Lumber Liquidators 2010 Annual Report Download - page 14

Laminates. Our proprietary laminate flooring is typically constructed with a high-density fiber board core, inserted
between a melamine laminate backing and high-quality photographic paper displaying an image of wood and a ceramic
finish, abrasion-resistant laminate top. Our laminate flooring brands allow for easy-click installation, and some include a
pre-glued undersurface, moisture repellent, soundproofing, single-strip format or a handscraped textured finish. Our
laminates carry wear warranties ranging from 10 to 30 years.
Moldings and Accessories. We offer a wide variety of wood flooring moldings and accessories. Moldings are a required
finishing detail to every floor and we sell a complete selection that matches virtually all of our floors or can complement
them. We also sell stair treads and risers in both finished and unfinished versions. Accessories include underlays that are
placed between the new floor and the sub-floor, insulating sound and cushioning the floors. In addition, we sell installation
supplies (such as sealers, adhesives 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. Our bamboo and cork flooring products carry wear
warranties ranging from 10 to 30 years.
Finishing
In 2010, we finished approximately 76% of our Bellawood products at our finishing facility in Toano, Virginia, and we
obtained the balance from qualified finishing suppliers in North America and South America. 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 Toano 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
that provide for 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 expanded 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 produce quality products to our
specifications, work on our behalf to control quality at the mill locations and handle certain other matters. In 2010, one of the
trading companies, Sequoia Floorings, provided services on approximately 40% of our merchandise purchases, primarily in
Asia. Our top 10 suppliers accounted for approximately 72% of our supply purchases in 2010. 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 2010, approximately 46% of our
product was sourced from Asia, 41% from North America, 10% from South America and 3% from other locations, including
Europe and Australia. All of our foreign purchases are negotiated and paid for in U.S. dollars.
Distribution and Order Fulfillment
We operate a central distribution center located in Toano, Virginia, supplemented by a facility we lease in Hampton,
Virginia. In addition, we will operate a facility in Toronto, Canada, which will be both a store front and a small warehouse
for that metropolitan market. In 2010, approximately 81% of our purchases were received by central distribution and 19%
were received directly at a store location, shipped from either a vendor-mill or our leased consolidation center in China. The
China consolidation center allows certain quantities of designated products produced in Asia to be shipped in bulk to the
consolidation center in Shanghai, where our product allocation department determines an appropriate mix of a number of
products to be packed in a single container and shipped directly to a store location.
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