Freres Lumber Co., Inc. - Page 8

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            On March 1, 1988, D.C. Walker, Mary Walker, and Bebout each                                    
            owned one-third of the stock of D.C. Walker Enterprises, Inc.                                  
                  Before March 1, 1988, D.C. Walker Enterprises, Inc.,                                     
            manufactured forest products.  It sold mostly soft white woods to                              
            customers in the Orient.  It did not sell products in competition                              
            with petitioner.  Customers from the Orient wanted high-quality                                
            lumber cut to precise metric measurements.  Petitioner did not                                 
            have that capability.                                                                          
                         b.    Lyons Veneer                                                                
                  D.C. Walker started Lyons Veneer in 1981.  On March 1, 1988,                             
            Bebout owned 50 percent of Lyons Veneer, and D.C. and Mary Walker                              
            owned the other 50 percent.  Lyons Veneer competed against                                     
            petitioner, Willamette Industries, and many others before March                                
            1, 1988.  Petitioner, the Walker entities, Young & Morgan, and                                 
            Frank Lumber were the primary competitors.  Before March 1, 1988,                              
            Lyons Veneer sold almost all of its finished product to Alpine                                 
            Veneer.  Lyons Veneer did not process soft white woods.                                        
                         c.    Sources of Timber for the Walker Entities                                   
                  The Walker entities obtained logs from the Forest Service,                               
            BLM, the State of Oregon, and private sources.  Most of its logs                               
            came from the Forest Service.  Lyle Sanders and D.C. Walker                                    
            managed timber procurement for the Walker entities.                                            

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