Cabela's 2009 Annual Report Download - page 64

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On January 21, 2010, the federal agencies issued final rules entitled Risk-Based Capital Guidelines; Capital
Adequacy Guidelines; Capital Maintenance; Regulatory Capital; Impact of Modifications to Generally Accepted
Accounting Principles; Consolidation of Asset-Backed Commercial Paper Programs; and Other Related Issues
relating to changes to regulatory capital as a result of ASC Topics 810 and 860. WFB’s required capital will be
increased with the consolidation of the assets and liabilities of the Trust on WFB’s balance sheet under ASC Topics 810
and 860. The effect of changes to regulatory capital requirements resulting from the final rules issued by the federal
agencies will cause us to reallocate capital from our Retail and Direct businesses to meet the capital needs of our
Financial Services business, or require us to raise additional debt or equity capital, which in turn could significantly
alter our growth initiatives. Also, if WFB fails to satisfy the requirements for the well-capitalized classification under
the regulatory framework for prompt corrective action, WFB would become subject to regulatory restrictions and
WFB’s ability to issue certificates of deposit could be affected. The final rule provides an optional two-quarter delay
and subsequent two-quarter phase-in (for a maximum of one year) for the effect on risk-based capital relating to the
assets that must be consolidated as a result of the change in accounting principles. The effect of changes to regulatory
capital requirements is expected to cause us to contribute approximately $200 million in additional capital to our
bank subsidiary during 2010 to meet the capital needs of our Financial Services business. We had sufficient cash
at January 2, 2010, to provide the necessary capital contribution to WFB so WFB can meet the regulatory capital
requirements for the well-capitalized classification for 2010. Effective December 11, 2009, we amended the terms of
our credit agreement to allow us to contribute to WFB up to $225 million of capital in 2010 plus up to $25 million
of capital per year through June 30, 2012, when this credit agreement expires. The credit facility is unsecured and
expires on June 30, 2012. Advances under the credit facility are used for our general business support, including
working capital support. We paid $1.85 million to the lending banks to facilitate the amendment.
Operating, Investing and Financing Activities
The following table presents changes in our cash and cash equivalents for the years ended:
2009 2008 2007
(Dollars In Thousands)
Net cash provided by operating activities $ 294,020 $154,968 $31,828
Net cash used in investing activities (106,023)(98,211)(331,493)
Net cash (used in) provided by financing activities (15,916)222,165 257,944
2009 versus 2008
Operating Activities – Cash derived from operating activities increased $139 million in 2009 compared to
2008. This net increase in cash from operations was primarily due to a net increase in accounts payable and accrued
expenses of $117 million where these balances increased $33 million in 2009 compared to a reduction of $84 million
in 2008. WFB paid cash out on a net basis for credit card originations (net of cash received from collections, proceeds
from new securitizations, and changes in retained interests) of $10 million in 2009 compared to $6 million of net cash
received in 2008. Inventory decreased $78 million in 2009, to a balance of $440 million, compared to a decrease of
$91 million in 2008, to a balance of $518 million. Current and deferred income taxes payable increased $7 million in
2009 compared to a decrease of $17 million in 2008.
Investing Activities – Cash used in investing activities increased $8 million in 2009 compared to 2008. In
2009, cash paid for property and equipment additions totaled $49 million compared to $91 million in 2008. We
opened our Billings, Montana, retail store in May 2009 and two retail stores in 2008. WFB retained asset-backed
securities totaling $75 million on April 14, 2009, from the $500 million Series 2009-I issuance of asset-backed notes
and purchased triple-A rated notes for approximately $2 million in the secondary markets from previously issued
series of the Trust. WFB classified these notes as asset-backed available for sale securities which are reflected in
the consolidated balance sheet under the caption “retained interests in securitized loans, including asset-backed
securities.” In 2009, we realized $12 million in proceeds from the disposition of certain premises and equipment. We
purchased $19 million of economic development bonds in 2008.