UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 19,~~September 11, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number: 001-39350

Albertsons Companies, Inc.

(Exact name of registrant as specified in its charter)


Delaware						47-4376911
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

250 Parkcenter Blvd.

Boise, Idaho 83706

(Address of principal executive offices and zip code)

(208) 395-6200

(Registrant's telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, $0.01 par value	ACI	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of ~~July 28,~~October 18, 2021, the registrant had ~~466,535,671~~467,124,900 shares of Class A common stock, par value $0.01 per share, outstanding.

Albertsons Companies, Inc. and Subsidiaries



PART I - FINANCIAL INFORMATION		Page
	Item 1 - Condensed Consolidated Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations and Comprehensive Income	4
	Condensed Consolidated Statements of Cash Flows	5
	Condensed Consolidated Statements of Stockholders' Equity	6
	Notes to Condensed Consolidated Financial Statements	78










	Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations	1820
	Item 3 - Quantitative and Qualitative Disclosures About Market Risk	2939
	Item 4 - Controls and Procedures	3039

PART II - OTHER INFORMATION
	Item 1 - Legal Proceedings	3140
	Item 1A - Risk Factors	3140
	Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds	3140
	Item 3 - Defaults Upon Senior Securities	3140
	Item 4 - Mine Safety Disclosures	3140
	Item 5 - Other Information	3140
	Item 6 - Exhibits	3141

SIGNATURES		3342

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1 - Condensed Consolidated Financial Statements (unaudited)

Albertsons Companies, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in millions, except share data)

(unaudited)


			June 19, 2021		February 27, 2021				September 11, 2021		February 27, 2021
ASSETS	ASSETS						ASSETS
Current assets	Current assets						Current assets
		Cash and cash equivalents	$	2,173.8	$	1,717.0		Cash and cash equivalents	$	2,849.8	$	1,717.0
		Receivables, net	618.7		550.9			Receivables, net	544.7		550.9
		Inventories, net	4,271.9		4,301.3			Inventories, net	4,179.1		4,301.3
		Other current assets	313.1		418.8			Other current assets	414.7		418.8
		Total current assets	7,377.5		6,988.0			Total current assets	7,988.3		6,988.0

Property and equipment, net	Property and equipment, net		9,295.1		9,412.7		Property and equipment, net		9,201.1		9,412.7
Operating lease right-of-use assets	Operating lease right-of-use assets		5,857.3		6,015.6		Operating lease right-of-use assets		5,861.3		6,015.6
Intangible assets, net	Intangible assets, net		2,149.1		2,108.8		Intangible assets, net		2,181.3		2,108.8
Goodwill	Goodwill		1,200.5		1,183.3		Goodwill		1,200.2		1,183.3
Other assets	Other assets		902.4		889.6		Other assets		912.1		889.6
TOTAL ASSETS	TOTAL ASSETS		$	26,781.9	$	26,598.0	TOTAL ASSETS		$	27,344.3	$	26,598.0

LIABILITIES	LIABILITIES						LIABILITIES
Current liabilities	Current liabilities						Current liabilities
		Accounts payable	$	3,386.3	$	3,487.3		Accounts payable	$	3,554.2	$	3,487.3
		Accrued salaries and wages	1,365.4		1,474.7			Accrued salaries and wages	1,492.3		1,474.7
		Current maturities of long-term debt and finance lease obligations	214.3		212.4			Current maturities of long-term debt and finance lease obligations	211.5		212.4
		Current maturities of operating lease obligations	610.9		605.3			Current maturities of operating lease obligations	621.7		605.3
		Other current liabilities	1,127.3		1,052.5			Other current liabilities	1,190.0		1,052.5
		Total current liabilities	6,704.2		6,832.2			Total current liabilities	7,069.7		6,832.2

Long-term debt and finance lease obligations	Long-term debt and finance lease obligations		8,145.8		8,101.2		Long-term debt and finance lease obligations		8,129.1		8,101.2
Long-term operating lease obligations	Long-term operating lease obligations		5,464.5		5,548.0		Long-term operating lease obligations		5,464.1		5,548.0
Deferred income taxes	Deferred income taxes		534.6		533.7		Deferred income taxes		598.3		533.7
Other long-term liabilities	Other long-term liabilities		2,635.3		2,659.5		Other long-term liabilities		2,524.1		2,659.5

Commitments and contingencies	Commitments and contingencies		0		0		Commitments and contingencies		0		0
Series A convertible preferred stock, $0.01 par value; 1,750,000 shares authorized, 924,000 shares issued and outstanding as of June 19, 2021 and February 27, 2021			844.3		844.3
Series A-1 convertible preferred stock, $0.01 par value; 1,410,000 shares authorized, 826,000 shares issued and outstanding as of June 19, 2021 and February 27, 2021			754.8		754.8
Series A convertible preferred stock, $0.01 par value; 1,750,000 shares authorized, 924,000 shares issued and outstanding as of September 11, 2021 and February 27, 2021							Series A convertible preferred stock, $0.01 par value; 1,750,000 shares authorized, 924,000 shares issued and outstanding as of September 11, 2021 and February 27, 2021		844.3		844.3
Series A-1 convertible preferred stock, $0.01 par value; 1,410,000 shares authorized, 826,000 shares issued and outstanding as of September 11, 2021 and February 27, 2021							Series A-1 convertible preferred stock, $0.01 par value; 1,410,000 shares authorized, 826,000 shares issued and outstanding as of September 11, 2021 and February 27, 2021		754.8		754.8

STOCKHOLDERS' EQUITY	STOCKHOLDERS' EQUITY						STOCKHOLDERS' EQUITY
		Undesignated preferred stock, $0.01 par value; 96,840,000 shares authorized, 0 shares issued as of June 19, 2021 and February 27, 2021	0		0			Undesignated preferred stock, $0.01 par value; 96,840,000 shares authorized, no shares issued as of September 11, 2021 and February 27, 2021	—		—
		Class A common stock, $0.01 par value; 1,000,000,000 shares authorized, 586,520,608 and 585,574,666 shares issued as of June 19, 2021 and February 27, 2021, respectively	5.9		5.9			Class A common stock, $0.01 par value; 1,000,000,000 shares authorized, 586,668,103 and 585,574,666 shares issued as of September 11, 2021 and February 27, 2021, respectively	5.9		5.9
		Class A-1 convertible common stock, $0.01 par value; 150,000,000 shares authorized, 0 shares issued as of June 19, 2021 and February 27, 2021	0		0			Class A-1 convertible common stock, $0.01 par value; 150,000,000 shares authorized, no shares issued as of September 11, 2021 and February 27, 2021	—		—
		Additional paid-in capital	1,911.1		1,898.9			Additional paid-in capital	1,936.1		1,898.9
		Treasury stock, at cost, 120,009,647 shares held as of June 19, 2021 and February 27, 2021	(1,907.0)		(1,907.0)			Treasury stock, at cost, 120,009,647 shares held as of September 11, 2021 and February 27, 2021	(1,907.0)		(1,907.0)
		Accumulated other comprehensive income	63.6		63.5			Accumulated other comprehensive income	78.7		63.5
		Retained earnings	1,624.8		1,263.0			Retained earnings	1,846.2		1,263.0
		Total stockholders' equity	1,698.4		1,324.3			Total stockholders' equity	1,959.9		1,324.3
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	26,781.9	$	26,598.0	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	27,344.3	$	26,598.0

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Table of Contents

Albertsons Companies, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Income

(in millions, except per share data)

(unaudited)


		16 weeks ended				12 weeks ended				28 weeks ended
		June 19, 2021		June 20, 2020				September 11, 2021		September 12, 2020		September 11, 2021		September 12, 2020
Net sales and other revenue	Net sales and other revenue	$	21,269.4	$	22,751.6		Net sales and other revenue	$	16,505.7	$	15,757.6	$	37,775.1	$	38,509.2
Cost of sales	Cost of sales	15,078.4		15,980.1			Cost of sales	11,788.7		11,182.7		26,867.1		27,162.8
Gross profit	Gross profit	6,191.0		6,771.5			Gross profit	4,717.0		4,574.9		10,908.0		11,346.4

Selling and administrative expenses	Selling and administrative expenses	5,503.6		5,769.4			Selling and administrative expenses	4,231.3		4,031.2		9,734.9		9,800.6
Loss on property dispositions and impairment losses, net		0.3		30.3
(Gain) loss on property dispositions and impairment losses, net							(Gain) loss on property dispositions and impairment losses, net	(0.2)		(18.3)		0.1		12.0

Operating income	Operating income	687.1		971.8			Operating income	485.9		562.0		1,173.0		1,533.8

Interest expense, net	Interest expense, net	153.3		180.6			Interest expense, net	109.3		128.6		262.6		309.2

Other (income) expense, net		(43.5)		3.1
Loss on debt extinguishment							Loss on debt extinguishment	—		49.1		—		49.1
Other income, net							Other income, net	(18.9)		(11.4)		(62.4)		(8.3)
Income before income taxes	Income before income taxes	577.3		788.1			Income before income taxes	395.5		395.7		972.8		1,183.8

Income tax expense	Income tax expense	132.5		201.9			Income tax expense	100.3		111.2		232.8		313.1
Net income	Net income	$	444.8	$	586.2		Net income	$	295.2	$	284.5	$	740.0	$	870.7

Other comprehensive income, net of tax	Other comprehensive income, net of tax						Other comprehensive income, net of tax
Recognition of pension gain	Recognition of pension gain	0.1		0.8			Recognition of pension gain	15.1		10.1		15.2		10.9

Other	Other	0		0.9			Other	—		0.3		—		1.2
Other comprehensive income	Other comprehensive income	$	0.1	$	1.7		Other comprehensive income	$	15.1	$	10.4	$	15.2	$	12.1

Comprehensive income	Comprehensive income	$	444.9	$	587.9		Comprehensive income	$	310.3	$	294.9	$	755.2	$	882.8

Net income per Class A common share	Net income per Class A common share						Net income per Class A common share
Basic net income per Class A common share	Basic net income per Class A common share	$	0.80	$	1.03		Basic net income per Class A common share	$	0.55	$	0.52	$	1.27	$	1.57
Diluted net income per Class A common share	Diluted net income per Class A common share	0.78		1.00			Diluted net income per Class A common share	0.52		0.49		1.26		1.49
Weighted average Class A common shares outstanding	Weighted average Class A common shares outstanding						Weighted average Class A common shares outstanding
Basic	Basic	465.1		568.0			Basic	465.3		477.3		465.2		529.2
Diluted	Diluted	571.4		583.7			Diluted	573.0		582.9		470.6		583.3

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Table of Contents

Albertsons Companies, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in millions)

(unaudited)


		16 weeks ended					28 weeks ended
		June 19, 2021		June 20, 2020			September 11, 2021		September 12, 2020
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	444.8	$	586.2	Net income	$	740.0	$	870.7
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Loss on property dispositions and impairment losses, net	Loss on property dispositions and impairment losses, net	0.3		30.3		Loss on property dispositions and impairment losses, net	0.1		12.0
Depreciation and amortization	Depreciation and amortization	504.2		460.1		Depreciation and amortization	883.2		808.8
Operating lease right-of-use assets amortization	Operating lease right-of-use assets amortization	189.3		176.4		Operating lease right-of-use assets amortization	333.0		309.3

LIFO expense	LIFO expense	14.5		13.1		LIFO expense	29.1		23.2
Deferred income tax	Deferred income tax	(17.9)		(51.2)		Deferred income tax	43.0		2.8

Contributions to pension and post-retirement benefit plans, net of (income) expense	Contributions to pension and post-retirement benefit plans, net of (income) expense	(14.5)		(63.5)		Contributions to pension and post-retirement benefit plans, net of (income) expense	(47.5)		(68.9)
(Gain) loss on interest rate swaps and commodity hedges, net	(Gain) loss on interest rate swaps and commodity hedges, net	(6.3)		24.5		(Gain) loss on interest rate swaps and commodity hedges, net	(7.5)		25.9

Amortization and write-off of deferred financing costs						Amortization and write-off of deferred financing costs	11.1		11.2
Loss on debt extinguishment						Loss on debt extinguishment	—		49.1
Equity-based compensation expense	Equity-based compensation expense	22.2		19.0		Equity-based compensation expense	49.0		28.3
Other	Other	(22.9)		(1.8)		Other	(21.2)		(28.7)
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Receivables, net	Receivables, net	(74.7)		(4.7)		Receivables, net	(6.4)		(21.7)
Inventories, net	Inventories, net	14.8		67.8		Inventories, net	93.0		62.2
Accounts payable, accrued salaries and wages and other accrued liabilities	Accounts payable, accrued salaries and wages and other accrued liabilities	(31.3)		733.1		Accounts payable, accrued salaries and wages and other accrued liabilities	229.2		585.4
Operating lease liabilities	Operating lease liabilities	(109.5)		(98.7)		Operating lease liabilities	(249.3)		(228.4)
Self-insurance assets and liabilities	Self-insurance assets and liabilities	27.5		24.1		Self-insurance assets and liabilities	36.3		24.2
Other operating assets and liabilities	Other operating assets and liabilities	118.5		177.2		Other operating assets and liabilities	22.6		255.4
Net cash provided by operating activities	Net cash provided by operating activities	1,059.0		2,091.9		Net cash provided by operating activities	2,137.7		2,720.8

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Business acquisitions, net of cash acquired	Business acquisitions, net of cash acquired	(23.5)		0		Business acquisitions, net of cash acquired	(23.5)		—
Payments for property, equipment and intangibles, including payments for lease buyouts	Payments for property, equipment and intangibles, including payments for lease buyouts	(513.4)		(402.3)		Payments for property, equipment and intangibles, including payments for lease buyouts	(822.5)		(702.9)
Proceeds from sale of long-lived assets	Proceeds from sale of long-lived assets	15.2		6.7		Proceeds from sale of long-lived assets	24.6		20.6
Other investing activities	Other investing activities	28.7		(3.8)		Other investing activities	30.9		(4.8)
Net cash used in investing activities	Net cash used in investing activities	(493.0)		(399.4)		Net cash used in investing activities	(790.5)		(687.1)

Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Proceeds from issuance of long-term debt	Proceeds from issuance of long-term debt	0		2,000.0		Proceeds from issuance of long-term debt	—		3,500.0
Payments on long-term borrowings	Payments on long-term borrowings	(0.3)		(2,001.4)		Payments on long-term borrowings	(0.5)		(3,388.5)
Payments of obligations under finance leases	Payments of obligations under finance leases	(14.1)		(14.1)		Payments of obligations under finance leases	(32.2)		(32.9)

Payment of redemption premium on debt extinguishment						Payment of redemption premium on debt extinguishment	—		(41.4)
Payments for debt financing costs						Payments for debt financing costs	—		(15.6)
Dividends paid on common stock	Dividends paid on common stock	(46.5)		0		Dividends paid on common stock	(93.0)		—
Dividends paid on convertible preferred stock	Dividends paid on convertible preferred stock	(29.5)		0		Dividends paid on convertible preferred stock	(59.1)		—
Proceeds from convertible preferred stock	Proceeds from convertible preferred stock	0		1,680.0		Proceeds from convertible preferred stock	—		1,680.0
Third party issuance costs on convertible preferred stock	Third party issuance costs on convertible preferred stock	0		(80.9)		Third party issuance costs on convertible preferred stock	—		(80.9)
Treasury stock purchase, at cost	Treasury stock purchase, at cost	0		(1,680.0)		Treasury stock purchase, at cost	—		(1,680.0)
Employee tax withholding on vesting of restricted stock units	Employee tax withholding on vesting of restricted stock units	(10.0)		(6.2)		Employee tax withholding on vesting of restricted stock units	(11.8)		(6.7)
Other financing activities	Other financing activities	(8.8)		(4.3)		Other financing activities	(17.8)		(14.7)
Net cash used in financing activities	Net cash used in financing activities	(109.2)		(106.9)		Net cash used in financing activities	(214.4)		(80.7)

Net increase in cash and cash equivalents and restricted cash	Net increase in cash and cash equivalents and restricted cash	456.8		1,585.6		Net increase in cash and cash equivalents and restricted cash	1,132.8		1,953.0
Cash and cash equivalents and restricted cash at beginning of period	Cash and cash equivalents and restricted cash at beginning of period	1,767.6		478.9		Cash and cash equivalents and restricted cash at beginning of period	1,767.6		478.9
Cash and cash equivalents and restricted cash at end of period	Cash and cash equivalents and restricted cash at end of period	$	2,224.4	$	2,064.5	Cash and cash equivalents and restricted cash at end of period	$	2,900.4	$	2,431.9

