Cabela's 2009 Annual Report Download - page 104

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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 $138 and $134
against interest expense during 2009 and 2008, respectively. The net credit was due to the gross decrease of certain
unrecognized tax benefits. No penalties were accrued. The liability for estimated interest on unrecognized tax
benefits totaling $683 and $847 at the end of 2009 and 2008, respectively, 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 $2,989.
We file income tax returns in the United States, Canada, Hong Kong, and various states. The tax years 2005 through
2008 remain open to examination by major taxing jurisdictions to which Cabela’s is subject.
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 $8,624,
$8,494, and $9,792 for 2009, 2008, and 2007, respectively. The following is a schedule of future minimum rental
payments under operating leases as of January 2, 2010:
2010 $6,701
2011 8,346
2012 7,784
2013 7,681
2014 7,617
Thereafter 130,157
$168,286
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 2009 and 2008, we received $3,899 and $21,977,
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.
We have entered into real estate purchase, construction, and/or economic development agreements for various
new retail store site locations. At January 2, 2010, we had total estimated cash commitments of approximately
$75,000 for 2010 and 2011 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 10 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
January 2, 2010, the total amount of grant funding subject to a specific contractual remedy was $10,316.