Cabela's 2009 Annual Report Download - page 91

82
CABELA’S INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands Except Share and Per Share Amounts)
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 $225,000 of capital in 2010 plus up to $25,000 of capital per year through June 30, 2012, when this credit
agreement expires.
In June 2009, the FASB issued FAS No. 168, The FASB Accounting Standards Codification and the Hierarchy
of Generally Accepted Accounting Principles — a replacement of FASB Statement No. 162. This codification is
the source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and
interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative generally
accepted accounting principles (“GAAP”) for Securities and Exchange Commission registrants. We adopted the
provisions of FAS No. 168 effective June 28, 2009. The adoption of this statement did not have an effect on our
financial position or results of operations.
3. CREDIT CARD LOANS AND SECURITIZATION
The Company’s wholly-owned bank subsidiary, World’s Foremost Bank (“WFB”), has established the Cabela’s
Master Credit Card Trust and related entities (collectively referred to as the “Trust”) for the purpose of routinely
selling and securitizing credit card loans and issuing beneficial interest to investors. The Trust issues variable
funding facilities and long-term notes each of which has an undivided interest in the assets of the Trust. Variable
rate notes are priced at a benchmark rate plus a spread. Fixed rate notes are priced on a swap rate plus a spread. At
the end of December 2009, the Trust had five term series outstanding totaling $1,950,000 and two variable funding
facilities with $671,880 in available capacity and $468,752 outstanding. WFB maintains responsibility for servicing
the securitized loans and receives a servicing fee based on the average outstanding loans in the Trust. Servicing fees
are paid monthly and reflected in other non-interest income in Financial Services revenue. As of January 2, 2010, the
Trust was not a subsidiary of WFB or Cabela’s and was therefore excluded from the consolidated financial statements
in accordance with GAAP. These securitizations qualify as sales under GAAP and accordingly are not treated as
debt on the consolidated financial statements. Accordingly, the credit card loans receivable equal to the investor
interest is also excluded from the consolidated financial statements.
As contractually required, WFB establishes certain cash accounts to be used as collateral for the benefit of
investors. The balance in the cash accounts with the trustee was $8,000 at December 27, 2008. There were no
amounts in the cash accounts at the end of December 2009, and none were required. In addition, WFB owns asset-
backed securities from some of its securitizations, which are subordinated to other notes issued.
WFB’s retained interests in credit card asset securitizations include a transferor’s interest, asset-backed
securities, accrued interest receivable on securitized credit card receivables, cash accounts, servicing rights, the
interest-only strip, cash reserve accounts, and other retained interests. The transferor’s interest is represented by
security certificates and is reported in credit card loans held for sale. WFB’s transferor’s interest ranks pari passu
with investors’ interests in the securitization trusts. The remaining retained interests are subordinate to certain
investors’ interests and, as such, may not be realized by WFB if needed to absorb deficiencies in cash flows that are
allocated to the investors of the trusts.
On April 14, 2009, the Trust sold $500,000 of asset-backed notes, Series 2009-I. This securitization transaction
included the issuance of $425,000 of Class A notes, which accrue interest at a floating rate equal to the one-month
London Inter-Bank Offered Rate plus 2.00% per year. The Class A notes are eligible collateral under the Term Asset-
Backed Securities Loan Facility (“TALF”) established by the Federal Reserve Bank of New York. This securitization
transaction also included the issuance of three subordinated classes of notes in the aggregate principal amount
of $75,000. WFB retained each of the subordinated classes of notes as asset-backed available for sale securities
which are recorded in the consolidated balance sheet under the caption “retained interests in securitized loans,