Page 341 - Onboarding May 2017

Date: January 30 , 2017
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To: Apple Supply Chain Co-op Audit & Finance Committee
Roy Raeburn, Chairman
Mark Schostak

From: Dustin Pittman

Subject: Final 2016 Cost Management Performance – Apple Co-op

The Apple Co-op Board approved using a modified Producer Price Index as the benchmark to
compare against the Applebee’s Market Basket performance for 2016. The enclosed work-papers are
meant to provide the Co-op’s Audit & Finance Committee transparency into the methodology,
calculation, and supporting details to substantiate the published performance results.

Enclosed please find the final 2016 audited Cost Management results for the Apple Co-op, including:

 2016 Cost Management target calculation
 Cost Management methodology explanation
 2016 Market Basket performance compared to the Modified Producer Price Index
 2016 Market Basket category performance detail
 Actual store delivered costs 2015 vs. 2016 (backup detail to the Apple Market Basket)
 PPI sub-index performance detail for 2015 and 2016 (backup detail to the MPPI Index)

All inputs to the Cost Management calculation were audited against the approved methodology. The
audited performance by category was calculated based on static purchase volumes for year-over-
year comparability.

For calendar year 2016, the Apple Market Basket saw a favorable decrease in costs of 4.0%, while the
MPPI showed a favorable decrease of 1.5%. This difference of 2.5% shows that the Apple Market
Basket outperformed its 2016 target of 1.82% by 0.7%.

We look forward to reviewing this information with you on the February 2 conference call.
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Enclosures

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