Cabela's 2013 Annual Report Download - page 52

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Impairment and Restructuring Charges
Impairment losses consisted of the following for the years ended:
2013 2012
Impairment losses relating to:
Accumulated amortization of deferred grant income $ 4,931 $ 1,309
Property, equipment, and other assets 937 1,321
Other property - 17,694
Total $ 5,868 $ 20,324
Long-lived assets are evaluated for possible impairment (i) whenever 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 and 2012, we evaluated the recoverability of
economic development bonds, property (including existing store locations and future retail store sites), equipment,
goodwill, other property, and other intangible assets.
On February 4, 2014, a U. S. district court entered a judgment against the Company in the amount of $14
million. This judgment consists of two issues. The court ordered us to repay a $5 million incentive that we received
in conjunction with a retail store we opened in 2007. In addition, a jury trial determined that we pay $9 million
relating to the real property we received in 2007. Pursuant to this judgment, we recognized a liability of $14 million
at December 28, 2013, including an estimated amount for legal fees and costs, in our consolidated balance sheet.
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 these grants was recognized in 2013 as
depreciation expense. Therefore, the adjustment that reduced the deferred grant income of this retail store property
at December 28, 2013, resulted in an increase in depreciation expense of $5 million in 2013, which was included in
impairment and restructuring charges in the consolidated statements of income. This impairment loss was recorded
to the Retail segment. Refer to Note 14 “Impairment and Restructuring Charges” of the Notes to Consolidated
Financial Statements for additional financial information regarding this matter.
We recognized an impairment loss totaling $1 million in 2013 related to the store closure of our former
Winnipeg, Manitoba, Canada, retail site. The impairment loss of $1 million included leasehold improvements
write-offs as well as lease cancellation and restoration costs. This impairment loss was recorded to the Retail and
Corporate Overhead and Other segments.
In 2004, the Company acquired property near Denver, Colorado (“the Colorado Property”) with the intent to
build a Cabela’s retail store at that location. The appraised value of the Colorado Property at that time was based
on the projected cash flows from the Company’s prospective retail store development. In the second quarter ended
June 2011, we made a decision not to locate a retail store on the Colorado Property, nor to further develop the
Colorado Property, but to dispose of it, and instead to build two retail stores in different locations in the greater
Denver area. We publicly announced this decision in July 2011. As a result, we classified the Colorado Property
as other property in the Corporate Overhead and Other segment. Shortly after we publicly announced that we
would not develop a retail store on the Colorado Property, we received a letter of intent from a developer offering
to purchase the property. The letter of intent provided evidence of the fair value of the Colorado Property, which,
at the time, resulted in an impairment loss of $3 million that was recognized in the third quarter of 2011. The
developer’s purchase offer expired in 2012, and the Company continued to market the property for sale and sought
an appraisal. In January 2013, we received an appraisal report on the Colorado Property. This appraisal report
concluded that the carrying value of the Colorado Property was higher than the estimated fair value, resulting
in an additional impairment loss of $15 million, which was recognized in the fourth quarter of 2012. After the
impairment loss was recognized, the carrying value of the Colorado Property was $6 million at the end of 2012.
The 2013 appraisal was based on the sales comparison approach to estimate the “as-is” fee simple market value