T4224910 85122
4
ITT GA 85122941Z
4970885 KISNGR

01 08 1316
22941 SGWLON G
GA

TO: LORD ROLL

FROM: HENRY A. KISSINGER

MANY THANKS FOR YOUR MOST RECENT TELEX REGARDING OUR MEETING
AND LUNCH. I WILL DEFINITELY BE ABLE TO STAY FOR LUNCH AND
I LOOK FORWARD TO IT. IN TERMS OF MY EXPENSES THERE WILL
BE NONE, HOWEVER, WITH REGARD TO MY COLLEAGUE, WHILE I AM DELIGHTED -

TO HAVE HIM ATTEND, I AM NOT IN A POSITION TO JUSTIFY HIS EXPENSES
BY OUR COMPANY. AS I INDICATED TO YOU, I WILL MAKE AN EFFORT TO
MAKE SOME ARRANGEMENT FOR FUNDING, BUT AT THIS POINT HAVE NOT
BEEN ABLE TO DO SO. IF YOU FEEL MY ASSOCIATE'S EXPENSES CAN BE
COVERED THROUGH YOUR EFFORTS THEN WE WILL MAKE THE TRAVEL
ARRANGEMENTS. OTHERWISE, PERHAPS IT WOULD BE BEST FOR THIS
MEETING FOR YOU TO USE YOUR OWN PEOPLE. PLEASE LET ME KNOW YOUR
THOUGHTS.

WARMEST REGARDS
HENRY A. KISSINGER
22941 SGWLON G
4970885 KISNGR

1319EST 002.80

?@

JAN 06 1988 0738‡
4970885 KISNGR

22941 SGWLON G
STF PTK008 8801061238 ( 901) TLX115 8801061239 A5711

TELEX TO KISSINGER ASSOCIATES, NEW YORK

TELEX NO.: 497 0885

FOR: THE HON. DR. H. KISSINGER

FROM: LORD ROLL

DELIGHTED TO LEARN FROM OUR LAST TELEPHONE CONVERSATION THAT YOU CAN STAY FOR LUNCH ON 22ND, ESPECIALLY AS HERRHAUSEN HAS AGREED TO COME. HE WILL ARRIVE SOME TIME IN THE COURSE OF THE MORNING BUT AS HE WILL HAVE TO LEAVE IN THE EARLY AFTERNOON, WE WILL OBVIOUSLY NEED TO MAKE LUNCH A WORKING ONE.

REGARDING FUNDING, AS I TOLD YOU WE WILL BE PREPARED TO MAKE A SUITABLE CONTRIBUTION AND I WILL TALK TO DAVIGNON, HERRHAUSEN AND POSSIBLY OBA. WITH WHAT YOU THINK YOU MIGHT BE ABLE TO ARRANGE WITH SUITABLE DONORS WE SHOULD BE AMPLY COVERED.

I THINK IT WILL BE HIGHLY DESIRABLE FOR YOUR YOUNG MAN WHO WILL BE ACTING AS SECRETARY ETC. TO BE PRESENT AT THAT MEETING.

WARMEST REGARDS
ERIC

R/GP

6TH JANUARY, 1988

SENT JTF

NNNN

22941 SGWLON G*  
4970885 KISNGR

REPLY VIA WORLDCOM

CYJ

To: HK

From: Chris

Subj: Eric Roll's Group

The attached telex was received during your absence and when I raised it on the phone with you, you indicated that you really did not intend to get involved and also believed it would never really get off the ground.

All of which relieved me because this isn't the sort of group you would normally join, nor effort you would throw yourself into.

However, - you met with Sylvia Ostry last week and Stoga told me that he received a message that she would be trying to call him on January 2nd or 3rd to discuss this group and things to be done.

Stoga is delighted to NOT talk to her -- but will do whatever you indicate.

ACTION:

1. You need to give Alan some guidance as to how to handle Ostry's call.

2. The first issue to handle is the question of a meeting in London Jan. 22nd or in NYC on the 26th or 27th according to Roll's telex.

I understand you don't intend to really do this but what do you want us to do to ease you out of it????

Wait till Roll gets back in touch w/ response to attendees at first meeting and then I'll decide

Remind me to talk to Stoga

I should face it now and tell Roll I'll try to attend but cannot preside and cannot make available a secretary and convener (see item #2 of Roll's telex)

PORTER LEVAY AND ROSE L BOUGH
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NEW YORK NY 10022

MAY 10 1988

WE HAVE JUST COMPLETED DEVELOPMENT OF A HAND HELD COMPUTER WHICH
CHANGES YOUR VOICE INTO RUSSIAN AND OTHER FOREIGN LANGUAGES AND ALSO
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Cable: Wilmorow NY

Telephone: 212-889-3050

Telex: 22-4063 Wilmor

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SEP 21 1988

August 30, 1988

Dr. Henry Kissinger
55 East 52nd Street
New York, NY 10055

Dear Dr. Kissinger,

Enclosed are the bound galleys for David Irving's ground-breaking
biography of Hermann Göring who was second only to Hitler in Nazi
Germany and Hitler's chosen successor. William Morrow will publish
it in March 1989.

True to form, David Irving has tracked down and received permission
to use an astonishing array of new sources, including Göring's own
diaries from the years 1935, 1938, 1941, and 1943, his family
letters (held up to now by his daughter), the verbatim records of
his wartime conferences, the Borman documents found in Hitler's
bunker, transcripts of his grilling by war-crime investigators at
Nuremberg, and six letters he wrote from his prison cell which shed
light on the mystery of his death.

These and other new primary sources have allowed David to write a
completely fresh appraisal of Göring. Perhaps as important, this
book also contains a substantial amount of new information about the
inner workings of Nazi Germany, the events leading up to World War
II, and the trials at Nuremberg. In all, this is a military history
and revealing biography which has all the elements of a thriller.
It should build on the substantial audience of his recent highly
acclaimed Rommel biography, THE TRAIL OF THE FOX.

We would, of course, be delighted if you have any comments that we
could use on the jacket or in the promotion of the book.

It is quite a story and I hope you enjoy it.

[LC]

APR 15 1988.

Nixon, Hargrave, Devans & Doyle

Attorneys and Counselors at Law

A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS

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TELECOPIER: (407) 747-4113

April 12, 1988

Dr. Henry Kissinger
Kissinger Associates
350 Park Avenue
26th Floor
New York, NY 10022

Re: Grigory and Ninel Bravve, 64 and 70 years old respectively. Nine years in refusal.

Dear Henry:

It was good having lunch with you at the Plaza Hotel a few weeks ago and I am writing to seek your assistance in accomplishing a meritorious goal which amounts to an errand of mercy.

Specifically, I have written to President Reagan to ask that he place on his list of humanitarian cases for his meeting with Secretary Gorbachev in May, the aforementioned persons who desire to leave the Soviet Union so that they can visit their daughter, Sophia, who is suffering from cancer and is here with her 2 1/2 year old daughter. Sophia arrived in the United States in September, 1987. Their son, Vladimir, arrived in the United States in December, 1986 and his wife, Rimma, was allowed to come here in the winter of 1987 because she was also dying of cancer. She has, in fact, since died.

