- 3 - offering its employees up to 3 years' severance pay if they left the company. No employees accepted the offer, however, because no other jobs were available. In 1982, petitioner contributed to USMP $261,000 of additional capital by converting into equity a comparable amount of payables that USMP owed petitioner. Despite this cash infusion, USMP continued to fall behind in paying for goods purchased from petitioner and its subsidiaries. Although petitioner was unwilling to advance additional cash, it agreed to extend USMP's payables beyond the 60 days in which members of the consolidated group generally paid one another for merchandise. Petitioner extended the payables again in 1983. Despite these remedial measures, USMP's financial condition worsened and such deterioration was exacerbated by an unstable political climate and extreme inflation. USMP's net income or loss, converted from Portuguese escudos to U.S. dollars, was a follows: 1980 1981 1982 1983 $40,207 $52,107 ($113,917) ($117,278) As of December 31, 1983, USMP had a net worth (i.e., assets minus liabilities) of negative $35,371. As a result of USMP's decline in sales revenue, petitioner's inability to reduce USMP's expenses, and USMP's substantial losses in 1982 and 1983, petitioner concluded in early 1984 thatPage: Previous 1 2 3 4 5 6 Next
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