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Petitioners subsequently filed their respective petitions
commencing the instant cases. In its petition, NITCO did not
allege any specific business needs for which it was accumulating
its earnings.
During pretrial discovery, on March 4, 1992, respondent
propounded certain interrogatories to NITCO asking it to
elaborate fully with respect to the alleged specific business
needs for which NITCO contended it was accumulating its earnings
during 1987 through 1989. In its April 17, 1992, response to the
interrogatories, NITCO generally objected to having to answer the
interrogatories and declined to provide the information
respondent sought, except that in partial response to some of the
interrogatories, NITCO referred to an April 8, 1992, memorandum
concerning NITCO's reasonable business needs that had been
prepared by NITCO's counsel and that recently had been furnished
by NITCO's counsel to respondent's Appeals officer. The April 8,
1992, memorandum provided to the Appeals officer stated:
This is a summary of the items we intend to rely on as
justification of * * * NITCO's accumulation of working
capital [and earnings] for years 1987 through 1989. It
is based upon documents we have reviewed and
discussions we have had to date with NITCO personnel
and outside advisors (including NITCO's accountant,
outside counsels [sic] and independent telephone
industry consultants).
The memorandum did not indicate that NITCO, during the years in
issue, planned to: (1) Replace its Alcatel switches, (2) acquire
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