Cabela's 2013 Annual Report Download - page 118

Download and view the complete annual report

Please find page 118 of the 2013 Cabela's annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 132

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132

108
CABELA’S INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands Except Share and Per Share Amounts)
Level 3 is comprised of financial instruments whose fair value is estimated based on internally developed
models or methodologies utilizing significant inputs that are primarily unobservable from objective sources. At
December 28, 2013, the financial instruments carried on our consolidated balance sheets subject to fair value
measurements consisted of economic development bonds and were classified as Level 3 for valuation purposes. For
2013, 2012, and 2011, there were no transfers in or out of Levels 1, 2, or 3.
The Company’s recurring financial instruments classified as Level 3 for valuation purposes consists of
economic development bonds. The table below presents changes in fair value of the economic development bonds
measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended:
2013 2012 2011
Balance, beginning of year $ 85,041 $ 86,563 $ 104,231
Total gains or losses:
Included in earnings - realized - - 13
Included in accumulated other comprehensive income
(loss) - unrealized (3,064) 5,814 9,078
Valuation adjustments - (5,030) (24,314)
Purchases, issuances, and settlements:
Purchases - - 601
Issuances - - -
Settlements (3,473) (2,306) (3,046)
Total (3,473) (2,306) (2,445)
Balance, end of year $ 78,504 $ 85,041 $ 86,563
Fair values of the Company’s economic development bonds were estimated using discounted cash flow
projection estimates. These estimates are based on available market interest rates and the estimated amounts and
timing of expected future payments to be received from municipalities under tax development zones, which we
consider to be unobservable inputs (Level 3). These fair values do not reflect any premium or discount that could
result from offering these bonds for sale or through early redemption, or any related income tax impact. Declines
in the fair value of available-for-sale economic development bonds below cost that are deemed to be other than
temporary are reflected in earnings. In 2012 and 2011, we determined that the fair value of the bonds was below
carrying value, with the decline in fair value deemed to be other than temporary, which resulted in fair value
adjustments totaling $5,030 and $24,314 at the end of 2012 and 2011, respectively. Accordingly, deferred grant
income was reduced by $5,030 and $24,314 for the respective years due to other than temporary impairment losses
of the same amounts that were recognized on the economic development bonds. 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. At the end
of 2010, none of the bonds with a fair value below carrying value were deemed to have other than a temporary
impairment. At December 28, 2013, there were no other than temporary fair value adjustments of economic
development bonds and no adjustments of deferred grant income in 2013.