Cabela's 2005 Annual Report Download - page 31

Due to the seasonality of our business, our annual operating results would be adversely affected if our
revenue during the third and fourth fiscal quarters were substantially below expectations.
We experience seasonal fluctuations in our revenue and operating results. Historically, we have realized a
significant portion of our revenue and substantially all of our earnings for the year during the third and fourth
fiscal quarters, with a majority of the revenue and earnings for these quarters realized in the fourth fiscal quarter.
In fiscal 2005, we generated 23.9% and 37.5% of our revenue, and 22.4% and 58.6% of our net income, in the
third and fourth fiscal quarters, respectively. We incur significant additional expenses in the third and fourth
fiscal quarters due to higher customer purchase volumes and increased staffing. If we miscalculate the demand
for our products generally or for our product mix during these two quarters, our revenue could decline, which
would harm our financial performance. In addition, abnormally warm weather conditions during the third and
fourth fiscal quarters can reduce sales of many of the products normally sold during this time period and
inclement weather can reduce store traffic or cause us to temporarily close stores causing a reduction in revenue.
Because a substantial portion of our operating income is derived from our third and fourth fiscal quarter revenue,
a shortfall in expected third and fourth fiscal quarter revenue would cause our annual operating results to suffer
significantly.
A decline in discretionary consumer spending could reduce our revenue.
Our revenue depends on discretionary consumer spending, which may decrease due to a variety of factors
beyond our control, including:
• unfavorable general business conditions;
• increases in interest rates;
• increases in inflation;
• wars, fears of war and terrorist attacks and organizing activities;
• increases in consumer debt levels and decreases in the availability of consumer credit;
• adverse or unseasonable weather conditions or events;
• increases in gasoline prices reducing the willingness to travel to our destination retail stores;
• adverse changes in applicable laws and regulations;
• increases in taxation;
• adverse unemployment trends; and
• other factors that adversely influence consumer confidence and spending.
Our customers’ purchases of discretionary items, including our products, could decline during periods when
disposable income is lower or periods of actual or perceived unfavorable economic conditions. If this occurs, our
revenue would decline.
If we lose key management or are unable to attract and retain the talent required for our business,
our operating results could suffer.
Our future success depends to a significant degree on the skills, experience and efforts of Dennis Highby,
our President and Chief Executive Officer, and other key personnel, including our senior executive management
and merchandising teams. With the exception of our Chairman, Richard N. Cabela, and our Vice Chairman,
James W. Cabela, none of our senior management or directors have employment agreements other than our
Management Change of Control Severance Agreements. We do not carry key-man life insurance on any of our
executives or key management personnel. In addition, our corporate headquarters is located in a sparsely
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