Cabela's 2009 Annual Report Download

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2009 ANNUAL REPORT
Letter To Shareholders Form 10–K

Table of contents

  • Page 1
    2009 ANNUAL REPORT Le tte r To S ha re ho lde rs F o rm 10-K

  • Page 2
    ... retail long been recognized as the World's Foremost Outfitter. stores and our well-established direct business, we offer a wide and distinctive selection of high-quality outdoor products at competitive prices while providing superior customer service. We also issue the Cabela's CLUB® Visa credit...

  • Page 3
    ... in the financial services industry. For the year, revenue at World's Foremost Bank increased 7.8 percent due to a 9.1 percent increase in average active credit card accounts and a 10.9 percent increase in average managed credit card loans. For fiscal 2009, following a thorough review of all our...

  • Page 4
    ... improve retail profitability while never sacrificing customer service, we announced our new 2012 Vision We also created a new long-term strategic plan in 2009. Our 2012 Vision was the culmination of interaction with key leaders in our business, store personnel, distribution and call center team...

  • Page 5
    ... total catalog costs during 2009 of $16 million. During 2009's critical holiday season, ForSee, a leading Internet customer satisfaction rating service, scored Cabelas.com as the fifth best Internet site from a customer satisfaction standpoint, in company with such businesses as Apple, Amazon, Net...

  • Page 6
    ... high underwriting standards resulted in 2009 charge-off rates below the industry average. The Cabela's CLUB Visa program is the glue to adhere our best customers to our Cabela's brand and we are committed to increasing the value of our card to our loyal customers. to serve, us well in these times...

  • Page 7
    ... Amounts As Reported Added Back Non-GAAP As Adjusted (Dollars in Thousands Except Earnings Per Share) Revenue: Merchandise sales Financial Services revenue (1) Other revenue Total revenue Total cost of revenue (exclusive of depreciation and amortization) Selling, distribution, and administrative...

  • Page 8
    ... Non-GAAP As Reported Added Back As Adjusted (Dollars in Thousands Except Earnings Per Share) Revenue: Merchandise sales Financial Services revenue (1) Other revenue Total revenue Total cost of revenue (exclusive of depreciation and amortization) Selling, distribution, and administrative expenses...

  • Page 9
    ...development bonds, and (4) any changes in the allowance for loan losses at our Financial Services segment ("WFB") (all after tax). Total capital is calculated by adding current maturities of long-term debt, deferred compensation, operating leases capitalized at eight times next year's annual minimum...

  • Page 10
    ... $436,990,580 as of June 27, 2009 (the last business day of the registrant's most recently completed second fiscal quarter) based upon the closing price of the registrant's Class A Common Stock on that date as reported on the New York Stock Exchange. For the purposes of this disclosure only...

  • Page 11
    ... new retail store openings; the rate of growth of general and administrative expenses associated with building a strengthened corporate infrastructure to support our growth initiatives; increasing competition in the outdoor segment of the sporting goods industry; the cost of our products; political...

  • Page 12
    ... 14. Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions, and Director Independence Principal Accounting Fees and Services PART Iv...

  • Page 13
    ... site and have them delivered to the retail store of their choice without incurring shipping costs, increasing foot traffic in our stores. Conversely, our retail stores introduce customers to our Internet and catalog channels. Our multi-channel model employs the same merchandising team, distribution...

  • Page 14
    ... strategies to control our catalog costs while continuing to grow our merchandising business. Financial Services Business Through our wholly-owned subsidiary, World's Foremost Bank, we issue and manage the Cabela's CLUB Visa card and related customer loyalty rewards program. We believe the Cabela...

  • Page 15
    ... of the rewards program as our employees can inform customers of their number of accumulated points when making purchases at our stores. The percentage of our merchandise sales that were made on the Cabela's CLUB card was 27.9% for 2009 compared to 27.5% for 2008. Financial Services Marketing. We...

  • Page 16
    ... of new catalog titles, and the development and marketing of new products. We have taken advantage of web-based technologies such as targeted promotional e-mails, on-line shopping engines, and Internet affiliate programs to increase sales. We also are improving our customer relationship management...

