Cabela's 2013 Annual Report Download - page 101

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CABELA’S INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands Except Share and Per Share Amounts)
14. IMPAIRMENT AND RESTRUCTURING CHARGES
Impairment and restructuring charges consisted of the following for the years ended:
2013 2012 2011
Impairment losses relating to:
Accumulated amortization of deferred grant income $ 4,931 $ 1,309 $ 6,538
Property, equipment, and other assets 937 1,321 154
Other property - 17,694 4,617
5,868 20,324 11,309
Restructuring charges for severance and related benefits - - 935
Total $ 5,868 $ 20,324 $ 12,244
Long-lived assets of the Company are evaluated for possible impairment (i) whenever events or changes in
circumstances may indicate that the carrying value of an asset may not be recoverable and (ii) at least annually for
recurring fair value measurements and for those assets not subject to amortization. In 2013, 2012, and 2011, we
evaluated the recoverability of our economic development bonds, property (including existing store locations and
future retail store sites), equipment, goodwill, other property, and other intangible assets.
Retail Store Properties:
In November 2006, the Company entered into agreements providing for financial incentives, including,
among other benefits, the receipt of land for a nominal amount and an incentive of $5,000 upon completion of a
new retail store. In exchange, the Company agreed to open the retail store within one year, and to refrain from
opening another retail store within a defined radius restriction area for a five year period. We opened this retail
store in November 2007.
In November 2011, after attempting to negotiate a release of the radius restriction, the Company filed a
declaratory judgment action to challenge the validity and enforceability of the radius restriction. In April 2012,
we opened another retail store within the radius restriction associated with the 2007 store. On June 18, 2013, a U.
S. district court (the “Court”) ruled that the radius restriction was enforceable, but requested additional briefing
on the remaining outstanding issues. On July 30, 2013, the Court reversed its decision and denied the defendant’s
first motion for summary judgment, finding that although the Company had breached the radius restriction, the
defendant had not established its right to recovery. The defendant filed a motion for reconsideration of the Court’s
July 30, 2013, ruling and the Company filed its own motion for summary judgment. These motions were heard
on October 31, 2013. At this hearing, the Court again reversed its decision and granted the defendant’s motion for
reconsideration of the Court’s July 30, 2013, ruling, granted the defendant’s motion for summary judgment, and
denied the Company’s motion for summary judgment. This ruling resulted in the Court ordering the Company to
repay the $5,000 incentive. In addition, trial by jury was set to determine the award related to the real property
received by the Company in 2007. Trial was held beginning January 27, 2014, and on January 31, 2014, a jury
determined that the Company pay $8,625 to the defendant relating to the real property we received in 2007. On
February 4, 2014, the Court entered a judgment against the Company in the amount of $13,625. At December 28,
2013, pursuant to this judgment, the Company recognized a liability of $14,125, including an estimated amount for
legal fees and costs, in its consolidated balance sheet. We intend to appeal the Court’s ruling.
The recognition of this liability at December 28, 2013, to repay these grants resulted in the Company
recording an increase to the carrying amount of the related retail store property through a reduction in deferred
grant income by the amount repayable, plus legal and other costs. The cumulative additional depreciation that
would have been recognized through December 28, 2013, as an expense in the absence of the grant was recognized