The Limited, Inc., and Consolidated Subsidiaries - Page 10

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          WFNNB:  Capitalization and Liquidity Needs                                  
               WFNNB had cash (liquidity) needs that could not be met                 
          without borrowing.  Limited Service Corp. (Limited Service),                
          another member of the affiliated group, performed the “treasury             
          function” for WFNNB.  That function included assisting WFNNB in             
          meeting its liquidity needs.  Limited Service had access to funds           
          generated by petitioner’s sale of its commercial paper.                     
          Initially, WFNNB’s liquidity needs were met from within the                 
          affiliated group.  On May 1, 1989, Limited Service granted WFNNB            
          a line of credit in the amount of $500 million.  On December 1,             
          1993, Limited Service increased to $1 billion the line of credit            
          it granted to WFNNB.  At various times, WFNNB obtained funds from           
          Limited Service pursuant to various other long- and short-term              
          loan agreements.  WFNNB also borrowed money from, and was granted           
          lines of credit by, various unrelated, outside lenders.  On                 
          December 4, 1992, WFNNB was granted a $280 million line of credit           
          by a syndicate of 17 banks.  WFNNB never drew on that line of               
          credit because it could obtain funds less expensively from                  
          Limited Service.                                                            
          Certificates of Deposit                                                     
               WFNNB first issued (sold) a certificate of deposit (CD) on             
          May 1, 1989.  That CD was sold to Limited Service for $100,000,             
          the minimum acceptable time deposit pursuant to the CEBA                    
          restrictions incorporated in the articles.                                  

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