  • Page 17
    ... million catalogs annually in order to attract customers to our Retail and Direct businesses. We have also established our website to market our products to customers and potential customers who shop via the Internet. We use both our catalogs and our website to cross-market at our retail stores. Our...

  • Page 18
    ...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...

  • Page 19
    ... capital from our Retail and Direct businesses to meet the capital needs of our Financial Services business" and "Management's Discussion and Analysis of Financial Condition and Results of Operations - Impact of New Accounting Pronouncements." The activities of our bank subsidiary as a consumer...

  • Page 20
    ... background check of purchasers of hunting rifles and other firearms. We also are subject to a variety of state laws and regulations relating to, among other things, advertising, pricing, and product safety/restrictions. Some of these laws prohibit or limit the sale, in certain states and locations...

  • Page 21
    ... 5 Sporting Goods; • retailers that currently compete with us through retail businesses that may enter the direct business; • mass merchandisers, warehouse clubs, discount stores, and department stores, such as Wal-Mart and Target; and • casual outdoor apparel and footwear retailers, such...

  • Page 22
    ... new stores in locations with high concentrations of our Direct business customers. As a result of this competition, we may need to spend more on advertising and promotion. Some of our mass merchandising competitors, such as Wal-Mart, do not currently compete in many of the product lines we offer...

  • Page 23
    ... locations to open new retail stores. Our ability to open new retail stores in a timely manner and operate them profitably depends on a number of factors, many of which are beyond our control, including: • our ability to manage the financial and operational aspects of our retail growth strategy...

  • Page 24
    ... customers; • increases in U.S. Postal Service rates, paper costs, and printing costs resulting in higher catalog production costs and lower profits for our Direct business; • failures to properly design, print, and mail our catalogs in a timely manner; • failures to introduce new catalog...

  • Page 25
    ... 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...

  • Page 26
    ... deliver to our direct customers and retail stores. We currently rely on distribution centers in Sidney, Nebraska; Prairie du Chien, Wisconsin; and Wheeling, West Virginia, to handle our distribution needs. In addition, on January 1, 2010, we opened a small distribution center in Winnipeg, Manitoba...

  • Page 27
    ... of our inventory and materially impair our ability to adequately stock our retail stores, deliver merchandise to customers, and process returns to vendors and could result in lost revenue, increased costs, and reduced profits. Our historic sales tax collection policy for our Direct business may...

  • Page 28
    ...pay the bonds. At the time we purchase these bonds, we make estimates of the discounted future cash flow streams they are expected to generate in the form of interest and principal payments. Because these cash flows are based primarily on future property or sales tax collections at our retail stores...

  • Page 29
    ... time-consuming, result in costly litigation, cause product delays, or require us to enter into royalty or licensing agreements. As a result, any such claim could have an adverse effect on our operating results. Risks Related to Our Financial Services Business We may experience limited availability...

  • Page 30
    ...add additional term securitizations and variable funding facilities on favorable terms as it becomes necessary could increase our financing costs and potentially limit our ability to grow our Financial Services business. Furthermore, even if we are able to securitize our credit card loans consistent...

  • Page 31
    ... and future securitization transactions, which will have a significant impact on our consolidated financial statements, and will cause us to reallocate capital from our Retail and Direct businesses to meet the capital needs of our Financial Services business. The Financial Accounting Standards...

  • Page 32
    ... make payments to us due to current economic conditions and limited access to other credit sources; • inability to manage credit risk and keep credit models up to date with current consumer credit trends; • lack of growth of potential new customers generated by our Retail and Direct businesses...

  • Page 33
    ...Act of 2009 (the "CARD Act") and related regulations require our Financial Services business to change some of its current practices. These requirements will restrict our ability to increase interest rates on existing credit card balances, charge over-limit fees, and charge fees for making a payment...

  • Page 34
    ...revenue generated by our Financial Services business. Our Financial Services business faces possible risk from the outcomes of certain credit card industry litigation. For example, a number of entities, each purporting to represent a class of retail merchants, have sued Visa and several member banks...

  • Page 35
    ... and Administrative Offices Customer Care Center Customer Care Center and Administrative Offices Location Sidney, Nebraska Total Square Feet 294,000 Segment That Uses Property Retail, Direct and Other Sidney, Nebraska Sidney, Nebraska Prairie du Chien, Wisconsin Wheeling, West Virginia (1) 131,000...

