FINANCE MANUAL POLICY

CHAPTER:
SECTION:
POLICY:

3.0 Accounting
Other Transactions
3.900 Inter-company Transaction Guidelines

3.900.1 Policy Overview

Each Business Unit bears all costs that relate to or benefit its business and charges between the
Business Units are often required to obtain this result. All intercompany accounts in the Balance Sheet
and Profit and Loss Statement must properly reflect all intercompany activity at each stated reporting
period including the period actuals and Operating Plans. Intercompany balances must be settled between
Business Units on a timely basis and in accordance with Mars, Incorporated policy and loan agreements.
This policy should be read in conjunction with the following two Intercompany Finance Manual Policies:
Chapter 2.0 (Financial Control), Policy 2.210 (Inter-company Pricing Guidelines)
Chapter 2.0 (Financial Control), Policy 2.240 (Intercompany Cost Sharing Arrangements)
3.900.2 Scope
Intercompany activity covered by this policy includes the following:
Purchases or sale of product from/to another Business Unit.
Services provided from/to another Business Unit, such as Global, Segment or Regional
programs (e.g., Mars IS, Corporate Service Fee, Segment Service Fee, Research &
Development, Risk Management, and other relevant programs).
Expenses incurred or income received on behalf of another Business Unit
Tax payments for countries with consolidated tax entities but separate reporting Business Units.
Business Unit specific agreements (e.g., sharing of Advertising and Consumer Promotion,
Associates, Engineering, Commercial or other appropriate cross-charge agreements).
Interest income and expense on intercompany loans
Royalty income and expense charged between Business Units, where a royalty agreement exists.
See Chapter 3.0 (Accounting), Policy 3.901 (Intercompany Associate Assignments) for guidance on
accounting for cross charging costs for Associates on assignment (i.e., secondment).
3.900.3 Guidelines
3.900.3.1 Intercompany Invoicing
Intercompany invoices are legal documents that must be billed to each legal entity and by Business Unit.
The invoice must provide sufficient quality of information for the receiving Business Unit to properly record
the transaction correctly the first time. This is especially relevant where there are new cross-charges
between Business Units. Invoices for services sent by a Business Unit must include support for the items
included in the invoice. The supporting documents should appropriately identify the nature of the cost.
The support must be sufficient for the receiving Business Unit to verify and evidence the claim. Examples
of appropriate support may include supporting e-mails, third party invoices, etc.
3.900.3.1.1 Intercompany Billing Currency
Goods & Services - Intercompany invoicing for goods, services and Cost Sharing Agreements are
invoiced according to the Finance Manual, Chapter 3.0 (Accounting) Policy 3.830 (Accounting and
Reporting for Currency Transactions).
3.900.3.2 Shipping Terms
Title will pass to the receiving Business Unit immediately upon dispatch from the factory warehouse. The
sale must be recorded as an intercompany sale by the supplying Business Unit and goods-in-transit
recorded by the receiving Business Unit at the time of shipment. The documents produced for product
sales must be a legal invoice.
3.900.3.3 Shared Cost Accounting
Page 1 of 9
Last Modified: 14 November 2014

FINANCE MANUAL POLICY

Global, segment, regional programs and expert centers exist where Business Units are contractually
obligated to share the specific costs with other Business Units. Cross-charges are required to achieve
the appropriate distribution of costs for operational, fiscal or legal purposes. Examples include group
research & development projects, insurance, tax payments, event marketing programs, regional expert
centers, and management costs for the multinational Business Units.
One Business Unit may manage the budget, pooling and allocation of costs for each global, segment, or
regional program or expert center. The shared costs are to be allocated based on the guidance in
Chapter 2.0 (Financial Control), Policy 2.240 (Intercompany Cost Sharing Arrangements)
Mars, Incorporated Corporate Service Fee Corporate Service Fee is based on the Operating
Plan third party GSV and billed each period. The Corporate Service Fee is an exception to the
billing currency for services from Chapter 2.0 (Financial Control), Policy 2.240 (Intercompany
Cost Sharing Arrangements) and is billed and payable in the Business Units local currency.
An estimated year end true up will be made in Period 12. The allocable costs shall be based on
Period 11 actuals with an estimate of Period 12 and Period 13 costs. The over or under
collection for each Business Unit is credited or charged based on actual activity versus Operating
Plan Corporate Service Fee amounts. The adjustment (difference between plan and estimate) is
charged or credited to the Business Units in Period 12, and these adjustments are recorded
below Operating Profit in Corporate Service Fee True-Up (FPPS 37271/FIS F17708_TII).
In Period 4 of the following year, the Corporate Office reconciles the Corporate Service Fee
collected with actual third party GSV and actual Mars, Incorporated Corporate Office expenses.
The over or under collection for each Business Unit is credited or charged based on actual
activity versus Operating Plan Corporate Service Fee amounts including the Period 12 estimate.
The Corporate Service Fee adjustment is charged or credited to the Business Units in Period 4.
These adjustments are booked below Operating Profit in Corporate Service Fee True Up (FPPS
37271/FIS F17708_TII).

