Cabela's 2007 Annual Report Download - page 68

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62
CABELA’S INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands Except Share and Per Share Amounts)
3. ACCOUNTING PRONOUNCEMENTS
In September 2006, the FASB issued FAS No. 157, Fair Value Measurements. This statement defines fair value,
establishes a framework for measuring fair value, and requires expanded disclosures about fair value measurements.
FAS 157 is effective for financial statements issued in fiscal years beginning after November 15, 2007, or beginning
in 2008 for us. We have evaluated the impact of this statement to Cabela’s, and we do not believe that the adoption of
the provisions of this statement will have a material impact on our financial position or results of operations.
In February 2007, the FASB issued FAS No. 159, The Fair Value Option for Financial Assets and Financial
Liabilities — Including an Amendment of FASB Statement No. 115. This statement permits entities to choose to
measure many financial instruments and certain other items at fair value. FAS 159 is effective as of the beginning
of an entity’s first fiscal year that begins after November 15, 2007. We evaluated the provisions of this statement
and did not elect to adopt the fair value option on any financial instruments or other items held by the Company on
December 29, 2007.
In December 2007, the FASB issued FAS No. 141R, Business Combinations, which replaces FAS No. 141.
FAS 141R establishes principles and requirements for how the acquirer of a business recognizes and measures in its
financial statements the identifiable assets acquired and the liabilities assumed. This statement applies prospectively
to all business combinations for which the acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008. FAS 141R will be applicable to us beginning in 2009.
In December 2007, the FASB issued FAS No. 160, Noncontrolling Interests in Consolidated Financial
Statements – an amendment of ARB No. 51. This statement amends ARB No. 51 to establish accounting and reporting
standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. FAS 160 is
effective for fiscal years beginning on or after December 15, 2008, including interim periods. We do not believe that
the adoption of this statement will have a material effect on our financial position or results of operations.
4. CREDIT CARD LOANS AND SECURITIZATION
WFB has established a trust for the purpose of routinely securitizing and selling credit card loans. WFB
maintains responsibility for servicing the securitized loans and receives a servicing fee based on the average
outstanding loans in the trust. Servicing fees are paid monthly and reflected as a component of Financial Services
revenue. The trust issues commercial paper, long-term bonds, or long-term notes. Variable bonds and notes are priced
at a benchmark rate plus a spread. Fixed rate notes are priced on a five-year swap rate plus a spread. WFB retains
rights to future cash flows arising after investors have received the return to which they are entitled and after certain
administrative costs of operating the trust. This portion of the retained interests is known as interest-only strips
and is subordinate to investor’s interests. The value of the interest-only strips is subject to credit, payment rate, and
interest rate risks on the loans sold. The investors have no recourse to the assets of WFB for failure of debtors to pay.
However, as contractually required, WFB establishes certain cash accounts, known as cash reserve accounts, to be
used as collateral for the benefit of investors.