  • Page 36
    ... the location, opening date, and approximate total square footage of our United States retail stores used in our Retail segment: Location Kearney, Nebraska Sidney, Nebraska Owatonna, Minnesota Prairie Du Chien, Wisconsin East Grand Forks, Minnesota Dundee, Michigan Mitchell, South Dakota Kansas City...

  • Page 37
    ... table sets forth, for the fiscal quarters indicated, the high and low sales prices per share of our common stock as reported on the NYSE: 2009 High First Quarter Second Quarter Third Quarter Fourth Quarter $ 9.80 14.48 17.73 16.00 $ Low 4.90 8.71 11.11 11.65 $ High 16.29 16.25 15.75 13.03 $ 2008...

  • Page 38
    ... our common stock and do not anticipate paying any cash dividends on our common stock in the foreseeable future. In addition, our revolving credit facility and our senior notes limit our ability to pay dividends to our stockholders. Equity Compensation Plans For information on securities authorized...

  • Page 39
    ... World's Foremost Bank which were $371 million, $402 million, $123 million, $53 million, and $81 million at years ended 2009, 2008, 2007, 2006, and 2005. Our ability to use this cash for non-banking operations, including its use as working capital for our Retail or Direct businesses, or for retail...

  • Page 40
    ...Cabela's® We are a leading specialty retailer, and the world's largest direct marketer, of hunting, fishing, camping, and related outdoor merchandise. We provide a quality service to our customers who enjoy an outdoor lifestyle by supplying outdoor products through our multi-channel retail business...

  • Page 41
    ... revenue from our Retail business and Financial Services segments and improved efficiencies in labor productivity and advertising in our Retail business. In 2009, we finalized plans on certain existing and future retail store sites, and consequently evaluated the recoverability of related properties...

  • Page 42
    ... and use our retail store, Internet, and catalog channels. Our in-store pick-up program allows customers to order products through our catalogs and Internet site, and have them delivered to the retail store of their choice without incurring shipping costs, thereby helping to increase foot traffic...

  • Page 43
    ... Canada acquisition; and • targeted marketing designed to increase sales of certain on-line market sectors. Our Direct revenue decreased $37 million in 2009 compared to 2008 primarily due to customers buying more ammunition, firearms, and related products from our retail locations, and customers...

  • Page 44
    ...to mail or deliver periodic statements for credit card accounts at least 21 days before payment is due; • restricts annual percentage rate increases on outstanding balances except under limited circumstances; • restricts interest rate increases during the first year an account is opened except...

  • Page 45
    ... continuing to evaluate appropriate modifications to its products, revenue generation, marketing strategies, and other business practices that will be in compliance with the law. The full impact of the CARD Act on WFB is unknown at this time as it ultimately depends upon continued regulatory actions...

  • Page 46
    ... credit card loans Unrestricted credit card loans Allowance for loan losses on credit cards Credit card loans, net Prepaid expenses and other current assets Total current assets Property, equipment, and land held for sale, net Retained interests in securitized loans, net Economic development bonds...

  • Page 47
    ... products and expected level of customer service in each store while managing labor, advertising, and other store costs. Retail Expansion - Capitalize on our brand strength by developing a profitable retail expansion strategy focused on site locations and appropriate sized stores in our top markets...

  • Page 48
    ... of market share we capture through the Internet. Financial Service Performance - Continue to attract new cardholders through our Retail and Direct businesses and increase the amount of merchandise or services customers purchase with their CLUB Visa cards while maintaining bank profitability and...

  • Page 49
    ...The increase in average sales per square foot resulted from an increase in comparable store sales. Direct Revenue - Direct revenue decreased $37 million, or 3.3%, primarily due to customers buying more ammunition, firearms, and related products from our retail locations, and customers buying smaller...

  • Page 50
    ..., other fees, and interchange, net of reward program costs, interest expense, and credit losses from our credit card operations. The components of Financial Services revenue on a generally accepted accounting principles ("GAAP") basis were as follows for the years ended: 2009 Interest and fee income...

  • Page 51
    ... Cabela's CLUB Visa card usage by our customers due to increases in credit card purchases of 1.3% and changes to customer rewards marketing programs utilized comparing the respective years. Managed credit card loans of the Financial Services business segment include both credit card loans receivable...

