1267130--2/28/2007--CABELAS

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{cost, operation, labor}

{condition, economic, financial}

{acquisition, growth, future}

{capital, credit, financial}

{operation, natural, condition}

{operation, international, foreign}

{regulation, government, change}

{product, market, service}

{tax, income, asset}

{loan, real, estate}

{debt, indebtedness, cash}

{property, intellectual, protect}

{personnel, key, retain}

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Risks Related to Our Merchandising Business If we cannot successfully implement our destination retail store expansion strategy, our growth and profitability would be adversely impacted. Our continued retail expansion will result in a higher number of destination retail stores, which could adversely affect the desirability of our destination retail stores, harm the operating results of our retail business and reduce the revenue of our direct business. Our failure to successfully manage our direct business could have a material adverse effect on our operating results and cash flows. Competition in the outdoor recreation and casual apparel and footwear markets could reduce our revenue and profitability. If we fail to maintain the strength and value of our brand, our revenue is likely to decline. We are implementing substantial systems changes in support of our direct business and destination retail store expansion that might disrupt our supply chain operations. We depend on vendors and service providers to operate our business and any disruption of their supply of products and services could have an adverse impact on our revenue and profitability. Political and economic uncertainty and unrest in foreign countries where our vendors are located could adversely affect our operating results. Our ability to source our merchandise profitably or at all could be hurt if new trade restrictions are imposed or existing trade restrictions become more burdensome. Due to the seasonality of our business, our annual operating results would be adversely affected if our revenue during the third and fourth fiscal quarters were substantially below expectations. A decline in discretionary consumer spending could reduce our revenue. If we lose key management or are unable to attract and retain the talent required for our business, our operating results could suffer. Our business depends on our ability to meet our labor needs, and if we are unable to do so, our destination retail store expansion strategy may be delayed and our revenue growth may suffer. Our use tax collection policy for our direct business may subject us to liabilities for unpaid use taxes on past sales. Our destination retail store expansion strategy may result in our direct business establishing nexus with additional states which may cause our direct business to pay additional income and use taxes and have an adverse effect on the profitability and cash flows of our direct business. We must successfully order and manage our inventory to reflect customer demand and anticipate changing consumer preferences and buying trends or our revenue and profitability will be adversely affected. A natural disaster or other disruption at our distribution centers or return facility could cause us to lose merchandise and be unable to effectively deliver to our direct customers and destination retail stores. Our failure to obtain or negotiate economic development packages with local and state governments could cause us to significantly alter our destination retail store strategy or format and/or delay the construction of one or more of our destination retail stores and could adversely affect our revenue, cash flows and profitability. The failure of properties to generate sufficient taxes to amortize economic development bonds owned by us that relate to the development of such properties would have an adverse impact on our cash flows and profitability. Our failure to comply with the terms of current economic development agreements could result in our repayment of grant money or other adverse consequences that would affect our cash flows and profitability. We may incur costs from litigation or increased regulation relating to products that we sell, particularly tree stands and firearms, which could adversely affect our revenue and profitability. Current and future government regulation may negatively impact demand for our products and our ability to conduct our business. Our inability or failure to protect our intellectual property could have a negative impact on our operating results. Failure to successfully integrate any business we acquire could have an adverse impact on our profitability. Risks Related to Our Financial Services Business We may experience limited availability of financing or variation in funding costs for our financial services business, which could limit growth of the business and decrease our profitability. We may have to reallocate capital from our direct and retail businesses to meet the capital needs of our financial services business, which could alter our destination retail store expansion program. It may be difficult to sustain the historical growth and profitability of our financial services business, and we will be subject to various risks as we attempt to grow the business. Economic downturns and social and other factors could cause our credit card charge-offs and delinquencies to increase, or credit card balances to decrease, which would decrease our profitability. The performance of our financial services business may be negatively affected by the performance of our merchandising businesses. Our financial services business faces the risk of a complex and changing regulatory and legal environment. Changes in interest rates could have a negative impact on our earnings. Credit card industry litigation could adversely impact the amount of revenue generated by our financial services business. Fluctuations in the value of our interests in our securitizations relating to our financial services business may adversely affect our earnings.

Full 10-K form ▸

1267130--2/28/2007--CABELAS_INC