Segment Service Fee for Global Business Unit (GBU) Segment Service Fees are costs
incurred for maintaining a Segment Office for the benefit of the Business Units. These costs are
charged to all Segment Business Units reporting to this Segment (GBU) Office. The Segment
Service Fee percentage is determined based on the third party Net Sales of all participating
Business Units using the 3 years average Net Sales translated at the current year Mars Plan &
Consolidation Rates (MPCR rates).
The Segment Office communicates the appropriate service fee percentage during the planning
process, and this amount is used by the Business Units to record their planned Segment Service
Fee expense based on third party Net Sales. The planned amounts are paid each period to the
Segment Offices. The account to be used is under Other Operating Costs in the Service
Fee/Segment Office account (FPPS 37309/FIS F17505_TIC). The periodic invoicing is in the
Segment Offices currency using current year Plan Rates (MPCR) for purposes of calculations
and allocations.
An estimated total year true up will be made in Period 12. The true up is based on Period 11
actuals with an estimate of Period 12 and Period 13 costs. The Period 12 true up is recorded to
Other Non-Operating Costs while the Period 12 and Period 13 costs are recorded to Other
Operating Costs. The Segment Office reconciles the Segment Service Fee collected with actual
Segment Office expenses and updates the allocation using actual year-to-date third party Net
Sales. The over or under collection for each Business Unit is credited or charged based on actual
activity. The true up adjustment is recorded in Other Non-Operating Income and Expense in the
Segment Service Fee True Up Total account (FPPS 17709/38572). The true-up invoicing is
prepared in the Segment Offices currency using actual currency rates for purposes of
calculations and allocations.
Page 2 of 9
Last Modified: 14 November 2014

FINANCE MANUAL POLICY

In Period 4 of the following year, the Segment Office reconciles the Segment Service Fee
collected with actual third party NSV and actual Segment Office expenses. The over or under
collection for each Business Unit is credited or charged based on actual activity versus Operating
Plan Segment Service Fee amounts including the Period 12 estimate. The Segment Service Fee
adjustment is charged or credited to the Business Units in Period 4. These adjustments are
recorded to Other Non-Operating Income and Expense within the Segment Service Fee True Up
Total Account (FPPS 17709/38572).
Segment Offices Locations*:
Petcare Corporate Office - Belgium - Currency EUR
Chocolate Corporate Office - USA - Currency USD
Food/Drinks/Multisales Corporate Office - Belgium Currency EUR
Drinks Corporate Office UK - Currency GBP and Drinks Corporate Office USA - Currency
USD
*Gum/Confections, Royal Canin and Mars Symbioscience Segments do not use the
Segment/GBU Service Fee Cost Sharing method.
Segment Offices may incur shared project costs that benefit certain Business Units in the
Segment but not all Business Units within the Segment. These costs are not included in the
Segment Service Fee. Business Units are required to follow Chapter 2.0 (Financial Control),
Policy 2.240 (Intercompany Cost Sharing Arrangements) for costs incurred outside of Segment
Service Fees.

Regional & Expert Centers These centers exist to provide support to Business Units within the
region. An example of these include the Regional Treasury & Benefits Centers. Regional and
Expert Centers will recover all of their costs within the region.

Shared Cost Service Center (SC2) Exists to facilitate the administration of certain global
shared programs. This includes the administration of Cost Sharing Agreements, allocation keys
and processes, periodic billings of the global programs administered, reporting on the global
program activity. All programs administered by SC2 are approved for inclusion in their activity by
their steering committee.

