Cabela's 2011 Annual Report Download - page 105

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CABELA’S INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands Except Share and Per Share Amounts)
The Company has entered into real estate purchase, construction, and/or economic development agreements
for various new retail store site locations. At December 31, 2011, the Company had total estimated cash
commitments of approximately $80,200 outstanding for projected expenditures 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 the Company is 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. The Company generally receives 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 the Company to the state or local government providing the funding. The commitments
typically phase out over approximately five to 10 years. If the Company failed 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 the Company’s cash flows and profitability. At December 31, 2011, and January 1, 2011, the total
amount of grant funding subject to a specific contractual remedy was $9,930, and $12,625, respectively.
The Company operates an open account document instructions program, which provides for Cabela’s-issued
letters of credit. The Company had obligations to pay participating vendors $40,074 and $43,749, at December 31,
2011, and January 1, 2011, respectively.
WFB enters into financial instruments with off-balance sheet risk in the normal course of business through
the origination of unsecured credit card loans. Unsecured credit card accounts are commitments to extend
credit and totaled $20,235,000 and $15,797,000 at December 31, 2011, and January 1, 2011, respectively. These
commitments are in addition to any current outstanding balances of a cardholder. Unsecured credit card loans
involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated balance
sheets. The principal amounts of these instruments reflect WFB’s maximum related exposure. WFB has not
experienced and does not anticipate that all customers will exercise the entire available line of credit at any given
point in time. WFB has the right to reduce or cancel the available lines of credit at any time.
Litigation and Claims – The Company is party to various legal proceedings arising in the ordinary course
of business. These actions include commercial, intellectual property, employment, regulatory, and product liability
claims. Some of these actions involve complex factual and legal issues and are subject to uncertainties. The
activities of WFB are subject to complex federal and state laws and regulations. WFB’s regulators are authorized
to impose penalties for violations of these laws and regulations and, in some cases, to order WFB to pay restitution.
The Company cannot predict with assurance the outcome of the actions brought against it. Accordingly, adverse
developments, settlements, or resolutions may occur and have a material effect on the Company’s results of
operations for the period in which such development, settlement, or resolution occurs. However, the Company
does not believe that the outcome of any current legal proceeding would have a material effect on its results of
operations, cash flows, or financial position taken as a whole.
On January 6, 2011, the Company received a Commissioner’s charge from the Chair of the U.S. Equal
Employment Opportunity Commission (“EEOC”) alleging that the Company has discriminated against non-Whites
on the basis of their race and national origin in recruitment and hiring. The Company is disputing these allegations,
and the EEOC currently is in the early stages of its investigation. At the present time, the Company is unable to
form a judgment regarding a favorable or unfavorable outcome regarding this matter or the potential range of loss
in the event of an unfavorable outcome.
Self-Insurance – The Company is self-insured for health claims and workers’ compensation claims up to
a certain stop loss amount per individual. The Company has a liability for health claims submitted and for those
claims incurred prior to year end but not yet reported totaling $3,529 and $3,603 at the end of 2011 and 2010,
respectively. The Company also has a liability for workers’ compensation claims submitted and for those claims
incurred prior to year end but not yet reported totaling $4,674 and $4,001 at the end of 2011 and 2010, respectively.
These liabilities are included in accrued expenses in the consolidated balance sheet.