had some basis for concluding that it would not have substantial losses for fiscal 1966.
1. From 1961 through 1965, the company's annual income forecasts had been reasonably accurate. (See Def's Exh. 230).
2. Defendant's annual income forecasts were re-checked each quarter. Each division of the company would reforecast its expected income for the fiscal year. These quarterly forecasts were then checked by the corporation's financial department. The Aircraft Division's cost estimates contained in its second quarter forecast were checked by an independent analysis conducted by the corporate cost estimating group, Department G-31. While Department G-31's cost estimates were greater than those of the Aircraft Division, the difference was within the normal acceptable range of tolerance and the company could conclude that Department G-31's estimates tended to confirm the Aircraftapproximately eight weeks prior to June 24, 1966. Since this upward trend coincided in time with some of the steps taken by management to improve productivity, management could reasonably conclude that conditions in the Aircraft Division were improving. However, in view of previous similar improvements in assembly performance which were followed by steep declines in productivity, management could not reasonably conclude with any certainty that the then current upward trend would necessarily continue.
9. Donald W. Douglas, Jr., president of Douglas, had been advised by a "very senior man of the Department of Defense" in the spring of 1966 that the Department would not be ordering more of Douglas' A 4 dive bombers because ". . . we are not going to end up at the end of this