Cabela's 2008 Annual Report Download - page 92

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87
CABELA’S INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands Except Share and Per Share Amounts)
We adopted the provisions of FIN 48 in 2007 as discussed in Note 2. The reconciliation of unrecognized tax
benefits, the balance of which is classified as other long-term liabilities in the consolidated balance sheet, is as
follows for the years ended:
2008 2007
Unrecognized tax benefits, beginning of year $ 2,000 $ 8,569
Decreases on items related to prior periods (134)(6,866)
Increases from current period items 1,210 297
Unrecognized tax benefits, end of year $ 3,076 $2,000
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 $134 against
interest expense during 2008 due to the gross decrease of certain unrecognized tax benefits. No penalties were
accrued. The liability for estimated interest on unrecognized tax benefits totaling $847 at the end of 2008 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 $2,230.
We file income tax returns in the United States, Canada, and various states. The tax years 2004 through 2007 remain
open to examination by major taxing jurisdictions to which Cabela’s is subject.
At the beginning of fiscal 2007, the current portion of deferred income taxes payable in our consolidated
balance sheet related to the book-tax difference resulting from the LIFO method used for income tax purposes totaled
$18,697. We elected in our 2007 federal income tax return to change our method of accounting for inventory from
LIFO to FIFO for income tax purposes and, accordingly, we will incur a cash outlay totaling $18,697 over the four
years subsequent to the change.
16. COMMITMENTS AND CONTINGENCIES
We lease various buildings, computer equipment, 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 $8,494,
$9,792 and $6,733 for 2008, 2007 and 2006, respectively. The following is a schedule of future minimum rental
payments under operating leases as of December 27, 2008:
2009 $ 5,616
2010 5,090
2011 4,604
2012 4,167
2013 4,167
Thereafter 83,902
$107,546
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 2008 and 2007, we received $21,977 and $17,018, respectively, 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.