Question 1
Stock Split When Croc?s, the shoe company, reported in early 2007 that its first quarter earnings had increased from the previous year, its stock price jumped to over $80 per share. At the same time, the company announced a 2 to 1 stock split. Question 1. What is a stock split and what effect does it have on the company?s stock? Question 2. What effect will it likely have on the market value of the company?s stock? In light of your answers, do you think the stock split is positive for the company and for its stockholders?,were you able to open the PDF file sir?,Sir if you can send a email message to peoplesrealtor@gmail.com I can return the message with the cabela's2010 report. I tried attach the PDF file but I guess it didn't catch. Or maybe you can down load it from the internet Cabelas 2010 The Annual Report,I am sorry I was asking about the other one I recently sent you , it was with a a PDF file attached,Sir what is a QID?,"D. Financial Analysis Question: For the past two years, calculate and discuss the significance of the following ratios: Liquidity ratios 2009 2010 Working capital $619,354 $1,747,124 Current ratio Receivable turnover Day?s sales uncollected Inventory turnover Day?s inventory on hand Payables turnover Day?s payable Operating cycle Financing period Profitability ratios 2009 2010 Profit margin 1.88% 4.21% Asset turnover Return on assets Return on equity Long-term Solvency ratios 2009 2010 Debt to equity ratio Interest coverage Cash Flow Adequacy 2009 2010 Cash flow yield Cash flows to sales Cash flows to assets Free cash flow Market Strength ratios 2009 2010 Price /earnings per share Dividends yield a n n2u a0l 1r e0p o r t l e t t e r t o s h a r e h o l d e r s f o r m 1 0 - k About Us Cabela?s? is a leading specialty retailer, and the world?s largest direct marketer, of hunting, fi shing, camping and related outdoor merchandise. Since our 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 Outfi tter.? Through our growing number of retail stores and our well-established direct business, we offer a wide and distinctive selection of high-quality outdoor products at competitive prices while providing superior customer service. We also issue the Cabela?s CLUB? Visa credit card, which serves as our primary customer loyalty rewards program. Tommy Millner - Chief Executive Offi cer Financial Highlights (1) (1) (1) Fiscal Year (Dollars in thousands, except per share data) 2010(1) 2009(1) 2008 (1) Total Revenue $2,663,242 $2,629,683 $2,557,078 Gross Profi t $1,087,793 $1,027,062 $1,016,864 Gross Profi t Margin 40.8% 39.1% 39.8% Operating Income $200,388 $156,915 $151,180 Operating Income Margin 7.5% 6.0% 5.9% Net Income $121,328 $91,615 $82,955 Earnings Per Diluted Share $1.76 $1.36 $1.24 Diluted Weighted Average Shares Outstanding 69,086,533 67,453,474 67,158,583 Total Cash and Cash Equivalents $136,419 $582,185 $410,104 Inventories $509,097 $440,134 $517,657 Total Debt (2) $345,152 $348,279 $380,031 Total Stockholders? Equity $1,024,548 $984,421 $913,705 Lease Adjusted Debt-To-Capitalization Ratio(2)(3) 28.1% 29.0% 32.0% Return on Invested Capital(4) 13.1% 11.0% 9.5% (1) Fiscal year 2010, 2009, and 2008 results exclude the impact of valuations of interest-only strips associated with securitized loans, impairment and restructuring charges, and other special charges. A reconciliation to GAAP is provided after the Letter to Shareholders. (2) Excludes all borrowings of fi nancial services subsidiary. (3) Both the numerator and the denominator are adjusted to include operating lease obligations capitalized at eight times next year?s annual minimum lease payments and deferred compensation. (4) A calculation of ROIC is provided after the Letter to Shareholders. Dear Cabela?s Shareholders: Fifty years ago, Dick Cabela, in Chicago with his father to purchase furniture for the family store in Chappell, Nebraska, came across a small display of hand-tied fi shing fl ies. He bought the lot, 20 gross, and in so doing set in motion events that would lead us to where we are today. We are very pleased with our record performance in 2010, which gives us great confi dence leading into our Golden Anniversary year. During 2010, we not only improved on our successful 2009, but we also saw an acceleration of momentum in all of our key fi nancial metrics: return on invested capital, merchandise gross margin, Retail segment operating margin, total revenue growth, retail expansion, and performance of our Cabela?s CLUB Visa loyalty program. This acceleration of momentum gives us confi dence in our ability to achieve our goal of becoming the best multi-channel outdoor retail company in the world by the end of 2012. I am pleased to report, on a like-calendar basis, total revenue increased 3.2 percent to an all-time record of $2.7 billion, and comparable store sales increased 1.6 percent led by a 7.3 percent increase in our all important fourth quarter. Merchandise gross margin increased 50 basis points, marking the fi rst annual increase in merchandise gross margin in fi ve years. During the year, we opened one new store in Grand Junction, Colorado, and announced