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Copyright

INTERCO
HARVARD BUSINESS SCHOOL
Case Software 2-296-720
Copyright 1991 by the President and Fellows of Harvard College.
Research Associate Susan L. Rother prepared this case under the supervision of Professor Scott P. Mason
as the basis for class discussion rather than to illustrate either effective or ineffective handling of an
administrative situation.

Page 1

Copyright

on of Professor Scott P. Mason


neffective handling of an

Page 2

Exhibit 1

Exhibit 1

Board of Directors as of May 16, 1988

Harvey Saligman

Chairman of the Board and CEO of Interco

Harry M. Krogh

President and COO of Interco

Ronald L. Aylward

Vice Chairman of the Board of Interco

R. Stuart Moore

Vice President of Interco; President of The Lane Company, Inc., a subsidiar

Mark H. Lieberman

Vice President of Interco; President of Londontown, a division of Interco

Richard B. Loynd

Vice President of Interco; Chairman of the Board of Converse, Inc., a subsid

Charles J. Rothschild, Jr.

Vice President of Interco; Chairman of the Board of Megastar Apparel Grou

Zane E. Barnes

Chairman of the Board, President, CEO and director of Southwestern Bell C

Donald E. Lasater

Chairman of the Board, CEO and director of Mercantile Bancorporation, Inc

Lee M. Liberman

Chairman of the Board, President, CEO and director of Laclede Gas Compa

Robert H. Quenon

President, CEO and director of Peabody Holding Company, Inc., which is en

William E. Cornelius

President, CEO and director of Union Electric Company, an electric public u

Marilyn S. Lewis

Civic leader and volunteer

Thomas H. O'Leary

Vice Chairman of the Board and director of Burlington Northern Inc., a hold

As of April 15, 1988 all directors, nominees and officers of Interco, as a group (24 persons) beneficially owne

Page 3

Exhibit 1

e Company, Inc., a subsidiary of Interco

own, a division of Interco

rd of Converse, Inc., a subsidiary of Interco

rd of Megastar Apparel Group, a division of Interco

ector of Southwestern Bell Corporation, engaged in the general telecommunications business

ercantile Bancorporation, Inc., a bank holding company, and Chairman of the Board and director of Mercantile Bank Nationa

ector of Laclede Gas Company, a gas public utility

g Company, Inc., which is engaged in coal mining and sales

ompany, an electric public utility

lington Northern Inc., a holding company with transportation, energy and natural resources concerns

4 persons) beneficially owned 1.14% of the outstanding shares of Interco's common stock.

Page 4

Exhibit 1

director of Mercantile Bank National Association

rces concerns

Page 5

Exhibit 2

Exhibit 2

Subsidiaries

Abe Schrader Corp.


Big Yank Corp.
Bowen Shoe Co., Inc.
Broyhill Furniture Industries, Inc.
Campco Holdings, S.A.
Campus Pacific Ltd.
Central Hardware Co.
Clayton Operations, S.A.
College-Town, Inc.
Converse Inc.
Delmar Sportswear, Inc.
Ethan Allen Inc.
Factory Outlet Co.
Fine's Men's Shops, Inc.
Florsheim Inc.
Florsheim Shoe Store Co. of Hawaii
Florsheim Shoe Store Co.Midwest
Florsheim Shoe Store Co.Northwest
Florsheim Shoe Store Co.South
Florsheim Shoe Store Co.West
Golde's Department Stores, Inc.
Grand Entry Hat Corp.
Highland House, Inc.
Highland Transport, Inc.
Hy-Test, Inc.
Interco Subsidiary, Inc.
Keith O'brien Investment Co.
Lane Co., Inc.
Lease Management, Inc.
Julius Marlow Holdings, Ltd.
L. J. O'neill Shoe Co.
ORC Financial Ag
Patriot Investment Co.
Queen Casuals, Inc.
Senack Shoes, Inc.
Sky City Stores, Inc.
Stuffed Shirt Inc.
United Shirt Distributors, Inc.
Walton Road Management Co.

