Market Overview

Cabela's Inc. Announces Fourth Quarter 2015 Results

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SIDNEY, Neb.--(BUSINESS WIRE)--

Cabela's Incorporated (NYSE: CAB) today reported financial results for fourth quarter and fiscal year ended January 2, 2016. As previously disclosed, the Company's fourth fiscal quarter and fiscal year ended January 2, 2016, included 14 weeks and 53 weeks, respectively, while its fourth fiscal quarter and fiscal year ended December 27, 2014, included 13 weeks and 52 weeks, respectively.

For the quarter, total revenue increased 10.5% to $1.4 billion; Retail store revenue increased 14.3% to $926.5 million; Direct revenue increased 0.5% to $351.5 million; and Financial Services revenue increased 15.7% to $131.1 million. During the period, on a 14 week versus 14 week basis, U.S. comparable store sales decreased 3.5% and consolidated comparable store sales decreased 4.9%.

For the quarter, adjusted for certain items, net income increased 9.5% to $86.8 million compared to $79.3 million in the year ago quarter, and earnings per diluted share were $1.26 compared to $1.11 in the year ago quarter. The Company reported GAAP net income of $78.8 million and earnings per diluted share of $1.14 as compared to GAAP net income of $78.6 million and earnings per diluted share of $1.10 in the year ago quarter. Fourth quarter 2015 GAAP results included impairment and restructuring charges and other items of $0.12 in earnings per diluted share. See the supporting schedules to this earnings release labeled "Reconciliation of GAAP Reported to Non-GAAP Adjusted Financial Measures" for a reconciliation of the GAAP to non-GAAP financial measures.

For fiscal 2015, net income was $204.7 million compared to $207.1 million last year, and earnings per diluted share were $2.88 compared to $2.88 a year ago, each adjusted for certain items. The Company reported GAAP net income of $189.3 million and earnings per diluted share of $2.67 as compared to GAAP net income of $201.7 million and earnings per diluted share of $2.81 a year ago. Fiscal 2015 GAAP results included impairment and restructuring charges and other items of $0.21 in earnings per diluted share. See the supporting schedules to this earnings release labeled "Reconciliation of GAAP Reported to Non-GAAP Adjusted Financial Measures" for a reconciliation of the GAAP to non-GAAP financial measures.

"During the second half of 2015, we deepened our focus on profitable growth, expense leverage, and better balance sheet utilization," said Tommy Millner, Cabela's Chief Executive Officer. "In the fourth quarter, we were excited to see the early results of these initiatives. Specifically, we outperformed external estimates for revenue, expenses, and earnings per share."

"U.S. comparable store sales were down 3.5%," Millner said. "Consolidated comparable store sales were down 4.9% for the quarter. In both the United States and Canada, weather impacted fall and winter apparel and footwear products. We were encouraged by positive comp performance in many of our core categories, including camping, powersports, home and gifts, firearms, and ammunition."

"We clearly faced a challenging environment in the fourth quarter," Millner said. "However, we were able to drive better than anticipated merchandise revenue as the result of several initiatives, including expanded drop ship programs, retail inventory visibility online, and a focus on key merchandise categories. We are confident that a continued focus on key merchandise categories as well as new initiatives, such as optimization of store formats and digital and mobile leadership, will continue to drive merchandise revenue performance."

For the quarter, adjusted for certain items, SD&A expenses as a percentage of sales decreased 130 basis points to 29.5% as compared to 30.8% in the same quarter a year ago. This expense leverage was attributable to lower costs resulting from the Company's third quarter launch of new initiatives aimed at lowering its expense base to increase return on invested capital. These cost reduction initiatives are expected to provide a significant benefit to our 2016 results. Fourth quarter cost reductions were slightly offset by increased incentive compensation expense as compared to the fourth quarter a year ago, which had no incentive compensation expense.

In addition to its initiatives to reduce costs, the Company has seen meaningful progress in efforts to optimize its balance sheet. As part of this process, the Company plans to reduce working capital and sell unproductive assets. Lower inventory levels will be a major source of the reduction in working capital. At year end 2015, days inventory on hand decreased by approximately four days as compared to the prior year.

