Cabela's 2013 Annual Report Download

Download and view the complete annual report

Please find the complete 2013 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 132

  • 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

Table of contents

  • Page 1

  • Page 2

  • Page 3
    ...foot. As we continue to expand our retail footprint at a rate of approximately one million square feet per year, these new stores will continue to drive strong returns. Additionally, we were able to grow merchandise gross margin by 50 basis points, which made a significant contribution to increased...

  • Page 4
    ... per active credit card account grew 2.9% and net charge-offs reached historically low levels, finishing the year at 1.8%. This program continues to develop strong bonds with customers, and in 2013, we gave Cabela's CLUB members $213 million in free merchandise through our CLUB rewards program. We...

  • Page 5
    ... aspects associated with shopping on a desktop or laptop. Our DCEM program was another significant investment in the future of our company for 2013. We currently have approximately 50 Outfitters working in our Foothills office focused on enhancing customer relationships through social media...

  • Page 6
    ... by providing a record Voice of the Customer survey rating of 88.7, putting us at the top of a list consisting of the most respected names in retail. As we look forward to 2014, we could not be more excited about the opportunities ahead to build on the strengths of the foundation established...

  • Page 7
    ... site and $937 recognized in the second quarter of fiscal 2013 related to the closure and relocation of a retail store in May 2013. For fiscal 2012, reflects impairment losses primarily on other property and economic development bonds. See Note 14 in the 2013 Form 10-K for additional information...

  • Page 8
    ... Adjusted Financial Measures (1) Fiscal Year Ended Fiscal Year Ended December 31, 2011 January 1, 2011 GAAP Basis Non-GAAP Non-GAAP GAAP Basis Non-GAAP Non-GAAP as Reported Adjustments Amounts as Reported Adjustments Amounts (Dollars in Thousands Except Earnings Per Share) Selling, distribution, and...

  • Page 9
    ... tax rate Adjusted net income, non-GAAP Calculation of 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 Financial Services segment) Less: Cash...

  • Page 10
    (This page intentionally left blank.)

  • Page 11
    ...,180 as of June 28, 2013 (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
    ... 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; • the availability of our products due to political or financial instability...

  • 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
    ... to access and use our retail stores, web and social media channels, and catalogs. Our omni-channel model employs the same merchandising team, distribution centers, customer database, and infrastructure, which we continue to leverage by building on the strengths of each channel. Customer service...

  • Page 15
    ..., North Carolina; Fort Mill, South Carolina; Bristol, Virginia; Moncton, New Brunswick, Canada; Ammon, Idaho; Fort Oglethorpe, Georgia; and Short Pump, Virginia. We plan to open 13 to 15 retail stores each year. The retail stores planned for 2014 represent approximately one million new square feet...

  • Page 16
    ... our brand name, and increasing our merchandise revenue. Our rewards program is a simple loyalty program that allows customers to earn points whenever and wherever they use their Cabela's CLUB Visa credit card and then redeem earned points for products and services at our retail stores or through...

  • Page 17
    ... and our catalogs. 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 through the...

  • Page 18
    ... clubs, discount and department stores, small specialty retailers, and catalog and Internet-based retailers. We believe that we compete effectively with our competitors on the basis of our wide and distinctive merchandise selection, our strong credit card loyalty rewards program for our customers...

  • Page 19
    ... three times per week for replenishment of our retail stores. We also operate a small merchandise return center in Oshkosh, Nebraska. Because we have begun adding stores to our distribution network through the omni-channel fulfillment process, customers who order through our call centers or Cabelas...

  • Page 20
    ...to states in which our retail stores are physically located. As we open more retail stores, we will be subject to tax in an increasing number of state and local taxing jurisdictions. Intellectual Property Cabela's®, Cabela's CLUB®, Cabelas.com®, World's Foremost Outfitter®, World's Foremost Bank...

  • Page 21
    ... apparel and footwear markets are highly fragmented and competitive. We compete directly or indirectly with the following types of companies: • other specialty retailers that compete with us across a significant portion of our merchandising categories through retail store or direct businesses...

  • Page 22
    ... 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, Target, and Amazon; and • casual outdoor apparel and footwear retailers, such as L.L. Bean, Lands' End...

  • Page 23
    ...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 24
    ... adjust the fixed costs of a catalog mailing to reflect subsequent sales of the products marketed in the catalog; and • 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. Any one...