Source: Lotus One Source

Page 6

Exhibit 3

Exhibit 3

Common Stock Price History (Monthly)

Month End Prices (adjusted for stock splits)


1986

31-Jan-86
28-Feb-86
31-Mar-86
30-Apr-86
30-May-86
30-Jun-86
31-Jul-86
29-Aug-86
30-Sep-86
31-Oct-86
28-Nov-86
31-Dec-86

$35.13
39
39.25
39.625
43.5
47.188
41.375
43.75
40
43.75
44.125
36.875

1987

30-Jan-87
27-Feb-87
31-Mar-87
30-Apr-87
29-May-87
30-Jun-87
31-Jul-87
31-Aug-87
30-Sep-87
30-Oct-87
30-Nov-87
31-Dec-87

39.75
42.625
44.125
39.625
40.125
45.375
51.25
53.25
47.5
36
30
32.25

1988

29-Jan-88
29-Feb-88
31-Mar-88
29-Apr-88
31-May-88
30-Jun-88
29-Jul-88

37.125
42
42
41.125
43.875
44.75
68.5

Source: Interactive Data Corporation

Page 7

Exhibit 4

Exhibit 4

Common Stock Price History (Daily)

Daily Closing Prices


2-May-88
3-May-88
4-May-88
5-May-88
6-May-88
9-May-88
10-May-88
11-May-88
12-May-88
13-May-88
16-May-88
17-May-88
18-May-88
19-May-88
20-May-88
23-May-88
24-May-88
25-May-88
26-May-88
27-May-88
30-May-88
31-May-88
1-Jun-88
2-Jun-88
3-Jun-88
6-Jun-88
7-Jun-88
8-Jun-88
9-Jun-88
10-Jun-88
13-Jun-88
14-Jun-88
15-Jun-88
16-Jun-88
17-Jun-88
20-Jun-88
21-Jun-88
22-Jun-88
23-Jun-88
24-Jun-88
27-Jun-88
28-Jun-88

$40.25
41.5
41
41.625
40.625
40.875
41.75
41.625
42
42.125
42.25
42
41.5
40.625
40.625
40.375
41.5
42.5
42.625
41.25
N.A.
43.875
43.5
42.875
44.125
43.25
42
43.875
43.375
43.375
43.5
43.625
42.5
42.875
43.625
43.25
43.125
43.75
43.625
43.5
43.625
44

1-Jul-88
4-Jul-88
5-Jul-88
6-Jul-88
7-Jul-88
8-Jul-88
11-Jul-88
12-Jul-88
13-Jul-88
14-Jul-88
15-Jul-88
18-Jul-88
19-Jul-88
20-Jul-88
21-Jul-88
22-Jul-88
25-Jul-88
26-Jul-88
27-Jul-88
28-Jul-88
29-Jul-88
1-Aug-88
2-Aug-88
3-Aug-88
4-Aug-88
5-Aug-88
8-Aug-88

Page 8

44.625
N.A.
45.375
44.5
44.625
45
45.25
45.375
46.375
49
54.375
54.5
58.375
58.125
57.875
57.25
58
58.875
59.375
67.75
68.5
68.875
67.625
67
67.375
68.25
72.5

Exhibit 4
29-Jun-88
30-Jun-88

44
44.75

Source: Interactive Data Corporation

Page 9

Exhibit 6

Exhibit 6

Historical Balance Sheets

INTERCO
Consolidated Balance Sheet
($000s except per share data)
February 28,
Current Assets:
Cash
Marketable securities
Receivable, net
Inventories
Prepaid expenses and other
current assets
Total current assets
Property, Plant and Equipment:
Land
Buildings and improvements
Machinery and equipment
Less accumulated depreciation
Net Property, Plant and Equipment
Other Assets
Total Assets
Current Liabilities:
Notes payable
Current maturities of longterm debt and capital
lease obligations
Accounts payable and
accrued expenses
Income taxes
Total Current Liabilities
Long-term debt, less current
maturities
Obligations under capital leases,
less current maturities
Other long-term liabilities

1986

1987

$16,856
127,341
402,225
647,116

$16,631
63,747
446,755
733,907

$20,849
11,033
486,657
805,095

22,547

25,614

35,665

$1,216,085

$1,286,654

$1,359,299

26,770
437,812
320,256
784,838
343,018
441,820

32,266
465,811
364,499
862,576
377,226
485,350

32,525
471,787
380,402
884,714
405,215
479,499

99,238
$1,756,893

153,383
$1,925,387

146,788
$1,985,586

--

$68,840

$70,517

9,647

11,915

8,172

184,032
12,699
$249,587

216,365
17,327
$358,226

239,513
4,402
$373,343

127,409

135,019

257,327

56,495
43,249

50,546
55,381

41,813
61,766

Shareholders' Equity:

