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Cabela's Inc. Reports Strong Top and Bottom Line Growth for Fourth Quarter Fiscal 2011

- Fourth Quarter Earnings Per Diluted Share of $1.06, Before $0.07 Impairment and Restructuring Charge

- Comparable Store Sales Increased 1.7%

- Retail Operating Margin Improved 80 Basis Points to 20.6%

- Merchandise Gross Margin Increased 40 Basis Points

- Full Year After-Tax Return on Invested Capital Improved 120 Basis Points to 14.3%

- Company Accelerates 2012 and 2013 Store Openings

SIDNEY, Neb.--(BUSINESS WIRE)--Feb. 16, 2012-- Cabela's Incorporated (NYSE:CAB) today reported record financial results for fourth quarter and fiscal year ended December 31, 2011.

For the quarter, adjusted for divestitures, total revenue increased 5.4% to $983.7 million; Retail store revenue increased 9.8% to $525.6 million; Direct revenue decreased 1.9% to $378.9 million; and Financial Services revenue increased 34.5% to $77.7 million. For the quarter, comparable store sales increased 1.7%. On a reported basis, total revenue increased 5.3% and Direct revenue decreased 2.1%. A detailed reconciliation is provided at the end of this release.

For the quarter, net income increased 25% to $75.0 million compared to $59.9 million in the year ago quarter, and earnings per diluted share were $1.06 compared to $0.86 in the year ago quarter, each excluding certain items. The Company reported GAAP net income of $69.8 million and earnings per diluted share of $0.99 as compared to GAAP net income of $66.3 million and earnings per diluted share of $0.95 in the year ago quarter. Fourth quarter 2011 results include impairment charges of $7.8 million pre-tax mostly related to economic development bonds; while fourth quarter 2010 results include a benefit of $9.2 million pre-tax. See the supporting schedules to this earnings release labeled “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of the GAAP to non-GAAP financial measures.

For fiscal 2011, net income increased 24% to $150.8 million compared to $121.3 million last year, and earnings per diluted share were $2.12 compared to $1.76 a year ago, each excluding certain items. The Company reported GAAP net income of $142.6 million and earnings per diluted share of $2.00 as compared to GAAP net income of $112.2 million and earnings per diluted share of $1.62 a year ago. Fiscal 2011 results include impairment charges of $12.2 million pre-tax, while fiscal 2010 results include impairment and special charges of $13.6 million pre-tax. See the supporting schedules to this earnings release labeled “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of the GAAP to non-GAAP financial measures.

"Over the past three years, we have focused on improving profitability and after-tax return on invested capital, enabling us to accelerate growth initiatives," said Tommy Millner, Cabela's Chief Executive Officer. "Our strong revenue and profit results in the fourth quarter led to record profitability in our Direct and Retail segments for the full year 2011 and reassure us as we invest to accelerate growth over the next few years."

"As a result of the significant improvements in retail profitability and after-tax return on capital, we are further accelerating our retail store expansion," Millner said. "In 2012, we now expect to open five next-generation stores in North America in addition to our first Outpost store, increasing retail square footage approximately 10%. Looking forward to 2013, we expect to increase retail square footage 11-13% with the opening of six next-generation stores in the U.S. and up to three additional Outpost stores."

Due to the success of the next-generation stores, and in particular the success of the smaller Springfield, Oregon, store, Cabela's has developed a new "Outpost" store format. These stores will be approximately 40,000 square feet and have an innovative "core-flex" merchandise strategy allowing us to effectively serve smaller markets with a large concentration of Cabela's customers. The first Outpost store is expected to open in the fall of 2012 and will be located in Union Gap, Washington.

"We are especially pleased that merchandise margins increased 40 basis points in the quarter and 50 basis points for the year as we continue to improve pre-season planning, in-season management and the performance of Cabela's branded merchandise," Millner said. "Additionally, despite the unusually warm weather, comparable store sales grew 1.7%, and increased collaboration with vendors allowed us to more tightly manage inventories, which declined 3% for the year."

"Mostly due to higher gross margin, Retail profitability for the quarter increased 80 basis points to 20.6%," Millner said. "This is the eleventh consecutive quarter of increases in Retail profitability."