three new stores for 2011 (Allen, Texas; Springfi eld, Oregon; and Edmonton, Canada). Our confi dence to increase store growth arises, in part, from a 290 basis point increase in Retail segment contribution margin. Our Cabela?s CLUB Visa loyalty program witnessed a 32.8 percent revenue increase, also a new record. We also saw improvement in the aggregate number of multi-channel customers and their spend. As a multichannel retailer, this represents a vital measure of our long-term success. In 2010, the number of multi-channel customers increased 4 percent while their spend increased 6 percent. And fi nally, our most important metric, return on invested capital, increased 210 basis points to 13.1 percent, the highest level in fi ve years. Fiscal 2010 Results In 2010, net income, excluding impairment charges and certain other items, increased 32 percent to a record $121 million, or $1.76 per diluted share, compared to $92 million, or $1.36 per diluted share, in 2009. Improvements in earnings were a result of higher gross margin, improved performance at our Cabela?s CLUB Visa program, and a continued focus on tightly managing expenses. For the year, consolidated operating margin, also excluding impairment charges and certain other items, increased improved performance in our Cabela?s CLUB Visa program and higher merchandise gross margin. In our Retail segment, on a like-calendar basis, revenue increased 4.3 percent due to a 1.6 percent increase in comparable store sales and revenue contribution from new stores. For the year, Retail segment operating margin increased 290 basis points to 14.6 percent. Improving operating margin has been a key focus over the past two years, and we are very pleased with the improvement we have realized. We also realized improvements in our Direct business - Internet and call center. For the year, on a like-calendar basis and adjusting for divestitures, Direct business revenue decreased just 1.6 percent as we saw double-digit gains in our Internet business and planned declines in call center revenues. These results were an improvement over 2009 levels and are encouraging in light of greater than expected challenges with two systems implementations - the new Cabelas.com website and a new customer relationship management system at our call centers. While the customer issues are largely behind us, at times in our busy fourth quarter, our customers experienced longer than average wait times and slow response times while placing orders. For the year, operating margin in our Direct segment increased 40 basis points to 15.6 percent from 15.2 percent last year. Our Cabela?s CLUB Visa program had a solid year. Financial Services revenue increased 32.8 percent in 2010 due to lower provision for loan losses, reduced interest expense, Letter To Shareholders 50 basis points to 7.5 percent from 6.0 percent last year. The increase in consolidated operating margin was due to 1 s Retail segment and higher interchange income. For the year, average active accounts increased 5.9 percent and the average account balance increased 1.0 percent. In 2010, we incurred impairment and other special charges totaling $13.6 million pre-tax. These charges related to our settlement of all matters related to a 2009 Federal Deposit Insurance Corporation compliance examination as well as non-cash asset impairment charges related to the write-down of certain property and land to fair value. Our balance sheet also saw signifi cant improvement in 2010 as we ended the year with just $345 million of debt and generated $167 million of cash fl ows from operations. The strength of our balance sheet and cash fl ows has allowed us to self-fund the capital needs of our Cabela?s CLUB Visa program and retail store expansion, and solidify our strong position with vendor partners in an uncertain global economic environment. 2012 Vision Update In 2009, we developed a long-term strategic plan for the Company, which we refer to as our 2012 Vision. 2010 marked the fi rst full year of this three-year plan, and I would like to provide an update on its status. As you will recall, we formally communicated our 2012 Vision to the organization in the third quarter of 2009 and followed with a realignment of our executive leadership team in January 2010 to ensure responsibilities were aligned with our plan. As a normal part of our strategic planning process, our executive leadership team assembled in mid-summer 2010 to examine whether our strategic initiatives should be adjusted as we moved toward 2011. I am pleased to report our leadership team remains convinced not only of the strategic initiatives? validity, but also in our ability to attain their imbedded goals by the end of 2012. Our Vision is to become the best multi-channel outdoor retail company in the world by the end of 2012. To accomplish this goal, we must passionately serve and please every customer every day; celebrate and reward passion, innovation, and results with our employees; and achieve profi table growth with superior returns for our owners. These three pillars of the plan form our Circles of Excellence: Customers, Employees, and