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Commission File Number: 001-39350

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

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

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. ☐

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			8
			Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations			20
			Item 3 - Quantitative and Qualitative Disclosures About Market Risk			38
			Item 4 - Controls and Procedures			38
PART II - OTHER INFORMATION
			Item 1 - Legal Proceedings			40
			Item 1A - Risk Factors			40
			Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds			41
			Item 3 - Defaults Upon Senior Securities			41
			Item 4 - Mine Safety Disclosures			41
			Item 5 - Other Information			41
			Item 6 - Exhibits			41
SIGNATURES						42

						December 4, 2021						February 27, 2021
ASSETS
Current assets
			Cash and cash equivalents			$	2,661.0					$	1,717.0
			Receivables, net			607.4						550.9
			Inventories, net			4,671.0						4,301.3
			Other current assets			440.3						418.8
			Total current assets			8,379.7						6,988.0
Property and equipment, net						9,249.4						9,412.7
Operating lease right-of-use assets						5,922.8						6,015.6
Intangible assets, net						2,239.5						2,108.8
Goodwill						1,201.0						1,183.3
Other assets						943.7						889.6
TOTAL ASSETS						$	27,936.1					$	26,598.0
LIABILITIES
Current liabilities
			Accounts payable			$	4,066.1					$	3,487.3
			Accrued salaries and wages			1,483.3						1,474.7
			Current maturities of long-term debt and finance lease obligations			82.0						212.4
			Current maturities of operating lease obligations			627.8						605.3
			Other current liabilities			1,202.0						1,052.5
			Total current liabilities			7,461.2						6,832.2
Long-term debt and finance lease obligations						7,915.7						8,101.2
Long-term operating lease obligations						5,508.2						5,548.0
Deferred income taxes						684.9						533.7
Other long-term liabilities						2,456.3						2,659.5
Commitments and contingencies
Series A convertible preferred stock, $0.01 par value; 1,750,000 shares authorized, 924,000 shares issued and outstanding as of December 4, 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 December 4, 2021 and February 27, 2021						754.8						754.8
STOCKHOLDERS' EQUITY
			Undesignated preferred stock, $0.01 par value; 96,840,000 shares authorized, no shares issued as of December 4, 2021 and February 27, 2021			—						—
			Class A common stock, $0.01 par value; 1,000,000,000 shares authorized, 587,855,940 and 585,574,666 shares issued as of December 4, 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, no shares issued as of December 4, 2021 and February 27, 2021			—						—
			Additional paid-in capital			1,946.1						1,898.9
			Treasury stock, at cost, 120,009,647 shares held as of December 4, 2021 and February 27, 2021			(1,907.0)						(1,907.0)
			Accumulated other comprehensive income			78.6						63.5
			Retained earnings			2,187.1						1,263.0
			Total stockholders' equity			2,310.7						1,324.3
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY						$	27,936.1					$	26,598.0

			12 weeks ended												40 weeks ended
			December 4, 2021						December 5, 2020						December 4, 2021						December 5, 2020
Net sales and other revenue			$	16,728.4					$	15,408.9					$	54,503.5					$	53,918.1
Cost of sales			11,898.3						10,900.3						38,765.4						38,063.1
Gross margin			4,830.1						4,508.6						15,738.1						15,855.0
Selling and administrative expenses			4,243.9						4,309.1						13,978.8						14,109.7
Gain on property dispositions and impairment losses, net			(13.4)						(59.0)						(13.3)						(47.0)
Operating income			599.6						258.5						1,772.6						1,792.3
Interest expense, net			111.3						115.9						373.9						425.1
Loss on debt extinguishment			3.7						8.6						3.7						57.7
Other income, net			(38.3)						(19.2)						(100.7)						(27.5)
Income before income taxes			522.9						153.2						1,495.7						1,337.0
Income tax expense			98.4						29.5						331.2						342.6
Net income			$	424.5					$	123.7					$	1,164.5					$	994.4
Other comprehensive (loss) income, net of tax
Recognition of pension gain			0.1						0.6						15.3						11.5
Other			(0.2)						(0.1)						(0.2)						1.1
Other comprehensive (loss) income			$	(0.1)					$	0.5					$	15.1					$	12.6
Comprehensive income			$	424.4					$	124.2					$	1,179.6					$	1,007.0
Net income per Class A common share
Basic net income per Class A common share			$	0.78					$	0.21					$	1.97					$	1.78
Diluted net income per Class A common share			0.74						0.20						1.95						1.71
Weighted average Class A common shares outstanding
Basic			466.0						468.7						465.4						511.0
Diluted			574.2						472.1						471.2						580.3

