Cabela's 2012 Annual Report Download - page 67

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On November 2, 2011, we entered into a new credit agreement providing for a $415 million revolving credit
facility that expires on November 2, 2016. The unsecured $415 million revolving credit facility permits the
issuance of letters of credit up to $100 million and swing line loans up to $20 million. This credit facility may be
increased to $500 million subject to certain terms and conditions. Advances under the credit facility will be used
for the Company’s general business purposes, including working capital support.
Our unsecured $415 million revolving credit facility and unsecured senior notes contain certain financial
covenants, including the maintenance of minimum debt coverage, a fixed charge coverage ratio, a leverage ratio,
and a minimum consolidated net worth standard. In the event that we failed to comply with these covenants,
a default would trigger and all principal and outstanding interest would immediately be due and payable. At
December 29, 2012, and December 31, 2011, we were in compliance with all financial covenants under our credit
agreements and unsecured notes. We anticipate that we will continue to be in compliance with all financial
covenants under our credit agreements and unsecured notes through at least the next 12 months.
Our $15 million Canadian dollars (“CAD”) unsecured revolving credit facility for our operations in Canada
was terminated January 31, 2013.
We announced in February 2012 our intent to repurchase up to 800,000 shares of our common stock in open
market transactions through February 2013 to offset future equity grants. During 2012, we repurchased 816,057
shares of our common stock, which included 800,000 shares purchased for $29 million in cash from operations
pursuant to our stock repurchase program, as well as 16,057 shares withheld (under the terms of grants pursuant to
a stock compensation plan) to offset tax withholding obligations upon the vesting and release of certain restricted
shares. We announced on February 14, 2013, that we intend to repurchase up to 750,000 shares of our outstanding
common stock in open market transactions through February 2014 pursuant to this share repurchase program. The
share repurchase program does not obligate us to repurchase any outstanding shares of our common stock, and the
program may be limited or terminated at any time.
Financial Services Segment – The primary cash requirements of the Financial Services segment relate to
the financing of credit card loans. These cash requirements will increase if our credit card originations increase
or if our cardholders’ balances or spending increase. The Financial Services segment sources operating funds
in the ordinary course of business through various financing activities, which include funding obtained from
securitization transactions, obtaining brokered and non-brokered certificates of deposit, borrowing under its
federal funds purchase agreements, and generating cash from operations. 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 and near-term growth plans.
WFB is prohibited by regulations from lending money to Cabela’s or other affiliates. WFB is subject to
capital requirements imposed by Nebraska banking law and the Visa U.S.A., Inc. membership rules, and its
ability to pay dividends is also limited by Nebraska and Federal banking law. If there are any disruptions in the
credit markets, the Financial Services segment, like many other financial institutions, may increase its funding
from certificates of deposit which may result in increased competition in the deposits market with fewer funds
available or at unattractive rates. Our ability to issue certificates of deposit is reliant on our current regulatory
capital levels. WFB is classified as a “well capitalized” bank, the highest category under the regulatory framework
for prompt corrective action. If WFB were to be classified as an “adequately capitalized” bank, which is the next
level category down from “well capitalized,” we would be required to obtain a waiver from the FDIC in order to
continue to issue certificates of deposit. We will invest additional capital in the Financial Services segment, if
necessary, in order for WFB to continue to meet the minimum requirements for the “well capitalized” classification
under the regulatory framework for prompt corrective action. In addition to the non-brokered certificates of deposit
market to fund growth and maturing securitizations, we have access to the brokered certificates of deposit market
through multiple financial institutions for liquidity and funding purposes.