William J. and Sandra D. Heitz - Page 14

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          Home Interiors & Gifts, Inc. v. Commissioner, supra at 1146.                
          Exacto maintains that Mr. Heitz’ efforts were of great value to             
          the corporation, and we agree.                                              
               Mr. Heitz has contributed to the success of Exacto in                  
          several ways.  First, he was instrumental in improving the                  
          overall efficiency and quality of Exacto's production process.              
          Mr. Heitz regularly makes adjustments to Exacto's automated line            
          of spring-making machines to improve the efficiency of the line             
          and to reduce the percentage of rejected springs.  Mr. Heitz also           
          contributes significantly in the area of shipping and product               
          assembly, having invented several new types of spring packaging.            
               Perhaps the most valuable service that Mr. Heitz provided to           
          Exacto was in sales and marketing.  He was very successful at               
          targeting clients and marketing Exacto's services.  He was                  
          personally responsible for 65 to 70 percent of Exacto's sales               
          during the years at issue.  From FY 1991 to FY 1994, the period             
          when Mr. Heitz had assumed sole responsibility for the                      
          administration and operation of the company, Exacto's gross sales           
          increased from $8,923,374 to $16,162,119.  Mr. Heitz’ efforts to            
          solicit clients played a key role in Exacto's success, and Exacto           
          was substantially dependent on him.  However, Mr. Heitz was also            
          being compensated for his sales efforts, in part, by Hickory.  He           








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