Associate Provides Services on Behalf of Another Business Unit An Associate may be

legally employed by one Business Unit but provide services to another Business Unit (e.g., Staff
Officers). The Associates legal employer records the salaries, wages, and benefits in its local
general ledger and cross charges these costs as Affiliate Professional Services Cross Charged
Out, Affiliate Professional Services Cross Charged Out-Travel, Affiliate Professional Services
Cross Charged Out-Other and Affiliate Professional Services Cross Charged Out-Non-Operating.
The receiving Business Unit must record these costs as Affiliate Professional Services Cross
Charged In, Affiliate Professional Services Cross Charged In-Travel, and Affiliate Professional
Services Cross Charged In-Other. Business Units are required to follow Chapter 2.0 (Financial
Control), Policy 2.240 (Intercompany Cost Sharing Arrangements) for these costs.

Direct Costs Incurred on behalf of another Business Unit A Business Unit may negotiate
contracts on behalf of another Business Unit(s); however, the invoicing arrangements within
these contracts must be direct to all participating Business Units from the vendor. This is done to
minimize the amount of cross charges between Business Units for shared contracts.
Exceptions to this policy require approval from the Business Units Regional S&F Staff Officers or
the Corporate Financial Controller if a Business Unit does not have an assigned Staff Officer.

Page 3 of 9
Last Modified: 14 November 2014

FINANCE MANUAL POLICY

All transportation, lodging, meals, entertainment and similar expenses incurred by

traveling Associates are paid by the visiting Associate For example, if the Business Unit
changes airline bookings for a visiting Associate, the changed tickets are charged to the
Associate's personal or company credit card. Cross-charges are not permitted for travel and
entertainment costs (including taxis, meals, etc.) incurred for visiting Associates, regardless of
amount. The only exceptions to this policy include costs incurred due to Associate
relocations/transfers and Associates visiting a Business unit for the purpose of interviewing for a
new position.

Facilities and equipment costs for Associates based at a site other than where their costs
are absorbed (e.g. Corporate Staff located outside of MVA) The facility costs (only for services
to operate the facility) and equipment costs (only to the extent the equipment is purchased
directly for the benefit of the hosted Associate) incurred by a Business Unit on behalf of another
Business Unit may only be cross-charged to the Associates home office if they meet either of the
following criteria:
The Business Unit has twenty (20) or more Associates from other Business Units based
at its site; or,
The Business Units total facility and equipment costs attributable to the Associates from
other Business Units based at its site are greater than 10% of the total facility and
equipment costs for the respective period.
The exception to this requirement is if both Business Units agree in advance to reimburse the
costs prior to hosting the Associate which must be evidenced in writing. Business Units cannot
cross-charge building depreciation.
All cross charges for these costs must be labelled and included as service revenue. Under no
circumstances should equipment costs be invoiced and labelled/identified as equipment
depreciation expense or cross charged separately as a single line item within the intercompany
invoice. The amount cross charged by the host Business Unit cannot exceed the equipment
depreciation expense recognized by the host Business Unit for the respective period. The
equipment must reside on the fixed asset subledger of the Business Unit originally purchasing the
property from the third party vendor which typically is the host Business Unit. The host Business
Unit does not reverse the equipment depreciation expense for the respective period on the host
Business Units local ledger.

Minimum Invoice Amount To achieve administrative efficiency, and to avoid the transfer of
costs immaterial to both the billing and receiving Business Units, no invoice less than $1,000
USD (or its local currency equivalent) may be cross-charged (except as noted in the paragraph
below). Business Units are encouraged to reject invoices that are less than the $1,000 required
minimum expenditure amount. Additionally, Business Units are required to invoice/cross charge
within 2 periods after receipt of the invoice from the third party vendor. Receiving Business Units
are encouraged to reject invoices with cross-charges that are over 2 periods old. The sending
Business Unit is required to invoice a cost within 2 periods of incurring the cost otherwise the
cross-charge is not considered timely which is inconsistent with the Efficiency Principle and may
provide a hardship to the receiving Business Unit to plan for the costs appropriately. If the costs
are not invoiced within 2 periods, the Business Unit is responsible for those costs and cannot
cross charge for the costs.
Exceptions to the $1,000 threshold must be agreed in advance in writing between the Business
Unit S&F Head or their delegate of both Business Units. Exceptions to the 2 period limit must be
approved in writing by the Business Units Regional S&F Staff Officer or the Corporate Financial
Controller if a Business Unit does not have an assigned Staff Officer.

