Note 35
Contingent liabilities
Sale of Ahold's operations
will not, in the aggregate, have a material adverse effect on Ahold's consolidated financial position, results of operations, or
cash flows. Such other legal proceedings, however, are subject to inherent uncertainties and the outcome of individual matters
is not predictable. It is possible that Ahold could be required to make expenditures, in excess of established provisions, in
amounts that cannot reasonably be estimated.
Related to the sale of the assets of Ahold's operations in Brazil (Bomprego/Hipercard), Argentina, Spain (Ahold
Supermercados), the United States (BI-LO/Bruno's and Wilson Farms and Sugarcreek convenience stores), Poland (Ahold
hypermarkets) and the Netherlands and Belgium (Deli XL), as further described in Note 12, Ahold has provided in the relevant
sales agreements certain 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 three years after the date of the relevant agreement. The claims under the representations and warranties
are, with certain exceptions, capped at EUR 38 for Bomprego/Hipercard, EUR 50 for Spain, USD 33 (EUR 28) for BI-LO/
Bruno's, USD 5 (EUR 4) for Wilson Farms and Sugarcreek convenience stores, PLN 120 (EUR 31) for the Polish hypermarkets
and EUR 40 for Deli XL. In addition, specific, limited representations and warranties were given with respect to the divestment
of Paiz Ahold. The claims under those representations and warranties were capped at the sale price, but the impact of any
claim under such representations and warranties is not expected to be material.
With respect to Disco, the claims under the representation and warranties are capped at USD 15 (EUR 13). In addition,
Ahold is required to indemnify the buyers of Disco for (i) certain claims made in relating to the mandatory conversions into the
Argentine pesos of certain U.S. dollar debts of Disco, (ii) the assessment of taxes made by the Argentinean tax authorities
related to certain bonds issued by Disco and (iii) 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 certain of the Company's smaller divestments in 2004 and 2005 as described
in Note 12. The aggregate impact of a claim under such representations and warranties is not expected to be material.
BI-LO/Bruno's
On January 31, 2005, Ahold completed the sale of BI-LO and Bruno's to an affiliate of the Lone Star Funds. Ahold received
USD 574 (EUR 440) in cash proceeds in 2005. Within 18 months of closing, Ahold will be entitled to receive the balance of
the purchase price in stages, depending upon BI-LO and Bruno's achieving certain targets relating to dispositions of inventory,
real estate and other assets. Estimated proceeds under this arrangement are approximately USD 100 (EUR 84). A letter of
credit for USD 100 (EUR 84) has been placed in escrow to secure the purchaser's obligations to pay the balance of the
purchase price. Ahold received USD 69 (EUR 56) of the variable balance of the purchase price until March 2006. In
connection with the sale, BI-LO and Bruno's retained all of their debt obligations and other liabilities including finance lease
liabilities, although Ahold has certain post-closing indemnification obligations under the sale agreement which Ahold believes
are customary for transactions of this nature. In addition, Ahold may be contingently liable to landlords under guarantees of
224 BI-LO or Bruno's operating or finance leases, which existed at the time of the sale in the event of a future default by the
tenant under such leases.
Tops Convenience Stores
On June 20, 2005, Ahold's subsidiary Tops completed the sale of its chain of 198 Wilson Farms and Sugarcreek convenience
stores to WFI Acquisition, Inc., a corporation formed by Nanco Enterprises, Inc. and Bruckmann, Rosser, Sherrill Co., Inc.
In connection with the sale, Tops and Ahold have certain post-closing indemnification obligations under the sale agreement,
which Ahold believes are customary for transactions of this nature. In addition, pursuant to applicable law Tops may be
contingently liable to landlords under 193 leases assigned in connection with this transaction in the event of a future default
by the tenant under such leases and Ahold may be contingently liable to landlords under guarantees of 69 of such leases in
the event of a future default by the tenant under such leases.
AHOLD ANNUAL REPORT 2005 173
