Cabela's 2009 Annual Report Download - page 66

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(1) Effective December 11, 2009, we decreased our revolving credit facility to $350 million from $430 million,
resulting in a total amount available for borrowing of $365 million, including the $15 million CAD facility for
our Canada operations.
In addition, WFB has total borrowing availability of $85 million under its agreements to borrow federal funds.
At January 2, 2010, the entire $85 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 $350 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 January 2, 2010,
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 through the next 12 months.
2008 versus 2007
Operating Activities – Cash derived from operating activities increased $123 million for 2008 compared to
2007. Inventory balances decreased $91 million at the end of 2008 over 2007, as we focused on inventory reduction in
2008 compared to 2007, in which we opened eight new stores. Cash derived from operating activities also included a
$63 million net increase between years related to WFB’s proceeds from securitization transactions, net of originations
of credit card loans. For 2008, WFB received cash on a net basis for credit card originations (net of cash received
from collections, proceeds from new securitizations, and changes in retained interests) of $21 million compared
to $42 million of net cash used in 2007. In addition, land held for sale increased $12 million compared to 2007 as
we increased our holdings. Partially offsetting these improvements in cash was a decrease in accounts payable and
accrued expenses of $94 million between years, mostly due to the reduction in inventory in 2008 compared to 2007.
The net change in the liability for gift instruments and credit card reward points was a decrease of $39 million over
2007 from increased sales of gift cards in 2007 compared to 2008. In addition, the net change in current and deferred
income taxes payable was a decrease of $33 million in 2008 compared to 2007 due to nearly $56 million paid in 2008
for federal and state income taxes.
Investing Activities – Cash used in investing activities decreased $233 million for 2008 compared to 2007. This
net decrease was primarily due to less expenditures related to the development and construction of the new retail stores
in 2008 compared to 2007. For 2008, cash paid for property and equipment additions totaled $91 million compared to
$336 million for 2007. Economic development bonds totaling $3 million related to our Mitchell, South Dakota, retail
store were retired in 2008 and bonds totaling $45 million were retired in 2007. We purchased $19 million of economic
development bonds in 2008 compared to $36 million in 2007, and used $9 million in the September 2007 acquisition
of S.I.R. Warehouse Sports in Winnipeg, Manitoba.