ELC]

Our daughter-in-law, Rimma Bravwe, died from cancer.
Our daughter, Sophia Bravwe, suffers from cancer.
Let us be together with our children!

Ninel Zetkovskaya Bravwe, 63
Grigory Bravwe, 69

Bolshaya Cherkizovskaya Street
House 32, Korpus 5, Apt. 15
Moscow, USSR 107553

Phone: 162-4626

Grigory Bravwe and his wife, Ninel are alone in the Soviet Union. Their daughter, Sophia is suffering from cancer, their granddaughter, Elina and son, Vladimir all live in the USA. Their daughter-in-law, Rimma died from cancer in June, 1987.

For the past eight long years the Soviet authorities have denied them per-
mission to leave the Soviet Union. Grigory and Ninel are in very poor health.
They need their children and granddaughter, their very ill daughter needs
her parents.

Why do Soviet authorities persist in this cruelty?

Why do they deny Ninel and Grigory the chance to be with their children at
this difficult time?

Grigory is sixty-nine years old, Ninel is sixty-three years old. Ninel has worked as a pediatrician for almost 40 years and saved many children's lives. Her health is very poor. Grigory is a veteran of the Second World War and he has 12 military decorations. All of his family was killed by the Nazis during the war. Haven't they deserved, at their old age, a peaceful life with their children?

Please ask Mr. Gorbachev to give these elderly, ill people permission to be with their children.

Please help us stop this senseless cruelty. Time is running out. Please help Grigory and Ninel Bravwe!

Sofya Bravwe
Vladimir Bravwe
19 Bobrich Drive, Apt. C
Rochester, New York 14610

Identifying Information

Name: Grigory Abramovich Bravve father

Birth date: 1918

Name: Ninel Semenovna Zetkovskaya mother

Birth date: 1924

Address: USSR, Moscow, 107553, Bolshaya Cherkizovskaya street,
house 32, korpus 5, apt. 15

Phone: 162-4626

Status: Retired from 1978

Applied for emigration in 1979

Refuseniks from 1980

February, 29, 1988 their exit visa application was again denied.

Stephen S. Rosenfeld

# Opening in Mexico

JUL 26 1988

For American foreign policy this summer, the big change on the horizon is not in the Soviet Union but in Mexico. Regarding the Soviets, the basic requirement is nuclear balance. Balance existed even in the bad old days, and it remains in place. Everything else is, relatively speaking, gravy—exciting and potentially valuable but modest next to keeping the nuclear peace.

Regarding the Mexicans, meanwhile, the breaking of the ruling party's 60-year monopoly of power is a real convulsion. It stands to alter at both ends a connection that is the most profound and extensive that the United States has with any single nation or group of nations. Debt, drugs, immigration, investment, trade, Central America: these sets of issues touch the well-being of American individuals, institutions and interests across the board.

Ho hum, you say, what's new? For decades the United States enjoyed in Mexico a predictable and generally reliable partner in the ruling Institutional Revolutionary Party. Now, under the emerging new order in Mexico City, it has an uncertain and quite unpredictable partner, conceivably a much more difficult one or, worse, no real partner at all.

The optimistic view, which tends to dominate official American pronouncements, is that the heretofore corrupt and authoritarian PRI is in the process of a bold and essential reform that will reestablish its popular legitimacy, equip it better to ease Mexico's tremendous economic and social strains and make the Mexican government

again the reliable interlocutor the United States needs.

The pessimistic view, found among nervous creditors but not only in those circles, is that Mexico may be tipping into prolonged multifaceted crisis that could give the United States the sort of neighbor it has been blessedly spared until now, one which: 1) is in permanent political turmoil tending to the left, the disorderly and the violent, 2) is in a position by its decisions on debt repayment to contribute to a serious economic problem in the United States, 3) has a defiant nationalistic political program giving it an incentive to do exactly that, and 4) shares with Washington no common notion of what their relationship ought to be.

Looking around, one sees that the optimists can imagine a progress of protest, repression and near-insurrection and are extremely nervous about it, and the pessimists, or the more extreme among them, are on the verge of panic.

Some observers recall with what seems a tinge of nostalgia that it used to be enough for the CIA station chief to meet with the Mexican president and assure him he spoke for the American president. But the diffusion of authority in both capitals is far advanced and, on both sides of the border, the actual conduct of relations has been dispersed among many hands, private (banks, investors, etc.) as well as public, and among many feet, too—those of immigrants who make their own decisions to head north.

Mexicans and Americans collide on many

specific issues or practices or solutions. That's natural and should be manageable, but the effort is complicated by deeper complaints. Mexicans see an alleged American historical conspiracy or bent for their destabilization. Americans worry about the basic competence, economic and political, of the Mexican system—an anxiety whose expression by Americans darkens the visage even of the considerable number of Mexicans who fully share it.

In the name of promoting stability, the United States long held itself in silent complicity with the PRI's corrupt and undemocratic ways. But Mexico's economic and political unraveling has unhinged many Americans, who speak out or murmur about it. This pains Mexicans, whose acute nationalism is further wounded by the (necessary and necessarily intrusive) structural reforms that the Reagan administration sought as it moved (constructively) to help Mexico handle its debts after 1982.

The strategic objection to the Reagan administration's absorption with Central America has always been that it distracted the United States from a focus on Mexico, big, important and immediately next door. The Mexicans now seem to have supplied their own corrective, forcing their country to the top of the agenda that will greet the new American president in January.

BY SALIH MEMECAN

[LC]

KATHARINE GRAHAM

Chairman of the Board

Wanted you to see this
piece.

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Stephen S. Rosenfeld

JUL 26 1988

# Opening in Mexico

WATCH YOUR STEP

BY SALIH MEMECAN

[y]

## South Africa

And so I come at last to my host country, the Republic of South Africa. I am not here with a blueprint of how to solve problems that the centuries have spawned and decades have made intractable. I want to describe how your country's international situation appears to a well-disposed outsider. There seem to me to be four fundamental realities.

**First:** In terms of resources and technical skill, South Africa is in a unique position to promote the peace and progress of the continent. There would be extraordinary prospects were South Africa able to achieve an accommodation with its neighbors.

**Second:** Black Africa has an immense stake in the shared enterprise of building security and prosperity in Africa: the potential value of constructive relations with its neighbor to the south should be clear. Black Africa pays an enormous price, moreover, when its countries allow themselves to be occupied by tens of thousands of non-African combat troops--irrespective of the pretext for their being there. There is no profit for Africans if the continent remains a battleground for superpower contention in its crudest form. Those in Moscow and Havana who seek to perpetuate the presence of foreign troops in Africa do not have Africa's interests in mind; they undoubtedly prefer the perpetuation of tensions and seek to prevent conditions of cooperation and mutual security among the nations of the continent.

All African states need to face up to this truth. A better alternative is available.

**Third:** South Africa is of the greatest strategic importance to the non-Communist world, not only geographically but in terms of resources, some of them nearly irreplacable elsewhere.

