Cabela's 2013 Annual Report Download - page 108

98
CABELA’S INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands Except Share and Per Share Amounts)
in the consolidated balance sheets. The principal amounts of these instruments reflect the Financial Services
segment’s maximum related exposure. The Financial Services segment has not experienced and does not anticipate
that all customers will exercise the entire available line of credit at any given point in time. The Financial Services
segment has the right to reduce or cancel the available lines of credit at any time.
Visa Litigation Settlement – In June 2005, a number of entities, each purporting to represent a class of
retail merchants, sued Visa and several member banks, and other credit card associations, alleging, among
other things, that Visa and its member banks have violated United States antitrust laws by conspiring to fix the
level of interchange fees. On July 13, 2012, the parties to this litigation announced that they had entered into a
memorandum of understanding, which subject to certain conditions, including court approval, obligates the parties
to enter into a settlement agreement to resolve the claims brought by the class members. On December 13, 2013, the
settlement received final court approval. The settlement agreement requires, among other things, (i) the distribution
to class merchants of an amount equal to 10 basis points of default interchange across all credit rate categories for a
period of eight consecutive months, which otherwise would have been paid to issuers like WFB, (ii) Visa to change
its rules to allow merchants to charge a surcharge on credit card transactions subject to a cap, and (iii) Visa to
meet with merchant buying groups that seek to negotiate interchange rates collectively. To date, WFB has not been
named as a defendant in any credit card industry lawsuits. Based on the information in the proposed settlement,
management determined that the 10 basis point reduction of default interchange across all credit rate categories for
the period of eight consecutive months from July 29, 2013, through March 28, 2014, would result in a reduction of
interchange income of approximately $12,500 in the Financial Services segment. Therefore, a liability of $12,500
was recorded as of December 29, 2012, to accrue for this settlement.
In 2013, certain plaintiffs opted out of the proposed settlement resulting in the Company re-evaluating the
impact of the 10 basis point reduction of default interchange to the Financial Services segment. Also, Visa has
issued interchange reduction reports to WFB through November 2013 resulting in assessments of $4,646. Based on
re-evaluations due to opt-outs and analysis of the merchant charge volume based on the Visa interchange reduction
reports, we determined that the estimated effect for this settlement should be reduced by $3,167 as of December 28,
2013. Therefore, the remaining liability balance for this settlement was $4,687 at December 28, 2013.
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 conduct compliance examinations and 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. We have a liability for health claims submitted and for those claims
incurred prior to year end but not yet reported totaling $4,839 and $3,856 at the end of 2013 and 2012, respectively.