Cabela's 2006 Annual Report Download - page 86

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82
CABELA’S INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands Except Share and Per Share Amounts)
and equipping of new destination retail stores and related infrastructure development. While purchasing these
bonds involves an initial cash outlay by the Company in connection with a new store, some or all of these costs
can be recaptured through the repayments of the bonds. The payments of principal and interest on the bonds are
typically tied to sales, property or lodging taxes generated from the store and, in some cases, from businesses in
the surrounding area, over periods which range between 20 and 30 years. In addition, some of the bonds that the
Company has purchased may be repurchased for par value by the governmental entity prior to the maturity date of
the bonds. However, the governmental entity from which the Company purchased the bonds is not otherwise liable
for repayment of principal and interest on the bonds to the extent that the associated taxes are insufficient to pay the
bonds. In one location, the bonds will become subordinated to other bonds associated with the development if the
Company fails to continue to operate the store over a prescribed period. If sufficient tax revenue is not generated by
the subject properties, the Company will not receive scheduled payments and will be unable to realize the full value
of the bonds carried by the Company.
WFB enters into financial instruments with off balance sheet risk in the normal course of business through
the origination of unsecured credit card loans. These financial instruments consist of commitments to extend credit,
totaling $9,528,456 and $7,478,208, in addition to any other balances a cardholder might have, at fiscal years ended
2006 and 2005, respectively. These instruments involve, to varying degrees, elements of credit risk in excess of
the amount recognized in the consolidated balance sheet. The principal amounts of these instruments reflect the
maximum exposure WFB has in the instruments. WFB has not experienced and does not anticipate that all of the
customers will exercise their entire available line of credit at any given point in time. WFB has the right to reduce or
cancel these available lines of credit at any time.
Litigation – The Company is engaged in various legal actions arising in the ordinary course of business. The
subject matter of these proceedings primarily includes commercial disputes, employment issues and product liability
lawsuits. After taking into consideration legal counsel’s evaluation of such actions, management is of the opinion
that the ultimate outcome will not have a material adverse effect on the Company’s financial position, results of
operations or liquidity.
Self-Insurance – The Company is self-insured for health claims up to $300 per individual. The Company has
established a liability for health claims submitted and for those claims incurred prior to year end but not yet reported
totaling $3,934 and $4,201 at the end of fiscal 2006 and 2005, respectively.
The Company is also self-insured for workers’ compensation claims up to $500 per individual. The Company
has established a liability for workers’ compensation claims submitted and for those claims incurred prior to year end
but not yet reported totaling $3,843 and $2,533 at the end of fiscal 2006 and 2005, respectively.
The Company’s liabilities for health and workers’ compensation claims incurred but not reported are based
upon internally developed calculations. These estimates are regularly evaluated for adequacy based on the most
current information available, including historical claim payments, expected trends and industry factors.
12. REGULATORY CAPITAL REQUIREMENTS
WFB is subject to various regulatory capital requirements administered by the Federal Deposit Insurance
Corporation (“FDIC”) and the Nebraska State Department of Banking and Finance. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, WFB must meet specific capital guidelines
that involve quantitative measures of WFB’s assets, liabilities and certain off-balance sheet items as calculated under
regulatory accounting practices. WFB’s capital amounts and classification are also subject to qualitative judgment
by the regulators with respect to components, risk weightings and other factors.