  • Page 52
    ...accounts, and cash accounts associated with our securitized loans. Our Cabela's CLUB Visa card loyalty program allows customers to earn points whenever and wherever they use their credit card, and then redeem earned points for products and services at our retail stores or through our Direct business...

  • Page 53
    ... in catalog-related costs resulting in a decrease in catalog and Internet marketing costs of $16 million, • improved efficiencies in advertising in our Retail and Direct businesses resulting in a decrease of $5 million in advertising and promotional costs, and • a decrease in new store opening...

  • Page 54
    ... resulting in a decrease of $4 million in advertising and promotional costs. • An increase in marketing fees of $3 million received from the Financial Services segment. Direct Business Segment: • A net decrease in catalog and Internet related marketing costs of $16 million compared to 2008...

  • Page 55
    ... expenses of distribution centers, procurement activities, and other corporate overhead costs. Increase (Decrease) $ (48,361) 2009 Total operating income Total operating income as a percentage of total revenue Operating income by business segment: Retail Direct Financial Services Operating income...

  • Page 56
    merchandise gross margin. These decreases were partially offset by increases in revenue from our Retail business and Financial Services segments, a decrease in catalog and Internet related marketing costs due to a managed reduction in catalog page count, and improved efficiencies in compensation and...

  • Page 57
    ...41,294 44,194 Financial Highlights Net income Net income as a percentage of revenue Net income per diluted share Revenue by segment: Direct Retail Financial Services Other Total revenue New store sales Comparable store sales Average sales per square foot Gross Profit Gross Profit as a percentage of...

  • Page 58
    ... 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...

  • Page 59
    ... 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...

  • Page 60
    ... number of completed billing cycles during which a customer has failed to make a required payment. The following chart shows the percentage of our managed credit card loans that were delinquent at year end: Number of days delinquent Greater than 30 days Greater than 60 days Greater than 90 days 2009...

  • Page 61
    ... retail stores, purchases of inventory, investments in our management information systems and infrastructure, purchases of economic development bonds related to the construction of new retail stores, and general working capital needs. We historically have met these requirements with cash generated...

  • Page 62
    ... the terms of our credit facility. Financial Services Business Segment (World's Foremost Bank or "WFB") - The primary cash requirements of WFB relate to the financing of credit card loans. These cash requirements will increase if our credit card originations increase or if our cardholders' balances...

  • Page 63
    ...imposed by Nebraska banking laws and the Visa membership rules, and its ability to pay dividends is also limited by Nebraska and Federal banking laws. If there are any disruptions in the credit markets, our Financial Services business, like many other financial institutions, may increase its funding...

  • Page 64
    .... Investing Activities - Cash used in investing activities increased $8 million in 2009 compared to 2008. In 2009, cash paid for property and equipment additions totaled $49 million compared to $91 million in 2008. We opened our Billings, Montana, retail store in May 2009 and two retail stores in...

  • Page 65
    ...under the credit facility are used for general business purposes, including working capital support. The following table highlights the borrowing activity of our merchandising business and bank operations for the years ended: 2009 Borrowings on (repayment of) lines of credit and short-term debt, net...

  • Page 66
    ... the proceeds from this offering for new retail store expansion, including property and equipment additions, purchase of economic development bonds, and general corporate purposes. Our $350 million credit agreement requires that Cabela's comply with certain financial and other customary covenants...

  • Page 67
    ... help fund its credit card operations, resulting in a net change in cash flows of $267 million between years. Grants and Economic Development Bonds In the past, we have negotiated economic development arrangements relating to the construction of a number of our new retail stores, including free land...

  • Page 68
    ... a financial asset. Unlike a mortgage or other closed-end loan account, the terms of a credit card account permit a customer to borrow additional amounts and to repay each month an amount the customer chooses, subject to a monthly minimum payment requirement. The credit card account remains open...

  • Page 69
    ... favorable terms as it becomes necessary could increase our financing costs and potentially limit our ability to grow the business of WFB. Unfavorable conditions in the asset-backed securities markets generally, including the unavailability of commercial bank liquidity support or credit enhancements...

