Cabela's 2012 Annual Report Download - page 74

Download and view the complete annual report

Please find page 74 of the 2012 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 135

  • 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
  • 133
  • 134
  • 135

64
We have been, and will continue to be, particularly reliant on funding from securitization transactions for the
Financial Services segment. A failure to renew existing facilities or to add additional capacity on favorable terms
as it becomes necessary could increase our financing costs and potentially limit our ability to grow the business
of the Financial Services segment. Unfavorable conditions in the asset-backed securities markets generally,
including the unavailability of commercial bank liquidity support or credit enhancements, could have a similar
effect. During 2012, the Financial Services segment issued $156 million in certificates of deposit, renewed its
$225 million variable funding facility for an additional year, and completed two $500 million term securitizations
that will mature in February and June of 2017. In 2013, the Financial Services segment intends to issue additional
certificates of deposit and additional term securitizations. We believe that these liquidity sources are sufficient to
fund the Financial Services segment’s foreseeable cash requirements, including certificate of deposit maturities,
and near-term growth plans.
Furthermore, the securitized credit card loans of the Financial Services segment could experience poor
performance, including increased delinquencies and credit losses, lower payment rates, or a decrease in excess
spreads below certain thresholds. This could result in a downgrade or withdrawal of the ratings on the outstanding
securities issued in the Financial Services segment’s securitization transactions, cause “early amortization”
of these securities, or result in higher required credit enhancement levels. Credit card loans performed within
established guidelines and no events which could trigger an “early amortization” occurred during the years ended
December 29, 2012, and December 31, 2011.
Certificates of Deposit
The Financial Services segment utilizes brokered and non-brokered certificates of deposit to partially finance
its operating activities. The Financial Services segment issues certificates of deposit in a minimum amount of one
hundred thousand dollars in various maturities. At December 29, 2012, the Financial Services segment had $1.0
billion of certificates of deposit outstanding with maturities ranging from January 2013 to December 2018 and with
a weighted average effective annual fixed rate of 2.22%. This outstanding balance compares to $982 million at
December 31, 2011, with a weighted average effective annual fixed rate of 2.53%.
Impact of Inflation
We do not believe that our operating results have been materially affected by inflation during the preceding
three years. We cannot assure, however, that our operating results will not be adversely affected by inflation in
the future.