Page 10

1988(a)

Exhibit 6
Preferred stock, no par value
Common stock, $3.75 stated value
Capital surplus (41,356,847
shares issued)
Retained earnings
Less 5,173,811 treasury shares
Total Shareholders' Equity
Total Liabilities and Net Worth

66,027
163,765

61,795
163,643

57,113
155,088

104,205
1,027,895
1,361,892
81,739
1,280,153
$1,756,893

98,246
1,099,006
1,422,690
96,475
1,326,215
$1,925,387

44,539
1,179,964
1,436,704
185,367
1,251,337
$1,985,586

Source: Annual report, 10Q's


(a) February 29, 1988

Page 11

Exhibit 6

1987

1988

$29,700
57,789
431,743
786,792

$19,622
16,366
460,759
872,135

25,622

44,959

$1,331,646

$1,413,841

868,670
386,762
481,908

890,887
412,332
478,555

149,170
$1,962,724

146,878
$2,039,273

$97,297

$146,016

9,288

8,900

278,847
15,294
$400,726

292,051
5,463
$452,430

133,403

255,279

49,270
56,410

40,032
63,484

Page 12

Exhibit 6
61,285
155,088

36,721
155,088

49,149
1,111,527
1,377,049
54,134
1,322,915
$1,962,724

32,117
1,194,884
1,418,810
190,762
1,228,048
$2,039,273

Page 13

Exhibit 7

Exhibit 7

Historical Income Statements

INTERCO
Consolidated Statement of Earnings
($000s)
Year Ended February 28,

First Quarter Ended May 31,


1987

1986

1987

1988(a)

$2,832,384
36,140
2,868,524

$2,946,902
32,175
2,979,077

$3,341,423
29,237
3,370,660

$781,421
6,293
787,714

1,932,258

2,000,423

2,284,640

522,759

681,886
25,523

712,861
28,082

799,025
33,535

199,145
7,351

2,639,667

2,741,366

3,117,200

729,255

228,857
109,008

237,711
111,937

253,460
108,457

52,276
25,276

$119,849

$125,774

$145,003

$26,514

Operating income(b)

218,240

233,618

257,758

53,334

Operating cash flow(c)

267,756

287,133

319,275

Income:
Net sales
Other income
Costs and Expenses:
Cost of sales
Selling, general and
administrative expenses
Interest expense

Earnings before income tax


Income taxes
Net earnings

Source: Annual report and 10Q

(a) For the year ended February 29, 1988


(b) Operating income equal to the sum of earning before income taxes and interest expense less other inco
(c) Operating cash flow equal to the sum of operating income and depreciation expense

Page 14

Exhibit 7

t Quarter Ended May 31,


1988

$778,107
6,864
784,971
522,942
201,129
9,179
733,250
51,904
25,762
$30,689

54,219
-

interest expense less other income


tion expense

Page 15

Exhibit 8

Exhibit 8

Business Segment Information

Year Ended February 28,

1986

First Quarter Ended May 31,


1987

1987

1988

$907,833
461,785
558,286
904,480
$2,832,384

$817,660
498,324
663,521
967,397
$2,946,902

$813,198
532,251
890,411
1,105,563
$3,341,423

$160,339
148,138
209,535
263,409
$781,421

$66,716
32,085
48,475
105,111
$252,387

$47,269
40,610
52,136
123,766
$263,781

$20,240
39,101
92,204
149,090
$300,635

($670)
14,136
15,777
38,319
$67,562

$36,140
(34,147)

$32,175
(30,163)

$29,237
(42,877)

$6,293
(14,228)

254,380
(25,523)

265,793
(28,082)

286,995
(33,535)

59,627
(7,351)

Net Sales to Unaffiliated Customers:


Apparel
General retail
Footwear
Furniture
Total

Operating Earnings:
Apparel
General retail
Footwear
Furniture
Total
Other income
Corporate expense
Earnings before interest
and taxes
Interest expense

Earnings before
income taxes

$228,857

$237,711

$253,460

Identifiable Assets at Year End:


Apparel
General retail
Footwear
Furniture

Corporate Assets
Total

$456,972
234,004
291,292
618,980
$1,601,248

$465,601
248,639
497,706
640,106
$1,852,052

$425,350
252,195
595,861
688,853
$1,962,259

155,645

73,335

23,327

$1,756,893

$1,925,387

$1,985,586

Page 16

$52,276

Exhibit 8
Depreciation Expense:
Apparel
General retail
Footwear
Furniture

$11,965
8,294
8,286
20,971

$12,123
9,079
10,638
21,675

$12,521
9,681
13,107
26,208

$13,433
6,169
8,114
27,278

$8,869
8,167
7,486
24,720

$9,220
10,735
9,236
36,188

Capital Expenditures:
Apparel
General retail
Footwear
Furniture

Source: 1988 Annual reports and 10Q

Page 17

Exhibit 8

t Quarter Ended May 31,


1988

$138,836
149,209
226,672
263,390
$778,107

($247)
12,498
19,700
32,196
$64,147
$6,864
(9,928)
61,083
(9,179)

$51,904

Page 18

Exhibit 8

Page 19

Exhibit 9

Exhibit 9

Summary of the Takeover Offer

City Capital Associates, L.P. Offer

Date:

8-Aug-88

Price per share:

$70.00

Premium to stock one-day prior(a)

17.90%

Premium to stock one-month prior:

59.10%

Premium to 52-week low:

137.30%

Premium to 52-week high:

17.20%

Value of equity

$2,622.8MM

Net debt

318.5MM

Value of firm

$2,941.3MM

Sales

Value of Firm
as a Multiple of:
Operating
Cash Flow

Operating
Income

Year ending 2/29/88

0.9x

9.2x

11.4x

Estimate of year ending 2/28/

0.9

8.8

10.7

Source: Adapted with minor modifications in terminology from Wasserstein, Perella & Co., Inc. presentation
to the Interco Board of Directors, August 8, 1988. Civil Action No. 10111, filed in the Court of Chancery
of the State of Delaware in and for New Castle County, Exhibit 23.
(a) Premiums based on stock prices as of July 27, 1988

Page 20

Exhibit 9

Value of Equity
as a Multiple of:
Net
Book
Income
Value

18.1x

2.2x

17

2.2

Perella & Co., Inc. presentation


ed in the Court of Chancery

Page 21

Exhibit 10

Exhibit 10

Premiums Paid Analysis

# Deals(a)

Average Premium Paid over Stock Price


One Day
4 Weeks
52-Week Low 52-Week High

1Q 1988

19

62.30%

95.50%

159.50%

16.70%

2Q 1988

68.60%

91.30%

182.80%

31.50%

3Q 1988(b)

12

36.50%

49.90%

181.30%

2.60%

1988

40

56.00%

80.90%

171.30%

15.80%

17.90%

59.10%

137.30%

17.20%

Rales

Source: Wasserstein, Perella & Co., Inc. presentation to the Interco Board of Directors, August 8, 1988. Civi
No. 10111, filed in the Court of Chancery of the State of Delaware in and for New Castle County, Exhibit 23.
(a) Wasserstein, Perella & Co., Inc. selected tender offers
(b) Selected tender offers from the months of July and August

Page 22

Exhibit 10

Week High

Directors, August 8, 1988. Civil Action


New Castle County, Exhibit 23.

Page 23

Exhibit 11

Exhibit 11

Comparable Transaction Analysis

a. Purchase Price Multiples by Business Segment


Furniture Manufacturing Companies

Announcement
Date
Acquiror/Target

Aggregate
Price ($MM)(a)

Net
Income

Purchase Price Multiples(


Book
Value(b)

12/14/1987

La-Z-Boy/Kincaid

$63.50

22.0x

2.1x

11/17/1986

INTERCO/Lane

523.7

19.3

2.8

8/12/1986

Chicago Pacific/
General Mills Furniture

89.3

14.1

1.8

6/3/1986

Masco/Henredon

260.9

31.6

2.6

8/8/1988

Rales Proposal

$2,941.30

18.1x

2.2x

Source: Wasserstein, Perella & Co., Inc. presentation to the Interco Board of Directors, August 8, 1988. Civi
Action No. 10111, filed in the Court of Chancery of the State of Delaware in and for New Castle County, Exhi

(a) Sales, operating income, and operating cash flow multiples adjusted for the value of net debt outstandin
(b) Book value adjusted for intangibles

Footwear Manufacturing Companies

Announcement
Date
Acquiror/Target

Aggregate
Price ($MM)(a)

Net
Income

Purchase Price Multiples(


Book
Value(b)

4/25/1988

NIKE/Cole Haan

$95.00

36.2x

N.M.