Owners, supported by six strategic initiatives: ? Focus on Core Customers ? Improve Retail Profi tability ? Improve Merchandise Performance ? Retail Expansion ? Direct Channel Growth ? Growth of the Cabela?s CLUB Visa Program Focus on Core Customers Throughout 2010, we focused on our four customer personas, developed in 2009 from our customer data, which represent our core customers. Our merchants, retail operators, and marketers use these personas as a fi lter to ensure we make decisions biased to our core customers. Looking forward, we will continue to deepen our focus on our core customers and intend to roll out several initiatives designed to further improve the customer experience and maintain our industry leading customer service levels. Examples of these initiatives include the formation of a cross-functional Customer Experience Governance Council to oversee, coordinate, and prioritize customer experience improvement initiatives across the enterprise. We are also rolling out our Legendary Impressions program designed to deploy values-based training and decision-making throughout the Company and organizing customer champions to assist in creating and executing improvement action plans. We have also introduced a new ?Voice of the Customer? survey for our customers which will provide us with a more complete view of the customer experience and allow us to compare ourselves with other retailers. In addition to new metrics, in the second quarter, we will implement an avenue for our Direct customers, as well as non-purchasing customers, to provide feedback through an online survey. Improve Retail Profi tability We have spent considerable time and effort improving Retail profi tability over the past two years and realized signifi cant improvement for the second year in a row. For the year, Retail segment operating margin increased 290 basis points. I mentioned last year that we had nearly 100 ongoing initiatives in Retail operations to meet our goal of a 150-250 basis point improvement in Retail profi tability 2012 by the end of 2012. While we have clearly exceeded our goal, many of these initiatives are ongoing, and we have added other initiatives providing for signifi cant opportunities still ahead. Improve Merchandise Performance This initiative is critical because improving merchandise gross margin is the most important contributor to overall profi t growth in our business. In 2010, we improved merchandise gross margin 50 basis points. Margin expansion was broad-based and a result of better pre-season planning and in-season management. We expect our ongoing initiatives related to greater vendor collaboration, better pre-season planning and in-season management, price optimization, and better inventory quality to support future margin expansion. I remain confi dent in our ability to achieve our strategic margin improvement goal of a 200-300 basis point improvement over 2009 levels by the end of 2012. Retail Expansion Given the significant improvements in Retail profitability and merchandise gross margin and the performance of our next generation stores, we are excited that 2011 will be the year we accelerate retail store expansion. In 2011, we will open two stores in the United States, one in Springfield, Oregon, and the other in Allen, Texas. Our United States retail store expansion will continue to focus on building stores in trafficked retail areas, and these two new stores are prime examples of this. Additionally, our expansion will be a blend of repurposed real estate and newly constructed sites, all in our next generation store format. Our approach to growth will continue to be patient and purposeful, following the guiding principle of profitable growth. In 2011, in addition to our two stores in the United States, we will also open a new store in Edmonton, Canada, doubling our store base in this great market. This marks the beginning of our retail store expansion into Canada following our acquisition of a Canadian outdoor specialty retailer in late 2007. The Cabela?s brand is as strong in Western Canada as it is in the United States, and we are excited about our expansion into Canada, which like our expansion in the United States, will be patient and purposeful utilizing our next generation store format. We are very excited about the opportunities in this underserved market. Direct Channel Growth There is no question we have the leading direct business in our industry. In 2010, our Cabelas.com website was once again the most visited website in our industry. We have spent the last few years positioning our Direct business for renewed growth as we divested several non-core businesses, installed a new customer relationship management system, and launched our new Cabelas.com website. Additionally, we have expanded our mobile and social marketing initiatives by recently launching new mobile technology enhancements that include a fully-integrated mobile site showcasing our entire assortment. In addition, we have launched a Facebook shopping outlet to support our growing fan base, currently at 850,000 fans. Several additional digital enhancements will