Cabela's 2011 Annual Report Download - page 91

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81
CABELA’S INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands Except Share and Per Share Amounts)
excess of these requirements are reported to investors as excess spread. An excess spread of less than zero percent
for a contractually specified period, generally a three-month average, would trigger an early amortization event.
Such an event could result in WFB incurring losses related to its retained interests. In addition, if WFB’s retained
interest in the loans falls below the 5% minimum 20 day average and WFB fails to add new accounts to the
securitized pool of loans, an early amortization event would be triggered. The investors have no recourse to WFB’s
other assets for failure of debtors to pay other than for breaches of certain customary representations, warranties,
and covenants. These representations, warranties, covenants, and the related indemnities do not protect the Trust or
third party investors against credit-related losses on the loans.
Another feature, which is applicable to the notes issued from the Trust, is one in which excess cash flows
generated by the transferred loans are held at the Trust for the benefit of the investors. This cash reserve account
funding is triggered when the three-month average excess spread rate of the Trust decreases to below 4.50% or
5.50% (depending on the series) with increasing funding requirements as excess spread levels decline below preset
levels or as contractually required by the governing documents. Similar to early amortization, this feature also is
designed to protect the investors’ interests from loss thus making the cash restricted. Upon scheduled maturity or
early amortization of a securitization, WFB is required to remit principal payments received on the securitized
pool of loans to the Trust which are restricted for the repayment of the investors’ principal note. Credit card loans
performed within established guidelines and no events which could trigger an “early amortization” occurred during
the years ended 2011, 2010, and 2009.
The following table presents the components of the consolidated assets and liabilities of the Trust at the
years ended:
2011 2010
Consolidated assets:
Restricted credit card loans, net of allowance of $72,870 and $90,100 $ 3,069,281 $ 2,685,668
Restricted cash 18,296 18,575
Tot al $ 3,087,577 $ 2,704,243
Consolidated liabilities:
Secured variable funding obligations $ 460,000 $ 393,000
Secured long-term obligations 1,402,500 1,590,900
Interest due to third party investors 1,563 2,336
Tot al $ 1,864,063 $ 1,986,236
5. CREDIT CARD LOANS AND ALLOWANCE FOR LOAN LOSSES
WFB grants individual credit card loans to its customers and is diversified in its lending with borrowers
throughout the United States. The following table reflects the composition of the credit card loans at the years ended:
2011 2010
Restricted credit card loans of the Trust (1) $ 3,142,151 $ 2,775,768
Unrestricted credit card loans 25,362 24,444
Total credit card loans 3,167,513 2,800,212
Allowance for loan losses (73,350) (90,900)
Credit card loans, net $ 3,094,163 $ 2,709,312
(1) Restricted credit card loans are restricted for repayment of secured borrowings of the Trust.