**Fourth:** However, this last reality has one powerful limiting condition. Even the best-disposed Americans are shaped and bound by their country's deeply held ideals of liberty. South Africans must not deceive themselves with comforting thoughts about strategic geography and resources, into believing that severe moral and political differences will not override them. Nor can even the most geopolitically-oriented American statesmen fail to take into account the aspirations and convictions of the preponderant majority of this continent, as they have been impressed upon me in recent days in Zambia and Zimbabwe.

CYJ

all the peoples of this country, to devise new structures
and concepts compatible with the fundamental values of
other Western societies. History is kind to political
leaders who use a margin of choice while it is still
available; those who wait on events are usually overwhelmed
by them.

The period before pressures become overwhelming should
be used for an act of constructive statesmanship. The
best way to keep Soviet influence out of the region is first
to ameliorate and then to eliminate the conditions which
facilitate its entry.

I do not know whether southern Africa is heading for
further tragedy, or for a future of progress and
reconciliation. I know only that the history of the re-
mainder of this century will be full of dramatic events,
and much of the history of that period will be made on
this continent. Your beautiful and dramatic country will
be a major actor in the unfolding drama. Your friends can
only wish you well in any efforts to provide that the
continent on which you live can be a showplace for the
peace of the world and the reconciliation of the races.

CAPITAL CITIES/ABC, INC.

24 EAST 51ST STREET . NEW YORK, NEW YORK 10022-6887

APR 20 1988

THOMAS S. MURPHY
CHAIRMAN OF THE BOARD

421-9595
AREA CODE 212

April 4, 1988

Dear Steve:

Our sports division is presently negotiating to acquire the television
rights for the 1990 World Cup games to be played in Italy. There
is a sincere interest on our part to be involved with this event.

Nothing would do more to give soccer a boost in this country than
to host the World Cup in 1994. The folks at Anheuser-Busch have
had conversations with us relative to their involvement and we know
of their commitment.

We do not feel comfortable, however, in making a direct contribution
to support an American host bid. Ultimately we will engage in
negotiations for television rights for the 1994 Cup, be it in the
United States, or elsewhere. We recently took the same position
with the Anchorage Olympic Committee in its quest for the 1994
Winter Games.

We hope your committee is successful and that we become television
partners with you. Best wishes, and if we can help with advice
concerning world broadcast feeds and things of this nature, please
do not hesitate to call on us.

Best regards,

Mr. Steven J. Ross
Chairman of the Board
Warner Communications, Inc.
75 Rockefeller Plaza
New York, New York 10019

TSM/ekl

SEP 1

1988.

*Can anyone take the world's most popular sport out of Chapter 11 in this country?*

# Selling Soccer

by Tani Maher

Huge rolls of barbed wire and troops with fixed bayonets are needed to protect soccer players from their own fans in Buenos Aires. In normally staid Britain, when the soccer players of Manchester United come to town with their unruly army of wildly singing supporters, it's like a courtesy call from the Golden Horde of Genghis Khan. But in the U.S., the world's most popular sport

stirs about as much excitement as a sewing bee. In the land where pro football generates an estimated $1.2 billion in gate receipts and TV rights, where baseball does $565 million and where even hockey does $255 million, professional soccer is in Chapter 11.

"No one shot off fireworks because the U.S. will host the 1994 World Cup," says Ivar Quigley, manager of sports promotions at Metropolitan Life. "It's going to be a slow, painful road back for U.S. soccer." Skeptics say soccer will

never become a national pastime, because the game is too slow to grab spectators' attention. Using only one's feet is foreign and frustrating.

So what drives Americans to endure the freezing temperatures during a football game? How do they fight the Zzzs during a baseball game? "There's a brutality, a toughness in football that Americans can identify with," says Thomas Tutko, a sports psychologist and the author of *Winning is Everything, Another American Myth*. Some sociologists say football's "territoriality" dimension—gaining and defending yards—is the basis on which the country was founded.

With baseball, they go on, it's more of a duel between the pitcher, a tobacco-chewing prairie hunter who tries to trap his prey with piercing eyes, power and precision, and the batter, the pioneer who battles to get home by

*American skeptics say soccer is too slow to grab spectators' attention.*

THOMAS JANE BRUNNAPfel INTERNATIONAL

30

FINANCIAL WORLD/SEPTEMBER 6, 1988

The Warner Experience

When Warner Communications tried to popularize soc-
cer in the United States they brought in big name foreign
players and overblown budgets, transforming the New
York Generals into the high-flying Cosmos.

When Pele, the soccer king who led Brazil to three
World Cup championships, signed a three-year contract
with the Cosmos in 1975, Warner Communications
coughed up $15 million, of which more than half went to
licensing his legendary name. Other foreign players such
as Franz Beckenbauer, were also well compensated.

Such well-known superstars drew sellout crowds at Gi-
antts Stadium. Trouble was, no one but a billion dollar cor-
poration was willing to dish out $90,000 for Giants Stadi-
um. "The Cosmos overspent and made it impossible for
the NASL to compete with them," says Dominick Flora,
an ex-vice president with the team.

So Warner's big promotional push for soccer never
paid off financially. In one game, the Cosmos lost more
than $60,000 at Giants Stadium. Mostly because of rain,
that game drew fewer than 9,000 spectators. Attendance
averaged 27,000 in the mid-1980s, a far cry from the

50,000-plus fans who enthusiastically cheered the team to
victory during the Cosmos shining debut. The novelty
wore off and the spectators eventually dwindled. Warner
lost an estimated $5 million in 1983, more than the ASL
currently has budgeted for its entire 10-team league.

"For a major corporation to put such big dollars into a
single club isn't in the interest of that particular club or its
players or, for that matter, the league or the entire sys-
tem," says Werner Fricker, president of the U.S. Soccer
Federation. The ASL has limited team salaries to
$50,000. To Americanize the game, each 18-member
team is allowed three imported players per team this year
and only two in 1989. Whereas the NASL teams swapped
hometowns like baseball cards, the ASL's thrust is to start
slow and gain the recognition and fans needed to make
soccer a spectator sport.

The Cosmos experience taught U.S. soccer another
important business lesson: "Commercial dollars through
sponsorship or marketing can't be the primary source of
funds because you can't go into any kind of business and
try to sell something that's not salable. First you need the
spectator support," says Fricker, "then the commercial
support will follow."
—T.M.

hitting the ball out of the park.

In soccer, players are constantly
moving. "Soccer is the ultimate team
sport. Everyone can be the quarterback
during different times of the game,"
says 26-year-old Kevin Crow, a member
of the U.S. national soccer team. Is con-
tinuous motion un-American? What
about hockey or basketball? Soccer also
has a history of adapting to the temper-
ament, style and culture of the country
where it's played: the direct team at-
tack in Germany, a playful, sly ap-
proach in France and the rhythmic ball
jugglers in Brazil. Can't American soc-
cer create role models and generate a
unique style?