Page 4 of 9
Last Modified: 14 November 2014

FINANCE MANUAL POLICY

Multi-site Business Units may operate at a higher minimum limit provided this is agreed upon with
their Regional S&F Staff Officer or the Corporate Financial Controller if a Business Unit does not
have an assigned Staff Officer.
Exceptions to the minimum invoice amount and 2 period limit are the approved cost sharing
arrangements. Even with quarterly billings of approved cost sharing arrangements, some of the
Business Units are allocated less than the $1,000 USD threshold. As agreed with the Corporate
Tax Department, the Business Units are billed as stated in the cost sharing agreement regardless
of the amount of the cross-charge, since cost sharing agreements are closely reviewed by
various local tax authorities. The cost sharing programs included in this exception are Mars IS,
Corporate Service Fees, Segment Service Fees, Shared Costs Service Center, Global Programs,
Regional Programs and Mars University courses. All cost sharing arrangements greater than
$100K (USD) require a signed agreement as evidence of the arrangement. If the cost sharing
arrangement is less than $100K (USD) the Business Units are required to have documentation
supporting and evidencing that the arrangement was agreed upon in advance between the
participating Business Units.
3.900.3.2 Interest Income and Expense and Dividends
Intercompany interest income and expense is to be recorded by Business Units based on the terms of the
intercompany loan.
Intercompany dividends are recorded in the period when the payment occurs, except for MMI and New
Uno Holdings, which are required to record dividends payable upon declaration. Dividend amounts in a
currency other than the Business Units functional currency are to be booked using the spot exchange
rate from the date of payment.
3.900.3.3 Intercompany Reconciliations
Because many aspects of our business are managed and reported at consolidated levels in addition to
the Business Unit level, it is necessary that valid consolidated reports are produced. To achieve this, all
appropriate intercompany balances and accounts must eliminate in each consolidation.
3.900.3.3.1 Period-End Procedures
The following procedures are carried out each period:
Statement of Intercompany Balances - All Business Units (MOE)/Legal Entities must provide a
statement of account dated and effective as of the last day of the period to all Business Units with which
there is activity to verify. All intercompany Balance Sheet accounts must be included on the period end
statement and Business Units are required to include all invoices on the Statement. The statement of
account should include the following accounts:
Accounts Receivable Affiliate (FPPS 10239),
Accounts Payable Affiliate (FPPS 10240),
Deposit with Cash Centre (FPPS 10532),
Borrowing From Cash Centre (FPPS 10533),
Notes Receivable Affiliate (FPPS 10241),
Notes Payable Affiliate (FPPS 10242)
The Business Unit with the asset balance provides the confirmation statement. The statement includes
an opening balance, charges, credits and adjustments, and an ending period balance. The statement
must include all intercompany invoices. The Business Units must also ensure that intercompany income,
expenses, interest, dividends, etc., are in balance and recorded in the same period.
Each type of balance is detailed separately; i.e., accounts receivable, notes receivable, deposits with
cash center, etc. These amounts are stated in the currency used for the invoice. Statements may
include balances in more than one currency amount. Every transaction listed on the statement must be
Page 5 of 9
Last Modified: 14 November 2014

FINANCE MANUAL POLICY

supported with proper documentation which should have been provided with the invoice. If a billing
Business Unit cannot prepare a proper invoice in time to include it with the statement, it must hold the
charge and bill it in a subsequent period.
Timing and Confirmation - The period end statements must be prepared by the Business Unit with the
asset balance and delivered to the other Business Units no later than Noon local time of the Business
Unit sending the statement on Monday of Week 1 by e-mail. Business Units which are required to send
invoices by conventional mail for local statutory reasons must also send the invoice by e-mail to increase
the efficiency and speed of processing to ensure that the receiving Business Unit can meet the required
deadlines for posting intercompany activity.
To achieve the Monday deadline, it is necessary for the sending (billing) Business Unit to cut off some
intercompany activity earlier than the last day of the period. Services cross-charges will be cut off early
so that the last invoice is sent by 5:00 p.m. local time on Wednesday of Week 4. Business Units are
encouraged to invoice items in advance of the deadline (e.g., global programs billed a period in arrears
must be processed in the first two weeks of the period).
Product shipments must not be cut off early, and Factory Business Units should ensure that systems and
processes are in place to provide sales invoices for dispatches on the last Saturday of the period.
No early cut-off is allowed for intercompany interest, dividend and principal activity. Any service costs
booked into a cost center after the cutoff date of Day 3 Week 4 may be recorded by the sending Business
Unit incurring the cost to the Balance Sheet Account I/C to X-Charge Next Period (FPPS 39707/HFM
10411). This process ensures the service related costs do not impact the sending Business Unit.
Specifically, Business Units should record unbilled intercompany activity for services to their balance
sheet, but only for the specific period in which the Business Unit receives an invoice subsequent to the
intercompany invoice billing deadline.
The intercompany invoice billing deadline for Affiliate Products and Affiliate interest is Monday of Week 1.
When received, the Business Unit with the payable has until close of business on Monday, Week 1 to
verify the statement and, if necessary, agree any adjustments with the sending (billing) Business Unit. If
agreement is not reached, the receiving Business Unit may record the statement amount to the
Intercompany to Cross Charge Next Period Balance Sheet Account. Discussions over disputed
amounts can continue after that time and if subsequent adjustments are agreed, they can be made to the
account in the next period.
During the Period 13 close, the Business Units should not use an early cut-off procedure. Since Period
13 is the close of a given year, the Business Units must capture all applicable intercompany activity
through Saturday of Week 4 (5) and communicate the period-end statements by Friday of Week 1.
Intercompany Accounts in FPPS/HFM - Accounts are established to handle the various types of
intercompany accounts. These accounts require that the corresponding Business Unit's code (MOE for
FPPS, Company Code for HFM) is included with the account code. Do not group intercompany balances
from several Business Units under a single Business Unit account. This reconciliation is first due Monday
Week 1 at 5:00 p.m. local time. After this point, the report is updated in real time so that any corrections
with partner Business Units can be monitored up until the final submission of FPPS.
Payables and receivables from the same Business Unit are not to be netted.
HFM Out of Balance Reconciliation Subsequent to each period close, the HFM support team
communicates all A/R and A/P out of balances to all Business Units by HFM Company Code. The out of
balances are identified by ICP tags. Business Units are expected to have no out of balances for both
HFM & FPPS. If an HFM Company Code is out of balance due to timing at a more granular level than

