Cabela's 2004 Annual Report Download

Download and view the complete annual report

Please find the complete 2004 Cabela's annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 130

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130

NYSE: CAB
CABELA’S INC.
2004 ANNUAL REPORT

Table of contents

  • Page 1
    CABELA'S INC. 2004 ANNUAL REPORT N YS E : CA B

  • Page 2
    ... and value in our products and services. Cabela's Class A Common Stock began trading on June 25, 2004 on the New York Stock Exchange under the ticker symbol "CAB". Cabela's is the nation's largest direct marketer, and a leading specialty retailer, of hunting, fishing, camping and related outdoor...

  • Page 3
    ... per share Diluted weighted average shares outstanding Total cash and cash equivalents Marketable securities Total debt Total stockholders' equity Number of catalogs mailed Number of retail stores (at end of period) Total gross square-footage Average sales per gross square-foot Inventory turns...

  • Page 4
    ... product lines, which account for roughly one-third of sales. This expansion allows us to offer our customers top-quality products at a great value, while also maximizing our profit potential and promoting the Cabela's brand. We ended the year once again as the largest direct marketer and a leading...

  • Page 5
    ...and our new retail store in Wheeling,West Virginia, which opened in August 2004. Financial services revenue grew 34.0% for the year, as we continued to grow our active account base. Net income rose 26.5% to a record $65.0 million, and earnings per share were $1.03 for the year. 2004 Accomplishments...

  • Page 6
    ... producing sales, drive customers to our Internet site and destination retail stores. In 2004, we mailed more than 120 million catalogs with 76 different titles and shipped 8.1 million packages. The Cabela's Club VISA credit card, issued by our wholly-owned subsidiary, World's Foremost Bank, serves...

  • Page 7
    ...strength of the Cabela's brand, our superior product selection and our devotion to customer service will allow us to continue to increase our market share and solidify our position as the World's Foremost Outfitter. Sincerely, Dennis Highby President and Chief Executive Officer ANNUAL 5 REPORT

  • Page 8
    ... This helps us achieve our outstanding sales-per-square-foot metric. Our exciting destination retail stores serve as a catalyst for introducing new customers to the growing Cabela's direct business. Also, we continue to build customer loyalty through our Cabela's Club VISA program. Club members have...

  • Page 9
    ... when we opened our store in Wheeling,West Virginia, people were already familiar with the Cabela's brand due to their experience with our catalogs and Internet site. We believe our direct business provides significant advantages as we accelerate our retail expansion. Cabela's plans to open four new...

  • Page 10
    ... Sales As an integral part of Cabela's direct retailing strategy, Cabela's Internet presence at www.cabelas.com provides customers with detailed information and a huge selection of products and services. The website contains links to Cabela's product lines, as well as buyer's guides, product reviews...

  • Page 11
    ... Cabela's Club VISA credit card, issued through our wholly-owned subsidiary, World's Foremost Bank. The program, now in its 10th year, has been successful in increasing brand loyalty and strengthening customer relationships. Cabela's Club VISA members receive rewards whenever and wherever they use...

  • Page 12
    ...and Chief Executive Officer Omaha World-Herald Company Theodore M. Armstrong Retired Chief Financial Officer Angelica Corporation Jim and Dick Cabela founded our company on five core values that still guide us today: Superior Customer Service â- Integrity & Honesty â- Quality Products & Services...

  • Page 13
    ... approximately $775,474,531 as of July 2, 2004 (the last business day of the registrant's most recently completed second Ã'scal quarter) based upon the closing price of the registrant's Class A Common Stock on that date as reported on the New York Stock Exchange. For the purposes of this disclosure...

  • Page 14
    ... Controls and Procedures Other Information PART III Directors and Executive OÇcers of the Registrant Executive Compensation Security Ownership of Certain BeneÃ'cial Owners and Management Certain Relationships and Related Transactions Principal Accounting Fees and Services 3 15 16 16 Item...

  • Page 15
    ... includes hunting, Ã'shing, marine and camping merchandise, casual and outdoor apparel and footwear, optics, vehicle accessories, gifts and home furnishings with an outdoor theme. Our direct business uses catalogs and the Internet to increase brand awareness and generate customer orders via the mail...

  • Page 16
    ... added new catalogs featuring home and cabin furnishings, women's and children's clothing, and work wear. ‚ Our wholly-owned bank subsidiary, World's Foremost Bank, reached $1 billion in its managed credit card receivables, and surpassed the one million credit card accounts mark. Business Strategy...

