Cabela's 2010 Annual Report Download - page 63

Download and view the complete annual report

Please find page 63 of the 2010 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 128

  • 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

53
The ability of our Financial Services business to engage in securitization transactions on favorable terms or at
all could be adversely affected by disruptions in the capital markets or other events, which could materially affect
our business and cause our Financial Services business to lose an important source of capital. The Reform Act
will also affect a number of significant changes relating to asset-backed securities, including additional oversight
and regulation of credit rating agencies and additional reporting and disclosure requirements. As a result of the
accounting guidance on consolidations and the accounting for transfers of financial assets and the criteria for
determining whether to consolidate a variable interest entity, there was uncertainty over FDIC guidance regarding
the safe-harbor for legal isolation of transferred assets provided by FDIC Rule 12 C.F.R. 360.6 “Treatment by the
Federal Deposit Insurance Corporation as Conservator or Receiver of Financial Assets Transferred by an Insured
Depository Institution in Connection With a Securitization or Participation.” In March 2010, the FDIC announced
an interim amendment of this regulation. Under the interim amendment, the legal isolation of property transferred
in a securitization transaction prior to September 30, 2010, was preserved, regardless of whether the transfer
qualified for sale accounting treatment under new accounting standards if the transfer otherwise complied with
the FDIC’s regulation. On September 27, 2010, the FDIC approved a final rule that, subject to certain conditions,
preserves the safe-harbor treatment applicable to certain grandfathered revolving trusts and master trusts that had
issued at least one series of asset-backed securities as of such date, which we believe includes the Trust. The final
rule imposes significant new conditions on the availability of the safe-harbor with respect to securitizations that are
not grandfathered.
In addition, several rules and regulations have recently been proposed or adopted that may substantially affect
issuers of asset-backed securities. On April 7, 2010, the SEC issued proposed rules that will significantly change
the offering process, disclosure, and reporting for asset-backed securities. Pursuant to the provisions of the Reform
Act, on January 20, 2011, the SEC adopted rules that require issuers of asset-backed securities to disclose demand,
repurchase, and replacement information through the periodic filing of a new form with the SEC. These rules
also require rating agencies to disclose in any report accompanying a credit rating for an asset-backed security the
representations, warranties, and enforcement mechanisms available to investors and how they differ from those in
similar securities. Also pursuant to the provisions of the Reform Act, on January 20, 2011, the SEC issued rules that
require issuers of registered asset-backed securities to perform a review of the assets underlying the securities and
to publicly disclose information relating to the review. These rules also require issuers of asset-backed securities to
make publicly available the findings and conclusions of any third-party due diligence report obtained by the issuer.
It remains to be seen whether and to what extent the January 20, 2011, rules or any other final rules adopted by the
SEC will impact WFB and its ability and willingness to continue to rely on the securitization market for funding.
At the beginning of 2010, WFB’s required capital was increased under regulatory capital requirements of the
applicable federal agencies as a result of new accounting standards which required the consolidation of the assets
and liabilities of the Trust on WFB’s balance sheet. As of December 31, 2010, the most recent notification from
the FDIC categorized WFB as well-capitalized under the regulatory framework for prompt corrective action. In
order for our bank subsidiary to continue to meet the minimum requirements for the well-capitalized classification
under the regulatory framework for prompt corrective action, we invested $150 million in 2010 in additional
capital in WFB. Effective December 11, 2009, we amended the terms of our credit agreement to allow us to invest
up to $225 million into WFB in 2010 plus up to $25 million per year through June 30, 2012, when this credit
agreement expires.
Operating, Investing and Financing Activities
The following table presents changes in our cash and cash equivalents for the years ended:
2010 2009 2008
(In Thousands)
Net cash provided by operating activities $ 167,427 $294,020 $154,968
Net cash used in investing activities (347,570)(106,023)(98,211)
Net cash (used in) provided by financing activities (265,623)(15,916)222,165