Past attempts have failed. Some have
blamed the demise of the North Amer-
ican Soccer League on the outrageously
high salaries foreign superstars like
Pele and Franz Beckenbauer received
(See Warner sidebar, above). Seven-
teen teams entered the NASL in 1968,
but the league almost became extinct a
year later when the number of teams
fell to five.

By the early 1970s, the NASL again
had 24 clubs. That dwindled to a mere
handful by the early 1980s and the
league folded in 1984. Today, the only
professional soccer being played in the

U.S. is the Major Indoor Soccer
League, and it is in financial straits.
Two months ago, the MISL lost two
more teams and is currently playing
with only seven, down from 11 in April.
Again, high salaries of $1.3 million per
six-man team were the culprit.

In the U.S., Latin American or Eu-
ropean immigrants are still the main
spectator group and the Spanish net-
work is the only channel that has wide
coverage of soccer. Because of fewer
soccer scholarships at the college level
and scarce professional teams, Ameri-
can children often opt for the big three
sports—football, baseball and
basketball—which provide more fi-
nancial support and opportunities.
Somehow the reasons given for soccer’s
unpopularity in the U.S. don’t stand up
to scrutiny. For example, most Ameri-
cans think soccer’s low scores mean it’s
a slow game. “But in a typical football
game, a score of 21-14 is really 3-2,”
says Tutko.

Since 1973, the number of youths
between the age of 4 and 18 registered
with the United States Soccer Federa-
tion, which is the governing organiza-
tion for soccer in America, has grown
from 35,000 to over 1.3 million. In
fact, the sport now boasts 10 million

participants in this country.

"The real asset of the sport is that it reaches the white-collar, middle-class population," says Steve Caspers, a partner at the sports marketing firm C&W Associates. "More parents participate and you have a greater impact when they take notice."

With more young people playing
soccer, the American Soccer League is
again attempting to put together an
outdoor league. "The key differences
now are that we're focused and target-
ed as being a league by Americans for
Americans," says ASL Commissioner
Chuck Blazer, "and our financial posi-
tioning is more conservative." He does
not expect to turn a profit overnight or
to have sellout crowds. So far, attend-
ance has averaged 2,700 per game but
that's 700 more than projected.

"The days of 70,000 crowds for the Cosmos are over," says Dominick Flora, ex-vice president of the Cosmos and an owner of the New Jersey Eagles. "30,000 is possible, but not today."

"It takes time to build up an under-
standing for a sport which is still very
foreign to most Americans," says Sunil
Gulati, the 28-year-old chairman of the
International Games Committee at the
U.S. Soccer Federation. Backed by in-

31

MIKE VALERI/FG INTERNATIONAL

American soccer fans

In the U.S., the stands are empty.

fluential soccer fans such as Henry Kissinger, a stamp of approval from Ronald Reagan and nearly $1 million from corporations such as Philip Morris, Coca-Cola, Gillette and Union Pacific, Werner Fricker, president of the U.S. Soccer Federation scored a coup.

He convinced the Federation Internationale de Football Association (FIFA), the world governing organization of soccer, to award the U.S. with the 1994 World Cup over soccer-crazed Brazil. As host, the U.S. automatically qualifies as one of the final 24 teams in the playoffs. A six-year race is on to develop a winning U.S. team and create momentum to revive interest from U.S. spectators.

When the World Cup is played in the U.S., soccer may catch on. However, there's one obstacle that could prevent soccer from being televised in America's nonsubsidized networks: Soccer only has time-outs during an injury, so there's less time to advertise.

"It's difficult to interrupt action," says Bob Jeremiah, the ESPN director of advertising sales. "Games could be taped but they would lose something." Past soccer games on the ESPN have rated an average of 0.5, which is below the prime-time rating of 1.9, below the 2 for college basketball and also below the 10.9 for NFL games.

Still, some multinational companies have already entered the soccer business. Last year, Procter & Gamble sponsored the Clasico Internacional, in which the U.S. national team competed against top Latin American clubs. With a proof-of-purchase program, fans could buy half-price tickets for the five games, which averaged 12,000 spectators. Metropolitan Life sponsors the Maguire Cup for the under-19 national club championship.

Other companies are likely to become soccer sponsors because "soccer is more of a grass-roots sport, encompassing all types of family situations, with boys and girls playing the game," says MetLife's Quigley.

"From a business standpoint, America is a sleeping giant," says Tom Weekes, the national manager for soccer promotions at Adidas. "The American public is always searching for new and entertaining sports." And Tutko, a sports psychologist, adds: "If soccer catches on in this country, it will be a craze." ■

## The New Jersey Eagles

"There's no one in my club who wants to make a quick dollar," says Dominick Flora contemptuously. "They're in it because they love the sport of soccer."

Flora, president of the New Jersey Eagles, has a budget in the quarter-of-a-million dollar range, but the revenues don't cover costs.

In addition to 400 or so season tickets, Flora estimates that the Eagles have to sell at least 3,000 tickets per game at ticket prices of $7 and $8 for adults, and $4 and $5 for youngsters, to break even. But attendance has been roughly 2,000 in a small stadium that has a capacity of 9,600.

With the low attendance, plus advertising and stadium expenses averaging $8,500 per game, the team expects to lose in the neighborhood of $50,000 this year. By contrast, that's just a drop in the bucket compared with the losses Warner Communications incurred with the New York Cosmos (see "Warner", page 31).

Indeed, despite the ASL's tighter financial controls, which include a stern salary cap of $50,000 per season for each 18-player team, none of the league's 10 teams is likely to turn a profit this season.

Although the part-time players on the Eagles captured the northern division championship with a 15-5 record, "a lot of people still don't know that we exist," says Flora. So far, the club has tried doing promotional packages with

Metropolitan Life, for the outstanding player of the year; with Adolph Coors, for stadium signs and ticket programs; and with Software City, which advertised on the team's uniforms. Other sponsorship has been on the local level, and Flora plans to do more advertising during the off-season.

When asked about financing the Eagles's flight into the future, Flora doesn't have much of a game plan besides a $1 million stock offering, of which 90% will be used to build an indoor stadium for youth leagues in New Jersey. By sponsoring soccer clinics at the stadium, Flora hopes to generate additional revenue when the Eagles aren't playing official games.

Flora and three of his partners own 70% of the Eagles and have about $175,000 invested in the team so far. He figures the club is worth $500,000 today and, with the additional exposure generated by the 1994 World Cup in the U.S., the value could rise by at least 50%. If it does, he says he won't sell out. Flora and the ASL are in for the long haul, working to establish a coast-to-coast national league by the early 1990s.

With tighter reigns on the budget, the ASL may have a shot at making soccer a U.S. success. But only if owners like Flora make a businesslike effort to identify their potential fan population more precisely and then aggressively promote the game to that market. Will they build the necessary grass-roots support to get the game off the ground? —T.M.