soon be launched during 2011. These enhancements include rich apps for both the iPhone and Android devices, which will enhance our customer shopping experience. In addition, new digital customer engagement tools will be leveraged allowing us to better interact with and serve our passionate customer base. I am confi dent in our ability to remain the leading direct marketer in our industry. Growth of Cabela?s CLUB Visa Program The Cabela?s CLUB Visa program constantly creates significant loyalty to our powerful Cabela?s brand, and last year more than $134 million in free merchandise was earned by CLUB members. In 2010, average active cardholders increased 5.9 percent and the average account balance increased 1.0 percent. In addition, we realized significant improvements in delinquencies, charge-offs, and funding costs. We continue to focus on finding new ways to use the Cabela?s CLUB Visa program to drive greater customer loyalty and additional customer spending through all of our channels. In 2010, we implemented a number of creative programs for our cardholders, including inviting CLUB members on exclusive fishing and hunting trips. Customer response to these trips was overwhelming, and we look forward to expanding these opportunities in 2011. The Cabela?s CLUB Visa program is the glue to adhere our best customers to Cabela?s brand, and we will continue to look for new ways to increase the value of the CLUB Visa program for our loyal customers. Looking Forward While we made signifi cant progress in 2010, accelerating every important fi nancial component of our business, we are fully mindful that 2010 was but one step in a long road of continuous improvement in every facet of our business. We remain buoyed by our powerful brand, deep customer loyalty, and a strong balance sheet and cash fl ows, which provide us tremendous fl exibility in an uncertain global economic environment. Our 14,000 passionate and dedicated Outfi tters are mindful of our shortcomings, encouraged by our successes, and absolutely committed to achieving our expressed goal of becoming the best multi-channel outdoor retail company in the world by the end of 2012. The Company?s 2010 performance only deepens our confi dence in achieving these objectives. Please join us in 2011 as we celebrate our 50th Anniversary. Thank you for your continued confi dence. Sincerely, Tommy Millner President and Chief Executive Officer To supplement the Company?s consolidated statements of income presented in accordance with generally accepted accounting principles (?GAAP?), the Company has disclosed non-GAAP measures of operating results that exclude certain items. Financial Services revenue; total revenue; selling, distribution, and administrative expenses; impairment and restructuring charges; operating income; other non-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 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?), (ii) the impairment and restructuring charges recorded in fiscal 2010 and 2009, and (iii) the impact of valuations of the Company?s interestonly strip associated with its securitized loans recorded in fiscal 2009. The valuation of the Company?s interest-only strip associated with its securitized loans was not a reported amount beginning in fiscal 2010 under new accounting standards. The impairment and restructuring charges include asset write-downs and severance and related costs. In light of their nature and magnitude, the Company believes 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 presented in this Annual Report. 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 total revenue, 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 total revenue, 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 financial measures for the fiscal years presented. Fiscal Year Ended January 1, 2011 GAAP Basis As Reported Excluded Amounts Non-GAAP As Adjusted (Dollars in Thousands Except Earnings Per Share) Revenue: Merchandise sales $2,412,486 $ - $2,412,486 Financial Services revenue 227,675 - 227,675 Other revenue 23,081 - 23,081 Total revenue 2,663,242 - 2,663,242 Total cost of revenue (exclusive of depreciation and amortization) 1,575,449 - 1,575,449 Selling, distribution, and administrative expenses (1) 895,405 (8,000) 887,405 Impairment and restructuring charges (2) 5,626 (5,626) - Operating income 186,762 13,626 200,388 Interest expense, net (27,442) - (27,442) Other non-operating income, net 7,360 - 7,360 Income before provision for income taxes 166,680 13,626 180,306 Provision for income taxes (3) 54,521 4,457 58,978 Net income $ 112,159 $ 9,169 $ 121,328 Earnings per basic share $ 1.65 $ 0.14 $ 1.79 Earnings per diluted share (4) $ 1.62 $ 0.13 $ 1.76 (Footnotes on the following page) CABELA?S INCORPORATED AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Fiscal Year Ended January 2, 2010 GAAP Basis As Reported Excluded Amounts Non-GAAP As Adjusted (Dollars in Thousands Except Earnings Per Share) Revenue: Merchandise sales $ 2,447,635 $ - $2,447,635 Financial Services revenue (5) 171,414 (2,557) 168,857 Other revenue 13,191 - 13,191 Total revenue 2,632,240 (2,557) 2,629,683 