30
Ahold Annual Report 2003
Financial Statements
167
U.S. District Court for the Southern District of New York. In that action, Stop Shop seeks a declaration that it is not
obligated to pay the Rental Increases demanded by Vornado. On May 23, 2003, Vornado moved for summary
judgment. On June 11, 2003, Stop Shop opposed Vornado's motion for summary judgment and cross-moved for
summary judgment in its favor. By letter, dated June 25, 2003, and subsequent court order, the action has been
held in abeyance until Vornado's motion to interpret (discussed below) is decided.
In response to the action instituted by Stop Shop, on April 10, 2003, Vornado made a motion to interpret
in the Bradlees bankruptcy seeking an interpretation of certain court orders that Vornado claims would resolve
the dispute between Stop Shop and Vornado concerning the Master Agreement. Vornado alleges in the motion
to interpret that the Rental Increases are worth "tens of millions of dollars," comprised of USD 5 annually through
January 31, 2012, and, if certain renewal options are exercised, USD 6 annually thereafter through the expiration
of the last lease covered by the Master Agreement, which Vornado alleges could extend until 2031, depending upon
whether renewal options are exercised. Stop Shop has opposed the motion to interpret, which was to be argued
July 24, 2003 before the bankruptcy court. Instead of hearing argument, however, the bankruptcy court suggested
the parties go to mediation. The parties agreed and several mediation sessions have occurred, but the mediation
process is not complete.
Horn and Braziunas arbitration
Arbitration proceedings were initiated on February 21, 2003, by Sverre Horn and Gediminias Braziunas
(together, "Horn c.s.") against ICA Norge AS (formerly Hakon Gruppen AS) and ICA Baltic AB (together,
"ICA Norge"). Horn c.s. alleges breach of a contract relating to the performance of certain services by Horn c.s.
for ICA Norge in connection with real estate development projects in Lithuania in consideration for a fee calculated
as a percentage of total project costs. The total amount of the claim is NOK 445 (approximately EUR 55).
Horn c.s. alleges that ICA Norge breached the contract as a result of termination of the contract by ICA Norge in
October 2002. ICA Norge responded to Horn c.s. on October 17, 2003, requesting the claim be dismissed and
bringing a counterclaim against Horn c.s. for not fulfilling their obligations under the contract. The hearing of the
case is expected to commence in September or October 2004. The Company has determined that a loss is not
probable, although it is reasonably possible that the Company could incur losses or expenditures arising from this
matter in amounts that cannot be reasonably estimated.
Ahold and its subsidiaries are parties to a number of other legal proceedings and investigations that arose as
a result of its business operations. The Company believes that the ultimate resolution of these proceedings will not,
in the aggregate, have a material adverse effect on the Company's consolidated financial position, results of
operations, or cash flows.
Contingent liabilities
Sale of Ahold's operations
Related to the sale of the assets of Ahold's operations in Malaysia, Indonesia, Thailand, Santa Isabel-Chile,
Bomprepo, Hipercard, Santa Isabel-Peru and Disco, the Company has provided in the relevant sales agreement
customary representations and warranties including but not limited to, completeness of books and records, title to
assets, schedule of material contracts and arrangements, litigation, permits, labor matters and employee benefits and
taxes. These representations and warranties will generally terminate, depending on the specific representation and
warranties, one to two years after the date of the relevant agreement. The claims under the representation and
warranties are capped at MYR 9 (EUR 2.2) for Malaysia, IDR 534,000 (EUR 6) for Indonesia and USD 15 for
Thailand. The claims under the representations and warranties are capped at USD 30 for Chile and USD 38
for Bomprepo and Hipercard and for Peru, capped at USD 10 for general warranties and lower amounts for certain
other warranties. With respect to Disco, the claims under the representation and warranties are capped at EUR 15.
In addition, Ahold is required to indemnify the buyers of Disco for (1) certain claims made in relating to the mandatory
conversions into Pesos of certain US dollar debts of Disco, (2) the assessment of taxes made by the Argentinean tax
authorities related to certain bonds issued by Disco and (3) certain claims made by certain creditors of Banco
Montevideo, TCB and BM Fondos. For additional information on these legal proceedings, see Legal Proceedings"
above. Ahold's indemnification obligations relating to these legal proceedings are not capped at a certain amount
nor restricted to a certain time period.
Similar representations and warranties exist for smaller divestments in 2003 as described in Note 3.
The aggregate impact of such representations and warranties is not expected to be material.
U.S. Foodservice
Various matters raised by the USF investigation were further reviewed to determine their impact, if any,
on Ahold's consolidated financial statements. One such matter relates to certain USF vendor invoicing practices.
These practices resulted in overbillings by various USF local branches of various vendors with respect to vendor
allowances of approximately USD 23. Ahold has recorded an accrual to cover any refunds that Ahold or USF
expects to be required to pay to vendors for these overbillings, and in its 2002 annual report Ahold restated its
