EXHIBIT 12.1
March 10, 1999
Board of Directors
SMITH HAYES Trust, Inc.
Board of Trustees
Ranson Managed Portfolios
RE: Plan of Reorganization for Combining the SMITH HAYES Trust, Inc.,
Lancaster Nebraska Tax-Free Fund (the "Transferor Fund") into the
Ranson Managed Portfolios Nebraska Municipal Fund (the" Surviving
Fund")
Dear Sirs:
We have been asked to give our opinion relating to the above-described
transaction (the "Reorganization"), as to certain Federal income tax
consequences of consummating the transactions contemplated in the
Agreement and Plan of Reorganization (the "Plan").
Background
SMITH HAYES Trust, Inc., d/b/a Lancaster Funds ("Lancaster") is a Minnesota
corporation consisting of multiple investment portfolios, including
the Transferor Fund identified above. Ranson Managed Portfolios
("Ranson") is a Massachusetts business trust consisting of multiple
investment portfolios, including the Surviving Fund identified above.
The Transferor Fund and the Surviving Fund are sometimes referred to
herein collectively as "Funds." Lancaster and Ranson each is
registered under the Investment Company Act of 1940, as amended, as an
open-end investment company of the management type.
It is proposed that all the assets and liabilities of the Transferor Fund
be transferred to the Surviving Fund. As consideration for such
transfer, the Surviving Fund is issuing to the Transferor Fund a
number of full and fractional shares of common stock in the Surviving
Fund equal to the net asset value of the shares outstanding of the
Transferor Fund at the Effective Time of the Reorganization.
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Immediately after the transfer, the Surviving Fund shares issued to the
Transferor Fund are to be distributed to the shareholders of the
Transferor Fund in liquidation of the Transferor Fund, and the
Transferor Fund is to cease operations. Each Transferor Fund
shareholder is receiving shares of the Surviving Fund in proportion to
the shareholding in the Transferor Fund immediately before the
Reorganization. The outstanding shares of the Transferor Fund are to
be canceled, and the Transferor Fund is to be terminated.
Assumptions
For purposes of this opinion, we have made several assumptions:
First, that each of the Funds qualified as a "regulated investment company"
under Part I of Subchapter M of Subtitle A, Chapter 1, of the Internal
Revenue Code of 1986, as amended (the "Code") and also met the
diversification requirements of Codess.368(a)(2)(E)(ii), for its most
recently ended fiscal year and will continue to so qualify for its
current fiscal year;
Second, that the Surviving Fund is acquiring at least 90% of the fair
market value of the net assets and at least 70% of the fair market
value of the gross assets held by the Transferor Fund immediately
prior to the transaction, treating any assets used to make other than
regular and normal distributions or redemptions as unacquired assets;
Third, that the shareholders of the Transferor Fund have no plan or
intention to dispose of a number of shares of the Surviving Fund
received by them as a result of the transaction which would result in
their owning in the aggregate shares of the Surviving Fund having a
fair market value that is less than 50% of the fair market value of
the Transferor Fund's shares outstanding immediately before the
transaction (including any of the Transferor Fund's shares redeemed in
anticipation of the transaction);
Fourth, that the Surviving Fund has no plan or intention to reacquire any
of its shares issued in the transaction, except for redemptions in the
ordinary course of business as a regulated investment company;
Fifth, that the Surviving Fund has no plan or intention to sell or
otherwise to dispose of any of the assets of the Transferor Fund
acquired in the transaction, except for dispositions made in the
ordinary course of business;
Sixth, that the liabilities of the Transferor Fund assumed by the Surviving
Fund and the liabilities to which the transferred assets of the
Transferor Fund are subject were incurred by the Transferor Fund in
the ordinary course of business;
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Seventh, that the transaction serves a business purpose or purposes of the
Funds and that following the transaction the Surviving Fund will
continue the historic business of the Transferor Fund or use a
significant portion of the Transferor Fund's historic business assets
in a business;
Eighth, that there is no intercorporate indebtedness existing between the
Surviving Fund and the Transferor Fund that was issued, acquired or
will be settled at a discount;
Ninth, that the Surviving Fund does not own, directly or indirectly, nor
has it owned during the past five years, directly or indirectly, any
stock of the Transferor Fund;
Tenth, that the Transferor Fund is not under the jurisdiction of a court in
a case under Title 11 of the United States Code or a receivership,
foreclosure or similar proceeding in any Federal or State court; and
Eleventh, that the Plan substantially in the form included as an exhibit to
the registration statement of the Surviving Fund, on Form N-14 under
the Securities Act of 1933 (the "Registration Statement") has been or
will be duly authorized by the Surviving Fund.
