Cabela's 2012 Annual Report Download

Download and view the complete annual report

Please find the complete 2012 Cabela's annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 135

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135

LETTER TO SHAREHOLDERS
|
FORM
10
-
K

Table of contents

  • Page 1
    L E T T E R T O S H A R E H O L D E R S | F O R M 1 0 - K

  • Page 2
    ... Outfitter. our growing number of retail 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 card, which serves as...

  • Page 3
    ... was made improving merchandise adjacencies in our retail stores, developing skills in merchandising around pre-season planning and in-season management, improving vendor collaboration, and through a Company-wide effort to elevate the quality and performance of Cabela's branded products. These...

  • Page 4
    ... lifestyle. The Cabela's CLUB Visa program is the primary vehicle through which we reward our customers' loyalty. Over the last three years, we have rewarded customers with more than $480 million in free merchandise. Since 2009, we have added Signature Outdoor Adventures, which have opened the door...

  • Page 5
    ... very well in these markets. With more than 70% of new Cabela's CLUB members signing up at our retail stores, the Cabela's CLUB program will see increases in account growth with the acceleration of retail store openings. The foundational element of accelerating retail square footage growth is to...

  • Page 6
    ... with many of our new products. We will utilize new and existing digital marketing platforms to support our Retail business. Using social, mobile, and email media to engage our customers for new store openings, holiday events, and events specific to their geographic location will enable us to...

  • Page 7
    ...financial measures presented in this Annual Report. Management believes these non-GAAP financial results provide useful supplemental information to investors regarding the underlying business trends and performance of the Company's ongoing operations and are useful for period-over-period comparisons...

  • Page 8
    ... Company's Financial Services business segment. Reflects an accrual recognized in fiscal 2010 as a result of an agreement in principle to settle all matters with the Federal Deposit Insurance Corporation arising out of its compliance examination conducted in 2009 of World's Foremost Bank. Reflects...

  • Page 9
    ... charges caused by impairment of economic development bonds (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 lease payments, and total stockholders' equity to...

  • Page 10
    (This page intentionally left blank.)

  • Page 11
    ...,195 as of June 29, 2012 (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. Indicate the number of shares outstanding of each of the...

  • Page 12
    ... and credit markets or the availability of capital and credit; our ability to successfully execute our omni-channel strategy; increasing competition in the outdoor sporting goods industry and for credit card products and reward programs; the cost of our products, including increases in fuel prices...

  • Page 13
    ... About Market Risk Financial Statements and Supplementary Data Changes in and Disagreements With Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information PART III Item 10. Item 11. Item 12. Item 13. Item 14. Directors, Executive Officers and Corporate Governance...

  • Page 14
    ... - Wichita, Kansas; Tulalip, Washington; Saskatoon, Saskatchewan, Canada; Charleston, West Virginia; Rogers, Arkansas; and, on October 4, 2012, our first Outpost store in Union Gap, Washington. The opening of these retail stores increased our total retail square footage to 5.1 million square feet at...

  • Page 15
    ... state and local governments. Refer to Item 2 - "Properties" for additional information on our stores. Direct Business The Direct segment sells products through our e-commerce websites (Cabelas.com and Cabelas.ca) and direct mail catalogs. Our Direct segment generated revenue of $931 million in 2012...

  • Page 16
    ...Our rewards program is integrated into our store point-of-sale system. Our customers are informed of their number of accumulated points when making purchases at our stores or ordering through our Direct business. The percentage of our merchandise sold to customers using the Cabela's CLUB Visa credit...

  • Page 17
    ..., catalogs, and the Internet. Our customers can apply for the Cabela's CLUB Visa credit card at our retail stores and website through our instant credit process and, if approved, receive reward points available for use on merchandise purchases the same day. When a customer's application is approved...

  • Page 18
    ... 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 renew efforts in local markets and to increase sales. We also have improved our customer relationship management system...

  • Page 19
    .... These distribution centers comprise over 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 Post, and the United States Postal Service. We use common...

  • Page 20
    ... to our systems for omni-channel merchandise and financial planning, e-commerce, and customer relationship management. Employees At the end of 2012, we employed 15,200 employees - 6,900 of whom were employed full-time. We use parttime and temporary workers to supplement our labor force at peak...

  • Page 21
    ..., pricing, product safety, and product restrictions. Some of these laws prohibit or limit the sale, in certain states and locations, of certain items we offer, such as firearms, black powder firearms, ammunition, bows, knives, and similar products. State and local government regulation of hunting...

