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the 1991 report states that C & A discussed Eatel’s business
decisions with Eatel’s president, neither the 1991 report nor the
record as a whole reveals the substance or extent of those
discussions.
Even assuming, arguendo, that DATA’s and Eatel’s operations
were similar enough to allow Mr. Chaffe to rely reasonably on his
1989 report, we find other faults with the 1991 report. First,
the 1991 report does not adequately account for the fact that
Eatel’s 1991 earnings increased dramatically over DATA’s earnings
for the years covered by the 1989 report. Second, the 1991
report does not adequately take into account that Eatel began
paying dividends after the time covered by the 1989 report.
Third, the 1991 report makes no reference to the 1989 report’s
statement that DATA’s disposition in 1988 of a second-tier
subsidiary did away with a business that had a negative effect on
earnings; e.g., the 1991 report does not discuss the effect of
that disposition on Eatel’s 1991 net worth. Fourth, the 1989
report evidences an anticipated growth of DATA’s subsidiaries by
1991 through incorporation of technology, transformation, and
changes in operation, yet the 1991 report does not discuss the
results of this anticipated growth or its effect on Eatel’s net
worth. Fifth, the 1989 report explains that “the large increase
in 1988 income was the result of a single sale of stock held by
the Company [DATA] which resulted in a pre-tax gain of
approximately $4,752,417 which was invested in temporary cash
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