- 31 - backs) for that year was negative $3,599,000. In addition, at the time that Mr. Ruf became petitioner's CEO, petitioner was facing increased competition from the entry of large discount home centers into its market. Despite that competition, under Mr. Ruf's direction, petitioner achieved, according to its financial statements, a positive net income after taxes (but before utilization of net operating loss carryforwards/carry- backs) for each of its fiscal years ended February 28, 1987, through February 28, 1991. After Mr. Ruf became petitioner's CEO in March 1986, he undertook a number of initiatives in order to return petitioner to profitability. Shortly after becoming petitioner's CEO, he negotiated with petitioner's suppliers to extend petitioner's credit even though petitioner had not been paying its bills. Petitioner's suppliers extended petitioner's credit in part because of Mr. Ruf's reputation in the industry for turning around troubled home centers. To improve employee morale, Mr. Ruf started having 7 a.m. "donuts with Jess" meetings with petitioner's store employees. As a result of his efforts, employee morale improved as evidenced by fewer workmen's compensation claims and reduced inventory shrinkage. Within approximately three to six months after becoming petitioner's CEO, Mr. Ruf reduced petitioner's office staff byPage: Previous 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 Next
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