"Another important trend is expansion of return on invested capital, which increased 120 basis points to 14.3% in 2011," Millner said. "This compares to return on invested capital of just 9.6% three years ago. This important measure reflects continuing effort on balance sheet management and increasing profitability. With the strong performance of our next-generation stores, we remain confident in our ability to further increase return on invested capital."

The Cabela's CLUB® Visa program also posted very strong results in the quarter. For the quarter, net charge-offs decreased 126 basis points to 2.12% compared to 3.38% in the prior year quarter. This is the lowest level of net charge-offs in more than four years. Primarily due to higher interest and fee income and reduced interest expense, Financial Services revenue increased 34.5% in the quarter to $77.7 million.

As previously announced, the Company's Board of Directors has approved a share repurchase program designed primarily to offset shareholder dilution resulting from the granting of equity-based compensation awards. As a result, the Company intends to repurchase up to 800,000 shares of its common stock in open market transactions through February 2013.

"We are extremely pleased with our progress on our strategic initiatives," Millner said. "It is clear our strategies are working, and our next-generation stores are achieving superior results. Accordingly, we expect to achieve double digit full year earnings per share growth in 2012."

Conference Call Information

A conference call to discuss fourth quarter fiscal 2011 operating results is scheduled for today (Thursday, February 16, 2012) at 11:00 a.m. Eastern Time. A webcast of the call will take place simultaneously and can be accessed by visiting the Investor Relations section of Cabela's website at www.cabelas.com. A replay of the call will be archived on www.cabelas.com.

About Cabela's Incorporated

Cabela's Incorporated, headquartered in Sidney, Nebraska, is a leading specialty retailer, and the world's largest direct marketer, of hunting, fishing, camping and related outdoor merchandise. Since the Company's founding in 1961, Cabela's® has grown to become one of the most well-known outdoor recreation brands in the world, and has long been recognized as the World's Foremost Outfitter®. Through Cabela's growing number of retail stores and its well-established direct business, it offers a wide and distinctive selection of high-quality outdoor products at competitive prices while providing superior customer service. Cabela's also issues the Cabela's CLUB® Visa credit card, which serves as its primary customer loyalty rewards program. Cabela's stock is traded on the New York Stock Exchange under the symbol “CAB”.

Caution Concerning Forward-Looking Statements

Statements in this press release that are not historical or current fact are "forward-looking statements" that are based on the Company's beliefs, assumptions and expectations of future events, taking into account the information currently available to the Company. Such forward-looking statements include, but are not limited to, the Company's statements regarding the opening of five next-generation stores in North America in 2012, the opening of the first Outpost store in the fall of 2012, increasing retail square footage approximately 10% in 2012, increasing retail square footage 11-13% in 2013, opening six next-generation stores in the U.S. and up to three additional Outpost stores in 2013, further increasing after-tax return on invested capital, repurchasing up to 800,000 shares in open market transactions through February 2013, and earnings per share for 2012 growing at a double-digit rate. The Company's share repurchase program does not obligate the Company to make any purchases of the Company's common stock, and the program may be limited or terminated at any time without prior notice. Forward-looking statements involve risks and uncertainties that may cause the Company's actual results, performance or financial condition to differ materially from the expectations of future results, performance or financial condition that the Company expresses or implies in any forward-looking statements. These risks and uncertainties include, but are not limited to: the level of discretionary consumer spending; the state of the economy, including increases in unemployment levels and bankruptcy filings; changes in the capital and credit markets or the availability of capital and credit; the Company's ability to comply with the financial covenants in its credit agreements; changes in consumer preferences and demographic trends; the Company's ability to successfully execute its multi-channel strategy; the ability to negotiate favorable purchase, lease and/or economic development arrangements for new retail store locations; expansion into new markets and market saturation due to new retail store openings; the rate of growth of general and administrative expenses associated with building a strengthened corporate infrastructure to support the Company's growth initiatives; increasing competition in the outdoor segment of the sporting goods industry; the cost of the Company's products, including increases in fuel prices; political or financial instability in countries where the goods the Company sells are manufactured; increases in postage rates or paper and printing costs; supply and delivery shortages or interruptions, and other interruptions or disruptions to our systems, processes or controls, caused by system changes or other factors, including technology system changes in support of our customer relationship management system; adverse or unseasonal weather conditions; fluctuations in operating results; increased government regulation, including regulations relating to firearms and ammunition; inadequate protection of the Company's intellectual property; material security breaches of computer systems; the Company's ability to protect its brand and reputation; the outcome of litigation, administrative and/or regulatory matters (including a Commissioner's charge the Company received from the Chair of the U.S. Equal Employment Opportunity Commission in January 2011); the Company's ability to manage credit, liquidity, interest rate, operational, legal and compliance risks; increasing competition for credit card products and reward programs; the Company's ability to increase credit card receivables while managing fraud, delinquencies and charge-offs; the Company's ability to securitize its credit card receivables at acceptable rates or access the deposits market at acceptable rates; decreased interchange fees as a result of credit card industry regulation and/or litigation; the impact of legislation, regulation and supervisory regulatory actions in the financial services industry, including new and proposed regulations affecting securitizations and the Dodd-Frank Wall Street Reform and Consumer Protection Act; other factors that the Company may not have currently identified or quantified; and other risks, relevant factors and uncertainties identified in the Company's filings with the SEC (including the information set forth in the "Risk Factors" section of the Company's Form 10-K for the fiscal year ended January 1, 2011, and Form 10-Q for the fiscal quarter ended April 2, 2011), which filings are available at the Company's website at www.cabelas.com and the SEC's website at www.sec.gov. Given the risks and uncertainties surrounding forward-looking statements, you should not place undue reliance on these statements. The Company's forward-looking statements speak only as of the date they are made. Other than as required by law, the Company undertakes no obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise.