  • Page 17
    ... development of relevant businesses and product categories. We will continue to leverage our brand recognition in selected areas through corporate relationships and alliances. We intend to increase the penetration of our Cabela's Club VISA credit card among our customer base through low cost target...

  • Page 18
    ... destination retail store in Sidney, Nebraska. Since 1998, we expanded our retail business by opening eight additional destination retail stores in seven states. For Ã'scal 2004, our destination retail stores which were open as of January 4, 2004 generated average net sales per gross square foot of...

  • Page 19
    ... for future retail expansion. In August 2004, we opened a new 176,000 square foot destination retail store in Wheeling, West Virginia. In 2005, we currently plan on opening a 230,000 square foot destination retail store in Ft. Worth, Texas, a 185,000 square foot destination retail store in...

  • Page 20
    ...accessories, gifts and home furnishings with an outdoor theme. Our merchandise assortment ranges from products at entry-level price points to premium-priced highend items and we generally price our products consistently across our direct and retail businesses. Our destination retail stores generally...

  • Page 21
    ...brand by communicating our wide and distinctive oÃ...ering of quality products to our customers and potential customers in a cost eÃ...ective manner. Our largest marketing eÃ...ort consists of distributing over 120 million catalogs annually in order to attract customers to our direct and retail businesses...

  • Page 22
    ... visits and purchases is due, in part, to the strength of our customer support and service operations. Financial Services Business Through our wholly-owned subsidiary, World's Foremost Bank, we issue and manage the Cabela's Club VISA card and related customer loyalty rewards program. We believe...

  • Page 23
    ...rewards program as our employees can inform customers of their number of accumulated points when making purchases at our stores. In Ã'scal 2004, approximately 17.7% of our total merchandise sales in our direct and retail businesses were made to customers who used their Cabela's Club VISA credit card...

  • Page 24
    ... ship merchandise to our direct customers via UPS and the United States Postal Service. We use common carriers and typically deliver inventory two to three times per week to our destination retail stores. Our primary returns processing facility is located in Oshkosh, Nebraska. Management Information...

  • Page 25
    ... 2003, the Community Reinvestment Act, the Service members' Civil Relief Act and the Gramm-Leach-Bliley Act (GLB), as well as various state laws. The Truth-in-Lending Act requires disclosure of the ""Ã'nance charge'' and the ""annual percentage rate'' and certain costs and terms of credit. The Equal...

  • Page 26
    ... to states in which our destination retail stores are physically located. Upon entering a new state, we apply for a private letter ruling from the state's revenue department stating which types of taxes our direct and retail businesses will be required to collect and pay in such state, and we accrue...

  • Page 27
    ... Direct and Retail Direct Direct, Financial Services and Other Direct Other (1) We own all of these properties except the Grand Island, Nebraska customer care center and Wheeling, West Virginia distribution center, which we lease. We have evaluated the SEC's recent clariÃ'cation of lease accounting...

  • Page 28
    ..., 2004 on the NYSE under the symbol ""CAB''. Prior to that date, there was no public market for our common stock. Our non-voting common stock is not listed on any exchange and not traded over the counter. On January 1, 2005, the closing price of our common stock on the NYSE was $22.74 per share. As...

  • Page 29
    ... declared eÃ...ective on June 24, 2004. The proceeds were used to pay the outstanding balance of $38.1 million on our line of credit, with the remainder used for our destination retail store expansion, including the purchase of economic development bonds. The managing underwriters of our oÃ...ering were...

  • Page 30
    ... purchase an aggregate of 1,313,860 shares of common stock under our 2004 Stock Plan to employees, non-employee directors and advisors. 550,500 of these options have an exercise price of $13.34 per share and 763,360 of these options have an exercise price of $20.00 per share. We received no payment...

  • Page 31
    ... to be expected for any future period. 2004 2003 Fiscal Year(1) 2002 2001 2000 Statement of Operations Data: Revenue: Direct revenue Retail revenue Financial services revenue(2 Other revenue(3 Total revenue Cost of revenue Gross proÃ't Selling, general and administrative expenses Operating...

  • Page 32
    ... operating activities Net cash Ã-ows from investing activities Net cash Ã-ows from Ã'nancing activities Other Data: Number of catalogs mailed (000's) ÏÏ Number of destination retail stores (at end of period Total gross square footage (at end of the period Average sales per gross square foot...

