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Financial Condition and Results of Operations of AB Acquisition" and 'Supplemental Management's Discussion and Analysis of Results of Operations of Safeway" included elsewhere in this prospectus and our consolidated financial statements and the related notes. OUR COMPANY We are one of the largest food

s of approximately $440 million by the end of fiscal 2015. For fiscal 2014 on a pro forma basis, we would have generated net sales of $57.5 billion, Adjusted EBITDA of $2.4 billion and free cash flow (which we define as Adjusted EBITDA less capital 1 hill). %kW wsce.go% A R: hi% es 'Agar data' 1646972 00011931

r cash flows as reported under GAAP. Some of these limitations are: • Non-GAAP Measures do not reflect the anticipated synergies associated with the Safeway acquisition; • Non-GAAP Measures do not reflect certain one-time or non-recurring cash costs to achieve the anticipated synergies associated with t

mance. See Prospectus Summary—Summary Consolidated Historical and Pro Forma Financial and Other Data" for further discussion and a reconciliation of Adjusted EBITDA and Adjusted Net Income. EBITDA, Adjusted EBITDA and Adjusted Net Income (collectively, the "Non-GAAP Measures") are performance measures that prov

on to realizing increased sales, profitability and free cash flow through the implementation of our operating playbook, we expect synergies from the Safeway acquisition to enhance our profitability and free cash flow over the next few years. OUR INTEGRATION HISTORY Over the past nine years, we have com

nts expenditures) of $1.5 billion. For the 12 months ended June 20, 2015, on a pro forma basis, we would have generated net sales of $57.9 billion, Adjusted EBITDA of $2.5 billion and free cash flow of $1.7 billion. For the first quarter of fiscal 2015. we generated net sales of $18.1 billion, Adjusted EBITDA o

ed Commencing on January 31. 2015. ow consolidated financial statements also include the financial position, results of operations and cash flows of Safeway. (2) The pro forma information for fiscal 2014. the first quarter of fiscal 2014 and the 12 months ended June 20. 2015 includes the pre-combination

ay of fiscal 2014. See "Unaudited Pro Forma Condensed Consolidated Financial Information' for a presentation of such pro forma financial data. (5) Adjusted EBITDA is a non-GAAP measure defined as earnings (net income (loss)) before interest, income taxes, depreciation and amortization, further adjusted to elim

of sales, for the first quarter of fiscal 2014. The increase in Adjusted EBITDA for the first quarter of fiscal 2015 reflects contributions from the Safeway acquisition as well as our improved operating performance. The following is a reconciliation of Net loss to Adjusted EBITDA (in millions) for the qu

d amortization, as further adjusted to eliminate the effects of items management does not consider in assessing ongoing performance. We believe that Adjusted EBITDA provides a meaningful representation of operating performance because it excludes the impact of items that could be considered 'non-core" in nature.

1) 13.4 (4.2) Adjusted EBITDA $ 1,098.7 $ 585.9 $ 65.0 (1) Includes results from four weeks for the stores purchased in the acquisition of Safeway on January 30, 2015. (2) Includes results from 48 weeks for the stores purchased in the acquisition of NAI on March 21, 2013 and eight weeks for th

Amendment No. 3 to Form S-1 jabk of Contents Following is a reconciliation of GAAP Net (loss) income to Adjusted EBITDA (in millions) for each of fiscal 2014, fiscal 2013 and fiscal 2012: Fiscal 201441) fiscal 2013(2) Fiscal 2012 Net (loss) income $ (1.225.2) $

local presence and national scale. As of June 20, 2015, we operated 2,205 stores across 33 states under 18 well-known banners, including Albertsons, Safeway, Vons, Jewel-Osco, Shaw's, Acme, Tom Thumb, Randslls, United Supermarkets, Pavilions, Star Market and Carrs. We operate in 121 MSAs and are ranked

of approximately $440 million by the end of fiscal 2015. For fiscal 2014 on a pro forma basis, we would have generated net sales of $57.5 billion, Adjusted EBITDA of $2.4 billion and free cash flow (which we define as Adjusted EBITDA less capital expenditures) of $1.5 billion. For the 12 months ended June 20,

e holders of AB Acquisition's membership interests. The company determined that both distribution hurdles were achieved upon the consummation of the Safeway acquisition. Accordingly, the Special Bonus was paid to Mr. Miller upon the closing date of the Safeway acquisition. In recognition of their effort

Bonus component, the remaining 50% of each executive officer's target bonus opportunity, is based on the company's level of achievement of an annual Adjusted EBITDA target approved by our board of directors. Amounts under the Annual Corporate Bonus may be earned above or below target level. The threshold level a

redit agreement (the 'Credit Agreement") with a syndicate of banks that was scheduled to terminate on June 1, 2015. The Credit Agreement provided to Safeway (i) a four-year revolving domestic credit facility of up to $1,250.0 million for U.S. dollar advances and (ii) a $400.0 million subfacility of the d

ent also contained two financial maintenance covenants: (i) an interest coverage ratio that required Safeway not to permit the ratio of consolidated Adjusted EBITDA, F-111 (Continued) hill). wua.scc.go% A R: es edgar data' 1646972 000119312515335826A900395dsla.htm110 14'2015 9:03:02 AM1 CONFIDENTIAL - PURSUA