Cabela's 2008 Annual Report Download - page 44

39
Selling, Distribution, and Administrative Expenses
2008 2007 Increase (Decrease) % Change
(Dollars in Thousands)
Selling, distribution, and administrative expenses $ 871,468 $820,121 $ 51,347 6.3%
SD&A expenses as a percentage of total revenue 34.1%34.9%
Retail store pre-opening costs $ 8,356 $17,136 (8,780)(51.2)
Selling, distribution, and administrative expenses include all operating expenses related to our retail stores,
Internet website, distribution centers, product procurement, and overhead costs, including: advertising and
marketing, catalog costs, employee compensation and benefits, occupancy costs, information systems processing,
and depreciation and amortization.
Selling, distribution, and administrative expenses on a consolidated basis increased $51 million, or 6.3%, for
2008 over 2007. The primary reason for the increase was the addition of two new stores in 2008 and eight new stores
in 2007 (six added in the fourth quarter of 2007), 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 2008 from our retail store
expansion, included increases in:
• employee compensation, benefits, training, and recruitment costs of $21 million;
• contract labor and facility depreciation of $7 million;
• advertising costs of $7 million;
• property and other business taxes of $8 million; and
• restructuring and impairment charges of $6 million.
Significant selling, distribution, and administrative expense increases and decreases related to specific business
segments included the following:
Retail Business Segment:
• Operating costs for new stores that were not open in 2007 of $60 million, including employee compensation
and benefits costs of $38 million and $10 million in advertising and promotional expenses.
• An increase in existing retail store operating costs of $14 million over 2007.
• A decrease in comparable store employee compensation and benefits of $9 million resulting from staffing
changes and declining sales in comparable stores.
• An increase in depreciation on stores of $8 million over 2007.
• New store pre-opening costs of $8 million, a decrease of $9 million compared to 2007.
• Lower marketing fees of $1 million received from the Financial Services segment.
Direct Business Segment:
• A decrease in catalog costs and certain information system costs of $9 million compared to 2007 specifically
related to our website.
• Lower marketing fees of $4 million received from the Financial Services segment.
Financial Services:
• A decrease in advertising and promotional costs of $6 million due to new marketing incentives received,
less new accounts, which were partially offset by increases in new account acquisition costs.
• A decrease of $5 million in the marketing fee paid by the Financial Services segment to the Direct business
segment ($4 million) and the Retail business segment ($1 million).
• An increase in professional fees of $2 million from additional securitizations completed in 2008.
• An increase in third party processing fees of $1 million due to an increase in the volume of transactions.
• Postage cost increases of $1 million from increases in the number of accounts and additional mailings for
changes in terms.