Cabela's 2004 Annual Report Download - page 34

Download and view the complete annual report

Please find page 34 of the 2004 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 130

  • 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

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis of Ñnancial condition, results of operations, liquidity and capital
resources should be read in conjunction with our audited consolidated Ñnancial statements and notes
thereto appearing elsewhere in this Form 10-K. This discussion contains forward-looking statements that
involve risks and uncertainties, including information with respect to our plans, intentions and strategies for
our businesses. See ""Special Note Regarding Forward-Looking Statements.'' For additional information
regarding some of the risks and uncertainties that aÅect our business and the industries in which we
operate, please see ""Factors AÅecting Future Results''. Our actual results may diÅer materially from those
estimated or projected in any of these forward-looking statements.
Overview
We are the nation's largest direct marketer, and a leading specialty retailer, of hunting, Ñshing,
camping and related outdoor merchandise. Since our founding in 1961, Cabela's has grown to become one
of the most well-known outdoor recreation brands in the United States. Through our well-established
direct business and our growing number of destination retail stores, we believe we oÅer the widest and
most distinctive selection of high quality outdoor products at competitive prices while providing superior
customer service. Our multi-channel retail model Ì catalog, Internet and destination retail stores Ì
strategically positions us to meet our customer's ever-growing needs. Our extensive product oÅering
consists of approximately 245,000 stock keeping units, or SKUs, and includes hunting, Ñshing, marine and
camping merchandise, casual and outdoor apparel and footwear, optics, vehicle accessories, gifts and home
furnishings with an outdoor theme. Our co-branded credit card provides revenue from credit and
interchange fees and oÅers us the opportunity to enhance our merchandising business revenue by
reinforcing our brand and increasing customer loyalty. To best reÖect our operations, we organize the
Ñnancial reporting of our business into the following three segments:
‚ Direct, which consists of our catalogs and website;
‚ Retail, which consists of our destination retail stores; and
‚ Financial Services, which consists of our credit card business, which is managed and administered
by our wholly-owned bank subsidiary, World's Foremost Bank.
In the discussion below, where we refer to our ""merchandising business'' we are referring to our
Direct and Retail segments, collectively. Where we refer to the ""bank,'' we are referring to our Financial
Services segment.
We also operate various other small businesses, which are not included within these segments but
which we believe are an extension of our overall business strategy and enable us to oÅer additional
products and services to our customers that further develop and leverage our brand and expertise. These
businesses are aggregated under the category ""Other'' in this discussion and include a travel agency
specializing in big-game hunting, wing shooting, Ñshing and trekking trips and a developer of real estate
adjacent to some of our destination retail stores. Corporate and other expenses, consisting of unallocated
shared-service costs and general and administrative expenses, also are included in the ""Other'' category.
Unallocated shared-service costs include receiving, distribution and storage costs, merchandising, quality
assurance costs and corporate occupancy costs. General and administrative expenses include costs
associated with general corporate management and shared departmental services such as management
information systems, Ñnance, human resources and legal.
Revenue
Revenue consists of sales of our products and services. Direct revenue includes sales from orders
placed over the phone, by mail and through our website and includes customer shipping charges. Retail
revenue includes all sales made at our destination retail stores and is driven by sales at new stores and
changes in comparable store sales. A store is included in our comparable store sales base on the Ñrst day
22