Cabela's 2007 Annual Report Download - page 39

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33
Selling, distribution, and administrative expenses on a consolidated basis increased $105 million, or 14.6%,
for 2007 over 2006. The primary reason for the increase in 2007 was the addition of eight new stores in 2007
compared to four added in 2006 along with the addition of infrastructure necessary to support this store expansion.
The most significant factors contributing to the increase in selling, distribution, and administrative expenses, and the
infrastructure expansion required to support the revenue growth in 2007 from our retail store expansion, included
increases in:
•employee compensation, benefits, training, and recruitment costs of $56 million;
•facility and information system depreciation of $15 million;
•advertising costs of $11 million;
•catalog and Internet marketing costs of $7 million;
•credit card processing fees of $6 million; and
•information systems costs of $4 million.
Significant selling, distribution, and administrative expense increases and decreases related to specific business
segments included the following:
Retail Business Segment:
•New store pre-opening costs of $17 million, an increase of $7 million over 2006.
•Operating costs for new stores that were not open in the comparable period of 2006 of $54 million,
including employee compensation and benefits costs of $31 million.
•A decrease in comparable store employee compensation and benefits of $1 million resulting from declining
sales in comparable stores.
•Depreciation on new stores not open in the comparable period of 2006 of $9 million.
Direct Business Segment:
•An increase of $6 million in marketing costs primarily from Internet marketing and mailing promotions,
catalog costs from higher postage and print rates, and the addition of five catalogs not circulated in
2006.
•Increases in employee compensation and benefits of $2 million principally for positions added to support
our growth.
•Increases in incidental information system costs of $2 million specifically related to our website.
Financial Services:
•Increases in advertising and promotional costs of $1 million due to increases in new account acquisition
costs, increases in Visa charges driven by increases in credit card transactions, and account retention
tools.
•Third party data credit card processing services increased by $2 million as the number of credit card
accounts and credit card transactions increased.
•Postage cost increases of $1 million from increases in the number of accounts and postage rate
increases.
•An increase in employee compensation and benefits of $1 million to support our credit card account
growth.