7. COMMITMENTS AND
Various lawsuits and claims,
arising in the ordinary course of business, are pending or have
been asserted against the Company. While the ultimate effect of
such actions cannot be predicted with certainty, management
believes that their outcome will not result in a material adverse
effect on the consolidated financial position, operating results or
liquidity of the Company.
We contribute to four
multi-employer pension plans based on obligations arising from our
collective bargaining agreements covering supply chain and certain
store union employees. Three of these plans are underfunded as of
September 29, 2012. These plans provide retirement benefits to
participants based on their service to contributing employers. The
benefits are paid from assets held in trust for that purpose.
Trustees are appointed by employers and unions. The trustees are
responsible for determining the level of benefits to be provided to
participants as well as for such matters as the investment of the
assets and the administration of the plans.
Because we are one of a
number of employers contributing to these plans, it is difficult to
ascertain what our share of the underfunding would be, although we
anticipate that our contributions to these plans may increase. If
we choose to exit a plan, any adjustment for a withdrawal liability
will be recorded when it is probable that a liability exists and
can be reasonably determined.
In connection with the exit
or sale of our independent distribution business, we have assigned
leases and subleases for retail stores which expire at various
dates through 2021. A remaining potential obligation exists in the
event of a default under the assigned leases and subleases by the
assignee. The potential obligations include rent, real estate
taxes, common area costs and other sundry expenses. The future
minimum lease payments are approximately $8.3 million. We believe
the likelihood of a liability related to these assigned leases and
subleases is remote.