Cabela's 2008 Annual Report Download - page 14

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Distribution and Fulfillment
We operate distribution centers located in Sidney, Nebraska; Prairie du Chien, Wisconsin; and Wheeling, West
Virginia. These distribution centers comprise nearly 3.0 million square feet of warehouse space for our retail store
replenishment and Direct business activities. We ship merchandise to our Direct business customers via United
Parcel Service and the U. S. Postal Service. We use common carriers and typically deliver inventory two to three
times per week for replenishment of our retail stores.
Management Information Systems
Our management information and operational systems manage our Retail, Direct, and Financial Services
businesses. These systems are designed to process customer orders, track customer data and demographics,
order, monitor, and maintain sufficient amounts of inventory, facilitate vendor transactions, and provide financial
reporting. We continually evaluate, modify, and update our information technology systems supporting the supply
chain, including our design, sourcing, merchandise planning, forecasting and purchase order, inventory, distribution,
transportation, and price management systems. We continue to make modifications to our technology that will
involve updating or replacing certain systems with successor systems, including improvements to our systems for
multi-channel tracking and processing of inventory, and improvements to our customer relationship management
system.
Employees
At the end of 2008, we employed 14,700 employees - 7,300 of whom were employed full time. We use part-
time and temporary workers to supplement our labor force at peak times during our third and fourth quarters. None
of our employees are represented by a labor union or are party to a collective bargaining agreement. We have not
experienced any work stoppages and consider our relationship with our employees to be good.
Seasonality
We experience seasonal fluctuations in our revenue and operating results. Due to buying patterns around the
holidays and the opening of hunting seasons, our merchandise revenue is traditionally higher in the third and fourth
quarters than in the first and second quarters, and we typically earn a disproportionate share of our operating income
in the fourth quarter. Because of our retail store expansion, and fixed costs associated with retail stores, our quarterly
operating income may be further impacted by these seasonal fluctuations. We anticipate our sales will continue to
be seasonal in nature. Refer to Note 25 to our consolidated financial statements for quarterly results of operations
for 2008 and 2007.
Government Regulation
Regulation of Our Bank Subsidiary. Our wholly-owned bank subsidiary is a Nebraska state-chartered bank
with deposits insured by the Bank Insurance Fund of the Federal Deposit Insurance Corporation (“FDIC”). Our bank
subsidiary is subject to comprehensive regulation and periodic examination by the Nebraska Department of Banking
and Finance (“NDBF”) and the FDIC. We also are registered as a bank holding company with the NDBF and as such
are subject to periodic examination by the NDBF.
Our bank subsidiary does not qualify as a “bank” under the Bank Holding Company Act of 1956, as amended,
(“BHCA”), because it is in compliance with a credit card bank exemption from the BHCA. If it failed to meet the
credit card bank exemption criteria, its status as an insured depository institution would make us subject to the
provisions of the BHCA, including restrictions as to the types of business activities in which a bank holding company
and its affiliates may engage. We could be required to either divest our bank subsidiary or divest or cease any
activities not permissible for a bank holding company and its affiliates, including our Retail and Direct businesses.
While the consequences of being subject to regulation under the BHCA would be severe, we believe that the risk of
being subject to the BHCA is minimal as a result of the precautions we have taken in structuring our business.