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Table of Contents

Albertsons Companies, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders' Equity

(in millions, except share data)

(unaudited)


		Class A Common Stock			Additional paid in capital				Treasury Stock						Accumulated other comprehensive income			Retained earnings				Total stockholders' equity				Class A Common Stock						Additional paid in capital				Treasury Stock							Accumulated other comprehensive income				Retained earnings				Total stockholders' equity
		Shares	Amount				Shares			Amount							Shares								Amount					Shares					Amount
Balance as of February 27, 2021	Balance as of February 27, 2021	585,574,666	$	5.9			$	1,898.9		120,009,647			$	(1,907.0)						$	63.5			$	1,263.0		$	1,324.3	Balance as of February 27, 2021		585,574,666			$	5.9			$	1,898.9			120,009,647			$	(1,907.0)			$	63.5			$	1,263.0	$	1,324.3
Equity-based compensation	Equity-based compensation	—	—		22.2				—		—				—			—				22.2			Equity-based compensation	—			—				22.2				—				—			—				—				22.2
Shares issued and employee tax withholding on vesting of restricted stock units	Shares issued and employee tax withholding on vesting of restricted stock units	945,942	—		(10.0)				—		—				—			—				(10.0)			Shares issued and employee tax withholding on vesting of restricted stock units	945,942			—			(10.0)				—				—			—				—				(10.0)

Cash dividends declared on common stock	Cash dividends declared on common stock	—	—		—				—		—				—			(46.5)				(46.5)			Cash dividends declared on common stock	—			—			—				—				—			—				(46.5)				(46.5)
Dividends accrued on convertible preferred stock	Dividends accrued on convertible preferred stock	—	—		—				—		—				—			(36.4)				(36.4)			Dividends accrued on convertible preferred stock	—			—			—				—				—			—				(36.4)				(36.4)
Net income	Net income	—	—		—				—		—				—			444.8				444.8			Net income	—			—			—				—				—			—				444.8				444.8
Other comprehensive income, net of tax	Other comprehensive income, net of tax	—	—		—				—		—				0.1			—				0.1			Other comprehensive income, net of tax	—			—			—				—				—			0.1				—				0.1
Other activity	Other activity	—	—		0				—		—				—			(0.1)				(0.1)			Other activity	—			—			—				—				—			—				(0.1)				(0.1)
Balance as of June 19, 2021	Balance as of June 19, 2021	586,520,608	$	5.9	$	1,911.1			120,009,647		$	(1,907.0)			$	63.6		$	1,624.8			$	1,698.4		Balance as of June 19, 2021	586,520,608			$	5.9		$	1,911.1			120,009,647				$	(1,907.0)		$	63.6			$	1,624.8			$	1,698.4
Equity-based compensation																									Equity-based compensation	—			—			26.8				—				—			—				—				26.8
Shares issued and employee tax withholding on vesting of restricted stock units																									Shares issued and employee tax withholding on vesting of restricted stock units	147,495			—			(1.8)				—				—			—				—				(1.8)

Cash dividends declared on common stock																									Cash dividends declared on common stock	—			—			—				—				—			—				(46.5)				(46.5)
Dividends accrued on convertible preferred stock																									Dividends accrued on convertible preferred stock	—			—			—				—				—			—				(27.3)				(27.3)
Net income																									Net income	—			—			—				—				—			—				295.2				295.2
Other comprehensive income, net of tax																									Other comprehensive income, net of tax	—			—			—				—				—			15.1				—				15.1

Balance as of September 11, 2021																									Balance as of September 11, 2021	586,668,103			$	5.9		$	1,936.1			120,009,647				$	(1,907.0)		$	78.7			$	1,846.2			$	1,959.9

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Class A Common Stock Additional paid in capital Treasury Stock Accumulated other comprehensive loss Retained earnings Total stockholders' equity
Shares Amount Shares Amount
Balance as of February 29, 2020 582,997,251 $ 5.8 $ 1,824.3 3,671,621 $ (25.8) $ (118.5) $ 592.3 $ 2,278.1
Issuance of common stock to Company's parents 1,312,859 — — — — — — —
Equity-based compensation — — 19.0 — — — — 19.0
Employee tax withholding on vesting of restricted stock units — — (6.2) — — — — (6.2)
Repurchase of common stock — — — 101,611,736 (1,680.0) — — (1,680.0)
Dividends accrued on convertible preferred stock — — — — — — (3.9) (3.9)
Net income — — — — — — 586.2 586.2
Other comprehensive income, net of tax — — — — — 1.7 — 1.7
Balance as of June 20, 2020 584,310,110 $ 5.8 $ 1,837.1 105,283,357 $ (1,705.8) $ (116.8) $ 1,174.6 $ 1,194.9

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Albertsons Companies, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders' Equity

(in millions, except share data)

(unaudited)


	Class A Common Stock			Additional paid in capital		Treasury Stock			Accumulated other comprehensive loss		Retained earnings		Total stockholders' equity
	Shares	Amount				Shares	Amount
Balance as of February 29, 2020	582,997,251	$	5.8	$	1,824.3	3,671,621	$	(25.8)	$	(118.5)	$	592.3	$	2,278.1
Issuance of common stock to Company's parents	1,312,859	—		—		—	—		—		—		—
Equity-based compensation	—	—		19.0		—	—		—		—		19.0
Employee tax withholding on vesting of restricted stock units	—	—		(6.2)		—	—		—		—		(6.2)
Repurchase of common stock	—	—		—		101,611,736	(1,680.0)		—		—		(1,680.0)
Dividends accrued on convertible preferred stock	—	—		—		—	—		—		(3.9)		(3.9)
Net income	—	—		—		—	—		—		586.2		586.2
Other comprehensive income, net of tax	—	—		—		—	—		1.7		—		1.7

Balance as of June 20, 2020	584,310,110	$	5.8	$	1,837.1	105,283,357	$	(1,705.8)	$	(116.8)	$	1,174.6	$	1,194.9
Equity-based compensation	—	—		9.3		—	—		—		—		9.3
Shares issued and employee tax withholding on vesting of restricted stock units	22,101	—		(0.5)		—	—		—		—		(0.5)
Equity reclassification	—	—		30.0		—	—		—		—		30.0
Dividends accrued on convertible preferred stock	—	—		—		—	—		—		(26.9)		(26.9)
Net income	—	—		—		—	—		—		284.5		284.5
Other comprehensive loss, net of tax	—	—		—		—	—		10.4		—		10.4
Other activity	—	—		(0.1)		—	—		—		—		(0.1)
Balance as of September 12, 2020	584,332,211	$	5.8	$	1,875.8	105,283,357	$	(1,705.8)	$	(106.4)	$	1,432.2	$	1,501.6

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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Albertsons Companies, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(unaudited)

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying interim Condensed Consolidated Financial Statements include the accounts of Albertsons Companies, Inc. and its subsidiaries (the "Company"). All significant intercompany balances and transactions were eliminated. The Condensed Consolidated Balance Sheet as of February 27, 2021 is derived from the Company's annual audited Consolidated Financial Statements, which should be read in conjunction with these Condensed Consolidated Financial Statements and which are included in the Company's Annual Report on Form 10-K for the fiscal year ended February 27, 2021, filed with the Securities and Exchange Commission (the "SEC") on April 28, 2021. Certain information in footnote disclosures normally included in annual financial statements was condensed or omitted for the interim periods presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). In the opinion of management, the interim data includes all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the interim periods. The interim results of operations and cash flows are not necessarily indicative of those results and cash flows expected for the year. The Company's results of operations are for the 1612 and 28 weeks ended ~~June 19,~~September 11, 2021 and ~~June 20,~~September 12, 2020.

Significant Accounting Policies

Restricted cash: Restricted cash is included in Other current assets or Other assets depending on the remaining term of the restriction and primarily relates to funds held in escrow. The Company had $50.6 million of restricted cash as of ~~June 19,~~September 11, 2021 and February 27, 2021.

Inventories, net: Substantially all of the Company's inventories consist of finished goods valued at the lower of cost or market and net of vendor allowances. The Company uses either item-cost or the retail inventory method to value inventory ~~at the lower of cost or market~~ before application of any last-in, first-out ("LIFO") reserve. Interim LIFO inventory costs are based on management's estimates of expected year-end inventory levels and inflation rates. The Company recorded LIFO expense of ~~$14.5~~$14.6 million and ~~$13.1~~$10.1 million for the 1612 weeks ended ~~June 19,~~September 11, 2021 and ~~June 20,~~September 12, 2020, respectively, and $29.1 million and $23.2 million for the 28 weeks ended September 11, 2021 and September 12, 2020, respectively.

Equity-based compensation: The Company maintains the Albertsons Companies, Inc. Restricted Stock Unit Plan and the Albertsons Companies, Inc. 2020 Omnibus Incentive Plan. The Company recognizes equity-based compensation expense for restricted stock units ("RSUs") and restricted common stock ("RSAs") of the Company granted to employees and non-employee directors. Actual forfeitures are recognized as they occur. Equity-based compensation expense is based on the fair value on the grant date and is recognized over the requisite service period of the award. The fair value of the RSUs and RSAs with a service condition or performance-based condition is generally determined using the fair market value of the Company's Class A common stock on the grant date.

Upon vesting, RSUs and RSAs will be settled in shares of the Company's Class A common stock. RSUs generally vest over three years from the grant date, based on a service period, or upon a combination of both a service period and achievement of certain performance-based thresholds, and RSAs generally vest over five years from the grant date, with 50% based solely on a service period and 50% upon a service period and achievement of certain performance-based thresholds. For performance-based RSUs and RSAs granted in fiscal 2021, the number of shares of the Company's Class A common stock to be received at vesting can be adjusted within a predetermined range based on the Company's actual performance for fiscal 2021 relative to the fiscal 2021 performance target.

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Equity-based compensation expense recognized in the Condensed Consolidated Statements of Operations (in millions):

16 weeks ended
June 19,
2021 June 20,
2020
RSUs $ 19.7 $ 17.8
RSAs 2.5 1.2
Total equity-based compensation expense $ 22.2 $ 19.0
Total related tax benefit $ 5.1 $ 4.6

On May 12, 2021, the Company issued 3.2 million RSUs to its employees and directors, of which 2.2 million were deemed granted. The 2.2 million issued and granted awards consist of 1.7 million RSUs that have solely time-based vesting and 0.5 million performance-based RSUs that were deemed granted upon the establishment of the fiscal 2021 performance target and that would vest upon both the achievement of such performance target and continued service through the vesting period. Additionally, 1.2 million previously issued performance-based RSUs and 0.3 million previously issued performance-based RSAs were deemed granted in fiscal 2021 upon the establishment of the fiscal 2021 annual performance target and that would vest upon both the achievement of such performance target and continued service through the vesting period.


	12 weeks ended				28 weeks ended
	September 11, 2021		September 12, 2020		September 11, 2021		September 12, 2020
RSUs	$	24.9	$	8.0	$	44.6	$	25.8
RSAs	1.9		1.3		4.4		2.5
Total equity-based compensation expense	$	26.8	$	9.3	$	49.0	$	28.3
Total related tax benefit	$	6.4	$	2.0	$	11.5	$	6.6

As of ~~June 19,~~September 11, 2021, there was ~~$119.4~~$126.2 million of unrecognized costs related to ~~11.1~~11.5 million unvested granted ~~RSUs.~~restricted stock units ("RSUs"). That cost is expected to be recognized over a weighted average period of ~~1.9~~1.8 years. As of ~~June 19,~~September 11, 2021, there was ~~$9.2~~$7.3 million of unrecognized costs related to 1.0 million unvested granted ~~RSAs.~~restricted common stock ("RSAs"). That cost is expected to be recognized over a weighted average period of 1.9 years.

Income taxes: Income tax expense was ~~$132.5~~$100.3 million, representing a ~~23.0%~~25.4% effective tax rate, for the 1612 weeks ended ~~June 19,~~September 11, 2021. Income tax expense was ~~$201.9~~$111.2 million, representing a ~~25.6%~~28.1% effective tax rate, for the 16

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12 weeks ended ~~June 20,~~September 12, 2020. The decrease in the effective tax rate was primarily driven by nondeductible transaction-related costs incurred during the 12 weeks ended September 12, 2020.

Income tax expense was $232.8 million, representing a 23.9% effective tax rate, for the 28 weeks ended September 11, 2021. Income tax expense was $313.1 million, representing a 26.4% effective tax rate, for the 28 weeks ended September 12, 2020. The decrease in the effective income tax rate was primarily driven by the recognition of ~~certain~~ discrete state income tax benefits during the 1628 weeks ended ~~June 19, 2021. The Company expects its annual effective tax rate for fiscal~~September 11, 2021 ~~to be approximately 25%.~~and certain nondeductible transaction-related costs incurred during the 28 weeks ended September 12, 2020.

Segments: The Company and its subsidiaries offer grocery products, general merchandise, health and beauty care products, pharmacy, fuel and other items and services in its stores or through digital channels. The Company's operating divisions are geographically based, have similar economic characteristics and similar expected long-term financial performance. The Company's operating segments and reporting units are its 12 operating divisions, which are reported in 1 reportable segment. Each reporting unit constitutes a business for which discrete financial information is available and for which management regularly reviews the operating results. Across all operating segments, the Company operates primarily 1 store format. Each division offers through its stores and digital channels the same general mix of products with similar pricing to similar categories of customers, has similar distribution methods, operates in similar regulatory environments and purchases merchandise from similar or the same vendors.

Revenue Recognition: Revenues from the retail sale of products are recognized at the point of sale or delivery to the customer, net of returns and sales tax. Pharmacy sales are recorded upon the customer receiving the prescription. Third-party receivables from pharmacy sales were ~~$298.9~~$236.0 million and $262.5 million as of ~~June 19,~~September 11, 2021 and February 27, 2021, respectively, and are recorded in Receivables, net. For digital related sales, which primarily include home delivery and Drive Up & Go curbside pickup, revenues are recognized upon either pickup in store or delivery to the customer and may include revenue for separately charged delivery services. The Company records a contract liability when rewards are earned by customers in connection with the Company's loyalty programs. As rewards are redeemed or expire, the Company reduces the contract liability and recognizes revenue. The contract liability balance was immaterial as of ~~June 19,~~September 11, 2021 and February 27, 2021.

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The Company records a contract liability when it sells its own proprietary gift cards. The Company records a sale when the customer redeems the gift card. The Company's gift cards do not expire. The Company reduces the contract liability and records revenue for the unused portion of gift cards ("breakage") in proportion to its customers' pattern of redemption, which the Company determined to be the historical redemption rate. The Company's contract liability related to gift cards was ~~$85.0~~$76.2 million as of ~~June 19,~~September 11, 2021 and $98.1 million as of February 27, 2021. Breakage amounts were immaterial for the 1612 and 28 weeks ended ~~June 19,~~September 11, 2021 and ~~June 20,~~September 12, 2020, respectively.

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Disaggregated Revenues

The following table represents sales revenue by type of similar product (dollars in millions):


		16 weeks ended								12 weeks ended					28 weeks ended
		June 19, 2021				June 20, 2020					September 11, 2021		September 12, 2020				September 11, 2021				September 12, 2020
		Amount (1)		% of Total		Amount (1)		% of Total					Amount (1)		% of Total		Amount (1)		% of Total		Amount (1)		% of Total		Amount (1)		% of Total
Non-perishables (2)	Non-perishables (2)	$	9,270.3	43.6	%	$	10,783.8	47.4	%			Non-perishables (2)	$	7,268.5	44.0	%	$	7,126.6	45.2	%	$	16,538.8	43.8	%	$	17,910.4	46.5	%
Perishables (3)	Perishables (3)	8,912.6		41.9		9,555.6		42.0				Perishables (3)	6,823.2		41.3		6,654.1		42.2		15,735.8		41.6		16,209.7		42.1
Pharmacy	Pharmacy	1,728.6		8.1		1,554.9		6.8				Pharmacy	1,253.4		7.6		1,171.8		7.5		2,982.0		7.9		2,726.7		7.1
Fuel	Fuel	1,049.3		4.9		589.2		2.6				Fuel	918.5		5.6		570.8		3.6		1,967.8		5.2		1,160.0		3.0
Other (4)	Other (4)	308.6		1.5		268.1		1.2				Other (4)	242.1		1.5		234.3		1.5		550.7		1.5		502.4		1.3
Net sales and other revenue	Net sales and other revenue	$	21,269.4	100.0	%	$	22,751.6	100.0	%			Net sales and other revenue	$	16,505.7	100.0	%	$	15,757.6	100.0	%	$	37,775.1	100.0	%	$	38,509.2	100.0	%

(1) Digital related sales are included in the categories to which the revenue pertains.