  • Page 33
    ... of purchases of economic development bonds, the proceeds of which are used to construct our destination retail stores and related infrastructure. See ""Management's Discussion and Analysis of Financial Condition and Results of Operations Ì Liquidity and Capital Resources Ì Retail Store Expansion...

  • Page 34
    ... costs associated with general corporate management and shared departmental services such as management information systems, Ã'nance, human resources and legal. Revenue Revenue consists of sales of our products and services. Direct revenue includes sales from orders placed over the phone, by mail...

  • Page 35
    ... Direct and Retail segments) and include receiving, distribution and storage costs, merchandising, quality assurance costs and corporate occupancy costs. General and administrative expenses include costs associated with general corporate management and shared departmental services such as management...

  • Page 36
    ... associate scheduling analysis tools, which we believe will help increase our labor eÇciencies as we expand into new markets. We currently operate ten destination retail stores, including our new 176,000 square foot destination retail store in Wheeling, West Virginia, which we opened in August 2004...

  • Page 37
    ... through low cost targeted marketing and enhancing our loyalty program to encourage increased customer usage of our credit cards. We are also exploring the further expansion of our Financial Services segment by oÃ...ering to manage co-branded VISA credit cards for selected other businesses, similar to...

  • Page 38
    ...Future Results Ì Risks Related to Our Financial Services Business Ì Changes in interest rates could have a negative impact on our earnings.'' ‚ Changes in segment mix. We record direct labor expenses of our Retail segment and all of the costs of our Financial Services segment in selling, general...

  • Page 39
    ... outstanding balance on our line of credit. We used the remaining net proceeds for the capital expenditures and the purchase of marketable securities relating to the construction and opening of new destination retail stores. On November 16, 2004, certain of our stockholders sold 12,000,000 shares...

  • Page 40
    ... of our segments for Ã'scal years 2004, 2003 and 2002. 2004 Fiscal Years 2003 (Dollars in thousands) 2002 Direct revenue Retail revenue Financial services revenue Other revenue Total revenue Direct operating income Retail operating income Financial services operating income Other operating...

  • Page 41
    ... following table on a ""managed'' basis is important information to analyze our revenue in the Financial Services segment. This non-GAAP presentation reÃ-ects the Ã'nancial performance of the credit card loans we own plus those that have been sold for the Ã'scal years ended 2004, 2003 and 2002 and...

  • Page 42
    ... Interest income Interchange income, net of customer reward costs Other fee income Interest expense Provision for loan losses Other Managed Financial Services revenue Average reported credit card loans Average managed credit card loans Fiscal 2004 vs. Fiscal 2003 Information: $ 71,309 $ 54...

  • Page 43
    ... have purchased merchandise from us in the last twelve months, increased by 6.1% to approximately 4.2 million in Ã'scal 2004 over Ã'scal 2003. The product categories that contributed the largest dollar volume increase to our Direct revenue growth included work wear, home furnishings and archery with...

  • Page 44
    ...the distribution department, relating to the new distribution center in Wheeling, West Virginia. In addition to new employees, there was a $1.7 million compensation charge related to stock options granted at less than fair market value under our 2004 stock plan, which was included in the increase in...

  • Page 45
    ...data processing services increased by $2.3 million, as the number of credit card transactions increased. Salary and wages along with bonus and other related wage costs increased $2.2 million with the growth of the bank. Advertising and promotion costs related to new account acquisitions increased by...

  • Page 46
    ...a result of increased new store sales of $89.4 million. The product categories that contributed the largest dollar volume increase to our Retail revenue growth by dollar volume included hunting equipment, camping equipment, optics and tree stands with women's and children's casual clothing being our...

  • Page 47
    ... of new store operating costs of $17.6 million. Advertising expenses increased by $2.3 million in connection with new store events. Depreciation expense and property taxes increased by $2.1 million and $1.5 million, respectively, as we added new stores and related equipment. These increases were...

  • Page 48
    ... results for a full Ã'scal year. See ""ÃŒ Factors AÃ...ecting Future Results'' and ""ÃŒ InÃ-uences on Period Comparability''. Unaudited 2004 (52 Weeks) Second Third Fourth First Quarter(2) Quarter Quarter Quarter(1) (Dollars in thousands except EPS) 2003 (53 Weeks) Second Third Quarter Quarter First...

  • Page 49
    ... outstanding at Ã'scal year end 2004, $5.2 million were originated from sources other than Cabela's Club credit cards. The following table shows credit card receivables available for sale along with those securitized as of Ã'scal year end 2004, 2003 and 2002: 2004 Receivables H90 Days Outstanding...

