Cabela's 2013 Annual Report Download - page 61

51
Other Non-Operating Income, Net
Other non-operating income was $6 million for 2012 and $7 million for 2011. This income was primarily
from interest earned on our economic development bonds.
Provision for Income Taxes
Our effective tax rate was 33.7% in 2012 compared to 33.5% in 2011. The effective tax rates for both years
differed from our statutory rate primarily due to the mix of taxable income between the United States and foreign
tax jurisdictions. The balance of unrecognized tax benefits, which was classified with long-term liabilities in the
consolidated balance sheet, totaled $39 million at December 29, 2012, compared to $38 million at December 31, 2011.
Asset Quality of Cabela’s CLUB
Delinquencies and Non-Accrual
We consider the entire balance of an account, including any accrued interest and fees, delinquent if the
minimum payment is not received by the payment due date. Our aging method is based on the number of
completed billing cycles during which a customer has failed to make a required payment. As part of collection
efforts, a credit card loan may be closed and placed on non-accrual or restructured in a fixed payment plan prior to
charge off. Our fixed payment plans require payment of the loan within 60 months and consist of a lower interest
rate, reduced minimum payment, and elimination of fees. Loans on fixed payment plans include loans in which
the customer has engaged a consumer credit counseling agency to assist them in managing their debt. Customers
who miss two consecutive payments once placed on a payment plan or non-accrual will resume accruing interest
at the rate they had accrued at before they were placed on a plan. Interest and fees are accrued in accordance with
the terms of the applicable cardholder agreements or payment plan on credit card loans until the date of charge-off
unless placed on non-accrual. Payments received on non-accrual loans will be applied to principal and reduce the
amount of the loan.
The quality of our credit card loan portfolio at any time reflects, among other factors: 1) the creditworthiness
of cardholders, 2) general economic conditions, 3) the success of our account management and collection
activities, and 4) the life-cycle stage of the portfolio. During periods of economic weakness, delinquencies and net
charge-offs are more likely to increase. We have mitigated periods of economic weakness by selecting a customer
base that is very creditworthy. We use the scores of Fair Isaac Corporation (“FICO”), a widely-used tool for
assessing an individual’s credit rating, as the primary credit quality indicator. The median FICO score of our credit
cardholders was 793 at the end of both 2013 and 2012.
The following table reports delinquencies, including any delinquent non-accrual and restructured credit card
loans, as a percentage of our credit card loans, including any accrued interest and fees, in a manner consistent with
our monthly external reporting for the years ended:
2013 2012 2011
Number of days delinquent:
Greater than 30 days 0.69% 0.72% 0.87%
Greater than 60 days 0.42 0.46 0.53
Greater than 90 days 0.22 0.24 0.27
Delinquencies declined as a result of improvements in the economic environment and our conservative
underwriting criteria and active account management.