(2) Consists primarily of general merchandise, grocery and frozen foods.

(3) Consists primarily of produce, dairy, meat, deli, floral and seafood.

(4) Consists primarily of wholesale revenue to third parties, commissions and other miscellaneous revenue.

Recently issued accounting standards: In June 2020, the FASB issued ASU 2020-06, "Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity" ("ASU 2020-06"). ASU 2020-06 simplifies the accounting for certain convertible instruments, amends guidance on derivative scope exceptions for contracts in an entity's own equity and modifies the guidance on diluted earnings per share calculations as a result of these changes. ASU 2020-06 will take effect for public entities for annual reporting periods beginning after December 15, 2021, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the effect of this standard on its Consolidated Financial Statements.

NOTE 2 - FAIR VALUE MEASUREMENTS

The accounting guidance for fair value established a framework for measuring fair value and established a three-level valuation hierarchy for disclosure of fair value measurement. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability at the measurement date. The three levels are defined as follows:

Level 1 - Quoted prices in active markets for identical assets or liabilities;

Level 2 - Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and

Level 3 - Unobservable inputs in which little or no market activity exists, requiring an entity to develop its own assumptions that market participants would use to value the asset or liability.

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Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

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The following table presents assets and liabilities which were measured at fair value on a recurring basis as of ~~June 19,~~September 11, 2021 (in millions):


		Fair Value Measurements									Fair Value Measurements
		Total		Quoted prices in active markets for identical assets (Level 1)		Significant observable inputs (Level 2)		Significant unobservable inputs (Level 3)			Total		Quoted prices in active markets for identical assets (Level 1)		Significant observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets:	Assets:									Assets:

Short-term investments (1)	Short-term investments (1)	$	11.7	$	4.8	$	6.9	$	0	Short-term investments (1)	$	14.7	$	5.0	$	9.7	$	—
Non-current investments (2)	Non-current investments (2)	104.9		32.3		72.6		0		Non-current investments (2)	92.6		19.5		73.1		—
Derivative contracts (3)	Derivative contracts (3)	9.9		0		9.9		0		Derivative contracts (3)	10.0		—		10.0		—
Total	Total	$	126.5	$	37.1	$	89.4	$	0	Total	$	117.3	$	24.5	$	92.8	$	—

Liabilities:	Liabilities:									Liabilities:
Derivative contracts (4)	Derivative contracts (4)	$	34.0	$	0	$	34.0	$	0	Derivative contracts (4)	$	26.3	$	—	$	26.3	$	—

Total	Total	$	34.0	$	0	$	34.0	$	0	Total	$	26.3	$	—	$	26.3	$	—

(1) Primarily relates to Mutual Funds (Level 1) and Certificates of Deposit (Level 2). Included in Other current assets.

(2) Primarily relates to investments in publicly traded stock (Level 1) and U.S. Treasury Notes and Corporate Bonds (Level 2). Included in Other assets.

(3) Primarily relates to ~~energy hedges.~~derivative contracts. Included in Other assets.

(4) Primarily relates to interest rate swaps. Included in Other current liabilities.

The following table presents assets and liabilities which were measured at fair value on a recurring basis as of February 27, 2021 (in millions):


		Fair Value Measurements									Fair Value Measurements
		Total		Quoted prices in active markets for identical assets (Level 1)		Significant observable inputs (Level 2)		Significant unobservable inputs (Level 3)			Total		Quoted prices in active markets for identical assets (Level 1)		Significant observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets:	Assets:									Assets:

Short-term investments (1)	Short-term investments (1)	$	11.9	$	4.4	$	7.5	$	0	Short-term investments (1)	$	11.9	$	4.4	$	7.5	$	—
Non-current investments (2)	Non-current investments (2)	110.2		40.3		69.9		0		Non-current investments (2)	110.2		40.3		69.9		—
Total	Total	$	122.1	$	44.7	$	77.4	$	0	Total	$	122.1	$	44.7	$	77.4	$	—

Liabilities:	Liabilities:									Liabilities:
Derivative contracts (3)	Derivative contracts (3)	$	40.0	$	0	$	40.0	$	0	Derivative contracts (3)	$	40.0	$	—	$	40.0	$	—

Total	Total	$	40.0	$	0	$	40.0	$	0	Total	$	40.0	$	—	$	40.0	$	—

(1) Primarily relates to Mutual Funds (Level 1) and Certificates of Deposit (Level 2). Included in Other current assets.

(2) Primarily relates to investments in publicly traded stock (Level 1) and U.S. Treasury Notes and Corporate Bonds (Level 2). Included in Other assets.

(3) Primarily relates to interest rate swaps. Included in Other current liabilities.

The estimated fair value of the Company's debt, including current maturities, was based on Level 2 inputs, being market quotes or values for similar instruments, and interest rates currently available to the Company for the issuance of debt with similar terms and remaining maturities as a discount rate for the remaining principal payments. As of ~~June 19,~~September 11, 2021, the fair value of total debt was ~~$8,178.2~~$8,325.6 million compared to the carrying value of

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~~$7,815.2~~ $7,815.0 million, excluding debt discounts and deferred financing costs. As of February 27, 2021, the fair value of total debt was $8,150.7 million compared to the carrying value of $7,815.5 million, excluding debt discounts and deferred financing costs.

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Assets Measured at Fair Value on a Non-Recurring Basis

The Company measures certain assets at fair value on a non-recurring basis, including long-lived assets and goodwill, which are evaluated for impairment. Long-lived assets include store-related assets such as property and equipment and certain intangible assets. The inputs used to determine the fair value of long-lived assets and a reporting unit are considered Level 3 measurements due to their subjective nature.

NOTE 3 - DERIVATIVE FINANCIAL INSTRUMENTS

The aggregate notional amount of the Company's ~~Swaps~~interest rate swaps as of ~~June 19,~~September 11, 2021 and February 27, 2021, were $1,553.0 million and $1,653.0 million, respectively, of which none were designated as cash flow hedges as defined by GAAP.

Activity related to interest rate swaps consisted of the following (in millions):

16 weeks ended
June 19,
2021 June 20,
2020 Location of loss recognized from derivatives
Loss on undesignated portion of interest rate swaps $ (0.3) $ (19.0) Other (income) expense, net


	12 weeks ended
	September 11, 2021		September 12, 2020		Location of loss recognized from derivatives
Loss on undesignated portion of interest rate swaps	$	—	$	(0.4)	Other income, net


	28 weeks ended
	September 11, 2021		September 12, 2020		Location of loss recognized from derivatives
Loss on undesignated portion of interest rate swaps	$	(0.3)	$	(19.4)	Other income, net

NOTE 4 - LONG-TERM DEBT AND FINANCE LEASE OBLIGATIONS

The Company's long-term debt and finance lease obligations as of ~~June 19,~~September 11, 2021 and February 27, 2021, net of unamortized debt discounts of ~~$43.8~~$43.0 million and $44.8 million, respectively, and deferred financing costs of ~~$66.2~~$63.6 million and $69.8 million, respectively, consisted of the following (in millions):


		June 19, 2021		February 27, 2021			September 11, 2021		February 27, 2021

Senior Unsecured Notes due 2023 to 2030, interest rate range of 3.25% to 7.50%	Senior Unsecured Notes due 2023 to 2030, interest rate range of 3.25% to 7.50%	$	6,683.9	$	6,680.5	Senior Unsecured Notes due 2023 to 2030, interest rate range of 3.25% to 7.50%	$	6,686.5	$	6,680.5
Safeway Inc. Notes due 2021 to 2031, interest rate range of 4.75% to 7.45%	Safeway Inc. Notes due 2021 to 2031, interest rate range of 4.75% to 7.45%	504.2		504.3		Safeway Inc. Notes due 2021 to 2031, interest rate range of 4.75% to 7.45%	504.4		504.3
New Albertsons L.P. Notes due 2026 to 2031, interest rate range of 6.52% to 8.70%	New Albertsons L.P. Notes due 2026 to 2031, interest rate range of 6.52% to 8.70%	470.3		469.1		New Albertsons L.P. Notes due 2026 to 2031, interest rate range of 6.52% to 8.70%	470.9		469.1

Other financing obligations	Other financing obligations	29.4		29.4		Other financing obligations	29.2		29.4
Mortgage notes payable, secured	Mortgage notes payable, secured	17.4		17.6		Mortgage notes payable, secured	17.4		17.6
Finance lease obligations	Finance lease obligations	654.9		612.7		Finance lease obligations	632.2		612.7
Total debt	Total debt	8,360.1		8,313.6		Total debt	8,340.6		8,313.6
Less current maturities	Less current maturities	(214.3)		(212.4)		Less current maturities	(211.5)		(212.4)
Long-term portion	Long-term portion	$	8,145.8	$	8,101.2	Long-term portion	$	8,129.1	$	8,101.2

Senior Unsecured Notes

On October 1, 2021, subsequent to the end of the 12 weeks ended September 11, 2021, the Company provided notice to the holders and trustee, of its election to redeem all of the $200.0 million aggregate principal amount currently outstanding of the Company's 5.750% Senior Unsecured Notes due 2025 (the "2025 Notes"). The 2025 Notes will be redeemed on November 1, 2021 (the "Redemption Date"), using cash on hand, at a redemption price of 101.438% of the principal amount thereof plus accrued and unpaid interest on the 2025 Notes to, but excluding, the Redemption Date.

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ABL Facility

As of ~~June 19,~~September 11, 2021 and February 27, 2021, there were 0no amounts outstanding under the Company's asset-based loan facility ("ABL Facility"), and letters of credit ("LOC") issued under the LOC sub-facility were ~~$349.1~~$323.8 million and $354.6 million, respectively.

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NOTE 5 - EMPLOYEE BENEFIT PLANS

Pension and Other Post-Retirement Benefits

The following tables provide the components of net pension and post-retirement (income) expense (in millions):


		16 weeks ended									12 weeks ended
		Pension				Other post-retirement benefits					Pension				Other post-retirement benefits
		June 19, 2021		June 20, 2020		June 19, 2021		June 20, 2020			September 11, 2021		September 12, 2020		September 11, 2021		September 12, 2020
Estimated return on plan assets	Estimated return on plan assets	$	(32.7)	$	(31.5)	$	0	$	0	Estimated return on plan assets	$	(24.5)	$	(23.7)	$	—	$	—
Service cost	Service cost	6.9		4.8		0		0		Service cost	5.1		3.5		—		—
Interest cost	Interest cost	13.0		16.6		0.1		0.1		Interest cost	9.7		12.6		0.1		0.1
Amortization of prior service cost	Amortization of prior service cost	0.1		0.1		0		0.6		Amortization of prior service cost	—		—		—		0.4
Amortization of net actuarial loss (gain)	Amortization of net actuarial loss (gain)	0.3		0.6		(0.2)		(0.2)		Amortization of net actuarial loss (gain)	0.2		0.5		(0.1)		(0.1)

Settlement (gain) loss										Settlement (gain) loss	(14.3)		3.0		—		—
(Income) expense, net	(Income) expense, net	$	(12.4)	$	(9.4)	$	(0.1)	$	0.5	(Income) expense, net	$	(23.8)	$	(4.1)	$	—	$	0.4


	28 weeks ended
	Pension				Other post-retirement benefits
	September 11, 2021		September 12, 2020		September 11, 2021		September 12, 2020
Estimated return on plan assets	$	(57.2)	$	(55.2)	$	—	$	—
Service cost	12.0		8.3		—		—
Interest cost	22.7		29.2		0.2		0.2
Amortization of prior service cost	0.1		0.1		—		1.0
Amortization of net actuarial loss (gain)	0.5		1.1		(0.3)		(0.3)
Settlement (gain) loss	(14.3)		3.0		—		—
(Income) expense, net	$	(36.2)	$	(13.5)	$	(0.1)	$	0.9

The Company contributed ~~$2.0~~$9.2 million and ~~$54.6~~$11.2 million to its defined pension plans and post-retirement benefit plans during the 1612 and 28 weeks ended ~~June 19,~~September 11, 2021, respectively. For the 12 and ~~June 20,~~28 weeks ended September 12, 2020, the Company contributed $1.7 million and $56.3 million, respectively. ~~The Company currently anticipates contributing an~~At the Company's discretion, additional ~~$46.8 million~~funds may be contributed to ~~meet~~ the ~~minimum funding requirements for these~~defined benefit pension plans ~~for the remainder of fiscal 2021 but may make additional discretionary contributions~~ that are determined to be beneficial to the Company. The Company currently anticipates contributing an additional $26.1 million to these plans for the remainder of fiscal 2021.

During the 12 and 28 weeks ended September 11, 2021, the Company purchased a group annuity policy and transferred $203.5 million of pension plan assets to an insurance company, thereby reducing the Company's defined benefit pension obligations by $205.4 million. As a result of the annuity purchase, the Company recorded a settlement gain of $11.1 million during the 12 and 28 weeks ended September 11, 2021.

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Defined Contribution Plans and Supplemental Retirement Plans

Total contributions expensed for defined contribution plans (401(k) plans) were ~~$16.2~~$26.4 million and ~~$21.8~~$16.3 million for the 1612 weeks ended ~~June 19,~~September 11, 2021 and ~~June 20,~~September 12, 2020, respectively. For the 28 weeks ended September 11, 2021 and September 12, 2020, total contributions expensed were $42.6 million and $38.1 million, respectively.

Multiemployer Pension Plans

ARP Act: The American Rescue Plan Act ("ARP Act") was signed into law on March 11, 2021. The ARP Act establishes a special financial assistance program for financially troubled multiemployer pension plans. Under the ARP Act, eligible multiemployer plans can apply to receive a one-time cash payment in the amount projected by the Pension Benefit Guaranty Corporation ("PBGC") to pay pension benefits through the plan year ending 2051. On July 9, 2021, the PBGC issued its interim final rule with respect to the special financial assistance program. The PBGC interim final rule provides direction on the application requirements, identifies which plans will have priority, eligibility requirements, the determination of the amount of financial assistance to be provided and establishes conditions and restrictions that apply to plans that receive the assistance. The Company is ~~currently~~ evaluating the interim final rule ~~which is subject to a~~and has submitted comments during the 30-day comment ~~period, including~~period. The Company's evaluation includes any potential impact to the Company's Excess Plan as defined in and further described in "Part II—Item 8. Financial Statements and Supplemental Data—Note 12" of the Company's Annual Report on Form 10-K for the fiscal year ended February 27, 2021.

NOTE 6 - COMMITMENTS AND CONTINGENCIES AND OFF BALANCE SHEET ARRANGEMENTS

Guarantees

California Department of Industrial Relations: On January 21, 2014, the Company entered into a Collateral Substitution Agreement with the California Self-Insurers' Security Fund to provide collateral related to certain California self-insured workers' compensation obligations pursuant to applicable regulations. The collateral not covered by the California Self-Insurers' Security Fund is covered by surety bonds for the benefit of the State of

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California Office of Self-Insurance Plans. A portion of the surety bonds is covered by irrevocable LOCs. The collateral requirements are adjusted annually based on semi-annual filings of an actuarial study reflecting liabilities as of December 31 of each year reduced by claim closures and settlements. The related LOC was $22.6 million as of ~~June 19,~~September 11, 2021 and $40.1 million as of February 27, 2021, respectively.

Lease Guarantees: The Company may have liability under certain operating leases that were assigned to third parties. If any of these third parties fail to perform their obligations under the leases, the Company could be responsible for the lease obligation, including as a result of the economic dislocation caused by the response to the COVID-19 pandemic. Because of the wide dispersion among third parties and the variety of remedies available, the Company believes that if an assignee became insolvent, it would not have a material effect on the Company's financial condition, results of operations or cash flows.

The Company also provides guarantees, indemnifications and assurances pursuant to ~~others~~contractual obligations in the ordinary course of its business.

Legal Proceedings

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respect to certain of the matters described herein cannot be ascertained at this time, any resulting liability of these and other matters, including any punitive damages, will not have a material adverse effect on the Company's business or financial condition.

The Company continually evaluates its exposure to loss contingencies arising from pending or threatened litigation and believes it has made provisions where the loss contingency is probable and can be reasonably estimated. Nonetheless, assessing and predicting the outcomes of these matters involves substantial uncertainties. Management currently believes that the aggregate range of reasonably possible loss for the Company's exposure in excess of the amount accrued is expected to be immaterial to the Company. It remains possible that despite management's current belief, material differences in actual outcomes or changes in management's evaluation or predictions could arise that could have a material effect on the Company's financial condition, results of operations or cash flows.

