3. Facility Closure Reserves

We conduct regular reviews of our real estate portfolio to identify underperforming facilities, and close those facilities that are no longer strategically or economically beneficial. We record a liability for the cost associated with a facility closure at its estimated fair value in the period in which the liability is incurred, primarily the location’s cease-use date. Upon closure, unrecoverable costs are included in facility closure reserves and include provisions for the present value of future lease obligations, less contractual or estimated sublease income. These facility closure charges are included in other operating expenses (income), net in the Consolidated Statements of Income. Accretion expense is recognized over the life of the required payments and is included in operating, selling, and general and administrative expenses in the Consolidated Statements of Income.

During the first three months of 2012, we recorded facility closure charges of $25.3 million in our Retail segment primarily related to the closure of 15 underperforming domestic stores prior to the end of their lease terms. There were no such charges recorded in the first quarter of 2013.

Facility closure reserve account activity during the first three months of 2013 was as follows:


	Total
	(thousands)
Balance at December 29, 2012	$	74,643
Cash payments		(7,540	)
Accretion		562

Balance at March 30, 2013	$	67,665

Reserve balances were classified in the Consolidated Balance Sheets as follows:


	March 30, 2013
	(thousands)
Accrued expenses and other current liabilities - Other	$	21,439
Other long-term liabilities		46,226

Total	$	67,665

The facilities closure reserve consisted of the following:


	March 30, 2013
	(thousands)
Estimated future lease obligations	$	116,207
Less: anticipated sublease income		(48,542	)

Total	$	67,665