Cabela's 2010 Annual Report Download - page 54

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44
• An increase in bad debt expense of $5 million from estimated losses of customer receivables.
• An increase in advertising and promotional expense of $1 million to build on our market position and
further increase our brand awareness and loyalty.
Financial Services:
• An increase of $38 million in the marketing fee paid by the Financial Services segment to the Retail
segment ($21 million) and the Direct business segment ($17 million).
• An increase of $8 million relating to the matters arising out of the FDIC compliance examination.
• An increase in contract labor of $5 million primarily as a result of an increase in collection agency costs
and an increase in the number of active credit card accounts and credit card transactions.
• An increase of $2 million in employee compensation and benefits.
• Changes in marketing programs and a reduction in new accounts resulting in a decrease of $1 million in
advertising and promotional costs.
Corporate Overhead, Distribution Centers, and Other:
• An increase of $6 million in employee compensation and benefits.
• An increase of $5 million in contract labor due to costs relating to gift instruments sold through third
parties and implementation issues relating to the information technology system changes in support of
our customer relationship management system.
• Increases of $1 million in depreciation and amortization expense and $1 million in costs for
professional services.
• Decreases of $1 million in equipment and software expenses and $1 million in property taxes.
Impairment and Restructuring Charges
Impairment and restructuring charges consisted of the following for the years ended:
2010 2009
Impairment losses on:
Property, equipment and other assets $ 3,792 $43,721
Land held for sale 1,834 16,046
Economic development bonds - 2,099
Goodwill and other intangible assets - 460
5,626 62,326
Restructuring charges for:
Severance and related benefits - 4,468
Total $5,626 $66,794
Our long-lived assets are evaluated for possible impairment whenever changes in circumstances may indicate
that the carrying value of an asset may not be recoverable. In 2010 and 2009, we evaluated the recoverability of
our property (including our existing store locations and future retail store sites), equipment, land held for sale,
economic development bonds, other assets, goodwill, and other intangible assets. In accordance with accounting
guidance on asset valuations, we recognized impairment losses totaling $6 million and $62 million in 2010 and
2009, respectively. Trends and management projections could change undiscounted cash flows in future periods
which could trigger possible future write downs.
In 2009, we incurred charges totaling approximately $4 million for severance and related benefits primarily
from outplacement costs and a voluntary retirement plan implemented in February 2009. All impairment and
restructuring charges were recorded to the Corporate Overhead and Other segment for 2010 and 2009.
Important factors we consider that could result in an impairment review are underperformance of the asset
compared to historical or planned operations, significant changes in the utilization of the asset, or changes related
to our strategic plans. An impairment loss is recognized when the estimated undiscounted cash flows expected to