Cabela's 2009 Annual Report Download - page 86

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CABELA’S INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands Except Share and Per Share Amounts)
Intangible Assets – Intangible assets are recorded in other assets and include non-compete agreements and
goodwill. At the end of 2009 and 2008, intangible assets totaled $5,756 and $5,902, net of accumulated amortization
of $2,862 and $2,132, respectively. For the fourth quarters of 2009 and 2008, in connection with the preparation of our
consolidated financial statements, we completed our annual impairment analyses of goodwill and other intangible
assets and recognized an impairment of $460 and $1,070, respectively, recorded in impairment and restructuring
charges where projected discounted cash flows were less than the fair value of the reporting unit.
Intangible assets, excluding goodwill, are amortized over three to five years. Amortization expense for these
intangible assets for the next five years is estimated to approximate $613 (2010), $462 (2011), $410 (2012), $222
(2013), $123 (2014), and $589 (2015 and thereafter).
On September 27, 2007, we purchased the net assets, and assumed certain liabilities, of an outdoors specialty
retailer located in Winnipeg, Manitoba, totaling $11,162. The purchase price was allocated to tangible and identifiable
assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The excess of
the purchase price over the fair value of the net assets acquired was recorded as goodwill of $3,505. We recorded
goodwill related to this acquisition based on expected future economic benefits as this acquisition will serve as our
platform for expansion into Canada. Results of operations for this acquisition since October 2007 are included in our
consolidated income statement.
Land Held for Sale or Development – Proceeds from the sale of land from development activities are recognized
in other revenue and the corresponding costs of land sold are recognized in other costs of revenue.
Government Economic Assistance – When we construct a new retail store or retail development, we may receive
economic assistance from local governments to fund a portion or all of our associated capital costs. This assistance
typically comes in the form of cash and/or land grants and has been typically funded by the local government through
proceeds from the sale of economic development bonds. We have historically purchased the majority of the bonds
associated with our developments. Cash grants are made available to fund land, retail store construction, and/or
development infrastructure costs. Economic development bonds are typically repaid through sales and/or property
taxes generated by the retail store and/or within a designated development area. Cash and land grants are recognized
as deferred grant income as a reduction to the costs, or recognized fair value in the case of land grants, of the
associated property and equipment. Deferred grant income is amortized to earnings, as a reduction of depreciation
expense, over the average estimated useful life of the associated assets.
Deferred grant income estimates, and their associated present value, are updated quarterly. These estimates
are determined when estimation of the fair value of associated economic development bonds are performed if there
are related bond investments. When it is determined that recorded amounts will not be recovered through projected
discounted cash flows, an adjustment is made to reduce deferred grant income, and accumulated amortization
on the deferred grant at that point in time is reversed as an increase to depreciation expense. We may agree to
guarantee deficiencies in tax collections which fund the repayment of economic development bonds. We guaranteed
an economic development bond totaling $3,695 at the end of 2007 and did not guarantee any economic development
bonds at the end of 2009 or 2008.
Land grants typically include land associated with the retail store and may include other land for sale and
further development. Land grants are recognized at the fair value of the land on date of grant. Deferred grant income
on land grants is recognized as a reduction to depreciation expense over the estimated life of the related assets of the
developments. In 2009, we did not receive any land under these grants. In 2008, we received land under land grants
with a fair value of $5,015.