Total cost of revenue (exclusive of depreciation and amortization) 1,602,621 - 1,602,621 Selling, distribution, and administrative expenses 870,147 - 870,147 Impairment and restructuring charges (2) 66,794 (66,794) - Operating income 92,678 64,237 156,915 Interest expense, net (23,109) - (23,109) Other non-operating income, net (6) 6,955 574 7,529 Income before provision for income taxes 76,524 64,811 141,335 Provision for income taxes (3) 26,907 22,813 49,720 Net income $ 49,617 $ 41,998 $ 91,615 Earnings per basic share $ 0.74 $ 0.63 $ 1.37 Earnings per diluted share $ 0.74 $ 0.62 $ 1.36 (1) Reflects an accrual recognized in fiscal 2010 as a result of an agreement in principle to settle all matters with the FDIC arising out of the FDIC?s compliance examination conducted in 2009 of WFB. (2) Reflects impairment losses on certain assets where projected cash flows were less than the fair value of the respective assets and restructuring charges for severance and related benefits pursuant to certain reductions in workforce and voluntary retirement plans. See Note 15 in the 2010 Form 10-K for additional detail. (3) The provision for income taxes for the non-GAAP measures were based on the effective tax rate for the respective fiscal year. (4) Amounts may not foot across due to rounding from the calculations using basic and diluted weighted average shares outstanding. (5) Valuations of the interest-only strip associated with securitized loans of the Company?s Financial Services business segment. (6) Loss incurred in the fourth quarter of fiscal 2009 to terminate forward exchange rate contracts for Canadian operations. CABELA?S INCORPORATED AND SUBSIDIARIES Reconciliation of Non -GAAP Financial Measures CABELA?S INCORPORATED AND SUBSIDIARIES Return On Invested Capital 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 writedowns, and (3) any acceleration of depreciation charges caused by impairment 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 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 January 1, 2011 January 2, 2010 December 27, 2008 (Dollars in Thousands) Net income $ 112,159 $ 49,617 $ 76,404 Add back: Interest expense 27,482 23,223 29,708 Rent expense 7,506 8,624 8,494 Depreciation and amortization - Retail segment 40,011 41,822 37,930 Exclude: Losses on sales of assets - - - Impairment charges or fixed asset writedowns 5,626 60,227 3,694 Acceleration of depreciation charges from impairment of economic development bonds - 2,099 516 80,625 135,995 80,342 After tax effect 54,253 88,179 51,917 Effective tax rate 32.71% 35.16% 35.38% Adjusted net income $ 166,412 $ 137,796 $ 128,321 Total capital: Current maturities of long-term debt $ 230 $ 3,101 $ 695 Deferred compensation 291 349 5,192 Operating leases capitalized at 8x next year?s annual minimum lease payments 55,864 53,608 44,928 Total stockholders? equity 1,024,548 984,421 913,705 Long-term debt (excluding WFB debt) 344,922 345,178 379,336 1,425,855 1,386,657 1,343,856 Less: Cash and cash equivalents (136,419) (582,185) (410,104) Add back cash and cash equivalents at WFB 81,904 371,408 402,058 (54,515) (210,777) (8,046) Adjusted total capital $ 1,371,340 $ 1,175,880 $ 1,335,810 Average total capital $ 1,273,610 $1,255,845 $ 1,353,061 Return on Invested Capital 13.1% 11.0% 9.5% This page is intentionally left blank. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 Form 10-K (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 1, 2011 OR ? TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 1-32227 CABELA?S INCORPORATED (Exact name of registrant as specified in its charter) Delaware 20-0486586 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number) One Cabela Drive, Sidney, Nebraska 69160 (Address of principal executive offices) (Zip Code) Registrant?s telephone number, including area code: (308) 254-5505 Securities registered pursuant to Section 12 (b) of the Act: Title of each class Name of each exchange on which registered Class A Common Stock, par value $0.01 per share New York Stock Exchange Securities registered pursuant to Section 12 (g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o No x Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for at least the past 90 days. Yes x No o Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (?229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (?229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant?s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of ?large accelerated filer,? ?accelerated filer? and ?smaller reporting company? in Rule 12b-2 of the Exchange Act. Large accelerated filer ? Accelerated filer ? Non-accelerated filer ? (Do not check if a smaller reporting company) Smaller reporting company ? Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was approximately $494,482,540 as of July 2, 2010 (the last business day of the registrant?s most recently completed second fiscal quarter) based upon the closing price of the registrant?s Class A Common Stock on that date as reported on the New York Stock Exchange. For the purposes of this disclosure only, the registrant has assumed that its directors and executive officers and the beneficial owners of 5% or more of its voting common stock as of July 2, 2010, are affiliates of the registrant. Indicate the number of shares outstanding of each of the issuer?s classes of common stock, as of the latest practicable date. Common stock, $0.01 par value: 68,408,611 shares as of February 22, 2011. