Cabela's 2007 Annual Report Download - page 52

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The following tables provide summary information concerning other commercial commitments at the end of 2007.
2008
(In Thousands)
Letters of credit (1) ................................................................ $46,080
Standby letters of credit (1) .......................................................... 13,516
Revolving line of credit for boat and ATV inventory (2) ................................... 7,988
Open account document instructions .................................................. 6,399
Bank – federal funds (3) ............................................................ —
Total ......................................................................... $73,983
(1) Our credit agreement allows for maximum borrowings of $325 million including lender letters of credit and
standby letters of credit. At December 29, 2007, the total amount available for borrowing under this revolving line
of credit, including lender letters of credit and standby letters of credit, was $215 million. Our credit agreement for
operations in Canada is for $15 million, with $8 million available for borrowing at December 29, 2007.
(2) The line of credit for boat and ATV financing is limited by the aforementioned $325 million revolving line of
credit to $50 million of secured collateral.
(3) The maximum amount that can be borrowed on the federal funds agreements is $85 million.
Off-Balance Sheet Arrangements
Operating Leases – We lease various items of office equipment and buildings. Rent expense for these operating
leases is recorded in selling, distribution, and administrative expenses in the consolidated statements of income.
Future obligations are shown in the preceding contractual obligations table.
Credit Card Limits – The bank bears off-balance sheet risk in the normal course of its business. One form
of this risk is through the bank’s commitment to extend credit to cardholders up to the maximum amount of their
credit limits. The aggregate of such potential funding requirements totaled $12 billion above existing balances as of
December 29, 2007. These funding obligations are not included on our consolidated balance sheet. While the bank
has not experienced, and does not anticipate that it will experience, a significant draw down of unfunded credit lines
by its cardholders, a significant draw down would create a cash need at the bank which likely could not be met by
our available cash and funding sources. The bank has the right to reduce or cancel these available lines of credit at
any time.
Securitizations – All of the bank’s securitization transactions have been accounted for as sales transactions and
the credit card loans relating to those pools of assets are not reflected in our consolidated balance sheet.
Critical Accounting Policies and Use of Estimates
Our consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America which requires management to make estimates and judgments that affect
amounts reported in the consolidated financial statements and accompanying notes. Management has discussed the
development, selection, and disclosure of critical accounting policies and estimates with the Audit Committee of
Cabela’s Board of Directors. While our estimates and assumptions are based on our knowledge of current events and
actions we may undertake in the future, actual results may ultimately differ from our estimates and assumptions.
Our estimation processes contain uncertainties because they require management to make assumptions and apply
judgment to make these estimates. Should actual results be different than our estimates, we could be exposed to gains
or losses from differences that are material.
For a summary of our significant accounting policies, please refer to Note 1 of our consolidated financial
statements. We believe the accounting policies discussed below are our accounting policies that are the most critical
to understanding our consolidated financial statements.
Merchandise Revenue Recognition
Revenue is recognized on our Internet and catalog sales when merchandise is delivered to customers at the
point of delivery, with the point of delivery based on our estimate of shipping time from our distribution centers
to the customer. We recognize reserves for estimated product returns based upon our historical return experience