Exhibit 12
[Willkie Farr & Gallagher Letterhead]
August [ ], 2003
Smith Barney Money Funds, Inc.
on behalf of Retirement Portfolio and Cash Portfolio
125 Broad Street
New York, NY 10004
Ladies and Gentlemen:
You have asked us for our opinion concerning certain U.S. federal income tax
consequences to (i) Cash Portfolio (the "Acquiring Fund"), a separate series
Smith Barney Money Funds, Inc., a Maryland corporation ("Money Funds"), (ii)
Retirement Portfolio (the "Acquired Fund"), a separate series of Money Funds,
and (iii) the holders (the "Acquired Fund Shareholders") of voting shares of
common stock of the Acquired Fund (the "Acquired Fund Shares") when the Acquired
Fund Shareholders receive voting shares of common stock of the Acquiring Fund
(the "Acquiring Fund Shares") in exchange for their Acquired Fund Shares
pursuant to the acquisition by the Acquiring Fund of all of the assets of the
Acquired Fund in exchange for Acquiring Fund Shares and the assumption by the
Acquiring Fund of all of the liabilities of the Acquired Fund (the
"Reorganization"), all pursuant to that certain Plan of Reorganization, dated
[ ], 2003, of Money Funds on behalf of the Acquiring Fund and the Acquired
Fund (the "Plan"). This opinion is being delivered pursuant to Section
D.2.(a)(ii) of the Plan.
We have reviewed such documents and materials as we have considered necessary
for the purpose of rendering this opinion. In rendering this opinion, we have
assumed that such documents as yet unexecuted will, when executed, conform in
all material respects to the proposed forms of such documents that we have
examined. In addition, we have assumed the genuineness of all signatures, the
capacity of each party executing a document to so execute that document, the
authenticity of all documents submitted to us as originals and the conformity to
original documents of all documents submitted to us as certified or photostatic
copies.
We have made inquiry as to the underlying facts which we considered to be
relevant to the conclusions set forth in this letter. The opinions expressed in
this letter are based upon certain factual statements relating to the Acquiring
Fund and the Acquired Fund set forth in the Proxy Statement (the "Proxy
Statement") filed by the Acquired Fund with the Securities and Exchange
Commission and representations made in letters from the Acquiring Fund and the
Acquired Fund addressed to us for our use in rendering this opinion (the "Tax
Representation Letters"). We have no reason to believe that
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Cash Portfolio
August [ ], 2003
Page 2
these representations and facts are not valid, but we have not attempted to
verify independently any of these representations and facts, and this opinion is
based upon the assumption that each of them is accurate.
The conclusions expressed herein are based upon the Internal Revenue Code of
1986, as amended (the "Code"), Treasury regulations issued thereunder, published
rulings and procedures of the Internal Revenue Service and judicial decisions,
all as in effect on the date of this letter.
Based upon the foregoing, we are of the opinion that for U.S. federal income tax
purposes:
(a) the transfer to the Acquiring Fund of all of the assets of the
Acquired Fund in exchange solely for the Acquiring Fund Shares and the
assumption by the Acquiring Fund of all of the liabilities of the
Acquired Fund, followed by the distribution of such Acquiring Fund
Shares to the Acquired Fund Shareholders in exchange for their
Acquired Fund Shares in complete liquidation of the Acquired Fund,
will constitute a "reorganization" within the meaning of Section
368(a)(1) of the Code, and the Acquiring Fund and the Acquired Fund
will each be "a party to a reorganization" within the meaning of
Section 368(b) of the Code;
(b) except for gain or loss regularly attributable to the termination of
the Acquired Fund's taxable year, no gain or loss will be recognized
by the Acquired Fund upon the transfer of the Acquired Fund's assets
to the Acquiring Fund in exchange for the Acquiring Fund Shares and
the assumption by the Acquiring Fund of liabilities of the Acquired
Fund or upon the distribution of the Acquiring Fund Shares to the
Acquired Fund Shareholders in exchange for their Acquired Fund Shares;
(c) except for assets that may be revalued as a consequence of a
termination of the Acquired Fund's taxable year, the basis of the
assets of the Acquired Fund in the hands of the Acquiring Fund will be
the same as the basis of such assets of the Acquired Fund immediately
prior to the Reorganization;
(d) except for assets that may be revalued as a consequence of a
termination of the Acquired Fund's taxable year, the holding period of
the assets of the Acquired Fund in the hands of the Acquiring Fund
will include the period during which such assets were held by the
Acquired Fund;
(e) no gain or loss will be recognized by the Acquiring Fund upon the
receipt of the assets of the Acquired Fund solely in exchange for the
Acquiring Fund Shares and the assumption by the Acquiring Fund of all
of the liabilities of the Acquired Fund;
(f) no gain or loss will be recognized by the Acquired Fund Shareholders
upon the receipt of the Acquiring Fund Shares solely in exchange for
their Acquired Fund Shares as part of the Reorganization;
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Cash Portfolio
August [ ], 2003
Page 3
(g) the aggregate basis of the Acquiring Fund Shares received by the
Acquired Fund Shareholders will be the same as the aggregate basis of
their Acquired Fund Shares exchanged therefor; and
(h) the holding period of the Acquiring Fund Shares received by the
Acquired Fund Shareholders will include the holding period during
which the Acquired Fund Shares exchanged therefor were held, provided
that at the time of the exchange the Acquired Fund Shares were held as
capital assets in the hands of the Acquired Fund Shareholders.
Our opinion is based upon the accuracy of the certifications, representations
and warranties and satisfaction of the covenants and obligations contained in
the Plan, the Tax Representation Letters and in the various other documents
related thereto. Our opinion may not be relied upon if any of such
certifications, representations or warranties are not accurate or if any of such
covenants or obligations are not satisfied in all material respects.
Sincerely yours,