Cabela's 2010 Annual Report Download

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2010
annual report
letter to shareholders
form 10-k

Table of contents

  • Page 1
    a n n u a l 2010 form 10-k r e p o r t letter to shareholders

  • Page 2
    ... of high-quality outdoor products at competitive prices while providing superior customer service. We also issue the Cabela's CLUB® Visa credit card, which serves as our primary customer loyalty rewards program. Tommy Millner - Chief Executive Officer Financial Highlights Fiscal Year (Dollars...

  • Page 3
    ... customers experienced longer than average wait times and slow response times while placing orders. For the year, operating margin in our Direct segment increased 40 basis points to 15.6 percent from 15.2 percent last year. Our Cabela's CLUB Visa program had a solid year. Financial Services revenue...

  • Page 4
    ...ficant improvement in 2010 as we ended the year with just $345 million of debt and generated $167 million of cash ï¬,ows from operations. The strength of our balance sheet and cash ï¬,ows has allowed us to self-fund the capital needs of our Cabela's CLUB Visa program and retail store expansion, and...

  • Page 5
    .... In 2010, average active cardholders increased 5.9 percent and the average account balance increased 1.0 percent. In addition, we realized significant improvements in delinquencies, charge-offs, and funding costs. We continue to focus on finding new ways to use the Cabela's CLUB Visa program to...

  • Page 6
    ... to Cabela's brand, and we will continue to look for new ways to increase the value of the CLUB Visa program for our loyal customers. Looking Forward While we made significant progress in 2010, accelerating every important financial component of our business, we are fully mindful that 2010 was...

  • Page 7
    ...the related GAAP financial measures for the fiscal years presented. Fiscal Year Ended January 1, 2011 GAAP Basis Excluded Non-GAAP As Reported Amounts As Adjusted (Dollars in Thousands Except Earnings Per Share) Revenue: Merchandise sales Financial Services revenue Other revenue Total revenue Total...

  • Page 8
    ... tax rate for the respective fiscal year. Amounts may not foot across due to rounding from the calculations using basic and diluted weighted average shares outstanding. Valuations of the interest-only strip associated with securitized loans of the Company's Financial Services business segment. Loss...

  • Page 9
    ...impairment of economic development bonds After tax effect Effective tax rate Adjusted net income Total capital: Current maturities of long-term debt Deferred compensation Operating leases capitalized at 8x next year's annual minimum lease payments Total stockholders' equity Long-term debt (excluding...

  • Page 10
    This page is intentionally left blank.

  • Page 11
    ... and executive officers and the beneficial owners of 5% or more of its voting common stock as of July 2, 2010, are affiliates of the registrant. Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common stock, $0.01 par value...

  • Page 12
    ... ability to successfully execute our multi-channel strategy; the ability to negotiate favorable purchase, lease, and/or economic development arrangements for new retail store locations; expansion into new markets and market saturation due to new retail store openings; the rate of growth of general...

  • Page 13
    ... 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 14
    ...in May 2010, increasing our total retail square footage to 4.4 million square feet at the end of 2010. Our Retail store business operations generated revenue of $1.4 billion in 2010, representing 58.6% of our total revenue from our Retail and Direct businesses. Customer Relations. In order to better...

  • Page 15
    ... Our Direct business uses catalogs and the Internet as marketing tools to generate sales orders via the Internet, telephone, and mail. Our Direct business generated revenue of $1.0 billion in 2010, representing 41.4% of our total revenue from our Retail and Direct businesses. Catalog Distributions...

  • Page 16
    ... use their Cabela's CLUB Visa credit card and then redeem earned points for products and services at our retail stores or through our Direct business. Our rewards program is integrated into our store point-of-sale system. Our customers are informed of their number of accumulated points when making...

  • Page 17
    ... of our merchandise revenue contributed by each of the five product categories for our Retail and Direct businesses and in total for the last three years. 2010 Hunting Equipment Clothing and Footwear Fishing and Marine Camping Gifts and Furnishings Total 44.5% 24.0 14.2 8.5 8.8 Retail 2009 45.3% 22...

  • Page 18
    ... 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 19
    ..., Wisconsin; Wheeling, West Virginia; and Winnipeg, Manitoba. These distribution centers comprise nearly 3 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, Canada...