The Cabela's CLUB Visa program had another excellent quarter. During the quarter, growth in the average number of active credit card accounts was 6.6%. Growth in the average balance per active credit card account was 7.3%, and growth in the average balance of credit card loans was 14.4% to $4.8 billion. For the quarter, net charge-offs remained at historically low levels of 1.76%. Fourth quarter financial services revenue increased 15.7%, driven by increases in interest and fee income as well as interchange income.

"We have been very pleased with the results realized from both our revenue and expense initiatives implemented in 2015," Millner said. "As a result, for full-year 2016, we expect a high-single-digit growth rate in revenue and a high-single-digit or low-double-digit growth rate in earnings per diluted share as compared to full-year 2015 adjusted earnings per diluted share of $2.88."

On December 2, 2015, the Company issued a press release announcing that its Board of Directors was initiating a process to explore and evaluate a wide range of strategic alternatives to enhance value for the Company's shareholders. That process has continued and is ongoing.

Conference Call Information

A conference call to discuss fourth quarter fiscal 2015 operating results is scheduled for today (Thursday, February 18, 2016) 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 a continued focus on key merchandise categories as well as new initiatives, such as optimization of store formats and digital and mobile leadership, continuing to drive merchandise revenue performance; cost reduction initiatives providing a significant benefit to 2016 results; plans to reduce working capital and sell unproductive assets; and a high-single-digit growth rate in revenue and a high-single-digit or low-double-digit growth rate in earnings per diluted share for full-year 2016 as compared to full-year 2015 adjusted earnings per diluted share of $2.88. 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 Company's exploration and evaluation of strategic alternatives may not result in the successful identification or completion of a strategic alternative that yields additional value for stockholders, and the exploration and evaluation process may have an adverse impact on the Company's business; the state of the economy and the level of discretionary consumer spending, including changes in consumer preferences, demand for firearms and ammunition, and demographic trends; adverse changes in the capital and credit markets or the availability of capital and credit; the Company's ability to successfully execute its omni-channel strategy; increasing competition in the outdoor sporting goods industry and for credit card products and reward programs; the cost of the Company's products, including increases in fuel prices; the availability of the Company's products due to political or financial instability in countries where the goods the Company sells are manufactured; supply and delivery shortages or interruptions, and other interruptions or disruptions to the Company's systems, processes, or controls, caused by system changes or other factors; increased or adverse government regulations, including regulations relating to firearms and ammunition; the Company's ability to protect its brand, intellectual property, and reputation; the Company's ability to prevent cybersecurity breaches and mitigate cybersecurity risks; the outcome of litigation, administrative, and/or regulatory matters (including the ongoing Securities and Exchange Commission investigation, audits by tax authorities, and compliance examinations by the Federal Deposit Insurance Corporation); the Company's ability to manage credit, liquidity, interest rate, operational, legal, regulatory capital, and compliance risks; the Company's ability to increase credit card receivables while managing credit quality; the Company's ability to securitize its credit card receivables at acceptable rates or access the deposits market at acceptable rates; the impact of legislation, regulation, and supervisory regulatory actions in the financial services industry; 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 December 27, 2014, and Form 10-Q for the quarterly period ended September 26, 2015), 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
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands Except Earnings Per Share)
(Unaudited)
 
    Three Months Ended     Fiscal Year Ended
January 2,
2016
  December 27,
2014
January 2,
2016
  December 27,
2014
Revenue:
Merchandise sales $ 1,279,198 $ 1,159,718 $ 3,481,375 $ 3,200,219
Financial Services revenue 131,054 113,311 502,543 430,385
Other revenue (2,425 ) 1,595   13,784   17,046  
Total revenue 1,407,827   1,274,624   3,997,702   3,647,650  
Cost of revenue:

Merchandise costs (exclusive of depreciation and
  amortization)

852,847 752,306 2,286,554 2,058,891
Cost of other revenue 158     378   1,398  

Total cost of revenue (exclusive of depreciation
  and amortization)

853,005   752,306   2,286,932   2,060,289  
 
Selling, distribution, and administrative expenses 418,154 393,682 1,387,647 1,251,325
Impairment and restructuring charges 9,744     15,331   641  
 