  • Page 50
    ... believe that as credit card accounts mature they are less likely to charge-oÃ... and less likely to be closed. The following table shows our managed receivables outstanding at Ã'scal year end 2004 and 2003 by months since the account opened. Receivables Outstanding 2004 2003 Percentage of Receivables...

  • Page 51
    ... economic development bonds related to the development of new destination retail stores, investments in our management information systems and other infrastructure, and other general working capital needs. We historically have met these requirements by generating cash from our merchandising business...

  • Page 52
    ...to an increase in the purchase of economic development bonds of $56.3 million related to our destination retail stores. An additional increase in cash used for investing activities was due to increased credit card loans receivable of $5.3 million. These credit card loans are related to our new third...

  • Page 53
    ... of future economic development bonds relating to expansion of our distribution center in Wheeling, West Virginia throughout Ã'scal 2005 and 2006. Retail Store Expansion SigniÃ'cant amounts of cash will be needed in order to open new destination retail stores and implement our retail growth strategy...

  • Page 54
    ... the full value of the bonds carried on our balance sheet. See ""ÃŒ Critical Accounting Policies and Use of Estimates ÃŒ Economic Development Bonds and Factors AÃ...ecting Future Results ÃŒ Risks Related to our Merchandising Business ÃŒ The failure of properties to generate suÇcient taxes to amortize...

  • Page 55
    ...an amount the customer chooses, subject to a monthly minimum payment requirement. The credit card account remains open after repayment of the balance and the customer may continue to use it to borrow additional amounts. We reserve the right to change the credit card account terms, including interest...

  • Page 56
    ... becomes necessary could increase our Ã'nancing costs and potentially limit our ability to grow our Financial Services business. Unfavorable conditions in the asset-backed securities markets generally, including the unavailability of commercial bank liquidity support or credit enhancements, such as...

  • Page 57
    ...cash Ã-ow leverage ratio of no more than 2.50 to 1.00 as of the last day of any Ã'scal quarter; and ‚ a tangible net worth of no less than $300 million plus 50% of positive consolidated net earnings on a cumulative basis for each Ã'scal year beginning with Ã'scal year ended 2004 as of the last day...

  • Page 58
    ...scal year end 2004. Contractual Obligations 2005 2006 2007 2008 (Dollars in thousands) 2009 Thereafter Total Long-term debt Interest payments(1) ÏÏÏ Capital lease obligations Operating leases Time deposits by maturity Obligations under economic development arrangements(2 Purchase obligations...

  • Page 59
    ..., including the purchase of bonds, associated with our Wheat Ridge, Colorado destination retail store. (3) Our purchase obligations relate primarily to purchases of inventory, shipping and other goods and services in the ordinary course of business under binding purchase orders. The amount...

  • Page 60
    ...the store. For direct sales, revenue is recognized when the merchandise is delivered to the customer, with the time of delivery being based on our estimate of shipping time from our distribution facility to the customer. We record a reserve for estimated product returns in each reporting period. The...

  • Page 61
    ... costs) associated with that catalog. If the carrying amount is in excess of the estimated probable remaining future revenue, the excess is expensed in the reporting period. In 2004 and 2003 we had $26.6 million and $26.9 million, respectively, capitalized at year-end. Economic Development Bonds...

  • Page 62
    ...of additional development or land sales at the relevant sites. Future sales tax revenues are estimated generally using historical same store sales and projected increases for similar stores. Declines in the fair value of held-tomaturity and available-for-sale bonds and securities below cost that are...

  • Page 63
    ... No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance. This Statement is eÃ...ective for public entities that do not Ã'le as small business issuers as of the beginning of the Ã'rst interim or annual reporting period that begins after June 15, 2005. The Company will...

  • Page 64
    ... consistent levels of proÃ'tability in our retail business, particularly as we expand into markets now served by other large-format sporting goods retailers and mass merchandisers. In particular, new destination retail stores typically generate lower operating margins because pre-opening costs are...

  • Page 65
    ... customers; ‚ increases in U.S. Postal Service rates, paper costs and printing costs resulting in higher catalog production costs and lower proÃ'ts for our direct business; ‚ failures to properly design, print and mail our catalogs in a timely manner; ‚ failures to introduce new catalog...

  • Page 66
    ... Sporting Goods and Big 5 Sporting Goods; ‚ mass merchandisers, warehouse clubs, discount stores and department stores, such as Wal-Mart and Target; and ‚ casual outdoor apparel and footwear retailers, such as L.L. Bean, Land's End and REI. Many of our competitors have a larger number of stores...

