Cabela's 2008 Annual Report Download - page 45

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40
Corporate Overhead, Distribution Centers, and Other:
• An increase of $6 million related to restructuring and impairment charges recognized in the fourth quarter
of 2008.
• A decrease in depreciation expense of $3 million primarily related to longer estimated useful lives for
information system hardware and software in 2008 versus 2007.
• A decrease of $2 million in equipment and software expenses principally from less equipment and software
expenditures.
Restructuring and Impairment Charges
Our operating results for 2008 declined compared to 2007 as we continued to be impacted by a challenging
retail and macroeconomic environment resulting in slowed retail store and Direct segment sales. Comparable store
sales decreased $34 million, or 3.7%, for 2008 compared to 2007. After completing a review of our organizational
structure, in October 2008 we announced a reduction in workforce of approximately 10% at our company headquarters.
Severance and related benefits under this workforce reduction totaled approximately $2 million, which are recorded
in selling, distribution, and administrative expenses.
During the fourth quarter of 2008, we completed our annual impairment analyses on goodwill and other intangible
assets. We recognized an impairment of $1 million recorded in selling, distribution, and administrative expenses in our
Direct segment where projected discounted cash flows were less than the fair value of the reporting unit.
In addition, we evaluated the recoverability of our available-for-sale economic development bonds being
actively marketed and recorded an other-than-temporary impairment. We also evaluated the recoverability of certain
property and equipment. Write-downs related to these assets totaled $2 million, and in addition to the prepayment
penalties of $1 million incurred in the fourth quarter of 2008, total restructuring and impairment charges of $6
million were recognized in the fourth quarter of 2008.
Operating Income
Operating income is revenue less cost of revenue and selling, distribution, and administrative expenses.
Operating income for our business segments excludes costs associated with operating expenses of distribution
centers, procurement activities, and other corporate overhead costs.
2008 2007 Increase
(Decrease) % Change
(Dollars in Thousands)
Total operating income $ 141,039 $ 151,092 $(10,053)(6.7)%
Total operating income as a percentage
of total revenue 5.5%6.4%
Operating income by business segment:
Retail $141,578 $ 127,744 13,834 10.8
Direct 161,249 190,046 (28,797)(15.2)
Financial Services 46,184 37,448 8,736 23.3
Operating income as a percentage
of segment revenue:
Retail 11.0%12.2%
Direct 14.7 16.8
Financial Services 29.1 23.5