6/3/1987

Moacq/Morse Shoe

312.5

2.5

1.8

3/10/1987

Reebok/AVIA

191

40.6

6.7

Page 24

Exhibit 11

9/18/1986

Reebok/Rockport

146.1

30.7

N.M.

7/31/1986

INTERCO/Converse

202.7

37.1

1.8

8/8/1988

Rales Proposal

$2,941.30

18.1x

2.2x

Source: Wasserstein, Perella & Co., Inc. presentation to the Interco Board of Directors, August 8, 1988. Civi
Action No. 10111, filed in the Court of Chancery of the State of Delaware in and for New Castle County, Exhi

(a) Sales, operating income, and operating cash flow multiples adjusted for the value of net debt outstandin
(b) Book value adjusted for intangibles

Exhibit 11 (continued)

Comparable Transaction Analysis

Apparel Companies

Announcement
Date
Acquiror/Target

4/28/1988 Wesray/William Carter


2/2/1988 Salant/Manhattan Indus.

Purchase Price Multiples(


Book
Value(b)

Aggregate
Price ($MM)(a)

Net
Income

$157.40

N.M.

1.6x

129.7

N.M.

1.4

3/17/1986

W Acquisition/Warnco

504.7

21

2.5

11/4/1985

West Point Pepperall/


Cluett, Peabody

551.9

19.6

1.5

Rales Proposal

$2,941.30

18.1x

2.2x

8/8/1988

Source: Wasserstein, Perella & Co., Inc. presentation to the Interco Board of Directors, August 8, 1988. Civi
Action No. 10111, filed in the Court of Chancery of the State of Delaware in and for New Castle County, Exhi

(a) Sales, operating income, and operating cash flow multiples adjusted for the value of net debt outstandin
(b) Book value adjusted for intangibles

Page 25

Exhibit 11
Central Hardware Division

Announcement
Date
Acquiror/Target

6/24/1988

8/8/1988

Purchase Price Multiples(


Book
Value(b)

Aggregate
Price ($MM)(a)

Net
Income

Management Group/
Payless Cashways

$1,189.40

22.0x

2.3x

Rales Proposal

$2,941.30

18.1x

2.2x

Source: Wasserstein, Perella & Co., Inc. presentation to the Interco Board of Directors, August 8, 1988. Civi
Action No. 10111, filed in the Court of Chancery of the State of Delaware in and for New Castle County, Exhi

(a) Sales, operating income, and operating cash flow multiples adjusted for the value of net debt outstandin
(b) Book value adjusted for intangibles

Exhibit 11 (continued)

Comparable Transaction Analysis

b. Value Ranges by Business Segment

Business
Segment

Apparel
General retail
Footwear
Furniture

Business
Segment

Apparel

1988
Sales

$813.20
532.3
890.4
1,105.60

Multiple
Range

.4 - .9
.6 - .6
.5 - 2.1
.8 - 2.1

Value
Range

$ 325.3 319.4 445.2 884.5 $1,974.4 -

$ 731.9
319.4
1,869.8
2,321.8
$5,242.9

Median
Value

$569.20
319.4
1,335.60
1,437.30
3,661.50

1988
Operating
Income

Multiple
Range

Value
Range

Median
Value

$20.20

10.6 - 24.0

$ 214.1 - $ 484.8

$214.10

Page 26

Exhibit 11
General retail
Footwear
Furniture

Business
Segment

Apparel
General retail
Footwear
Furniture

39.1
92.2
149.1

13.1 - 13.1
13.0 - 26.0
11.1 - 20.3

1988
Operating
Cash Flow

Multiple
Range

$32.70
48.8
105.3
175.3

9.2 - 13.7
9.2 - 9.2
9.2 - 23.9
8.1 - 15.8

Page 27

512.2
1,198.6
$1,655.0
$3,579.9

- 512.2
- 2,397.2
- $3,026.7
- $6,420.9

Value
Range

$ 300.8 448.9 968.8 $1,419.9 $3,138.4 -

$ 448.0
448.9
2,516.7
$2,769.7
$6,183.3

512.2
2,268.10
1,766.80
$4,761.20

Median
Value

$300.80
448.9
970.7
1,709.20
$3,429.60

Exhibit 11

Purchase Price Multiples(a)


Operating
Sales
Income

Operating
Cash Flow

0.8x

11.7x

8.1x

1.6

11.1

9.6

12

9.9

2.1

20.3

15.8

0.9x

11.4x

9.2x

ctors, August 8, 1988. Civil


for New Castle County, Exhibit 23.