			40 weeks ended
			December 4, 2021						December 5, 2020
Cash flows from operating activities:
Net income			$	1,164.5					$	994.4
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on property dispositions and impairment losses, net			(13.3)						(47.0)
Depreciation and amortization			1,273.2						1,171.7
Operating lease right-of-use assets amortization			478.2						443.9
LIFO expense			58.6						37.5
Deferred income tax			99.4						(16.8)
Contributions to pension and post-retirement benefit plans, net of (income) expense			(73.6)						(80.6)
(Gain) loss on interest rate swaps and commodity hedges, net			(8.8)						24.0
Deferred financing costs			16.0						16.1
Loss on debt extinguishment			3.7						57.7
Equity-based compensation expense			75.4						43.4
Other			(48.7)						(46.0)
Changes in operating assets and liabilities:
Receivables, net			(69.6)						(23.1)
Inventories, net			(427.4)						(322.9)
Accounts payable, accrued salaries and wages and other accrued liabilities			627.6						627.1
Operating lease liabilities			(388.2)						(357.7)
Self-insurance assets and liabilities			34.7						20.6
Other operating assets and liabilities			(18.9)						453.7
Net cash provided by operating activities			2,782.8						2,996.0
Cash flows from investing activities:
Business acquisitions, net of cash acquired			(25.4)						—
Payments for property, equipment and intangibles, including payments for lease buyouts			(1,216.4)						(1,083.0)
Proceeds from sale of long-lived assets			37.8						143.9
Other investing activities			26.9						(5.2)
Net cash used in investing activities			(1,177.1)						(944.3)
Cash flows from financing activities:
Proceeds from issuance of long-term debt			—						3,500.0
Payments on long-term borrowings			(330.6)						(3,638.7)
Payments of obligations under finance leases			(50.6)						(52.0)
Payment of redemption premium on debt extinguishment			(2.9)						(48.6)
Payments for debt financing costs			—						(15.9)
Dividends paid on common stock			(149.0)						(47.3)
Dividends paid on convertible preferred stock			(88.6)						(36.4)
Proceeds from convertible preferred stock			—						1,680.0
Third party issuance costs on convertible preferred stock			—						(80.9)
Treasury stock purchase, at cost			—						(1,864.7)
Employee tax withholding on vesting of restricted stock units			(28.7)						(13.7)
Other financing activities			(11.3)						(25.7)
Net cash used in financing activities			(661.7)						(643.9)
Net increase in cash and cash equivalents and restricted cash			944.0						1,407.8
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			$	2,711.6					$	1,886.7

			Class A Common Stock												Additional paid in capital						Treasury Stock												Accumulated other comprehensive income						Retained earnings						Total stockholders' equity
			Shares						Amount												Shares						Amount
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			—						—						22.2						—						—						—						—						22.2
Shares issued and employee tax withholding on vesting of restricted stock units			945,942						—						(10.0)						—						—						—						—						(10.0)
Cash dividends declared on common stock ($0.10 per common share)			—						—						—						—						—						—						(46.5)						(46.5)
Dividends accrued on convertible preferred stock			—						—						—						—						—						—						(36.4)						(36.4)
Net income			—						—						—						—						—						—						444.8						444.8
Other comprehensive income, net of tax			—						—						—						—						—						0.1						—						0.1
Other activity			—						—						—						—						—						—						(0.1)						(0.1)
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			—						—						26.8						—						—						—						—						26.8
Shares issued and employee tax withholding on vesting of restricted stock units			147,495						—						(1.8)						—						—						—						—						(1.8)
Cash dividends declared on common stock ($0.10 per common share)			—						—						—						—						—						—						(46.5)						(46.5)
Dividends accrued on convertible preferred stock			—						—						—						—						—						—						(27.3)						(27.3)
Net income			—						—						—						—						—						—						295.2						295.2
Other comprehensive income, net of tax			—						—						—						—						—						15.1						—						15.1
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
Equity-based compensation			—						—						26.4						—						—						—						—						26.4
Shares issued and employee tax withholding on vesting of restricted stock units			1,187,837						—						(16.9)						—						—						—						—						(16.9)
Cash dividends declared on common stock ($0.12 per common share)			—						—						—						—						—						—						(56.0)						(56.0)
Dividends accrued on convertible preferred stock			—						—						—						—						—						—						(27.2)						(27.2)
Net income			—						—						—						—						—						—						424.5						424.5
Other comprehensive loss, net of tax			—						—						—						—						—						(0.1)						—						(0.1)
Other activity			—						—						0.5						—						—						—						(0.4)						0.1
Balance as of December 4, 2021			587,855,940						$	5.9					$	1,946.1					120,009,647						$	(1,907.0)					$	78.6					$	2,187.1					$	2,310.7

