Cabela's 2010 Annual Report Download - page 70

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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 2010. 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.
(5) Amounts for unrecognized tax benefits are not reflected in year 2011 through 2015 since the ultimate amount
and timing of any future cash settlements cannot be predicted with reasonable certainty.
The following table provides summary information concerning other commercial commitments at January 1, 2011:
(In Thousands)
Letters of credit (1) $ 11,951
Standby letters of credit (1) 5,628
Revolving line of credit for boat and ATV inventory (2) 537
Open account document instructions 43,749
Bank – federal funds (3) -
Total $61,865
(1) Our credit agreement allows for maximum borrowings of $350 million including lender letters of credit
and standby letters of credit. At January 1, 2011, the total amount of borrowings under this revolving line of
credit, including lender letters of credit and standby letters of credit, was $17 million. Our credit agreement
for operations in Canada is for $15 million CAD, of which all is available for borrowing at January 1, 2011.
(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 $16 billion above existing balances at the
end of 2010. 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.
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