Cabela's 2013 Annual Report Download - page 29

19
Changes in these laws and regulations or additional regulation, particularly new laws or increased regulations
regarding sales and ownership of firearms and ammunition, could cause the demand for and sales of our products
to decrease and could materially adversely impact our revenue and profitability. Moreover, complying with
increased or changed regulations could cause our operating expenses to increase.
Our inability or failure to protect our intellectual property could have a negative impact on our
operating results.
Our trademarks, service marks, copyrights, patents, trade secrets, domain names, and other intellectual
property are valuable assets that are critical to our success. Effective trademark and other intellectual property
protection may not be available in every country in which our products are made available. The unauthorized
reproduction or other misappropriation of our intellectual property could diminish the value of our brands or
goodwill and cause a decline in our revenue. Any infringement or other intellectual property claim made against
us, whether or not it has merit, could be time-consuming, result in costly litigation, cause product delays, or require
us to enter into royalty or licensing agreements. As a result, any such claim could have a material adverse effect on
our operating results.
Risks Related to Our Financial Services Business
We may experience limited availability of financing or variation in funding costs for our Financial
Services segment, which could limit growth of the business and decrease our profitability.
Our Financial Services segment requires a significant amount of cash to operate. These cash requirements
will increase if our credit card originations increase or if our cardholders’ balances or spending increase.
Historically, we have relied upon external financing sources to fund these operations, and we intend to continue
to access external sources to fund our growth. A number of factors such as our financial results, changes within
our organization, disruptions in the capital markets, increased competition in the deposit markets, our corporate
and regulatory structure, interest rate fluctuations, general economic conditions, possible negative credit ratings
affecting our asset-backed securities, and accounting and regulatory changes and regulations could make such
financing more difficult or impossible to obtain or more expensive. In addition, several rules and regulations have
recently been proposed by the SEC that may substantially affect issuers of asset-backed securities.
We have been and will continue to be particularly reliant on funding from securitization transactions for
our Financial Services segment. Securitization funding sources include both variable funding facilities and fixed
and floating rate term securitizations. A failure to renew these facilities, to refinance the term securitizations
as they mature, or to add additional term securitizations and variable funding facilities on favorable terms as
it becomes necessary could increase our financing costs and potentially limit our ability to grow our Financial
Services segment. In addition, the ability of our Financial Services segment to engage in securitization transactions
on favorable terms or at all could be adversely affected by disruptions in the capital markets or other events,
which could adversely affect our business and cause our Financial Services segment to lose an important source
of funding.
Furthermore, even if we are able to securitize our credit card loans consistent with past practice, poor
performance of our loans, including increased delinquencies and credit losses, lower payment rates, or a decrease
in excess spreads below certain thresholds, could result in a downgrade or withdrawal of the ratings on the
outstanding securities issued in our securitization transactions, cause “early amortization” or “early redemption”
of these securities, or result in higher required credit enhancement levels. This could jeopardize our ability to
complete other securitization transactions on acceptable terms, decrease our liquidity, and force us to rely on other
potentially more expensive funding sources, to the extent available, which would decrease our profitability.
Our current funding strategy also includes a continued reliance on certificates of deposit to help fund growth
and maturing securitizations. If there is an increase in other financial institutions relying on the certificates of
deposit market for liquidity and funding, competition in the deposits market may increase. In addition, FDIC
deposit insurance coverage may be reduced. Either of these events could result in less funds available or funds