			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
Equity-based compensation			—						—						15.1						—						—						—						—						15.1
Shares issued and employee tax withholding on vesting of restricted stock units			1,198,504						0.1						(7.0)						—						—						—						—						(6.9)
Repurchase of common stock			—						—						—						13,635,932						(184.7)						—						—						(184.7)
Cash dividends declared on common stock ($0.10 per common share)			—						—						—						—						—						—						(47.3)						(47.3)
Dividends accrued on convertible preferred stock			—						—						—						—						—						—						(27.3)						(27.3)
Net income			—						—						—						—						—						—						123.7						123.7
Other comprehensive income, net of tax			—						—						—						—						—						0.5						—						0.5
Other activity			—						—						(0.1)						—						—						—						0.1						—
Balance as of December 5, 2020			585,530,715						$	5.9					$	1,883.8					118,919,289						$	(1,890.5)					$	(105.9)					$	1,481.4					$	1,374.7

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 12 and 40 weeks ended December 4, 2021 and December 5, 2020.

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 December 4, 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 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 $29.5 million and $14.3 million for the 12 weeks ended December 4, 2021 and December 5, 2020, respectively, and $58.6 million and $37.5 million for the 40 weeks ended December 4, 2021 and December 5, 2020, respectively.

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

						12 weeks ended												40 weeks ended
						December 4, 2021						December 5, 2020						December 4, 2021						December 5, 2020
RSUs						$	24.5					$	13.6					$	69.1					$	39.4
RSAs						1.9						1.5						6.3						4.0
Total equity-based compensation expense						$	26.4					$	15.1					$	75.4					$	43.4
Total related tax benefit						$	6.3					$	3.5					$	17.8					$	10.1

Income taxes: Income tax expense was $98.4 million, representing a 18.8% effective tax rate, for the 12 weeks ended December 4, 2021. Income tax expense was $29.5 million, representing a 19.3% effective tax rate, for the 12 weeks ended December 5, 2020. The decrease in the effective income tax rate was primarily driven by incremental discrete state income tax benefits related to expired statutes and audit settlements during the 12 weeks ended December 4, 2021.

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 one 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 one 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 $269.5 million and $262.5 million as of December 4, 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 December 4, 2021 and February 27, 2021.

			12 weeks ended																								40 weeks ended
			December 4, 2021												December 5, 2020												December 4, 2021												December 5, 2020
			Amount (1)						% of Total						Amount (1)						% of Total						Amount (1)						% of Total						Amount (1)						% of Total
Non-perishables (2)			$	7,344.2					43.9		%				$	7,007.9					45.5		%				$	23,883.0					43.8		%				$	24,918.3					46.2		%
Perishables (3)			6,798.0						40.6						6,369.7						41.3						22,533.8						41.3						22,579.4						41.9
Pharmacy			1,436.7						8.6						1,272.7						8.3						4,418.7						8.1						3,999.4						7.4
Fuel			906.6						5.4						528.9						3.4						2,874.4						5.3						1,688.9						3.1
Other (4)			242.9						1.5						229.7						1.5						793.6						1.5						732.1						1.4
Net sales and other revenue			$	16,728.4					100.0		%				$	15,408.9					100.0		%				$	54,503.5					100.0		%				$	53,918.1					100.0		%

Recently issued accounting standards: In June 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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.

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.

						Fair Value Measurements
						Total						Quoted prices in active markets  for identical assets (Level 1)						Significant observable inputs (Level 2)						Significant unobservable inputs (Level 3)
Assets:
Short-term investments (1)						$	12.0					$	5.1					$	6.9					$	—
Non-current investments (2)						128.4						19.8						108.6						—
Derivative contracts (3)						9.3						—						9.3						—
Total						$	149.7					$	24.9					$	124.8					$	—
Liabilities:
Derivative contracts (4)						$	18.3					$	—					$	18.3					$	—
Total						$	18.3					$	—					$	18.3					$	—

(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 certain equity investments, U.S. Treasury Notes and Corporate Bonds (Level 2). Included in Other assets.

