-15-
Petitioner's controller's March 1986 CEP report stated that:
(a) Petitioner must expand its herd and milking facilities to
meet the demand of the milk cooperative because Government
programs will reduce the number of cows in Florida; and (b) due
to the exorbitant increase in liability insurance costs,
petitioner will reduce insurance from $10,000,000 to $5,000,000
and self-insure for the remaining $5,000,000.
Petitioner's board analyzed its business needs in detail in
each of the years in issue and concluded that it needed much more
money than it had. The CEP listed three categories of
expenditures. Category one was capital expenditures, self-
insurance reserves, and petitioner's working capital needs for
the next fiscal year. Category two listed probable needs for the
2 years after the next fiscal year. Category three projected
probable needs for the 2 years after that. Petitioner intended
to implement the plans recorded in all three categories, but
category one was more definite than category two and category two
was more definite than category three.
The CEP did not count amounts transferred to the Super
Trust, discussed below at paragraph I-C-2, as funds available to
meet petitioner's projected expenses.
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