34 Commitments and contingencies continued
Ahold
Annual Report 2011
Group at a glance^^^^^^^^H Performance (Sovernance
Notes to the consolidated financial statements continued
Investors
Bradlees
In 1992, Stop Shop spun off Bradlees Stores, Inc. (Bradlees) as a public company (the Bradlees Spin-off). In connection with the
Bradlees Spin-off, Stop Shop assigned to Bradlees certain commercial real property leases. Pursuant to a 1995 reorganization of
Bradlees and a subsequent wind-down and liquidation of Bradlees following a bankruptcy protection filing in 2000 (collectively, the
Bradlees Bankruptcies), a number of such real property leases were assumed and assigned to third parties. Pursuant to applicable law,
Stop Shop may be contingently liable to landlords under certain of the leases assigned in connection with the Bradlees Spin-off and
subsequently assumed and assigned to third parties in connection with the Bradlees Bankruptcies.
Disco
Ahold is required to indemnify the buyers of Disco for (i) certain claims made in relation to the mandatory conversions into Argentine pesos
of certain of Disco's U.S. dollar debts and (ii) certain claims made by creditors of certain Uruguayan and other banks. For additional
information on these legal proceedings, see the Legal proceedings section below. Ahold's indemnification obligations relating to these
legal proceedings are not capped at a certain amount nor restricted to a certain time period.
BI-LO Bruno's
In connection with the sale of BI-LO and Bruno's, Ahold may be contingently liable to landlords under guarantees of some 200 BI-LO or
Bruno's operating or finance leases that existed at the time of the sale in the event of a future default by the tenant under such leases. As a
result of the bankruptcy filings by BI-LO and Bruno's during 2009, a provision was recognized in 2009. BI-LO exited bankruptcy in May
2010 and the Company has re-evaluated its estimate of liability. For more information, refer to the Guarantees section above in this Note.
U.S. Foodservice
In connection with the sale of U.S. Foodservice, which closed on July 3, 2007 (the Completion), Ahold indemnified U.S. Foodservice
against damages incurred after the Completion relating to matters including (i) the putative class actions filed in 2006 and 2007 and
referred to below under "Waterbury litigation" and any actions that might be brought by any current or former U.S. Foodservice customers
that concern the pricing practices at issue in such litigation for sales made by U.S. Foodservice prior to the Completion and (ii) the
investigation by the Civil Division of the U.S. Department of Justice into U.S. Foodservice's pricing practices for sales made to the U.S.
Government prior to the Completion. See also below.
Tops Markets, LLC
In connection with the sale of Tops in 2007, Ahold has certain post-closing indemnification obligations under the sale agreement (the 2007
Tops Sale Agreement) that Ahold believes are customary for transactions of this nature. Ahold retained certain liabilities in the sale,
including contingent liability for 49 leases that carry Ahold guarantees. Additionally, Ahold retained liabilities related to stores previously
sold, including guarantees on five Tops stores in eastern New York state, as well as liabilities related to the Tops convenience stores and
the stores in northeast Ohio as outlined below.
Tops convenience stores
Pursuant to applicable law, Tops may be contingently liable to landlords under 193 leases assigned in connection with the sale of the
Tops' Wilson Farms and Sugarcreek convenience stores in the event of a future default by the tenant under such leases. Ahold may also
be contingently liable to landlords under the guarantees of 71 such leases in the event of a future default by the tenant under these leases.
Tops northeast Ohio stores
Tops closed all of its locations in northeast Ohio prior to year-end 2006. As of January 1, 2012, 35 of the total 55 closed locations in
northeast Ohio have been sold, subleased, or partially subleased. An additional 15 leases have been terminated or have terms due to
expire within one year. Five stores continue to be marketed. In connection with the store sales, Tops and Ahold have certain post-closing
indemnification obligations under the sale agreements, which Ahold believes are customary for transactions of this nature. Pursuant to
applicable law, Ahold may be contingently liable to landlords under guarantees of 14 of such leases in the event of a future default by the
tenant under such leases. In the event Ahold is able to assign the leases for the remaining northeast Ohio stores, then pursuant to
applicable law, Ahold also may be contingently liable to landlords under guarantees of certain of such remaining leases in the event of a
future default by the tenant under such leases. Additionally, under U.S. pension law, the buyers of certain Tops stores assumed the
pension withdrawal liability associated with the underfunding of certain pension funds and Tops remains secondarily liable in the event the
buyer defaults within five years as described in the relevant pension plan.
In January 2011Tops Holdings, LLC, an Ahold subsidiary, was notified that a mass withdrawal had occurred under the International
Brotherhood of Teamsters Local 400 Food Terminal Employees' Pension Plan, which covered workers of a warehouse in northeast Ohio
previously owned by Tops Markets LLC and divested to Erie Logistics, LLC in 2002. This warehouse was closed in 2006 in connection
with the closing of the Tops stores in northeast Ohio. Tops Markets, LLC may have contractual liability to Erie Logistics, LLC for this mass
withdrawal liability and, pursuant to the 2007 Tops Sale Agreement, Tops Holdings, LLC may have also indemnified Tops Markets, LLC
for this liability. Based on Ahold's assessment of this potential loss contingency, at year end 2010 Ahold recognized a provision of $27
million (€20 million) relating to this potential liability. The provision remains in place.