  • Page 70
    ...future years is uncertain. At January 2, 2010, obligations for new store and expansion arrangements include approximately $75 million of estimated contractual obligations and commitments associated with projected retail store-related expansion and certain obligations under economic development bonds...

  • Page 71
    ... reduce or cancel these available lines of credit at any time. Securitizations - All of WFB's securitization transactions have been accounted for as sales transactions, and the credit card loans and associated debt relating to those pools of assets are not reflected in our consolidated balance sheet...

  • Page 72
    ... of our direct mail catalogs, composed principally of creative design, prepress/production, paper, printing, postal, and mailing costs. Deferred catalog costs are amortized over their expected period of future benefit or twelve months, whichever is shorter, based upon sales forecasts developed using...

  • Page 73
    ... value in the consolidated balance sheets. The transferor's interest is reported at the lower of cost or market in the consolidated balance sheets. On a quarterly basis, we reviewed and adjusted, as appropriate, the assumptions and estimates used in determining the fair value of the related accounts...

  • Page 74
    .... ASC Section 825-10-65 requires publicly traded companies to disclose the fair value of financial instruments within the scope of ASC 825 in interim financial statements, adding to the current requirement to make those disclosures in annual financial statements. This staff position also requires...

  • Page 75
    ... of the Company, various other interests currently reflected on the consolidated balance sheet will be reclassified primarily to credit card loans, other current assets, and accrued expenses. The Financial Services business will also be required to establish allowances for loan losses relating to...

  • Page 76
    ... techniques we use include managing the maturity, repricing, and distribution of assets and liabilities by issuing fixed rate securitization notes and entering into interest rate swaps. The table below shows the mix of our managed credit card account balances at the years ended: 2009 As a percentage...

  • Page 77
    ... STATEMENTS AND SUPPLEMENTARY DATA TABLE OF CONTENTS Page REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM CONSOLIDATED FINANCIAL STATEMENTS: Consolidated Statements of Income Consolidated Balance Sheets Consolidated Statements of Cash Flows Consolidated Statements of Stockholders' Equity...

  • Page 78
    REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Cabela's Incorporated and Subsidiaries Sidney, Nebraska We have audited the accompanying consolidated balance sheets of Cabela's Incorporated and Subsidiaries (the "Company") as of January 2, 2010 ...

  • Page 79
    ... Thousands Except Earnings Per Share) 2009 Revenue: Merchandise sales Financial services revenue Other revenue Total revenue Cost of revenue: Merchandise costs Cost of other revenue Total cost of revenue (exclusive of depreciation and amortization) Selling, distribution, and administrative expenses...

  • Page 80
    ... Economic development bonds Other assets Total assets LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT Accounts payable, including unpresented checks of $44,394 and $28,217 Gift certificates, and credit card and loyalty rewards programs Accrued expenses Time deposits Current maturities of long-term...

  • Page 81
    ... securities) Inventories Prepaid expenses and other current assets Land held for sale or development Accounts payable and accrued expenses Gift certificates, and credit card and loyalty rewards programs Other long-term liabilities Income taxes payable Net cash provided by operating activities CASH...

  • Page 82
    ... exercises BALANCE, end of 2007 Comprehensive income: Net income Unrealized loss on economic development bonds, net of taxes of $3,200 Derivative adjustment, net of taxes of $24 Foreign currency translation adjustment Total comprehensive income Stock based compensation Employee stock purchase plan...

  • Page 83
    ...to a customer's account. Credit Card Interest and Fees - Financial Services revenue includes credit card interest and fees relating to late payments, over limit, returned check, payment assurance, and cash advance transactions. These fees are assessed according to the terms of the related cardholder...

  • Page 84
    ... for non-banking operations. Securitization of Credit Card Loans - WFB sells the majority of its credit card loans to a securitization trust and recognizes related gains or losses as a component of securitization income in Financial Services revenue. WFB must retain a minimum 20 day average of 5% of...

  • Page 85
    ... netted in advertising expense above totaled $1,602, $1,834, and $7,058 for 2009, 2008, and 2007, respectively. Store Pre-opening Expenses - Non-capital costs associated with the opening of new stores are expensed as incurred. Leases - We lease certain retail locations, distribution centers, office...