Page 6 of 9
Last Modified: 14 November 2014

FINANCE MANUAL POLICY

FPPS, the Business Units are required to resolve the out of balances prior to the following period close.
If there are disputes regarding the ICP tags, Business Units must follow the intercompany dispute
resolution process.
3.900.3.3.2 Intercompany Dispute Resolution Process
Invariably, there will be disputes between Business Units. Typical disputes include differences in
amounts billed versus expectations, differences in amounts per invoice versus supporting documents, the
timing of billings, sufficient supporting documents, and the identification of the appropriate Business Unit
to be billed. Business Units should resolve all disputes prior to the period close.
If a dispute is not resolved prior to the period close, it will be escalated to the appropriate S&F managers
of both Business Units. The S&F managers must resolve the dispute by Monday of Week 2. If the S&F
managers are unable to resolve the dispute by Monday of Week 2 they are required to escalate the
dispute to the Business Unit S&F Heads. If the Business Unit S&F Heads are unable to resolve the
dispute by Monday of Week 3, the Business Unit S&F Heads are to contact their Regional Staff Officer or
the Regional Segment Chief Financial Officers if one or more Business Units do not have an assigned
Staff Officer to resolve the dispute on behalf of both Business Units.
The matrix below highlights the resolution process that must be followed by all Business Units.
Dispute Resolution - Escalation Matrix
Level
1
2
3
4

Escalation Contact

Resolution Deadlines

Intercompany Specialists
S&F manager

Monday of Week 1
Monday of Week 2

Business Unit S&F Head

Regional Staff Officer for both Units
or The Regional Segment Chief
Financial Officers if one or more
Business Units do not have an
assigned Staff Officer

Monday of Week 3
Upon Notification by S&F Head

If a dispute is initiated by the receiving Business Unit; it is the responsibility of the billing Business Unit to
provide the requested support/documentation to resolve the dispute. In all circumstances, the billing
Business Unit has the responsibility of resolving errors/omissions/etc. If an agreement is not reached
before the period is closed, both Business Units involved with the transaction are required to
record the intercompany receivable or payable as initially determined by the sending Business
Unit. The corresponding side of the journal entry (debit or credit) may be recorded in the following
manner based upon the nature of the entry and whether the entry is Inventory related or P&L impacting:
If the dispute is Inventory related, the Business Unit receiving the cross charge must record the
invoice to their balance sheet. The billing Business Unit would not change their P&L
classification.
If the dispute is P&L (Income Statement) related\, the Business Unit receiving the cross charge
may record the invoice to the I/C to X-Charge Next Period account (FPPS 39707/HFM 10411).
The receiving Business Unit will then reclassify the balance with a journal entry the following
period after the dispute has been resolved in accordance with the dispute resolution process
outlined below. The billing Business Unit will not change their P&L classification.
In both scenarios, the Business Units are required to record the intercompany receivable/payable.
3.900.3.3.3 Intercompany Balance Revaluations
Intercompany transactions occurring between Business Units that do not have the same functional
currency are subject to revaluation. In accordance with Chapter 3.0 (Accounting) Policy 3.830