  • Page 22
    ... 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 reports on Form 8-K, and any amendments to those reports, proxy statements and annual reports to shareholders, and, from time to time...

  • Page 23
    ... 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 24
    ...rely heavily on our information technology systems to manage and replenish inventory, to take customer orders, to deliver products to our customers in an efficient manner, to collect payments from our customers, and to provide accurate financial data and reporting for our business. Any disruption to...

  • Page 25
    ... profitability would be adversely impacted. We continue to seek additional 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...

  • Page 26
    ... customers; increases in United States 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 27
    ...'s products or services. 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 may rise which could have a material adverse impact on our profitability. Political and economic uncertainty...

  • Page 28
    ... success depends on hiring, training, managing, and retaining quality managers, sales associates, and employees in our retail stores and customer care centers. Our corporate headquarters, distribution centers, return center, and some of our retail stores are located in sparsely populated rural areas...

  • Page 29
    ... 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 distribution centers or to timely integrate new or expanded distribution centers into our inventory control process...

  • 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
    ... 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 meet the capital needs of our Financial Services segment, which could alter our retail store expansion program. WFB must satisfy the...

  • Page 32
    ...increased use of advertising, target marketing, reward programs, mobile payment solutions, and pricing competition in interest rates and cardholder fees as both traditional and new credit card issuers seek to expand or to enter the market and compete for customers. Economic downturns and social and...

  • Page 33
    ... and Regulation." As directed by the Reform Act, the United States Government Accountability Office released a report on January 20, 2012, that examines the potential implications of eliminating certain exceptions under the BHCA, including the exception for credit card banks. It is unclear...

  • Page 34
    ...between the interest rate we pay on our borrowings and the fees we earn from these accounts may change and our profitability may be materially adversely affected. In addition, approximately 33% of our cardholders did not have a balance on their credit card accounts at the end of 2012. No interest is...

  • Page 35
    ... Customer Care Center Merchandise Return Center Retail Store Concept Center (1) Customer Care Center, Bank Operations, and Administrative Offices Data Information Center (1) Marketing and Information Technology Center (2) Location Sidney, Nebraska Prairie du Chien, Wisconsin Wheeling, West Virginia...

  • Page 36
    ... the following table, which shows our stores located in the United States and Canada, and the approximate retail total square footage of each retail store by type of format used in our Retail segment: Number of Stores and Total Square Footage by Store Format (1) Legacy Next-Generation Outpost Total...

  • Page 37
    ... months in the fourth fiscal quarter ended December 29, 2012. We announced on February 14, 2013, that we intend to repurchase up to 750,000 shares of our outstanding common stock in open market transactions through February 2014 pursuant to this share repurchase program. The share repurchase program...

  • 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
    ... Financial Services segment totaling $91 million, $117 million, $82 million, $371 million, and $402 million at years ended 2012, 2011, 2010, 2009, and 2008, respectively. Our ability to use this cash for non-banking operations, including its use as working capital for our Retail or Direct businesses...

  • Page 40
    ...retail square footage of 5.1 million square feet at the end of 2012. Our Direct business segment is comprised of our highly acclaimed Internet website and supplemented by our catalog distributions as a selling and marketing tool. World's Foremost Bank ("WFB", "Financial Services segment", or "Cabela...

  • Page 41
    ... in total merchandise sales comparing 2012 to 2011 was primarily due to: • • a net increase of $195 million in revenue from new retail stores, and an increase of $102 million, or 6.9%, in comparable store sales, led by an increase in sales in the hunting equipment product category. These...

  • Page 42
    .... In addition, free shipping offered to our Cabela's CLUB Visa customers, which started in the last half of June 2012 and continued through the last six months of 2012, resulted in increased merchandise sales, greater order frequency, and increases in the number of new Visa cardholder accounts. We...

  • Page 43
    ...States and Canada by developing a profitable retail expansion strategy that considers site location and the strategic size for each store in its given market. We opened five retail stores during 2012 in the next-generation store format. We also opened our first Outpost store in Union Gap, Washington...

  • Page 44
    ...Direct segment revenue decreased 130 basis points to 16.7%. The free shipping offer to our Cabela's CLUB Visa customers, which started in the last half of June 2012 and continued through the last six months of 2012, resulted in increased merchandise sales. However, the decrease in sales in clothing...