  • Page 67
    ... to rise or remains at current levels, the cost to deliver merchandise to the customers of our direct business and from our distribution centers to our destination retail stores may rise which could have an adverse impact on our proÃ'tability. Political and economic uncertainty and unrest in foreign...

  • Page 68
    ... expansion strategy may be delayed and our revenue growth may suÃ...er. Our success depends on hiring, training, managing and retaining quality managers, sales associates and employees in our destination retail stores and customer care centers. Our corporate headquarters, distribution centers, return...

  • Page 69
    ... centers or return facility could cause us to lose merchandise and be unable to eÃ...ectively deliver to our direct customers and destination retail stores. We currently rely on distribution centers in Sidney, Nebraska, Prairie du Chien, Wisconsin, Mitchell, South Dakota and Wheeling, West Virginia...

  • Page 70
    ...adequately stock our destination retail stores, deliver merchandise to customers and process returns to vendors and could result in lost revenues, increased costs and reduced proÃ'ts. We are planning substantial systems changes in support of our direct business and destination retail store expansion...

  • Page 71
    ... trigger these remedies are the failure to maintain certain employment and wage levels, failure to timely open and operate a destination retail store and failure to develop property adjacent to a destination retail store. As of the end of Ã'scal, 2004, the total amount of grant funding subject to...

  • Page 72
    ... growth. A number of factors such as our Ã'nancial results and losses, changes within our organization, disruptions in the capital markets, our corporate and regulatory structure, interest rate Ã-uctuations, general economic conditions and accounting and regulatory changes and relations could make...

  • Page 73
    ...nancial services business could decline, for a variety of reasons, many of which are beyond our control, including: ‚ credit risk related to the loans we make to cardholders and the charge-oÃ... levels of our credit card accounts; ‚ lack of growth of potential new customers generated by our direct...

  • Page 74
    ... merchandising businesses and to the strength of the Cabela's brand. In addition, transactions on cardholder accounts produce loyalty points which the cardholder may apply to future purchases from us. Adverse changes in the desirability of products we sell, negative trends in retail customer service...

  • Page 75
    ... 38.0% Charges on the credit cards issued by our Financial Services segment are priced at a margin over the deÃ'ned national prime lending rate, subject to certain interest rate Ã-oors, except purchases of Cabela's merchandise, certain other charges and balance transfer programs, which are Ã'nanced...

  • Page 76
    ... Services segment, which could have a material eÃ...ect on our operating results. Merchandising Interest Rate Risk Two of our economic development bond agreements are priced at a variable interest rate. One is tied to the LIBOR rate and one is tied to the prime rate. In 2004, changes in these rates...

  • Page 77
    ... Part II of this report under ""Management's Discussion and Analysis of Financial Condition and Results of Operations'' is incorporated herein by reference. TABLE OF CONTENTS Page REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM CONSOLIDATED FINANCIAL STATEMENTS: Consolidated Balance Sheets...

  • Page 78
    ... as of January 1, 2005 and January 3, 2004, and the related consolidated statements of income, stockholders' equity, and cash Ã-ows for each of the three years in the period ended January 1, 2005. These Ã'nancial statements are the responsibility of the Company's management. Our responsibility is to...

  • Page 79
    ...EQUITY CURRENT LIABILITIES: Accounts payable Unpresented checks net of bank balance Accrued expenses and other liabilities Gift certiÃ'cates and credit card reward points Accrued employee compensation and beneÃ'ts Time deposits (Note 6 Current maturities of long-term debt (Note 8 Income taxes...

  • Page 80
    ... INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Dollar amounts in thousands except per share and share amounts) 2004 2003 2002 REVENUES: Merchandise sales Financial services revenue Other revenue Total revenues COST OF REVENUE: Cost of merchandise sales Cost of other revenue...

  • Page 81
    ... of common stock, net of transaction costs Repurchase of common stock Stock based compensation (Note 15) ÏÏ Employee stock purchase plan issuances Exercise of employee stock options ÏÏÏÏ Tax beneÃ't of employee stock option exercises BALANCE, End of Ã'scal year 2004 ÏÏÏÏÏ 6,250,000...

  • Page 82
    ...,023 Payments on line of credit 53,106) (117,023) Change in unpresented checks net of bank balance 2,135) (1,905) Proceeds from issuance of long-term debt 98 61 Payments on long-term debt 3,325) (18,862) Change in time deposits, net 18,995 12,224 Net (decrease) increase in employee savings plan...