32

SEP 6-1988

United States Soccer Federation
World Cup USA 1994

Office of the President

August 31, 1988

Dr. Henry A. Kissinger
350 Park Avenue, 26th Floor
New York, NY 10022

Mr. Andrew L. Lewis, Jr.
Union Pacific Corporation
345 Park Avenue, 31st Floor
New York, NY 10154

Mr. Stephen J. Ross
Chairman of the Board
Warner Communications
75 Rockefeller Plaza
New York, NY 10019

Dear Henry, Drew, and Steve,

Thanks for your letter of August 18th, and please let me take this
opportunity to thank each and every one of you for your support,
assistance, and contribution in connection with the successful
award of World Cup '94 to the United States.

There is no question that without your involvement this task would
have been much more difficult.

Please accept my personal thanks and appreciation.

I agree with the suggestions in your letter and would very much
like to see the three of you take a more active and ongoing role
in the planning and organization of the 1994 World Cup.

As you know, Scott LeTellier, who did all of the agreements with
the stadia and handled the actual preparation of our bid to FIFA,
was very closely associated with Peter Uberoth in the organization
of the '84 Olympics. Therefore, I have already asked Scott to
do an outline of items that need to be done starting now and leading
up to 1994 and the actual organization of the World Cup.

Scott will have this outline and certain recommendations completed
by sometime in September. I hope to review that and make the
appropriate considerations by the end of September and will look
forward to a meeting with the three of you sometime in October.

ONE VILLAGE ROAD • P.O. BOX 129 • HORSHAM, PA 19044 • TELEPHONE (215) 657-3478 • FAX (215) 657-5221

HENRY A. KISSINGER

May 19, 1988

Dear Cong. Rostenkowski:

I am writing to urge you not to move forward
with the "discussion options" for amending the
unrelated business income tax provisions of
the Internal Revenue Code.

Among these options are several which are of
serious concern to the museum community. Most
troubling to museums is the option which would
extend the unrelated business income tax to
"off-premises sales", including catalogues,
mail and phone order sales, regardless of
whether such sales furthered the exempt purposes
of the organization making them. "Off-premises
sales" could also encompass phone and mail orders
for tickets for exhibitions, concerts, lectures
and other events.

Museums have been faced in recent years with
reductions in funding from government sources.
The 1986 Tax Act placed further limitations on
their sources of support by reducing the tax
incentives to make charitable contributions of
appreciated property. To impose a tax on income
earned from related activities such as the sale
of publications and reproductions would cut into
one of the few remaining resources available to
museums to keep up with rising costs, with
insignificant revenue gain for the government.
The effect of this would be to curtail the ability
of museums to fulfill their educational mission
effectively, by, for example, keeping galleries
open on a daily basis, offering educational
programs to schools and continuing to subsidize
scholarly publications. Further, such attacks
would be in direct opposition to the longstanding
matching policy of the National Endowment for the

SUITE 1021 • 1800 K STREET, N. W. • WASHINGTON, D. C. 20006 • (202) 872-0300

MAY 19 '88 12:19 KISSINGER ASSOCIATES N.Y.

F.003F.2

SUGGESTED DRAFT

Dear

Among these options are several which are of serious concern to the museum community. Most troubling to museums is the option which would extend the unrelated business income tax to "off-premises sales", including catalogue, mail and phone order sales, regardless of whether such sales furthered the exempt purposes of the organization making them. "Off-premises sales" could also encompass phone and mail orders for tickets for exhibitions, concerts, lectures and other events.

Museums have been faced in recent years with reductions in funding from government sources. The 1986 Tax Act placed further limitations on their sources of support by reducing the tax incentives to make charitable contributions of appreciated property. To impose a tax on income earned from related activities such as the sale of publications and reproductions would cut into one of the few remaining resources available to museums to keep up with rising costs, with insignificant revenue gain for the government. The effect of this would be to curtail the ability of museums to fulfill their educational mission effectively, by, for example, keeping galleries open on a daily basis, offering educational programs to schools and continuing to subsidize scholarly publications. Further, such attacks would be in direct opposition to the longstanding matching policy of the National Endowment for the Arts, which requires museums receiving grants to seek funds from other available sources, including revenue from income-producing activities. Many corporations giving grants to museums ask for similar assurances.

As a member of the Board of Trustees of The Metropolitan Museum of Art, I urge you not to accept these proposals to extend the unrelated business income tax.

Sincerely yours,

MAY. 19 '88 12:20 KISSINGER ASSOCIATES N.Y.

P.004

MAY 11 '88 14:35 MMA EXECUTIVE

P.2

APPENDIX I

HOUSE WAYS AND MEANS COMMITTEE MEMBERS
AND TAX AIDES

| Representative | Tax Aide | Room/Building | Telephone |
|---|---|---|---|
| Michael A. Andrews (D-TX) | Nancy Powers | 322 Cannon | 225-7508 |
| *Beryl F. Anthony (D-AR) | J.W. Rayder | 1117 Longworth | 225-3772 |
| Bill Archer (R-TX) | Don Carlson | 1135 Longworth | 225-2571 |
| Hank Brown (R-CD) | Rita Kummer | 1424 Longworth | 225-4676 |
| Rod Chandler (R-WA) | William McKenney | 223 Cannon | 225-7761 |
| William J. Coyne (D-PA) | Coleman Conroy | 424 Cannon | 225-2301 |
| Phillip M. Crane (R-IL) | Dave Simons | 1035 Longworth | 225-3711 |
| Hal Daub (R-NE) | Mark Mullett | 1019 Longworth | 225-4155 |
| Brian Donnelly (D-MA) | Thomas Barker | 438 Cannon | 225-3215 |
| *Byron L. Dorgan (D-ND) | Andrew Kentz | 238 Cannon | 225-2611 |
| Thomas J. Downey (D-NY) | Dan Horwitz | 2232 Rayburn | 225-3335 |
| John J. Duncan (R-TN) | Patti Andrews | 2206 Rayburn | 225-5435 |
| *Ronnie G. Flippo (D-AL) | Frank Toohey | 2334 Rayburn | 225-4801 |
| *Harold E. Ford (D-TN) | Marva Kamp | 2305 Rayburn | 225-3265 |
| *Bill Frenzel (R-MN) | David Weyerhaeuser | 1026 Longworth | 225-2871 |
| Richard Gephardt (D-MO) | Mike Wessel | 1432 Longworth | 225-2671 |
| Sam Gibbons (D-FL) | Flora Sullivan | 2204 Rayburn | 225-3376 |
| Bill Gradison (R-OK) | Ted Johann | 2311 Rayburn | 225-3164 |
| Judd Gregg (R-NH) | Ann Squires | 308 Cannon | 225-5206 |
| Frank J. Guarini (D-NJ) | Sharon Cranford | 2458 Rayburn | 225-2765 |
| *Andrew Jacobs, Jr. (D-IN) | David Wildes | 1533 Longworth | 225-4011 |
| Ed Jenkins (D-GA) | Jim Rock | 203 Cannon | 225-5211 |
| Barbara Kennelly (D-CT) | Mike Prucker | 1230 Longworth | 225-2265 |
| Sander M. Levin (D-MI) | Sean Foley | 323 Cannon | 225-4961 |
| Robert T. Matsuji (D-CA) | George Henry | 2419 Rayburn | 225-7163 |
| *Raymond McGrath (R-WY) | Mary Beth Riordan | 205 Cannon | 225-5516 |
| Jim Moody (D-WI) | Nicholas Meyers | 1721 Longworth | 225-3571 |
| Donald J. Pease (D-OH) | Steve Bailey | 1127 Longworth | 225-3401 |
| *J.J. Pickle (D-TX) | Barbara Pate | 242 Cannon | 225-4865 |
| *Charles B. Rangel (D-NY) | Jon Sheiner | 2330 Rayburn | 225-4365 |
| Dan Rostenkowski<br>(D-IL), Chairman | Tom Sneeringer | 2111 Rayburn | 225-4061 |
| Marty Russo (D-IL) | Ed Greelegs | 2233 Rayburn | 225-5736 |
| *Richard Schulze (R-PA) | Rob Hartwell | 2201 Rayburn | 225-5761 |
| Fortney H. Stark (D-CA) | Ann Zeppenfeld | 1125 Longworth | 225-5065 |
| *William M. Thomas (R-CA) | Bob Winters | 2402 Rayburn | 225-2915 |
| Guy Vander Jagt (R-MI) | Ray Conkling | 2409 Rayburn | 225-3511 |

