Farmland Industries, Inc. - Page 36




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                  Terra obtained the funds necessary for capital                      
             expenditures from its own internal cash-flow.  Terra always              
             retained its profits for operating capital.  At the end of               
             its fiscal year 1982, Terra’s balance sheet showed retained              
             earnings of approximately $92 million.  Terra’s other                    
             source of funds was loans from petitioner and other                      
             affiliates.  By the end of 1981, the outstanding balance of              
             the loans petitioner and other affiliates had made to Terra              
             was $120,557,651.                                                        
                  Terra’s oil and gas acquisition and development                     
             expenditures for 1977 through 1982 were as follows:                      

                      Year            Expenditures (in Millions)                      
                      1977                      43.300                                
                      1978                      54.900                                
                      1979                      50.300                                
                      1980                      75.700                                
                      1981                      88.800                                
                      1982                       85.628                               
                    Total                       398.628                               

                  From 1970 to 1983, Terra consistently retained its                  
             full share of the uncommitted production of wells in which               
             it held an ownership interest and sought to acquire as much              
             of the crude oil held by its co-owners or subject to                     
             contractual obligations as possible.  Sales of uncommitted               
             production to parties other than petitioner, other than                  
             those incident to exchanges for CRA’s benefit, were                      






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Last modified: May 25, 2011