  • Page 86
    ... purchased the majority of the bonds associated with our developments. Cash grants are made available to fund land, retail store construction, and/or development infrastructure costs. Economic development bonds are typically repaid through sales and/or property taxes generated by the retail store...

  • Page 87
    .... Declines in the fair value of held-to-maturity and available-for-sale economic development bonds below cost that are deemed to be other than temporary are reflected in earnings. Credit Card and Loyalty Rewards Programs - Cabela's CLUB Visa cardholders receive Cabela's points based on the dollar...

  • Page 88
    ..., accounts receivable, accounts payable, gift certificates (including credit card loyalty rewards programs), accrued expenses, short-term borrowings, and income taxes payable included in the consolidated balance sheets approximate fair value given the short-term nature of these financial instruments...

  • Page 89
    .... ASC Section 825-10-65 requires publicly traded companies to disclose the fair value of financial instruments within the scope of ASC Topic 825 in interim financial statements, adding to the current requirement to make those disclosures in annual financial statements. This staff position also...

  • Page 90
    ... of the Company, various other interests currently reflected on the consolidated balance sheet will be reclassified primarily to credit card loans, other current assets, and accrued expenses. The Financial Services business will also be required to establish allowances for loan losses relating to...

  • Page 91
    ... 28, 2009. The adoption of this statement did not have an effect on our financial position or results of operations. 3. CREDIT CARD LOANS AND SECURITIZATION The Company's wholly-owned bank subsidiary, World's Foremost Bank ("WFB"), has established the Cabela's Master Credit Card Trust and related...

  • Page 92
    ... asset-backed securities, and related receivables are comprised of the following at the end of: 2009 Asset-backed trading securities Asset-backed available for sale securities (amortized cost of $76,984) Interest-only strip, cash reserve accounts, and cash accounts Transferor's interest Other assets...

  • Page 93
    ... Series 2008-I securitization in order to manage interest rate exposure. The exposure is related to changes in cash flows from funding credit card loans, which include a high percentage of accounts that do not incur monthly finance charges based on floating rate obligations. The Series 2008-I swap...

  • Page 94
    ... of managed credit card loans, including securitized loans: 2009 Credit card loans held for sale (including transferor's interest of $126,328 and $143,411) Credit card loans receivable, net of allowances of $1,374 and $1,507 Total Composition of credit card loans at year end: Loans serviced Loans...

  • Page 95
    ... used to estimate the fair value of the interest-only strip, cash reserve, and cash accounts resulting from the securitization of credit card loans for the years ended: 2009 Weighted average payment rates Weighted average life in years Weighted average expected credit losses Servicing fee Discount...

  • Page 96
    ... consisted of the following for the years ended: Gross Gross Unrealized Unrealized Gains Losses Fair value Cost 2009: Available-for-sale securities: Economic development bonds Asset-backed securities 2008: Available-for-sale securities: Economic development bonds $ $ 111,815 $ 76,984 188,799...

  • Page 97
    ... other assets (current and long-term) consisted of the following at the years ended: 2009 Prepaid expenses and other current assets: Deferred catalog costs Interest and notes receivable Financial Services - Visa interchange funding Financial Services accrued interest and other receivables Other $ 26...

  • Page 98
    ... Except Share and Per Share Amounts) 7. ACCRUED EXPENSES Accrued expenses consisted of the following at the years ended: 2009 Accrued employee compensation and benefits Accrued property, sales, and other taxes Deferred revenue and accrued sales returns Accrued interest Accrued credit card fees...

  • Page 99
    ... credit facility limits this security interest to $50,000. The extended payment terms to the vendor do not exceed one year. The outstanding liability, included in accounts payable, was $3,510 and $5,162 at the end of 2009 and 2008, respectively. 11. SHORT-TERM BORROWINGS OF FINANCIAL SERvICES...

  • Page 100
    ... 2009 and 2008, the average balance outstanding was $151 and $25,790 with a weighted average rate of 0.22% and 2.90%, respectively. 12. LONG-TERM DEBT AND CAPITAL LEASES Long-term debt, including revolving credit facilities and capital leases, consisted of the following at the years ended: 2009...

  • Page 101
    ...of our consolidated financial statements during 2009, 2008, and 2007, we evaluated the recoverability of property, equipment, land held for sale, economic development bonds, goodwill, and other intangible assets. This evaluation included our existing store locations and future retail store sites. In...