Mailing

Address: The Honorable (Member's Name) (###) (Rayburn, Longworth, or Cannon) House Office Building
U.S. House of Representatives
Washington, D.C. 20515

* Member, Oversight Subcommittee

CONFIDENTIAL MEMORANDUM

This Confidential Memorandum has been prepared by Salomon Brothers Inc ("Salomon") in its capacity as financial advisor to Company Z (the "Company") from information furnished to it by the management of the Company. It is being delivered to a limited number of parties who may be interested in making an equity investment in the Company. By its acceptance hereof, each recipient agrees that it will not copy, reproduce or distribute to others this Confidential Memorandum in whole or in part, at any time, without the prior written consent of the Company or Salomon, and it will keep permanently confidential all information contained herein not already public and will use this Confidential Memorandum only for the purpose set forth above.

While the information contained herein is believed to be accurate, Salomon and the Company expressly disclaim any and all liability for representations, expressed or implied, contained in, or for omissions from, this Confidential Memorandum or any other written or oral communication transmitted to any interested party in the course of evaluation of the Company.

Salomon or the Company reserve the right to request the return of this Confidential Memorandum at any time.

CONFIDENTIAL MEMORANDUM

COMPANY Z STRATEGIC BUSINESS PLAN

Table of Contents

<table><thead><tr><th></th><th>TAB</th><th>PAGE</th></tr></thead><tbody><tr><td>Business Plan Summary</td><td>1</td><td></td></tr><tr><td>Introduction</td><td></td><td>1</td></tr><tr><td>Business Plan Overview</td><td></td><td>2</td></tr><tr><td>Financial Statements</td><td>2</td><td></td></tr><tr><td>Historical and Pro Forma Income Statements</td><td></td><td>5</td></tr><tr><td>Projected Detail by Profit Center</td><td></td><td>6</td></tr><tr><td>Pro Forma Quarterly Income and Cash Flow Statements</td><td></td><td>7</td></tr><tr><td>Pro Forma Reconciliation of Shareholders' Equity</td><td></td><td>8</td></tr><tr><td>Pro Forma Capitalization</td><td></td><td>9</td></tr><tr><td>Departmental Business Plan Summaries</td><td>3</td><td></td></tr><tr><td>Corporate Bond Trading</td><td></td><td>10</td></tr><tr><td>High Yield Bond Trading</td><td></td><td>11</td></tr><tr><td>Government Bond Trading</td><td></td><td>12</td></tr><tr><td>Mortgage-Backed Trading</td><td></td><td>13</td></tr><tr><td>Retail Sales</td><td></td><td>14</td></tr><tr><td>Arbitrage</td><td></td><td>16</td></tr><tr><td>OTC Trading</td><td></td><td>17</td></tr><tr><td>Block Trading</td><td></td><td>18</td></tr><tr><td>Corporate Finance</td><td></td><td>19</td></tr><tr><td>Expense Detail: Sales and Research</td><td></td><td>20</td></tr><tr><td>Expense Detail: Support and Firmwide</td><td></td><td>21</td></tr><tr><td>Personnel</td><td>4</td><td></td></tr><tr><td>Staffing Summary</td><td></td><td>23</td></tr><tr><td>Sales Staff by Location</td><td></td><td>26</td></tr><tr><td>Real Estate Summary</td><td>5</td><td>27</td></tr></tbody></table>

# INTRODUCTION

In connection with recent market developments and financial trends evident throughout the year, management has reviewed all aspects of its business and formulated a new business plan, consistent with a narrower focus on selected market opportunities and a more productive use of available resources. Significant progress has been made in implementing the plan, which will be substantially in place by the end of the first quarter of 1988.

The Company will require additional capital of approximately $50 million to support its financial position during a period of restructuring. This Confidential Memorandum summarizes the key elements of the business plan for 1988 and is intended to assist a potential investor in evaluating the likely financial effects of the restructuring. Potential investors should note that additional information is available describing in greater detail the Company's current financial position and businesses of specific interest.

-1-

[li]

# BUSINESS PLAN OVERVIEW

The Company's expansion over the past several years has led to a proliferation of businesses and financial products and a substantial increase in the fixed component of the firm's cost structure. The new business plan reflects an effort to focus professional and financial resources in selected areas of proven success that promise higher returns on capital and to reduce earnings volatility by dramatically cutting fixed costs.

Management has identified several areas of distinctive competence in defining Company Z's "business franchise." The new business plan is predicated upon the profitable exploitation of several key corporate assets that are an integral part of the franchise:

## Primary Dealer in U.S. Government Securities.
As one of 43 primary dealers, the Company makes markets in the full range of Treasury issues for a diverse group of customers and participates significantly as an underwriter in Treasury auctions and agency underwritings. Primary dealer status provides:

* Real time knowledge of the configuration of the U.S. dollar-denominated primary yield curve, against which all U.S. dollar assets are priced

* Direct dealing with the Federal Reserve Bank

* Access to exclusive trading markets provided by inter-dealer brokers

* Access to supplies of agency securities, since only primary dealers are allowed major positions in the underwriting and selling groups for federal agency securities

* Participation in a profitable business with substantial growth potential and significant barriers to entry by non-primary dealers

* Reputation and standing - the considerable prestige associated with being a primary dealer, increases stature and credibility among market participants

## Corporate bond sales and trading.
Corporate bond sales and trading has consistently been a profitable business at the Company. The Company makes active secondary markets in investment-grade corporate fixed-income securities and its Fixed Income Research Department, which provides coverage on approximately 340 issuers, ranked first among securities firms in 1984, 1985 and 1986, according to an annual survey of institutional investors.

- 2 -

[10]

**High yield sales and trading.** In recent years the Company has expanded its sales, trading and research efforts in the high yield corporate market and now ranks among the top firms in high yield bond trading.

