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sufficiently specific plans that are reflected in minutes of
ADCS’ and of petitioner’s board meetings, in cost and design
estimates, and in other documentation. Some of the reasonably
anticipated business needs and the amount of the projected
expenditures relating thereto are set forth below:
European Manufacturing Plant $ 3,500,000
Burnet, Texas, New Manufacturing Plant 6,000,000
Relocation of Administrative Offices 400,000
Product Liabilities 3,000,000
Patent Litigation 3,000,000
Total $15,900,000
The decision of the management of petitioner and of ADCS-
Limited to retain its current earnings during the 1996 3-month
short taxable year and during the 1997 9-month short taxable
year, rather than have ADCS-Limited distribute the earnings
through Holdings LLC and Operating LLC to petitioner and have
petitioner pay out the earnings as dividends to its individual
shareholders, reflected the reasonable business plans developed
by management of petitioner and of its affiliated entities to use
the earnings to finance the continued rapid growth of petitioner
and the expanding business activities of petitioner’s
affiliates.7 For the years in issue, the plans established by
7 With the exception of petitioner’s plan to locate a
manufacturing plant in Europe, the planned expenses of petitioner
set forth above were carried out or realized either by petitioner
or by ATMI within a short period of time following ATMI’s
acquisition of petitioner. The planned 22,500-square-foot
(continued...)
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