Operating income 126,924 128,636 307,792 335,395
 
Interest expense, net (8,179 ) (7,366 ) (22,882 ) (21,842 )
Other non-operating income, net 4,532   867   9,717   4,924  
 
Income before provision for income taxes 123,277 122,137 294,627 318,477
Provision for income taxes 44,486   43,527   105,297   116,762  
Net income $ 78,791   $ 78,610   $ 189,330   $ 201,715  
 
Earnings per basic share $ 1.15   $ 1.11   $ 2.70   $ 2.84  
Earnings per diluted share $ 1.14   $ 1.10   $ 2.67   $ 2.81  
 
Basic weighted average shares outstanding 68,570,043   71,088,901   70,102,715   70,987,168  
Diluted weighted average shares outstanding 69,127,372   71,560,899   70,968,913   71,877,856  
 
 
CABELA'S INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands Except Par Values)
(Unaudited)
     
January 2,
2016
December 27,
2014
ASSETS
CURRENT
Cash and cash equivalents $ 315,066 $ 142,758
Restricted cash of the Trust 40,983 334,812
Accounts receivable, net 79,330 62,358

Credit card loans (includes restricted credit card loans of the Trust of $5,066,660
  and $4,440,520), net of allowance for loan losses of $75,911 and $56,572

5,035,267 4,421,185
Inventories 819,271 760,293
Prepaid expenses and other current assets 117,330 93,929
Income taxes receivable and deferred income taxes (2014 only) 77,698   122,337  
Total current assets 6,484,945 5,937,672
Property and equipment, net 1,811,302 1,608,153
Deferred income taxes 28,042
Economic development bonds 83,767 82,074
Other assets 64,447   47,418  
Total assets $ 8,472,503   $ 7,675,317  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
Accounts payable, including unpresented checks of $23,580 and $38,790 $ 281,985 $ 335,969
Gift instruments, credit card rewards, and loyalty rewards programs 365,427 339,782
Accrued expenses and other liabilities 224,733 216,274
Time deposits 215,306 273,081
Current maturities of secured variable funding obligations of the Trust 655,000 480,000
Current maturities of secured long-term obligations of the Trust 510,000 467,500
Current maturities of long-term debt 223,452   8,434  
Total current liabilities 2,475,903 2,121,040
Long-term time deposits 664,593 532,975
Secured long-term obligations of the Trust, less current maturities 2,728,500 2,579,750
Long-term debt, less current maturities 637,829 491,281
Deferred income taxes 6,546
Other long-term liabilities 137,035 126,215
 
COMMITMENTS AND CONTINGENCIES
 
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value; Authorized – 10,000,000 shares; Issued – none
Common stock, $0.01 par value:
Class A Voting, Authorized – 245,000,000 shares
Issued – 71,595,020 and 71,093,216 shares 716 711
Outstanding – 67,818,715 and 71,093,216 shares
Additional paid-in capital 389,754 365,973
Retained earnings 1,651,862 1,462,532
Accumulated other comprehensive loss (50,914 ) (11,706 )
Treasury stock, at cost – 3,776,305 shares at January 2, 2016 (162,775 )  
Total stockholders' equity 1,828,643   1,817,510  
Total liabilities and stockholders' equity $ 8,472,503   $ 7,675,317  
 
 
CABELA'S INCORPORATED AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(Dollars in Thousands)
(Unaudited)
           
Three Months Ended Fiscal Year Ended
January 2,
2016
December 27,
2014
January 2,
2016
December 27,
2014
 

Components of Total Consolidated Revenue:

Retail $ 926,533 $ 810,614 $ 2,658,853 $ 2,350,685
Direct 351,485 349,871 823,286 851,738
Financial Services 131,054 113,311 502,543 430,385
Other (1,245 ) 828   13,020   14,842  
Total consolidated revenue as reported $ 1,407,827   $ 1,274,624   $ 3,997,702   $ 3,647,650  
 

As a Percentage of Total Consolidated Revenue:

Retail revenue 65.8 % 63.6 % 66.5 % 64.4 %
Direct revenue 25.0 27.4 20.6 23.4
Financial Services revenue 9.3 8.9 12.6 11.8
Other revenue (0.1 ) 0.1   0.3   0.4  
Total 100.0 % 100.0 % 100.0 % 100.0 %
 

Operating Income (Loss) by Segment:

Retail $ 174,918 $ 156,999 $ 424,609 $ 417,655
Direct 27,245 37,288 82,913 112,717
Financial Services 38,098 26,803 172,988 111,650
Other (113,337 ) (92,454 ) (372,718 ) (306,627 )
Total consolidated operating income as reported $ 126,924   $ 128,636   $ 307,792   $ 335,395  
 

Operating Income by Segment as a Percentage of Segment Revenue:

Retail operating income 18.9 % 19.4 % 16.0 % 17.8 %
Direct operating income 7.8 10.7 10.1 13.2
Financial Services operating income 30.3 24.8 35.9 26.9

Total operating income by segment as a percentage of
   total segment revenue

9.0 10.1 7.7 9.2
 
 

CABELA'S INCORPORATED AND SUBSIDIARIES
COMPONENTS OF FINANCIAL SERVICES REVENUE
(Dollars in Thousands)
(Unaudited)

 

   Financial Services revenue consists of activity from the Company's 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 Financial Services revenue as reported for the periods
presented below.

       
Three Months Ended Fiscal Year Ended
January 2,
2016
  December 27,
2014
January 2,
2016
  December 27,
2014
 
Interest and fee income $ 131,898 $ 108,744 $ 481,731 $ 400,948
Interest expense (18,199 ) (16,322 ) (68,827 ) (64,167 )
Provision for loan losses (27,907 ) (19,806 ) (85,120 ) (61,922 )
Net interest income, net of provision for loan losses 85,792   72,616   327,784   274,859  
Non-interest income:
Interchange income 106,585 98,877 394,037 366,633
Other non-interest income 661   717   2,990   3,338  
Total non-interest income 107,246 99,594 397,027 369,971
Less: Customer rewards costs (61,984 ) (58,899 ) (222,268 ) (214,445 )
Financial Services revenue as reported $ 131,054   $ 113,311   $ 502,543   $ 430,385  
 

   The following table sets forth the components of Financial Services revenue as reported as a percentage of average total
credit card loans, including any accrued interest and fees, for the periods presented below.

 
Three Months Ended Fiscal Year Ended
January 2,
2016
December 27,
2014
January 2,
2016
December 27,
2014
 
Interest and fee income 11.1 % 10.4 % 10.8 % 10.2 %
Interest expense (1.5 ) (1.6 ) (1.5 ) (1.6 )
Provision for loan losses (2.3 ) (1.9 ) (1.9 ) (1.6 )
Interchange income 8.9 9.5 8.8 9.3
Other non-interest income 0.1 0.1 0.1
Customer rewards costs (5.2 ) (5.6 ) (5.0 ) (5.5 )
Financial Services revenue as reported 11.0 % 10.9 % 11.3 % 10.9 %
 
 

CABELA'S INCORPORATED AND SUBSIDIARIES

KEY STATISTICS OF FINANCIAL SERVICES BUSINESS

 (Unaudited)

 

   The following tables show key statistics reflecting the performance of the Financial Services business for the periods
presented below.

       
Three Months Ended
January 2,
2016
  December 27,
2014

Increase

(Decrease)

% Change
(Dollars in Thousands Except Average Balance per Active Account )
 
Average balance of credit card loans (1) $ 4,763,351 $ 4,163,413 $ 599,938 14.4 %
Average number of active credit card accounts 2,032,492 1,905,785 126,707 6.6
 
Average balance per active credit card account (1) $ 2,344 $ 2,185 $ 159 7.3
 
Purchases on credit card accounts, net $ 5,463,292 $ 5,139,460 $ 323,832 6.3
 
Net charge-offs on credit card loans (1) $ 20,958 $ 18,149 $ 2,809 15.5

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

    1.76 %   1.74 %   0.02 %    
(1) Includes accrued interest and fees
           
Fiscal Year Ended
January 2,
2016
  December 27,
2014

Increase

(Decrease)