  • Page 25
    ...; • shipping companies, such as United Parcel Service, the United States Postal Service, and common carriers, for timely delivery of our catalogs, shipment of merchandise to our customers, and delivery of merchandise from our vendors to us and from our distribution centers to our retail stores...

  • Page 26
    ...as United States or foreign labor strikes, work stoppages, or boycotts could increase the cost or reduce the supply of merchandise available to us or may require us to modify our current business practices, any of which could hurt our profitability. Due to the seasonality of our business, our annual...

  • Page 27
    ... lose merchandise and be unable to effectively deliver to our direct customers and retail stores. We currently rely on distribution centers in Sidney, Nebraska; Prairie du Chien, Wisconsin; Wheeling, West Virginia; and Winnipeg, Manitoba, Canada, to handle our distribution needs. We operate a return...

  • Page 28
    ... checks on firearms purchases and compliance with other sales laws as mandated by state and federal law. We may also incur losses from lawsuits relating to the improper use of firearms or ammunition sold by us, including lawsuits by municipalities or other organizations attempting to recover costs...

  • Page 29
    ... in funding costs for our Financial Services segment, which could limit growth of the business and decrease our profitability. Our Financial Services segment requires a significant amount of cash to operate. These cash requirements will increase if our credit card originations increase or if...

  • Page 30
    ... of cardholders to make payments to us due to 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...

  • Page 31
    ...with 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...

  • Page 32
    ... 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 Bank Holding Company Act of 1956, as amended ("BHCA"), including the exception for credit card banks. It is unclear...

  • Page 33
    ... 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 segment. If the rate of interest we pay on borrowings increases more...

  • Page 34
    ... Care Center (1) Customer Care Center Merchandise Return Center Retail Store Concept Center (1) Customer Care Center, Bank Operations, and Administrative Offices (3) Data Information Center (1) Marketing and Information Technology Center (1) Administrative Offices Location Wheeling, West Virginia...

  • Page 35
    ... 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 operations: Number of Stores and Total Square Footage by Store Format (1) Next-Generation and Outpost Legacy Total...

  • Page 36
    ... sales prices per share of our common stock as reported on the New York Stock Exchange: 2013 High First Quarter Second Quarter Third Quarter Fourth Quarter $ 62.22 72.54 71.80 66.47 Low $ 40.58 53.07 62.45 58.17 High $ 39.80 41.61 55.65 56.78 2012 Low $ 23.65 33.10 37.06 38.44 Issuer Purchases...

  • Page 37
    ... 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 December 28, 2013. The graph and table also show the cumulative total returns of the Standard and Poor's ("S&P") 500 Retailing Index and the...

  • Page 38
    ...371 million at years ended 2013, 2012, 2011, 2010, and 2009, respectively. Regulatory restrictions limit 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 expansion. Amounts for all years except 2009...

  • Page 39
    ... website and supplemented by our catalog distributions as a selling and marketing tool. World's Foremost Bank ("WFB," "Financial Services segment," or "Cabela's CLUB") also plays an integral role in supporting our merchandising business. The Financial Services segment is comprised of our credit card...

  • Page 40
    ...the hunting equipment product category. Financial Services revenue increased $56 million, or 17.7%, in 2013 compared to 2012 due to increases in interest income and interchange income, partially offset by higher customer reward costs due to growth in the number of active accounts and average balance...

  • Page 41
    ... in generating cash flows. Increases in our return on invested capital, on an after-tax basis, indicate improvements in our use of capital, thereby creating value in our Company. We offer our customers integrated opportunities to access and use our retail store, website, and catalog channels. Our...

  • Page 42
    ..., North Carolina; Fort Mill, South Carolina; Bristol, Virginia; Moncton, New Brunswick, Canada; Ammon, Idaho; Fort Oglethorpe, Georgia; and Short Pump, Virginia. We plan to open 13 to 15 retail stores each year. The retail stores planned for 2014 represent approximately one million new square feet...

  • Page 43
    ... quarter of fiscal 2014. To address these trends, we increased our promotional spending while managing other expenses to levels consistent with how our business is performing. We plan to continue managing those costs accordingly through the remainder of fiscal 2014. The Financial Services segment...

  • Page 44
    ..., the Federal Reserve approved an extension of the conformance period until July 21, 2015. We are continuing to assess the impact, if any, that the Volcker Rule and the implementing regulation will have on our Retail, Direct, and Financial Services segments. The Cabela's Master Credit Card Trust and...

