Cabela's 2011 Annual Report Download - page 104

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94
CABELA’S INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands Except Share and Per Share Amounts)
The Company’s 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. The Company recorded
net interest expense of $798 in 2011. The Company recorded a net credit to interest expense of $3,684 and $138
against interest expense in 2010 and 2009, 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 $6,290 and $5,492 at the end of 2011 and 2010, respectively, is included in other long-term
liabilities in the consolidated balance sheet. The total amount of unrecognized tax benefits that, if recognized,
would affect the effective tax rate is $4,714.
The Internal Revenue Service commenced its examination of the Company’s 2007 and 2008 tax years in early
2010. The Company does not expect the examination process and related appeals to be completed within the next
12 months. The Company has reserved for potential adjustments to the provision for income taxes that may result
from examinations by the tax authorities and the Company believes that the final outcome of these examinations or
agreements will not have a material effect on results of operations.
Because existing tax positions will continue to generate increased liabilities for the Company for
unrecognized tax benefits over the next 12 months, and since the Company is routinely under audit by various
taxing authorities, it is reasonably possible that the amount of unrecognized tax benefits will change during
the next 12 months. However, the Company does not expect the change, if any, to have a material effect on the
consolidated financial condition or results of operations within the next 12 months.
The Company files income tax returns in the United States, Canada, Hong Kong, and various states. The tax
years 2007 through 2010 remain open to examination by major taxing jurisdictions to which Cabela’s is subject.
18. COMMITMENTS AND CONTINGENCIES
The Company leases various buildings, computer and other equipment, and storage space under operating
leases which expire on various dates through January 2037. Rent expense on these leases as well as other month to
month rentals was $9,541, $7,506, and $8,624, for 2011, 2010, and 2009, respectively. The following is a schedule of
future minimum rental payments under operating leases at December 31, 2011:
For the fiscal years ending:
2012 $ 10,746
2013 11,022
2014 9,473
2015 8,841
2016 8,579
Thereafter 121,524
$ 170,185
The Company has lease agreements for certain retail store locations. Certain leases include tenant allowances
that will be amortized over the life of the lease. In 2011 and 2010, no tenant allowances were received. Certain
leases require the Company 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 have terms which include renewal options ranging from 10 to 70 years.