  • Page 20
    ...enforcement authority over consumer products, including credit cards. The Reform Act will also effect a number of significant changes relating to asset-backed securities, including additional oversight and regulation of credit rating agencies and additional reporting and disclosure requirements. See...

  • Page 21
    ... many of the products we sell. Intellectual Property Cabela's®, Cabela's CLUB®, Cabelas.com®, World's Foremost Outfitter®, World's Foremost Bank®, Bargain Cave®, and Herters® are among our registered service marks or trademarks with the United States Patent and Trademark Office. We have...

  • Page 22
    ...to use our marks in the United States or elsewhere. We have no franchises or other concessions which are material to our operations. Available Information Our website address is www.cabelas.com. We make available on our website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current...

  • Page 23
    ...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 as L.L. Bean, Lands' End...

  • Page 24
    ... substantial information technology system changes in support of our customer relationship management system in our Direct business. There are inherent risks associated with these system changes that could affect our ability to take customer orders, to deliver products to our customers in...

  • Page 25
    ... revenue of our Direct business. As the number of our retail stores increases, our stores will become more highly concentrated in the geographic regions we serve. As a result, the number of customers and related revenue at individual stores may decline and the average amount of sales per square foot...

  • Page 26
    ...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...

  • Page 27
    ... purchase. Any delay or failure in offering products to our customers could have an adverse impact on our revenue and profitability. In addition, if the cost of fuel rises, the cost to deliver merchandise to the customers of our Direct business and from our distribution centers to our retail stores...

  • Page 28
    ... stock our retail stores, deliver merchandise to customers, and process returns to vendors and could result in lost revenue, increased costs, and reduced profits. New state tax initiatives could subject us to liability for past sales and cause our future Direct business sales to decrease. A number...

  • Page 29
    ... profit margins. In addition, as we implement our retail store expansion strategy, we will need to construct additional distribution centers or expand the size of our existing distribution centers to support our growing number of retail stores. If we are unable to find suitable locations for new...

  • Page 30
    ... we sell firearms and ammunition; laws and regulations governing hunting and fishing; laws and regulations relating to the collecting and sharing of non-public customer information; and United States customs laws and regulations pertaining to proper item classification, quotas, payment of duties...

  • Page 31
    ...what interest rate we can pay on deposits. At the end of 2010, WFB met the requirements for a well-capitalized institution, the highest of the Federal Deposit Insurance Corporation Improvement Act's five capital ratio levels. We may have to reallocate capital from our Retail and Direct businesses to...

  • Page 32
    ..., the number of transactions and average purchase amount of transactions on the credit card accounts may be reduced, which would reduce the revenue of our Financial Services business. A variety of social and other factors also may cause changes in credit card use, payment patterns, and the rate of...

  • Page 33
    ..., marketing, and credit card terms and conditions. Future legislation or regulations may be issued as a result of these studies. Future changes as a result of these studies may result in future negative impacts to the revenue from our Financial Services business. In addition, as a Visa member bank...

  • Page 34
    ...cardholders' account balances, and pay interest on the certificates of deposit and borrowings we use to fund those loans. Changes in these two interest rates affect the value of the assets and liabilities of our Financial Services business. If the rate of interest we pay on borrowings increases more...

  • Page 35
    ... our corporate headquarters, administrative offices, four distribution centers, a merchandise return center, and five customer care centers. The following table provides information regarding the general location, use, and approximate size of our principal non-retail properties: Total Square Footage...

  • Page 36
    ... Wheeling, West Virginia Fort Worth, Texas Buda, Texas Lehi, Utah Rogers, Minnesota Glendale, Arizona Boise, Idaho Richfield, Wisconsin La Vista, Nebraska Hazelwood, Missouri Hoffman Estates, Illinois East Hartford, Connecticut Gonzales, Louisiana Hammond, Indiana Reno, Nevada Post Falls, Idaho...

  • Page 37
    ... persons who hold our common stock in nominee or "street name" accounts through brokers or banks. The following 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: 2010 High First Quarter Second Quarter Third...

  • Page 38
    ... Graph The following stock performance graph and table show Cabela's cumulative total shareholder return on a semi-annual basis for the five fiscal years ended January 1, 2011. The graph and table also show the cumulative total returns of the Standard and Poor's ("S&P") 500 Retailing Index and the...

