Cabela's Inc. Reports Strong Second Quarter 2012 Results

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 its ability to tightly manage operating expenses as it accelerates growth, its ability to increase return on capital going forward, and full year 2012 earnings per share exceeding current estimates by 1-3%. 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 state of the economy and the level of discretionary consumer spending, including changes in consumer preferences 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 multi-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 government regulations, including regulations relating to firearms and ammunition; the Company's ability to protect its brand, intellectual property, 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; 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, including the Dodd-Frank Wall Street Reform and Consumer Protection Act; 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 31, 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								Six Months Ended
		June 30, 2012				July 2, 2011				June 30, 2012				July 2, 2011
Revenue:
Merchandise sales		$	542,662			$	488,409			$	1,077,939			$	997,519
Financial Services revenue		79,267				70,277				162,722				142,648
Other revenue		5,325				3,414				10,097				8,644
Total revenue		627,254				562,100				1,250,758				1,148,811
Cost of revenue:
Merchandise costs  (exclusive of depreciation and amortization)		339,782				309,233				690,502				650,443
Cost of other revenue		595				3				634				3
Total cost of revenue  (exclusive of depreciation and amortization)		340,377				309,236				691,136				650,446
Selling, distribution, and administrative expenses		229,049				214,600				455,218				429,214
Impairment and restructuring charges		—				955				—				955
Operating income		57,828				37,309				104,404				68,196
Interest expense, net		(6,444		)		(6,123		)		(10,948		)		(12,145		)
Other non-operating income, net		1,450				1,993				2,851				3,957
Income before provision for income taxes		52,834				33,179				96,307				60,008
Provision for income taxes		18,964				11,479				33,611				20,523
Net income		$	33,870			$	21,700			$	62,696			$	39,485
Earnings per basic share		$	0.48			$	0.31			$	0.90			$	0.57
Earnings per diluted share		$	0.47			$	0.31			$	0.87			$	0.55
Basic weighted average shares outstanding		70,034,486				69,279,823				69,744,356				69,028,853
Diluted weighted average shares outstanding		71,542,102				71,084,998				71,995,918				71,407,558

CABELA'S INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in Thousands Except Par Values) (Unaudited)
ASSETS			June 30, 2012				December 31, 2011				July 2, 2011
CURRENT
Cash and cash equivalents			$	347,389			$	304,679			$	385,327
Restricted cash of the Trust			15,826				18,296				18,524
Held-to-maturity investment securities			—				—				197,999
Accounts receivable, net			24,400				47,127				25,164
Credit card loans (includes restricted credit card loans of the Trust of $3,038,415,  $3,142,151, and $2,685,110), net of allowance for loan losses of $67,050, $73,350,  and $77,800			2,994,459				3,094,163				2,627,191
Inventories			577,120				494,828				599,851
Prepaid expenses and other current assets			134,999				146,479				133,440
Income taxes receivable and deferred income taxes			31,142				5,709				30,719
Total current assets			4,125,335				4,111,281				4,018,215
Property and equipment, net			928,442				866,899				827,800
Land held for sale or development			36,666				38,393				42,615
Economic development bonds			88,335				86,563				102,846
Deferred income taxes			—				—				11,141
Other assets			28,919				30,635				25,152
Total assets			$	5,207,697			$	5,133,771			$	5,027,769
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
Accounts payable, including unpresented checks of $23,287, $19,124, and $8,358			$	273,662			$	266,793			$	198,285
Gift instruments, and credit card and loyalty rewards programs			221,449				227,414				196,824
Accrued expenses			109,699				143,695				96,100
Time deposits			261,340				88,401				158,929
Current maturities of secured variable funding obligations of the Trust			—				460,000				—
Current maturities of secured long-term obligations of the Trust			—				425,000				1,123,400
Current maturities of long-term debt			8,394				8,387				123,390
Total current liabilities			874,544				1,619,690				1,896,928
Long-term time deposits			796,704				893,912				868,693
Secured long-term obligations of the Trust, less current maturities			1,827,500				977,500				722,500
Long-term debt, less current maturities			331,725				336,535				345,316
Deferred income taxes			31,084				26,367				—
Other long-term liabilities			98,473				98,451				107,352
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 - 70,542,289, 69,641,818, and 69,415,712 shares;
Outstanding - 69,742,289, 68,840,883, and 69,415,712 shares			705				696				694
Additional paid-in capital			346,007				334,925				328,169
Retained earnings			925,610				862,914				759,779
Accumulated other comprehensive income (loss)			4,322				2,731				(1,662		)
Treasury stock, at cost			(28,977		)		(19,950		)		—
Total stockholders' equity			1,247,667				1,181,316				1,086,980
Total liabilities and stockholders' equity			$	5,207,697			$	5,133,771			$	5,027,769

