Cabela's 2008 Annual Report Download - page 55

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The following table summarizes our availability under debt and credit facilities, excluding the facilities of
WFB, at the end of years:
2008 2007
(In Thousands)
Amounts available for borrowing under credit facilities (1) $ 445,000 $ 340,000
Principal amounts outstanding (26,465)(58,023)
Outstanding letters of credit and standby letters of credit (16,117)(59,596)
Remaining borrowing capacity $ 402,418 $222,381
(1) Effective April 2, 2008, we increased our revolving credit facility by $105 million to $430 million, resulting in a
total amount available for borrowing of $445 million, including the credit facility for our Canada operations.
In addition, WFB has total borrowing availability of $110 million under its transferor’s interest credit agreement
($25 million) and agreements to borrow federal funds ($85 million). WFB entered into a credit agreement in 2007
for a $100 million variable funding facility secured by a participation interest in the bank’s transferor’s interest of the
Cabela’s Master Credit Card Trust. In May 2008, this credit facility was modified to a $25 million commitment and
was extended to May 28, 2009. These funds were used to fund continued growth of WFB’s credit card portfolio. At
the end of December 2008, the full $110 million of borrowing capacity was available to WFB.
In 2008, we issued $57 million of 7.20% unsecured senior notes to institutional buyers. Scheduled principal
repayments of $8 million are payable beginning January 16, 2012, and annually thereafter until their maturity at
January 16, 2018. Interest is payable semi-annually. We used the proceeds to pay down existing debt and for general
corporate purposes. In 2007, we issued $60 million aggregate principal amount of 6.08% unsecured senior notes.
We used the proceeds from this offering for new retail store expansion, including property and equipment additions,
purchase of economic development bonds, and general corporate purposes.
Our $430 million credit agreement requires that Cabela’s comply with certain financial and other customary
covenants, including 1) a fixed charge coverage ratio (as defined) of no less than 1.50 to 1.00 as of the last day of any
quarter; 2) a cash flow leverage ratio (as defined) of no more than 3.00 to 1.00 as of the last day of any quarter; and
3) a minimum tangible net worth standard (as defined). In addition, certain of the long-term debt agreements contain
various covenants and restrictions such as the maintenance of minimum debt coverage, net worth, and financial
ratios. The significant financial ratios and net worth requirements in the long-term debt agreements are 1) a limitation
of funded debt to be less than 60% of consolidated total capitalization; 2) cash flow fixed charge coverage ratio, as
defined, of no less than 2.00 to 1.00 as of the last day of any quarter; and 3) a minimum consolidated adjusted net
worth (as defined). Also, the debt agreements contain cross default provisions to other outstanding credit facilities. In
the event that we failed to comply with these covenants and the failure to comply would go beyond 30 days, a default
would trigger and all principal and outstanding interest would immediately be due and payable. At December 27,
2008, 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 throughout 2009.
2007 versus 2006
Operating Activities – Cash derived from operating activities decreased $23 million for 2007 compared to
2006. This net decrease in cash was primarily due to a net change of $31 million in inventories, as inventory balances
increased $124 million over 2006 due to more new store openings in 2007. The inventory increase was funded by
accounts payable, which had a net increase of $42 million compared to 2006. The net increase in accounts payable
was impacted by a $40 million decrease compared to 2006 due to a decrease in the payable to the third party
processor for WFB’s credit card transactions. In addition, land held for sale or development was up $11 million over
2006 as we increased our holdings in land investment. These uses of cash from operating activities were partially
offset by an $18 million net increase between years related to WFB’s funding from securitization transactions.