  • Page 45
    ... on the securitization market and the Financial Services segment is also unclear at this time. Visa Litigation Settlement - 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, alleging...

  • Page 46
    ... through our retail store website kiosks, and sales from customers utilizing our in-store pick-up program. Direct revenue includes sales from orders placed through our website, over the phone, and by mail where the merchandise is shipped to non-retail store locations. Financial Services revenue is...

  • Page 47
    ...a wide variety of firearms, ammunition, optics, archery products, and related accessories and supplies. The general outdoors merchandise category includes a full range of equipment and accessories supporting all outdoor activities, including all types of fishing and tackle products, boats and marine...

  • Page 48
    ...of our Financial Services revenue as a percentage of average credit card loans, including any accrued interest and fees, for the years ended: 2013 Interest and fee income Interest expense Provision for loan losses Interchange income Other non-interest income Customer rewards costs Financial Services...

  • Page 49
    ... 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 the Cabela's CLUB Visa credit card approximated 30% for 2013. The dollar amounts related to...

  • Page 50
    ... related to our retail stores, 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 and...

  • Page 51
    ... of our new and existing retail stores as well as corporate offices; • an increase of $13 million in advertising, promotional, and direct marketing costs to support customer relationships, for new store openings, and from an increase in account origination costs in our Financial Services segment...

  • Page 52
    ...intent to build a Cabela's retail store at that location. The appraised value of the Colorado Property at that time was based on the projected cash flows from the Company's prospective retail store development. In the second quarter ended June 2011, we made a decision not to locate a retail store on...

  • Page 53
    ...longer support a value high enough to justify the cost of developing the property. At December 2013 and 2012, we classified all of our unimproved land not used in our merchandising business as "other property" and included the carrying value of $15 million and $23 million at the end of 2013 and 2012...

  • Page 54
    ...to increases in comparable and new store costs and related support areas. Under an Intercompany Agreement, the Financial Services segment pays to the Retail and Direct business segments a fixed license fee equal to 70 basis points on all originated charge volume of the Cabela's CLUB Visa credit card...

  • Page 55
    ... CLUB Visa free shipping offer and advertising 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...

  • Page 56
    .... Customer rewards costs increased $33 million due to an increase in credit card purchases. The following table sets forth the components of our Financial Services revenue as a percentage of average managed credit card loans, including any accrued interest and fees, for the years ended: 2012...

  • Page 57
    ... the years ended: Increase (Decrease) $350,663 120,322 $ 77 $ (6,717) (0.48)% % Change 12.8% 8.5 4.0 (10.4) 2012 Average balance of managed credit card loans (1) Average number of active credit card accounts Average balance per active credit card account (1) Net charge-offs on managed loans (1) Net...

  • Page 58
    ... retail stores as well as corporate offices; • an increase 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...

  • Page 59
    ... analyzing the market for similar properties that have sold or that were available for sale (Level 2 inputs). In the fourth quarter of 2012, we also impaired a second property held for sale based on an arms-length sales contract of adjoining land anticipated to close in mid-2013 (Level 2 inputs). In...

  • Page 60
    ... 70 basis points on all 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 segments for certain operating and promotional costs. Reported operating income...

  • Page 61
    ... credit card loans, as a percentage of our credit card loans, including any accrued interest and fees, in a manner consistent with our monthly external reporting for the years ended: 2013 Number of days delinquent: Greater than 30 days Greater than 60 days Greater than 90 days 0.69% 0.42 0.22 2012...

  • Page 62
    .... Management estimates losses inherent in the credit card loans 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...

  • Page 63
    ...1.87% 2.35% For 2013, net charge-offs as a percentage of average credit card loans decreased to 1.80%, down seven basis points compared to 1.87% for 2012. We believe our charge-off levels remain well below industry averages. Our net charge-off rates and allowance for loan losses have decreased due...

  • Page 64
    ... will have on our Retail, Direct, and Financial Services segments. 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 systems and infrastructure, and...

  • Page 65
    ... shares of our common stock, and the program may be limited or terminated at any time. There is no guarantee as to the exact number of shares that we will repurchase. Financial Services Segment - The primary cash requirements of the Financial Services segment relate to the financing of credit card...

  • Page 66
    ...-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 Trust is structured to qualify for the exemption from the Investment Company...

