- 6 -6
Petitioner's shareholders' equity is as follows:
FYE Shareholders'
Aug. 31 Equity
1981 $1,719,074
1982 2,070,404
1983 2,490,070
1984 3,191,644
1985 3,755,202
1986 4,243,775
1987 4,958,268
1988 5,523,189
1989 7,260,559
1990 6,251,019
1991 7,815,983
1992 10,163,504
Petitioner has never paid dividends.
In the 1970's, petitioner and its shareholders borrowed
funds to expand petitioner's facilities. The terms of the
financing arrangement prohibited petitioner from paying dividends
to its shareholders. In 1985, and again in 1987, petitioner
entered into a bond guaranty agreement (guaranty agreement) with
AmSouth Bank N.A. in connection with another expansion of
petitioner's facilities. The guaranty agreement was operative
through 1992, and it prohibited petitioner from paying dividends
to its shareholders while the bonds were outstanding.
4. Ferguson's Executive Duties
Ferguson became petitioner's president and chief executive
officer (CEO) in 1988, after Bell's death. After becoming CEO,
Ferguson continued to serve as petitioner's treasurer. In
November 1988, petitioner created two additional vice president
positions, for a total of three vice presidents, and the three
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