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

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

						Fair Value Measurements
						Total						Quoted prices in active markets  for identical assets (Level 1)						Significant observable inputs (Level 2)						Significant unobservable inputs (Level 3)
Assets:
Short-term investments (1)						$	11.9					$	4.4					$	7.5					$	—
Non-current investments (2)						110.2						40.3						69.9						—
Total						$	122.1					$	44.7					$	77.4					$	—
Liabilities:
Derivative contracts (3)						$	40.0					$	—					$	40.0					$	—
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.

NOTE 3 - DERIVATIVE FINANCIAL INSTRUMENTS

						12 weeks ended												40 weeks ended
						December 4, 2021						December 5, 2020						December 4, 2021						December 5, 2020
Gain (loss) on interest rate swaps						$	0.7					$	(0.3)					$	0.4					$	(19.7)

			December 4, 2021						February 27, 2021
Senior Unsecured Notes due 2023 to 2030, interest rate range of 3.25% to 7.50%			$	6,490.0					$	6,680.5
Safeway Inc. Notes due 2027 to 2031, interest rate range of 7.25% to 7.45%			374.4						504.3
New Albertsons L.P. Notes due 2026 to 2031, interest rate range of 6.52% to 8.70%			471.6						469.1
Other financing obligations			29.2						29.4
Mortgage notes payable, secured			17.4						17.6
Finance lease obligations			615.1						612.7
Total debt			7,997.7						8,313.6
Less current maturities			(82.0)						(212.4)
Long-term portion			$	7,915.7					$	8,101.2

			12 weeks ended
			Pension												Other post-retirement benefits
			December 4, 2021						December 5, 2020						December 4, 2021						December 5, 2020
Estimated return on plan assets			$	(22.1)					$	(24.3)					$	—					$	—
Service cost			4.5						3.7						—						—
Interest cost			8.1						9.7						—						0.1
Amortization of prior service cost			0.1						0.1						—						0.5
Amortization of net actuarial loss (gain)			0.1						0.4						—						(0.2)
(Income) expense, net			$	(9.3)					$	(10.4)					$	—					$	0.4

			40 weeks ended
			Pension												Other post-retirement benefits
			December 4, 2021						December 5, 2020						December 4, 2021						December 5, 2020
Estimated return on plan assets			$	(79.3)					$	(79.5)					$	—					$	—
Service cost			16.5						12.0						—						—
Interest cost			30.8						38.9						0.2						0.3
Amortization of prior service cost			0.2						0.2						—						1.5
Amortization of net actuarial loss (gain)			0.6						1.5						(0.3)						(0.5)
Settlement (gain) loss			(14.3)						3.0						—						—
(Income) expense, net			$	(45.5)					$	(23.9)					$	(0.1)					$	1.3

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 reviewed the interim final rule and submitted comments during the 30-day comment period. On December 15, 2021, the PBGC announced that it will issue final regulations in January 2022. 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.

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 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 December 4, 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.

ERISA Litigation: Two 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 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. 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.

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 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 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. 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. On December 3, 2021, the Seventh Circuit denied relators' petition. Relators have until March 3, 2022 to seek review by the U.S. Supreme Court.

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. A trial has also been scheduled in Nevada state court for April 2023. 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

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 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 have sought court approval of the settlement. A hearing is scheduled for March 2022 during which the court will review the settlement for approval. The Company has recorded an estimated liability for this matter.

			40 weeks ended December 4, 2021
			Total						Pension and Post-retirement benefit plans												Other
Beginning balance			$	63.5					$	61.3											$	2.2
Other comprehensive income (loss) before reclassifications			34.1						34.3												(0.2)
Amounts reclassified from accumulated other comprehensive income			(13.8)						(13.8)												—
Tax expense			(5.2)						(5.2)												—
Current-period other comprehensive income (loss), net of tax			15.1						15.3												(0.2)
Ending balance			$	78.6					$	76.6											$	2.0

			40 weeks ended December 5, 2020
			Total						Pension and Post-retirement benefit plans												Other
Beginning balance			$	(118.5)					$	(121.7)											$	3.2
Other comprehensive income before reclassifications			10.9						9.6												1.3
Amounts reclassified from accumulated other comprehensive income			5.7						5.7												—
Tax expense			(4.0)						(3.8)												(0.2)
Current-period other comprehensive income, net of tax			12.6						11.5												1.1
Ending balance			$	(105.9)					$	(110.2)											$	4.3