ERISA Litigation: NaN lawsuits were brought against Safeway Inc. ("Safeway") and the Safeway Benefits Plan Committee (the "Benefit Plans Committee," and together with Safeway, the "Safeway Benefits Plans Defendants") and other third parties alleging breaches of fiduciary duty under the Employee Retirement Income Security Act of 1974, as amended ("ERISA") with respect to Safeway's 401(k) Plan (the "Safeway 401(k) Plan"). On July 14, 2016, a complaint was filed in the United States District Court for the Northern District of California by a participant in the Safeway 401(k) Plan individually and on behalf of the Safeway 401(k) Plan. An amended complaint was filed on November 18, 2016. On August 25, 2016, a second complaint was filed in the United States District Court for the Northern District of California by another participant in the Safeway 401(k) Plan individually and on behalf of all others similarly situated against the Safeway Benefits Plans Defendants and against the Safeway 401(k) Plan's former record-keepers. An amended complaint was filed on September 16, 2016, and a second amended complaint was filed on November 21, 2016. In general, both lawsuits alleged that the Safeway Benefits Plans Defendants breached their fiduciary duties under ERISA regarding the selection of investments offered under the Safeway 401(k) Plan and the fees and expenses related to those investments. All parties filed summary judgment motions which were heard and taken under submission on August 16, 2018. Plaintiffs' motions were denied, and defendants' motions were granted in part and denied in part. Bench trials for both matters were set for May 6, 2019. A settlement in principle was reached before trial. On September 13, 2019, settlement papers were filed with the Court along with a motion for preliminary approval of the settlement. A hearing for preliminary approval was set for

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November 20, 2019, but the Court vacated the hearing. The Court issued an order on March 30, 2020 requesting some minor changes to the notice procedures, and plaintiffs submitted an amended motion for preliminary approval. On September 8, 2020, the Court granted plaintiffs' amended motion, and a final approval hearing was held on April 26, 2021, at which time the Court took the matter under submission. ~~The Company has recorded an estimated liability for these matters.~~On July 19, 2021, the Court issued a final order approving the settlement. In August 2021, a settlement fund was established with funds from insurers. A settlement administrator is now managing the calculation and payment of settlement provisions to class members.

False Claims Act: The Company has received a civil investigative demand dated February 28, 2020 from the United States Attorney for the Southern District of New York in connection with a False Claims Act ("FCA") investigation relating to the Company's dispensing practices regarding insulin pen products. The investigation seeks documents regarding the Company's policies, practices and procedures, as well as dispensing data, among other things. The Company ~~intends to cooperate~~has cooperated with the U.S. Attorney in the investigation. The Company is currently unable to determine the probability of the outcome of this matter or the range of possible loss, if any.

NaN qui tam actions alleging violations of the FCA have also been filed against the Company and its subsidiaries. Violations of the FCA are subject to treble damages and penalties of up to a specified dollar amount per false claim.

In United States ex rel. Proctor v. Safeway, filed in the United States District Court for the Central District of Illinois, the relator alleges that Safeway overcharged federal government healthcare programs by not providing the federal government, as part of its usual and customary prices, the benefit of discounts given to customers in pharmacy membership discount and price-matching programs. The relator filed his complaint under seal on November 11, 2011, and the complaint was unsealed on August 26, 2015. The relator amended the complaint on

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March 31, 2016. On June 12, 2020, the Court granted Safeway's motion for summary judgment, holding that the relator could not prove that Safeway acted with the intent required under the FCA, and judgment was issued on June 15, 2020. On July 10, 2020, the relator filed a motion to alter or amend the judgment and to supplement the record, which Safeway opposed. On November 13, 2020, the Court denied relator's motion, and on December 11, 2020, relator filed a notice of appeal. The appeal is now pending in the Seventh Circuit Court of Appeals. Oral argument ~~is scheduled for~~took place September 9, 2021.

In United States ex rel. Schutte and Yarberry v. SuperValu, New Albertson's, Inc., et al., also filed in the Central District of Illinois, the relators allege that defendants (including various subsidiaries of the Company) overcharged federal government healthcare programs by not providing the federal government, as a part of usual and customary prices, the benefit of discounts given to customers who requested that defendants match competitor prices. The complaint was originally filed under seal and amended on November 30, 2015. On August 5, 2019, the Court granted relators' motion for partial summary judgment, holding that price-matched prices are the usual and customary prices for those drugs. On July 1, 2020, the Court granted the defendants' motions for summary judgment and dismissed the case, holding that the relator could not prove that defendants acted with the intent required under the FCA. Judgment was issued on July 2, 2020. On July 9, 2020, the relators filed a notice of appeal. ~~The appeal is now pending in the Seventh Circuit Court of Appeals.~~ Oral argument was held on January 19, 2021. On August 12, 2021, the Court of Appeals for the Seventh Circuit affirmed the grant of summary judgment in the Company's favor. On September 23, 2021, the relators filed a petition for rehearing en banc with the Seventh Circuit. The Company's response to the petition for rehearing is due by November 9, 2021.

In both of the above cases, the federal government previously investigated the relators' allegations and declined to intervene. The relators elected to pursue their respective cases on their own and in each case have alleged FCA damages in excess of $100 million before trebling and excluding penalties. The Company is vigorously defending each of these matters and believes each of these cases is without merit. The Company has recorded an estimated liability for these matters.

~~The Company was also subject to another FCA qui tam action entitled~~ ~~United States ex rel. Zelickowski v. Albertson's LLC.~~ In that case, the relators alleged that Albertson's LLC ("Albertson's") overcharged federal healthcare programs by not providing the federal government, as a part of its usual and customary prices to the federal government, the benefit of discounts given to customers who enrolled in the Albertson's discount-club program. The complaint was originally filed under seal and amended on June 20, 2017. On December 17, 2018, the case was dismissed, without prejudice.

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Opioid Litigation: The Company is one of dozens of companies that have been named in various lawsuits alleging that defendants contributed to the national opioid epidemic. At present, the Company is named in over 80 suits pending in various state courts as well as in the United States District Court for the Northern District of Ohio, where over 2,000 cases have been consolidated as Multi-District Litigation ("MDL") pursuant to 28 U.S.C. §1407. Most of these cases have been stayed pending bellwether trials. At present, the most active case is a matter in New Mexico state court where we have been in active discovery and where a September 2022 trial date has been set. The MDL Court and a state court in Utah are currently considering position statements from the parties in connection with scheduling bellwether trials and it is likely that the Company may be included in one or more of those anticipated bellwether trials. The Company is vigorously defending these matters and believes that these cases are without merit. At this stage in the proceedings, the Company is unable to determine the probability of the outcome of these matters or the range of reasonably possible loss, if any.

California Air Resources Board: Upon the inspection by the California Air Resources Board ("CARB") of several of the Company's stores in California, it was determined that the Company failed certain paperwork and other administrative requirements. As a result of the inspections, the Company proactively undertook a broad evaluation of the record keeping and administrative practices at all of its stores in California. In connection with this evaluation, the Company retained a third party to conduct an audit and correct deficiencies identified across its California store base. The Company is working with CARB to resolve these compliance issues and comply with governing regulations, and that work is ongoing. CARB has made an opening demand regarding potential fines and penalties. On July 7, 2021, the parties entered into a settlement agreement for which the Company has recorded an estimated liability.

FACTA: On May 31, 2019, a putative class action complaint entitled Martin v. Safeway was filed in the California Superior Court for the County of Alameda, alleging the Company failed to comply with the Fair and Accurate Credit Transactions Act ("FACTA") by printing receipts that failed to adequately mask payment card numbers as

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required by FACTA. The plaintiff claims the violation was "willful" and exposes the Company to statutory damages provided for in FACTA. The Company has answered the complaint and is vigorously defending the matter. On January 8, 2020, the Company commenced mediation discussions with plaintiff's counsel and reached a settlement in principle on February 24, 2020. The parties will seek court approval of the settlement. The Company has recorded an estimated liability for this matter.

Other Commitments

In the ordinary course of business, the Company enters into various supply contracts to purchase products for resale and purchase and service contracts for fixed asset and information technology commitments. These contracts typically include volume commitments or fixed expiration dates, termination provisions and other standard contractual considerations.

NOTE 7 - OTHER COMPREHENSIVE INCOME OR LOSS

Total comprehensive earnings are defined as all changes in stockholders' equity during a period, other than those from investments by or distributions to the stockholders. Generally, for the Company, total comprehensive income or loss equals net income plus or minus adjustments for pension and other post-retirement liabilities. Total comprehensive earnings represent the activity for a period net of tax.

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While total comprehensive earnings are the activity in a period and are largely driven by net earnings in that period, accumulated other comprehensive income or loss ("AOCI") represents the cumulative balance of other comprehensive income, net of tax, as of the balance sheet date. Changes in the AOCI balance by component are shown below (in millions):


		16 weeks ended June 19, 2021				28 weeks ended September 11, 2021
		Total		Pension and Post-retirement benefit plans			Other			Total		Pension and Post-retirement benefit plans		Other
Beginning balance	Beginning balance	$	63.5	$	61.3		$	2.2	Beginning balance	$	63.5	$	61.3	$	2.2

Other comprehensive income before reclassifications									Other comprehensive income before reclassifications	34.3		34.3		—
Amounts reclassified from accumulated other comprehensive income	Amounts reclassified from accumulated other comprehensive income	0.2		0.2			0		Amounts reclassified from accumulated other comprehensive income	(14.0)		(14.0)		—
Tax expense	Tax expense	(0.1)		(0.1)			0		Tax expense	(5.1)		(5.1)		—
Current-period other comprehensive income, net of tax	Current-period other comprehensive income, net of tax	0.1		0.1			0		Current-period other comprehensive income, net of tax	15.2		15.2		—
Ending balance	Ending balance	$	63.6	$	61.4		$	2.2	Ending balance	$	78.7	$	76.5	$	2.2


		16 weeks ended June 20, 2020				28 weeks ended September 12, 2020
		Total		Pension and Post-retirement benefit plans			Other			Total		Pension and Post-retirement benefit plans		Other
Beginning balance	Beginning balance	$	(118.5)	$	(121.7)		$	3.2	Beginning balance	$	(118.5)	$	(121.7)	$	3.2
Other comprehensive income before reclassifications	Other comprehensive income before reclassifications	1.2		0			1.2		Other comprehensive income before reclassifications	11.1		9.6		1.5
Amounts reclassified from accumulated other comprehensive income	Amounts reclassified from accumulated other comprehensive income	1.1		1.1			0		Amounts reclassified from accumulated other comprehensive income	4.9		4.9		—
Tax expense	Tax expense	(0.6)		(0.3)			(0.3)		Tax expense	(3.9)		(3.6)		(0.3)
Current-period other comprehensive income, net of tax	Current-period other comprehensive income, net of tax	1.7		0.8			0.9		Current-period other comprehensive income, net of tax	12.1		10.9		1.2
Ending balance	Ending balance	$	(116.8)	$	(120.9)		$	4.1	Ending balance	$	(106.4)	$	(110.8)	$	4.4

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NOTE 8 - NET INCOME PER CLASS A COMMON SHARE

The Company calculates basic and diluted net income per Class A common share using the two-class method. The two-class method is an allocation formula that determines net income per Class A common share for each share of Class A common stock and the Company's Series A-1 convertible preferred stock ("Series A-1 preferred stock") and Series A convertible preferred stock ("Series A preferred stock" and together with the Series A-1 preferred stock, the "Convertible Preferred Stock"), a participating security, according to dividends declared and participation rights in undistributed earnings. Under this method, all earnings (distributed and undistributed) are allocated to Class A common shares and Convertible Preferred Stock based on their respective rights to receive dividends. The holders of Convertible Preferred Stock participate in cash dividends that the Company pays on its common stock to the extent that such cash dividends exceed $206.25 million per fiscal year. In applying the two-class method to interim periods, the Company allocates income to its quarterly periods independently and discretely from its year-to-date and annual periods. Basic net income per Class A common share is computed by dividing net income allocated to Class A common stockholders by the weighted average number of Class A common shares outstanding for the period, including Class A common shares to be issued with no prior remaining contingencies prior to issuance. Diluted net income per Class A common share is computed based on the weighted average number of shares of Class A common stock outstanding during each period, plus potential Class A common shares considered outstanding during the period, as long as the inclusion of such awards is not antidilutive. Potential Class A common shares consist of unvested RSUs and RSAs and Convertible Preferred Stock, using the more dilutive of either the two-class method or as-converted stock method. Performance-based RSUs are considered dilutive when the related performance criterion has been met.

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The components of basic and diluted net income per Class A common share were as follows (in millions, except per share data):


		16 weeks ended				12 weeks ended				28 weeks ended
		June 19, 2021		June 20, 2020				September 11, 2021		September 12, 2020		September 11, 2021		September 12, 2020
Basic net income per Class A common share	Basic net income per Class A common share						Basic net income per Class A common share
Net income	Net income	$	444.8	$	586.2		Net income	$	295.2	$	284.5	$	740.0	$	870.7
Accrued dividends on Convertible Preferred Stock	Accrued dividends on Convertible Preferred Stock	(36.4)		(3.9)			Accrued dividends on Convertible Preferred Stock	(27.3)		(26.9)		(63.7)		(30.8)
Earnings allocated to Convertible Preferred Stock	Earnings allocated to Convertible Preferred Stock	(36.2)		0			Earnings allocated to Convertible Preferred Stock	(11.0)		(9.0)		(84.2)		(9.0)
Net income allocated to Class A common stockholders - Basic	Net income allocated to Class A common stockholders - Basic	$	372.2	$	582.3		Net income allocated to Class A common stockholders - Basic	$	256.9	$	248.6	$	592.1	$	830.9

Weighted average Class A common shares outstanding - Basic (1)	Weighted average Class A common shares outstanding - Basic (1)	465.1		568.0			Weighted average Class A common shares outstanding - Basic (1)	465.3		477.3		465.2		529.2

Basic net income per Class A common share	Basic net income per Class A common share	$	0.80	$	1.03		Basic net income per Class A common share	$	0.55	$	0.52	$	1.27	$	1.57

Diluted net income per Class A common share	Diluted net income per Class A common share						Diluted net income per Class A common share
Net income allocated to Class A common stockholders - Basic	Net income allocated to Class A common stockholders - Basic	$	372.2	$	582.3		Net income allocated to Class A common stockholders - Basic	$	256.9	$	248.6	$	592.1	$	830.9
Accrued dividends on Convertible Preferred Stock	Accrued dividends on Convertible Preferred Stock	36.4		3.9			Accrued dividends on Convertible Preferred Stock	27.3		26.9		—		30.8
Earnings allocated to Convertible Preferred Stock	Earnings allocated to Convertible Preferred Stock	36.2		0			Earnings allocated to Convertible Preferred Stock	11.0		9.0		—		9.0
Net income allocated to Class A common stockholders - Diluted	Net income allocated to Class A common stockholders - Diluted	$	444.8	$	586.2		Net income allocated to Class A common stockholders - Diluted	$	295.2	$	284.5	$	592.1	$	870.7

Weighted average Class A common shares outstanding - Basic (1)	Weighted average Class A common shares outstanding - Basic (1)	465.1		568.0			Weighted average Class A common shares outstanding - Basic (1)	465.3		477.3		465.2		529.2
Dilutive effect of:	Dilutive effect of:						Dilutive effect of:
Restricted stock units and awards	Restricted stock units and awards	4.7		4.8			Restricted stock units and awards	6.1		4.0		5.4		4.3
Convertible preferred stock (2)		101.6		10.9
Convertible Preferred Stock (2)							Convertible Preferred Stock (2)	101.6		101.6		—		49.8
Weighted average Class A common shares outstanding - Diluted (3)	Weighted average Class A common shares outstanding - Diluted (3)	571.4		583.7			Weighted average Class A common shares outstanding - Diluted (3)	573.0		582.9		470.6		583.3

Diluted net income per Class A common share	Diluted net income per Class A common share	$	0.78	$	1.00		Diluted net income per Class A common share	$	0.52	$	0.49	$	1.26	$	1.49

(1) There were ~~20,048~~0.3 million Class A common shares remaining to be issued for the 1612 and 28 weeks ended ~~June 19,~~September 11, 2021 compared to 00.4 million Class A common shares remaining to be issued for the 1612 and 28 weeks ended ~~June 20,~~September 12, 2020.

(2) Reflects the number of shares of Convertible Preferred Stock issued, if converted into common stock for the period outstanding. For the 28 weeks ended September 11, 2021, 101.6 million potential common shares outstanding related to Convertible Preferred Stock were antidilutive.

