Winn-Dixie Stores, Inc. and Subsidiaries - Page 49




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          billion, resulting in a total "after-tax earnings effect" of more           
          than $2 billion.                                                            
               The June 1993 projections contain a cash-flow analysis for             
          each policy year from 1993 to 2052.  The structure of the zero-             
          cash strategy was intended to produce a positive after-tax cash-            
          flow for each policy year.  Thus for the first year, the plan was           
          to produce a positive cash-flow of $196,000 after factoring in              
          tax savings from deducting policy loan interest and fees.43                 
          Without the savings from these deductions, there would have been            
          a negative cash-flow of over $4 million.  The projections show              
          increasing positive after-tax cash-flows for each of the                    
          following 59 years.  Projected after-tax cumulative cash-flow for           
          the entire 60-year period was more than $2 billion.  Cumulative             
          net equity at the end of each year varied, rising in some years             
          and falling in others but, because of the policy loans and                  
          withdrawals, remained relatively small in relationship to the               
          numbers in the overall plan.  For example, cumulative net equity            


               43In addition, the plan would result in petitioner’s having            
          a cumulative net equity in the COLI policies at the end of the              
          first policy year of $96,000.  Cumulative net equity was the                
          gross surrender value of the policies minus outstanding policy              
          loans and accrued policy loan interest.  Gross cash surrender               
          value of $112,471,000 minus the sum of the outstanding loan of              
          $101,184,000 and accrued loan interest of $11,191,000 equals                
          $96,000.  See appendix B, Balance Sheet Summary.  The combination           
          of cumulative net equity and positive cash-flow equals the                  
          projected positive after-tax earnings effect of $292,000.                   
          $96,000 plus $196,000 equals $292,000.                                      





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