Labelgraphics, Inc. - Page 5

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          companies.  Petitioner mastered early the ability to produce                
          polycarbonate overlays with little loss of material.  It has also           
          been very innovative in developing scratch-resistant coatings for           
          its products.  By its fiscal year ended June 30, 1990, petitioner           
          employed 58 persons.  Its plant is perhaps one of the most modern           
          in the United States.  In addition, petitioner is very highly               
          regarded in the label and printing industry.  Its principal                 
          competitors in the country are much larger companies.                       
               Over its first 8 fiscal years from July 1, 1980, through               
          June 30, 1988, petitioner's annual gross receipts increased                 
          dramatically.  Its gross receipts for each fiscal year during               
          this period were higher than the preceding year.  For its fiscal            
          year ended June 30, 1988, petitioner had $4,821,650 in gross                
               Over its next 2 fiscal years from July 1, 1988, through June           
          30, 1990, however, petitioner's annual gross receipts slightly              
          declined.  This decline in petitioner's business was not                    
          unexpected.  Earlier, in 1987, petitioner's management had                  
          anticipated such a possible future decline in business.  At that            
          time, its management recognized that it would be difficult to               
          expand sales further in the Portland market and to maintain high            
          profit margins, as petitioner had already saturated that market             
          and was likely to encounter increasing competition for that                 
          market's remaining new business.  Also, by 1987, petitioner's               
          management was concerned about some customers' relocating their             

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