Intercompany interest rates Jan Schets Director Treasury Sara

Intercompany interest rates Jan Schets Director Treasury Sara Lee International BV

Agenda Introduction Sara Lee n Interco interest rates applied n Business cas n Lessons learned n

A decade of Sara Lee 2002 n n Diversified company Operations in 55 countries US$ 20 bln Net Sales in nearly 200 nations 155, 000 employees worldwide

A decade of Sara Lee 2003 to 2011 n Divested appr. 60% – – – Apparel European Meats Direct Selling Household and Body Care Bakery

A decade of Sara Lee 2011 to 2012 n “Sara Lee 2. 0” – US meat business n Spin of “Coffee. Co” – International Coffee & Tea

Intercompany interest rates for cash pool participants Utopia: no interest Practical: use same debit/credit interest as applicable for the cash pool leader Tax: armslength rates based on credit profile of individual participant

Intercompany interest rates for interco loans q Short term on demand loans: q q Libor + 25 bp Standard long term loans: q Parent company debt q Parent company rating reference rates

Intercompany interest rates for interco loans q Special loans: q Benchmark quote bank q Benchmark transaction q Benchmark pricing report

Intercompany interest rates Business case q Temporary statutory equity shortfall q Capital tax of 1% q Profit Participating Loan qualified as equity q Armslength interest rate PPL q 3 rd party pricing report

Intercompany interest rates Business case q 3 rd party pricing report q Based on financials and sector q Comparison q Detailed report

Lessons learned q q Documentation q Finance policy & Treasury guidelines q Cash pool & Loan documentation Outlook q Increased focus on armslength rates