Cabela's 2004 Annual Report Download - page 83

CABELA'S INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar Amounts in Thousands Except Share and Per Share Amounts)
1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business Ì Cabela's Incorporated is the World's Foremost OutÑtter» of hunting, Ñshing
and outdoor gear. The Company is a retailer and direct merchant, oÅering its products through regular and
special catalog mailings, the Internet and ten retail stores located in Nebraska, Kansas, Minnesota, South
Dakota, Michigan, Wisconsin, Pennsylvania and West Virginia. The Company's products are sold
throughout the United States as well as many foreign countries. On January 8, 2004, the Company
incorporated in the state of Delaware; previously the Company was incorporated in Nebraska.
Principles of Consolidation Ì The consolidated Ñnancial statements include the accounts of Cabela's»
Incorporated and its wholly owned subsidiaries (the ""Company''). All material intercompany accounts and
transactions have been eliminated.
World's Foremost Bank (""WFB''), a wholly-owned bank subsidiary, is a limited purpose bank formed
under the Competitive Equality Banking Act (""CEBA'') of 1987. Due to the limited nature of its charter,
WFB's lending activities are limited to credit card lending and the bank's deposit issuance is limited to
time deposits of at least one hundred thousand dollars. During 2003, WFB converted from a national
chartered bank to a state chartered bank.
Initial Public OÅering Ì On June 30, 2004, the Company closed its initial public oÅering of
6,250,000 shares of common stock, resulting in proceeds of $114,219, net of underwriting discounts and
other expenses. The Company used $38,088 of the net proceeds to repay the outstanding balance on its
open 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's Ñscal year ends on the Saturday nearest December 31. Unless
otherwise stated, references to years in this report relate to Ñscal years rather than to calendar years.
Fiscal Year Ended Weeks
2004ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ January 1, 2005 52
2003ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ January 3, 2004 53
2002ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ December 28, 2002 52
WFB's Ñscal year ends on December 31.
Revenue Recognition Ì Revenue is recognized for retail sales at the time of the sale in the store and
for direct sales when the merchandise is delivered to the customer. The Company records a reserve for
estimated product returns in each reporting period, which is equal to the gross proÑt on projected
merchandise returns and impairment of merchandise, based on its historical returns experience. Shipping
fees charged to customers are included in net revenues and shipping costs are included in cost of revenue.
The Company's policy regarding gift certiÑcates is to record revenue as the certiÑcates are redeemed for
merchandise. Prior to their redemption, the certiÑcates are recorded as a liability. WFB recognizes gains
on sales as credit card loans are securitized and sold. Interchange income is earned when a charge is made
to a customer's account.
Credit Card Interest and Fees Ì Credit card interest and fees are included in Financial Services
revenues and include interest, over limit, returned check, cash advance transaction fees and other credit
card fees. These fees are assessed according to the terms of the related cardholder agreements and
recognized as revenue when charged to the cardholder's accounts. Interest and fees are accrued in
accordance with the terms of the applicable cardholder agreement on credit card loans until the date of
charge-oÅ, which is generally in the month following when an account becomes 90 days contractually past
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