Lumber Liquidators 2008 Annual Report Download - page 15

Moldings, Accessories and Other Products. We offer a wide variety of wood flooring moldings and
accessories. We sell a complete selection of moldings that complement our various wood flooring products, and
we also sell stair treads and risers. Accessories include underlays that can be placed between the new floor and
the sub-floor, insulating sound and cushioning the floors. In addition, we sell installation supplies (such as
adhesive and trowels), floor cleaning supplies and butcher-block kitchen countertops.
Bamboo and Cork. Our proprietary bamboo products, harvested from the fast growing bamboo plant, are
offered as a prefinished or stained solid wood or engineered floor. Our proprietary cork flooring is produced by
harvesting the outer bark of the cork oak tree, and it is durable, acoustical and acts as an insulator.
Finishing
In 2008, we finished approximately 80% of our Bellawood products, or about 21 million square feet, at our
state-of-the-art finishing facility in Toano, Virginia, and we obtained the balance from qualified finishing
suppliers in North America, South America and Australia. Bellawood products have one of the highest scuff
resistant finishes in the industry as measured by the Taber Abrasion Test, an abrasion testing method designed to
measure the abrasion resistance of protective floor finishes. We also finish small quantities of certain of our other
products at our facility. We continually invest in improving our process controls and product quality, and we
believe that our existing finishing infrastructure at our Toano facility can support our planned growth over at
least the next three years with limited capital expenditures to increase capacity.
Our Suppliers
We work directly with a select group of vendors and mills with whom we have cultivated long-standing
relationships to ensure a consistent supply of high-quality product at the lowest prices. As part of ensuring the
high-quality nature of our brands, we have developed demanding product standards. As we have grown, we
believe our supplier relationships have strengthened, which we believe helps to ensure our access to a broad
selection of products. Many suppliers have grown to support our business. We select suppliers based on a variety
of factors, including their ability to supply products that meet industry grading standards and our specifications.
We currently purchase products from approximately 90 domestic and international vendors, which are
primarily mills or trading companies. Trading companies contract with mills, located primarily in China, to make
products for us, and handle certain shipping and customs matters. In 2008, one of the trading companies, Sequoia
Floorings, accounted for approximately 29% of our purchases. Our top 10 suppliers accounted for approximately
67% of our supply purchases in 2008. We believe that we are the largest customer for most of our suppliers,
which we believe enables us to obtain better prices in some circumstances. We believe that alternative and
competitive suppliers are available for most of our products. In 2008, approximately 40% of our product was
sourced from Asia, 39% from North America, 16% from South America and 5% from other locations. All of our
foreign purchases are negotiated and paid for in U.S. dollars.
Distribution and Order Fulfillment
We operate a single distribution center located in Toano, Virginia. We warehouse our products at that
facility before shipping them to our stores by truck or intermodal, and in 2008, approximately 90% of our
merchandise passed through that facility before we moved it to our stores, with the remainder shipped directly
from our suppliers to our stores. We believe that our existing distribution infrastructure at our Toano facility can
support our planned growth over at least the next three years with limited capital expenditures and planned
logistics initiatives.
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