  • Page 102
    CABELA'S INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in Thousands Except Share and Per Share Amounts) 14. INTEREST (EXPENSE) INCOME, NET Interest expense, net of interest income, consisted of the following for years ended: 2009 Interest expense Capitalized ...

  • Page 103
    ...doubtful accounts Economic development bonds Other Deferred tax liabilities: Prepaid expenses Property and equipment Inventories Retained interests in securitized loans Asset-backed securities Credit card loan fee deferral Other Net deferred tax liability Less current deferred income taxes Long-term...

  • Page 104
    ... real estate purchase, construction, and/or economic development agreements for various new retail store site locations. At January 2, 2010, we had total estimated cash commitments of approximately $75,000 for 2010 and 2011 for projected retail store-related expenditures and the purchase of future...

  • Page 105
    ...to reduce or cancel the available lines of credit at any time. Litigation and Claims - We are party to various proceedings, lawsuits, disputes, and claims arising in the ordinary course of our business. These actions include commercial, intellectual property, employment, and product liability claims...

  • Page 106
    ...option pricing model. The expected volatility for 2009, 2008, and 2007 was based on the historical volatility of our common stock. The fair value of options in the years presented was estimated using the BlackScholes model with the following weighted average assumptions: 2009 Risk-free interest rate...

  • Page 107
    ...nonqualified stock options. The following table provides information relating to our equity share-based payment awards at January 2, 2010: Weighted Average Exercise Price $ 17.40 10.33 14.21 10.33 Weighted Average Fair value $ 7.65 5.63 7.10 5.63 Weighted Average Remaining Contractual Life (in Years...

  • Page 108
    ...new shares for the exercise of stock options. On March 13, 2009, there were 111,720 options granted to our President and Chief Executive Officer at an exercise price of $8.68 per share. These options are subject to the same terms and conditions of the 2004 Plan. These options have an eight-year term...

  • Page 109
    ... Except Share and Per Share Amounts) Nonvested Stock and Stock Unit Awards - During 2009, we issued 785,780 units of nonvested stock under the 2004 Plan to employees at a weighted average fair value of $8.19 per unit and 138,249 units to our President and Chief Executive Officer at a fair value of...

  • Page 110
    ... earnings per share calculations for the years ended: 2009 Weighted average number of shares: Common shares - basic Effect of incremental dilutive securities: Stock options, nonvested stock units, and employee stock purchase plan shares Common shares - diluted Stock options outstanding and nonvested...

  • Page 111
    ... sells products and services through our retail stores. The Direct segment sells products through e-commerce websites (Cabelas.com and complementary websites) and direct mail catalogs. The Financial Services segment issues co-branded credit cards. For the Retail segment, operating costs consist...

  • Page 112
    ... Fiscal Year 2009 Revenue from external customers Revenue (loss) from internal customers Total revenue Operating income (loss) As a percentage of revenue Depreciation and amortization Assets Property and equipment additions including accrued amounts Retail $ 1,388,991 $ 1,388,991 $ Direct $ 1,054...

  • Page 113
    ...product categories for our Retail and Direct businesses and in total for the periods presented: Retail 2008 39.9% 15.9 9.3 24.9 10.0 Direct 2008 28.7% 12.9 12.5 36.6 9.3 Total 2008 35.1% 14.6 10.6 30.0 9.7 2009 Hunting Equipment Fishing and Marine Camping Clothing and Footwear Gifts and Furnishings...

  • Page 114
    ...basis using significant unobservable inputs (Level 3), as defined in ASC Topic 820, for the years ended 2009 and 2008: Interest-Only Strip, Cash Reserve Asset-Backed Asset-Backed Economic Accounts, and Trading Available for Development Cash Accounts Securities Sale Securities Bonds Balance, December...

  • Page 115
    ... are reflected in current earnings. Fair values of economic development bonds ("bonds") are estimated using discounted cash flow projection estimates based on available market interest rates and the estimated amounts and timing of expected future payments to be received from municipalities under...

  • Page 116
    ... share are computed independently for each of the quarters presented and, therefore, may not sum to the totals for the year. (3) Revenue is typically higher in our third and fourth quarters than in the first and second quarters due to holiday buying patterns and hunting and fishing season openings...