Page 7 of 9
Last Modified: 14 November 2014

FINANCE MANUAL POLICY

(Accounting and Reporting for Currency Transactions), transactional gains or losses will result from the
effect of exchange rate changes between the initial booking rate and the final settlement rate on purchase
or sales denominated in other currencies. Gains or losses represent an increase or decrease in the local
currency cash flows upon payment or receipt of foreign currency.
As exposure transactions arise on intercompany transactions, they are entered into the Business Units
accounting system at the current exchange rate. The resultant asset or liability is revalued each period at
the period end rate and any gain or loss booked to the P&L (e.g. Sales to SPV, material purchases to
PPV, etc.).
When the currency denominated transaction is finally settled, the interim revaluations are backed out and
the final local currency gain or loss is entered.
The currency gain or loss created by revaluing the Intercompany Notes and Balances with Treasury
Centers is to be recorded in the current period to the following account: Revaluation Effect of Affiliate
Notes: FPPS 33739/FIS 17658_TII/HFM 90720
3.900.3.3.4 Settlement of Intercompany Balances
Intercompany Receivables and Payables - Payment dates and processes as defined below for settlement
of intercompany receivables and payables are in place to facilitate planning of cash flows, minimize
transfer costs, and have no adverse tax consequences. These amounts are settled using the global
intercompany netting process run by the European Treasury Center based in Veghel or the Wrigley
Treasury Center for the Wrigley Business Units. All Business Units are required to participate in these
global netting processes unless prohibited by local laws. These prohibitions usually occur in emerging
countries with currency control regulations.
The settlement of intercompany receivables and payables occurs every period as managed by the
respective Treasury Centers. The following procedures facilitate the settlement process:
Mars Legacy Business Units initiate the netting process through the intercompany process which
is managed by the European Treasury Center. The Wrigley netting process is facilitated through
the use of Bank Mendes Gans (BMG), a third party system.
The Business Unit fully settles the agreed statement payable balance through the intercompany
netting process. This may be in more than one currency as the payment should occur in the
currency as agreed in the statement.
The Business Unit with the payable initiates the payment process and sends their payment
intentions to the European Treasury Center according to the due dates as published by the
European Treasury Center.
Settlement occurs on Wednesday of Week 3 with the European Treasury Center providing details
of the amounts settled to all participating Business Units. Gains and losses from settlement of
the balances are recorded along with the original transaction.
For the Wrigley settlement process, the Wrigley Business Unit with the receivable balance enters
their receipt intentions directly in the BMG system before the due date for the applicable netting
period (Day 5 of Week 2 by 12:00 p.m. CST). The following Monday (Day 1 of Week 3) final
netting reports will be available for each Business Unit to review. In the case that the Business
Unit is in a net payable position, a payment must be initiated to BMG per their instructions on the
final netting report by Wednesday (Day 3 of Week 3). In the case the Business Unit is in a net
receivable position, there is no action required other than to confirm receipt of funds from BMG on
Day 3 of Week 3. It is the responsibility of the Business Unit to inform Wrigley Treasury Center if
the units bank instructions change and require an update in the BMG system.
Exceptions - The Business Units within countries with currency restrictions should be the only entities that
do not participate in the intercompany netting process. The European Treasury Center keeps track of all
non-participating Business Units and work with the Business Units and Corporate Treasury to ensure the

Page 8 of 9
Last Modified: 14 November 2014

FINANCE MANUAL POLICY

settlement process for these Business Units is appropriate. Approval not to participate in the global
netting process must be obtained from the Corporate Treasury Manager.
The Business Units that cannot participate in the global netting process are still required to settle
intercompany payables each period on the settlement day of Wednesday Week 3 each period.
Intercompany Notes All intercompany notes are legal contracts between legal entities that must be
executed in writing and signed by duly authorized officers of each legal entity as of the effective date of
the note. Intercompany notes are settled based on the payment terms contained in the note. If they are
interest bearing, the interest should be recorded each period and settled according to the note terms. If
the notes do not contain repayment clauses or are open as to settlement (effectively they are permanent
in nature), any repayments must be agreed to and coordinated with the Corporate Treasury Manager.
The terms and settlement of intercompany notes should also be agreed with the Corporate Tax
Department to ensure all appropriate tax and legal effects are considered.

Page 9 of 9
Last Modified: 14 November 2014