CABELA'S INCORPORATED AND SUBSIDIARIES SEGMENT INFORMATION (Dollars in Thousands) (Unaudited)
				Three Months Ended								Six Months Ended
				June 30, 2012				July 2, 2011				June 30, 2012				July 2, 2011
Revenue:
Retail				$	384,693			$	329,162			$	730,024			$	630,998
Direct				158,453				159,598				348,648				367,049
Financial Services				79,267				70,277				162,722				142,648
Other				4,841				3,063				9,364				8,116
Total revenue				$	627,254			$	562,100			$	1,250,758			$	1,148,811
Operating Income (Loss):
Retail				$	71,224			$	53,428			$	115,451			$	88,316
Direct				29,165				31,072				63,339				67,054
Financial Services				21,276				14,271				50,278				28,238
Other				(63,837		)		(61,462		)		(124,664		)		(115,412		)
Total operating income				$	57,828			$	37,309			$	104,404			$	68,196
As a Percentage of Total Revenue:
Retail revenue				61.3		%		58.6		%		58.4		%		54.9		%
Direct revenue				25.3				28.4				27.9				32.0
Financial Services revenue				12.6				12.5				13.0				12.4
Other revenue				0.8				0.5				0.7				0.7
Total revenue				100.0		%		100.0		%		100.0		%		100.0		%
As a Percentage of Segment Revenue:
Retail operating income				18.5		%		16.2		%		15.8		%		14.0		%
Direct operating income				18.4				19.5				18.2				18.3
Financial Services operating income				26.8				20.3				30.9				19.8
Total operating income as a percentage of total revenue				9.2				6.6				8.3				5.9

.

CABELA'S INCORPORATED AND SUBSIDIARIES COMPONENTS OF FINANCIAL SERVICES SEGMENT 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 for the periods presented below
			Three Months Ended								Six Months Ended
			June 30, 2012				July 2, 2011				June 30, 2012				July 2, 2011
Interest and fee income			$	72,085			$	65,598			$	145,193			$	134,000
Interest expense			(12,689		)		(18,567		)		(26,580		)		(35,860		)
Provision for loan losses			(12,198		)		(8,809		)		(18,844		)		(16,483		)
Net interest income, net of provision for loan losses			47,198				38,222				99,769				81,657
Non-interest income:
Interchange income			74,939				66,230				143,366				124,903
Other non-interest income			3,981				3,256				8,020				6,303
Total non-interest income			78,920				69,486				151,386				131,206
Less: Customer rewards costs			(46,851		)		(37,431		)		(88,433		)		(70,215		)
Financial Services revenue			$	79,267			$	70,277			$	162,722			$	142,648
The following table sets forth the components of Financial Services revenue as a percentage of average total credit card loans, including any accrued interest and fees, for the periods presented below.
			Three Months Ended								Six Months Ended
			June 30, 2012				July 2, 2011				June 30, 2012				July 2, 2011
Interest and fee income			9.6		%		9.9		%		9.8		%		10.1		%
Interest expense			(1.6		)		(2.8		)		(1.8		)		(2.7		)
Provision for loan losses			(1.6		)		(1.3		)		(1.2		)		(1.2		)
Interchange income			10.0				9.9				9.6				9.4
Other non-interest income			0.4				0.5				0.6				0.5
Customer rewards costs			(6.4		)		(5.6		)		(6.0		)		(5.3		)
Financial Services revenue			10.4		%		10.6		%		11.0		%		10.8		%

CABELA'S INCORPORATED AND SUBSIDIARIES KEY STATISTICS OF FINANCIAL SERVICES BUSINESS (Dollars in Thousands Except Average Balance per Account ) (Unaudited)

