank accounts Cash Pool bank sends statement to legal entity monthly charging arms-length interest Legal entity reconciles g/l to the bank statement as if it were a typical in-country bank account Ability to access the overall Cash Pool balance in a single currency Advantageous borrowing rates for local entities (eliminate local bank margins) Full interest compensation rather than interest enhancement (one currency rate per currency based on overall currency position) Use the Cash Pool for acquisition finance transactions

Global Cash Pool Benefits (cont’d) Internet based access enables: Access and visibility to all pooled funds from one platform. Third party accounts can be included. Entity funding initiated from one platform Administrative flexibility

Global Cash Pool Strategies Utilization of Cash Pool for funding requirements Pay down external debt Eliminate in-country credit lines Withholding Taxes on account overdrafts Monitor tax treaties with internal tax to assure the most advantageous treaty network is applied Accounting “Buy-in” from all disciplines to assure the Cash Pool did not create accounting entry complications Replacing Inter-company loans with deposits/overdrafts within Cash Pool Potential to offset on a consolidated basis Local Legal Entity Buy-In Economic benefit Education and communication with local entities to assure compliance with the new structure

Global Cash Pool Strategies Establishing automated two-way transfers Detailed process required assistance from local entity, local bank in conjunction with BMG and Corporate Treasury Continual adjustments to targets/ triggers to assure minimal liquidity remains in-country. Excess funds no longer remain in local bank accounts, but in cash pool accounts. Accurate cash forecasting is critical. Diversify investments Use Cash Pool to hedge currency exposures via plain vanilla FX Spot deals

Global Cash Pool overview All account balances in multiple currencies are viewed as just one account with one balance = single transfer to steer pool 37 currencies supported USD GBP EUR CHF JPY SGD

Liquidity management model for companies Integrating requirements Investment Funding or Treasury Pool bank Centralization 1 Local customer account Cash Pool bank account Group Companies Relationship banks Local customer account Cash Pool Bank account Japan UK

Liquidity management model for companies Integrating requirements Investment Funding or Treasury 2 Local customer BMG account Translation Pool bank Local customer BMG account Centralization JPY 550M + GBP 6M = (USD 3M) 1 Group Companies Relationship banks Japan UK

Liquidity management model for companies Integrating requirements 3 Investment Funding or Treasury 2 Pool bank Centralization JPY 550M + GBP 6M + USD 3M = USD 0M 1 Group Companies Relationship banks Japan UK

Local customer account balances Global Cash Pool Solution U S D E U R U S D GBP J P Y = 0 U S D S G D CHF Local customer account balances Cash Pool balance (1) Treasury Funding (2) Cash Pool Balance (3)

Global Cash Pool: True interest compensation USD account balances Set-off Cash Pool conditions Positive Interest result Step 1 Step 2 Step 3 Step 4 Investment rate = e.g. 20bp 20bp 20bp USD USD USD USD USD 20bp USD 10bp Borrowing rate = e.g. 30bp USD USD

Global Cash Pool - Considerations Regulatory Law: Thin capitalization rules and stamp duty may apply in case of intercompany loans Transfer Pricing: set Cash Pool margins at arms length and clearly document to avoid penalties Notional pooling and full off-set is allowed in the Netherlands. No cross-guarantees required under central banking regulations Tax: Withholding tax could apply on interest charged. In Netherlands no withholding imposed Tax authorities could view extended overdrafts on a cash pool account as a disguised liability Accounting: No intercompany loan administration and FX Swap contract administration Apply full off-setting on the balance sheet

Cash Pooling - Is it right for your company? Gather Data Do a feasibility study – make a case to management via a cost/benefit analysis Define an effective solution – work closely with corporate tax and legal advisors (physical/notional or both, Cash Pool leader, pool margins, countries, etc) Analyze Tax and Regulatory aspects Review each country’s jurisdiction specific rules Negotiate fixed Cash Pool fees with provider Obtain Crucial “Buy-In” From global operations Step-by-step Implementation – account set-up, legal documentation, set authorities, define processes for participants Manage from a central location (USA, Europe)

