Cabela's 2004 Annual Report Download - page 41

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Fiscal Years
2004 2003 2002
(Dollars in thousands)
As a Percentage of Segment Revenue:
Direct operating income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 15.1% 15.6% 15.4%
Retail operating income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 14.5% 13.8% 13.5%
Financial services operating incomeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 39.8% 33.1% 27.9%
Total operating income(1) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 6.2% 6.1% 6.2%
(1) The percentage set forth is a percentage of consolidated revenue rather than revenue by segment as it
is based upon our consolidated operating income. A separate line item is not included for Other
operating income as this amount is reÖected in the total operating income amount, which reÖects our
consolidated operating results.
For credit card loans securitized and sold, the loans are removed from our balance sheet and the net
earnings on these securitized assets after paying outside investors are reÖected as a component of our
securitization income on a GAAP basis. The following table summarizes the results of our Financial
Services segment for Ñscal year 2004, 2003 and 2002 on a GAAP basis with interest and fee income,
interest expense and provision for loan losses for the credit card receivables we own reported in net interest
income. Non-interest income on a GAAP basis includes servicing income, gains on sales of loans and
income recognized on retained interest for the entire securitized portfolio, as well as, interchange income
on the entire managed portfolio.
Financial Services Revenue as reported in the Financial Statements:
Fiscal Years
2004 2003 2002
(Dollars in thousands)
Interest and fee income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 12,735 $ 7,858 $ 5,284
Interest expenseÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (3,063) (3,226) (3,474)
Net interest income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 9,672 4,632 1,810
Non-interest income:
Securitization income(1) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 96,466 74,472 60,727
Other non-interest income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 24,905 19,050 14,979
Total non-interest income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 121,371 93,522 75,706
Less: Customer rewards costs ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (52,939) (39,876) (31,129)
Financial Services revenueÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 78,104 $ 58,278 $ 46,387
(1) For the Ñscal years ended 2004, 2003 and 2002, we recognized gains on sale of credit card loans of
$8.9 million, $5.9 million and $7.7 million respectively, which are reÖected as a component of
securitization income.
Our ""managed'' credit card loans represent credit card loans we own plus securitized credit card
loans. Since the Ñnancial performance of the managed portfolio has a signiÑcant impact on the earnings
we will receive from servicing the portfolio, we believe the following table on a ""managed'' basis is
important information to analyze our revenue in the Financial Services segment. This non-GAAP
presentation reÖects the Ñnancial performance of the credit card loans we own plus those that have been
sold for the Ñscal years ended 2004, 2003 and 2002 and includes the eÅect of recording the retained
interest at fair value. Interest, interchange (net of customer rewards) and fee income on both the owned
and securitized portfolio is recorded in their respective line items. Interest paid to outside investors on the
securitized credit card loans is included with other interest costs and included in interest expense. Credit
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