  • Page 39
    ... services subsidiary totaling $82 million, $371 million, $402 million, $123 million, and $53 million at years ended 2010, 2009, 2008, 2007, and 2006. 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 store...

  • Page 40
    ..., and strengthens our customer loyalty through our credit card loyalty programs. Fiscal 2010 Executive Overview 2010 Revenue: Retail Direct Total merchandise sales Financial Services Other revenue Total revenue Operating income Earnings per diluted share 2009 Increase (Decrease) % Change (Dollars...

  • Page 41
    .... Financial Services was not adjusted because its reporting periods end on a calendar year. 2009 Excluding Extra Week Increase (Decrease) 2010 Revenue: Retail Direct Total merchandise sales Financial Services Other revenue Total revenue (non-GAAP basis) Total revenue - week 53 Total revenue (GAAP...

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

  • Page 43
    ... States and Canada by developing a profitable retail expansion strategy that takes into consideration not only site location, but also the strategic size for each store in its given market. We incorporated our next generation store format into our new store that opened on May 20, 2010, in Grand...

  • Page 44
    ... 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 WFB's profitability and preserving customer loyalty by creating marketing plans, promoting additional products, and...

  • Page 45
    ... Financial Services business, such as marketing, underwriting, pricing, billing, and disclosure. For example, the CARD Act and related regulations restrict our ability to increase interest rates on existing credit card balances, charge over-limit fees, and charge fees for making a payment. The CARD...

  • Page 46
    ... Services business in a manner similar to our historical managed presentation for financial performance of the total managed portfolio of credit card loans, excluding income derived from the changes in the valuation of our interest-only strip, cash reserve accounts, and cash accounts associated...

  • Page 47
    ... $ $ Product Sales Mix - The following chart sets forth the percentage of revenue contributed by each of the five product categories for our Retail and Direct businesses and in total for the years ended: Retail 2010 2009 Hunting Equipment Clothing and Footwear Fishing and Marine Camping Gifts and...

  • Page 48
    ...average sales per square foot adjusted on a 52-week basis resulted from the increase in comparable store sales. Direct Revenue - Direct revenue includes catalog and Internet sales from orders placed over the phone, by mail, and through our website where the merchandise is shipped to non-retail store...

  • Page 49
    ... shopping experience, better promotional capability, and international commerce capabilities. In October 2010, we implemented substantial information technology system changes in support of our customer relationship management system in our Direct business and redesigned our Internet website...

  • Page 50
    ... sets forth the revenue components of our Financial Services segment managed portfolio for the years ended: 2010 Interest and fee income Interchange income Other non-interest income Interest expense Provision for loan losses Customer rewards costs Other Managed Financial Services revenue $ 271,651...

  • Page 51
    ...-only strip, cash reserve accounts, and cash accounts. Our Cabela's CLUB Visa credit 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. The...

  • Page 52
    ... of real estate totaled $2 million in both 2010 and 2009. These pre-tax gains on the sale of real estate were reflected in operating income for the respective years. Gross Profit Gross profit, or gross margin, is defined as total revenue less the costs of related merchandise sold and shipping costs...

  • Page 53
    ...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...

  • Page 54
    .... In 2010 and 2009, we evaluated the recoverability of our property (including our existing store locations and future retail store sites), equipment, land held for sale, economic development bonds, other assets, goodwill, and other intangible assets. In accordance with accounting guidance on asset...

  • Page 55
    ... excludes costs associated with operating expenses of distribution centers, procurement activities, and other corporate overhead costs. 2010 Total operating income Total operating income as a percentage of total revenue Operating income by business segment: Retail Direct Financial Services Operating...

  • Page 56
    ... Retail Direct Financial Services Other Total revenue New store sales (1) Comparable store sales (1) Average sales per square foot (1) Gross profit Gross profit as a percentage of revenue Merchandise gross margin Merchandise gross margin as a percentage of merchandising revenue Selling, distribution...

  • Page 57
    ... 2008. Internet site visits increased as we continued to focus our efforts on utilizing Direct marketing programs to increase traffic to our website. The hunting equipment product category was the largest dollar volume contributor to our Direct revenue for 2009. Financial Services Revenue. Financial...