  • Page 45
    ... will be used for the Company's general business purposes, including working capital support. Developments in Legislation and Regulation - In late 2012 and into 2013, there has been significant discussion regarding potential gun control legislation, primarily aimed at modern sporting rifles, certain...

  • Page 46
    ... from the definition of "bank" under the Bank Holding Company Act of 1956, as amended (the "BHCA") for credit card banks, such as WFB. As directed by the Reform Act, the United States Government Accountability Office released a report on January 20, 2012, that examines the potential implications...

  • Page 47
    ... imposing informational requirements similar to those applicable to registered public offerings. The final form that SEC Regulation AB II may take is uncertain at this time, but it may impact the Financial Services segment's ability and/or desire to sponsor securitization transactions in the future...

  • Page 48
    ...rule's impact on the securitization market and the Financial Services segment is also unclear at this time. Proposed Settlement of Visa Litigation - In June 2005, a number of entities, each purporting to represent a class of retail merchants, sued Visa and several member banks, and other credit card...

  • Page 49
    ... at our retail stores, sales from orders placed through our retail store Internet kiosks, and sales from customers utilizing our in-store pick-up program. Direct revenue includes Internet and call center (catalog) sales from orders placed through our website, over the phone, and by mail where the...

  • Page 50
    ... promotions in digital marketing. The free shipping offer to our Cabela's CLUB Visa customers resulted in increased merchandise sales, greater order frequency, and increases in the number of new Visa cardholder accounts. Internet sales increased in 2012 compared to 2011. The number of web site...

  • Page 51
    ... 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 percentage of our merchandise sold to customers using...

  • Page 52
    ... CLUB are shown in the following chart for the years ended: Increase 2012 2011 (Decrease) % Change (Dollars in Thousands Except Average Balance per Account) Average balance of credit card loans (1) Average number of active credit card accounts Average balance per active credit card account (1) Net...

  • Page 53
    ... to our retail stores, Internet website, distribution centers, product procurement, Cabela's CLUB credit card operations, and overhead costs, including: advertising and marketing, catalog costs, employee compensation and benefits, occupancy costs, information systems processing, and depreciation...

  • Page 54
    ... of $11 million in advertising and direct marketing costs, in advertising and promotional costs to support customer relationships, for new store openings, and from an increase in account origination costs in our Financial Services segment; and an increase of $3 million in equipment and software...

  • Page 55
    ... the recoverability of land held for sale, economic development bonds, property (including existing store locations and future retail store sites), equipment, goodwill, and other intangible assets. In December 2012, we received an appraisal report that updated the value from a previous appraisal...

  • Page 56
    ... 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 segments for certain operating and promotional costs. Reported operating income by segment, and the components of...

  • Page 57
    ... 1,377,527 1.6% Comparable store sales increased $39 million, or 2.8%, in 2011 principally because of the strength in our hunting equipment and clothing and footwear categories and the success of our Retail operations focus. Average sales per square foot for stores that were open during the entire...

  • Page 58
    ...categories. Internet sales increased in 2011 compared to 2010. Visitors to our websites increased 4.5% during 2011 as we continued to focus our efforts on utilizing Direct marketing programs to increase traffic to our website and social media networks. Our hunting equipment and clothing and footwear...

  • Page 59
    ... Services business are shown in the following chart for the years ended: Increase (Decrease) $ 274,625 98,997 $ 62 $ (39,896) (1.88)% 2011 Average balance of managed credit card loans (1) $ Average number of active credit card accounts Average balance per active credit card account (1) $ Net...

  • Page 60
    ... merchandising and distribution centers, and general corporate overhead support; an increase of $12 million in building costs primarily related to the operations and maintenance of our new and existing retail stores; an increase of $10 million in advertising and promotional costs to support customer...

  • Page 61
    ... of $5 million in advertising and promotions expense due to an increase in account origination costs. • An increase of $3 million in employee compensation and benefits principally for positions added to support the growth of credit card operations. Corporate Overhead, Distribution Centers, and...

  • Page 62
    ... Direct business segment and higher consolidated operating expenses. Selling, distribution, and administrative expenses increased in 2011 compared to 2010 due to increases in comparable and new store costs and related support areas, pre-opening costs, and costs related to our customer relationship...

  • Page 63
    ... economic weakness by selecting a customer base that is very creditworthy. We use the scores of Fair Isaac Corporation ("FICO"), a widely-used tool for assessing an individual's credit rating, as the primary credit quality indicator. During the second quarter of 2012, the Financial Services segment...