**Mortgage trading.** Mortgage trading complements the firm's skills in the government and corporate fixed income markets and represents a profitable growth opportunity. The Company is a market-maker in the mortgage-backed securities and whole loan markets. In addition, the Company offers investment banking services to issuers of asset-backed securities such as collateralized mortgage obligations, REMICS and mortgage-backed bonds. Capitalizing on the Company's contacts with community banks through its BANK SERVICE program, the whole loan trading area has become a significant source of revenue.

**Retail sales.** The Company currently serves individual clients through approximately 270 account executives located at two offices in New York and at offices in Boston, Chicago, Tampa and San Francisco. Average production generated by retail account executives is in excess of $300,000, among the highest in the industry.

**Arbitrage.** The Company's trading and research arbitrage activities are conducted in New York and London. Activities include both risk arbitrage and various hedged arbitrage techniques. In addition to revenues generated from trading for its own account, arbitrage revenues include a 20% profit participation arrangement as well as a 1 1/2% management fee with regard to $100 million of investors' funds under management. The department acts as an advisor to Global Asset Management as well as Evaluation Associates and manages money for both concerns. The department currently manages a bankruptcy fund and a Euro-arbitrage fund and a $100 million convertible hedge fund is scheduled to begin operations in the first quarter of 1988.

**Investment Banking.** The Company is a major bracket underwriter and has been a leading underwriter of equity issues for high technology and other emerging growth companies. The Company also provides merger and acquisition and other client advisory services. The investment banking effort is supported by an Equity Research Department which is recognized for its coverage of advertising, high technology, health care, pharmaceuticals, foods, tobacco, retail and entertainment companies.

**Corporate name.** Founded in 1899, the Company is a highly regarded firm with broad name recognition among both retail and institutional customers.

- 3 -

[illegible]

Several other existing businesses have been or will be deemphasized or eliminated altogether. These businesses generally offer unacceptable risk-adjusted returns on investment and are peripheral to the firm's primary areas of expertise:

* Municipal securities underwriting and market-making

* Preferred stock trading

* Mutual funds and asset management

* Certain aspects of equity research and trading - The costs associated with the equity research department have been substantially reduced as the result of staff reductions, although the department will continue to provide support for investment banking, institutional equity sales and trading and, to a lesser extent, retail sales. Institutional equity sales and block trading risk positions have also been scaled back, although the firm's successful OTC market-making operation will remain substantially unchanged.

* Clearing operations

* European operations

Fixed costs will be substantially reduced to lower the Company's break-even point. Specific actions contemplated to alter the cost structure include:

* Use of outside vendors to clear equity and corporate bond trades and elimination of a substantial portion of back office overhead: projected reductions in fixed costs of approximately $15 million.

* Personnel reductions relating to discontinued businesses and smaller requirements in certain existing businesses.

* Changes in compensation arrangements to place emphasis on performance: projected reduction from personnel reductions and changes in compensation is approximately $25 million.

* Reduction in office space commitments, which otherwise would result in a substantial increase in occupancy costs over 1987 and prior years.

As a result of these other actions taken to reduce fixed costs, the projected breakeven revenue required in 1988 will be $222 million versus $325 million in 1987.

- 4 -

PRO FORMA RECONCILIATION OF SHAREHOLDERS' EQUITY
at December 31, 1987
($ millions)

<table><tr><td>NET WORTH AT 9/30/87</td><td style="text-align: right;">$177.2</td></tr><tr><td>Projected operating loss for the fourth quarter</td><td style="text-align: right;">(75.5)</td></tr><tr><td>Other Provisions:</td><td></td></tr><tr><td style="padding-left: 20px;">Sublet of 55 Water Street</td><td style="text-align: right;">(2.0)</td></tr><tr><td style="padding-left: 20px;">Haas Securities - provision for uncollectible receivables</td><td style="text-align: right;">(10.0)</td></tr><tr><td style="padding-left: 20px;">1987 additional bonus accrual</td><td style="text-align: right;">(7.0)</td></tr><tr><td>Fourth quarter results</td><td style="text-align: right;">(94.5)</td></tr><tr><td>Special provision to close European operations</td><td style="text-align: right;">(6.0)</td></tr><tr><td>PROJECTED NET WORTH AT 12/31/87</td><td style="text-align: right;">$76.7</td></tr></table>

- 8 -

RETAIL SALES

**Strategy:** Continue selective hiring of additional account executives, emphasizing a "boutique" environment and entrepreneurial opportunities not available at competing wirehouses. Take steps to reduce fixed costs, including the sale or closing of the Tampa office, in anticipation of a budgeted decline in commission revenue. Maintain customer accounts with and clear retail trades through a well-capitalized outside firm at an average rate of $16.65 per trade (which would not include floor brokerage). One or two municipal bond traders will remain to facilitate retail customer trades.

1987 Results:

Revenue: $75.5 (annualized)

Payouts: 47%

Fixed Expense: $23.4 (annualized; $17.8 allocated to branches)

1988 Projections:

Revenue: $67.3; this figure falls short of 1987 levels due to industry-wide projected declines in retail sales in 1988 as well as the closing of the Tampa office. Includes municipal bond revenues of $0.5.

Payouts: 49%

Fixed Expenses: Total projected fixed expenses of $26.2 are allocated as follows:
Branches-parallels 1987 costs; projected at $20.6.
Administration and Support - projected to be $2.5; represents approximately $1.0 decrease from prior years due to the elimination of a tax shelter department, cutbacks in the IRA/Keough area, and other administrative functions.
Retail Municipal Bond - projected expenses of $0.5 to cover the remaining traders.
Fixed Income Liaison - projected to be $0.5, slightly below 1987 level.

- 14 -

[w]

RETAIL SALES (continued)

1988 Projections:

Fixed Expenses: Legal and Compliance - anticipated to include a 12-person department devoted to the retail office at a total cost of $1.5.

Equity Research - lower projected fixed costs of $0.5 due to reduction in department personnel.

Product Marketing - projected to be $0.1, approximately same level as 1987.

Participation: 30% of contribution.

- 15 -

EXPENSE DETAIL: SUPPORT AND FIRMWIDE

Operations Division

The projected cost of $11.3 for this area is based upon reductions in personnel from 358 to 116 scheduled to take effect with the implementation of an outside clearing firm (see details in Staffing Summary). The Company will stop self-clearing by March 1, 1988. The projections for 1988 assume a transition period for transferring the clearing business, and further cost reductions are expected to be realized in future years.

It is anticipated that the restructured company will generate the
following transaction volume annually (excluding governments and
mortgage-backeds):

<table>
   <thead>
    <tr>
     <td>
     </td>
     <td>
      Trades
     </td>
     <td>
      $/Trade*
     </td>
     <td>
      Cost
     </td>
    </tr>
   </thead>
   <tbody>
    <tr>
     <td>
      Retail
     </td>
     <td>
      375,000
     </td>
     <td>
      $16.65
     </td>
     <td>
      $6.2
     </td>
    </tr>
    <tr>
     <td>
      Fixed Income, Equity
     </td>
     <td>
      173,000
     </td>
     <td>
      $15.00
     </td>
     <td>
      $2.6
     </td>
    </tr>
   </tbody>
  </table>

* Represents weighted average of $18.50 per agency trade and $9.25 per principal trade.

