Cabela's 2011 Annual Report Download - page 112

102
CABELA’S INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands Except Share and Per Share Amounts)
24. SEGMENT REPORTING
The Company has three reportable segments: Retail, Direct, and Financial Services. The Retail segment 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 consist primarily of labor, advertising,
depreciation, and occupancy costs of retail stores. For the Direct segment, operating costs consist primarily of
direct marketing costs (catalog and e-commerce advertising costs) and order processing costs. For the Financial
Services segment, operating costs consist primarily of advertising and promotion, marketing fees, third party
services for processing credit card transactions, salaries, and other general and administrative costs.
Revenues included in Corporate Overhead and Other are primarily made up of amounts received from
outfitter services, real estate rental income, land sales, and fees earned through the Company’s travel business
and other complementary business services. Corporate Overhead and Other expenses include unallocated shared-
service costs, operations of various ancillary subsidiaries such as real estate development and travel, and segment
eliminations. Unallocated shared-service costs include receiving, distribution, and storage costs of inventory,
merchandising, and quality assurance costs, as well as corporate headquarters occupancy costs.
Segment assets are those directly used in or clearly allocable to an operating segment’s operations. For the
Retail segment, assets include inventory in the retail stores, land, buildings, fixtures, and leasehold improvements.
For the Direct segment, assets primarily include deferred catalog costs and fixed assets. Goodwill totaling $3,450
and $3,519, at December 31, 2011, and January 1, 2011, respectively, was included in the Retail segment. The
change in the carrying value of goodwill from 2010 is due to foreign currency adjustments. For the Financial
Services segment, assets include cash, credit card loans, restricted cash, receivables, fixtures, and other assets.
Cash and cash equivalents of WFB were $117,035 and $81,904 at December 31, 2011, and January 1, 2011,
respectively. Assets for the Corporate Overhead and Other segment include corporate headquarters and facilities,
merchandise distribution inventory, shared technology infrastructure and related information technology systems,
corporate cash and cash equivalents, economic development bonds, prepaid expenses, deferred income taxes,
and other corporate long-lived assets. Depreciation, amortization, and property and equipment expenditures are
recognized in each respective segment. The accounting policies of the segments, where applicable, are the same as
those described in the summary of significant accounting policies in the Company’s notes to consolidated financial
statements. Intercompany revenue between segments was eliminated in consolidation.
Prior to January 1, 2012, under an Intercompany Agreement, the Financial Services segment had incurred
a marketing fee that was paid to the Retail and Direct business segments. Effective January 1, 2012, this
Intercompany Agreement was amended with the marketing fee component eliminated and replaced with a fixed
license fee equal to 70 basis points on the externally originated charge volume of the Cabela’s CLUB Visa credit
card portfolio. In addition, among other changes, the agreement requires the Financial Services segment to
reimburse the Retail and Direct business segments for certain operating costs. The Company does not expect that
reported operating income by segment, or the components of operating income for each segment, will be materially
impacted compared to prior years by this new agreement.