ACM Partnership, Southampton-Hamilton Company, Tax Matters Partner - Page 14

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          could not have earned a profit on a net present value basis                 
          unless interest rates exceeded their expected levels, but a much            
          smaller increase would have been sufficient to break even.                  
               We reviewed historical data to assess the likelihood that              
          3-month LIBOR would have risen by the requisite amount for                  
          Colgate to break even.  The record includes published records of            
          market interest rates extending back to January 1984.  There are            
          71 observations of 3-month LIBOR as of the first day of each                
          month between January 1984 and November 1989.  Not one of the               
          71 monthly quotations is 300 basis points or more above the                 
          quotations for the 1 to 6 previous months.  Only three of the               
          quotations represent a level 200 basis points or more above any             
          quotations during the previous 6 months.  There is no month for             
          which 3-month LIBOR was above 12.13 percent.  It reached or                 
          exceeded 11 percent in 6 months, all in mid-1984.  In 30 months,            
          it fell within the range of 8 to 9.99 percent, and it fluctuated            
          between 10.31 and 8.56 percent during the first 11 months of                
          1989.  The longest that 3-month LIBOR remained at or above                  
          10 percent was 9 consecutive months in 1984.  Thereafter, the               
          longest period was 2 consecutive months in early 1989.  In the              
          late summer and early autumn of 1989, Colgate's treasury                    
          department confidently expected that interest rates would follow            
          a downward trend for the foreseeable future.                                








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