  • Page 58
    ...2009, lower revenue from our Direct business segment, and a lower 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...

  • Page 59
    ... received on non-accrual loans will be applied to principal and reduce the amount of the loan. The following chart shows delinquent, non-accrual, and restructured loans as a percentage of our managed credit card loans, including any accrued interest and fees, at the years ended: 2010 Number of days...

  • Page 60
    ...-off cardholder fees and accrued interest receivable directly against interest and fee income included in Financial Services revenue. The following chart shows the activity in our allowance for loan losses and charge off activity for the years ended: 2010 Balance, beginning of period Change in...

  • Page 61
    ... of our merchandising business relate to capital for new 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...

  • Page 62
    ... non-recourse funding to eligible investors who purchased TALF eligible asset-backed notes sponsored by WFB. No funding was provided directly to WFB. The TALF program ceased making new loans secured by eligible collateral backed by credit card receivables on March 31, 2010. WFB does not have any...

  • Page 63
    ... our business and cause our Financial Services business to lose an important source of capital. The Reform Act will also affect a number of significant changes relating to asset-backed securities, including additional oversight and regulation of credit rating agencies and additional reporting and...

  • Page 64
    ...of economic development bonds related to the construction of these stores and related projects, for the years ended: 2010 Property and equipment additions Proceeds from retirements and maturities of economic development bonds Number of new retail stores opened during the year Number of retail stores...

  • Page 65
    ... as the maintenance of minimum debt coverage, net worth, and financial ratios. The significant financial ratios and net worth requirements in the long-term debt agreements are 1) a limitation of funded debt to be less than 60% of consolidated total capitalization; 2) cash flow fixed charge coverage...

  • Page 66
    ...costs and improve the return on investment of our new retail stores. Economic Development Bonds - Through economic development bonds, the state or local government sells bonds to provide funding for land acquisition, readying the site, building infrastructure and related eligible expenses associated...

  • Page 67
    ...of bonds. If sufficient tax revenue is not generated by the subject properties, we will not receive scheduled payments and will be unable to realize the full value of the bonds carried on our consolidated balance sheet. At January 1, 2011, and January 2, 2010, economic development bonds totaled $104...

  • Page 68
    ...the investors. This cash reserve account funding is triggered when the three-month average excess spread rate of the Trust decreases to below 4.50% or 5.50% (depending on the series) with increasing funding requirements as excess spread levels decline below preset levels or as contractually required...

  • Page 69
    ...future years is uncertain. At January 1, 2011, obligations for new store and expansion arrangements include approximately $37 million of estimated contractual obligations and commitments associated with projected retail store-related expansion and certain obligations under economic development bonds...

  • Page 70
    ... office equipment and buildings. Rent expense for these operating leases is recorded in selling, distribution, and administrative expenses in the consolidated statements of income. Future obligations are shown in the preceding contractual obligations table. Credit Card Limits - WFB bears off-balance...

  • Page 71
    ... and retail economic trends. Had our estimated inventory reserves been different by 10% at the end of 2010, our cost of sales would have been higher or lower by approximately $1.1 million. Allowance for Loan Losses on Credit Cards The allowance for loan losses represents management's estimate...

  • Page 72
    ...long-lived asset, the new cost basis will be depreciated over its remaining useful life. Frequently our impairment loss calculations contain multiple uncertainties because they require management to make assumptions and to apply judgment to estimate future cash flows and asset fair values, including...

  • Page 73
    ... we use include managing the maturity, repricing, and mix of fixed and variable assets and liabilities by issuing fixed rate secured borrowings or certificates of deposit and entering into interest rate swaps. The table below shows the mix of our credit card account balances at the years ended: 2010...

  • Page 74
    ... on the credit cards issued by our Financial Services segment were priced at a margin over various defined lending rates. No interest is charged if the account is paid in full within 24 days of the billing cycle, which represented 34.0% of total balances outstanding as of 2010 year end. Some of...

  • Page 75
    ... 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 Notes...

  • Page 76
    ... resulted in the consolidation of the Cabela's Master Credit Card Trust and related entities. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of January 1, 2011, based...

