Estate of Nathaniel M. Leichter, Deceased, Steven Leichter, Co-Special Administrator - Page 4




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               The use of Asian suppliers kept costs low but subjected                
          Harlee to concerns such as:  (1) A 3-to-4 month order, or lead              
          time; (2) additional delays during the Asian rainy season; (3)              
          the possibility of political unrest that stopped and/or                     
          substantially decreased production; and (4) approximately 20                
          percent defective inventory.  For these reasons, Harlee                     
          maintained at least 3 to 4 months of inventory at all times.                
          However, during two of Harlee’s biggest seasons, Christmas and              
          spring, which coincide with the Asian rainy season, inventory was           
          increased beyond the 3 to 4 months standard.  Harlee was                    
          increasing its inventory at the time of decedent’s death.                   
               At the time of decedent’s death, Harlee conducted business             
          from leased premises in Corona, California.  Because the building           
          had become too small for Harlee’s needs and the lease was about             
          to expire, Harlee leased new premises beginning on January 1,               
          1996.                                                                       
               Harlee was exposed to competition by similarly sized                   
          companies on a national level.  Its customer base consisted of              
          approximately 100 customers, including retail stores,                       
          distributors and manufacturers.  Although most of the customers             
          were retail stores, the distributors generated the largest amount           
          of revenue.  Once a distributor became sufficiently large enough            
          to import products directly, it would cut out the middleman, such           
          as Harlee.  Sometimes Harlee remained involved as an agent for              







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Last modified: May 25, 2011