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant?s definitive Proxy Statement for the 2011 Annual Meeting of Shareholders are incorporated by reference into Part III of this Form 10-K to the extent stated herein. 2 Special Note Regarding Forward-Looking Statements This report contains ?forward-looking statements? that are based on our beliefs, assumptions, and expectations of future events, taking into account the information currently available to us. All statements other than statements of current or historical fact contained in this report are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. The words ?believe,? ?may,? ?should,? ?anticipate,? ?estimate,? ?expect,? ?intend,? ?objective,? ?seek,? ?plan,? and similar statements are intended to identify forwardlooking statements. Forward-looking statements involve risks and uncertainties that may cause our actual results, performance, or financial condition to differ materially from the expectations of future results, performance, or financial condition we express or imply 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; ? our ability to comply with the financial covenants in our credit agreements; ? changes in consumer preferences and demographic trends; ? our ability to successfully execute our 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 our growth initiatives; ? increasing competition in the outdoor segment of the sporting goods industry; ? the cost of our products; ? political or financial instability in countries where the goods we sell 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 regulations, including regulations relating to firearms and ammunition; ? inadequate protection of our intellectual property; ? material security
Question 5
1. As a general rule, revenue is normally recognized when it is A) measurable and earned. B) measurable and received. C) realizable and earned. D) collected (the cash is received). 2. According to accounting standards, initial franchise fees should be recognized as income when: A) the franchiser has substantially performed or satisfied all material services and conditions. B) the franchiser has collected the majority of fee in cash. C) the franchisee shows the ability to pay the fee. D) the franchiser bills the franchisee. Use the following to answer questions 3-4: The following information was extracted from Slurm Corporation's 2009 annual report: Common stock Shares outstanding 12/31/08 90 Million New shares issued 4/1/09 10 Million Shares outstanding 12/31/09 100 Million Preferred stock $10 par, 10%, convertible into 2 shares of common stock, shares Outstanding 50 Million Options 1 Million options, each to purchase one common share at $50 per Share Market price of stock Average for year $ 75 Beginning of year $ 70 End of year $ 78 Preferred dividends paid $ 50,000,000 Net Income for 2009 $350,000,000 3. Basic earnings per share for 2009 is: A) $3.50 B) $3.16 C) $3.08 D) $3.00 4. Using the treasury stock method, the options would result in how many extra shares being recognized in the diluted EPS calculation: A) 500,000 B) 358,975 C) 333,333 D) 285,714 5. Hulk Company reports the following 2008 2009 Sales $300,000 $360,000 Cost of goods sold $75,000 $90,000 Based upon this information which of the following is most correct: A) Cost of goods sold is a permanent cost B) Cost of goods sold is a economic cost C) Cost of goods sold is a totally variable cost D) Cost of goods sold is a period expense 6. Which of the following combinations of accounting practices will lead to the highest reported earnings in an inflationary environment? Depreciation Method Inventory Method A) Straight-line LIFO B) Double-declining balance LIFO C) Straight-line FIFO D) Double-declining balance FIFO Use the following to answer questions 7 and 8: TMTOMH Company reported in its annual report software refinement expenses of $12M, $15M and $18M for fiscal years 2007, 2008 and 2009, respectively. At the end of fiscal 2009 it had total assets of $140M. Net income was $20M for fiscal 2009, and it had a marginal tax rate of 35%. 