Cabela's 2008 Annual Report Download - page 29

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24
at the end of 2008, approximately 30.7% of our cardholders did not maintain balances on their credit card accounts.
We do not earn any interest from these accounts but do earn other fees from these accounts such as Visa interchange
fees. In the event interest rates rise, the spread between the interest rate we pay on our borrowings and the fees we
earn from these accounts may change and our profitability may be adversely affected.
Credit card industry litigation could adversely impact the amount of revenue generated by our Financial
Services business.
Our Financial Services business faces possible risk from the outcomes of certain credit card industry litigation.
For example, a number of entities, each purporting to represent a class of retail merchants, have sued Visa and several
member banks, and other credit card associations, alleging, among other things, that Visa and its member banks have
violated U.S. antitrust laws by conspiring to fix the level of interchange fees. To date, we have not been named as a
defendant in any credit card industry lawsuits. If the interchange fees that are charged to merchants are reduced as
a result of the interchange lawsuits or if the credit card industry is adversely affected by other credit card industry
litigation, the financial condition and results of operations of our Financial Services business may be negatively
impacted.
Fluctuations in the value of our interests in our securitizations relating to our Financial Services business
may adversely affect our earnings.
In connection with our securitizations relating to our Financial Services business, we retain certain interests
in the assets included in the securitization. These interests are carried on our consolidated financial statements
and include our “transferor’s interest” in the securitized loans; an “interest-only strip,” which represents our right
to receive excess cash available after repayment of all amounts due to the investors; servicing rights; and in some
cases cash reserve accounts and asset-backed securities, which may be subordinate to the investors’ notes. The value
of these retained interests depends upon income earned on these interests which is affected by many factors not
within our control, including the performance of the securitized loans, interest paid to the holders of securitization
securities, credit losses, and transaction expenses. The value of our interests in the securitizations will vary over
time as the amount of loans in the securitized pool and the performance of those loans fluctuate. The performance
of the loans included in our securitizations is subject to the same risks and uncertainties that affect the loans that
we have not securitized, including, among others, increased delinquencies and credit losses, economic downturns
and social factors, interest rate fluctuations, changes in government policies and regulations, competition, expenses,
dependence upon third-party vendors, fluctuations in accounts and account balances, and industry risks. The
earnings of our Financial Services business may also be negatively impacted if certain securitizations were reduced
or not renewed.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.