(3) There were 0no potential Class A common shares outstanding related to RSUs and RSAs that were antidilutive for the 1612 and 28 weeks ended ~~June 19, 2021~~September 11, 2021. There were no potential Class A common shares outstanding related to RSUs and ~~June 20, 2020, respectively.~~RSAs that were antidilutive for the 12 and 28 weeks ended September 12, 2020.

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Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This ~~Quarterly Report~~Form 10-Q contains ~~forward-looking statements. All~~"forward-looking statements" within the meaning of the federal securities laws. The "forward-looking statements" include our current expectations, assumptions, estimates and projections about our business and our industry. They include statements ~~other than statements of historical facts contained in this Quarterly Report, including statements regarding~~relating to our future operating ~~results and~~or financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. In many cases, you can identify forward-looking statements by terms such as "may," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential," or "continue" or the negative of these terms or other similar expressions. Forward-looking statements are based on our current expectations and assumptions about market conditions and our future operating performance which the Company believes to be reasonable at this time. ~~The Company's results may vary significantly from quarter~~You can identify forward-looking statements by the use of words such as "outlook," "may," "should," "could," "estimates," "predicts," "potential," "continue," "anticipates," "believes," "plans," "expects," "future" and "intends" and similar expressions which are intended to ~~quarter,~~identify forward-looking statements. These statements are not guarantees of future performance and ~~these expectations~~are subject to risks, uncertainties and ~~assumptions involve risks~~other factors, some of which are beyond our control and ~~uncertainties,~~difficult to predict, including, among others, changes in macroeconomic conditions, the retail consumer behavior and environment and the Company's industry, failure to achieve ~~anticipated synergies and cost-savings,~~productivity initiatives, increased rates of food price inflation ~~or deflation~~ and ~~other~~ factors ~~that could cause actual results or events~~related to ~~be materially different from those anticipated. These~~the continued impact of the COVID-19 pandemic, about which there are still many unknowns, including its duration, recurrence, new virus strains, status and effectiveness of vaccinations, duration and scope of related government orders, financial assistance programs, mandates and regulations and the extent of the overall impact to our business and the communities we serve. Such risks and uncertainties ~~that~~ could cause actual results to differ materially from those expressed or ~~implied~~forecasted in the forward-looking statements. In evaluating forward-looking statements, ~~include those related to~~you should carefully consider the ~~COVID-19 pandemic, about which there are still many unknowns,~~risks and uncertainties more fully described in the "Risk Factors" section or other sections in our reports filed with the SEC including the ~~duration~~most recent annual report on Form 10-K and any subsequent periodic reports on Form 10-Q and current reports on Form 8-K. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements and risk factors. Forward-looking statements contained in this Form 10-Q reflect our view only as of the ~~pandemic and the extent~~date of ~~its impact. The Company undertakes~~this Form 10-Q. We undertake no obligation, other than as required by law, to update or revise any ~~such~~forward-looking statements, whether as a result of new information, future events or otherwise. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.

As used in this Form 10-Q, unless the context otherwise requires, references to "Albertsons," the "Company," "we," "us" and "our" refer to Albertsons Companies, Inc. and, where appropriate, its subsidiaries.

NON-GAAP FINANCIAL MEASURES

We define EBITDA as generally accepted accounting principles ("GAAP") earnings (net loss) before interest, income taxes, depreciation and amortization. We define Adjusted EBITDA as earnings (net loss) before interest, income taxes, depreciation and amortization, further adjusted to eliminate the effects of items management does not consider in assessing our ongoing core performance. We define Adjusted net income as GAAP Net income adjusted to eliminate the effects of items management does not consider in assessing our ongoing core performance. We define Adjusted net income per Class A common share as Adjusted net income divided by the weighted average diluted Class A common shares outstanding, as adjusted to reflect all restricted stock units ("RSUs") and restricted common stock ("RSAs") outstanding at the end of the period. We define Net Debt as total debt (which includes finance lease obligations and is net of deferred financing costs and original issue discount) minus unrestricted cash and cash equivalents and we define Net Debt Ratio as the ratio of Net Debt to Adjusted EBITDA for the rolling 52 or 53 week period. See "Results of Operations" for further discussion and a reconciliation of Adjusted EBITDA, Adjusted net income and Adjusted net income per Class A common share.

EBITDA, Adjusted EBITDA, Adjusted net income and Adjusted net income per Class A common share (collectively, the "Non-GAAP Measures") are performance measures that provide supplemental information we believe is useful to analysts and investors to evaluate our ongoing results of operations, when considered alongside other GAAP measures such as Net income, operating income and gross profit. These Non-GAAP Measures exclude

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the financial impact of items management does not consider in assessing our ongoing core operating performance, and thereby provide useful measures to analysts and investors of our operating performance on a period-to-period basis. Other companies may have different definitions of Non-GAAP Measures and provide for different

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adjustments, and comparability to our results of operations may be impacted by such differences. We also use Adjusted EBITDA and Net Debt Ratio for board of director and bank compliance reporting. Our presentation of Non-GAAP Measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

Non-GAAP Measures should not be considered as measures of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using Non-GAAP Measures only for supplemental purposes.

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SECOND QUARTER OF FISCAL 2021 OVERVIEW

Given the significant variations that occurred in our business during fiscal 2020 due to the COVID-19 pandemic, we provide a supplemental comparison of the 1612 and 28 weeks ended ~~June 19,~~September 11, 2021 ("~~first~~second quarter of fiscal 2021" and "first 28 weeks of fiscal 2021") to the 1612 and 28 weeks ended ~~June 15,~~September 7, 2019 ("~~first~~second quarter of fiscal 2019" and "first 28 weeks of fiscal 2019") for certain financial measures to demonstrate the two-year growth in our business in addition to comparisons to the 1612 and 28 weeks ended ~~June 20,~~September 12, 2020 ("~~first~~second quarter of fiscal 2020" and "first 28 weeks of fiscal 2020").

As of ~~June 19,~~September 11, 2021, we operated 2,278 retail food and drug stores with 1,725 pharmacies, ~~399~~401 associated fuel centers, 22 dedicated distribution centers and 20 manufacturing facilities. WeWith a strong consumer environment, we continue to make significant progress against all of our strategic priorities, including in-store excellence, accelerating our digital and omni-channel capabilities, ~~driving~~increasing productivity and strengthening our talent and culture. Identical sales ~~decreased 10.0%~~increased 1.5%, excluding fuel, during the ~~first~~second quarter of fiscal 2021, resulting in two-year stacked identical sales growth of ~~16.5%~~15.3%. We continue to gain market share in food market, and in Multi Outlet ("MULO") we are up on a two-year basis and down marginally on a one-year basis. Food market generally includes traditional supermarkets while MULO includes most food market, drug, mass merchants, club, dollar and military stores that sell food.

Underscoring our strong omni-channel capabilities that allow customers to complete their shopping with us in any way they want, our digital initiatives continue to resonate with our customers, as evidenced by our sustained sales levels in the ~~first~~second quarter of fiscal 2021, ~~with~~ digital sales ~~flat~~increasing 5% compared to the ~~first~~second quarter of fiscal 2020 and a two-year stacked growth of ~~276%~~248%. During the ~~first~~second quarter of fiscal 2021, we expanded our Drive Up & Go curbside pickup service to ~~1,740~~approximately 1,900 locations and offer delivery services across more than 2,000 of our stores. In our delivery service, we have expanded first party locations, and continue to work with third party services to engage with customers on the platform of their choice. In addition to our continuing partnership with Instacart, we have expanded our partnership with DoorDash to offer on-demand grocery delivery service where customers can receive a broad assortment in under one hour. We also recently launched a similar partnership with Uber, where customers can order a full assortment of groceries on the Uber platform.

WeWith ongoing benefit enhancements, we continue to achieve significant success with ~~members in~~ our just for U loyalty program, which drives higher sales and customer retention, with ~~participation~~membership growing ~~18%~~17% in the second quarter of fiscal 2021 compared to the ~~first~~second quarter of fiscal 2020, reaching ~~26.7~~27.5 million members. ~~Our~~Within the program, the number of actively engaged members, those that redeemed fuel or grocery rewards during the second quarter of fiscal 2021, increased by almost 9% compared to the second quarter of fiscal 2020, and our retention rate of actively engaged members was 93% in the second quarter of fiscal 2021.

During the second quarter of fiscal 2021 we continued to roll out our Own Brands across all our banners, launching 85 new products ~~resonate well with~~and generating strong growth as our ~~customers as evidenced by increased~~ sales penetration ~~of Own Brands~~increased by ~~100~~60 basis points to 25.2% compared to the ~~first~~second quarter of fiscal 2020. ~~Own Brands continues~~We also continue to ~~deliver on innovation with more than 300 new items launched in the first quarter of fiscal 2021. During the first quarter of fiscal 2021, we made~~make significant progress on productivity initiatives, including promotional effectiveness, purchasing and procurement, labor efficiency ~~shrink, promotional effectiveness~~ and ~~purchasing and procurement.~~shrink.

Our capital allocation strategy balances investing for the future, strengthening our balance sheet and returns to shareholders through a combination of dividends and opportunistic share repurchases. Capital expenditures were approximately ~~$513~~$823 million during the first ~~quarter~~28 weeks of fiscal 2021 as we opened ~~five~~seven new stores and completed 3376 upgrades and remodels. Our balance sheet remains strong with a Net Debt Ratio of ~~1.5x~~1.3x as of the end of the ~~first~~second quarter of fiscal 2021. Capital returns to shareholders induring the first ~~quarter~~28 weeks of fiscal 2021 included our $0.10 per share quarterly dividend.

~~In addition, during~~ On October 18, 2021, subsequent to the ~~first~~end of the second quarter of fiscal 2021, we announced a 20% increase to our ~~Nourishing Neighbors fundraising drive raised approximately $9 million from our customers at our check stands,~~quarterly dividend, which ~~was matched by the Albertsons Companies Foundation, resulting in approximately $18 million in funds to feed children and families. We have also been partnering with the~~is now $0.12 per share of Class A common stock.

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In addition, we have continued to partner with the Department of Health and Human Services and local health authorities to administer COVID-19 vaccines to our local communities and, as of ~~July 28,~~October 12, 2021, have administered approximately 67.5 million doses.

~~First~~Second quarter of fiscal 2021 highlights

In summary, our financial and operating highlights for the ~~first~~second quarter of fiscal 2021 include:

•Identical sales ~~decrease~~increase of ~~10.0%~~1.5%; two-year identical sales stacked growth ~~of 16.5%~~was 15.3%

•~~Sustained digital~~Digital sales ~~levels;~~increased 5%; on a two-year stacked basis digital sales growth was ~~276%~~248%

•Net income of ~~$445~~$295 million, or ~~$0.78~~$0.52 per Class A common share

•Adjusted net income of ~~$518~~$370 million, or ~~$0.89~~$0.64 per Class A common share

•Adjusted EBITDA of ~~$1,308~~$965 million

•Opened ~~five~~one new ~~stores~~store and completed 3343 remodel projects

•Launched ~~320~~153 new Drive Up & Go locations ~~and one micro-fulfillment center~~

Stores

The following table shows stores operating, acquired, opened and closed during the periods presented:


		16 weeks ended		12 weeks ended				28 weeks ended
			June 19, 2021		June 20, 2020		September 11, 2021	September 12, 2020	September 11, 2021	September 12, 2020
Stores, beginning of period	Stores, beginning of period		2,277		2,252	Stores, beginning of period	2,278	2,252	2,277	2,252
Acquired (1)	Acquired (1)		1		—	Acquired (1)	—	—	1	—
Opened	Opened		5		—	Opened	1	2	6	2
Closed	Closed		(5)		—	Closed	(1)	(2)	(6)	(2)
Stores, end of period	Stores, end of period		2,278		2,252	Stores, end of period	2,278	2,252	2,278	2,252

(1) The 1628 weeks ended ~~June 19,~~September 11, 2021 includes one store acquired from Kings and Balducci's that transferred to us subsequent to the end of the fourth quarter of fiscal 2020.

The following table summarizes our stores by size:


		Number of stores		Percent of Total				Retail Square Feet (1)			Number of stores		Percent of Total				Retail Square Feet (1)
Square Footage	Square Footage	June 19, 2021	June 20, 2020	June 19, 2021		June 20, 2020		June 19, 2021	June 20, 2020	Square Footage	September 11, 2021	September 12, 2020	September 11, 2021		September 12, 2020		September 11, 2021	September 12, 2020
Less than 30,000	Less than 30,000	223	204	9.8	%	9.1	%	5.1	4.7	Less than 30,000	223	204	9.8	%	9.1	%	5.1	4.7
30,000 to 50,000	30,000 to 50,000	786	783	34.5	%	34.7	%	32.9	32.9	30,000 to 50,000	786	781	34.5	%	34.6	%	32.9	32.8
More than 50,000	More than 50,000	1,269	1,265	55.7	%	56.2	%	75.0	74.7	More than 50,000	1,269	1,267	55.7	%	56.3	%	75.0	74.8
Total Stores	Total Stores	2,278	2,252	100.0	%	100.0	%	113.0	112.3	Total Stores	2,278	2,252	100.0	%	100.0	%	113.0	112.3

(1) In millions, reflects total square footage of retail stores operating at the end of the period.

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RESULTS OF OPERATIONS

Comparison of ~~First~~Second Quarter of Fiscal 2021 and First 28 Weeks of Fiscal 2021 to Second Quarter of Fiscal 2020 and First ~~Quarter~~28 Weeks of Fiscal 2020:

The following ~~table~~tables and related discussion set forth certain information and comparisons regarding the components of our Condensed Consolidated Statements of Operations for the ~~first~~second quarter of fiscal 2021 and first 28 weeks of fiscal 2021 to the second quarter of fiscal 2020 and first ~~quarter~~28 weeks of fiscal 2020 (in millions, except per share data).


											12 weeks ended
											September 11, 2021		% of Sales		September 12, 2020		% of Sales
Net sales and other revenue										Net sales and other revenue	$	16,505.7	100.0	%	$	15,757.6	100.0	%
Cost of sales										Cost of sales	11,788.7		71.4		11,182.7		71.0
Gross profit										Gross profit	4,717.0		28.6		4,574.9		29.0
Selling and administrative expenses										Selling and administrative expenses	4,231.3		25.6		4,031.2		25.6
Gain on property dispositions and impairment losses, net										Gain on property dispositions and impairment losses, net	(0.2)		—		(18.3)		(0.1)

Operating income										Operating income	485.9		3.0		562.0		3.5
Interest expense, net										Interest expense, net	109.3		0.7		128.6		0.8
Loss on debt extinguishment										Loss on debt extinguishment	—		—		49.1		0.3
Other income, net										Other income, net	(18.9)		(0.1)		(11.4)		(0.1)
Income before income taxes										Income before income taxes	395.5		2.4		395.7		2.5
Income tax expense										Income tax expense	100.3		0.6		111.2		0.7
Net income										Net income	$	295.2	1.8	%	$	284.5	1.8	%

Basic net income per Class A common share										Basic net income per Class A common share	$	0.55			$	0.52
Diluted net income per Class A common share										Diluted net income per Class A common share	0.52				0.49

		16 weeks ended									28 weeks ended
		June 19, 2021		% of Sales		June 20, 2020		% of Sales			September 11, 2021		% of Sales		September 12, 2020		% of Sales
Net sales and other revenue	Net sales and other revenue	$	21,269.4	100.0	%	$	22,751.6	100.0	%	Net sales and other revenue	$	37,775.1	100.0	%	$	38,509.2	100.0	%
Cost of sales	Cost of sales	15,078.4		70.9		15,980.1		70.2		Cost of sales	26,867.1		71.1		27,162.8		70.5
Gross profit	Gross profit	6,191.0		29.1		6,771.5		29.8		Gross profit	10,908.0		28.9		11,346.4		29.5
Selling and administrative expenses	Selling and administrative expenses	5,503.6		25.9		5,769.4		25.4		Selling and administrative expenses	9,734.9		25.8		9,800.6		25.5
Loss on property dispositions and impairment losses, net	Loss on property dispositions and impairment losses, net	0.3		—		30.3		0.1		Loss on property dispositions and impairment losses, net	0.1		—		12.0		—

Operating income	Operating income	687.1		3.2		971.8		4.3		Operating income	1,173.0		3.1		1,533.8		4.0
Interest expense, net	Interest expense, net	153.3		0.7		180.6		0.8		Interest expense, net	262.6		0.7		309.2		0.8

Other (income) expense, net		(43.5)		(0.2)		3.1		—
Loss on debt extinguishment										Loss on debt extinguishment	—		—		49.1		0.1
Other income, net										Other income, net	(62.4)		(0.2)		(8.3)		—
Income before income taxes	Income before income taxes	577.3		2.7		788.1		3.5		Income before income taxes	972.8		2.6		1,183.8		3.1
Income tax expense	Income tax expense	132.5		0.6		201.9		0.9		Income tax expense	232.8		0.6		313.1		0.8
Net income	Net income	$	444.8	2.1	%	$	586.2	2.6	%	Net income	$	740.0	2.0	%	$	870.7	2.3	%

Basic net income per Class A common share	Basic net income per Class A common share	$	0.80			$	1.03			Basic net income per Class A common share	$	1.27			$	1.57
Diluted net income per Class A common share	Diluted net income per Class A common share	0.78				1.00				Diluted net income per Class A common share	1.26				1.49

Net Sales and Other Revenue

Net sales and other revenue ~~decreased~~increased ~~6.5%~~4.7% to ~~$21,269.4~~$16,505.7 million for the ~~first~~second quarter of fiscal 2021 from ~~$22,751.6~~$15,757.6 million for the second quarter of fiscal 2020. The increase in Net sales and other revenue was primarily driven by our 1.5% increase in identical sales, which includes an increase in pharmacy sales, partially from

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administering COVID-19 vaccines, an increase in sales related to the stores acquired and opened since the second quarter of fiscal 2020 and higher fuel sales.

