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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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