  • Page 67
    ... the years ended: 2013 Cash paid for property and equipment additions Proceeds from retirements and maturities of economic development bonds Number of new retail stores opened during the year, including the Winnipeg relocation Number of retail stores at the end of the year Retail square footage at...

  • Page 68
    ... repurchase our common stock in the future to offset future equity grants and to fund any repurchases with cash from operations. The following table presents the borrowing activities of our merchandising business and the Financial Services segment for the years ended: 2013 Borrowings (repayments) on...

  • Page 69
    ... to pay the 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 December 28, 2013, and December 29, 2012, economic development bonds...

  • Page 70
    ... the 5% minimum 20 day average and the Financial Services segment fails to add new accounts to the securitized pool of loans, an early amortization event would be triggered. Another feature, which is applicable to secured obligations of the Trust, is one in which excess cash flows generated by the...

  • Page 71
    ... fund the Financial Services segment's foreseeable cash requirements and near-term growth plans. Furthermore, the securitized credit card loans of the Financial Services segment could experience poor performance, including increased delinquencies and credit losses, lower payment rates, or a decrease...

  • Page 72
    ... in a minimum amount of one hundred thousand dollars in various maturities. At December 28, 2013, the Financial Services segment had $1.1 billion of certificates of deposit outstanding with maturities ranging from January 2014 to July 2023 and with a weighted average effective annual fixed rate of...

  • Page 73
    ...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 - The Financial Services...

  • Page 74
    ... is recognized on our Direct sales when merchandise is delivered to the customer at the point of delivery, with the point of delivery based on our estimate of shipping time from our distribution centers to the customer. We recognize reserves for estimated product returns based upon our historical...

  • Page 75
    ... assumptions used in estimating future cash flows and asset fair values, we may be exposed to losses that could be material. Economic Development Bonds Economic development bonds are generally repaid through incremental sales and/or property tax revenues generated from our retail store locations or...

  • Page 76
    ...on our consolidated financial statements for the fiscal year ended December 28, 2013. Any such impact of the final tangible property regulations would affect temporary deferred taxes only and result in a consolidated balance sheet reclassification between current and deferred taxes. We have analyzed...

  • Page 77
    ... 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 31.5% of total balances outstanding at the end of 2013. Some of...

  • Page 78
    ...FINANCIAL STATEMENTS 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...

  • Page 79
    ... Subsidiaries Sidney, Nebraska We have audited the accompanying consolidated balance sheets of Cabela's Incorporated and Subsidiaries (the "Company") as of December 28, 2013 and December 29, 2012, and the related consolidated statements of income, comprehensive income, stockholders' equity, and cash...

  • Page 80
    CABELA'S INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Dollars in Thousands Except Earnings Per Share) 2013 Revenue: Merchandise sales Financial Services revenue Other revenue Total revenue Cost of revenue: Merchandise costs (exclusive of depreciation and amortization) Cost of ...

  • Page 81
    ... STATEMENTS OF COMPREHENSIVE INCOME (In Thousands) 2013 Net income $ 224,390 Other comprehensive income (loss): Foreign currency translation adjustments (5,126) Unrealized gain (loss) on economic development bonds, net of taxes of $(923), $2,035, and $3,225 (2,141) Cash flow hedges, net of taxes...

  • Page 82
    ... taxes receivable and deferred income taxes Total current assets Property and equipment, net Economic development bonds Other assets Total assets LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT Accounts payable, including unpresented checks of $22,717 and $28,928 Gift instruments, credit card rewards...

  • Page 83
    ..., credit card rewards, and loyalty rewards programs Other long-term liabilities Income taxes receivable Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES: Property and equipment additions Change in credit card loans originated externally, net Change in restricted cash of...

  • Page 84
    ... employee stock option exercises BALANCE, end of 2012 Net income Other comprehensive loss Common stock repurchased Stock-based compensation Exercise of employee stock options and tax withholdings on share-based payment awards Excess tax benefit on employee stock option exercises BALANCE, end of 2013...

  • Page 85
    ...of hunting, fishing, and outdoor gear, offering products through its retail stores, U. S. and Canada websites, and regular and specialty catalog mailings. Cabela's operates 50 retail stores, 46 located in 26 states and four located in Canada. World's Foremost Bank ("WFB," "Financial Services segment...