 
CABELA'S INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands Except Earnings Per Share)
(Unaudited)
                       
       
Three Months Ended   Fiscal Year Ended
December 31, January 1, December 31, January 1,
2011   2011   2011   2011
Revenue:
Merchandise sales $ 903,926 $ 865,696 $ 2,505,733 $ 2,412,486
Financial Services revenue 77,660 57,760 291,746 227,675
Other revenue 2,159   10,955   13,687   23,081  
Total revenue 983,745   934,411   2,811,166   2,663,242  
 
Cost of revenue:
Merchandise costs
(exclusive of depreciation and amortization) 575,278 553,757 1,613,241 1,566,165
Cost of other revenue   8,115   8   9,284  
Total cost of revenue
(exclusive of depreciation and amortization) 575,278 561,872 1,613,249 1,575,449
Selling, distribution, and administrative expenses 290,803 268,231 954,125 895,405
Impairment and restructuring charges 7,801   795   12,244   5,626  
Operating income 109,863 103,513 231,548 186,762
 
Interest expense, net (6,105 ) (9,648 ) (24,427 ) (27,442 )
Other non-operating income, net 1,690   2,015   7,346   7,360  
Income before provision for income taxes 105,448 95,880 214,467 166,680
Provision for income taxes 35,620   29,578   71,847   54,521  
 
Net income $ 69,828   $ 66,302   $ 142,620   $ 112,159  
 
Earnings per basic share $ 1.01   $ 0.97   $ 2.06   $ 1.65  
Earnings per diluted share $ 0.99   $ 0.95   $ 2.00   $ 1.62  
 
Basic weighted average shares outstanding 69,166,725   68,055,713   69,194,663   67,791,782  
Diluted weighted average shares outstanding 70,718,826   69,637,169   71,274,242   69,086,533  
 
 
CABELA'S INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands Except Par Values)
(Unaudited)
 