  • Page 83
    ... line of credit. The remaining amount was used for capital expenditures and the purchase of economic development bonds related to the construction and opening of new destination retail stores. Transaction costs of $3,343 were recognized as a reduction to the proceeds. Reporting Year Ì The Company...

  • Page 84
    ... months or less. Unpresented checks net of bank balance in a single bank account are classiÃ'ed as current liabilities. WFB had $58,147 and $77,237 of cash and cash equivalents in Ã'scal years 2004 and 2003, respectively. Due to regulatory restrictions the Company is restricted from using this cash...

  • Page 85
    ...products. The capitalized costs of the advertising are amortized over a four to twelve month period following the mailing of the catalogs. At Ã'scal year ends 2004 and 2003, $26,592 and $26,928, respectively, of catalog costs were included in prepaid expenses in the accompanying consolidated balance...

  • Page 86
    ... into service. For the Ã'scal years ended 2004, 2003 and 2002, the Company capitalized $0, $246 and $151 of interest costs. The Company follows the American Institute of CertiÃ'ed Public Accountants Statement of Position (""SOP'') No. 98-1, Accounting for the Cost of Computer Software Developed or...

  • Page 87
    ... its balance sheet in accordance with EITF 91-10, Accounting for Special Assessments and Tax Increment Financing Entities. Such amounts are recorded in long-term debt (See Note 8). As of the Ã'scal years ended 2004 and 2003, the Company has guaranteed total outstanding economic development bonds of...

  • Page 88
    ...to credit card points, vouchers and gift certiÃ'cates are issued to card members at Club events and to new members when they apply for the card membership. These vouchers and gift certiÃ'cates are used to purchase Cabela's merchandise. All of these items are part of the customer rewards program. The...

  • Page 89
    ... For purposes of estimating fair value, time deposits are pooled in homogeneous groups and the future cash Ã-ows of those groups are discounted using current market rates oÃ...ered for similar products. At Ã'scal year end 2004 and 2003, the carrying amounts of the Company's time deposits were $100,659...

  • Page 90
    ... for cost method investments are eÃ...ective for Ã'scal years ending after June 15, 2004. Comparative information for periods prior to initial application is not required. The adoption of this Issue did not have a material impact on the Company's Ã'nancial position, results of operations or cash Ã-ows...

  • Page 91
    ... No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance. This Statement is eÃ...ective for public entities that do not Ã'le as small business issuers as of the beginning of the Ã'rst interim or annual reporting period that begins after June 15, 2005. The Company will...

  • Page 92
    ... market value and allowance for loan losses ÏÏÏ Total Delinquent loans in the managed credit card loan portfolio at Ã'scal year end: 30-89 days 90 days or more and still accruing Total net charge-oÃ...s on the managed credit card loans portfolio for Ã'scal year ended Annual average credit card...

  • Page 93
    ...year ended 2004, key economic assumptions and the sensitivity of the current fair value of retained interests of $28,723 to immediate 10% and 20% adverse changes in those assumptions are as follows: 2004 Impact on Fair Value of an Adverse Change of 10% 20% Assumption Payment rates Expected credit...

  • Page 94
    ...assets consist of the following at each Ã'scal year end: Amortization Period in Years Fiscal Year Ended 2004 Accumulated Cost Amortization Net Purchased credit card relationships Deferred Ã'nancing costs Customer name lists Non-compete agreement Goodwill 4 3 - 17 5 7 ÃŒ $ 4,576 1,378 3,018...

  • Page 95
    ... TO CONSOLIDATED FINANCIAL STATEMENTS ÃŒ (Continued) (Dollar Amounts in Thousands Except Share and Per Share Amounts) Amortization Period in Years Fiscal Year Ended 2003 Accumulated Cost Amortization Net Purchased credit card relationships Deferred Ã'nancing costs Customer name lists Goodwill...

  • Page 96
    ... STATEMENTS ÃŒ (Continued) (Dollar Amounts in Thousands Except Share and Per Share Amounts) The amortized cost and fair value of economic development bonds by contractual maturity at Ã'scal 2004 is as follows: Available for Sale Amortized Fair Cost Value Held to Maturity Amortized Fair Cost Value...

