2017 Transfer Pricing Internal Memorandum Quarterly True-Up Process

2017 Transfer Pricing Quarterly True-Up Process 2017 Transfer Pricing internal memorandum – Quarterly True-Up Process

Overview

Per the 2017 Transfer Pricing Memos for Citect, ClearScada and Ampla, a true-up process will be in place due to the system limitation (PBS) of one price/discount applicable per product code. This process will be adjusting for the following scenarios:  Distributors – Differential between system pricing and actual pricing agreement with the applicable Product Management team  SE Entities – Where FX and/or Special discounts has been applied and approved by the applicable Product Management team  SE Entities – Where entities are incurring a statutory loss (or not the minimum 5% Operating Income) in their country as a result of the current system pricing which will be reviewed/processed by the Factory/Back Office/Process Owner.

Process Owner

This process will be administered and managed by the Finance Business Partner (FBP) for Citect, ClearScada and Ampla with advice from the relevant Tax and Product Management teams.

Actions Required This process will be administrated separately for the following situations:

 Distributors – No input needed from entities, process of adjustment done by the Factory/Back Office/Process Owner.  SE Entities (with FX/Special discounts) – No input needed from entities, process of adjustment done by the Factory/Back Office/Process Owner.  SE Entities (without FX/Special discounts) – Where entities are incurring a statutory loss (or not the minimum 5% Operating Income), onus on the applicable entity to submit a markdown file requesting an adjustment which will be reviewed/applied by the Factory/Back Office/Process Owner.

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Timing

The process will be on a quarterly basis, this timing is to factor in where some countries have different financial years and also to reduce the administration burden for all parties. For the SE Entities (without FX/Special discounts) the necessary template (outline and provided below) will be required for submission no later than the 2nd to last Friday of the month for the relevant quarter end to ensure time to review and process. Below are the relevant dates for 2017:

 Quarter 1 2017: Friday 24th March 2017

 Quarter 2 2017: Friday 23rd June 2017

 Quarter 3 2017: Friday 22nd September 2017

 Quarter 4 2017: Friday 22nd December 2017

If a quarter is missed and/or for transactions in the remaining days of the quarter after the cut off above, can be submitted for review/action in the next quarter.

As per above for Distributors and SE Entities (with FX/Special discounts) the process will be applied automatically by the Factory/Back Office/Process Owner for each quarter where applicable.

True-up Template (applicable to SE Entities without FX/Special discounts only)

Attached is the template to be submitted by SE Entities (without FX/Special discounts). All necessary fields are required to be completed and any missing/incomplete data may result in delays in processing and/or the adjustment not be approved/processed. As the Global List Prices and Transfer Prices are in USD, the templates are to be completed in USD and any adjustments will be processed in USD.

Submission of a separate template for each entity and product line is required. No adjustment will be processed without the necessary template as supporting documentation.

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Examples

Below are examples showing the true-up adjustment for each scenario.

1. A Distributor who has an agreed discount off Global List Price of 50% on Citect Customer First and the system default is 41%. Therefore, the Distributor will receive a credit to the equivalent of 9% of the Global List Price for the applicable product code(s).

2. For Citect Licences, a SE Entity has an approved FX discount of 23% on top of the system discount of 50% with the total discount being 73%. They will receive a credit to the equivalent of 23% of the Global List Price for the applicable product code(s).

3. SE Entity is requesting an adjustment due to a statutory loss on the sale of Ampla Licences. A completed template has been received showing that in order to achieve at least 5% Operating Income a further discount of 10% off Global List Price needs to be applied. Therefore, they will receive a credit to the equivalent of 10% of the Global List Price for the applicable product code(s).

Contact People

Finance/Process Owner: Erich Landrum Product Management (CitectScada): John Falkowski Product Management (Citect Historian): Con Karantziounis Product Management (ClearScada): Bradley Shaw Product Management (Ampla): Matthew Graham