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distribution facility in Fresno, California, and a 131,000 square
foot distribution, manufacturing, and converting facility in
DeForest, Wisconsin.
Demco had built a strong reputation for quality, service,
and moderate pricing by the time of the gifts, all of which gave
Demco good name recognition and a strong market position. Demco
also had a strong continuing customer base which generated repeat
business.
Demco had an experienced management team at the time of the
gifts that had worked together for many years. Demco’s
relationship with its workforce (which was nonunion) was good,
turnover was low, and Demco had not experienced any difficulty
recruiting qualified employees at all levels. During 1991, the
year immediately prior to the gifts, Demco had approximately 235
employees.
Demco’s net revenues and net income for 1987-91 (the 5 years
prior to the gifts), and Demco’s projected net revenues and net
income for 1992 (the year of the gifts, as projected by
management around the time of the gifts) were as shown in the
following table:2
2 The financial information in the table was compiled from
Demco’s audited and unaudited financial statements and
management’s projections for 1992, as adjusted by petitioners’
expert Donna J. Walker (Ms. Walker) to eliminate the results of
Demco’s media division, which was sold in 1991. Respondent’s
(continued...)
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