Cabela's 2013 Annual Report Download - page 119

109
CABELA’S INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands Except Share and Per Share Amounts)
On a quarterly basis, we perform various procedures to analyze the amounts and timing of projected cash
flows to be received from our economic development bonds. We revalue each economic development bond using
discounted cash flow models based on available market interest rates (Level 2 inputs) and management estimates,
including the estimated amounts and timing of expected future tax payments (Level 3 inputs) to be received by the
municipalities under tax increment financing districts. Projected cash flows are derived from sales and property
taxes. Based on our analysis, in those instances where the expected cash flows are insufficient to recover the
current carrying value of the bond, we adjust the carrying value of the individual bonds to their revised estimated
fair value. The governmental entity from which the Company purchases the bonds is not liable for repayment of
principal and interest on the bonds to the extent that the associated taxes are insufficient to fund principal and
interest amounts under the bonds. Should sufficient tax revenue not be generated by the subject properties, the
Company may not receive all anticipated payments and thus will be unable to realize the full carrying values of the
economic development bonds, which result in a corresponding decrease to deferred grant income.
Long-lived assets other than goodwill and other intangible assets, which generally are tested separately
for impairment on an annual basis, are evaluated for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. The calculation for an impairment loss compares the
carrying value of the asset to that asset’s estimated fair value, which may be based on estimated future discounted
cash flows or unobservable market prices. We recognize an impairment loss if the asset’s carrying value exceeds
its estimated fair value. Frequently our impairment loss calculations contain multiple uncertainties because they
require management to make assumptions and to apply judgment to estimate future cash flows and asset fair
values, including forecasting cash flows under different scenarios. We have consistently applied our accounting
methodologies that we use to assess impairment loss. However, if actual results are not consistent with our
estimates and assumptions used in estimating future cash flows and asset fair values, we may be exposed to losses
that could be material.
We evaluate the recoverability of property and equipment, other property, goodwill and intangibles whenever
indicators of impairment exist using significant unobservable inputs. This evaluation included existing store
locations and future retail store sites. Impairment losses consisted of the following for the years ended:
2013 2012 2011
Carrying value of other property and other assets $ 49,343 $ 30,669 $ 36,954
Fair value of related assets 43,475 11,654 32,183
Impairment losses $ 5,868 $ 19,015 $ 4,771
The carrying amounts of cash and cash equivalents, accounts receivable, restricted cash, accounts payable,
gift instruments (including credit card and loyalty rewards programs), accrued expenses, and income taxes
receivable and payable included in the consolidated balance sheets approximate fair value given the short-term
nature of these financial instruments. The secured variable funding obligations of the Trust, which include variable
rates of interest that adjust daily, can fluctuate daily based on the short-term operational needs of the Financial
Services segment with advances and pay downs at par value. Therefore, the carrying value of the secured variable
funding obligations of the Trust approximates fair value.