Gustafson's Dairy, Inc. - Page 15

                                        -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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