Cabela's 2013 Annual Report Download - page 88

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CABELA’S INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands Except Share and Per Share Amounts)
Property and Equipment – Property and equipment are stated at cost. Depreciation and amortization are
provided over the estimated useful lives of the assets, including assets held under capital leases, on a straight-
line basis. Leasehold improvements are amortized over the lease term or, if shorter, the useful lives of the
improvements. Assets held under capital lease agreements are amortized using the straight-line method over the
shorter of the estimated useful lives of the assets or the lease term. When property is fully depreciated, retired, or
otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting
gain or loss is reflected in the consolidated statement of income. The costs of major improvements that extend the
useful life of an asset are capitalized. Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable. Capitalized interest on projects
during the construction period totaled $4,270, $2,798, and $126 for 2013, 2012, and 2011, respectively. Costs
related to internally developed software are capitalized and amortized on a straight-line basis over their estimated
useful lives.
Intangible Assets – Intangible assets are recorded in other assets and include non-compete agreements and
goodwill. At the end of 2013 and 2012, intangible assets totaled $4,164 and $4,093, net of accumulated amortization
of $2,468 and $2,178, respectively. During the fourth quarter of 2013, 2012, and 2011, in connection with the
preparation of the consolidated financial statements, the Company completed its annual impairment analyses of
goodwill and other intangible assets. The Company did not recognize any impairment in 2013, 2012, or 2011. The
Company records impairment and restructuring charges where projected discounted cash flows are less than the
fair value of the reporting unit.
Intangible assets, excluding goodwill, are amortized over three to five years. Amortization expense for these
intangible assets for the next five years was estimated to approximate $327 (2014), $304 (2015), $163 (2016), $75
(2017), and $0 (2018). The Company had goodwill of $3,295 and $3,535 in its consolidated balance sheet at the end
of 2013 and 2012, respectively, relating to an acquisition of a Canadian outdoors specialty retailer in 2007. The
change in the carrying value of goodwill from 2012 was due to foreign currency translation adjustments.
Other Property – Other property primarily consists of unimproved land not used in our merchandising
business and is recorded at the lower of cost or estimated fair value less estimated selling costs. Proceeds from
the sale of other property are recognized in other revenue and the corresponding costs of other property sold are
recognized in costs of other revenue. Other property with a carrying value of $15,109 and $23,448 at the end of
2013 and 2012, respectively, was included in other assets in the consolidated balance sheet.
Government Economic Assistance – When Cabela’s constructs a new retail store or retail development,
the Company may receive economic assistance from local governments to fund a portion or all of the Company’s
associated capital costs. This assistance typically comes in the form of cash grants, land grants, and/or proceeds
from the sale of economic development bonds funded by the local government. The Company has historically
purchased the majority of the bonds associated with its developments. Cash grants are made available to fund land,
retail store construction, and/or development infrastructure costs. Economic development bonds are typically
repaid through sales and/or property taxes generated by the retail store and/or within a designated development
area. Cash and land grants are recognized as deferred grant income as a reduction to the costs, or recognized fair
value in the case of land grants, of the associated property and equipment. Property and equipment was reduced by
deferred grant income of $289,903 and $290,734 at the end of 2013 and 2012, respectively. Deferred grant income
is amortized to earnings, as a reduction of depreciation expense, over the average estimated useful life of the
associated assets.
Deferred grant income estimates, and their associated present value, are updated whenever events or changes
in circumstances indicate that their recorded amounts may not be recovered. These estimates are determined when
estimation of the fair value of associated economic development bonds are performed if there are related bond
investments. If it is determined that the Company will not receive the full amount remaining from the bonds, the