  • Page 86
    ... Financial Services segment does not record any liabilities for off-balance sheet risk of unfunded commitments through the origination of unsecured credit card loans, as it has the right to refuse or cancel these available lines of credit at any time. The direct credit card account origination costs...

  • Page 87
    ... and $919 for 2013, 2012, and 2011, 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 capital...

  • Page 88
    ... 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 bonds are typically repaid through sales and/or property taxes generated by the retail store...

  • Page 89
    ...did not guarantee any economic development bonds that it owned at the end of 2013, 2012, or 2011. 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 date of grant...

  • Page 90
    ...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 91
    ... FINANCIAL STATEMENTS (Dollars in Thousands Except Share and Per Share Amounts) types of debt of comparable maturity. The estimated fair value of long-term debt (level 2) is based on future cash flows associated with each type of debt discounted using current borrowing rates for similar types...

  • Page 92
    ... the 5% minimum 20 day average and the Financial Services segment fails to add new accounts to the securitized pool of loans, an early amortization event would be triggered. Another feature, which is applicable to secured obligations of the Trust, is one in which excess cash flows generated by the...

  • Page 93
    ... 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 94
    ... STATEMENTS (Dollars in Thousands Except Share and Per Share Amounts) The table below provides information on current, 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...

  • Page 95
    CABELA'S INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in Thousands Except Share and Per Share Amounts) 5. PROPERTY AND EQUIPMENT Property and equipment consisted of the following at the years ended: Depreciable Life in Years Land and improvements Buildings and ...

  • Page 96
    ... FINANCIAL STATEMENTS (Dollars in Thousands Except Share and Per Share Amounts) 7. PREPAID EXPENSES AND OTHER ASSETS Prepaid expenses and other assets (current and long-term) consisted of the following at the years ended: 2013 Prepaid expenses and other current assets: Financial Services segment...

  • Page 97
    ... Share Amounts) 10. 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 was as follows at the years ended: 2013...

  • Page 98
    ... During the years ended December 28, 2013, and December 29, 2012, the daily average balance outstanding on these notes was $26,328 and $142,077, with a weighted average interest rate of 0.77% and 0.78%, respectively. The Financial Services segment has unsecured federal funds purchase agreements with...

  • Page 99
    ... FINANCIAL STATEMENTS (Dollars in Thousands Except Share and Per Share Amounts) At December 28, 2013, there was $2,932 outstanding under our credit agreement, and no amounts were outstanding at December 29, 2012. During 2013 and 2012, the daily average principal balance outstanding on the lines...

  • Page 100
    CABELA'S INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in Thousands Except Share and Per Share Amounts) 13. LONG-TERM DEBT AND CAPITAL LEASES Long-term debt and capital leases consisted of the following at the years ended: 2013 Unsecured revolving credit ...

  • Page 101
    ... (ii) at least annually for recurring fair value measurements and for those assets not subject to amortization. In 2013, 2012, and 2011, we evaluated the recoverability of our economic development bonds, property (including existing store locations and future retail store sites), equipment, goodwill...

  • Page 102
    ...intent to build a Cabela's retail store at that location. The appraised value of the Colorado Property at that time was based on the projected cash flows from the Company's prospective retail store development. In the second quarter ended June 2011, we made a decision not to locate a retail store on...

  • Page 103
    CABELA'S INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in Thousands Except Share and Per Share Amounts) Economic Development Bonds: In the fourth quarter of 2012, we received information on a project that the development would be delayed thus reducing the amount ...

  • Page 104
    ... AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in Thousands Except Share and Per Share Amounts) 16. INCOME TAXES For financial reporting purposes, income before taxes includes the following components: 2013 Federal Foreign $ 244,878 98,650 $ 343,528 $ $ 2012 164,433 97,281...

  • Page 105
    ...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 deferred tax (asset) liability Less current deferred income taxes Long...

  • Page 106
    ... Company's consolidated financial condition or results of operations within the next 12 months. The Company files income tax returns in the United States, Canada, Hong Kong, and various states. The tax years 2007 through 2012 remain open to examination by major taxing jurisdictions to which Cabela...

  • Page 107
    ...10 to 70 years. The Company has entered into real estate purchase, construction, and/or economic development agreements for various new retail store site locations. At December 28, 2013, the Company had total estimated cash commitments of approximately $384,400 outstanding for projected expenditures...

