Cabela's 2005 Annual Report Download - page 108

CABELA’S INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollar Amounts in Thousands Except Share and Per Share Amounts)
The Company entered into an employee and office space lease agreement with the Company’s Chairman
dated January 1, 2004, pursuant to which he leased the services of certain Company employees and associated
office space. This agreement terminated on December 31, 2004. The Company entered into a new employee
lease agreement with an affiliate of the Company’s Board Chairman dated January 1, 2005, pursuant to which
such affiliate leases the services of certain Company employees. For fiscal 2005 and 2004, total reimbursements
for these expenses were $297 and $221, respectively.
19. CONTINGENCIES
Litigation—The Company is engaged in various legal actions arising in the ordinary course of business.
After taking into consideration legal counsel’s evaluation of such actions, management is of the opinion that the
ultimate outcome will not have a material adverse effect on the Company’s financial position, results of
operations or liquidity.
Self-Insurance—The Company is self-insured for health claims up to $300 per individual. A liability of
$4,201 and $4,168 has been estimated and recorded at year end for fiscal 2005 and 2004, respectively, for those
claims submitted and for those incurred prior to year end but not yet reported.
The Company is also self-insured for workers’ compensation claims up to $500 per individual in fiscal years
2005 and 2004, respectively. A liability of $2,533 and $1,913 has been estimated and recorded at year end for
fiscal 2005 and 2004, respectively, for those claims submitted and for those incurred prior to year end but not yet
reported.
The Company’s liabilities for health and workers’ compensation claims incurred but not reported are based
upon internally developed calculations. These estimates are regularly evaluated for adequacy based on the most
current information available, 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 segment consists of
destination retail stores in various sizes and formats; and the Financial Services segment issues co-branded credit
cards. The reconciling amount or Other segment is primarily made up of land sales, employee discounts,
corporate overhead and shared services. The Company’s executive management, being its chief operating
decision makers, assesses the performance of each operating segment based on an operating income measure,
which is net revenue less merchandise acquisition costs and certain directly identifiable and allocable operating
costs as described below. For the Direct segment, these operating costs primarily consist of catalog costs,
e-commerce advertising costs and order processing costs. For the Retail segment, these operating costs primarily
consist of labor, advertising, depreciation and occupancy costs of our destination retail stores. For the Financial
Services segment, operating costs primarily consist of advertising and promotion, third party services for
processing credit card transactions, salaries and wages and other general and administrative costs. Corporate and
other expenses consist of unallocated shared-service costs, general and administrative expenses, various small
companies such as real estate development, travel and lodging, which are not aggregated with the other segments,
and eliminations. Unallocated shared-service costs include receiving, distribution and storage costs of our
inventory, merchandising and quality assurance costs, as well as corporate headquarters occupancy costs.
General and administrative expenses include costs associated with general corporate management and shared
departmental services such as management information systems, finance, human resources and legal.
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