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the Contract, petitioner would receive at least 50 percent of the
cumulative net income produced from its housefile mailings; after
the first 2 years, petitioner would receive at least 70 percent.
In April 1986 petitioner agreed to keep the guarantee at 50
percent in exchange for W&H’s reducing its “creative” package fee
on housefile mailings and capping its mailing fee on any
housefile mailing of more than 500,000.
Petitioner generally maintained its books under an accrual
method of accounting. For 1984 through 1989, petitioner received
the amounts of total annual contributions set forth in table 1.
Table 1
Year Total Contributions
1984 $240,380
1985 5,087,453
1986 7,869,015
1987 10,740,045
1988 3,883,352
1989 1 943,142
Total 28,763,387
1 An analysis of petitioner’s financial statements, prepared by
petitioner’s counsel and assumed to be true by petitioner’s
expert witness Richard S. Steinberg, indicates that $644,627 of
the 1989 contributions were produced under the Contract.
For 1984 through 1989, petitioner incurred at least the
amounts of total annual expenses in fundraising and in its
mailing campaign set forth in table 2.
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