Net sales and other revenue decreased 1.9% to $37,775.1 million for the first ~~quarter~~28 weeks of fiscal 2021 from $38,509.2 million for the first 28 weeks of fiscal 2020. The decrease in Net sales and other revenue was primarily driven by our ~~10.0%~~5.3% decrease in identical sales, ~~driven by significantly elevated demand at the onset of the COVID-19 pandemic in the first quarter of fiscal 2020 and~~which was partially offset by an increase in pharmacy sales, primarily from administering COVID-19 ~~vaccines. The decrease~~vaccines, and an increase in ~~Net~~ sales related to the stores opened since the first 28 weeks of fiscal 2020 and ~~other revenue was also partially offset by $460.1 million in~~ higher fuel sales.

Identical Sales, Excluding Fuel

Identical sales include stores operating during the same period in both the current year and the prior year, comparing sales on a daily basis. Direct to consumer digital sales are included in identical sales, and fuel sales are excluded from identical sales. Acquired stores become identical on the one-year anniversary date of the acquisition. Identical sales for the 1612 and 28 weeks ended ~~June 19,~~September 11, 2021 and the 1612 and 28 weeks ended ~~June 20,~~September 12, 2020, respectively, were:

16 weeks ended
June 19,
2021 June 20,
2020
Identical sales, excluding fuel (10.0)% 26.5%

12 weeks ended

28 weeks ended

September 11,
2021

September 12,
2020

September 11,
2021

September 12,
2020

Identical sales, excluding fuel

1.5%

13.8%

(5.3)%

21.0%

The decrease in identical sales for the first quarter of fiscal 2021 was a direct result of significant demand at the onset of the COVID-19 pandemic during the first quarter of fiscal 2020. Though our identical sales decreased in the first quarter of fiscal 2021, we retained market share gains compared to pre-pandemic levels.

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Gross Profit

Gross profit represents the portion of Net sales and other revenue remaining after deducting Cost of sales during the period, including purchase and distribution costs. These costs include, among other things, purchasing and sourcing costs, inbound freight costs, product quality testing costs, warehouse and distribution costs, Own Brands program costs and digital-related delivery and handling costs. Advertising, promotional expenses and vendor allowances are also components of Cost of sales.

Gross profit margin decreased to ~~29.1%~~28.6% during the ~~first~~second quarter of fiscal 2021 compared to ~~29.8%~~29.0% during the ~~first~~second quarter of fiscal 2020. Excluding the impact of fuel, gross profit margin was flat compared to the second quarter of fiscal 2020, primarily due to higher product, supply chain and advertising costs, offset by benefits related to productivity initiatives, favorable product mix and improved pharmacy margins related to administering COVID-19 vaccines.

Gross profit margin decreased to 28.9% during the first 28 weeks of fiscal 2021 compared to 29.5% during the first 28 weeks of fiscal 2020. Excluding the impact of fuel, gross profit margin increased 10five basis points compared to the first ~~quarter~~28 weeks of fiscal 2020. The increase in gross profit margin was primarily driven by productivity initiatives, favorable product mix and improved pharmacy margins related to administering COVID-19 vaccines, ~~productivity initiatives related to optimization of promotions, growth in Own Brands penetration and lower COVID-19 related costs,~~ partially offset by ~~the~~ sales ~~deleverage.~~deleverage and higher product and supply chain costs.

Selling and Administrative Expenses

Selling and administrative expenses consist primarily of store level costs, including wages, employee benefits, rent, depreciation and utilities, in addition to certain back-office expenses related to our corporate and division offices.

Selling and administrative expenses ~~increased to 25.9%~~were 25.6% of Net sales and other revenue during the ~~first~~second quarter of fiscal 2021 ~~compared to 25.4% of Net sales~~ and ~~other revenue for~~ the ~~first~~second quarter of fiscal 2020. Excluding the impact of fuel, Selling and administrative expenses as a percentage of Net sales and other revenue increased ~~115~~55 basis points during the ~~first~~second quarter of fiscal 2021 compared to the second quarter of fiscal 2020. The increase in Selling and administrative expenses as a percentage

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of Net sales and other revenue was primarily attributable to employee costs, depreciation and other expenses related to our investments in our digital and omni-channel capabilities and strategic priorities. The increase in employee costs was the result of additional labor related to reopening fresh departments, market-driven retail wage rate increases and higher equity-based compensation expense. These increases were partially offset by lower COVID-19 related costs and execution of productivity initiatives.

Selling and administrative expenses increased to 25.8% of Net sales and other revenue during the first ~~quarter~~28 weeks of fiscal 2021 compared to 25.5% of Net sales and other revenue for the first 28 weeks of fiscal 2020. Excluding the impact of fuel, Selling and administrative expenses as a percentage of Net sales and other revenue increased 90 basis points during the first 28 weeks of fiscal 2021 compared to the first 28 weeks of fiscal 2020. The increase in Selling and administrative expenses as a percentage of Net sales and other revenue was primarily attributable to ~~the~~ sales deleverage, ~~including~~together with higher employee ~~wage and benefit~~ costs, depreciation and ~~amortization~~other expenses related to our investments in our digital and ~~rent~~omni-channel capabilities and ~~occupancy costs.~~strategic priorities. The increase in employee costs was the result of additional labor related to reopening of fresh departments, market-driven retail wage rate increases and higher equity-based compensation expense. These increases were partially offset by ~~benefits related to the execution of our productivity initiatives and~~ lower COVID-19 related ~~costs.~~costs and execution of productivity initiatives.

(Gain) Loss on Property Dispositions and Impairment Losses, Net

For the second quarter of fiscal 2021, net gain on property dispositions and impairment losses was $0.2 million, primarily driven by $6.2 million of gains from the sale of assets, partially offset by $6.0 million of intangible asset impairment. For the second quarter of fiscal 2020, net gain on property dispositions and impairment losses was $18.3 million, primarily driven by $20.0 million of gains from the sale of assets, partially offset by $1.7 million of asset impairments.

For the first ~~quarter~~28 weeks of fiscal 2021, net loss on property dispositions and impairment losses was ~~$0.3~~$0.1 million, primarily driven by ~~$9.9~~$15.9 million of asset impairments, primarily related to right-of-use assets and intangible assets, partially offset by $15.8 million of gains from the sale of assets. For the first 28 weeks of fiscal 2020, net loss on property dispositions and impairment losses was $12.0 million, primarily driven by $22.8 million of asset impairments, primarily related to right-of-use assets, partially offset by ~~$9.6~~$10.8 million of gains from the sale of real estate assets. For the first quarter of fiscal 2020, net loss on property dispositions and impairment losses was $30.3 million, primarily driven by $21.1 million of asset impairments, primarily related to right-of-use assets, and $9.2 million of losses from the sale of real estate assets.

Interest Expense, Net

Interest expense, net was ~~$153.3~~$109.3 million during the ~~first~~second quarter of fiscal 2021 compared to ~~$180.6~~$128.6 million during the ~~first~~second quarter of fiscal 2020. The decrease in interest expense was primarily attributable to lower average outstanding borrowings and lower average interest rates. The weighted average interest rate during the ~~first~~second quarter of fiscal 2021 was ~~5.6%~~5.4%, excluding ~~amortization~~deferred financing costs and ~~write-off~~original issue discount, compared to 6.0% during the second quarter of fiscal 2020.

Interest expense, net was $262.6 million during the first 28 weeks of fiscal 2021 compared to $309.2 million during the first 28 weeks of fiscal 2020. The decrease in interest expense was primarily attributable to lower average outstanding borrowings and lower average interest rates. The weighted average interest rate during first 28 weeks of fiscal 2021 was 5.5%, excluding deferred financing costs and original issue discount, compared to 6.0% during the first ~~quarter~~28 weeks of fiscal 2020.

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Loss of Debt Extinguishment

There was no loss on debt extinguishment during both the second quarter of fiscal 2021 and first 28 weeks of fiscal 2021, compared to loss on debt extinguishment of $49.1 million during both the second quarter of fiscal 2020 and first 28 weeks of fiscal 2020. The loss on debt extinguishment during the second quarter and first 28 weeks of fiscal 2020 primarily consisted of a redemption premium payment and write-off of debt discounts associated with the redemption of the Company's 6.625% Senior Unsecured Notes due 2024 (the "2024 Notes").

Other ~~(Income) Expense,~~Income, Net

For the ~~first~~second quarter of fiscal 2021, ~~other~~Other income, net was ~~$43.5~~$18.9 million compared to ~~other expense, net of $3.1~~$11.4 million for the ~~first~~second quarter of fiscal 2020. Other income, net during the ~~first~~second quarter of fiscal 2021 was primarily driven by ~~realized gains from non-operating investments,~~ non-service cost components of net pension and post-retirement expense and income related to our equity investment, partially offset by unrealized losses from non-operating investments. Other ~~expense,~~income, net during the ~~first~~second quarter of fiscal 2020 was primarily driven by ~~recognized~~

~~Table~~non-service cost components of ~~Contents~~net pension and post-retirement expense and income related to our equity investment.

For the first 28 weeks of fiscal 2021, Other income, net was $62.4 million compared to $8.3 million for the first 28 weeks of fiscal 2020. Other income, net during the first 28 weeks of fiscal 2021 was primarily driven by non-service cost components of net pension and post-retirement expense, realized gains from non-operating investments and income related to our equity investment, partially offset by unrealized losses from non-operating investments. Other income, net during the first 28 weeks of fiscal 2020 was primarily driven by non-service cost components of net pension and post-retirement expense and income related to our equity investment, partially offset by recognized losses on interest rate swaps and unrealized losses from non-operating ~~investments, partially offset by income from non-service cost components of net pension and post-retirement expense.~~investments.

Income Taxes

Income tax expense was ~~$132.5~~$100.3 million, representing a ~~23.0%~~25.4% effective tax rate, for the ~~first~~second quarter of fiscal 2021. Income tax expense was ~~$201.9~~$111.2 million, representing a ~~25.6%~~28.1% effective tax rate, for the second quarter of fiscal 2020. The decrease in the effective tax rate was primarily driven by nondeductible transaction-related costs incurred during the second quarter of fiscal 2020.

Income tax expense was $232.8 million, representing a 23.9% effective tax rate, for the first ~~quarter~~28 weeks of fiscal 2021. Income tax expense was $313.1 million, representing a 26.4% effective tax rate, for the first 28 weeks of fiscal 2020. The decrease in the effective income tax rate was primarily driven by the recognition of ~~certain~~ discrete state income tax benefits during the first ~~quarter~~28 weeks of fiscal ~~2021.~~ 2021 and certain nondeductible transaction-related costs incurred during the first 28 weeks of fiscal 2020.

We currently expect our annual effective tax rate for fiscal 2021 to be in the range of approximately ~~25%~~23% to 24%.

Net Income and Adjusted Net Income

Net income was ~~$444.8~~$295.2 million, or ~~$0.78~~$0.52 per Class A common share, during the second quarter of fiscal 2021 compared to $284.5 million, or $0.49 per Class A common share, during the second quarter of fiscal 2020. Adjusted net income was $369.5 million, or $0.64 per Class A common share, during the second quarter of fiscal 2021 compared to $356.4 million, or $0.60 per Class A common share, during the second quarter of fiscal 2020.

Net income was $740.0 million, or $1.26 per Class A common share, during the first ~~quarter~~28 weeks of fiscal 2021 compared to ~~$586.2 million,~~$870.7, or ~~$1.00~~$1.49 per Class A common share, during the first ~~quarter~~28 weeks of fiscal 2020. Adjusted net income was ~~$517.5~~$887.0 million, or ~~$0.89~~$1.53 per Class A common share, during the first ~~quarter~~28 weeks of fiscal 2021 compared to ~~$801.2~~$1,157.6 million, or ~~$1.35~~$1.95 per Class A common share, during the first ~~quarter~~28 weeks of fiscal 2020.

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Adjusted EBITDA

For the ~~first~~second quarter of fiscal 2021, Adjusted EBITDA was ~~$1,308.1~~$965.4 million, or ~~6.2%~~5.8% of Net sales and other revenue, compared to ~~$1,691.0~~$948.4 million, or ~~7.4%~~6.0% of Net sales and other revenue, for the second quarter of fiscal 2020. The increase in Adjusted EBITDA was primarily the result of an increase in Net sales and other revenue, partially offset by an increase in Selling and administrative expenses. For the first 28 weeks of fiscal 2021, Adjusted EBITDA was $2,273.5 million, or 6.0% of Net sales and other revenue, compared to $2,639.4 million, or 6.9% of Net sales and other revenue for the first ~~quarter~~28 weeks of fiscal 2020. The decrease in Adjusted EBITDA was primarily the result of a decrease in Net sales and other revenue.

Supplemental Two-Year Results - Comparison of ~~First~~Second Quarter of Fiscal 2021 to ~~First~~Second Quarter of Fiscal 2019

The following table provides a comparison of the ~~first~~second quarter of fiscal 2021 to the ~~first~~second quarter of fiscal 2019 for certain financial measures, including a compounded annual growth rate ("CAGR"), to demonstrate the two-year growth in our business. We believe these supplemental comparisons provide meaningful and useful information to investors about the trends in our business relative to pre-COVID-19 pandemic periods. These comparisons should not be reviewed in isolation or considered substitutes for our financial results included elsewhere in this Form 10-Q.


	~~First~~Second Quarter of Fiscal 2021 Supplemental Two-Year Results
Identical sales two-year stacked (1)	~~16.5~~15.3	%

Net income per Class A common share two-year CAGR (2)	~~212.2~~1.0	%

Adjusted net income per Class A common share two-year CAGR	~~72.2~~94.0	%
Net income two-year CAGR (2)	~~201.3~~0.1	%
Adjusted net income two-year CAGR	93.0	%
Adjusted EBITDA two-year CAGR	~~22.1~~30.4	%
Margins:
Gross profit (1)	Increased 9085 basis points
Selling and administrative expenses (1)	Decreased 75120 basis points

(1) Excluding ~~fuel~~fuel.

(2) The net income per Class A common share two-year CAGR and net income two-year CAGR are impacted by gains related to sale leaseback transactions in the second quarter of fiscal 2019.

Net sales and other revenue was ~~$21.3~~$16.5 billion during the ~~first~~second quarter of fiscal 2021 compared to ~~$18.7~~$14.2 billion during the ~~first~~second quarter of fiscal 2019. The increase in sales compared to the ~~first~~second quarter of fiscal 2019 iswas primarily due to the ~~16.5%~~15.3% increase in two-year stacked identical sales. Identical sales were driven in part by the ~~276%~~248% two-year stacked increase in digital sales.

Gross profit margin was ~~29.1%~~28.6% during the ~~first~~second quarter of fiscal 2021 compared to ~~28.0%~~27.8% during the ~~first~~second quarter of fiscal 2019. Excluding the impact of fuel, gross profit margin increased by approximately 9085 basis points compared to the second quarter of fiscal 2019, primarily driven by sales leverage, improvements in shrink expense, productivity initiatives and improved pharmacy margins related to administering COVID-19 vaccines, partially offset by growth in digital sales and an increase in supply chain costs and COVID-19 expenses.