   
ASSETS

December 31,
2011

January 1, 2011

CURRENT
Cash and cash equivalents $ 304,679 $ 136,419
Restricted cash of the Trust 18,296 18,575
Accounts receivable, net 47,127 47,218
Credit card loans (includes restricted credit card loans of the Trust of $3,142,151 and
$2,775,768), net of allowance for loan losses of $73,350 and $90,900 3,094,163 2,709,312
Inventories 494,828 509,097
Prepaid expenses and other current assets 146,479 123,304
Income taxes receivable and deferred income taxes 5,709   2,136  
Total current assets 4,111,281 3,546,061
Property and equipment, net 866,899 817,947
Land held for sale or development 38,393 21,816
Economic development bonds 86,563 104,231
Deferred income taxes 12,786
Other assets 30,635   28,338  
Total assets $ 5,133,771   $ 4,531,179  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
Accounts payable, including unpresented checks of $19,124 and $27,227 $ 266,793 $ 214,757
Gift instruments, and credit card and loyalty rewards programs 227,414 202,541
Accrued expenses 143,695 138,510
Time deposits 88,401 148,619
Current maturities of secured variable funding obligations of the Trust 460,000 393,000
Current maturities of secured long-term obligations of the Trust 425,000 698,400
Current maturities of long-term debt 8,387 230
Income taxes payable   2,880  
Total current liabilities 1,619,690 1,798,937
Long-term time deposits 893,912 364,132
Secured long-term obligations of the Trust, less current maturities 977,500 892,500
Long-term debt, less current maturities 336,535 344,922
Deferred income taxes 26,367
Other long-term liabilities 98,451 106,140
 
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value; Authorized - 10,000,000 shares; Issued - none
Common Stock, $0.01 par value; Authorized - 245,000,000 shares;
Issued - 69,641,818 and 68,156,154 shares; Outstanding - 68,840,883 and 68,156,154 shares 696 681
Additional paid-in capital 334,925 306,149
Retained earnings 862,914 720,294
Accumulated other comprehensive income (loss) 2,731 (2,576 )
Treasury stock, at cost (19,950 )  
Total stockholders' equity 1,181,316   1,024,548  
Total liabilities and stockholders' equity $ 5,133,771   $ 4,531,179  
 
 
CABELA'S INCORPORATED AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
                 
       
Three Months Ended Fiscal Year Ended
December 31, January 1, December 31, January 1,
2011 2011 2011 2011
(Dollars in Thousands)

Revenue:

Retail $ 525,607 $ 478,769 $ 1,550,442 $ 1,412,715
Direct 378,931 386,927 956,834 999,771
Financial Services 77,660 57,760 291,746 227,675
Other 1,547   10,955   12,144   23,081  
Total revenue $ 983,745   $ 934,411   $ 2,811,166   $ 2,663,242  
 

Operating Income (Loss):

Retail $ 108,425 $ 94,856 $ 263,010 $ 205,768
Direct 68,055 63,908 172,163 156,255
Financial Services 15,910 13,219 59,032 52,401
Other (82,527 ) (68,470 ) (262,657 ) (227,662 )
Total operating income $ 109,863   $ 103,513   $ 231,548   $ 186,762  
 

As a Percentage of Total Revenue:

Retail revenue 53.4 % 51.2 % 55.2 % 53.0 %
Direct revenue 38.5 41.4 34.0 37.5
Financial Services revenue 7.9 6.2 10.4 8.6
Other revenue 0.2   1.2   0.4   0.9  
Total revenue 100.0 % 100.0 % 100.0 % 100.0 %
 

As a Percentage of Segment Revenue:

Retail operating income 20.6 % 19.8 % 17.0 % 14.6 %
Direct operating income 18.0 16.5 18.0 15.6
Financial Services operating income 20.5 22.9 20.2 23.0
Total operating income as a percentage of total revenue 11.2 11.1 8.2 7.0
 
   
CABELA'S INCORPORATED AND SUBSIDIARIES
REVENUE FOR 2010 ADJUSTED FOR DIVESTITURE
(Unaudited)
 
The Company divested its non-core home restoration products business in October 2010. Information on Direct and total
revenue impacted by this divestiture is presented below for comparison purposes for the periods ending December 31, 2011, and
January 1, 2011. Management believes that these measures are an important analytical tool to aid in understanding operating
trends for the three months and fiscal years ended December 31, 2011, and January 1, 2011.
 
