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Net Income Shareholder's
Year Ended Sales After Taxes Equity
Feb. 28, 1986 $61,499,000 ($3,591,000) ($1,489,000)
Feb. 28, 1987 58,515,000 823,000 2,848,000
Feb. 29, 1988 53,854,000 1,561,000 4,082,000
Feb. 28, 1989 57,672,000 (504,000) 1,037,000
Feb. 28, 1990 60,960,000 (71,000) 1,212,000
Feb. 28, 1991 56,883,000 362,000 1,508,000
Mr. Ruf's Loans to Petitioner
At approximately the same time that petitioner paid
$1,454,746 to Mr. Ruf during its fiscal year ended February 28,
1989, Mr. Ruf lent petitioner approximately $925,000. At ap-
proximately the same time that petitioner paid $2,600,000 to Mr.
Ruf during its fiscal year ended February 28, 1990, Mr. Ruf lent
petitioner approximately $2 million.
Mr. Neiman
Throughout the years at issue, Mr. Neiman owned interests in
the original notes and the replacement notes issued in connection
with the sale of petitioner's stock to Mr. Ruf and the UBM note
that the former shareholders and Mr. Ruf purchased. Until
January 1988, Mr. Neiman remained on petitioner's payroll and
retained an office next to Mr. Ruf's office. After January 1988,
Mr. Neiman decided that he no longer wanted to be on petitioner's
payroll; nonetheless, throughout the remaining years at issue,
Mr. Ruf allowed Mr. Neiman to use one of petitioner's offices.
Prior to, during, and after the years at issue, Mr. Neiman re-
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