  • Page 77
    ... Thousands Except Earnings Per Share) 2010 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 78
    ...taxes Total current assets Property and equipment, net Land held for sale or development Retained interests in securitized loans, including asset-backed securities Economic development bonds Deferred income taxes Other assets Total assets LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT Accounts payable...

  • Page 79
    ... 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 FLOWS FROM INVESTING ACTIVITIES: Property and...

  • Page 80
    ... compensation Employee stock purchase plan issuances Exercise of employee stock options Tax benefit on employee stock option exercises BALANCE, end of 2009 Effect of adopting ASC Topics 810 and 860, net of tax Comprehensive income: Net income Unrealized loss on economic development bonds, net of...

  • Page 81
    ...AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business - Cabela's Incorporated is a retailer of hunting, fishing, and outdoor gear, offering products through retail stores, the Internet, and regular and special catalog mailings. Cabela's operates 31 retail stores, 30 located in 22 states...

  • Page 82
    .... Cabela's gift instrument liability at the end of 2010 and 2009 was $110,791 and $103,305, respectively. Financial Services revenue includes credit card interest and fees relating to late payments, over limit, payments made with a customer service representative, returned check, payment assurance...

  • Page 83
    ...the consolidation of the Trust on January 3, 2010, WFB sold the majority of its credit card loans to a securitization trust and recognized related gains or losses as a component of securitization income in Financial Services revenue. WFB retains a minimum 20 day average of 5% of the interests in the...

  • Page 84
    .... Store Pre-opening Expenses - Non-capital costs associated with the opening of new stores are expensed as incurred. Leases - The Company leases certain retail locations, distribution centers, office space, equipment and land. Assets held under capital lease are included in property and equipment...

  • Page 85
    ... sale of land from development activities are recognized in other revenue and the corresponding costs of land sold are recognized in other costs of revenue. Government Economic Assistance - When Cabela's constructs a new retail store or retail development, the Company may receive economic assistance...

  • Page 86
    ... for special promotions for the acquisition and retention of accounts. The dollar amount of related points are accrued as earned by the cardholder and recorded as a reduction in Financial Services revenue. In addition to the WFB issued credit cards, customers receive points for purchases at Cabela...

  • Page 87
    ... accounts receivable are limited due to the nature of the Company's receivables. Fair Value of Financial Instruments - The carrying amount of cash and cash equivalents, accounts receivable, restricted cash, accounts payable, gift certificates (including credit card loyalty rewards programs), accrued...

  • Page 88
    ... SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in Thousands Except Share and Per Share Amounts) 3. CHANGE IN ACCOUNTING PRINCIPLES - CONSOLIDATION OF CABELA'S MASTER CREDIT CARD TRUST Change in Accounting Principles: The Company's wholly-owned bank subsidiary, WFB, utilizes the...

  • Page 89
    ... 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 Economic development bonds and other assets Total assets...

  • Page 90
    ..., generally a three-month average, would trigger an early amortization event. Such an event could result in WFB incurring losses related to its retained interests. In addition, if WFB's retained interest in the loans falls below the 5% minimum 20 day average and WFB fails to add new accounts to the...

  • Page 91
    ...loans that have been restructured and other credit card loans in order to facilitate the estimation of the losses inherent in the portfolio as of the reporting date. WFB uses the scores of Fair Isaac Corporation ("FICO"), a widely-used tool for assessing an individual's credit rating, as the primary...

  • Page 92
    ... interest, asset-backed securities, accrued interest receivable on securitized credit card receivables, cash accounts, servicing rights, the interest-only strip, cash reserve accounts, and other retained interests. WFB's retained interests were subject to credit, payment, and interest rate risks on...

  • Page 93
    ... Trust, as of January 2, 2010: Credit card loans held for sale (including gross transferor's interest of $126,328) Credit card loans receivable, net of allowances of $1,374 Total Composition of credit card loans at year end: Loans serviced Loans securitized and sold to outside investors Securitized...

  • Page 94
    ... assumptions 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 2009: Weighted average payment rates Weighted average life in years Weighted average expected credit losses Servicing fee Discount rate...

  • Page 95
    ...economic development bond portfolio at the end of 2009. Interest earned on the economic development bonds totaled $6,256, $6,988, and $6,305, for 2010, 2009, and 2008, respectively. Interest earned on the asset-backed securities totaled $5,453 in 2009 and is a component of Financial Services revenue...

