NOTE 3—RESERVES FOR CLOSED PROPERTIES AND PROPERTY, PLANT AND EQUIPMENT-RELATED IMPAIRMENT CHARGES

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:


	2014			2013			2012
Beginning balance	$	61		$	72		$	96
Additions		4			16			9
Payments		(16	)		(22	)		(26	)
Adjustments		(2	)		(5	)		(7	)

Ending balance	$	47		$	61		$	72

Property, Plant and Equipment and Lease Reserve Impairment Charges

Property, plant and equipment and lease reserve impairment charges are recorded as a component of Selling and administrative expenses in the Consolidated Statements of Operations. 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.

In fiscal 2014, property, plant and equipment-related assets with a carrying amount of $45 were written down to their fair value of $21, resulting in impairment charges of $24. Fiscal 2014 impairment charges primarily related to software projects primarily within the Retail Food segment, distribution centers within Independent Business and previously impaired Save-A-Lot stores. In fiscal 2013, property, plant and equipment-related assets with a carrying amount of $291 were written down to their fair value of $40, resulting in impairment charges of $251. Fiscal 2013 impairment charges primarily related to certain capital projects in process, mainly related to software under development, and certain other software support tools that the executive management team determined the Company would abandon, all within the Retail Food segment and Corporate, and the announced closing of approximately 22 non-strategic Save-A-Lot stores. In fiscal 2012, property, plant and equipment-related assets with a carrying amount of $10 were written down to their fair value of $7, resulting in impairment charges of $3. Property, plant and equipment and favorable operating lease intangible related impairment charges were measured at fair value on a nonrecurring basis using Level 3 inputs and are a component of Selling and administrative expenses in the Consolidated Statements of Operations.

Due to the announced the closure of approximately 22 non-strategic Save-A-Lot stores, impairment charges of $10 were recorded in fiscal 2013 related to these closed stores’ operating leases in the Save-A-Lot segment.