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years, are indicative of an optimistic management outlook for TPC
as of May of 1998.
As explained by TPC’s president, although its profitability
margins and net income were declining due to increased spending
on technology-related projects, in 1997 and 1998 TPC experienced
record revenue. Not until 2001 was TPC’s total revenue adversely
affected in a significant way by the Internet and by new
technology. Mr. Holst-Knudsen explained at trial as follows:
Q. [By petitioner’s counsel] When, if at all, did [TPC]
take what you’ve termed a “hit”?
A. We were taking a hit in the sense of, as I said before,
the investments we were making. That hit became more
serious as we went on. I would say that the years 2001,
2002, and the fiscal year that will close this year is when
we really began to take the hit on our top line, on
revenues. We have shed approximately 30 percent of our
revenue, and about 35 to 40 percent of our account basis
disappeared over that period of time.
The additional $10 million a year in technology-related
expenditures that the estate’s experts factored into their
projections of subsequent-year income, and that we also allow, we
believe to be an adequate indication or quantification of the
level of Internet- and technology-related risks TPC faced, as of
May 2, 1998.
Also, we regard TPC as an extremely well managed company,
with top quality managers throughout the company. We allow no
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