Cabela's 2014 Annual Report Download - page 52

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Corporate Overhead, Distribution Centers, and Other:
x A decrease of $19 million in employee compensation, benefits, and contract labor primarily due to a
reduction in incentive compensation and our emphasis on operating expense management.
x An increase of $14 million in building costs primarily related to the operations and maintenance of our
corporate office to support operational growth.
x A decrease of $23 million in advertising and promotional costs primarily due to cost allocations
between segments.
Impairment and Restructuring Charges
Impairment losses consisted of the following for the years ended:
2014 2013
Impairment losses relating to:
Accumulated amortization of deferred grant income $ - $ 4,931
Property, equipment, and other assets - 937
- 5,868
Restructuring charges for severance and related benefits 641 -
Tot al $ 641 $ 5,868
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 2014 and 2013, 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 June 11, 2014, we announced the transition to a third-party logistics provider for our distribution needs in
Canada and the closing of our distribution center in Winnipeg, Manitoba, in March 2015. The third-party logistics
provider began processing a portion of our Canada merchandise in a Calgary, Alberta, distribution center in
October 2014. Accordingly, in the second quarter of 2014 the Company recognized a restructuring charge related
to employee severance agreements and termination benefits totaling approximately $1 million. This restructuring
charge was recognized in the Corporate Overhead and Other segment. We expect to incur approximately $2 million
in additional incremental expenses related to the transition to this third-party logistics provider and the closing of
our current distribution center in the first half of fiscal 2015.
On February 4, 2014, a U. S. district court (the “Court”) entered a judgment against the Company in the
amount of $14 million relating to litigation regarding a breach of a retail store radius restriction. At December
28, 2013, pursuant to this judgment, we recognized a liability of $14 million, including an estimated amount for
legal fees and costs, in our consolidated balance sheet. The recognition of this liability at December 28, 2013,
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 recognized in the Retail segment.
On March 21, 2014, through a supplemental judgment, the Court ordered that we pay interest in the amount of
$1 million to the defendant. Therefore, our liability relating to this judgment increased in the first quarter of 2014
resulting in the Company recording an increase to the carrying amount of the related retail store property through
a reduction in deferred grant income. The additional depreciation adjustment that reduced the deferred grant
income of this retail store property resulted in an increase in depreciation expense of approximately $1 million that