Cabela's 2007 Annual Report Download - page 18

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• changes in applicable federal and state regulation;
• breaches of Internet security; and
• failures in our Internet infrastructure or the failure of systems of third parties, such as telephone or
electric power service, resulting in website downtime, customer care center closures, or other problems.
Any one or more of these factors could result in lower-than-expected revenue for our Direct business. These
factors could also result in increased costs, increased merchandise returns, slower turning inventories, inventory
write-downs, and working capital constraints. Because our Direct business accounts for a significant portion of
our total revenue, any performance shortcomings experienced by our Direct business would likely have a material
adverse effect on our operating results and cash flows.
We are implementing substantial systems changes in support of our Direct business and retail store
expansion that might disrupt our supply chain operations.
Our success depends on our ability to source merchandise efficiently through appropriate management
information and operational systems and procedures. We regularly evaluate our information technology systems and
are implementing modifications to our technology that will involve updating or replacing our systems with successor
systems during the course of several years, including changes to our merchandising systems and improvements to
our customer relationship management system. There are inherent risks associated with replacing or modifying
these systems, including supply chain disruptions that could affect our ability to deliver products to our stores and
our customers in an efficient manner. In addition, in updating and replacing our systems, we may be unable to
accurately capture and transfer data. We may be unable to successfully launch these new systems, the launch of these
new systems could result in supply chain disruptions, or the actual cost may exceed the estimated cost of these new
systems, any of which could have an adverse effect on our financial condition and results of operations. Additionally,
there is no assurance that successfully implemented new systems will deliver value to us.
Any disruption of the supply of products and services from our vendors could have an adverse impact on
our revenue and profitability.
Our vendors and service providers include the following:
• vendors to supply our merchandise in sufficient quantities at competitive prices in a timely manner;
• outside printers and catalog production vendors to print and mail our catalogs and to convert our catalogs
to digital format for website posting;
• shipping companies, such as United Parcel Service, the U.S. Postal Service, and common carriers, for
timely delivery of our catalogs, shipment of merchandise to our customers, and delivery of merchandise
from our vendors to us and from our distribution centers to our retail stores;
• telephone companies to provide telephone service to our in-house customer care centers;
• communications providers to provide our Internet users with access to our website and a website hosting
service provider to host and manage our website;
• software providers to provide software and related services to run our operating systems for our Retail
and Direct businesses; and
• third-party card processors, such as First Data Resources, that process Cabela’s CLUB Visa
transactions.
Any disruption in these services could have a negative impact on our ability to market and sell our products,
and serve our customers. Our ten largest trade vendors collectively represented approximately 13% of our total
merchandise purchases in 2007. If we are unable to acquire suitable merchandise or lose one or more key vendors, we
may not be able to offer products that are important to our merchandise assortment. We also are subject to risks, such
as the unavailability of raw materials, labor disputes, union organizing activity, strikes, inclement weather, natural
disasters, war and terrorism, and adverse general economic and political conditions that might limit our vendors’
ability to provide us with quality merchandise on a timely basis. We have no contractual arrangements providing for
continued supply from our key vendors and our vendors may discontinue selling to us at any time. We may not be able