Period Ending
December 31,   January 1,   Increase  
2011 2011 (Decrease) % Change
(Dollars in Thousands)

Three Months Ended:

Direct revenue $ 378,931 $ 386,927 $ (7,996 ) (2.1 )%
Less revenue from divestiture   (815 )

815

 
Direct revenue - adjusted $ 378,931   $ 386,112   $ (7,181 ) (1.9 )
 
Total revenue $ 983,745 $ 934,411 $ 49,334 5.3
Less revenue from divestiture   (815 ) 815  
Total revenue - adjusted $ 983,745   $ 933,596   $ 50,149   5.4
 

Fiscal Year Ended:

Direct revenue $ 956,834 $ 999,771 $ (42,937 ) (4.3 )
Less revenue from divestiture   (13,724 ) 13,724  
Direct revenue - adjusted $ 956,834   $ 986,047   $ (29,213 ) (3.0 )
 
Total revenue $ 2,811,166 $ 2,663,242 $ 147,924 5.6
Less revenue from divestiture   (13,724 ) 13,724  
Total revenue - adjusted $ 2,811,166   $ 2,649,518   $ 161,648   6.1
 
     
CABELA'S INCORPORATED AND SUBSIDIARIES
COMPONENTS OF FINANCIAL SERVICES SEGMENT REVENUE
(Unaudited)
 
Financial Services revenue consists of activity from our credit card operations and is comprised of interest and fee income,
interchange income, other non-interest income, interest expense, provision for loan losses, and customer rewards costs. The
following table details the components and amounts of total revenue of the Company's Financial Services segment for the
periods presented below.
 
Three Months Ended Fiscal Year Ended
December 31,   January 1, December 31,   January 1,
2011 2011 2011 2011
(In Thousands)
 
Interest and fee income $ 73,112 $ 65,924 $ 277,242 $ 271,651
Interest expense (14,795 ) (20,715 ) (70,303 ) (86,494 )
Provision for loan losses (11,671 ) (15,030 ) (39,287 ) (66,814 )
Net interest income, net of provision for loan losses 46,646   30,179   167,652   118,343  
Non-interest income:
Interchange income 74,729 64,983 267,106 231,347
Other non-interest income 3,836   3,142   13,620   12,247  
Total non-interest income 78,565 68,125 280,726 243,594
Less: Customer rewards costs (47,551 ) (40,544 ) (156,632 ) (134,262 )
 
Financial Services revenue $ 77,660   $ 57,760   $ 291,746   $ 227,675  
 
   
The following table sets forth the components of our Financial Services revenue as a percentage of average total credit card
loans for the periods presented below.

 

Three Months Ended Fiscal Year Ended

December 31,
2011

 

January 1,
2011

December 31,
2011

 

January 1,
2011

 
Interest and fee income 10.0 % 10.3 % 10.1 % 11.0 %
Interest expense (2.0 ) (3.2 ) (2.6 ) (3.5 )
Provision for loan losses (1.6 ) (2.4 ) (1.4 ) (2.7 )
Interchange income 10.2 10.1 9.7 9.4
Other non-interest income 0.5 0.5 0.5 0.5
Customer rewards costs (6.5 ) (6.3 ) (5.7 ) (5.5 )
Financial Services revenue 10.6 % 9.0 % 10.6 % 9.2 %
 
     
CABELA'S INCORPORATED AND SUBSIDIARIES
KEY STATISTICS OF FINANCIAL SERVICES BUSINESS
(Unaudited)
 

Key statistics reflecting the performance of our Financial Services business are shown in the following charts:

 
Three Months Ended

December 31,
2011

 

January 1, 2011

Increase
(Decrease)

%
Change

(Dollars in Thousands Except Average Balance per Account )
 
Average balance of credit card loans (1) $ 2,917,083 $ 2,570,493 $ 346,590 13.5 %
Average number of active credit card accounts 1,495,242 1,384,443 110,799 8.0
 
Average balance per active credit card account (1) $ 1,951 $ 1,857 $ 94 5.1
 
Net charge-offs on credit card loans (1) $ 15,493 $ 21,735 $ (6,242 ) (28.7 )
 

Net charge-offs as a percentage of average credit card loans (1)

 

  2.12 %   3.38 %   (1.26 )%    
(1) Includes accrued interest and fees
  Fiscal Year Ended    

December 31,
2011

  January 1, 2011 Increase
(Decrease)
%
Change
(Dollars in Thousands Except Average Balance per Account )
 
Average balance of credit card loans (1) $ 2,745,118 $ 2,470,493 $ 274,625 11.1 %
Average number of active credit card accounts 1,416,887 1,317,890 98,997 7.5
 
