Herbert V. Kohler, Jr., et al. - Page 8

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          benefited the community at large, and likely would have been more           
          difficult to implement and maintain if Kohler were public.                  
               Accordingly, Kohler has never registered its stock with the            
          Securities and Exchange Commission and has never publicly sold              
          its stock.  Kohler stock has never traded on any organized                  
          securities exchange.  Small lots, usually just one or two shares,           
          were sold periodically in private transactions.  Bid and ask                
          prices for shares of Kohler stock were listed in the National               
          Quotations Bureau’s pink sheets.  About 36 trades in Kohler stock           
          were listed in the pink sheets from December 1993 through March             
          31, 1998.                                                                   
               Kohler has paid dividends to its shareholders at least                 
          annually since about 1900.  Kohler’s stated policy was to                   
          reinvest at least 90 percent of its earnings in its business each           
          year, with 7 to 10 percent of earnings paid to shareholders as              
          dividends.  In recessionary times, Kohler’s policy was to                   
          continue paying dividends even if it meant not reinvesting the 90           
          percent.  Kohler management knew that the shareholders often                
          depended on their dividends for their well-being.  Receiving                
          dividends was the primary way a Kohler shareholder could receive            
          a return on his or her investment because the company was                   
          private.  The shareholder could not simply sell the shares                  
          whenever he or she wished and could not count on appreciation in            







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