Concentration of Credit Risk

12 Months Ended

Dec. 29, 2012

Concentration Risk Disclosure [Text Block]

(13)     Concentration of Credit Risk

We provide financial assistance in the form of loans to some of our independent retailers for inventories, store fixtures and equipment and store improvements.  Loans are generally secured by liens on real estate, inventory and/or equipment, personal guarantees and other types of collateral, and are generally repayable over a period of five to seven years.  We establish allowances for doubtful accounts based upon periodic assessments of the credit risk of specific customers, collateral value, historical trends and other information.  We believe that adequate provisions have been recorded for any doubtful accounts.  In addition, we may guarantee debt and lease obligations of retailers.  In the event these retailers are unable to meet their debt service payments or otherwise experience an event of default, we would be unconditionally liable for the outstanding balance of their debt and lease obligations, which would be due in accordance with the underlying agreements.

As of December 29, 2012, we have guaranteed outstanding lease obligations of a number of Food Distribution customers in the amount of $1.4 million.  In the normal course of business, we also sublease and assign to third parties various leases.  As of December 29, 2012, we estimate the present value of our maximum potential obligation, with respect to the subleases to be approximately $15.1 million and assigned leases to be approximately $8.3 million.

                For guarantees issued after December 31, 2002, we are required to recognize an initial liability for the fair value of the obligation assumed under the guarantee.  The maximum undiscounted payments we would be required to make in the event of default under the guarantees is $1.4 million, which is referenced above.  These guarantees are secured by certain business assets and personal guarantees of the respective customers.  We believe these customers will be able to perform under the lease agreements and that no payments will be required and no loss will be incurred under the guarantees.  A liability representing the fair value of the obligations assumed under the guarantees is included in the accompanying consolidated financial statements.  The amount of this liability is no longer significant due to elimination of the $0.7 million liability associated with the guarantee of the lease obligations of No Frills.