Cabela's 2011 Annual Report Download - page 76

Download and view the complete annual report

Please find page 76 of the 2011 Cabela's annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 132

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132

66
Management has performed several interest rate risk analyses to measure the effects of the timing of the
repricing of our interest sensitive assets and liabilities. Based on these analyses, we believe that an immediate
decrease of 50 basis points, or 0.5%, in LIBOR interest charged to customers and on our cost of funds would cause
a pre-tax decrease to earnings of $3 million for our Financial Services segment over the next twelve months.
Merchandising Business Interest Rate Risk
The interest payable on our line of credit is based on variable interest rates and therefore affected by changes
in market interest rates. If interest rates on existing variable rate debt increased 1.0%, our interest expense and
results from operations and cash flows would not be materially affected.
Foreign Currency Risk
We purchase a significant amount of inventory from vendors outside of the United States in transactions
that are primarily U. S. dollar transactions. A small percentage of our international purchase transactions are
in currencies other than the U. S. dollar. Any currency risks related to these transactions are immaterial to us.
A decline in the relative value of the U. S. dollar to other foreign currencies could, however, lead to increased
merchandise costs. For our operations in Canada, we intend to fund all transactions in Canadian dollars and utilize
our unsecured revolving credit agreement of $15 million CAD to fund such operations as well as the utilization of
cash held by our foreign subsidiary.