			12 weeks ended												40 weeks ended
			December 4, 2021						December 5, 2020						December 4, 2021						December 5, 2020
Basic net income per Class A common share
Net income			$	424.5					$	123.7					$	1,164.5					$	994.4
Accrued dividends on Convertible Preferred Stock			(27.2)						(27.3)						(90.9)						(58.1)
Earnings allocated to Convertible Preferred Stock			(34.2)						—						(155.4)						(25.4)
Net income allocated to Class A common stockholders - Basic			$	363.1					$	96.4					$	918.2					$	910.9
Weighted average Class A common shares outstanding - Basic (1)			466.0						468.7						465.4						511.0
Basic net income per Class A common share			$	0.78					$	0.21					$	1.97					$	1.78
Diluted net income per Class A common share
Net income allocated to Class A common stockholders - Basic			$	363.1					$	96.4					$	918.2					$	910.9
Accrued dividends on Convertible Preferred Stock			27.2						—						—						58.1
Earnings allocated to Convertible Preferred Stock			34.2						—						—						25.4
Net income allocated to Class A common stockholders - Diluted			$	424.5					$	96.4					$	918.2					$	994.4
Weighted average Class A common shares outstanding - Basic (1)			466.0						468.7						465.4						511.0
Dilutive effect of:
Restricted stock units and awards			6.6						3.4						5.8						4.0
Convertible Preferred Stock (2)			101.6						—						—						65.3
Weighted average Class A common shares outstanding - Diluted (3)			574.2						472.1						471.2						580.3
Diluted net income per Class A common share			$	0.74					$	0.20					$	1.95					$	1.71

(1) There were no Class A common shares remaining to be issued for the 12 and 40 weeks ended December 4, 2021 and December 5, 2020.

(2) Reflects the number of shares of Convertible Preferred Stock issued, if converted into common stock for the period outstanding. For the 40 weeks ended December 4, 2021 and the 12 weeks ended December 5, 2020, 101.6 million potential common shares outstanding related to Convertible Preferred Stock were antidilutive.

(3) There were no potential Class A common shares outstanding related to RSUs and RSAs that were antidilutive for the 12 and 40 weeks ended December 4, 2021 and December 5, 2020.

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

•changes in macroeconomic conditions;

•retail consumer behavior and environment and the Company's industry;

•ability to attract and retain qualified associates;

•failure to achieve productivity initiatives;

•increased rates of food price inflation or future deflation; and

•factors related to the continued impact of the COVID-19 pandemic, about which there are still many unknowns, including its duration, recurrence, new variants, 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.

In the just for U loyalty program, ongoing benefit enhancements continued to accelerate membership growth, which increased 17% in the third quarter of fiscal 2021 compared to the third quarter of fiscal 2020, reaching 28 million members. Within the program, our retention rate of actively engaged members, those that redeemed fuel or grocery rewards during the third quarter of fiscal 2021, was more than 93%.

•Identical sales increased 5.2%; on a two-year stacked basis identical sales growth was 17.5%

•Digital sales increased 9%; on a two-year stacked basis digital sales growth was 234%

•Net income of $425 million, or $0.74 per Class A common share

•Adjusted net income of $457 million, or $0.79 per Class A common share

•Adjusted EBITDA of $1,051 million

•Completed 70 remodel projects

			12 weeks ended												40 weeks ended
			December 4, 2021						December 5, 2020						December 4, 2021						December 5, 2020
Stores, beginning of period			2,278						2,252						2,277						2,252
Acquired (1)			2						—						3						—
Opened			—						5						6						7
Closed			(2)						(4)						(8)						(6)
Stores, end of period			2,278						2,253						2,278						2,253

(1) The 40 weeks ended December 4, 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.

						Number of stores												Percent of Total												Retail Square Feet (1)
Square Footage						December 4, 2021						December 5, 2020						December 4, 2021						December 5, 2020						December 4, 2021						December 5, 2020
Less than 30,000						223						202						9.8		%				9.0		%				5.1						4.7
30,000 to 50,000						782						784						34.3		%				34.8		%				32.7						32.9
More than 50,000						1,273						1,267						55.9		%				56.2		%				75.2						74.8
Total Stores						2,278						2,253						100.0		%				100.0		%				113.0						112.4