Cabela's 2013 Annual Report Download - page 92

Download and view the complete annual report

Please find page 92 of the 2013 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

82
CABELA’S INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands Except Share and Per Share Amounts)
rate risks on the transferred credit card loans. The secured obligations contain legal isolation requirements which
would protect the assets pledged as collateral for the securitization investors as well as protect Cabela’s and WFB
from any liability from default on the secured obligations of the Trust.
To protect the holders of the secured obligations of the Trust (the “investors”), the securitization structures
include certain features that could result in earlier-than-expected repayment of the securities, which could cause the
Financial Services segment to sustain a loss of one or more of its retained interests and could prompt the need to
seek alternative sources of funding. The primary investor protection feature relates to the availability and adequacy
of cash flows in the securitized pool of loans to meet contractual requirements, the insufficiency of which triggers
early repayment of the securities. The Financial Services segment refers to this as the early amortization feature.
Investors are allocated cash flows derived from activities related to the accounts comprising the securitized pool
of loans, the amounts of which reflect finance charges collected, certain fee assessments collected, allocations of
interchange, and recoveries on charged-off accounts. These cash flows are considered to be restricted under the
governing documents to pay interest to investors, servicing fees, and to absorb the investor’s share of charge-offs
occurring within the securitized pool of loans. Any cash flows remaining in 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
the Financial Services segment incurring losses related to its retained interests. In addition, if the retained interest
in the loans of the Financial Services segment falls below the 5% minimum 20 day average and the Financial
Services segment fails to add new accounts to the securitized pool of loans, an early amortization event would
be triggered.
Another feature, which is applicable to secured obligations of 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%
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, the Financial Services segment 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. The investors
have no recourse to the other assets of the Financial Services segment 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. Credit card loans performed within established guidelines and no events which could trigger an early
amortization occurred during the years ended 2013, 2012, and 2011.
The following table presents the components of the consolidated assets and liabilities of the Trust at the
years ended:
2013 2012
Consolidated assets:
Restricted credit card loans, net of allowance of $52,820 and $65,090 $3,903,410 $ 3,458,043
Restricted cash 23,191 17,292
Total $ 3,926,601 $ 3,475,335
Consolidated liabilities:
Secured variable funding obligations $ 50,000 $ 325,000
Secured long-term obligations 2,452,250 1,827,500
Interest due to third party investors 1,904 1,424
Total $ 2,504,154 $ 2,153,924