Cabela's 2014 Annual Report Download - page 78

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68
The table below shows the mix of our credit card account balances as a percentage of total balances
outstanding at the years ended:
2014 2013 2012
Balances carrying an interest rate based upon various
interest rate indices 65.9% 63.8% 62.3%
Balances carrying an interest rate of 9.99% 4.6 4.5 4.2
Balances carrying a promotional interest rate of 0.00% - 0.2 0.2
Balances not carrying interest because the previous
month balance was paid in full 29.5 31.5 33.3
100.0% 100.0% 100.0%
Charges on the credit cards issued by the Financial Services segment were priced at a margin over various
defined lending rates. No interest is charged if the account is paid in full within 25 days of the billing cycle,
which represented 29.5% of total balances outstanding at the end of 2014. Some of the zero percentage promotion
expenses are passed through to the merchandise vendors for each specific promotion offered.
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, at December 27, 2014, we believe
that an increase in LIBOR is more likely. Therefore, we believe that an immediate increase in interest rates
of 50 basis points would result in a pre-tax increase to projected earnings of approximately $8 million for the
Financial Services segment over the next 12 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 retail operations in Canada, we intend to fund all transactions in Canadian dollars and
utilize cash held by our foreign subsidiaries as well as our unsecured revolving credit agreement of $20 million
CAD to fund such operations. As our operations in Canada continue to expand, a sustained decline in the relative
value of the Canadian dollar to the U.S. dollar could negatively impact our consolidated results of operations.