The opinions set forth below are subject to the approval of the Plan by
the shareholders of the Transferor Fund, to the proper submission and
filing of appropriate documents with the appropriate government
agencies and to the satisfaction of the terms and conditions set forth
in the Plan. Conclusions
Based upon the Code, applicable Treasury Department regulations in effect as
of the date hereof, current published administrative positions of the
Internal Revenue Service contained in revenue rulings and procedures,
and judicial decisions, and upon the information, representations and
assumptions contained herein and in the documents provided to us by
you, it is our opinion for Federal income tax purposes that:
(i) the transfer of all of the assets and liabilities of the
Transferor Fund to the Surviving Fund in exchange for shares of
the Surviving Fund and distribution to shareholders of the
Transferor Fund of the shares of the Surviving Fund so received,
as described in the Plan, will constitute a reorganization within
the meaning of Code section 368(a)(1)(C);
(ii) in accordance with sections 361(a), 361(c)(1) and 357(a) of the
Code, no gain or loss will be recognized by the Transferor Fund
as a result of such transaction;
(iii)in accordance with section 1032(a) of the Code, no gain or loss
will be recognized by the Surviving Fund as a result of such
transaction;
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(iv) in accordance with section 354(a)(1) of the Code, no gain or loss
will be recognized by the shareholders of the Transferor Fund on
the distribution to them by the Transferor Fund of shares of the
Surviving Fund in exchange for their shares of the Transferor
Fund;
(v) in accordance with section 358(a)(1) of the Code, the basis of
the Surviving Fund's shares received by a shareholder of the
Transferor Fund will be the same as the basis of the
shareholder's Transferor Fund shares immediately before the
transaction;
(vi) in accordance with section 362(b) of the Code, the basis to the
Surviving Fund of the assets of the Transferor Fund received
pursuant to the transaction will be the same as the basis of
those assets in the hands of the Transferor Fund immediately
before the transactions;
(vii)in accordance with section 1223(1) of the Code, a shareholder's
holding period for Surviving Fund shares will be determined by
including the period for which the shareholder held Transferor
Fund shares exchanged therefor, provided that the shareholder
held such Transferor Fund shares as a capital asset; and
(viii) in accordance with section 1223(2) of the Code, the Surviving
Fund's holding period with respect to any asset acquired from the
Transferor Fund will include the period for which such asset was
held by the Transferor Fund.
We express no opinion relating to any Federal income tax matter except on
the basis of the documents and assumptions described above. In issuing
our opinion, we have relied solely upon existing provisions of the
Code, existing and proposed regulations thereunder, and current
administrative rulings and court decisions. Such laws, regulations,
administrative rulings and court decisions are subject to change at
any time. Any such change could affect the validity of the opinion set
forth above. We express no opinion on any state or local tax issues.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to our firm under the
caption "Proposal - Agreement and Plan of Reorganization - Federal
Income Tax Consequences" in the Proxy Statement/Prospectus
constituting a part of the Registration Statement.
Very truly yours,
/s/
CLINE, WILLIAMS, WRIGHT,
JOHNSON & OLDFATHER
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