% Change
(Dollars in Thousands Except Average Balance per Active Account )
 
Average balance of credit card loans (1) $ 4,465,058 $ 3,937,192 $ 527,866 13.4 %
Average number of active credit card accounts 1,940,534 1,817,012 123,522 6.8
 
Average balance per active credit card account (1) $ 2,301 $ 2,167 $ 134 6.2
 
Purchases on credit card accounts, net $ 20,213,403 $ 19,066,829 $ 1,146,574 6.0
 
Net charge-offs on credit card loans (1) $ 75,846 $ 66,553 $ 9,293 14.0

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

        1.70 %   1.69 %   0.01 %    
(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. We use ROIC as
a measure of efficiency and effectiveness of our use of total capital.

 

   We calculate ROIC by dividing adjusted net income (non-GAAP) by average total capital. Adjusted net income is derived
by adding interest expense, rent expense, and Retail segment depreciation and amortization (all after tax) to reported GAAP net
income excluding: (1) certain selling, distribution, and administrative expenses (as defined); (2) impairment and restructuring
charges; and (3) any losses on sales of assets. Total capital is derived by adding current maturities of long-term debt (excluding
debt of the Financial Services segment), operating leases capitalized at eight times next year's annual minimum lease
payments, and total stockholders' equity to long-term debt (excluding debt of the Financial Services segment), and then
subtracting cash and cash equivalents (excluding cash and cash equivalents of the Financial Services segment). 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
January 2, 2016   December 27, 2014
(Dollars in Thousands)
 
Net income as GAAP reported $ 189,330   $ 201,715  
Add back:
Interest expense 22,891 21,860
Rent expense 23,678 19,716
Depreciation and amortization - Retail segment 80,585 68,005
Exclude:

Selling, distribution, and administrative expenses (see Note 2 in the table "Reconciliation of
  GAAP Reported to Non-GAAP Adjusted Financial Measures" herein for the detail of
   components)

8,626 1,842

Impairment and restructuring charges (see Note 3 in the table "Reconciliation of GAAP
  Reported to Non-GAAP Adjusted Financial Measures" herein for the detail of
   components)

15,331   641  
151,111   112,064  
 
After tax effect 97,164   70,937  
Effective tax rate 35.7 % 36.7 %
Adjusted net income, non-GAAP $ 286,494   $ 272,652  
 
Calculation of total capital:
Current maturities of long-term debt (excluding Financial Services segment) $ 223,452 $ 8,434
Operating leases capitalized at 8x next year's annual minimum lease payments 195,392 184,360
Total stockholders' equity 1,828,643 1,817,510
Long-term debt (excluding Financial Services segment) 637,829   491,281  
2,885,316 2,501,585
Less:
Cash and cash equivalents (315,066 ) (142,758 )
Add back cash and cash equivalents at the Financial Services segment 156,968   49,294  
(158,098 ) (93,464 )
 
Adjusted total capital, non-GAAP $ 2,727,218   $ 2,408,121  
 
Average total capital, non-GAAP $ 2,567,670   $ 2,184,420  
 
Return on Invested Capital, non-GAAP 11.2 % 12.5 %
 
 

CABELA'S INCORPORATED AND SUBSIDIARIES

REVENUE IN FISCAL YEAR 2015 (53 WEEKS) COMPARED TO FISCAL YEAR 2014 (52 WEEKS)

 (Dollars in Thousands)

 (Unaudited)

 

   Information on the extra week in the fourth fiscal quarter of 2015 and fiscal year ended January 2, 2016, is presented below
in order to separate the impact of the extra week on reported results in comparison to reported results for the fourth fiscal
quarter of 2014 and fiscal year ended December 27, 2014. Financial Services was not adjusted because its reporting periods end
on a calendar year. Management believes that these measures are an important analytical tool to aid in understanding operating
trends without the 53rd week in fiscal year 2015.

