In 1936, the Mormon Church set up an operation to manufacture garments called Deseret Clothing Factory. From 1938 to 1960, four commercial companies, not owned by or affiliated with the Mormon Church, also manufactured garments in the United States under restrictive licenses from the Church. These licenses forbade sale to non-members, display, or advertising of the garment.

The companies were Lady Gay Manufacturing, Salt Lake Knitting Works, Ogden Knitting Works and Security Knitting Works. In addition to garments, Lady Gay Manufacturing manufactured other types of clothing of no religious significance for other customers. The other three commercial companies manufactured only garments.

The four commercial companies performed all necessary steps in the manufacture of the garments prior to their being marked with the religious symbols. Marking was authorized to be done by the Mormon Church member who purchased the garment, by the Relief Society of the Church or by Church members assigned to be at the commercial companies to mark the garments. No religious requirement of any kind was imposed on any employee of the four commercial companies. Until 1965, garments were distributed through the Mormon Church and also through certain department stores under restrictive licenses which forbade sale to non-members and prohibited display or advertising of garments.

When Beehive took over the manufacturing operations of the commercial companies in 1960, it continued to employ a number of the companies' employees. Among them were some who were not eligible for a temple recommend, ("ineligible members") and some who were not members of the Mormon Church. Supplemental Answers to Plaintiffs' Third Set of Interrogatories and Second Request for Production of Documents, December 14, 1984 ("Supp.Ans.") No. 8. At least some of the non-members or ineligible member employees were retained by agreement under an arrangement with the companies. . .In 1980 and 1981, Beehive contracted on a job lot basis with a number of commercial companies in Utah and Arizona as it could not meet the immediate demand for garments created when a new design of garment was introduced. Supp.Ans. No. 24; Goldthorpe Depo. at 71. Under its arrangement with these commercial manufacturers, cutting, marking, packaging, and distribution were done at Beehive. The commercial companies did the sewing of the pre-cut pieces. No religious requirement of any kind was imposed on any of these commercial companies' employees. At present, three commercial companies outside of the United States, not owned by or affiliated with the Mormon Church, also produce garments. They are Jockey, Inc., in the Phillipines, I-Way Manufacturing in the United Kingdom, and Canterbury Manufacturing in New Zealand. I-Way Manufacturing has been producing garments since 1979, Jockey, Inc. has been producing garments since 1984, and Canterbury Manufacturing has been engaged since approximately 1982. Supp.Ans. No. 24; Affidavit of Keith B. McMullin, April 11, 1985 ("McMullin Affidavit") paragraph 15. In each case, the commercial company cuts, and sews the garment up to the marking stage. Marking, packaging, and distribution are done by the Mormon Church. Supp.Ans. No. 24. No religious requirement of any kind is imposed upon the employees of these foreign companies who cut and sew garments. Recently, the Mormon Church has contracted with companies in Taiwan and Korea to manufacture garments. McMullin Affidavit, paragraph 14.