  • Page 64
    ... segment and restructured credit card loans segment based on a model which tracks historical loss experience on delinquent accounts, bankruptcies, death, and charge-offs, net of estimated recoveries. The Financial Services segment uses a migration analysis and historical bankruptcy and death rates...

  • Page 65
    ...delinquency roll-rates and favorable charge-off trends. Aging of Credit Cards Loans Outstanding The following table shows our credit card loans outstanding at the end of 2012 and 2011 segregated by the number of months passed since the accounts were opened. 2012 Loans Percentage Outstanding of Total...

  • Page 66
    ... Services segment, and its ability and willingness to sponsor securitization transactions in the future. Retail and Direct Segments - The primary cash requirements of our merchandising business relate to capital for new retail stores, purchases of inventory, investments in our management information...

  • Page 67
    ... common stock in open market transactions through February 2014 pursuant to this share repurchase program. The share repurchase program does not obligate us to repurchase any outstanding shares of our common stock, and the program may be limited or terminated at any time. Financial Services Segment...

  • Page 68
    ..., and bona fide market-making activity. It is not clear how the final rule will differ from the proposed rule, if at all. The final rule's impact on the securitization market and the Financial Services segment is also unclear at this time. The JOBS Act was signed into law on April 5, 2012, and will...

  • Page 69
    ... imposing informational requirements similar to those applicable to registered public offerings. The final form that SEC Regulation AB II may take is uncertain at this time, but it may impact the Financial Services segment's ability and/or desire to sponsor securitization transactions in the future...

  • Page 70
    ...related projects, for the years ended: 2012 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 at the end of the year Retail square footage at the end of the year $ 214,267...

  • Page 71
    .... Inventory decreased $14 million in 2011, to a balance of $495 million, compared to an increase of $69 million in 2010, or to a balance of $509 million. WFB paid cash out on a net basis of $17 million for credit card loans originated at Cabela's through our Retail and Direct businesses. Accounts...

  • Page 72
    ...,000 shares of our outstanding common stock in open market transactions at a cost of $20 million. Economic Development Bonds and Grants In the past, we have negotiated economic development arrangements relating to the construction of a number of our new retail stores, including free land, monetary...

  • Page 73
    ... result in the Financial Services segment incurring losses related to its retained interests. In addition, if the retained interest in the loans of the Financial Services segment falls below the 5% minimum 20 day average and the Financial Services segment fails to add new accounts to the securitized...

  • Page 74
    ... costs and potentially limit our ability to grow the business of the Financial Services segment. Unfavorable conditions in the asset-backed securities markets generally, including the unavailability of commercial bank liquidity support or credit enhancements, could have a similar effect. During 2012...

  • Page 75
    ... obligations associated with retail store locations where we are in the process of certain negotiations. Our purchase obligations relate primarily to purchases of inventory, shipping, and other goods and services in the ordinary course of business under binding purchase orders or contracts...

  • Page 76
    ...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 - The Financial Services segment bears off-balance sheet risk in the normal course of its business. One form...

  • Page 77
    ...provisions for inventory shrinkage, damaged goods returned values, and obsolete and slowmoving items based on historical loss and product performance statistics and future merchandising objectives. Had our estimated inventory reserves been different by 10% at the end of 2012, our cost of sales would...

  • Page 78
    ... estimate of net losses over the next 12 months been different by 10% at the end of 2012, the Financial Services segment's allowance for loan losses and provision for loan losses would have changed by approximately $7 million. Credit card loans that have been modified through a fixed payment plan or...

  • Page 79
    ...respond equally to changes in interest rates, or that rates do not change uniformly, earnings could be affected. The variable rate credit card loans are indexed to the one month London Interbank Offered Rate ("LIBOR") and the credit card portfolio is segmented into risk-based pricing tiers each with...

  • Page 80
    ... on the credit cards issued by the 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 25 days of the billing cycle, which represented 33.3% of total balances outstanding at the end of 2012. Some of...

  • Page 81
    ... AND SUPPLEMENTARY DATA TABLE OF CONTENTS Page REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM CONSOLIDATED FINANCIAL STATEMENTS: Consolidated Statements of Income Consolidated Statements of Comprehensive Income Consolidated Balance Sheets Consolidated Statements of Cash Flows Consolidated...

  • Page 82
    ...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 December 29, 2012, based on criteria...