  • Page 97
    ... into an unsecured Federal Funds Line of Credit agreement with a Ã'nancial institution. The maximum amount of funds which can be borrowed is $40,000 of which no amounts were outstanding at Ã'scal year end 2004. The interest rate for the line of credit is based on the current Federal funds rate. 85

  • Page 98
    ..., West Virginia. The lease term is 30 years, with monthly installments of $42 and contains a bargain purchase option at the end of the lease term. The Company is accounting for this lease as a capital lease and has recorded the leased asset at its present value of the future minimum lease payments...

  • Page 99
    ... income from economic development bonds consists of income earned on bonds associated with various economic development agreements entered into by the Company. 10. INCOME TAXES The provision for income taxes consists of the following for each respective year-end: 2004 2003 2002 Current: Federal...

  • Page 100
    ... year-end: 2004 2003 Deferred tax assets: Deferred compensation Deferred revenue Reserve for returns Accrued vacation pay Reserve for health insurance claims Inventory Accrued expenses Amortization Allowance for doubtful accounts Other Deferred tax liabilities: Prepaid catalog costs...

  • Page 101
    ... associated with the Company's foreign currency derivatives designated as cash Ã-ow hedges. There were no discontinued foreign currency derivative cash Ã-ow hedges during the Ã'scal years ended 2004 and 2003. Generally, the Company hedges a portion of its anticipated inventory purchases for periods...

  • Page 102
    ... to closing. In addition, the Company is obligated to fund $28 million of future economic development bonds relating to its Wheeling, West Virginia development agreement. The funds are designated for use of construction of additional distribution center facilities within the Company's development...

  • Page 103
    ... or retirement, employees can receive their balance in a lump sum payment or equal monthly payments over a Ã've, ten or twelve year period. The charge to interest expense under the Ã'xed rate portion of the plan was approximately $595, $2,967 and $2,246 during the Ã'scal years ended 2004, 2003 and...

  • Page 104
    ... related to employee charges were $1,449 and $1,356 at Ã'scal year end 2004 and 2003, respectively. The eligibility and charge limits for employee charge accounts vary depending on length of employment. 15. STOCK OPTION PLANS In March 2004, the Company adopted the Cabela's Incorporated 2004 Stock...

  • Page 105
    ... employee. These options were not issued under the 1997 Plan and all of these options have been exercised in the past three years. Information relating to stock options at Ã'scal years ended 2004, 2003 and 2002 is as follows: 2004 Number of Options Weighted Average Exercise Price 2003 Number...

  • Page 106
    ... NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ÃŒ (Continued) (Dollar Amounts in Thousands Except Share and Per Share Amounts) The following summarizes information about stock options outstanding as of Ã'scal year ended 2004: Options Outstanding Exercise Price Number Average Remaining Contractual Life...

  • Page 107
    ... of the initial public oÃ...ering and the Ã'ling of the Company's Amended and Restated Articles of Incorporation in connection therewith, the Company authorized 10,000,000 shares of Preferred Stock, par value $0.01 per share. At Ã'scal year ended 2004 there were no shares outstanding. The board of...

  • Page 108
    ... cost was $70 per month. Rent expense on this lease was $844 for Ã'scal years 2003 and 2002. At the end of Ã'scal 2003 the Company purchased these buildings for $5.0 million. These buildings were located in Sidney, Nebraska and are used for warehouse, distribution and corporate storage. The Company...

  • Page 109
    ..., including historical claim payments, expected trends and industry factors. 20. SEGMENT REPORTING The Company has three reportable segments: Direct, Retail and Financial Services. The Direct segment sells products through direct-mail catalogs and an e-commerce website (Cabelas.com); the Retail 97

  • Page 110
    ...related to corporate headquarters, merchandise distribution and technology infrastructure. Unallocated assets include corporate cash and equivalents, inventory that could be shipped for sales to the Retail or Direct segment entities, the net book value of corporate facilities and related information...

  • Page 111
    ... markets, primarily Canada, have collectively been less than 1% of consolidated net sales in each reported period. No single customer accounted for ten percent or more of consolidated net sales. No single product or service accounts for a signiÃ'cant percentage of the Company's consolidated...

  • Page 112
    ...and Subsidiaries Sidney, Nebraska We have audited the consolidated Ã'nancial statements of Cabela's Incorporated and Subsidiaries (the ""Company'') as of January 1, 2005 and January 3, 2004, and for each of the three years in the period ended January 1, 2005, and have issued our report thereon dated...