Feasibility Study Required Information: Balances (debit & credit) for a representative period (e.g. 1 month) of a selected group of companies For all accounts (local and foreign currency) including local bank interest conditions Working capital loans you would like to dismantle Local credit lines and cost thereof Local deposits with 3rd party banks

Cash Pooling - High Level Summary A centralized Treasury fosters: Global adoption of standardized policies and procedures A common approach towards global liquidity management A sound foundation that enables the implementation of a robust global Cash Pool product Global Cash Pool enables: Aggregation of different currencies from different countries into one common currency Cash in excess of working capital at the in-country level to no longer remain “trapped” or subject to local investment/borrowing vehicles Short term funding in the currency of choice without the traditional reliance of inter-company loan structures

Global Liquidity Management - Netting

Objectives Add discipline to intercompany settlement process Reduce the number of intercompany flows to reduce FX and transfer cost one monthly settlement per group company Reduce/avoid cut off time and value dating issues guaranteed settlement with proper value date Improve and simplify the monthly reconciliation process Internet based access for reporting and file upload/download purposes Integrate netting with other cash management requirements liquidity (investment / funding) management hedge policy

Global Multilateral Netting Multilateral netting is management of cross-border payments among multiple entities, resulting in a single net receipt or payment to each participant in the participants' functional currency. The a process designed to organize and simplify the settlement of inter-company payments on a fixed customized periodic schedule. (third party payments can be included)

Global Netting Benefits Pall implemented Netting in November 2008 No bank accounts need to be opened Increased efficiency in managing inter-company flows Imposes standardization and discipline across the group Reduce payments between legal entities Centralized versus decentralized FX Cost savings in: Transfer costs reduced based on reduction in the number of settlements (approx.: 80% - 90%) FX cost reduced based on reduction in transactions (approx.: 80% - 90%) Elimination of value day loss　

Gross vs. Net - Intercompany Flows Average Reduction of Intercompany flows: Before netting: gross payment volume between group companies ; per annum : USD 1.2B After netting: net payment volume of intercompany payments between group companies ; per annum USD 590M Reduction of 52%!

Gross vs. Net - Intercompany Payments Average Reduction of Intercompany payments: Number of payments before netting: Per annum : 6,405 Number of payments after netting: Per annum : 674 Reduction of 89%!

Global Netting - Mechanics Before After AU US AU US Netting center DE UK DE UK SG SG

Global Netting - Transactions SALES Trade Vendor FINANCIAL Inter-company loans & interest Royalties & dividends Management & service-fees Internal FX hedging contracts External FX hedging contracts When a netting system is implemented by your company it is beneficial to use the system for any type of transfer (trade as well as financial) that needs to be made on a regular basis. Companies also use the system to route third party supplier payments. Suppliers are frequently in favor of being paid through a structurized netting scheme primarily because the supplier is able to fine-tune it’s own cash management.

Global Netting – Monthly Schedule 1: Send inter-company and vendor invoice payments to Netting center 2: View preliminary results and make changes when needed 3: Execute Final netting FX Spot deals 4: Run final netting 5: Execute all Netting settlements same day value 6: Reconcile AP&AR

Netting: Is it right for you? Gather Data Do a feasibility study – make a case to management via a cost/benefit analysis Define an effective solution – work closely with Accounting (Cash Netting leader, currencies, countries, etc) Obtain “Buy-In” From global operations Step-by-step Implementation, legal documentation, set authorities, define processes for participants. Manage from a central location (USA, Europe)

Feasibility study: What is needed? Intercompany Transactions for a representative period (e.g. 1 month) of a selected group of companies For all countries & currencies Vendor Payments (International)

Pall & BMG QUESTIONS ?