Cabela's 2014 Annual Report Download - page 86

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76
CABELA’S INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands Except Share and Per Share Amounts)
1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business – Cabela’s Incorporated is a retailer of hunting, fishing, and outdoor gear, offering
products through its retail stores, U. S. and Canada websites, and regular and specialty catalog mailings.
Cabela’s operates 64 retail stores, 57 located in 31 states and seven located in Canada. World’s Foremost Bank
(“WFB,” “Financial Services segment,” or “Cabela’s CLUB”), a wholly-owned bank subsidiary of Cabela’s, is
a limited purpose bank formed under the Competitive Equality Banking Act of 1987. The lending activities of
WFB are limited to credit card lending and its deposit issuance is limited to time deposits of at least one hundred
thousand dollars.
Principles of Consolidation – The consolidated financial statements include the accounts of Cabela’s
Incorporated and its wholly-owned subsidiaries (“Cabela’s,” “Company,” “we,” or “our”). All significant
intercompany accounts and transactions have been eliminated in consolidation. WFB is the primary beneficiary
of the Cabela’s Master Credit Card Trust and related entities (collectively referred to as the “Trust”) under the
guidance of Accounting Standards Codification (“ASC”) Topics 810, Consolidations, and 860, Transfers and
Servicing. Accordingly, the Trust was consolidated for all reporting periods of Cabela’s in this report. As the
servicer and the holder of retained interests in the Trust, WFB has the powers to direct the activities that most
significantly impact the Trust’s economic performance and the right to receive significant benefits or obligations to
absorb significant losses of the Trust. The credit card loans of the Trust are recorded as restricted credit card loans
and the liabilities of the Trust are recorded as secured obligations.
Reporting Year – The Company follows a 52/53 week fiscal year-end cycle. Unless otherwise stated,
the fiscal years referred to in the notes to these consolidated financial statements are the 52 weeks ended
December 27, 2014 (“2014” or “year ended 2014”), the 52 weeks ended December 28, 2013 (“2013” or “year
ended 2013”), and the 52 weeks ended December 29, 2012 (“2012” or “year ended 2012”). WFB follows a
calendar fiscal period so each fiscal year ends on December 31st.
Use of Estimates – The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
Revenue Recognition – Revenue is recognized for retail store sales at the time of the sale in the store and for
Direct sales when the merchandise is delivered to the customer. The Company recognizes a reserve for estimated
product returns based on its historical returns experience. Shipping fees charged to customers are included in
merchandise sales and shipping costs are included in merchandise costs.
Revenue from the sale of gift certificates, gift cards, and e-certificates (“gift instruments”) is recognized in
revenue when the gift instruments are redeemed for merchandise or services. The Company records gift instrument
breakage as revenue when the probability of redemption is remote. The Company recognizes breakage on gift
instruments four years after issuance based on historical redemption rates. Total gift instrument breakage was
$8,526, $7,461, and $7,576 for 2014, 2013, and 2012, respectively. Cabela’s gift instrument liability at the end of
2014 and 2013 was $174,764 and $145,363, respectively.
The dollar amount of related points associated with the Company’s loyalty rewards programs for Cabela’s
CLUB issued credit cards are accrued as earned by the cardholder, principally from transactions with unrelated
parties, and recorded as a reduction in Financial Services segment revenue. When these points are accrued as
earned by the cardholder, the Company estimates the cost of such points with the difference between the value
of the unredeemed points earned and the estimated cost of the points included in other revenue (recognized
in the Corporate Overhead and Other segment). The net amount related to points in other revenue totaled