Lumber Liquidators 2013 Annual Report Download - page 57

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Lumber Liquidators Holdings, Inc.
Notes to Consolidated Financial Statements
(amounts in thousands, except share data and per share amounts)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Lumber Liquidators Holdings, Inc. and its direct and indirect subsidiaries (collectively and, where
applicable, individually, the ‘‘Company’’) engage in business as a multi-channel specialty retailer of hardwood
flooring, and hardwood flooring enhancements and accessories, operating as a single business segment. The
Company offers an extensive assortment of exotic and domestic hardwood species, engineered hardwood,
laminate and vinyl plank flooring direct to the consumer. The Company also features the renewable flooring
products, bamboo and cork, and provides a wide selection of flooring enhancements and accessories, including
moldings, noise-reducing underlay, adhesives and flooring tools. These products are primarily sold under the
Company’s private label brands, including the premium Bellawood brand floors. The Company sells primarily
to homeowners or to contractors on behalf of homeowners through a network of 309 store locations in
primary or secondary metropolitan areas in 46 states and nine store locations in Canada at December 31,
2013. In addition to the store locations, the Company’s products may be ordered, and customer
questions/concerns addressed, through both its call center in Toano, Virginia, and its website,
www.lumberliquidators.com. The Company finishes the majority of the Bellawood products on its finishing
line in Toano, Virginia, which along with the call center, corporate offices, and a distribution center, represent
the ‘‘Corporate Headquarters.’’
Organization and Basis of Financial Statement Presentation
The consolidated financial statements of Lumber Liquidators Holdings, Inc., a Delaware corporation,
include the accounts of its wholly owned subsidiaries. All significant intercompany transactions have been
eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the
United States requires management to make estimates and assumptions that affect the amounts reported in the
consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company had cash equivalents of $9,333 and $7,664 at December 31, 2013 and 2012, respectively.
The Company considers all highly liquid investments with a maturity date of three months or less when
purchased to be cash equivalents, of which there was $170 at both December 31, 2013 and 2012. The
Company accepts a range of debit and credit cards, and these transactions are generally transmitted to a bank
for reimbursement within 24 hours. The payments due from the banks for these debit and credit card
transactions are generally received, or settle, within 24 to 48 hours of the transmission date. The Company
considers all debit and credit card transactions that settle in less than seven days to be cash and cash
equivalents. Amounts due from the banks for these transactions classified as cash and cash equivalents totaled
$9,163 and $7,494 at December 31, 2013 and 2012, respectively.
Credit Programs
Credit is offered to the Company’s customers through a proprietary credit card, the Lumber Liquidators
credit card, underwritten by a third party financial institution and at no recourse to the Company. A credit line
is offered to the Company’s professional customers through the Lumber Liquidators Commercial Credit
Program. This commercial credit program is underwritten by a third party financial institution, generally with
no recourse to the Company.
As part of the credit program, the Company’s customers may use their Lumber Liquidators credit card to
tender installation services provided by the Company’s third party installation provider, who is responsible for
all credits and program fees for the related transactions. The Company has agreed to indemnify the financial
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