NOTE B – ASSET IMPAIRMENTS, EXIT COSTS AND OTHER CHARGES

In recent years, the company has taken actions to adapt to changing and increasingly competitive conditions experienced in the markets in which we serve. These actions include closing stores and distribution centers ("DCs"), consolidating functional activities, disposing of businesses and assets, and taking actions to improve process efficiencies. Significant charges and impairments have been recognized associated with these activities. The charges and impairments recognized in 2009 related to a strategic review and were managed at the corporate level ("Charges") and not considered in determining Division operating profit. The charges and impairments recognized in 2011 and 2010 associated with facility closures, consolidating functions and process improvements were either included in the determination of Division operating profit or as corporate costs, depending on the underlying activity. Store-level impairments and store closure costs, unrelated to the actions discussed above, are included in determination of Division operating profit and are not included in the tables below.

The amount of charges and impairments discussed above, including Charges in 2009, recognized throughout the company by year and the line item presentation in our accompanying Consolidated Statements of Operations is as follows.


(Dollars in millions)	2011		2010		2009
Cost of goods sold and occupancy costs	$	2	$	—	$	13
Store and warehouse operating and selling expenses		25		14		188
Other asset impairments		—		51		26
General and administrative expenses		31		22		26

Total	$	58	$	87	$	253

The 2011 charges and impairments primarily relate to the consolidation and elimination of functions in Europe, the closure of stores in Canada and company-wide process improvement initiatives. The charges and impairments recognized in 2010 include $51 million for the abandonment of a certain software application, $23 million for losses on the disposal of operating entities in Israel and Japan and other costs, as well as $13 million of compensation-related costs following the departure of our former CEO. The $253 million of Charges recognized in 2009 followed a strategic review that led to closure of DCs in North America and Europe, closures of stores in North America and Japan, losses on sale-leaseback transactions that were initiated to enhance our liquidity position, as well as headcount reductions and other restructuring activities. As noted above, costs associated with that strategic review were captured and reviewed at the corporate level and were not included in Division results, consistent with the internal reporting used to manage the business and allocate resources. In addition to severance costs which usually require cash payment within 60 days of the initial accounting expense recognition, a significant amount of the Charges in 2009 related to closed store accruals, and to a lesser extent the 2011 store closures, will continue to require cash payments over the related lease contract period or until the lease is terminated. Charges and credits associated with adjusting these accrued lease liabilities can impact future period results. Also, the ongoing accretion of the discounted accrued liability is reflected in operating expenses at the corporate level, but is not included in the charges and impairments discussed above. The accretion charges for 2011 and 2010 totaled approximately $12 million and $14 million, respectively.

The following table indicates the amount of charges and impairments included in the determination of Division operating profit and at the corporate level:


(Dollars in million)	2011		2010		2009
North America Retail Division	$	12	$	—	$	—
North America Business Solutions Division		—		—		—
International Division		31		23		—
Corporate level		15		64		253

Total	$	58	$	87	$	253

Reconciliations of beginning and ending liability balances associated with exit and restructuring-related costs that are addressed above are as follows:


(Dollars in millions)	Beginning Balance		Charges Incurred		Cash Payments			Non-cash Settlements and Accretion			Currency and Other Adjustments			Ending Balance
2011
Termination benefits	$	4	$	25	$	(17	)	$	—		$	—		$	12
Accelerated depreciation		—		2		—			(2	)		—			—
Lease, contract obligations and, other costs		113		26		(59	)		12			3			95

Total	$	117	$	53	$	(76	)	$	10		$	3		$	107

2010
Termination benefits	$	13	$	6	$	(12	)	$	—		$	(3	)	$	4
Asset impairments and accelerated depreciation		—		1		—			(1	)		—			—
Lease and contract obligations		162		5		(64	)		14			(4	)		113

Total	$	175	$	12	$	(76	)	$	13		$	(7	)	$	117

Lease accruals on closed facilities reflect the company's best estimate of its obligations under these long-term arrangements, net of sublease assumptions, discounted at the company's estimated unsecured borrowing rate at the time of each location closure. This accrued liability may be adjusted in future periods as actual sublease activity is better or worse than estimated. Any such adjustments, as well as accretion of this liability will be reflected as a component of store and warehouse operating and selling expenses or general and administrative expenses, depending on the nature of the underlying assets.