7. If software refinement had been capitalized each year and amortized over a three-year period beginning in the year the cost was incurred, total assets at the end of fiscal 2009 would have been: A) $185M B) $172M C) $158M D) $157M 8. If software refinement had been capitalized each year and amortized over a three year period beginning in the year the cost was incurred, net income for fiscal 2009 would have been: A) $31.7M B) $29.75M C) $21.95M D) $14.95M 9. A firm has net sales of $6,000, cash expenses (including taxes) of $2,800, and depreciation of $1,000. If accounts receivable increased in the period by $800, cash flows from operations equal A) $2,400 B) $3,200 C) $3,400 D) $4,200 10. Which of the following represents an investing activity in the statement of cash flows A) depreciation of plant assets B) sale of plant assets at a loss C) stock dividend D) purchase of inventory 11. Which of the following is not a financing activity in the statement of cash flows? A) cash dividend B) repurchase of common stock C) payment of interest on debt D) issuance of new debt Use the following to answer questions 12-15: Below is an example of an incorrectly prepared statement of cash flows. The descriptions of the activities are correct. Cash from operating activities Net Income $ 60,000 Depreciation (4,000) Increase in accounts receivable (2,000) Increase in deferred tax liability (1,000) $ 53,000 Cash from investing activities Purchase of marketable securities $(48,000) Dividends paid 1,500 $(46,500) Cash from financing activities Increase in Short-term debt ? trade $ (500) Increase in Long-term debt ? bonds Payable (2,500) $ (3,000) Increase in cash $ 3,500 12. The correct cash flows from operating activities is: A) 65,500 B) 63,500 C) 53,500 D) none of the above 13. The correct cash flows from investing activities is: A) ($41,000) B) ($45,500) C) ($48,000) D) none of the above 14. The correct cash flows from financing activities is: A) ($4,500) B) $3,000 C) $1,000 D) none of the above 15. The correct change in cash for the year is: A) $4,000 B) $15,000 C) $16,500 D) none of the above 16. On a statement of cash flows that uses the indirect approach, calculation of cash flow from operations treats depreciation as an adjustment to reported net income because: A) depreciation is a direct source of cash B) depreciation is an outflow of cash to a reserve account for the replacement of assets C) depreciation reduces net income and involves an outflow of cash D) depreciation reduces net income but does not involve an outflow of cash 17. Err Company has a major lawsuit against them for unsafe products. It recognizes a huge liability in 2008 of $300M. The effect of this liability is to decrease stockholders' equity by 50%. In 2009, the effect of recognizing this lawsuit in 2008, all else being equal in 2009, is: A) Return on net operating assets will increase dramatically B) Return on net operating assets will decrease dramatically C) Return on equity will increase dramatically D) Return on equity will decrease dramatically 18. If Company A has a high profit margin and Company B has a low profit margin, then return on assets A) should be higher for Company A than Company B. B) should be lower for Company A than Company B. C) should be the same for Company A and Company B. D) cannot be determined based on the information given. Use the following to answer questions 19-22: Below is selected information from Tripe Corp: Year 1 Year 2 Net operating assets /common equity 1.37 1.53 Net operating profit margin 19% 21% Income tax rate 47% 28% Revenues/net operating assets 0.81 0.61 EBIT/revenues 38% 32% 19. Return on Net Operating Assets for Year 1 is: A) 30.8% B) 16.3% C) 15.4% D) 14.5% 20. Return on Common Equity for Year 1 is: A) 19.0% B) 19.60% C) 21.08% D) 26.03% 21. Which of the following is correct concerning changes at Tripe Corp. from Year 1 to Year 2? RNOA ROCE A) Increased Increased B) Increased Decreased C) Decreased Decreased D) Decreased Increased 22. Which of the following statements is correct concerning changes from year 1 to year 2 at Tripe Corp? A) Despite favorable changes in the tax rate return on net operating assets has decreased B) Despite favorable changes in net operating asset utilization return on net operating assets has decreased C) Largely because of favorable changes in tax rates return on net operating assets has increased D) Largely due to favorable changes in leverage return on net operating assets has increased 23. An increase in net operating income (NOPAT) will cause which of the following? A) Increase in the return on net operating assets B) Decrease in the return on net operating assets C) No change in the return on net operating assets D) The change in the return on net operating assets is unclear, there is not sufficient information 24. Which of the following ratios best measures the profitability of a company? A) Return on equity B) Gross margin C) Current ratio D) Net operating asset turnover Use the following to answer questions 25-27: SQB Corporation reports sales of $10M for Year 2, with a gross profit margin of 40%. 