   
Three Months Ended
          Excluding 53rd Week
(Non-GAAP Basis)

January 2, 2016

Including 53rd

Week

 

December 27,

2014

 

Increase

(Decrease)

 

%

Change

  Week 53  

Increase

(Decrease)

 

%

Change

 
Revenue:
Retail $ 926,533 $ 810,614 $ 115,919 14.3 % $ 66,571 49,348 6.1 %
Direct   351,485     349,871   1,614   0.5   16,514 (14,900 ) (4.3 )
Total merchandise sales 1,278,018 1,160,485 117,533 10.1 83,085 34,448 3.0
Financial Services 131,054 113,311 17,743 15.7 17,743 15.7
Other revenue   (1,245 )   828   (2,073 ) (250.4 )   900 (2,973 ) (359.1 )
Total revenue $ 1,407,827   $ 1,274,624 $ 133,203   10.5 $ 83,985 49,218   3.9
 
 
Fiscal Year Ended
Excluding 53rd Week
(Non-GAAP Basis)

January 2, 2016

Including 53rd

Week

 

December 27,

2014

 

Increase

(Decrease)

 

%

Change

  Week 53

Increase

(Decrease)

%

Change

 
 
Revenue:
Retail $ 2,658,853 $ 2,350,685 $ 308,168 13.1 % $ 66,571 241,597 10.3 %
Direct   823,286     851,738   (28,452 ) (3.3 )   16,514 (44,966 ) (5.3 )
Total merchandise sales 3,482,139 3,202,423 279,716 8.7 83,085 196,631 6.1
Financial Services 502,543 430,385 72,158 16.8 72,158 16.8
Other revenue   13,020     14,842   (1,822 ) (12.3 )   900 (2,722 ) (18.3 )
Total revenue $ 3,997,702   $ 3,647,650 $ 350,052   9.6 $ 83,985 266,067   7.3
 
 

CABELA'S INCORPORATED AND SUBSIDIARIES

RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED FINANCIAL MEASURES (1)

 (Unaudited)

 

   To supplement our consolidated statements of income presented in accordance with generally accepted accounting
principles ("GAAP"), we are providing non-GAAP adjusted financial measures of operating results that exclude certain items.
Selling, distribution, and administrative expenses; impairment and restructuring charges; operating income; operating income as
a percentage of total revenue; income before provision for income taxes; provision for income taxes; net income; and earnings
per diluted share are presented below both as GAAP reported and non-GAAP financial measures excluding (i) consulting fees
and certain expenses primarily related to our corporate restructuring initiative; (ii) an expense pursuant to an ongoing
investigation by the Securities and Exchange Commission; (iii) incremental expenses related to the transition to a third-party
logistics provider and the closing of our distribution center in Winnipeg, Manitoba, Canada; (iv) impairment and restructuring
charges; and (v) adjustments to the provision for income taxes related to changes in our assessments of uncertain tax positions
recognized in 2014. 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 adjusted financial measures should be
considered in conjunction with the GAAP financial measures.

 

   We believe these non-GAAP adjusted financial measures provide useful supplemental information to investors regarding
the underlying business trends and performance of our ongoing operations and are useful for period-over-period comparisons of
such operations. In addition, we evaluate results using non-GAAP adjusted operating income, adjusted net income, and adjusted
earnings per diluted share. These non-GAAP adjusted financial 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 tables reconcile these financial measures to the related GAAP adjusted financial measures for the periods presented.

   
Reconciliation of GAAP Reported to Non-GAAP Adjusted Financial Measures (1)
Three Months Ended
January 2, 2016     December 27, 2014

GAAP Basis

as Reported

 

Non-GAAP

Adjustments

   

Non-GAAP

Amounts

GAAP Basis

as Reported

   

Non-GAAP

Adjustments

   

Non-GAAP

Amounts

(Dollars in Thousands Except Earnings Per Share)
 
Selling, distribution, and administrative expenses (2) $ 418,154 $ (2,761 ) $ 415,393 $ 393,682 $ (884 ) $ 392,798
 
Impairment and restructuring charges (3) $ 9,744 $ (9,744 ) $ $ $ $
 
Operating income $ 126,924 $ 12,505 $ 139,429 $ 128,636 $ 884 $ 129,520
 
Operating income as a percentage of total revenue 9.0 % 0.9 % 9.9 % 10.1 % 0.1 % 10.2 %
 
