1. 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

2. Global Liquidity Management - Notional Cash Pooling

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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

17. Liquidity management model for companies Integrating requirements3
Investment
Funding or
Treasury 2
Pool bank
Centralization
JPY 550M +
GBP 6M +
USD 3M =
USD 0M 1
Group Companies
Relationship banks
Japan UK

18. 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)

19. 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

20. 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

21. 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)

22. 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

23. 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

24. Global Liquidity Management - Netting

25. 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

26. 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)

27. 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　

28. 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%!

29. 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%!

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

31. 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.

32. 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

33. 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)

34. 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)

35. Pall & BMG
QUESTIONS ?