Winn-Dixie Stores, Inc. and Subsidiaries - Page 17




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          Winn-Dixie's earnings and cash-flow would be negative in every              
          year.17                                                                     
               In February 1993, Mr. McCook decided to have petitioner                
          engage in the proposed broad-based COLI plan.  On March 25, 1993,           
          Mr. Hlavacek sent Mr. McCook another projection under the                   
          constant loan interest rate scenario estimating the effect of the           
          proposed COLI plan.  The projection estimated, among other                  
          things, the effect over 60 years beginning in 1993 of the                   
          proposed COLI purchase on petitioner's effective tax rate.  The             
          projection assumed an effective tax rate of 40 percent and                  
          predicted that the proposed COLI purchase would reduce                      
          petitioner's effective tax rate each year, reaching its lowest              
          point of 26.54 percent in 2007.                                             
               AIG participated in the development of information for                 
          projections regarding petitioner's proposed COLI plan.  A                   
          preliminary census reflecting the ages of the approximately                 
          36,000 employees to be insured was prepared on May 28, 1993.18              
          Mr. Buerger sent two more sets of revised projections to Mr.                
          McCook.  The first set of revised projections was sent on May 28,           


               17Similarly, the proposal memorandum projected the effect of           
          the COLI purchase on petitioner's after-tax retained earnings               
          balance on its balance sheet over 60 years.  The proposal                   
          predicted that petitioner's retained earnings balance would                 
          increase by $2,241,491,000 over the 60 years.                               
               18Before the preliminary census, the projections were based            
          on estimates of the number of employees and their ages.                     




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