Key statistics reflecting the performance of the Cabela's CLUB Visa Program are shown in the following charts:

			Three Months Ended
			June 30, 2012				July 2, 2011				Increase (Decrease)				% Change
Average balance of credit card loans (1)			$	3,001,213			$	2,657,501			$	343,712			12.9	%
Average number of active credit card accounts			1,492,033				1,382,428				109,605				7.9
Average balance per active credit card account (1)			$	2,011			$	1,922			$	89			4.6
Net charge-offs on credit card loans (1)			$	13,948			$	15,552			$	(1,604	)		(10.3	)
Net charge-offs as a percentage of average credit card loans (1)			1.86		%		2.34		%		(0.48		)%
(1) Includes accrued interest and fees

			Six Months Ended
			June 30, 2012				July 2, 2011				Increase (Decrease)				% Change
Average balance of credit card loans (1)			$	2,984,384			$	2,643,827			$	340,557			12.9	%
Average number of active credit card accounts			1,487,242				1,379,814				107,428				7.8
Average balance per active credit card account (1)			$	2,007			$	1,916			$	91			4.7
Net charge-offs on credit card loans (1)			$	28,794			$	33,587			$	(4,793	)		(14.3	)
Net charge-offs as a percentage of average credit card loans (1)			1.93		%		2.54		%		(0.61		)%
(1) Includes accrued interest and fees

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. 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 and six months ended July 2, 2011. The impairment and restructuring charges include asset write-downs and severance and related costs. There were no impairment and restructuring charges reflected in the three and six months ended June 30, 2012. 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
			June 30, 2012				July 2, 2011
			GAAP Basis As Reported				GAAP Basis As Reported				Amounts Added Back				Non-GAAP As Adjusted
			(Dollars in Thousands Except Earnings Per Share)
Total revenue			$	627,254			$	562,100			$	—			$	562,100
Total cost of revenue (exclusive of depreciation and amortization)			340,377				309,236				—				309,236
Selling, distribution, and administrative expenses			229,049				214,600				—				214,600
Impairment and restructuring charges (1)			—				955				(955		)		—
Operating income			57,828				37,309				955				38,264
Interest expense, net			(6,444		)		(6,123		)		—				(6,123		)
Other non-operating income			1,450				1,993				—				1,993
Income before provision for income taxes			52,834				33,179				955				34,134
Provision for income taxes (2)			18,964				11,479				327				11,806
Net income			$	33,870			$	21,700			$	628			$	22,328
Earnings per basic share			$	0.48			$	0.31			$	0.01			$	0.32
Earnings per diluted share			$	0.47			$	0.31			$	0.01			$	0.32

			Six Months Ended
			June 30, 2012				July 2, 2011
			GAAP Basis As Reported				GAAP Basis As Reported				Amounts Added Back				Non-GAAP As Adjusted
			(Dollars in Thousands Except Earnings Per Share)
Total revenue			$	1,250,758			$	1,148,811			$	—			$	1,148,811
Total cost of revenue (exclusive of depreciation and amortization)			691,136				650,446				—				650,446
Selling, distribution, and administrative expenses			455,218				429,214				—				429,214
Impairment and restructuring charges (1)			—				955				(955		)		—
Operating income			104,404				68,196				955				69,151
Interest expense, net			(10,948		)		(12,145		)		—				(12,145		)
Other non-operating income			2,851				3,957				—				3,957
Income before provision for income taxes			96,307				60,008				955				60,963
Provision for income taxes (2)			33,611				20,523				327				20,850
Net income			$	62,696			$	39,485			$	628			$	40,113
Earnings per basic share			$	0.90			$	0.57			$	0.01			$	0.58
Earnings per diluted share			$	0.87			$	0.55			$	0.01			$	0.56

(1)	Reflects (i) impairment losses recognized in the three and six months ended July 2, 2011, to reflect the fair value on certain assets and (ii) restructuring charges for severance and related benefits recognized in the three and six months ended July 2, 2011.
(2)	The provision for income taxes for the non-GAAP measurements for the respective periods were based on the effective tax rate calculated under GAAP for those respective periods on a year-to-date basis.

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