20% of SQB's sales are on credit. Year 1 Year 2 Accounts receivable $ 150,000 $ 170,000 Inventory 900,000 1,000,000 Accounts payable 1,100,000 1,200,000 25. Accounts receivable days outstanding at the end of Year 2 is (use year-end receivable balance): A) 30.6 days B) 28.8 days C) 27.0 days D) 6.1 days 26. Accounts payable days outstanding at the end of Year 2 is (use average accounts payable for the year): A) 57.0 days B) 69.0 days C) 72.0 days D) 43.2 days 27. Days in inventory at the end of Year 2 is (use year-end inventory amount): A) 60.0 days B) 69.0 days C) 66.0 days D) 54.0 days 28. Which of the following industries would you expect to have the longest operating cycle? A) Fast Food Industry B) Aerospace Industry C) Discount retail store industry D) Utility industry 29. Which of the following industries would you expect to have the highest inventory turnover? A) restaurant B) car dealer C) jewelry store D) department store 30. If a company issues a 1% stock dividend what is the effect on the following ratios, all other things being equal? Total Debt/Equity Times Interest Earned Financial Leverage Ratio A) Increase Increase Increase B) Increase No effect Increase C) Increase No effect No effect D) No effect No effect No effect 31. When calculating debt to equity ratio: A) Convertible bonds should be treated as debt B) Convertible bonds should be excluded from debt but not included in equity C) Convertible bonds should be treated as equity D) Half the convertible bonds should be treated as debt, and the other half as equity 32. Venture Corporations total assets are 3 times greater than total equity; total equity is 50% of total liabilities. The total debt to total assets ratio is A) .67 B) .75 C) .87 D) undeterminable with the information given. 33. You are analyzing a stock. You expect that earnings will grow quickly relative to their current level, but the expected return on common stockholders' equity is low. What levels of the price earnings ratio (P/E) and price to book value ratio (P/BV) would you expect to see (relative to industry average)? P/E Ratio P/BV Ratio A) Low Low B) Low High C) High High D) High Low 34. AQTHF Inc. is unsuccessfully trading on the equity. Which of the following statements best reflects this? A) Their bonds payable after-tax interest rate is 7%; their ROI is 5%. B) Their market capitalization decreased by 3%. C) Stock dividends were issued this year. D) Net income was down 18% compared to last year. 35. Which of the following statements is most correct? A) If two companies have the same ROE and the same risk they must have the same residual income (abnormal earnings) for the year B) If two companies have the same net book value and the same residual income this year, then their stock prices must be the same C) If two companies have the same ROE and the same stock price their earnings must be the same for the year D) If two companies have the same ROE, net book value, and cost of capital then their residual income must be the same for the year 36. When examining quarterly results of a company in a seasonal business it is useful A) to compare to the preceding quarter B) to match the company's results against economic statistics C) to compare to the same period in the prior year D) to analyze using a percentage income statement 37. Which of the following is not included the definition of earnings persistence? A) Stability of the earnings B) Magnitude of the earnings C) Predictability of the earnings D) The earnings? trend 38. Which of the following is not a factor in producing earnings forecasts? A) Estimating the level of earnings B) Separation of recurring and nonrecurring components C) Recognizing potential earnings management D) Recognizing potential income smoothing Use the following to answer questions 39-40: Yi Corporation has no preferred stock and reports the following: 2009 Earnings per share $1.80 Dividends per share $0.72 Book Value per share-end of year $8.62 39. If price-to-book value at the end of 2009 equals 1.00, and return on beginning of year equity is expected to remain constant, then cost of equity (to nearest percent) equals: A) 15% B) 21% C) 24% D) Not determinable 40. If Yi Corporation had preferred stock outstanding then the earnings per share amount of $1.80 would be A) unchanged. B) cannot be determined. C) greater than $1.80. D) less than $1.80. 41. Interim financial reports are less _________ than annual financial reports. A) relevant B) consistent C) timely D) reliable 42. Which of the following statements concerning interim financial reports is incorrect? A) Accrual accounting is used for revenue and expense recognition B) Extraordinary items are reported in annual but not interim financial reports C) LIFO liquidation is not reported for interim purposes, unless decline in inventory is expected to be permanent D) Income taxes are accrued using effective tax rate expected for the annual period Use the following to answer questions 43-45: Below is information for year ended 12/31/09 for Company A and Company B. Company A Company B Operating Inc. before $ 1000 $ 1000 Taxes and Interest Interest Expense 400 0 Total assets ? 12/31/09 10,000 10,000 Total debt 5,000 0 Equity 5,000 10,000 Tax Rate 40% 40% 43. Return on total assets for Company A and B for 2009 are (use NOPAT): Company A Company B A) 6% 6% B) 8.4% 6% C) 10% 10% D) 14% 10% 44. ROE for Company A and B for 2009 are: Company A Company B A) 2.0% 2.0% B) 3.6% 4.0% C) 7.2% 6.0% D) 8.6% 10% 45. Times interest earned ratio for Company A is: A) 2.5 B) 2.6 C) 4.0 D) 4.2 46. The effects of leveraging are magnified in A) good years. B) bad years. C) both good and bad years. D) years that the company is unsuccessfully trading on the equity,Hi Michael. Just wanted to make sure that this could be completed before tomorrow, 12/8 at noon. This is when I need it. Let me know. Thanks, Monique