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to the first quarter of fiscal 2019, primarily driven by improvements in shrink expense, productivity initiatives, sales leverage and improved pharmacy margins related to administering COVID-19 vaccines, partially offset by our growth in digital sales and incremental COVID-19 expenses.

Selling and administrative expenses were ~~25.9%~~25.6% of sales during the ~~first~~second quarter of fiscal 2021 compared to ~~26.4%~~26.8% of sales for the ~~first~~second quarter of fiscal 2019. Excluding the impact of fuel, selling and administrative expenses as a percentage of sales decreased 75approximately 120 basis points primarily due to sales leverage and the execution of ~~our~~ productivity initiatives, partially offset by increases in employee costs and other expenses related to our investments in our digital and omni-channel capabilities and strategic priorities and increased market driven retail wage rates, higher equity-based compensation expense as well as incremental COVID-19 expenses.

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Reconciliation of Non-GAAP Measures

The following tables reconcile Net income to Adjusted net income, and Net income per Class A common share to Adjusted net income per Class A common share (in millions, except per share data):


		16 weeks ended							12 weeks ended
		June 19, 2021			June 20, 2020		June 15, 2019 Supplemental				September 11, 2021			September 12, 2020		September 7, 2019 Supplemental
Numerator:	Numerator:									Numerator:

Net income	Net income	$	444.8		$	586.2	$	49.0		Net income	$	295.2		$	284.5	$	294.8
Adjustments:	Adjustments:									Adjustments:
(Gain) loss on interest rate and commodity hedges, net (d)	(Gain) loss on interest rate and commodity hedges, net (d)	(6.3)			24.5		0.3			(Gain) loss on interest rate and commodity hedges, net (d)	(1.2)			1.4		—
Facility closures and transformation (1)(b)	Facility closures and transformation (1)(b)	20.8			9.8		—			Facility closures and transformation (1)(b)	14.8			6.1		—
Acquisition and integration costs (2)(b)	Acquisition and integration costs (2)(b)	3.5			6.3		26.1			Acquisition and integration costs (2)(b)	3.4			2.2		7.5
Equity-based compensation expense (b)	Equity-based compensation expense (b)	22.2			19.0		11.1			Equity-based compensation expense (b)	26.8			9.3		6.5
Loss (gain) on property dispositions and impairment losses, net		0.3			30.3		(28.5)
(Gain) loss on property dispositions and impairment losses, net (3)										(Gain) loss on property dispositions and impairment losses, net (3)	(0.2)			(18.3)		(435.5)
LIFO expense (a)	LIFO expense (a)	14.5			13.1		10.5			LIFO expense (a)	14.6			10.1		5.8
Discretionary COVID-19 pandemic related costs (3)(b)		—			89.9		—

Government-mandated incremental COVID-19 pandemic related pay (4)(b)	Government-mandated incremental COVID-19 pandemic related pay (4)(b)	29.1			—		—			Government-mandated incremental COVID-19 pandemic related pay (4)(b)	18.3			—		—
Civil disruption related costs (5)(b)	Civil disruption related costs (5)(b)	—			14.9		—			Civil disruption related costs (5)(b)	—			(1.9)		—
Transaction and reorganization costs related to convertible preferred stock issuance and initial public offering (b)		—			20.3		—
Transaction and reorganization costs related to Convertible Preferred Stock issuance and initial public offering (b)										Transaction and reorganization costs related to Convertible Preferred Stock issuance and initial public offering (b)	—			4.1		—
Amortization of debt discount and deferred financing costs (c)	Amortization of debt discount and deferred financing costs (c)	6.4			6.5		8.4			Amortization of debt discount and deferred financing costs (c)	4.7			4.7		35.4
Loss on debt extinguishment	Loss on debt extinguishment	—			—		42.7			Loss on debt extinguishment	—			49.1		23.1
Amortization of intangible assets resulting from acquisitions (b)	Amortization of intangible assets resulting from acquisitions (b)	16.1			17.5		92.8			Amortization of intangible assets resulting from acquisitions (b)	11.5			13.1		68.9

Miscellaneous adjustments (6)(f)	Miscellaneous adjustments (6)(f)	(10.8)			34.1		8.8			Miscellaneous adjustments (6)(f)	5.1			13.3		24.3
Tax impact of adjustments to Adjusted net income	Tax impact of adjustments to Adjusted net income	(23.1)			(71.2)		(44.6)			Tax impact of adjustments to Adjusted net income	(23.5)			(21.3)		68.4
Adjusted net income	Adjusted net income	$	517.5		$	801.2	$	176.6		Adjusted net income	$	369.5		$	356.4	$	99.2

Denominator:	Denominator:									Denominator:

Weighted average Class A common shares outstanding - diluted	Weighted average Class A common shares outstanding - diluted	571.4			583.7		579.4			Weighted average Class A common shares outstanding - diluted	573.0			582.9		580.6
Adjustments:	Adjustments:									Adjustments:

Restricted stock units and awards (7)	Restricted stock units and awards (7)	9.4			8.2		9.5			Restricted stock units and awards (7)	8.1			9.6		7.6
Adjusted weighted average Class A common shares outstanding - diluted	Adjusted weighted average Class A common shares outstanding - diluted	580.8			591.9		588.9			Adjusted weighted average Class A common shares outstanding - diluted	581.1			592.5		588.2

Adjusted net income per Class A common share - diluted	Adjusted net income per Class A common share - diluted	$	0.89		$	1.35	$	0.30		Adjusted net income per Class A common share - diluted	$	0.64		$	0.60	$	0.17

Supplemental Two-Year CAGR:	Supplemental Two-Year CAGR:									Supplemental Two-Year CAGR:
Net income two-year CAGR	Net income two-year CAGR	201.3		%						Net income two-year CAGR	0.1		%
Adjusted net income two-year CAGR										Adjusted net income two-year CAGR	93.0		%

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		16 weeks ended							12 weeks ended
		June 19, 2021			June 20, 2020		June 15, 2019 Supplemental				September 11, 2021			September 12, 2020		September 7, 2019 Supplemental
Net income per Class A common share - diluted	Net income per Class A common share - diluted	$	0.78		$	1.00	$	0.08		Net income per Class A common share - diluted	$	0.52		$	0.49	$	0.51

Non-GAAP adjustments (8)	Non-GAAP adjustments (8)	0.13			0.37		0.22			Non-GAAP adjustments (8)	0.13			0.12		(0.33)
Restricted stock units and awards (7)	Restricted stock units and awards (7)	(0.02)			(0.02)		—			Restricted stock units and awards (7)	(0.01)			(0.01)		(0.01)
Adjusted net income per Class A common share - diluted	Adjusted net income per Class A common share - diluted	$	0.89		$	1.35	$	0.30		Adjusted net income per Class A common share - diluted	$	0.64		$	0.60	$	0.17

Supplemental Two-Year CAGR:	Supplemental Two-Year CAGR:									Supplemental Two-Year CAGR:
Net income per Class A common share two-year CAGR	Net income per Class A common share two-year CAGR	212.2		%						Net income per Class A common share two-year CAGR	1.0		%
Adjusted net income per Class A common share two-year CAGR	Adjusted net income per Class A common share two-year CAGR	72.2		%						Adjusted net income per Class A common share two-year CAGR	94.0		%

The following table is a reconciliation of Adjusted net income to Adjusted EBITDA:


		16 weeks ended							12 weeks ended
		June 19, 2021			June 20, 2020		June 15, 2019 Supplemental				September 11, 2021			September 12, 2020		September 7, 2019 Supplemental
Adjusted net income (9)	Adjusted net income (9)	$	517.5		$	801.2	$	176.6		Adjusted net income (9)	$	369.5		$	356.4	$	99.2
Tax impact of adjustments to Adjusted net income	Tax impact of adjustments to Adjusted net income	23.1			71.2		44.6			Tax impact of adjustments to Adjusted net income	23.5			21.3		(68.4)
Income tax expense	Income tax expense	132.5			201.9		15.7			Income tax expense	100.3			111.2		81.9
Amortization of debt discount and deferred financing costs (c)	Amortization of debt discount and deferred financing costs (c)	(6.4)			(6.5)		(8.4)			Amortization of debt discount and deferred financing costs (c)	(4.7)			(4.7)		(35.4)
Interest expense, net	Interest expense, net	153.3			180.6		225.2			Interest expense, net	109.3			128.6		177.5
Amortization of intangible assets resulting from acquisitions (b)	Amortization of intangible assets resulting from acquisitions (b)	(16.1)			(17.5)		(92.8)			Amortization of intangible assets resulting from acquisitions (b)	(11.5)			(13.1)		(68.9)
Depreciation and amortization (e)	Depreciation and amortization (e)	504.2			460.1		515.9			Depreciation and amortization (e)	379.0			348.7		381.7
Adjusted EBITDA	Adjusted EBITDA	$	1,308.1		$	1,691.0	$	876.8		Adjusted EBITDA	$	965.4		$	948.4	$	567.6

Supplemental Two-Year CAGR:	Supplemental Two-Year CAGR:									Supplemental Two-Year CAGR:
Adjusted EBITDA two-year CAGR	Adjusted EBITDA two-year CAGR	22.1		%						Adjusted EBITDA two-year CAGR	30.4		%

(1) Includes costs related to closures of operating facilities and third-party consulting fees related to our strategic priorities and associated business transformation.

(2) Related to conversion activities and related costs associated with integrating acquired businesses. Also includes expenses related to management fees in prior periods paid in connection with acquisition and financing activities.

(3) ~~Includes $53 million of charitable contributions~~Primarily due to ~~our communities for hunger relief and $36.9 million~~gains related to sale leaseback transactions in ~~final reward payments to front-line associates at~~ the ~~end of the first~~second quarter of fiscal ~~2020.~~2019.

(4) Represents incremental pay that is legislatively required in certain municipalities in which we operate.

(5) Primarily includes costs related to store damage, inventory losses and community support as a result of the civil disruption during late May 2020 and early June 2020 in certain markets.

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(6) Miscellaneous adjustments include the following (see table below):


		16 weeks ended						12 weeks ended
		June 19, 2021		June 20, 2020		June 15, 2019 Supplemental				September 11, 2021		September 12, 2020		September 7, 2019 Supplemental
Non-cash lease-related adjustments	Non-cash lease-related adjustments	$	2.1	$	2.0	$	1.9		Non-cash lease-related adjustments	$	1.0	$	(0.1)	$	4.4
Lease and lease-related costs for surplus and closed stores	Lease and lease-related costs for surplus and closed stores	10.2		18.7		6.8			Lease and lease-related costs for surplus and closed stores	6.5		10.8		5.2

Net realized and unrealized (gain) loss on non-operating investments	Net realized and unrealized (gain) loss on non-operating investments	(22.5)		4.5		(3.3)			Net realized and unrealized (gain) loss on non-operating investments	12.8		0.2		10.8

Other (i)	Other (i)	(0.6)		8.9		3.4			Other (i)	(15.2)		2.4		3.9
Total miscellaneous adjustments	Total miscellaneous adjustments	$	(10.8)	$	34.1	$	8.8		Total miscellaneous adjustments	$	5.1	$	13.3	$	24.3

(i) Primarily includes adjustments for pension settlement gain, certain legal and regulatory accruals, unconsolidated equity investments and certain contract termination costs.

(7) Represents incremental unvested RSUs and unvested RSAs to adjust the diluted weighted average Class A common shares outstanding during each respective period to the fully outstanding RSUs and RSAs as of the end of each respective period.

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(8) Reflects the per share impact of Non-GAAP adjustments for each period. See the reconciliation of Net income to Adjusted net income above for further details.

(9) ~~Reflects the impact of Non-GAAP adjustments for each period presented.~~ See the reconciliation of Net income to Adjusted net income above for further details.

Non-GAAP adjustment classifications within the Consolidated Statement of Operations:

(a) Cost of sales

(b) Selling and administrative expenses

(d) (Gain) loss on interest rate and commodity hedges, net:


		16 weeks ended						12 weeks ended
		June 19, 2021		June 20, 2020		June 15, 2019 Supplemental				September 11, 2021		September 12, 2020		September 7, 2019 Supplemental
Cost of sales	Cost of sales	$	(6.6)	$	5.5	$	0.3		Cost of sales	$	(1.2)	$	1.0	$	—
Other (income) expense, net		0.3		19.0		—
Other income, net									Other income, net	—		0.4		—
Total (Gain) loss on interest rate and commodity hedges, net	Total (Gain) loss on interest rate and commodity hedges, net	$	(6.3)	$	24.5	$	0.3		Total (Gain) loss on interest rate and commodity hedges, net	$	(1.2)	$	1.4	$	—

(e) Depreciation and amortization:


		16 weeks ended						12 weeks ended
		June 19, 2021		June 20, 2020		June 15, 2019 Supplemental				September 11, 2021		September 12, 2020		September 7, 2019 Supplemental
Cost of sales	Cost of sales	$	50.8	$	54.0	$	52.0		Cost of sales	$	36.0	$	40.1	$	38.0
Selling and administrative expenses	Selling and administrative expenses	453.4		406.1		463.9			Selling and administrative expenses	343.0		308.6		343.7
Total Depreciation and amortization	Total Depreciation and amortization	$	504.2	$	460.1	$	515.9		Total Depreciation and amortization	$	379.0	$	348.7	$	381.7

(f) Miscellaneous adjustments:


		16 weeks ended						12 weeks ended
		June 19, 2021		June 20, 2020		June 15, 2019 Supplemental				September 11, 2021		September 12, 2020		September 7, 2019 Supplemental
Selling and administrative expenses	Selling and administrative expenses	$	6.8	$	24.8	$	7.1		Selling and administrative expenses	$	3.4	$	9.9	$	9.6
Other (income) expense, net		(17.6)		9.3		1.7
Other income, net									Other income, net	1.7		3.4		14.7
Total Miscellaneous adjustments	Total Miscellaneous adjustments	$	(10.8)	$	34.1	$	8.8		Total Miscellaneous adjustments	$	5.1	$	13.3	$	24.3

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	28 weeks ended
	September 11, 2021			September 12, 2020		September 7, 2019 Supplemental
Numerator:

Net income	$	740.0		$	870.7	$	343.8
Adjustments:
(Gain) loss on interest rate and commodity hedges, net (d)	(7.5)			25.9		0.3
Facility closures and transformation (1)(b)	35.6			15.9		—
Acquisition and integration costs (2)(b)	6.9			8.5		33.6
Equity-based compensation expense (b)	49.0			28.3		17.6
Loss (gain) on property dispositions and impairment losses, net (3)	0.1			12.0		(464.0)
LIFO expense (a)	29.1			23.2		16.3
Discretionary COVID-19 pandemic related costs (4)(b)	—			89.9		—
Government-mandated incremental COVID-19 pandemic related pay (5)(b)	47.4			—		—
Civil disruption related costs (6)(b)	—			13.0		—
Transaction and reorganization costs related to Convertible Preferred Stock issuance and initial public offering (b)	—			24.4		—
Amortization of debt discount and deferred financing costs (c)	11.1			11.2		43.8
Loss on debt extinguishment	—			49.1		65.8
Amortization of intangible assets resulting from acquisitions (b)	27.6			30.6		161.7

Miscellaneous adjustments (7)(f)	(5.7)			47.4		33.1
Tax impact of adjustments to Adjusted net income	(46.6)			(92.5)		23.7
Adjusted net income	$	887.0		$	1,157.6	$	275.7

Denominator:

Weighted average Class A common shares outstanding - diluted	470.6			583.3		580.0
Adjustments:
Convertible Preferred Stock (8)	101.6			—		—
Restricted stock units and awards (9)	8.8			9.2		8.2
Adjusted weighted average Class A common shares outstanding - diluted	581.0			592.5		588.2

Adjusted net income per Class A common share - diluted	$	1.53		$	1.95	$	0.47

Supplemental Two-Year CAGR:
Net income two-year CAGR	46.7		%
Adjusted net income two-year CAGR	79.4		%

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	28 weeks ended
	September 11, 2021			September 12, 2020		September 7, 2019 Supplemental
Net income per Class A common share - diluted	$	1.26		$	1.49	$	0.59
Convertible Preferred Stock (8)	0.03			—		—
Non-GAAP adjustments (10)	0.26			0.49		(0.11)
Restricted stock units and awards (9)	(0.02)			(0.03)		(0.01)
Adjusted net income per Class A common share - diluted	$	1.53		$	1.95	$	0.47

Supplemental Two-Year CAGR:
Net income per Class A common share two-year CAGR	46.1		%
Adjusted net income per Class A common share two-year CAGR	80.4		%

The following table is a reconciliation of Adjusted net income to Adjusted EBITDA:


	28 weeks ended
	September 11, 2021			September 12, 2020		September 7, 2019 Supplemental
Adjusted net income (11)	$	887.0		$	1,157.6	$	275.7
Tax impact of adjustments to Adjusted net income	46.6			92.5		(23.7)
Income tax expense	232.8			313.1		97.6
Amortization of debt discount and deferred financing costs (c)	(11.1)			(11.2)		(43.8)
Interest expense, net	262.6			309.2		402.7
Amortization of intangible assets resulting from acquisitions (b)	(27.6)			(30.6)		(161.7)
Depreciation and amortization (e)	883.2			808.8		897.6
Adjusted EBITDA	$	2,273.5		$	2,639.4	$	1,444.4

Supplemental Two-Year CAGR:
Adjusted EBITDA two-year CAGR	25.5		%

(1) Includes costs related to closures of operating facilities and third-party consulting fees related to our strategic priorities and associated business transformation.

