Exhibit 1 presents selected financial data for Oak Industries for the period 1978-1981. Oak established new sales and profit records each successive year during this period. In fact, in both 1980 and 1981 the company’s actual net income eclipsed the figure reported by the company. In 1980, Oak's top executives became concerned that the company could not indefinitely sustain its impressive growth rate in annual profit. To help the company maintain this trend, the executives began creating reserves that could be used to boost Oak’s reported profits in later years.