Cabela's 2013 Annual Report Download - page 59

Download and view the complete annual report

Please find page 59 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

49
Corporate Overhead, Distribution Centers, and Other:
• An increase of $24 million in employee compensation and benefits in general corporate and the
distribution centers to support operational growth.
• An increase of $4 million in equipment and software expense primarily related to new equipment and
updates to support operational growth.
• An increase of $2 million in building costs primarily related to the maintenance and expansion of our
administrative buildings.
Impairment and Restructuring Charges
Impairment and restructuring charges consisted of the following for the years ended:
2012 2011
Impairment losses relating to:
Other property $ 17,694 $ 4,617
Property, equipment, and other assets 1,321 154
Accumulated amortization of deferred grant income 1,309 6,538
20,324 11,309
Restructuring charges for severance and related benefits - 935
Total $ 20,324 $ 12,244
In December 2012, we received an appraisal report that updated the value from a previous appraisal on one
property held for sale. Results from the 2012 appraisal report concluded that the carrying value was higher than
the estimated fair value, resulting in an impairment loss. This 2012 appraisal was based on the sales comparison
approach to estimate the “as-is” fee simple market value of the subject property. This approach involved a process
in which a market value estimate was derived from analyzing the market for similar properties that have sold or
that were available for sale (Level 2 inputs). In the fourth quarter of 2012, we also impaired a second property held
for sale based on an arms-length sales contract of adjoining land anticipated to close in mid-2013 (Level 2 inputs).
In 2011, we wrote down the carrying value of certain other property based on signed agreements for their sale. We
recognized impairment losses on other property of $18 million and $5 million in 2012 and 2011, respectively.
In the fourth quarter of 2012, we received information on one 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. Therefore, the discounted cash
flows indicated that the fair value of these three economic development bonds was below carrying value, with the
decline in fair value deemed to be other than temporary. These fair value adjustments totaling $5 million and $24
million 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 million and $7 million in 2012 and
2011, respectively, which were 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 total amount of impairment adjustments that were made to deferred grant income,
which has been recorded as a reduction of property and equipment, was $39 million and $34 million, 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.
In 2011, we incurred charges totaling $1 million for severance and related benefits primarily from
outplacement costs and a voluntary retirement plan. All impairment and restructuring charges were recorded to the
Corporate Overhead and Other segment.