  • Page 83
    ... Thousands Except Earnings Per Share) 2012 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 84
    ... STATEMENTS OF COMPREHENSIVE INCOME (In Thousands) 2012 Net income $ 173,513 Other comprehensive income (loss): Effect of adopting ASC Topics 810 and 860, net of tax Foreign currency translation adjustments (1,105) Unrealized gain (loss) on economic development bonds, net of taxes of $2,035, $3,225...

  • Page 85
    ..., net Land held for sale Economic development bonds Other assets Total assets LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT Accounts payable, including unpresented checks of $28,928 and $19,124 Gift instruments, credit card rewards and loyalty rewards programs Accrued expenses Time deposits Current...

  • Page 86
    ...loan losses Other, net Change in operating assets and liabilities, net: Accounts receivable Credit card loans originated from internal operations, net Inventories Prepaid expenses and other current assets Land held for sale Accounts payable and accrued expenses Gift certificates, credit card rewards...

  • Page 87
    ... (Dollars in Thousands) Accumulated Other Comprehensive Income (Loss) $ 965 (3,650) 109 (2,576) 5,307 $ Common Stock Shares BALANCE, beginning of 2010 Effect of adopting ASC Topics 810 and 860, net of tax Net income Other comprehensive income Stock-based compensation Employee stock purchase plan...

  • Page 88
    ...is a retailer of hunting, fishing, and outdoor gear, offering products through its retail stores, the Internet, and regular and special catalog mailings. Cabela's operates 40 retail stores, 37 located in 24 states and three located in Canada. World's Foremost Bank ("WFB," "Financial Services segment...

  • Page 89
    .... Payments received on non-accrual loans are applied to principal. The Financial Services segment does not record any liabilities for off-balance sheet risk of unfunded commitments through the origination of unsecured credit card loans. The direct credit card account origination costs associated...

  • Page 90
    ... $919, and $1,501 for 2012, 2011, and 2010, respectively. 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...

  • Page 91
    ... sale of economic development bonds funded by the local government. The Company has historically purchased the majority of the bonds associated with its developments. Cash grants are made available to fund land, retail store construction, and/or development infrastructure costs. Economic development...

  • Page 92
    .... The Company did not guarantee any economic development bonds that it owned at the end of 2012, 2011 or 2010. Land grants typically include land associated with the retail store and may include other land for sale and further development. Land grants are recognized at the fair value of the land on...

  • Page 93
    ...anticipated payments and thus will be unable to realize the full carrying values of the economic development bonds, which result in a corresponding decrease to deferred grant income. Credit Card and Loyalty Rewards Programs - Cabela's CLUB Visa cardholders receive Cabela's points based on the dollar...

  • Page 94
    ... income (loss) in our consolidated balance sheets. Revenues and expenses are translated at average monthly currency exchange rates. Earnings Per Share - Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the...

  • Page 95
    ... at the lower of cost or market. Net unrealized losses, if any, were recognized in income through a valuation allowance. Although WFB continued to service the underlying credit card accounts and maintained the customer relationships, these securitization transactions were treated as sales and the...

  • Page 96
    ... result in the Financial Services segment incurring losses related to its retained interests. In addition, if the retained interest in the loans of the Financial Services segment falls below the 5% minimum 20 day average and the Financial Services segment fails to add new accounts to the securitized...

  • Page 97
    ... costs Credit card loans, net Allowance for Loan Losses: The following table reflects the activity in the allowance for loan losses by credit card segment for the years ended: 2012 2011 Restructured Total Restructured Total Credit Card Credit Card Credit Card Credit Card Credit Card Credit Card...

  • Page 98
    ... restructured and other credit card loans in order to facilitate the estimation of the losses inherent in the portfolio as of the reporting date. The Financial Services segment uses the scores of Fair Isaac Corporation ("FICO"), a widely-used tool for assessing an individual's credit rating, as the...

  • Page 99
    ... Share Amounts) The table below provides information on non-accrual, past due, and restructured credit card loans by class using the respective fourth quarter FICO score at the years ended: Restructured Credit Card Loans Segment (1) December 29, 2012: Credit card loan status: Current 1 to 29 days...

  • Page 100
    ...$ 7. SECURITIES Economic development bonds, which are all classified as available-for-sale, consisted of the following at the years ended: Gross Unrealized Gains $ $ 10,496 4,682 Gross Unrealized Losses $ $ - Amortized Cost December 29, 2012 December 31, 2011 $ $ 74,545 81,881 Fair Value $ $ 85...

