NOTE 3 — RESERVES FOR CLOSED PROPERTIES

The Company maintains reserves for costs associated with closures of retail stores, distribution centers and other properties that are no longer being utilized in current operations. The Company provides for closed property operating lease liabilities using a discount rate to calculate the present value of the remaining noncancellable lease payments after the closing date, reduced by estimated subtenant rentals that could be reasonably obtained for the property. Adjustments to closed property reserves primarily relate to changes in subtenant income or actual exit costs differing from original estimates.

Changes in the Company’s reserves for closed properties consisted of the following:


	December 1, 2012
Reserves for closed properties at beginning of fiscal year	$	141
Additions		40
Payments		(32	)
Adjustments		(5	)

Reserves for closed properties at end of period	$	144

During the second quarter of fiscal 2013, the Company announced the closure of approximately 60 non-strategic stores. Reserves for operating lease related to these closed properties are recorded at the time of closing. During the third quarter of fiscal 2013, the majority of these previously announced store closings were completed. The Company recorded a charge of $28 during the third quarter of fiscal 2013. The Company expects that the majority of the remaining store closures will be completed by February 23, 2013, the end of the Company’s 2013 fiscal year. The calculation of the closed property charges requires significant judgments and estimates including estimated subtenant rentals, discount rates, and future cash flows based on the Company’s experience and knowledge of the market in which the closed property is located, and previous efforts to dispose of similar assets and existing market conditions.