Build-A-Bear Workshop 2013 Annual Report Download - page 51

the exchange rate in effect at the balance sheet date, while revenues
and expenses are translated at average rates prevailing during the
years. Translation adjustments are reported in accumulated other
comprehensive income, a separate component of stockholders’
equity.
(z) Investment in Affiliate
The Company holds a minority interest in Ridemakerz, LLC of
approximately 21%, which is accounted for under the equity method.
In 2009, the carrying value of this investment was reduced to $-0-.
No income or loss allocations, impairments or other charges related
to Ridemakerz were recorded in fiscal 2013 or 2011. In 2012, certain
investors exercised a put option on 1.25 million shares, requiring
an additional investment of $0.5 million, which was immediately
impaired and included in selling, general and administrative
expenses as a component of net loss before income taxes in the Retail
segment. Under the current agreements, the Company could, at its
discretion, own up to approximately 28% of fully diluted equity in
Ridemakerz. The Company has no further obligations relating to its
investment in Ridemakerz.
(3) Prepaid Expenses and Other Assets
Prepaid expenses and other current assets consist of the following
(in thousands):
For 2013, 2012 and 2011, depreciation expense was $18.6 million, $20.4
million and $22.8 million, respectively.
In 2012, the Company made the decision to close a number of stores.
The Company considers a more likely than not assessment that an
individual location will close as a triggering event to review the
store asset group for recoverability. As a result of these reviews, it
was determined that certain stores would not be able to recover the
carrying value of store leasehold improvements through expected
undiscounted cash flows over the shortened remaining life of the
related assets. Accordingly, the carrying value of the assets was
reduced to fair value, calculated as the net present value of estimated
future cash flows for each asset group, and asset impairment
charges of $1.0 million and $0.9 million were recorded in fiscal 2013
and fiscal 2012, respectively, which are included in selling, general
and administrative expenses as a component of net loss before
income taxes in the Retail segment. Any remaining net book value
is depreciated over the shortened expected life. The inputs used to
determine the fair value of the assets are Level 3 fair value inputs as
defined by ASC section 820-10.
During 2013, the Company reviewed the operating performance and
forecasts of future performance for the stores in its Retail segment.
As a result of that review, it was determined that several stores would
not be able to recover the carrying value of certain store leasehold
improvements through expected undiscounted cash flows over the
remaining life of the related assets. Accordingly, the carrying value
of the assets was reduced to fair value, calculated as the net present
value of estimated future cash flows for each asset group, and asset
impairment charges of $0.1 million were recorded in the fourth
quarter of fiscal 2013, which are included in cost of merchandise sold
as a component of net loss before income taxes in the Retail segment.
The inputs used to determine the fair value of the assets are Level 3
fair value inputs as defined by ASC section 820-10. In the event that
we decide to close any or all of these stores in the future, we may
be required to record additional impairments, lease termination
charges, severance charges and other charges. The Company
recorded asset impairment charges of $1.4 million in the fourth
quarter of fiscal 2012 and $0.4 million in the fourth quarter of fiscal
2011.
(4) Property and Equipment
Property and equipment consist of the following (in thousands):
In 2012, the Company made the decision to close a number of stores.
The Company considers a more likely than not assessment that an
individual location will close as a triggering event to review the
store asset group for recoverability. As a result of these reviews, it
was determined that certain stores would not be able to recover the
carrying value of store leasehold improvements through expected
undiscounted cash flows over the shortened remaining life of the
related assets. Accordingly, the carrying value of the assets was
reduced to fair value, calculated as the net present value of estimated
future cash flows for each asset group, and asset impairment
charges of $1.0 million and $0.9 million were recorded in fiscal 2013
and fiscal 2012, respectively, which are included in selling, general
and administrative expenses as a component of net loss before
income taxes in the Retail segment. Any remaining net book value
is depreciated over the shortened expected life. The inputs used to
determine the fair value of the assets are Level 3 fair value inputs as
defined by ASC section 820-10.
2013 2012
Prepaid rent $ 4,608 $8,736
Prepaid income taxes 280 -
Other 6,659 5,480
$11,547 $14,216
2013 2012
Land $2,261 $2,261
Furniture and fixtures 39,723 40,516
Computer hardware 21,722 23,120
Building 14,970 14,970
Leasehold improvements 124,068 136,402
Computer software 42,276 40,943
Construction in progress 2,655 2,381
247,675 260,593
Less accumulated depreciation 177,512 189,134
$70,163 $71,459
Notes to Consolidated Financial Statements (continued)
BUILD- A-BEAR WORKSHOP, INC. 2013 FORM 10-K 41