Cabela's 2004 Annual Report Download - page 67

‚ communications providers to provide our Internet users with access to our website and a website
hosting service provider to host and manage our website; and
‚ software providers to provide software and related services to run our operating systems for our
direct and retail businesses.
Any disruption in these services could have a negative impact on our ability to market and sell our
products, and serve our customers. Our ten largest vendors collectively represented approximately 15.2% of
our total purchases in Ñscal 2004. If we are unable to acquire suitable merchandise or lose one or more
key vendors, we may not be able to oÅer products that are important to our merchandise assortment. We
are also subject to risks, such as the unavailability of raw materials, labor disputes, union organizing
activity, strikes, inclement weather, natural disasters, war and terrorism, and adverse general economic and
political conditions, that might limit our vendors' ability to provide us with quality merchandise on a
timely basis. We have no contractual arrangements providing for continued supply from our key vendors
and our vendors may discontinue selling to us at any time. We may not be able to develop relationships
with new vendors, and products from alternative sources, if any, may be of a lesser quality and more
expensive than those we currently purchase. Any delay or failure in oÅering products to our customers
could have an adverse impact on our revenues and proÑtability. In addition, if the cost of fuel continues to
rise or remains at current levels, the cost to deliver merchandise to the customers of our direct business
and from our distribution centers to our destination retail stores may rise which could have an adverse
impact on our proÑtability.
Political and economic uncertainty and unrest in foreign countries where our vendors are located could
adversely aÅect our operating results.
Approximately 57.5% of our merchandise is obtained directly from vendors located in foreign
countries, with approximately 35.3% of our merchandise being obtained from vendors located in China,
Taiwan and Japan. In addition, we believe that a signiÑcant portion of our other vendors obtain their
products from foreign countries that may also be subject to political and economic uncertainty. We are
subject to risks and uncertainties associated with changing economic and political conditions in foreign
countries where our vendors are located, such as:
‚ increased import duties, tariÅs, trade restrictions and quotas;
‚ work stoppages;
‚ economic uncertainties (including inÖation);
‚ adverse foreign government regulations;
‚ wars, fears of war and terrorist attacks and organizing activities;
‚ adverse Öuctuations of foreign currencies; and
‚ political unrest.
We cannot predict when, or the extent to which, the countries in which our products are
manufactured will experience any of the above events. Any event causing a disruption or delay of imports
from foreign locations, would likely increase the cost or reduce the supply of merchandise available to us
and would adversely aÅect our operating results, particularly if imports of our private label merchandise
were adversely aÅected as our margins are higher on our private label merchandise.
Due to the seasonality of our business, our annual operating results would be adversely aÅected if our
revenues during the third and fourth Ñscal quarters were substantially below expectations.
We experience seasonal Öuctuations in our revenues and operating results. Historically, we have
realized a signiÑcant portion of our revenues and substantially all of our earnings for the year during the
third and fourth Ñscal quarters, with a majority of the revenues and earnings for these quarters realized in
the fourth Ñscal quarter. In Ñscal 2004, we generated 24.7% and 37.2% of our revenues, and 25.4% and
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