Cabela's 2007 Annual Report Download - page 70

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64
CABELA’S INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands Except Share and Per Share Amounts)
Key Assumptions:
The following are the key economic assumptions used to estimate the fair value of the interest-only strips
resulting from the securitization of credit card loans for the years ended:
2007 2006
Weighted average payment rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.88 to 33.16% 33.05 to 35.27%
Weighted average life in years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.542 to 0.708 0.542 to 0.625
Weighted average expected credit losses ............................ 2.57 to 3.06% 2.59 to 2.96%
Servicing fee .................................................. 1.25 to 2.00% 1.25 to 2.00%
Discount rate .................................................. 10.12 to 16.60% 10.37 to 11.39%
Weighted average interest rate paid to investors . . . . . . . . . . . . . . . . . . . . . . 5.47 to 5.64% 5.46 to 5.62%
Sensitivity Analysis:
The key economic assumptions used and the sensitivity of the current fair value of retained interests of $51,777
at December 29, 2007, to immediate 10% and 20% adverse changes in those assumptions are as follows:
Assumption
Impact on Fair Value of
an Adverse Change of
10% 20%
Weighted average payment rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.88% $ (1,329) $ (2,562)
Weighted average expected credit losses ...................... 3.06 (1,362) (2,678)
Discount rate ............................................ 15.60 and 16.60 (257) (516)
Weighted average interest paid to investors .................... 5.57 (1,320) (2,640)
The sensitivity analysis is hypothetical and is as of a specific point in time. As a result, these scenarios should
be used with caution. As the table indicates, changes in fair value based on 10% variation in assumptions generally
cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be
linear. Also, in this table, the effect of a variation in a particular assumption on the fair values of the retained interests
are calculated without changing any other assumption; in reality, changes in one factor may result in changes in
another, which might magnify or counteract the sensitivities.