Average balance per active credit card account (1) $ 1,937 $ 1,875 $ 62 3.3
 
Net charge-offs on credit card loans (1) $ 64,520 $ 104,416 $ (39,896 ) (38.2 )
 

Net charge-offs as a percentage of average credit card loans (1)

  2.35 %   4.23 %   (1.88 )%    
(1) Includes accrued interest and fees
 
 

CABELA'S INCORPORATED AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP RETURN ON INVESTED CAPITAL
(Unaudited)

 
Return on invested capital ( “ROIC”) is not a measure of financial performance under generally accepted accounting principles (“GAAP”) and may not be defined and calculated by other companies in the same manner. ROIC should be considered supplemental to and not a substitute for financial information prepared in accordance with GAAP. The Company uses ROIC as a measure of efficiency and effectiveness of its use of capital.
The Company measures ROIC by dividing adjusted net income by average total capital. Adjusted net income is calculated by adding interest expense, rent expense, and Retail segment depreciation and amortization (all after tax) to reported net income excluding: (1) any losses on sales of assets, (2) any impairment charges or fixed asset write-downs, and (3) any accumulated amortization of deferred grant income caused by other-than-temporary impairment losses of economic development bonds (all after tax). Total capital is calculated by adding current maturities of long-term debt, deferred compensation, operating leases capitalized at eight times next year’s annual minimum lease payments, and total stockholders’ equity to long-term debt (excluding all debt of World's Foremost Bank ("WFB")) and then subtracting cash and cash equivalents (excluding cash and cash equivalents of WFB). Average total capital is calculated as the sum of current and prior year ending total capital divided by two. The following table reconciles the components of ROIC to the most comparable GAAP financial measures.
  Fiscal Year Ended
December 31,
2011
  January 1, 2011
(Dollars in Thousands)
 
Net income as reported $ 142,620   $ 112,159  
Add back:
Interest expense 24,454 27,482
Rent expense 9,541 7,506
Depreciation and amortization - Retail segment 41,506 40,011
Exclude:
Losses on sales of assets
Impairment charges or fixed asset write-downs 4,771 5,626
Accumulated amortization of deferred grant income 6,538    
86,810   80,625  
 
After tax effect 57,729   54,253  
Effective tax rate 33.50 % 32.71 %
 
Adjusted net income $ 200,349   $ 166,412  
 
Total capital:
Current maturities of long-term debt $ 8,387 $ 230
Deferred compensation 291
Operating leases capitalized at 8x next year's annual minimum lease payments 85,968 55,864
Total stockholders' equity 1,181,316 1,024,548
Long-term debt (excluding WFB debt) 336,535   344,922  
1,612,206 1,425,855
Less:
Cash and cash equivalents (304,679 ) (136,419 )
Add back cash and cash equivalents at WFB 117,035   81,904  
(187,644 ) (54,515 )
 
Adjusted total capital $ 1,424,562   $ 1,371,340  
 
Average total capital $ 1,397,951   $ 1,273,610  
 
Return on Invested Capital 14.3 % 13.1

%

 
 

CABELA'S INCORPORATED AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited)

 
To supplement the Company's condensed consolidated statements of income presented in accordance with generally accepted accounting principles ("GAAP"), management of the Company has disclosed non-GAAP measures of operating results that exclude certain items. Selling, distribution, and administrative expenses; operating income; provision for income taxes; net income; and earnings per basic and diluted share are presented below both as reported (on a GAAP basis) and excluding (i) the impairment and restructuring charges recorded in the three months and fiscal years ended December 31, 2011, and January 1, 2011, and (ii) the effect of the charge recorded in fiscal 2010 relating to matters arising out of the Federal Deposit Insurance Corporation's ("FDIC") compliance examination of World's Foremost Bank ("WFB"). The impairment and restructuring charges include asset write-downs and severance and related costs. In light of the nature and magnitude, we believe these items should be presented separately to enhance a reader's overall understanding of the Company's ongoing operations. These non-GAAP financial measures should be considered in conjunction with the GAAP financial measures.
Management believes these non-GAAP financial results provide useful supplemental information to investors regarding the underlying business trends and performance of the Company's ongoing operations and are useful for period-over-period comparisons of such operations. In addition, management evaluates results using non-GAAP adjusted operating income, adjusted net income, and adjusted earnings per diluted share. These non-GAAP measures should not be considered in isolation or as a substitute for operating income, net income, earnings per diluted share, or any other measure calculated in accordance with GAAP. The following table reconciles these financial measures to the related GAAP financial measures for the periods presented.
 
