Cabela's 2007 Annual Report Download - page 80

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CABELA’S INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands Except Share and Per Share Amounts)
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 $11,635,000 and $9,528,000, in addition to any other balances a cardholder might have, at years ended 2007
and 2006, 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 – We are 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 our financial position or results of operations.
Self-Insurance – We are self-insured for health claims up to $300 per individual. We have established a
liability for health claims submitted and for those claims incurred prior to year end but not yet reported totaling
$3,929 and $3,934 at the end of 2007 and 2006, respectively.
We are also self-insured for workers’ compensation claims up to $500 per individual. We have established
a liability for workers’ compensation claims submitted and for those claims incurred prior to year end but not yet
reported totaling $4,326 and $3,843 at the end of 2007 and 2006, respectively.
Our 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.
17. REGULATORY CAPITAL REQUIREMENTS
WFB is subject to various regulatory capital requirements administered by the 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.
The quantitative measures established by regulation to ensure capital adequacy require that WFB maintain
minimum amounts and ratios (defined in the regulations) as set forth in the following table. WFB exceeded the
minimum requirements for the well-capitalized category under the regulatory framework for prompt corrective
action provisions for both periods presented.
At the end of 2007 and 2006, the most recent notification from the FDIC categorized WFB as well capitalized
under the regulatory framework for prompt corrective action. To be categorized as well capitalized WFB must
maintain certain amounts and ratios as set forth in the following table. There are no conditions or events since that
notification that management believes have changed the institution’s category.