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Tax-advantaged investors unfazed by Orange County.

Corporate Cashflow Magazine

| April 01, 1995 | Fitch, Thomas P. | COPYRIGHT 1990 CFO Publishing Corp. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan.  All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)Copyright

Tax-paying corporations might be able to boost after-tax net income by investing some of their long-term core cash in municipal securities, which are exempt from state, local and federal taxes. Companies in the top 34% tax bracket should be able to increase after-tax income without unduly increasing their credit or market risk.

Along with higher after-tax yields, tax-exempts have "reasonable liquidity" and manageable credit risk, says Kenneth Neal, assistant treasurer at Lowe's Companies Inc., Wilkesboro, NC. It reported 1994 sales of $5 billion.

Lowe's, which operates 330 home centers in 21 states, has $30 million to $40 million of its cash reserves invested in a tax-advantaged investment account. "In a rising-rate environment, the 35-40 day issues have performed pretty well," Mr. Neal adds. "You get …

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