  • Page 96
    ... at the years ended: 3,519 1,823 8,382 7,965 2,065 4,584 28,338 $ $ 3,336 2,419 6,853 6,634 2,170 2,319 23,731 2010 Accrued employee compensation and benefits Accrued property, sales, and other taxes Deferred revenue and accrued sales returns Accrued interest Accrued credit card fees Other...

  • Page 97
    ... which ranges from 0.76% to 0.95%. The variable rate notes provide for a fee ranging from 0.41% to 0.60% on the unused portion of the facilities. During the year ended January 1, 2011, the daily average balance outstanding on these notes was $29,764 with a weighted average interest rate of 0.99%. 87

  • Page 98
    ... The daily average outstanding amount of total letters of credit during 2010 and 2009 was $17,784 and $11,050, respectively. During the term of the facility, the Company is required to pay a quarterly facility fee, which ranges from 0.10% to 0.25% of the average daily unused principal balance on the...

  • Page 99
    ...by the Company. Cabela's revolving 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 $537 and $3,510 at the end of 2010 and 2009, respectively. 14. LONG-TERM DEBT AND...

  • Page 100
    ... value of net scheduled lease payments Total long-term debt and capital leases 15. IMPAIRMENT AND RESTRUCTURING CHARGES Impairment and restructuring charges consisted of the following for the years ended: 2010 Impairment losses on: Property and equipment Land held for sale Economic development bonds...

  • Page 101
    ... value of an asset may not be recoverable. In 2010, 2009, and 2008, management evaluated the recoverability of property (including existing store locations and future retail store sites), equipment, land held for sale, economic development bonds, goodwill, and other intangible assets. The Company...

  • Page 102
    ... of the following for the years ended: 2010 Deferred tax assets: Deferred compensation Deferred revenue Reserve for returns Accrued expenses Gift certificates liability Allowance for loans losses and doubtful accounts Economic development bonds Loyalty rewards programs Other Deferred tax liabilities...

  • Page 103
    ... long-term liabilities in the consolidated balance sheet. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $2,617. The Internal Revenue Service commenced its examination of the Company's 2007 and 2008 tax years in early 2010. The Company does...

  • Page 104
    ... 70 years. The Company has entered into real estate purchase, construction, and/or economic development agreements for various new retail store site locations. At January 1, 2011, the Company had total estimated cash commitments of approximately $36,900 outstanding for projected retail store-related...

  • Page 105
    ... of business through the origination of unsecured credit card loans. Unsecured credit card accounts are commitments to extend credit and totaled $15,797,000 and $12,996,000 at January 1, 2011, and January 2, 2010, respectively. These commitments are in addition to any current outstanding balances of...

  • Page 106
    ... AND EMPLOYEE BENEFIT PLANS Stock-Based Compensation - The Company recognized total share-based compensation expense of $11,198, $9,410, and $6,535 in 2010, 2009, and 2008, respectively. Compensation expense related to the Company's sharebased payment awards is recognized in selling, distribution...

  • Page 107
    ...price of $19.47 per share. These options have an eight-year term and vest over three years for employees and one year for non-employee directors. Nonvested Stock Awards: During 2010, the Company issued 639,340 units of nonvested stock under the 2004 Plan to employees at a weighted average fair value...

  • Page 108
    ... performance based stock awards. The following table provides information relating to the Company's equity share-based payment awards at January 1, 2011: Weighted Average Remaining Contractual Life (in Years) 4.26 6.40 5.10 6.39 Vested and exercisable Non-vested Total outstanding Expected to vest...

  • Page 109
    ... holders of Class B non-voting common stock in all assets remaining after payment to creditors and subject to prior distribution rights of any shares of preferred stock that the Company may issue in the future. All of the outstanding shares of Class A common stock are fully paid and non-assessable...

  • Page 110
    ... earnings per share calculations for the years ended: 2010 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 the Company's 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...

  • Page 112
    ... 23,081 $ Fiscal Year 2010: Retail $ $ Direct 996,451 3,320 999,771 $ $ Financial Services 228,121 (446) 227,675 Total 2,663,242 2,663,242 186,762 7.0% 69,872 4,531,179 79,720 Revenue from external customers $ 1,412,715 Revenue (loss) from internal customers Total revenue $ 1,412,715 Operating...

