Cabela's 2004 Annual Report Download - page 33

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(9) This amount consists primarily of purchases of economic development bonds, the proceeds of which
are used to construct our destination retail stores and related infrastructure. See ""Management's
Discussion and Analysis of Financial Condition and Results of Operations Ì Liquidity and Capital
Resources Ì Retail Store Expansion''.
(10) When we use the term ""EBITDA'', we are referring to net income minus interest income plus
interest expense, income taxes and depreciation and amortization. We present EBITDA because we
consider it an important supplemental measure of our performance and believe it is frequently used
by securities analysts, investors and other interested parties in the evaluation of companies in our
industry. We also use EBITDA to determine our compliance with some of the covenants under our
revolving credit facility.
EBITDA has limitations as an analytical tool and you should not consider it in isolation or as a
substitute for net income, operating income, cash Öows from operating, investing or Ñnancing
activities or any other measure calculated in accordance with generally accepted accounting
principles. Some of these limitations are:
‚ EBITDA does not reÖect our cash expenditures or future requirements for capital expenditures
or capital commitments;
‚ EBITDA does not reÖect changes in, or cash requirements for, our working capital needs;
‚ EBITDA does not reÖect the interest expense or cash requirements necessary to service
interest or principal payments on our debt;
‚ Although depreciation and amortization are non-cash charges, the assets being depreciated and
amortized will often have to be replaced in the future, and EBITDA does not reÖect any cash
requirements for such replacements; and
‚ Other companies in our industry may calculate EBITDA diÅerently than we do, limiting its
usefulness as a comparative measure.
Because of these limitations, EBITDA should not be considered as a measure of discretionary cash
available to us to invest in the growth of our business and we rely primarily on our GAAP results and use
EBITDA only supplementally.
The following table reconciles EBITDA to net income:
Fiscal Year(1)
2004 2003 2002 2001 2000
(Dollars in thousands)
Net income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 64,996 $ 51,391 $ 46,922 $38,415 $34,780
Deprecation and amortization ÏÏÏÏÏÏ 29,843 26,715 23,539 17,355 14,681
Interest income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (601) (408) (443) (404) (487)
Interest expenseÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 8,178 11,158 8,413 7,307 5,604
Income taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 35,085 28,402 25,817 21,020 18,824
EBITDA ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $137,501 $117,258 $104,248 $83,693 $73,402
(1) EBITDA margin is deÑned as our consolidated EBITDA as a percentage of our consolidated revenue.
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