b'"Helping You Make Sense oflt"Affiliate News AllContinued from page 12Continued from page 13 The corporation itselfn ato the agree more likelyhave health insurance and healthy lifestyles." isotpartyment.to Aredemption agreem tone in which the corporatio well asSaid"The question that leaps to mind is,lreal CDC please stocken isn, asSmith,\'Wil the theshareholders, areparties,withthecorporationagreeingtobuy(orstep forward?\'Such contradictory research isfrom the norm for CDC far reti disableddec hers,ey redeem) the stock of aring,oreased shareholder.researc who are among the heroes of our nation for the work th do in Aridtion agreementsistsboth cross-purchasedisease control andion. We\'ll all be better off if they stick to what they hyb or combina con ofandpreventstock redemption agreements,which the corporation ande sdo best - fighting physical diseases,tdingtical oninth harehold no defen poli es." ers agree to p ase stock under arranged division. urch pre-aT most commonly used method for funding any buy-sell agreement is he life insurance. In archase agreement, each share owns a cross-pu holderpolifeer.corpor policy icy on the Iof every other sharehold Theation holds aonIndustry News each shareholder in the case of aion agreement.Continued from page stock redempt 14 What are the advantages?recover as quicklyGross Domestic P (GDP). "B putting things asroductut, In many cases, cross-purchase agreementsmore advantages thanin perspective, unemployment is still well below what we\'ve seen inst offerparedemption agreements.First, survivingsh receive stepped-uprecessions." areholders luethechasetorecessstock basis for tax purposes equal to the va ofpur price of theDuethe mildness of thision and the "immense amount of home ece stoc crossd dent\'sk. Second, a-purchase plan avoids any impact the pol equity accrued in recent years" from improving home values, residential icy\'sp ds may have on a Cion Alternative Minimum Taxremodeling will remain relativelythe ne quarters, rocee corporat \'sstrong throughxt three (AMT) calculation if the policy were corporateAnd,ird, s d saiders. "This s ment h positive momentum due tor nt high owned.th harehol Seid eg aseceersceive capital gains treatment rather than being exposed topotentiallevels of existing home sales." He a that "One of the real suc store theddedcess for div end treatmentrredemption pla life insurance isries in this era is homeownership,ich has continued to expand a year id unde stockns. Wherewh ll used to fund the agreement, moreover, company creditorsot layimand should keepup from arong 67 percent."\'low chief cann cla movingst Seiders felroceedsofof to any p used to fund the agreement.economists, Maury HarrisUBS Warburg and Michael MoranDaiwa One possible impediment to ass-purchase agreement funded by lifeSecurities America, largely concurred withforecast. Both citedrcro hisnumeinsurance arises when there is anumbers eho ers. Each share ous reasons tolieve thatecono ll not dip too far or too largeofhar ld be the Americanmy wiholder must hold aon the life of every otherlder, a situationlong inwake of S b \'s te a ks. For example, they lauded policyshareho theeptem er rroristttac{._that may be untenable. The creationa fe insurance trust cou servethe sound monetarylicypted by the Federal R erve, w ch began t ofli ldtopo ado es hiovercome this, with each shareholder contributing funds to pur lowering interest rates in J uary ofyear. problem an this areho prev ecessions,didn beg gatichase one policy per sh lder.Inious r the Fed\'tin lowering rates until ne ve Aemption agreement may be less complex thanagrowth set-and,ing to Moran,t takes s months for the stimred cross-purchaseinaccord "I ix agreement because the corpor ion canalicy onshareholder\'sula effects of th moves to materialize." Thefact that the Fed has at ownpo eachtiveese life without the needa u ,benefits discussed earlier ofmoved so promptly this timewell for aick recovery. All of the fortr st. However the taxbodesqua-purchase plan w l otten outweigh the need for aredemptioneconomists pr that the Fed will lower thederal funds ra by at cross il stockedictedfe te plan. Fu herm stock redemption plansbe unfair to majority share least a-point at eachthe n tits Federal Open rt ore,mayquarter ofex two meetings of whoers.mmitteeiney holders,may often be subsidizing the buyout of minority sharehold Market Co (FOMC)December and late January. After that, thDon\'tlay!predicted, the Fed will likelyon further looseninglDe hold offof monetary poAlthough you may be years away from aw awal from your busi icy at the FOMC\'s March meeting as signs of recovery emerge. Given these timedithdrnessas retirement), sudden illness, disability or deathnrce anexpecta , they believe long-termrates will remain in the 6.4 (suchca fo tions mortgage "untimely" withdrawal. The time to start planning for business succession isto 6.6rcent range through the rest2 and most of 2002. pe of001 now-once certainn have actuallyit may be too lateH risnoted th the r of technological change and innovation conti genciesoccurred,ar alsoatate byumberpatentsran the yeardate to implement effective transition strategies.demonstratedthe n ofg ted into-remains quiteand heted recent surveys indicating that Americans believe strong,cilifethe post-Sept. 11 era will "return to n l" or better than normal inormabefore long. Michael MoranDaiwaitiesslightly m upbeat aboute ofSecur wasorethprospects foreconomictakingld asas the first quarter anrecoveryho early of 2002. "A s in GDP isible inlyhe said. mall increaseposs ear 2002,"'