Cabela's 2007 Annual Report Download - page 79

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CABELA’S INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands Except Share and Per Share Amounts)
Our policy is to accrue interest expense, and penalties as appropriate, on estimated unrecognized tax benefits
as a charge to interest expense in the consolidated statements of income. We recorded a net credit of $346 against
interest expense during 2007 due to the gross decrease of certain unrecognized tax benefits. No penalties were
accrued. The liability for estimated interest on unrecognized tax benefits totaling $850 at the end of 2007 is included
in other long-term liabilities in the consolidated balance sheet. We do not anticipate a substantial change in the
balance of unrecognized tax benefits in the next twelve months.
The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $1,587.
We file income tax returns in the United States, Canada, and various states. The tax years 2003 through 2006 remain
open to examination by major taxing jurisdictions to which Cabela’s is subject.
16. COMMITMENTS AND CONTINGENCIES
We lease various buildings, computer equipment, signs, and storage space under operating leases, which expire
on various dates through April 2033. Rent expense on these leases as well as other month to month rentals was
$12,938, $8,896 and $6,793 for 2007, 2006 and 2005, respectively. The following is a schedule of future minimum
rental payments under operating leases as of December 29, 2007:
2008 ...................................... $ 5,126
2009 ...................................... 5,209
2010 ....................................... 4,944
2011 ....................................... 4,586
2012 ....................................... 4,167
Thereafter .................................. 78,398
$102,430
We have entered into certain lease agreements for retail store locations. Certain leases include tenant allowances
that will be amortized over the life of the lease. In 2007, we received $17,018 in tenant allowances. Certain leases
require us to pay contingent rental amounts based on a percentage of sales, in addition to real estates taxes, insurance,
maintenance, and other operating expenses associated with the leased premises. These leases include options to
renew with lease periods, including extensions, varying from 10 to 70 years.
We have entered into real estate purchase, construction, and/or economic development agreements for various
new retail store site locations. At December 29, 2007, we had total estimated cash commitments of approximately
$180,000 for 2008 and 2009 for projected retail store-related expenditures and the purchase of future economic
development bonds connected with the development, construction, and completion of new retail stores. This does not
include any amounts for contractual obligations associated with retail store locations where we are in the process of
certain negotiations.
Under various grant programs, state or local governments provide funding for certain costs associated with
developing and opening a new retail store. We generally receive grant funding in exchange for commitments, such as
assurance of agreed employment and wage levels at the retail store or that the retail store will remain open, made by
us to the state or local government providing the funding. The commitments typically phase out over approximately
five to ten years. If we fail to maintain the commitments during the applicable period, the funds received may
have to be repaid or other adverse consequences may arise, which could affect our cash flows and profitability. As
of December 29, 2007, the total amount of grant funding subject to a specific contractual remedy was $13,049. In
addition, at December 29, 2007, we had an obligation under our open account document instructions program to pay
$6,399 to participating vendors.