Cabela's 2013 Annual Report Download - page 90

Download and view the complete annual report

Please find page 90 of the 2013 Cabela's annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 132

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132

80
CABELA’S INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands Except Share and Per Share Amounts)
based on projected cash flows. We make revisions to the cash flow estimates of each bond based on the information
obtained. In those instances where the expected cash flows are insufficient to recover the current carrying
value of the bond, we adjust the carrying value of the individual bonds to their revised estimated fair value. The
governmental entity from which the Company purchases the bonds is not liable for repayment of principal and
interest on the bonds to the extent that the associated taxes are insufficient to fund principal and interest amounts
under the bonds. Should sufficient tax revenue not be generated by the subject properties, we may not receive
all anticipated payments and thus will be unable to realize the full carrying values of the economic development
bonds, which result in a corresponding decrease to deferred grant income.
Credit Card and Loyalty Rewards Programs – Cabela’s CLUB Visa cardholders receive Cabela’s points
based on the dollar amounts of transactions through credit cards issued by Cabela’s CLUB which may be redeemed
for Cabela’s products and services. Points may also be awarded for special promotions for the acquisition and
retention of accounts. The dollar amount of related points are accrued as earned by the cardholder and recorded
as a reduction in Financial Services revenue. In addition to the Cabela’s CLUB issued credit cards, customers
receive points for purchases at Cabela’s from various loyalty programs. The dollar amount of unredeemed credit
card points and loyalty points was $146,081 and $128,087 at the end of 2013 and 2012, respectively. The total cost
incurred for all credit card rewards and loyalty programs was $198,687, $176,882, and $158,630 for 2013, 2012, and
2011, respectively.
Income Taxes – The Company files consolidated federal and state income tax returns with its wholly-owned
subsidiaries. The consolidated group follows a policy of requiring each entity to provide for income taxes in an
amount equal to the income taxes that would have been incurred if each were filing separately. We recognize
deferred income tax assets and liabilities for the expected future tax consequences of temporary differences
between the financial statement carrying amounts and the tax bases of our assets and liabilities. The Company
establishes valuation allowances if we believe it is more likely than not that some or all of the Company’s deferred
tax assets will not be realized.
Stock-Based Compensation – Compensation expense is estimated based on grant date fair value on a
straight-line basis over the requisite service period. Costs associated with awards are included in compensation
expense as a component of selling, distribution, and administrative expenses.
Financial Instruments and Credit Risk Concentrations – Financial instruments which may subject the
Company to concentrations of credit risk are primarily cash, cash equivalents, and accounts receivable. The
Company invests primarily in money market accounts or tax-free municipal bonds, with short-term maturities,
limiting the amount of credit exposure to any one entity. At December 28, 2013, and December 29, 2012, the
Company did not have any cash invested in overnight funds. Concentrations of credit risk on accounts receivable
are limited due to the nature of the Company’s receivables.
Fair Value of Financial Instruments – The carrying amount of cash and cash equivalents, accounts
receivable, restricted cash, accounts payable, gift instruments (including credit card rewards and loyalty rewards
programs), accrued expenses, short-term borrowings, and income taxes included in the consolidated balance sheets
approximate fair value given the short-term nature of these financial instruments. Credit card loans (level 2) are
originated with variable rates of interest that adjust with changing market interest rates so the carrying value of
the credit card loans, including the carrying value of deferred credit card origination costs, less the allowance for
loan losses, approximates fair value. Time deposits (level 2) are pooled in homogeneous groups, and the future
cash flows of those groups are discounted using current market rates offered for similar products for purposes of
estimating fair value. The fair value of the secured variable funding obligations of the Trust (level 2) approximates
the carrying value since these obligations can fluctuate daily based on the short-term operational needs with
advances and pay downs at par value. The estimated fair value of secured long-term obligations of the Trust is
based on future cash flows associated with each type of debt discounted using current borrowing rates for similar