Page 93 - New Employee Onboarding

Confidential and Privileged
For the Audit and Finance Committee's Review

Work-paper #2:

Apple Market Basket vs. Modified Producer Price Index:

Commentary on 2015 Performance for All Categories

Category Contribution to performance Commentary

Our strategy of fixed pricing on steaks has protected and brought benefit since markets began their move up in
2011. With the belief we would expect some relief in markets in 2015, we converted a supplier to a market based

pricing program and shortened our commitment on fixed pricing and were able to see some decreases in House
Beef -77% Sirloins in the later part of 2015. These tactics were not able to overcome the fact we took significant increases
versus what were very market competitive prices in 2014. Ground Chuck is purchased 100% on the market - our
underperformance versus the PPI measure is a function of the difference between the PPI measure and the
specific product we purchase.

As with the Beef category, CSCS has utilized a strategy of fixing pricing for annual agreements. Markets in 2015 for

Poultry -31% further processed chicken moved down significantly during the last half of 2015 due to a higher growth in supply
than forecast, as well as softness in export demand due to the soft $US and political issues.

Cocoa cost increases, as well as Egg increases (Brioche) drove increases in 2015 that were unfavorable to the PPI
Bakery -8% indices we compare against. Product/Specification changes for Tortilla Chips drove a cost increase that resulted in
an underperformance versus the PPI.

Dairy markets were sharply lower in 2016, down 10.2% per PPI. Our Dairy items were down 8.8% as we followed
Dairy -3%
the market down.

Our favorability to market was a result of pricing protections that mitigated high market events during 2015, as
Produce 10%
well as specification rationalization, eg. shifting volume from Round Tomatoes to Romas for dicing.

Markets continued to soften on Seafood items in 2015. Our costs also decreased YOY. Our Shrimp costing
Seafood 6%
decreases were more aggressive than the PPI comparative market for frozen shellfish.

Oils 3% Softer markets and timely forward positions enabled us to outperform the PPI indices tied to our items.