Cabela's 2009 Annual Report Download - page 34

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25
any enacted legislation will preserve, eliminate, or modify this exemption. If such exemption were eliminated or
modified, we may be required to divest our ownership of our Financial Services business unless we were willing
and able to become a bank holding company under the BHCA. Any such forced divestiture may materially adversely
affect our business and results of operation.
Changes in interest rates could have a negative impact on our earnings.
In connection with our Financial Services business, we borrow money from institutions and accept funds by
issuing brokered and non-brokered certificates of deposit, which we then lend to cardholders. We earn interest on
the cardholders’ account balances, and pay interest on the certificates of deposit and borrowings we use to fund
those loans. Changes in these two interest rates affect the value of the assets and liabilities of our Financial Services
business. If the rate of interest we pay on borrowings increases more (or more rapidly) than the rate of interest we
earn on loans, our net interest income, and therefore our earnings, could fall. Our earnings could also be adversely
affected if the rates on our credit card account balances fall more quickly than those on our borrowings. In addition,
at the end of 2009, approximately 31.7% of our cardholders did not maintain balances on their credit card accounts.
We do not earn any interest from these accounts but do earn other fees from these accounts such as Visa interchange
fees. In the event interest rates rise, the spread between the interest rate we pay on our borrowings and the fees we
earn from these accounts may change and our profitability may be adversely affected.
Credit card industry litigation could adversely impact the amount of revenue generated by our
Financial Services business.
Our Financial Services business faces possible risk from the outcomes of certain credit card industry litigation.
For example, a number of entities, each purporting to represent a class of retail merchants, have sued Visa and several
member banks, and other credit card associations, alleging, among other things, that Visa and its member banks have
violated U.S. antitrust laws by conspiring to fix the level of interchange fees. To date, we have not been named as a
defendant in any credit card industry lawsuits. If the interchange fees that are charged to merchants are reduced as
a result of the interchange lawsuits or if the credit card industry is adversely affected by other credit card industry
litigation, the financial condition and results of operations of our Financial Services business may be negatively
impacted.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.