463 Findings of Fact royalties of $1,393.65 during 1953; $1,895.70 in 1954; and $1,457.55 in 1955 on the sales of visual aids created by her. 47. Plaintiff's dissemination divison handles the sale and distribution of plaintiff's publications, as well as other printed materials and merchandise obtained by plaintiff through direct purchases for resale. Plaintiff's 1957 catalog lists for sale its ten different groups of religious teaching materials, covering the age groupings from infancy into adulthood, and also its numerous other publications such as pamphlets and booklets. In addition, the catalog lists publications and merchandise purchased by plaintiff for resale, such as numerous religious books for all age levels, Bibles, Bible cases, religious song books, greeting cards, stationery, gifts, toys, games, handcraft supplies, records, films and filmstrips, projectors, a tape recorder, a record player, flags, chairs and tables. Plaintiff purposely handled a line of merchandise sufficiently complete so that Sunday Schools could obtain most of their requirements at one place. Most of the merchandise carried a religious theme, marking or Scriptural reference. Sales are promoted by plaintiff, mainly through use of mailing lists of Church Sunday Schools throughout the country and through issuance of catalogs. Plaintiff advertises its publications in some twelve religious magazines. Sales are also conducted by plaintiff in its two stores, one in downtown Chicago and the other in its Wheaton building. Store sales for the fiscal years ended January 31, 1949 to 1956 amounted to about $749,525, representing about 5.13 percent of plaintiff's total net sales for these eight years. Some of plaintiff's sales are made to outside bookstores and to individuals, but such sales amount to less than one percent of the total sales. Approximately 94 percent of plaintiff's sales are made directly to Sunday Schools throughout the country. About 26,000 Sunday Schools use plaintiff's lesson materials and other items, representing about 75 different Protestant denominations and more than 3,000,000 Sunday School pupils. Many thousands of pastors, ministers, Sunday School teachers and other religious leaders receive instructional training directly or indirectly from plaintiff's Findings of Fact 152 Ct. Cí. programs. Substantial grants of lesson materials are made by plaintiff to newly formed Sunday Schools and other organizations unable to pay for such materials. 48. A summary of plaintiff's operating statements for each of the fiscal years ended January 31, 1951 to 1957, is reported herein in Table II. Complete operating statements for the fiscal years 1946 to 1950 were not placed in evidence. However, data for those earlier years show the following information with respect to plaintiff's total net sales, contributions received, merchandise grants and cash donations, and net income, for each of the fiscal years ended as indicated: After January 31, 1950, plaintiff's operations continued to expand as shown in Table II. Approximately 85 percent of plaintiff's total net sales (during all seven of the fiscal years shown in Table II) represent plaintiff's own productions, consisting of Sunday School teaching and lesson materials and supplemental publications and materials. About 15 percent of the total of these net sales consist of Bibles, books, other publications, and numerous items of merchandise, which are purchased for resale by plaintiff from outside sources. Plaintiff's officers testified in this case that little or no profit is realized by plaintiff in handling such outside materials. By allocating plaintiff's overall operating and selling expenses to each of these groups of sales in accordance with the ratio between the net sales of each group, it is shown that a net loss was sustained by plaintiff on those items acquired from outside sources. Throughout the seven-year period, however, plaintiff averaged net income or profit from all of its operations at a rate of about 8.7 percent of total net sales. The items in this finding and in Table II, designated as contributions received, were not receipts from any solicitation of public funds, but were honorariums received from Findings of Fact 152 Ct. Cl. some of the various churches and other groups where plaintiff furnished speakers or instructors. With respect to the item of merchandise grants and cash donations, referred to in this finding and in Table II, the evidence in this case shows that in each year the value of merchandise granted was substantially greater than the cash donated by plaintiff. For the tax year ended January 31, 1953, the total figure of $31,951.89 is comprised of cash donations by plaintiff of $9,499.90 and the balance in merchandise grants. 49. Plaintiff's audit reports summarized in Table II fail to reflect the total costs incurred by plaintiff for its instructional work at Sunday School meetings and conventions and other sessions. This was due to the fact that the audits were conducted in accordance with the account classification employed by plaintiff. Plaintiff's records reflect approximate expenditures by plaintiff in its educational programs during seven fiscal years as follows: 1951, $21,835.67; 1952, $29,434.83; 1953, $36,452.08; 1954, $41,454.42; 1955, $46,378.63; 1956, $48,041.44; and 1957, $72,886.27. 50. Plaintiff's annual audit reports combine its store operations with its other sales and activities. During the fiscal years ended January 31, 1949 to 1956, during which period plaintiff operated only its downtown Chicago store, as it had not yet opened operations in its Wheaton building, plaintiff's total store sales amounted to $749,525, and its net income therefrom approximated $66,857.95. About 48 percent of these store sales were plaintiff's own publications, and the remaining 52 percent were catalog items purchased from others. The net income from such sales of plaintiff's own products amounted to $72,185.08, whereas a net loss was sustained on other materials of about $5,327.13. 51. Plaintiff's financial condition as of February 28, 1946, and at the end of each fiscal year ended January 31, 1947, to 1957, is set forth in Table III herein, which is a summary of financial statements for those years. The accumulated capital and surplus at the end of fiscal year 1957 amounted to $1,610,817.30, all of which represents plaintiff's |