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the distributors and received a 3- to 5-percent commission,
instead of the normal 30-percent profit. Due to a large
turnover, Harlee continually needed to, and did, generate new
customers.
Prior to his death in July 1995, Harvey Leichter was
Harlee’s president and primary salesman, generating 80 to 90
percent of all sales. Decedent was Harlee’s bookkeeper. Aside
from them, the management team consisted of James Woll, general
manager in charge of new product development; and James Seltzer,
assistant to the president. Altogether, Harlee had a workforce
consisting of 8 to 10 employees. Between Harvey Leichter’s death
in July 1995 and decedent’s death in October of that same year,
the workforce remained constant except that decedent became
president.
For the 4 years preceding decedent’s death (1991 through
1994), Harlee had total sales of $2,426,721, $1,896,895,
$2,778,872, and $3,894,587, respectively. In each of the 2 years
preceding death, Harlee’s sales increased more than 40 percent
from the prior year. For that same period, Harlee’s cost of
goods sold averaged in the mid-to-high 70-percent range in
relation to total sales, and its operating expenses averaged
approximately 18 percent of total sales. Harlee’s adjusted net
income for the 4 years preceding decedent’s death was generally
increasing, as follows: $40,194, $83,640, $77,570, and $113,191.
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Last modified: May 25, 2011