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significant sales and profits in future years and would
strengthen petitioner's competitive advantage in the industry.
Their assumption proved to be correct, as by 1995 the labels
accounted for approximately 30 percent of petitioner's sales and
were the fastest growing and most profitable segment of its
business.
From 1990 through 1996, petitioner's annual sales and gross
margins from clean room labels were as follows:
Year Sales Gross Margin
1990 $174,099 $102,196
1991 331,601 255,333
1992 450,856 360,685
1993 1,398,683 1,049,012
1994 1,828,637 1,371,478
1995 3,954,393 2,965,794
1996 5,116,026 3,990,500
During its fiscal year ended June 30, 1990, petitioner's
three officers were Mr. Martin, president; Jerry Crispe,
executive vice president; and Mrs. Martin, secretary. Of
petitioner's officers, only Mr. Martin had substantial experience
in the label and printing industry before working for petitioner.
He designed petitioner's physical plant and layout. He also
hired and trained the other members of petitioner's management
team, including Mr. Crispe and Mike.
When he began working part time for petitioner around 1982
or 1983, Mr. Crispe had no experience in the label and printing
business. He previously had been in the real estate development
business and had some familiarity with general business matters.
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