Cabela's 2013 Annual Report Download - page 45

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for private placements of asset-backed securities imposing informational requirements similar to those applicable
to registered public offerings. The final form that SEC Regulation AB II may take is uncertain at this time, but
it may impact the Financial Services segment’s ability and/or desire to sponsor securitization transactions in
the future.
On August 28, 2013, pursuant to the provisions of the Reform Act, the SEC, the Federal Reserve, the FDIC,
and certain other federal agencies re-proposed regulations requiring securitization sponsors to retain an economic
interest in assets that they securitize. We cannot predict at this time whether WFB’s existing forms of risk retention
will satisfy the regulatory requirements, whether structural changes will be necessary, or whether the final rules
will impact the Financial Services segment’s ability or desire to continue to rely on the securitization market for
funding.
On September 19, 2011, the SEC proposed a new rule under the Securities Act of 1933, as amended, to
implement certain provisions of the Reform Act. Under the proposed rule, an underwriter, placement agent, initial
purchaser, or sponsor of an asset-backed security, or any affiliate of any such person, shall not at any time within
one year after the first closing of the sale of the asset-backed security engage in any transaction that would involve
or result in any material conflict of interest with respect to any investor in a transaction arising out of such activity.
The proposed rule would exempt certain risk mitigating hedging activities, liquidity commitments, and bona fide
market-making activity. It is not clear how the final rule will differ from the proposed rule, if at all. The final rule’s
impact on the securitization market and the Financial Services segment is also unclear at this time.
Visa Litigation Settlement – In June 2005, a number of entities, each purporting to represent a class of
retail merchants, sued Visa and several member banks, and other credit card associations, alleging, among
other things, that Visa and its member banks have violated United States antitrust laws by conspiring to fix the
level of interchange fees. On July 13, 2012, the parties to this litigation announced that they had entered into a
memorandum of understanding, which subject to certain conditions, including court approval, obligates the parties
to enter into a settlement agreement to resolve the claims brought by the class members. On December 13, 2013, the
settlement received final court approval. The settlement agreement requires, among other things, (i) the distribution
to class merchants of an amount equal to 10 basis points of default interchange across all credit rate categories
for a period of eight consecutive months, which otherwise would have been paid to issuers like WFB, (ii) Visa to
change its rules to allow merchants to charge a surcharge on credit card transactions subject to a cap, and (iii) Visa
to meet with merchant buying groups that seek to negotiate interchange rates collectively. To date, WFB has not
been named as a defendant in any credit card industry lawsuits. We determined that the 10 basis point reduction of
default interchange across all credit rate categories for the period of eight consecutive months from July 29, 2013,
through March 28, 2014, would result in a reduction of interchange income of approximately $12.5 million in the
Financial Services segment. Accordingly, a liability of $12.5 million was recorded as of December 29, 2012, to
accrue for this settlement.
In 2013, certain plaintiffs opted out of the proposed settlement resulting in management re-evaluating the
impact of the 10 basis point reduction of default interchange to the Financial Services segment. Also, Visa issued
interchange reduction reports to WFB through November 2013 resulting in assessments of $4.6 million. Based on
re-evaluations due to opt-outs and analysis of the merchant charge volume based on the Visa interchange reduction
reports, management determined that the estimated effect for this settlement should be reduced by $3.2 million
as of December 28, 2013. Therefore, the remaining liability balance for this settlement was $4.7 million at
December 28, 2013.