NOTE 5 – EXIT ACTIVITIES

The Company maintains reserves for closed stores and other properties that are no longer utilized in current operations.

The following table identifies the closure reserves for stores and administrative office and distribution facilities at September 30, 2013, and December 31, 2012 (in thousands):



	Store Closure Liabilities		Administrative Office and Distribution Facilities Closure Liabilities
Balance at December 31, 2012	$	8,337	$	1,676
Additions and accretion		353		81
Payments		(1,945)		(357)
Revisions to estimates		(541)		-
Balance at September 30, 2013	$	6,204	$	1,400

The Company accrues for closed property operating lease liabilities using a credit-adjusted discount rate to calculate the present value of the remaining non-cancelable lease payments, contractual occupancy costs and lease termination fees after the closing date, net of estimated sublease income. The closed property lease liabilities are expected to be paid over the remaining lease terms, which currently extend through April 30, 2023. The Company estimates sublease income and future cash flows based on the Company’s experience and knowledge of the market in which the closed property is located, the Company’s previous efforts to dispose of similar assets and existing economic conditions. Adjustments to closed property reserves are made to reflect changes in estimated sublease income or actual contracted exit costs, which vary from original estimates, and are made for material changes in estimates in the period in which the changes become known.

Revisions to estimates in closure reserves for stores and administrative office and distribution facilities include changes in the estimates of sublease agreements, changes in assumptions of various store closure activities, changes in assumed leasing arrangements and actual exit costs since the inception of the exit activities. Revisions to estimates and additions or accretions to reserves for store and administrative office closure liabilities are included in “Selling, general and administrative expenses” on the accompanying Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2013 and 2012. Revisions to estimates and additions or accretions to reserves for distribution facility closure liabilities are included in “Cost of goods sold, including warehouse and distribution expenses” on the accompanying Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2013 and 2012.

The cumulative amount incurred in closure reserves for stores from the inception of the exit activity through September 30, 2013, was $24.3 million. The cumulative amount incurred in closure reserves for administrative office and distribution facilities from the inception of the exit activity through September 30, 2013, was $10.1 million. The balance of both these reserves is included in “Other current liabilities” and “Other liabilities” on the accompanying Condensed Consolidated Balance Sheets based upon the dates when the reserves are expected to be settled.