  • Page 101
    ...Share and Per Share Amounts) 8. PREPAID EXPENSES AND OTHER ASSETS Prepaid expenses and other assets (current and long-term) consisted of the following at the years ended: 2012 Prepaid expenses and other current assets: Deferred catalog costs Interest and notes receivable Financial Services segment...

  • Page 102
    ... Except Share and Per Share Amounts) 11. TIME DEPOSITS The Financial Services segment accepts time deposits only in amounts of at least one hundred thousand dollars. All time deposits are interest bearing. The aggregate amount of time deposits, net of brokered fees, by maturity at the end of 2012...

  • Page 103
    ...card loans. The Financial Services segment has unsecured federal funds purchase agreements with two financial institutions. The maximum amount that can be borrowed is $85,000. There were no amounts outstanding at December 29, 2012 or December 31, 2011. During 2012 and 2011, the daily average balance...

  • Page 104
    ... 9.67 to 1, a leverage ratio of 0.92 to 1, and a consolidated net worth that was $332,843 in excess of the minimum. The credit agreement includes a dividend provision limiting the amount that Cabela's could pay to stockholders, which at December 29, 2012, was not in excess of $180,529. The agreement...

  • Page 105
    .... The monthly installments are $83 and the lease contains a bargain purchase option at the end of the lease term. The Company accounted for this lease as a capital lease and recorded the additional leased asset at the present value of the future minimum lease payments using a 5.9% implicit rate. The...

  • Page 106
    ... recoverability of land held for sale, economic development bonds, property (including existing store locations and future retail store sites), equipment, goodwill, and other intangible assets. Land Held for Sale: In December 2012, the Company received an appraisal report that updated the value from...

  • Page 107
    ... from the economic development bonds. In 2011, the Company incurred charges totaling $935 for severance and related benefits primarily from outplacement costs and a voluntary retirement plan. All impairment and restructuring charges were recorded to the Corporate Overhead and Other segment. 16...

  • Page 108
    ... expenses Gift certificates liability Allowance for loans losses and doubtful accounts Loyalty rewards programs Other Deferred tax liabilities: Prepaid expenses Property and equipment Inventories Credit card loan fee deferral U.S. income tax on foreign earnings Economic development bonds Other Net...

  • Page 109
    ...696 and $6,290 at the end of 2012 and 2011, respectively, is included in other 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 $5,727. The Internal Revenue Service ("IRS") commenced its...

  • Page 110
    ... or local governments provide funding for certain costs associated with developing and opening a new retail store. The Company generally receives grant funding in exchange for commitments, such as assurance of agreed employment and wage levels at the retail store or that the retail store will remain...

  • Page 111
    ... Services segment has the right to reduce or cancel the available lines of credit at any time. Proposed Settlement of Visa Litigation - In June 2005, a number of entities, each purporting to represent a class of retail merchants, sued Visa and several member banks, and other credit card associations...

  • Page 112
    ... AND EMPLOYEE BENEFIT PLANS Stock-Based Compensation - The Company recognized total stock-based compensation expense of $13,733, $12,911, and $11,198 in 2012, 2011, and 2010, respectively. Compensation expense related to the Company's stockbased payment awards is recognized in selling, distribution...

  • Page 113
    ... 64,000 premium-priced non-qualified stock options to its President and Chief Executive Officer under the 2004 Plan at an exercise price of $40.45 (which is equal to 115% of the closing price of the Company's common stock on March 2, 2012). The premium-priced non-qualified stock options vest in...

  • Page 114
    ... table provides information relating to the Company's equity share-based payment awards at December 29, 2012: Weighted Average Remaining Contractual Life (in Years) 3.32 6.47 4.61 4.52 Vested and exercisable Non-vested Total outstanding Expected to vest after December 29, 2012 Number of Awards...

  • Page 115
    ...$40.45 Average Remaining Contractual Life (in Years) 6.46 3.41 3.48 3.89 1.58 7.06 4.61 Employee Stock Purchase Plan - The maximum number of shares of common stock available for issuance under the Company's Employee Stock Purchase Plan is 1,835,000. During 2012, there were 81,254 shares issued. At...

  • Page 116
    ... The share repurchase program does not obligate the Company to repurchase any outstanding shares of its common stock, and the program may be limited or terminated at any time. On February 16, 2012, the Company announced that it would repurchase up to 800,000 shares of its common stock in open market...

