Cabela's 2012 Annual Report Download - page 111

101
CABELA’S INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands Except Share and Per Share Amounts)
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.
Proposed Settlement of Visa Litigation – 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 November 9, 2012,
the settlement received preliminary 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. Management believes that the 10
basis point reduction of default interchange across all credit rate categories for a period of eight consecutive months
would result in a reduction of interchange income of approximately $12,500 in the Financial Services segment.
Accordingly, the Company has recorded a liability of $12,500 as of December 29, 2012, to accrue for such proposed
settlement, as a reduction of interchange income in the Financial Services segment.
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 $3,856 and $3,529 at the end of 2012 and 2011,
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 $4,064 and $4,674 at the end of 2012 and 2011, respectively.
These liabilities are included in accrued expenses in the consolidated balance sheet.
The liabilities for health and workers’ compensation claims incurred but not reported are based upon
internally developed calculations. These estimates are regularly evaluated for adequacy based on the most current
information available, including historical claim payments, expected trends, and industry factors.