  • Page 108
    ... Financial Services segment has the right to reduce or cancel the available lines of credit at any time. Visa Litigation Settlement - 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 109
    ... CONSOLIDATED FINANCIAL STATEMENTS (Dollars in Thousands Except Share and Per Share Amounts) We also have a liability for workers' compensation claims submitted and for those claims incurred prior to year end but not yet reported totaling $5,513 and $4,064 at the end of 2013 and 2012, respectively...

  • Page 110
    CABELA'S INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in Thousands Except Share and Per Share Amounts) The fair value of options granted was estimated on the date of the grant using the Black-Scholes option pricing model. The expected volatility for 2013, 2012, ...

  • Page 111
    ..., which was included in total stock-based compensation expense, was $117 in 2013, and $233 in each year 2012 and 2011. The following table summarizes award activity during 2013 for the Company's two stock plans: All Awards Weighted Average Number of Exercise Awards (1) Price 3,719,474 $ 14.55 721...

  • Page 112
    ... Price $ 0.00 to $11.28 $11.29 to $22.56 $22.57 to $33.84 $33.85 to $45.12 $45.13 to $56.40 $56.41 to $67.69 Average Remaining Contractual Life (in Years) 5.71 2.21 5.08 6.06 7.18 7.26 4.33 Employee Stock Purchase Plan - Effective June 5, 2013, the shareholders of the Company approved the Cabela...

  • Page 113
    ...650,000 shares of its common stock in open market transactions through February 2015. There is no guarantee as to the exact number of shares that we will repurchase. The following table reconciles the Company's treasury stock activity for the years ended: 2013 2012 Balance, beginning of year 492,414...

  • Page 114
    ...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 115
    ... FINANCIAL STATEMENTS (Dollars in Thousands Except Share and Per Share Amounts) 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...

  • Page 116
    ... STATEMENTS (Dollars in Thousands Except Share and Per Share Amounts) Financial information by segment is presented below for the following years: Corporate Overhead and Other Total $ - $ 3,205,632 375,810 16,831 18,135 16,831 $ 3,599,577 361,361 Fiscal Year 2013: Merchandise sales Non-merchandise...

  • Page 117
    ...measurement date under current market conditions. In determining fair value of financial instruments, the 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...

  • Page 118
    ... 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 tax development...

  • Page 119
    ... of property and equipment, other property, goodwill and intangibles whenever indicators 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: 2013...

  • Page 120
    ... fair value of the credit card loans does not represent the underlying value of the established cardholder relationship. Time Deposits. 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...

  • Page 121
    CABELA'S INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in Thousands Except Share and Per Share Amounts) 25. QUARTERLY FINANCIAL INFORMATION (Unaudited) The following table sets forth unaudited financial and operating data in each quarter for years 2013 and 2012:...

  • Page 122
    ... of Year Balance Year Ended December 28, 2013: Allowance for doubtful accounts on accounts receivable balances Reserve for sales returns Reserve on notes receivable Allowance for credit card loan losses Year Ended December 29, 2012: Allowance for doubtful accounts on accounts receivable balances...

  • Page 123
    ... 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 28, 2013, based on...

  • Page 124
    ..., in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended December 28, 2013, of the Company and our report dated February 20, 2014, expressed an unqualified...

  • Page 125
    ... 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 126
    ... 1. Financial Statements: • Report of Independent Registered Public Accounting Firm • Consolidated Statements of Income - Years ended December 28, 2013, December 29, 2012, and December 31, 2011 • Consolidated Statements of Comprehensive Income - Years ended December 28, 2013, December 29, 2012...

  • Page 127
    ...10.2 of our Quarterly Report on Form 10-Q, filed on May 12, 2005, File No. 001-32227)* Cabela's Incorporated 2004 Stock Plan (incorporated by reference from Exhibit 10.13 of our Annual Report on Form 10-K, filed on February 20, 2013, File No. 001-32227)* Form of 2004 Stock Plan Employee Stock Option...

  • Page 128
    ... 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 129
    ... certain subsidiaries of Cabela's Incorporated and U.S. Bank National Association, as Administrative Agent (incorporated by reference from Exhibit 10.2 of our Current Report on Form 8-K, filed on November 8, 2011, File No. 001-32227) Cabela's Incorporated 2013 Stock Plan (incorporated by reference...

  • Page 130
    ... * 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 February 20, 2014...

  • Page 131

  • Page 132