Cabela's 2013 Annual Report Download - page 103

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93
CABELA’S INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands Except Share and Per Share Amounts)
Economic Development Bonds:
In the fourth quarter of 2012, we received information on a project that the development would be delayed
thus reducing the amount expected to be received and delaying the timing of projected cash flows. Therefore, the
fair value of this economic development bond was determined to be below carrying value, with the decline in fair
value deemed to be other than temporary. In the fourth quarter of 2011, we received information on three projects
that development was either delayed or that actual tax revenues were lower than estimated, thus reducing the
amount expected to be received and delaying the timing of projected cash flows. Accordingly, the discounted cash
flows indicated that the fair values of these three economic development bonds were below carrying value, with the
decline in fair value deemed to be other than temporary.
These fair value adjustments totaling $5,030 and $24,314 in 2012 and 2011, respectively, reduced the carrying
value of the economic development bond portfolio at the end of 2012 and 2011 and resulted in corresponding
reductions in deferred grant income. These reductions in deferred grant income resulted in increases in
depreciation expense of $1,309 and $6,538 in 2012 and 2011, respectively, which have been included in impairment
and restructuring charges in the consolidated statements of income. The discounted cash flow models for our other
bonds did not result in other than temporary impairments. At the end of 2012 and 2011, the cumulative amount
of impairment adjustments that were made to deferred grant income, which has been recorded as a reduction of
property and equipment, was $38,656 and $33,626, respectively. These impairment adjustments made to deferred
grant income resulted from events or changes in circumstances that indicated the amount of deferred grant
income may not be recovered or realized in cash through collection, sales, or other proceeds from the economic
development bonds. There were no other than temporary impairments in 2013 relating to economic development
bonds.
Each quarter, we evaluate the projected underlying cash flows of our economic development bonds to
determine if the carrying amount of any such bonds, including interest accrued under the bonds, can be recovered.
To the extent the expected cash flows are not sufficient to recover the carrying amount, the bonds are assessed for
impairment. Deficiencies in projected discounted cash flows below the recorded carrying amount of the economic
development bonds evidences that we do not expect to recover the cost basis. Consequently, the valuation results in
an other than temporary impairment. Trends and management projections could change undiscounted cash flows in
future periods which could trigger possible future write downs.
In 2011, the Company incurred charges totaling $935 for severance and related benefits primarily from
outplacement costs and a voluntary retirement plan. These charges were recorded to the Corporate Overhead and
Other segment.
15. INTEREST (EXPENSE) INCOME, NET
Interest expense, net of interest income, consisted of the following for the years ended:
2013 2012 2011
Interest expense $ (26,159) $ (22,969) $ (24,580)
Capitalized interest 4,270 2,798 126
Interest income 35 48 27
$ (21,854) $ (20,123) $ (24,427)