Cabela's 2012 Annual Report Download - page 20

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the supply chain, including our design, sourcing, merchandise planning, forecasting and purchase order,
inventory, distribution, transportation, and price management systems. We continue to make modifications
to our technology that will involve updating or replacing certain systems with successor systems, including
improvements to our systems for omni-channel merchandise and financial planning, e-commerce, and customer
relationship management.
Employees
At the end of 2012, we employed 15,200 employees - 6,900 of whom were employed full-time. We use part-
time and temporary workers to supplement our labor force at peak times during our third and fourth quarters. None
of our employees are represented by a labor union or are party to a collective bargaining agreement. We have not
experienced any work stoppages and consider our relationship with our employees to be good.
Seasonality
We experience seasonal fluctuations in our revenue and operating results. Due to buying patterns around
the holidays and the opening of hunting seasons, our merchandise revenue is traditionally higher in the third
and fourth quarters than in the first and second quarters, and we typically earn a disproportionate share of our
operating income in the fourth quarter. Because of our retail store expansion, and fixed costs associated with retail
stores, our quarterly operating income may be further impacted by these seasonal fluctuations. We anticipate our
sales will continue to be seasonal in nature. Refer to Note 26 to our consolidated financial statements for financial
information by quarter for 2012 and 2011.
Government Regulation
Regulation of World’s Foremost Bank. WFB, our wholly-owned bank subsidiary, is a Nebraska state-
chartered bank with deposits insured by the Bank Insurance Fund of the FDIC. WFB is subject to comprehensive
regulation and periodic examination by the Nebraska Department of Banking and Finance and the FDIC. WFB
does not qualify as a “bank” under the Bank Holding Company Act of 1956, as amended, (“BHCA”), because it
is in compliance with a credit card bank exception from the BHCA. On July 21, 2010, the Reform Act was signed
into law. The Reform Act has made extensive changes to the laws regulating financial services firms and credit
rating agencies and requires significant rule-making. In addition, the legislation mandates multiple studies which
could result in additional legislative or regulatory action. The Reform Act does not eliminate the exception from
the definition of “bank” under the BHCA for credit card banks, such as WFB. However, as directed by the Reform
Act, the United States Government Accountability Office released a report on January 20, 2012, that examines the
potential implications of eliminating certain exceptions under the BHCA, including the exception for credit card
banks. It is unclear whether this report will lead to any additional legislative or regulatory action. If the credit card
bank exception were eliminated or modified, we may be required to divest our ownership of WFB unless we were
willing and able to become a bank holding company under the BHCA. Any such forced divestiture may materially
adversely affect our business and results of operations. In addition, the Reform Act established a new independent
Consumer Financial Protection Bureau (the “Bureau”) which has broad rulemaking, supervisory, and enforcement
authority over consumer products, including credit cards. The Reform Act will also affect a number of significant
changes relating to asset-backed securities, including additional oversight and regulation of credit rating agencies
and additional reporting and disclosure requirements. See “Risk Factors - The Dodd-Frank Wall Street Reform and
Consumer Protection Act may impact the practices of our Financial Services segment and could have a material
adverse effect on our results of operations” and “Management’s Discussion and Analysis of Financial Condition
and Results of Operations - Developments in Legislation and Regulation.”
There are various federal and Nebraska laws and regulations relating to minimum regulatory capital
requirements and requirements concerning the payment of dividends from net profits or surplus, restrictions
governing transactions between an insured depository institution and its affiliates, and general federal and
Nebraska regulatory oversight to prevent unsafe or unsound practices. At the end of 2012, WFB met the
requirements for a “well-capitalized” institution, the highest of the Federal Deposit Insurance Corporation
Improvement Act’s five capital ratio levels. A “well-capitalized” classification should not necessarily be viewed