EFTA01382326.pdf

Amendment No. 3 to Form S-I Table of Contents Interest Rate Risk and Long-Term Debt We are exposed to market risk from fluctuations in interest rates. We manage our exposure to interest rate fluctuations through the use of interest rate swaps (-Cash Flow Hedges"). Our risk management objective and strategy is to utilize these interest rate swaps to protect the company against adverse fluctuations in interest rates by reducing its exposure to variability in cash flows relating to interest payments on a portion of its outstanding debt. We believe that we are meeting our objectives of hedging our risks in changes in cash flows that are attributable to changes in the LIBOR rate, which is the designated benchmark interest rate being hedged (the 'hedged risk"), on an amount of the company's debt principal equal to the then-outstanding swap notional amount. Additionally, we had the Deal-Contingent Swap that was entered into on April 16, 2014 in order to reduce our exposure to anticipated variable rate debt issuances in connection with the Safeway acquisition. Upon consummation of the Safeway acquisition, the swap became effective and was designated as a cash flow hedge. In accordance with the swap agreement, we receive a floating rate of interest and pay a fixed rate of interest over the life of the contract. Interest rate volatility could also materially affect the interest rate we pay on future borrowings under the Senior Secured Credit Facilities. The interest rate we pay on future borrowings under the Senior Secured Credit Facilities are dependent on LIBOR. We believe a 100 basis point increase or decrease on our variable interest rates would not be significant. See Note 7—Derivative Financial Instruments in our consolidated financial statements, included elsewhere in this prospectus, for additional information. The tables below provide information about our interest rate derivatives classified as Cash Flow Hedges, deal-contingent swaps and underlying debt portfolio as of February 28, 2015 (dollars in millions). Pay FIxed/Recelve Variable Fiscal Fiscal Fiscal Fiscal Fiscal 2016 2018 2017 2018 2019 Thereafter Cash Flow Hedges and Deal-Contingent Swap Average notional amount outstanding $5.125 $4.628 83.807 $2.925 51.921 $ 1,367 Average pay rate 6.79% 6.86% 6.82% 6.77% 7.19% 7.19% Average receive rate 5.34% 5.37% 5.92% 6.39% 6.67% 6.97% Fiscal Fiscal Fiscal Fiscal Fiscal Fair 2015 2016 2017 2018 2019 Thereafter Total Value Long-Term Debt Principal payments $503.4 $217.1 $324.3 $219.1 $2,286.5 $ 8508.1 $12,158.5 $12.095.2 Weighted average interest rate(1) 3.15% 4.56% 5.77% 5.23% 5.24% 5.68% 5.43% (1) Excludes effect of interest rate swaps Commodity Price Risk We have entered into fixed price contracts to purchase electricity and natural gas for a portion of our energy needs. Contracts entered into as of February 28, 2015 expire from 2015 through 2034 with a combined contract value of $99.9 million. We expect to take delivery of these commitments in the normal course of business, and, as a result, these commitments qualify as normal purchases. We do not believe that these energy and commodity swaps would cause a material change to the financial position of the company. 102 hill). UM V.. sec.go% Archi% es edgar data' 1646972 000119312515335826'd900395ds lithinif 10 14'2015 9:03:02 AM1 CONFIDENTIAL - PURSUANT TO FED. R. GRIM. P. 6(e) DB-SDNY-0081641 CONFIDENTIAL SDNY_GM_00227825 EFTA01382326