Three Months Ended
December 31, 2011   January 1, 2011
GAAP Basis   Amounts   Non-GAAP GAAP Basis   Amounts   Non-GAAP
As Reported Added Back As Adjusted As Reported Added Back As Adjusted
(Dollars in Thousands Except Earnings Per Share)
 
Total revenue $ 983,745 $ $ 983,745 $ 934,411 $ $ 934,411
 
Total cost of revenue (exclusive of depreciation and amortization) 575,278 575,278 561,872 561,872
Selling, distribution, and administrative expenses (1) 290,803 290,803 268,231 10,000 278,231
Impairment and restructuring charges (2) 7,801   (7,801 )   795   (795 )  
Operating income 109,863 7,801 117,664 103,513 (9,205 ) 94,308
 
Interest expense, net (6,105 ) (6,105 ) (9,648 ) (9,648 )
Other non-operating income 1,690     1,690   2,015     2,015  
Income before provision for income taxes 105,448 7,801 113,249 95,880 (9,205 ) 86,675
Provision for income taxes 35,620   2,626   38,246   29,578   (2,840 ) 26,738  
 
Net income $ 69,828   $ 5,175   $ 75,003   $ 66,302   $ (6,365 ) $ 59,937  
 
Earnings per basic share $ 1.01   $ 0.07   $ 1.08   $ 0.97   $ (0.09 ) $ 0.88  
Earnings per diluted share $ 0.99   $ 0.07   $ 1.06   $ 0.95   $ (0.09 ) $ 0.86  

 

(Footnotes on the following page)

 
 
CABELA'S INCORPORATED AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited)
 
Fiscal Year Ended
December 31, 2011   January 1, 2011
GAAP Basis   Amounts   Non-GAAP GAAP Basis   Amounts   Non-GAAP
As Reported Added Back As Adjusted As Reported Added Back As Adjusted
(Dollars in Thousands Except Earnings Per Share)
 
Total revenue $ 2,811,166 $ $ 2,811,166 $ 2,663,242 $ $ 2,663,242
 
Total cost of revenue (exclusive of depreciation and amortization) 1,613,249 1,613,249 1,575,449 1,575,449
Selling, distribution, and administrative expenses (1) 954,125 954,125 895,405 (8,000 ) 887,405
Impairment and restructuring charges (2) 12,244   (12,244 )   5,626   (5,626 )  
Operating income 231,548 12,244 243,792 186,762 13,626 200,388
 
Interest expense, net (24,427 ) (24,427 ) (27,442 ) (27,442 )
Other non-operating income 7,346     7,346   7,360     7,360  
Income before provision for income taxes 214,467 12,244 226,711 166,680 13,626 180,306
Provision for income taxes 71,847   4,102   75,949   54,521   4,457   58,978  
 
Net income $ 142,620   $ 8,142   $ 150,762   $ 112,159   $ 9,169   $ 121,328  
 
Earnings per basic share $ 2.06   $ 0.12   $ 2.18   $ 1.65   $ 0.14   $ 1.79  
Earnings per diluted share $ 2.00   $ 0.12   $ 2.12   $ 1.62   $ 0.14   $ 1.76  
 
(1) Reflects an accrual recognized in the first quarter of fiscal 2010 relating to matters arising out of the FDIC's compliance examination conducted in 2009 of WFB. As a result of an agreement in principle to settle all matters with the FDIC, the Company reduced that liability in the fourth quarter of 2010 by $10 million pre-tax. On March 3, 2011, WFB and the FDIC settled all matters related to this issue. All restitution amounts and the civil money penalty were paid in the first fiscal quarter of 2011.
(2) Reflects (i) impairment losses recognized in the three months and fiscal years ended December 31, 2011, and January 1, 2011, respectively, to reflect the fair value on certain assets and (ii) restructuring charges for severance and related benefits recognized in the three months and fiscal year ended December 31, 2011.

Source: Cabela's Incorporated

Cabela's Incorporated
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or
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