Cabela's 2008 Annual Report Download - page 84

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79
CABELA’S INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands Except Share and Per Share Amounts)
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. In addition, the sensitivity analysis does not consider
any corrective action that WFB may take to mitigate the impact of any adverse changes in the key assumptions.
Credit card loans are originated with variable rates of interest that adjust with changing market interest rates.
Thus, the carrying value of the credit card loans, less the allowance for loan losses, approximates fair value. WFB
estimates related fair value of the transferor’s interest, less valuation allowance based on the present value of future
expected cash flows, using assumptions for credit losses, payment rates, and discount rates commensurate with
the risks involved. This valuation does not include the value that relates to estimated cash flows generated from
new loans over the life of the cardholder relationship. Accordingly, the aggregate fair value of the credit card loans
does not represent the underlying value of the established cardholder relationship. At the end of 2008 and 2007,
the carrying amounts of credit card loans were $167,226 and $191,893, respectively, with estimated fair values of
$168,429 and $191,893, respectively.
On February 19, 2009, Moody’s Investors Service announced that it had downgraded the ratings on 21 classes
of asset-backed notes issued by the trust of our Financial Services business. Downgrades could negatively impact the
ability of our Financial Services business to complete other securitization transactions on acceptable terms or at all
and force our Financial Services business to rely on other potentially more expensive funding sources, to the extent
available, which would decrease our profitability.
5. PROPERTY AND EQUIPMENT
Property and equipment included the following at the years ended:
Depreciable Life
in Years 2008 2007
Land and improvements Up to 20 $ 158,742 $172,582
Buildings and improvements 7 to 40 492,135 470,067
Furniture, fixtures and equipment 3 to 15 424,640 378,050
Assets held under capital lease Up to 30 14,562 14,562
Property and equipment 1,090,079 1,035,261
Less accumulated depreciation and amortization (302,575)(246,178)
787,504 789,083
Construction in progress 93,576 114,969
$881,080 $ 904,052