EFTA01382316.pdf

Amendment No. 3 to Form S-1 Tabk of Contents Selling and administrative expenses increased 510 basis points to 29.3% of net sales and other revenue in fiscal 2013 from 24.2% in fiscal 2012: Basis-point increase Fiscal 2013 vs. Fiscal 2012 (decrease) Depreciation and amortization 266 Employee-related costs 155 Acquisition and integration costs 50 Other 39 Total 510 Selling and administrative expense increased 510 basis points primarily due to increased depreciation and amortization expense and increased employee-related costs. Depreciation and amortization expense increased in fiscal 2013 due to the recognition of the acquired properties and intangible assets at fair value as part of applying the acquisition method of accounting for the NAI acquisition. Employee-related costs increased as a percentage of net sales and other revenue reflecting higher labor rates in stores acquired in the NAI acquisition compared to our Legacy Albertsons Stores, together with additional investments in store labor to improve customer service in these acquired stores as part of our turnaround initiatives. Interest Expense Interest expense was $633.2 million in fiscal 2014, $390.1 million in fiscal 2013 and $7.2 million in fiscal 2012. Interest expense in fiscal 2014 increased as a result of an increase in total debt from $3,694.2 million in fiscal 2013 to $12,569.0 million in fiscal 2014. The increased debt level was primarily attributable to financing the Safeway acquisition and the assumption of $2,210.6 million of Safeway debt including capital lease obligations, net of $864.6 million of assumed debt that was immediately paid following the Safeway acquisition. The increase in interest expense in fiscal 2013, compared to fiscal 2012, resulted primarily from the assumption of debt and related financing of the NAI acquisition. The following details our components of interest expense for the respective fiscal years (in millions): Fiscal 2014 Fiscal 2013 Fiscal 2012 ABL facility, senior secured notes, term loans, notes and debentures $ 454.1 $ 246.0 $ 2.8 Capital lease obligations 77.5 63.3 1.4 Loss on extinguishment of debt — 49.1 — Amortization and write off of deferred financing costs 65.3 25.1 1.2 Amortization and write off of debt discount 6.8 1.3 — Other, net 29.5 5.3 1.8 Total interest expense, net $ 633.2 $ 390.1 $ 7.2 At February 28, 2015, the company had total debt, including capital lease obligations, outstanding of $12,569.0 million with a weighted average interest rate of 7.30%. Other Expense, Net For fiscal 2014, Other expense, net was $96.0 million, primarily driven by the loss on our deal-contingent interest rate swap. In April 2014, we entered into a deal-contingent interest rate swap 86 hue. um V.. sec.go% A R:hi% es 'Agar data' 1646972 000119312515335826A900395dslahtm110 14'2015 9:03:02 Ab41 CONFIDENTIAL - PURSUANT TO FED. R. GRIM. P. 6(e) DB-SDNY-0081625 CONFIDENTIAL SDNY_GM_00227809 EFTA01382316