STORE CLOSING COSTS, IMPAIRMENTS AND REAL ESTATE TRANSACTIONS

Store Closing Costs and Severance

We made the decision to close 13 stores in our Kmart segment and 6 stores in our Sears Domestic segment during the first quarter of 2013. In accordance with accounting standards governing costs associated with exit or disposal activities, expenses related to future rent payments for which we no longer intend to receive any economic benefit are accrued for when we cease to use the leased space and have been reduced for any income that we believe can be realized through sub-leasing the leased space. During the first quarter of 2013, we closed 4 stores we previously announced would close and recorded charges of $1 million at Kmart for the related lease obligations. During the first quarter of 2012, we closed 31 stores we previously announced would close and recorded charges of $31 million at Sears Domestic and $3 million at Kmart for the related lease obligations.

Store closing costs recorded for the 13-week periods ended May 4, 2013 and April 28, 2012 were as follows:



millions	Markdowns⁽¹⁾		Severance Costs⁽²⁾		Lease Termination Costs⁽²⁾			Other Charges⁽²⁾		Impairment and Accelerated Depreciation⁽³⁾		Total Store Closing Costs
Kmart	$	5	$	1	$	(1	)	$	3	$	1	$	9
Sears Domestic	3		1		(3		)	2		8		11
Sears Canada	—		2		—			—		—		2
Total for the 13-week period ended May 4, 2013	$	8	$	4	$	(4	)	$	5	$	9	$	22

Kmart	$	—	$	—	$	3		$	—	$	—	$	3
Sears Domestic	—		—		31			—		—		31
Total for the 13-week period ended April 28, 2012	$	—	$	—	$	34		$	—	$	—	$	34


⁽¹⁾	Recorded within Cost of sales, buying and occupancy on the Condensed Consolidated Statements of Operations.


⁽²⁾	Recorded within Selling and administrative on the Condensed Consolidated Statements of Operations. Lease termination costs are net of estimated sublease income, and include the reversal of closed store reserves for which the lease agreement has been terminated and the reversal of deferred rent balances related to closed stores.


⁽³⁾	Costs for the 13-week period ended May 4, 2013 include $8 million recorded within Impairment charges and $1 million recorded within Depreciation and amortization on the Condensed Consolidated Statements of Operations.

Store closing cost accruals of $169 million, $155 million and $193 million at May 4, 2013, April 28, 2012 and February 2, 2013, respectively, were as follows:



millions	Severance Costs			Lease Termination Costs			Other Charges			Total
Balance at April 28, 2012	$	32		$	97		$	26		$	155
Store closing costs	31			52			7			90
Store closing capital lease obligations	—			9			—			9
Payments/utilizations	(22		)	(20		)	(19		)	(61		)
Balance at February 2, 2013	41			138			14			193
Store closing costs	4			(4		)	5			5
Payments/utilizations	(19		)	(7		)	(3		)	(29		)
Balance at May 4, 2013	$	26		$	127		$	16		$	169

Real Estate Transactions

During the first quarter of 2012, we recorded gains on the sales of assets of $386 million in connection with real estate transactions which included a gain of $223 million recognized on the sale of 11 (six owned and five leased) Sears Full-line store locations to General Growth Properties for $270 million in cash proceeds, and a gain of $163 million recognized on the surrender and early termination of the leases on three properties operated by Sears Canada, under an agreement with The Cadillac Fairview Corporation Limited for which Sears Canada received $170 million Canadian in cash proceeds. In connection with these transactions, we surrendered substantially all of our rights and obligations under our preexisting lease agreements and agreed to surrender each of the premises in periods ranging from six to 23 months from the date of closing.