Administrative Division

The projected budget of $10.3 includes the Legal Department, CFO
Division, Human Resources, Internal Audit, Credit Analysis, Office
Planning, Purchasing, Maintenance and Supply, and Corporate Marketing.
This budget is based upon a projected decrease in headcount from 155
(as of 10/15/87) to 115 (at 1/1/88). It is anticipated that the
headcount will decrease further after 3/1/88; however, no budget
reduction has been included for this decrease.

- 21 -

EXPENSE DETAIL: SUPPORT AND FIRMWIDE (continued)

Executive Administration


The projected expense of $3.9 anticipates two senior executives with compensation totaling $1.5, other employees with compensation totaling $0.4, and associated expenses of $2.0. Participation assumed to be 4.5% of firm net operating income.

Branch Administration


Projected expense of $3.7 reflects the closing of the London and Tampa offices and modest decreases in expenditure levels of the Boston, Chicago, and San Francisco offices.

Rent, Depreciation, Utilities


Projection of $9.4 includes the cost of floors 7-13 at 222 Broadway.

Miscellaneous Expense


Projected budget of $8.5 primarily includes firmwide insurance, reserves for legal settlements, and reserves for unanticipated expenses.

- 22 -

SALES STAFF BY LOCATION

<table><thead><tr><th></th><th style="text-align: right;">Projected<br>1/1/88</th></tr></thead><tbody><tr><td colspan="2"><strong>MAIN OFFICE:</strong></td></tr><tr><td>Fixed Income Sales -</td><td></td></tr><tr><td style="padding-left: 2em;">Corporate</td><td style="text-align: right;">39</td></tr><tr><td style="padding-left: 2em;">High Yield</td><td style="text-align: right;">15</td></tr><tr><td style="padding-left: 2em;">Government</td><td style="text-align: right;">20</td></tr><tr><td style="padding-left: 2em;">Bank Service & MBS</td><td style="text-align: right;">46</td></tr><tr><td></td><td style="text-align: right; border-top: 1px solid black;">120</td></tr><tr><td>Retail</td><td style="text-align: right;">109</td></tr><tr><td>Institutional Equity</td><td style="text-align: right;">22</td></tr><tr><td><strong>Total Main Office</strong></td><td style="text-align: right; border-top: 1px solid black;"><strong>251</strong></td></tr><tr><td><strong>UPTOWN RETAIL</strong></td><td style="text-align: right;"><strong>149</strong></td></tr><tr><td colspan="2"><strong>BOSTON:</strong></td></tr><tr><td>Fixed Income Sales -</td><td></td></tr><tr><td style="padding-left: 2em;">Corporate</td><td style="text-align: right;">7</td></tr><tr><td style="padding-left: 2em;">Government</td><td style="text-align: right;">3</td></tr><tr><td style="padding-left: 2em;">Bank Service & MBS</td><td style="text-align: right;">1</td></tr><tr><td></td><td style="text-align: right; border-top: 1px solid black;">11</td></tr><tr><td>Retail</td><td style="text-align: right;">63</td></tr><tr><td>Institutional Equity</td><td style="text-align: right;">5</td></tr><tr><td><strong>Total Boston</strong></td><td style="text-align: right; border-top: 1px solid black;"><strong>79</strong></td></tr><tr><td colspan="2"><strong>CHICAGO:</strong></td></tr><tr><td>Fixed Income Sales -</td><td></td></tr><tr><td style="padding-left: 2em;">Corporate</td><td style="text-align: right;">9</td></tr><tr><td style="padding-left: 2em;">Government</td><td style="text-align: right;">19</td></tr><tr><td></td><td style="text-align: right; border-top: 1px solid black;">28</td></tr><tr><td>Retail</td><td style="text-align: right;">61</td></tr><tr><td>Institutional Equity</td><td style="text-align: right;">3</td></tr><tr><td><strong>Total Chicago</strong></td><td style="text-align: right; border-top: 1px solid black;"><strong>92</strong></td></tr><tr><td colspan="2"><strong>SAN FRANCISCO:</strong></td></tr><tr><td>Fixed Income Sales -</td><td></td></tr><tr><td style="padding-left: 2em;">Corporate</td><td style="text-align: right;">8</td></tr><tr><td style="padding-left: 2em;">Government</td><td style="text-align: right;">9</td></tr><tr><td style="padding-left: 2em;">Bank Service & MBS</td><td style="text-align: right;">3</td></tr><tr><td></td><td style="text-align: right; border-top: 1px solid black;">20</td></tr><tr><td>Retail</td><td style="text-align: right;">55</td></tr><tr><td>Institutional Equity</td><td style="text-align: right;">3</td></tr><tr><td><strong>Total San Francisco</strong></td><td style="text-align: right; border-top: 1px solid black;"><strong>78</strong></td></tr><tr><td><strong>TOTAL STAFF IN SALES AREAS</strong></td><td style="text-align: right; border-top: 1px solid black;"><strong>649</strong></td></tr></tbody></table>

- 26 -

REAL ESTATE SUMMARY

The Company's existing rental commitments under leases for office space aggregate approximately 600,000 square feet in New York and 120,000 square feet elsewhere. These commitments involve an annual rental expense commencing at the time of full occupancy of 222 Broadway in 1988 of approximately $18.0 million, assuming no reduction in office space requirements. The Company believes that it could substantially reduce these costs by (i) giving up the space it occupies on the 45th and 46th floors of 55 Water Street and (ii) subletting a portion of the space under lease at 222 Broadway.

The Company is currently negotiating to dispose of the entire 45th and 46th floors at 55 Water Street at an estimated costs to the Company of approximately $2 million. (A charge for all furniture fixtures and improvements relating to this space was taken in 1986.) Although a written proposal with respect to this space has been received, no binding documents have been entered into. A resolution of these discussions during January 1988 is expected.

The Company has also developed a plan whereby it could sublease all or a portion of certain floors at 222 Broadway. These floors, consisting of 4, 5 and 6 and 14 and 15 are at the ends of the Company's space at such location, thus making them the most valuable to a prospective tenant seeking a large amount of space, possibly including other space currently available in the building.

In order to obtain the $26 million work letter provided under the lease, the Company intends to finish out the space on such floors at an estimated cost for leasehold improvements and related fees of $7.2 million. The Company estimates that construction could be completed with respect to all floors by April 30, 1988. At the conclusion of this work, the Company expects to commence withholding rent in accordance with the work letter provisions of the lease in the event the landlord does not deliver $26 million in satisfaction of its obligations under the work letter.

A consultant retained by the Company has estimated the total cost in connection with the subleasing of all five floors on a 10% net present value basis, including (i) brokerage commissions, (ii) free rent and "lease-up" period rental payments, (iii) work letter to a subtenant and (iv) write-off of existing improvements, less the benefit of the workletter attributable to such floors, to be $9.2 million.

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