value of net debt outstanding

Purchase Price Multiples(a)


Operating
Sales
Income

Operating
Cash Flow

1.5x

14.1

12.2

0.5

13

9.2

2.1

24.6

23.3

Page 28

Exhibit 11

1.7

26

23.9

0.9

24.7

18.2

0.9x

11.4x

9.2x

ctors, August 8, 1988. Civil


for New Castle County, Exhibit 23.

value of net debt outstanding

Purchase Price Multiples(a)


Operating
Sales
Income

Operating
Cash Flow

0.8x

24.0x

13.7x

0.4

N.M.

N.M.

0.9

10.6

9.2

0.6

10.6

9.2

0.9x

11.4x

9.2x

ctors, August 8, 1988. Civil


for New Castle County, Exhibit 23.

value of net debt outstanding

Page 29

Exhibit 11

Purchase Price Multiples(a)


Operating
Sales
Income

Operating
Cash Flow

0.6x

13.1x

9.2x

0.9x

11.4x

9.2x

ctors, August 8, 1988. Civil


for New Castle County, Exhibit 23.

value of net debt outstanding

Page 30

Exhibit 11

Page 31

Exhibit 12

Exhibit 12

Discounted Cash Flow Analysis

Assumptions

Sales growth(a)
Operating margin range(b)
Capital expenditures(c)
Increase in working investment

Furniture Group Footwear Group Apparel Group

7.70%

6.30%

7.10%

13.1%-14.1%

9.1%-10.4%

6.4%-7.0%

1x

1x

1x

12.50%

12.50%

12.50%

Tax rate

Multiple of Cash Flow in Year 10


14.0x
15.0x
16.0x
Terminal value ($ millions)

4,746.00

5,085.00

5,424.00

Implied stock price


Discount rate
10.00%
11.00%
12.00%
13.00%

$80.00
74
68
63

$84.00
77
72
66

$88.00
81
75
69

Source: Adapted with minor modifications in terminology from Wasserstein, Perella & Co., Inc. presentation
Board of Directors, August 8, 1988. Civil Action No. 1011, filed in the Court of Chancery of the State of Dela
for New Castle County, Exhibit 23.
(a)
(b)
(c)
(d)

Ten-year annual compound growth rate


Projected operating margin in 1989 and in 1998
As a multiple of depreciation
As a percent of the change in sales in 1994 forward

Page 32

Exhibit 12

Retail Group

Total

7.60%

7.20%

6.5%-7.5%

9.2%-10.1%

1x

1x

7.50%

11.60%
41.00%

erella & Co., Inc. presentation to the Interco


Chancery of the State of Delaware in and

Page 33

Exhibit 13

Exhibit 13

Reference Range; Retain Core Companies Case ($ millions Except Per Share)

Segment

Furniture Group
Footwear Group
Total
After-tax Divestiture Proceeds
Net Corporate Adjustments(a)
Range
Per Share Range(b)

Range

$1,525 - $1,750
775 -

900

$2,300 - $2,650
$ 588 - $ 639
(335) -

(273)

$2,553 - $3,016
$68.00 - $80.00+

Source: Wasserstein, Perella & Co., Inc. presentation to the Interco Board of Directors, August 8, 1988. Civi
Action No. 1011, filed in the Court of Chancery of the State of Delaware in and for New Castle County, Exhib

(a) Accounts for net debt, overfunded pension and miscellaneous other assets that include real estate whic
(b) Based on 37.5 million fully-diluted shares outstanding

Page 34

Exhibit 13

cept Per Share)

rs, August 8, 1988. Civil Action No. 1011, filed in the Court of Chancery of the State of Delaware in and for New Castle Cou
ew Castle County, Exhibit 23.
include real estate which could be understated

Page 35

Exhibit 13

Delaware in and for New Castle County, Exhibit 23.

Page 36

Exhibit 14

Exhibit 14

Market Interest Rates

Yield Curve at August 4, 1988:

1-year Tresury bills


7-year Tresury bonds
10-year Tresury bonds
30-year Tresury bonds

7.83%
8.87
9.01
9.10

Corporate Bond Rates at August 5, 1988,


(industrial companies)
10-year
10-year
10-year
10-year

AAA
AA
A
BBB

9.50%
9.65
9.80
10.10

Source: Salomon Brothers, Inc.

Page 37

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