(3) Primarily due to gains related to sale leaseback transactions in the second quarter of fiscal 2019.

(4) Includes $53 million of charitable contributions to our communities for hunger relief and $36.9 million in final reward payments to front-line associates at the end of the first quarter of fiscal 2020.

(5) Represents incremental pay that is legislatively required in certain municipalities in which we operate.

(6) Primarily includes costs related to store damage, inventory losses and community support as a result of the civil disruption during late May 2020 and early June 2020 in certain markets.

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(7) Miscellaneous adjustments include the following (see table below):


	28 weeks ended
	September 11, 2021		September 12, 2020		September 7, 2019 Supplemental
Non-cash lease-related adjustments	$	3.1	$	1.9	$	6.3
Lease and lease-related costs for surplus and closed stores	16.7		29.5		12.0

Net realized and unrealized (gain) loss on non-operating investments	(9.7)		4.7		7.5

Other (i)	(15.8)		11.3		7.3
Total miscellaneous adjustments	$	(5.7)	$	47.4	$	33.1

(i) Primarily includes adjustments for pension settlement gain, certain legal and regulatory accruals, unconsolidated equity investments and certain contract termination costs.

(8) Represents the conversion of Convertible Preferred Stock to the fully outstanding as-converted Class A common shares as of the end of each respective period, for periods in which the Convertible Preferred Stock is antidilutive under GAAP.

(9) Represents incremental unvested RSUs and unvested RSAs to adjust the diluted weighted average Class A common shares outstanding during each respective period to the fully outstanding RSUs and RSAs as of the end of each respective period.

(10) Reflects the per share impact of Non-GAAP adjustments for each period. See the reconciliation of Net income to Adjusted net income above for further details.

(11) See the reconciliation of Net income to Adjusted net income above for further details.

Non-GAAP adjustment classifications within the Consolidated Statement of Operations:

(a) Cost of sales

(b) Selling and administrative expenses

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(d) (Gain) loss on interest rate and commodity hedges, net:


	28 weeks ended
	September 11, 2021		September 12, 2020		September 7, 2019 Supplemental
Cost of sales	$	(7.8)	$	6.5	$	0.3
Other income, net	0.3		19.4		—
Total (Gain) loss on interest rate and commodity hedges, net	$	(7.5)	$	25.9	$	0.3

(e) Depreciation and amortization:


	28 weeks ended
	September 11, 2021		September 12, 2020		September 7, 2019 Supplemental
Cost of sales	$	86.8	$	94.1	$	90.0
Selling and administrative expenses	796.4		714.7		807.6
Total Depreciation and amortization	$	883.2	$	808.8	$	897.6

(f) Miscellaneous adjustments:


	28 weeks ended
	September 11, 2021		September 12, 2020		September 7, 2019 Supplemental
Selling and administrative expenses	$	10.2	$	34.7	$	16.7
Other income, net	(15.9)		12.7		16.4
Total Miscellaneous adjustments	$	(5.7)	$	47.4	$	33.1

LIQUIDITY AND CAPITAL RESOURCES

The following table sets forth the major sources and uses of cash and cash equivalents and restricted cash for each period (in millions):


		16 weeks ended					28 weeks ended
		June 19, 2021		June 20, 2020			September 11, 2021		September 12, 2020
Cash and cash equivalents and restricted cash at end of period	Cash and cash equivalents and restricted cash at end of period	$	2,224.4	$	2,064.5	Cash and cash equivalents and restricted cash at end of period	$	2,900.4	$	2,431.9
Cash flows provided by operating activities	Cash flows provided by operating activities	1,059.0		2,091.9		Cash flows provided by operating activities	2,137.7		2,720.8
Cash flows used in investing activities	Cash flows used in investing activities	(493.0)		(399.4)		Cash flows used in investing activities	(790.5)		(687.1)
Cash flows used in financing activities	Cash flows used in financing activities	(109.2)		(106.9)		Cash flows used in financing activities	(214.4)		(80.7)

Net Cash Provided by Operating Activities

Net cash provided by operating activities was ~~$1,059.0~~$2,137.7 million for the first ~~quarter~~28 weeks of fiscal 2021 compared to ~~$2,091.9~~$2,720.8 million for the first ~~quarter~~28 weeks of fiscal 2020. The decrease in cash flow from operations compared to the first ~~quarter~~28 weeks of fiscal 2020 was due to changes in working capital primarily related to accounts payable as our business experienced significantly elevated demand during the first 28 weeks of fiscal 2020 and a deferral of approximately $270 million of the employer-paid portion of social security taxes in the first 28 weeks of fiscal 2020 together with lower EBITDA during the first 28 weeks of fiscal 2021. These decreases were partially offset by less cash paid for interest and income taxes of $94 million and $72 million, respectively, $75 million payment for the UFCW & Employers Midwest Pension Fund settlement in the first 28 weeks of fiscal 2020 and a decrease of $45.1 million in contributions to our defined benefit pension plans and post-retirement benefit plans.

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experienced significantly elevated demand during the first quarter of fiscal 2020, a deferral of approximately $140 million of the employer-paid portion of social security taxes in the first quarter of fiscal 2020 and an increase of approximately $78 million in cash paid for income taxes. These decreases were partially offset by a decrease of approximately $43 million in cash paid for interest, $75 million payment for the UFCW & Employers Midwest Pension Fund settlement in the first quarter of fiscal 2020 and $52.6 million in reduced contributions to our defined benefit pension plans and post-retirement benefit plans.

Net Cash Used by Investing Activities

Net cash used in investing activities was ~~$493.0~~$790.5 million for the first ~~quarter~~28 weeks of fiscal 2021 compared to ~~$399.4~~$687.1 million for the first ~~quarter~~28 weeks of fiscal 2020.

For the first ~~quarter~~28 weeks of fiscal 2021, cash used in investing activities consisted primarily of payments for property and equipment ~~including lease buyouts,~~ of ~~$513.4~~$822.5 million and payments for business acquisitions of $23.5 million, partially offset by proceeds from the sale of long-lived assets of ~~$15.2~~$24.6 million. Payments for property and equipment in the first ~~quarter~~28 weeks of fiscal 2021 included the opening of ~~five~~six new stores, completion of 3376 remodels and increased investment in our digital technology. For the first 28 weeks of fiscal 2020, cash used in investing activities consisted primarily of payments for property and equipment of $702.9 million. Payments for property and equipment in the first 28 weeks of fiscal 2020 included the completion of 132 remodels and continued investment in our digital technology. For the full fiscal year of 2021, we expect capital expenditures to be in the range of $1.9 billion to $2.0 billion. For the first quarter of fiscal 2020, cash used in investing activities consisted primarily of payments for property and equipment, including lease buyouts, of $402.3 million. Payments for property and equipment in the first quarter of fiscal 2020 included the completion of 46 remodels and continued investment in our digital technology.

Net Cash Used in Financing Activities

Net cash used in financing activities was $~~109.2~~214.4 million during the first ~~quarter~~28 weeks of fiscal 2021 compared to ~~$106.9~~$80.7 million during the first ~~quarter~~28 weeks of fiscal 2020.

Net cash used in financing activities during the first ~~quarter~~28 weeks of fiscal 2021 consisted primarily of dividends paid on our Class A common stock and Convertible Preferred Stock. Net cash used in financing activities during the first 28 weeks of fiscal 2020 consisted primarily of the $1.5 billion issuance of new Senior Unsecured Notes and $1.25 billion aggregate redemption of 2024 Notes and 2025 Notes, the $2.0 billion borrowing and subsequent repayment of the ABL Facility, the issuance of the Convertible Preferred Stock and the repurchase of outstanding Class A common stock.

Liquidity ~~Needs~~and Factors Affecting Liquidity

We estimate our liquidity needs over the next 12 months to be in the range of $4.75 billion to $5.25 billion, which includes anticipated requirements for incremental working capital, capital expenditures, pension obligations, interest payments and scheduled principal payments of debt, dividends on Class A common stock and Convertible Preferred Stock, operating leases and finance leases. Based on current operating trends, we believe that cash flows from operating activities and other sources of liquidity, including borrowings under our ABL Facility, will be adequate to meet our liquidity needs for the next 12 months and for the foreseeable future. We believe we have adequate cash flow to continue to respond effectively to competitive conditions. In addition, we may enter into refinancing and sale leaseback transactions from time to time. There can be no assurance, however, that our business will continue to generate cash flow at or above current levels or that we will maintain our ability to borrow under our ABL Facility.

The holders of Convertible Preferred Stock are entitled to a quarterly dividend at a rate per annum of 6.75% of the liquidation preference per share of the Convertible Preferred Stock. On March 15, 2021, June 15, 2021 and ~~June~~September 15, 2021, we declared quarterly cash dividends of $29.5 million, respectively, to holders of the Convertible Preferred Stock, which was paid on March 31, 2021, June 30, 2021 and ~~June~~September 30, 2021, respectively. In addition, the holders of Convertible Preferred Stock will participate in cash dividends that we pay on our common stock to the extent that such cash dividends exceed $206.25 million per fiscal year.

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We have established a dividend policy pursuant to which we intend to pay a quarterly dividend on our Class A common ~~stock in an annual amount equal to $0.40 per share. On April 13,~~stock. During the first 28 weeks of fiscal 2021, we ~~announced a~~paid quarterly ~~dividend payment~~cash dividends of $0.10 per share of Class A common stock ~~which was paid~~ on May 10, 2021 and August 10, 2021, to stockholders of record as of the close of business on April 26, ~~2021.~~2021 and July 26, 2021, respectively. On ~~July 13,~~October 18, 2021, subsequent to the end of the ~~first~~second quarter of fiscal 2021, we announced ~~the next~~a 20% increase to our quarterly dividend, ~~payment of $0.10~~which is now $0.12 per share of Class A common stock, ~~to be paid~~payable on ~~August 10,~~November 12, 2021 to stockholders of record as of the close of business on ~~July 26,~~October 29, 2021.

As of September 11, 2021, we had no borrowings outstanding under out ABL Facility and total availability of $3,483.1 million (net of letter of credit usage).

Multiemployer Pension Plans

The American Rescue Plan Act ("ARP Act") establishes a special financial assistance program for financially troubled multiemployer pension plans. Under the ARP Act, eligible multiemployer plans can apply to receive a one-time cash payment in the amount projected by the Pension Benefit Guaranty Corporation ("PBGC") to pay pension benefits through the plan year ending 2051. The payment received by the multiemployer plan under this special financial assistance program would not be considered a loan and would not need to be paid back. Any financial assistance received by the multiemployer plan would need to be segregated from the other assets of the multiemployer plans and invested in investment grade bonds or other investments permitted by the PBGC.

Of the 27 multiemployer plans to which we contribute, 16 plans are classified as "Critical" or "Critical and Declining" and are potentially eligible for special financial assistance under the ARP Act. Though the amount of financial assistance that each of these 16 plans could receive will vary by plan, we currently estimate that these 16 plans represent over 90% of the $4.7 billion we estimated as our share of the underfunding of the 27 plans. On July 9, 2021, the PBGC issued its interim final rule with respect to the special financial assistance program. The PBGC interim final rule provides direction on the application requirements, identifies which plans will have priority, eligibility requirements, the determination of the amount of financial assistance to be provided and establishes conditions and restrictions that apply to plans that receive assistance. We are ~~currently~~ evaluating the interim final rule ~~which is subject to a~~and have submitted comments during the 30-day comment period, and we expect the special financial assistance program to provide funding for the multiemployer plans to which we contribute to remain solvent through the next 25 to 30 years.

CRITICAL ACCOUNTING POLICIES

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. We have chosen accounting policies that we believe are appropriate to report accurately and fairly our operating results and financial position, and we apply those accounting policies in a fair and consistent manner. See the Critical Accounting Policies section included in our Annual Report on Form 10-K for the fiscal year ended February 27, 2021, filed with the SEC on April 28, 2021, for a discussion of our significant accounting policies.

RECENTLY ISSUED AND RECENTLY ADOPTED ACCOUNTING STANDARDS

See Note 1 - Basis of presentation and summary of significant accounting policies of our unaudited interim Condensed Consolidated Financial Statements located elsewhere in this Form 10-Q.

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Item 3 - Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in our exposure to market risk from the information provided in our Annual Report on Form 10-K for the fiscal year ended February 27, 2021, filed with the SEC on April 28, 2021.

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Item 4 - Controls and Procedures

Based on their evaluation of our disclosure controls and procedures (as defined in Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934 (the "Exchange Act")) as of the end of the period covered by this ~~Quarterly Report on~~ Form 10-Q, our Principal Executive Officer and Principal Financial Officer concluded our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and is accumulated and communicated to management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the ~~first~~second quarter of fiscal 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1 - Legal Proceedings

The Company is subject from time to time to various claims and lawsuits arising in the ordinary course of business, including lawsuits involving trade practices, lawsuits alleging violations of state and/or federal wage and hour laws (including alleged violations of meal and rest period laws and alleged misclassification issues), real estate disputes as well as other matters. Some of these claims or suits purport or may be determined to be class actions and/or seek substantial damages. It is the opinion of the Company's management that although the amount of liability with respect to certain of the matters described in this Form 10-Q cannot be ascertained at this time, any resulting liability of these and other matters, including any punitive damages, will not have a material adverse effect on the Company's business or financial condition. See the matters under the caption Legal Proceedings in Note 6 - Commitments and contingencies and off balance sheet arrangements in the unaudited interim Condensed Consolidated Financial Statements located elsewhere in this Form 10-Q.

Item 1A - Risk Factors

There have been no material changes to the risk factors previously included in our Annual Report on Form 10-K for the fiscal year ended February 27, 2021, filed with the SEC on April 28, 2021, under the heading "Risk Factors."

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds

(a) Unregistered Sales of Equity Securities

None.

(b) Use of Proceeds

None.

Item 3 - Defaults Upon Senior Securities

None.

Item 4 - Mine Safety Disclosures

Not Applicable.

Item 5 - Other Information

None.

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Item 6 - Exhibits

3.1 Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Albertsons Companies, Inc.

10.1 ~~Employment~~Employment Agreement, dated ~~June 15, 2020,~~as of August 4, 2021, by and between Albertsons Companies, Inc. and ~~Juliette Pryor~~

~~10.2~~Sharon McCollam (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form ~~of time-based restricted stock unit agreement (fiscal 2021 award cycle)~~

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~~10.3 Form of performance-based restricted stock unit agreement (fiscal 2021 award cycle)~~8-K filed with the SEC on August 11, 2021)

31.1 Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2 Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1 Certification of the Principal Executive Officer and of the Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

EXHIBIT 101.INS - Inline XBRL Instance Document

EXHIBIT 101.SCH - Inline XBRL Taxonomy Extension Schema Document

EXHIBIT 101.CAL - Inline XBRL Taxonomy Extension Calculation Linkbase Document

EXHIBIT 101.DEF - Inline XBRL Taxonomy Extension Definition Linkbase Document

EXHIBIT 101.LAB - Inline XBRL Taxonomy Extension Label Linkbase Document

EXHIBIT 101.PRE - Inline XBRL Taxonomy Extension Presentation Linkbase Document

EXHIBIT 104 - Cover Page Interactive Data File (embedded within the Inline XBRL document)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		Albertsons Companies, Inc. (Registrant)

Date:	~~July 29,~~October 20, 2021	By:	/s/ Vivek Sankaran
			Vivek Sankaran
			~~President,~~ Chief Executive Officer and Director (Principal Executive Officer)


Date:	~~July 29,~~October 20, 2021	By:	/s/ ~~Robert B. Dimond~~Sharon McCollam
			~~Robert B. Dimond~~Sharon McCollam
			~~Executive Vice~~ President and Chief Financial Officer (Principal Financial Officer)

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