Cabela's 2009 Annual Report Download - page 71

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(4) Our purchase obligations relate primarily to purchases of inventory, shipping, and other goods and services in
the ordinary course of business under binding purchase orders or contracts. The amount of purchase obligations
shown is based on assumptions regarding the legal enforceability against us of purchase orders or contracts we
had outstanding at the end of 2009. Under different assumptions regarding our rights to cancel our purchase
orders, or different assumptions regarding the enforceability of the purchase orders under applicable laws, the
amount of purchase obligations shown in the preceding table would be less.
The following tables provide summary information concerning other commercial commitments at January 2, 2010.
(In Thousands)
Letters of credit (1) $ 4,720
Standby letters of credit (1) 6,674
Revolving line of credit for boat and ATV inventory (2) 3,510
Open account document instructions 23,471
Bank – federal funds (3) -
Total $38,375
(1) Our credit agreement allows for maximum borrowings of $350 million including lender letters of credit and
standby letters of credit. At January 2, 2010, the total amount of borrowings under this revolving line of credit,
including lender letters of credit and standby letters of credit, was $11.4 million. Our credit agreement for
operations in Canada is for $15 million CAD, with $12.1 million CAD available for borrowing at January 2,
2010.
(2) The line of credit for boat and all-terrain vehicles financing is limited by the aforementioned $350 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 – WFB bears off-balance sheet risk in the normal course of its business. One form of this
risk is through WFB’s commitment to extend credit to cardholders up to the maximum amount of their credit limits.
The aggregate of such potential funding requirements totaled $13 billion above existing balances at the end of 2009.
These funding obligations are not included on our consolidated balance sheet. While WFB has not experienced, and
does not anticipate that it will experience, a significant draw down of unfunded credit lines by its cardholders, such
an event would create a cash need at WFB which likely could not be met by our available cash and funding sources.
WFB has the right to reduce or cancel these available lines of credit at any time.
Securitizations – All of WFB’s securitization transactions have been accounted for as sales transactions, and
the credit card loans and associated debt relating to those pools of assets are not reflected in our consolidated balance
sheet at January 2, 2010.
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.