Income before provision for income taxes $ 123,277 $ 12,505 $ 135,782 $ 122,137 $ 884 $ 123,021
 
Provision for income taxes (4) $ 44,486 $ 4,488 $ 48,974 $ 43,527 $ 244 $ 43,771
 
Net income $ 78,791 $ 8,017 $ 86,808 $ 78,610 $ 640 $ 79,250
 
Earnings per diluted share     $ 1.14     $ 0.12       $ 1.26       $ 1.10       $ 0.01       $ 1.11  

(footnotes follow on the next page)

     
Reconciliation of GAAP Reported to Non-GAAP Adjusted Financial Measures (1)
Fiscal Year Ended
January 2, 2016     December 27, 2014

GAAP Basis

as Reported

 

Non-GAAP

Adjustments

 

Non-GAAP

Amounts

GAAP Basis

as Reported

 

Non-GAAP

Adjustments

 

Non-GAAP

Amounts

(Dollars in Thousands Except Earnings Per Share)
 
Selling, distribution, and administrative expenses (2) $ 1,387,647 $ (8,626 ) $ 1,379,021 $ 1,251,325 $ (1,842 ) $ 1,249,483
 
Impairment and restructuring charges (3) $ 15,331 $ (15,331 ) $ $ 641 $ (641 ) $
 
Operating income $ 307,792 $ 23,957 $ 331,749 $ 335,395 $ 2,483 $ 337,878
 

Operating income as a
   percentage of total revenue

7.7 % 0.6 % 8.3 % 9.2 % 0.1 % 9.3 %
 

Income before provision for
  income taxes

$ 294,627 $ 23,957 $ 318,584 $ 318,477 $ 2,483 $ 320,960
 
Provision for income taxes (4) $ 105,297 $ 8,553 $ 113,850 $ 116,762 $ (2,861 ) $ 113,901
 
Net income $ 189,330 $ 15,404 $ 204,734 $ 201,715 $ 5,344 $ 207,059
 
Earnings per diluted share       $ 2.67     $ 0.21     $ 2.88       $ 2.81     $ 0.07     $ 2.88  
 
(1) The presentation includes non-GAAP financial measures. These non-GAAP financial measures are not prepared under any comprehensive set of accounting rules or principles, and do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with GAAP.
 
(2) Consists of the following for the respective periods:
      Three Months Ended     Fiscal Year Ended
Jan. 2, 2016   Dec. 27, 2014 2015   2014
 

Consulting fees and certain expenses primarily related to the Company's
   corporate restructuring initiative

$ 2,761 $ $ 6,419 $
Expense related to the ongoing SEC investigation 1,000

Incremental expenses related to the transition to a third-party logistics
   provider and the closing of the Company's distribution center in Canada

    884   1,207   1,842
$ 2,761 $ 884 $ 8,626 $ 1,842
 

(3)

Consists of the following for the respective periods:

 
Three Months Ended Fiscal Year Ended
Jan. 2, 2016 Dec. 27, 2014 2015 2014
 
Impairment losses recognized on three separate parcels of land $ 5,691 $ $ 5,901 $

Write-off of costs pertaining to store sites previously identified as future
   retail store locations but in 2015 decided not to develop

3,874 3,874

Charges for employee severance agreements and termination benefits
   related to a corporate restructure and reduction in the number of personnel

179 5,556

Charges for employee severance agreements and termination benefits
   related to the transition to a third-party logistics provider and the closing
   of the Company's distribution center in Canada

        641
$ 9,744 $ $ 15,331 $ 641
 
(4) For all periods presented, reflects the estimated income tax provision on the non-GAAP adjusted income before provision for income taxes. In addition, for the three months and fiscal year ended December 27, 2014, reflects offsetting positions from a net operating loss carry forward and tax adjustments related to changes in assessments of uncertain tax positions.

Cabela's Incorporated
Investor Contact:
Andrew Weingardt, 308-255-7428
or
Media Contact:
Nathan Borowski, 308-255-2861

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