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for the period ending December 31, 1990, Brunswick had incurred
expenses of $3,667,000 relating to the sales of Brunswick's
Technical businesses and Nireco stock. The $3,667,000 in
expenses were allocated as follows:
Company Amount
Vapor $562,000
Vapor A/C 64,000
TXT 585,000
ECS 367,000
Circle Seal 516,000
Biotech 59,000
NIRECO 1,514,000
Total 3,667,000
On October 31, 1991, Brunswick's accountants reallocated
$2,425,000 from a total reserve of $10,600,000 for partnership
expenses and accounted for the $2,425,000 as commissions paid to
Merrill Lynch in connection with the sales of Vapor, TXT, and
Nireco stock. Brunswick reallocated $1,250,000 to Vapor AC,
$500,000 to TXT, and $675,000 to Nireco. Brunswick never
informed Arthur Andersen about the reallocation of expenses.
Based upon Arthur Andersen's work papers, Brunswick incurred
net partnership expenses of $8,950,000. Accounting for the
reallocation of $2,425,000 of expenses described above, Brunswick
concluded that it incurred net partnership expenses of
$6,006,944.
XI. Interest Rate Forecasts
Smith, petitioner's expert, prepared a report in which he
employed various methods for forecasting interest rates in an
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