  • Page 117
    ...through the Company's retail stores. The Direct segment sells products through our e-commerce websites (Cabelas.com and Cabelas.ca) and direct mail catalogs. The Financial Services segment issues co-branded credit cards. For the Retail segment, operating costs consist primarily of labor, advertising...

  • Page 118
    ... 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...

  • Page 119
    ...in Thousands Except Share and Per Share Amounts) Financial information by segment is presented below for the following years: Corporate Overhead and Other $ Fiscal Year 2012 Merchandise sales Non-merchandise revenue: Financial Services Other Total revenue Operating income (loss) As a percentage of...

  • Page 120
    ... Company uses various methods, including discounted cash flow projections based on available market interest rates and data, and management estimates of future cash payments. Judgment is required in interpreting certain market data to develop the estimates of fair value and, accordingly, any changes...

  • Page 121
    ...) 104,231 $ Fair values of the Company's economic development bonds were estimated using discounted cash flow projection estimates. These estimates are based on available market interest rates and the estimated amounts and timing of expected future payments to be received from municipalities under...

  • Page 122
    ... of impairment exist using significant unobservable inputs. This evaluation included existing store locations and future retail store sites. Impairment losses consisted of the following for the years ended: 2012 Carrying value of land held for sale and other assets Fair value of related assets...

  • Page 123
    ... (Dollars in Thousands Except Share and Per Share Amounts) Secured Long-Term Obligations of the Trust. The estimated fair value of secured long-term obligations of the Trust is based on future cash flows associated with each type of debt discounted using current borrowing rates for similar types of...

  • Page 124
    ... 31, 2011: Allowance for doubtful accounts Allowance for credit card loan losses Year Ended January 1, 2011: Allowance for doubtful accounts Allowance for credit card loan losses (1) $ Charged to Costs and Expenses Charged to Other Accounts Net ChargeOffs End of Year Balance 1,178 65,600 4,772...

  • Page 125
    ... accordance with accounting principles generally accepted in the United States of America. With the participation of our Chief Executive Officer and our Chief Financial Officer, management evaluated the effectiveness of our internal control over financial reporting as of December 29, 2012, based on...

  • Page 126
    ... 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 December 29, 2012, based...

  • Page 127
    ... amendments to, or waivers from, the provisions of our Business Code of Conduct and Ethics by posting such information on our website at the address specified above. Information contained on our website, whether currently posted or posted in the future, is not part of this document or the documents...

  • Page 128
    ... Registered Public Accounting Firm • Consolidated Statements of Income - Years ended December 29, 2012, December 31, 2011, and January 1, 2011 • Consolidated Statements of Comprehensive Income - Years ended December 29, 2012, December 31, 2011, and January 1, 2011 • Consolidated Balance Sheets...

  • Page 129
    ...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 Employment...to 1997 Stock Option Plan (incorporated by reference from Exhibit 10.11 of our Annual Report on ...

  • Page 130
    ... Option to Purchase dated April 26, 2005, between Ohio County Development Authority and Cabela's Wholesale, Inc. (incorporated by reference from Exhibit 10.29 of our Annual Report on Form 10-K, filed on March 1, 2006, File No. 001-32227) Cabela's Incorporated Performance Bonus Plan (incorporated by...

  • Page 131
    ... 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)* Executive Employment Agreement dated June 9, 2011, between Cabela's Incorporated and...

  • Page 132
    ...101.PRE 101.DEF * + Subsidiaries of Cabela's Incorporated Consent of Deloitte & Touche LLP Powers of Attorney Certification of CEO Pursuant to Rule 13a-14(a) under the ...management contract or compensatory plan or arrangement required to be filed as exhibits pursuant to Item 15(b) of this report...

  • Page 133
    ... M. Pritchard * By: /s/ Thomas L. Millner Thomas L. Millner 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...

  • Page 134
    ... Vice President and Chief Merchandising Officer Douglas R. Means Executive Vice President and Chief Supply Chain Officer Scott K. Williams Executive Vice President and Chief Marketing and E-Commerce Officer Corporate Headquarters Cabela's Incorporated One Cabela Drive Sidney, Nebraska 69160...

  • Page 135
    C abela's I n c . O n e C ab b ela la D ri ve Sidn e y, NE 6 916 0 308.254.5505 cabela s.co m N Y SE:C A B