  • Page 113
    ... orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various methods including discounted cash flow projections based on available market interest rates and management estimates of future cash payments. Financial instrument assets and...

  • Page 114
    ... to fair value these assets as of our 2009 fiscal year end. For the interest-only strip and cash reserve accounts, WFB estimated related fair values based on the present value of future expected cash flows using assumptions for credit losses, payment rates, and discount rates commensurate with the...

  • Page 115
    ... fair value of the credit card loans does not represent the underlying value of the established cardholder relationship. Time deposits are pooled in homogeneous groups, and the future cash flows of those groups are discounted using current market rates offered for similar products for purposes...

  • Page 116
    ... (Dollars in Thousands Except Share and Per Share Amounts) The following table provides the estimated fair values of financial instruments not carried at fair value at the years ended: 2010 Carrying value Financial Assets: Credit card loans, net Financial Liabilities: Time deposits Secured...

  • Page 117
    CABELA'S INCORPORATED AND SUBSIDIARIES SCHEDULE II vALUATION AND QUALIFYING ACCOUNTS (In Thousands) Beginning of Year Balance Year Ended January 1, 2011: Allowance for doubtful accounts Allowance for credit card loan losses (1) Year Ended January 2, 2010: Allowance for doubtful accounts Allowance ...

  • Page 118
    ... level controls related to revenue recording systems (fulfillment and order entry), cash, accounts receivable, gift cards liability, and credit card points liability were impacted by these system changes. These implementation issues had an adverse impact on our business during the quarter ended...

  • 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 1, 2011, based...

  • Page 120
    ... under the headings "Executive Compensation - Equity Compensation Plan Information as of Fiscal Year-End" and "Security Ownership of Certain Beneficial Owners and Management" in our Proxy Statement is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND...

  • Page 121
    ... 1. Financial Statements: • Report of Independent Registered Public Accounting Firm • Consolidated Statements of Income - Years ended January 1, 2011, January 2, 2010, and December 27, 2008 • Consolidated Balance Sheets - January 1, 2011, and January 2, 2010 • Consolidated Statements of Cash...

  • Page 122
    ...Cabela's Incorporated and various purchasers party thereto (incorporated by reference from Exhibit 4.9 of our Annual Report on Form 10-K, filed on March 1, 2010, File No. 001-32227) Executive... No. 333-113835)* Second Amendment to 1997 Stock Option Plan (incorporated by reference from Exhibit 10.8 of ...

  • Page 123
    ...our Annual Report on Form 10-K, filed on March 1, 2010, File No. 001-32227) Joinder Agreement made by Cabela's Retail IL, Inc. to Second Amended and Restated Credit Agreement dated as of July 15, 2005, among Cabela's Incorporated, various lenders party thereto, and U.S. Bank National Association, as...

  • Page 124
    ...Ohio County Development Authority and Cabela's Wholesale, Inc. (incorporated by reference from Exhibit 10.29 of our Annual Report of Form 10-K, filed on March 1, 2006, File No. 001-32227) Cabela's Incorporated Performance Bonus Plan (incorporated by reference from Exhibit 10 of our Current Report on...

  • Page 125
    ... of 2009 Amended and Restated Management Change of Control Severance Agreement (World's Foremost Bank) (incorporated by reference from Exhibit 10.3 of our Current Report on Form 8-K, filed on December 17, 2009, File No. 001-32227)* Subsidiaries of Cabela's Incorporated Consent of Deloitte & Touche...

  • Page 126
    ... Gottschalk * Reuben Mark * Michael R. McCarthy Title President, Chief Executive Officer, and Director (Principal Executive Officer) Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) Chairman of the Board and Director Date February 25...

  • Page 127
    ...and Chief Executive Officer Cabela's Incorporated Theodore M. Armstrong Retired Chief Financial Officer Angelica Corporation John H. Edmondson Retired Chief Executive Officer West Marine, Inc. John Gottschalk Chairman Omaha World-Herald Company Reuben Mark Retired Chairman and Chief Executive...

  • Page 128
    Cabela's Inc. One Cabela Drive cabelas.co m Sidne y, NE 6916 0 NY SE :C AB 308.254.550 5