  • Page 117
    ... for doubtful accounts Allowance for credit card receivable loan losses YEAR ENDED DECEMBER 29, 2007: Allowance for doubtful accounts Allowance for credit card receivable loan losses $ Charged to Costs and Expenses 808 1,106 Charged to Other Accounts $ Net ChargeOffs End of Year Balance 556...

  • Page 118
    ... on this evaluation, management concluded that our internal control over financial reporting was effective as of January 2, 2010. The independent registered public accounting firm of Deloitte & Touche LLP, as auditors of our consolidated financial statements included in this annual report on Form 10...

  • Page 119
    ... OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Cabela's Incorporated and Subsidiaries Sidney, Nebraska We have audited the internal control over financial reporting of Cabela's Incorporated and Subsidiaries (the "Company") as of January 2, 2010, based...

  • Page 120
    ... and Ethics. These policies satisfy the SEC's requirements for a "code of ethics," and apply to all of our directors, officers, and employees. Our Business Code of Conduct and Ethics is posted on our website at www.cabelas.com. We intend to satisfy the disclosure requirements under Item 5.05 of Form...

  • Page 121
    ... are filed as part of this report: 1. Financial Statements: • Report of Independent Registered Public Accounting Firm • Consolidated Statements of Income - Years ended January 2, 2010, December 27, 2008, and December 29, 2007 • Consolidated Balance Sheets - January 2, 2010, and December 27...

  • Page 122
    ...-113835)* Addendum to Executive Employment Agreement dated as of January 4, 2004, between Cabela's Incorporated and James W. Cabela (incorporated by reference from Exhibit 10.2 of our Quarterly Report of Form 10-Q, filed on May 12, 2005, File No. 001-32227)* 1997 Stock Option Plan (incorporated by...

  • Page 123
    ...File No. 001-32227)* Form of 2004 Stock Plan Non-Employee Director Stock Option Agreement (2006) (incorporated by reference from Exhibit 10.2 of our Current Report on Form 8-K, filed on May 15, 2006, File No. 001-32227)* 2004 Employee Stock Purchase Plan (incorporated by reference from Exhibit 10.14...

  • Page 124
    ...32227)* Form of 2004 Stock Plan Employee Stock Option Agreement (2009) (incorporated by reference from Exhibit 10.2 of our Current Report on Form 8-K, filed on March 6, 2009, File No. 001-32227)* Executive Employment Agreement dated March 13, 2009, between Cabela's Incorporated and Thomas L. Millner...

  • Page 125
    ...CFO Pursuant to Rule 13a-14(a) under the Exchange Act Certifications Pursuant to 18 U.S.C. Section 1350 Indicates management contract or compensatory plan or arrangement required to be filed as exhibits pursuant to Item 15(b) of this report. Financial Statement Schedules. See Item 15(a) above. 116

  • Page 126
    ..., the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CABELA'S INCORPORATED Dated: February 26, 2010 By: /s/ Thomas L. Millner Thomas L. Millner President and Chief Executive Officer Pursuant to the requirements of the Securities...

  • Page 127
    ... financial information; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. b. Date: February 26, 2010 /s/ Thomas L. Millner Thomas L. Millner President and Chief Executive...

  • Page 128
    ... and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. b. Date: February 26, 2010 /s/ Ralph W. Castner Ralph W. Castner Executive Vice President and Chief Financial Officer 119

  • Page 129
    ... as amended; and the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the registrant. Dated: February 26, 2010 /s/ Thomas L. Millner Thomas L. Millner President and Chief Executive Officer /s/ Ralph W. Castner Ralph...

  • Page 130
    ... and Chief Executive Officer of World's Foremost Bank John Gottschalk Chairman Omaha World-Herald Company Brian J. Linneman Executive Vice President and Chief Merchandising Officer Patrick A. Snyder Executive Vice President and Chief Marketing Officer Corpor Corporate Headquarters Cabela...

  • Page 131
    ..., advertising and costs while providing excellent customer experiences. Retail Expansion Capitalize on our brand strength by developing a profitable retail-expansion strategy focused on site locations and appropriate-sized stores in our top markets. Direct Channel Growth Grow our direct business...