  • Page 113
    ... Year Balance Charged to Costs and Expenses Charged to Other Accounts Net ChargeOÃ...s End of Year Balance YEAR ENDED JANUARY 1, 2005: Allowance for doubtful accounts ÏÏÏ Allowance for credit card receivable loan losses YEAR ENDED JANUARY 3, 2004: Allowance for doubtful accounts ÏÏÏ YEAR ENDED...

  • Page 114
    ...cer, and our Director of Accounting. We have also adopted a general business code of conduct and ethics that applies to all of our directors, oÇcers and employees. These codes are both posted on our website, which is located at www.cabelas.com. Stockholders may request a free copy of either of such...

  • Page 115
    ...of Certain BeneÃ'cial Owners and Management'' and ""Executive Compensation ÃŒ Equity Compensation Plan Information as of Fiscal Year End'' in our Proxy Statement is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information under the headings ""Certain...

  • Page 116
    ... various purchasers party thereto (incorporated by reference from Exhibit 4.13 of our Registration Statement on Form S-1, Ã'led on March 23, 2004, Registration No. 333-113835) Executive Employment Agreement, dated as of January 4, 2004, among Cabela's Incorporated and Richard N. Cabela (incorporated...

  • Page 117
    ... No. 333-113835)* 2004 Employee Stock Purchase Plan (incorporated by reference from Exhibit 10.14 of our Registration Statement on Form S-1, Ã'led on March 23, 2004, Registration No. 333-113835)* Amended and Restated Credit Agreement, dated as of May 6, 2004, among Cabela's Incorporated, various...

  • Page 118
    Exhibit Number Exhibit Description 10.23 21.1 23.1 31.1 31.2 32.1 Summary of Compensation to our Named Executive OÇcers* Subsidiaries of Cabela's...management contract or compensatory plan or arrangement required to be Ã'led as exhibits pursuant to Item 15(b) of this report. (c) Financial Statement...

  • Page 119
    ... Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CABELA'S INCORPORATED Dated: March 18, 2005 By: Dennis Highby Dennis Highby President and Chief Executive OÇcer /s/ Pursuant to the requirements of the Securities...

  • Page 120
    (This page intentionally left blank)

  • Page 121
    ... insurance programs, 401(k) Plan, and Employee Stock Purchase Plan, to receive awards under Cabela's 2004 Stock Plan, and to receive certain perquisites oÃ...ered by Cabela's, including discounted prices on merchandise. Additional information regarding the compensation awarded to the Named Executive...

  • Page 122
    .... Cabela's Marketing & Brand Management, Inc. Cabela's Retail, Inc. Cabela's Trophy Properties, LLC Cabela's Ventures, Inc. Cabela's Wholesale, Inc. Cabelas.com, Inc. Original Creations, LLC Van Dyke Supply Company, Inc. WFB Funding Corporation WFB Funding, LLC Wild Wings, LLC World's Foremost Bank...

  • Page 123
    ... S-8 of our reports dated March 18, 2005 relating to the Ã'nancial statements and the Ã'nancial statement schedule of Cabela's Incorporated, appearing in this Annual Report on Form 10-K of Cabela's Incorporated for the year ended January 1, 2005. DELOITTE & TOUCHE LLP Omaha, Nebraska March 18, 2005

  • Page 124
    ...Dennis Highby, certify that: 1. I have reviewed this annual report on Form 10-K of Cabela's Incorporated; 2. Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances...

  • Page 125
    ... I, Ralph W. Castner, certify that: 1. I have reviewed this annual report on Form 10-K of Cabela's Incorporated; 2. Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the...

  • Page 126
    ... with the Annual Report of Cabela's Incorporated (the ""registrant'') on Form 10-K for the period ended January 1, 2005 as Ã'led with the Securities and Exchange Commission on the date hereof (the ""report''), each of the undersigned certiÃ'es, pursuant to 18 U.S.C. Section 1350, that to the best of...

  • Page 127
    (This page intentionally left blank)

  • Page 128
    (This page intentionally left blank)

  • Page 129
    ... Omaha, NE 68124 Investor Relations Inquir ies Questions and requests for information should be directed to Christopher Gay,Treasurer and Manager of Investor Relations, at 308-255-2905 or via email at [email protected] or by visiting the company's website at www.cabelas.com. Independent...

  • Page 130
    Monument at Cabela's retail store in Wheeling, West Virginia "Where Eagles Dare" by Vic Payne Cabela's Inc. One Cabela Drive Sidney, Nebraska 69160 Telephone: 308-254-5505 www.cabelas.com NYSE: CAB