Albertsons Companies, Inc.: Form 10-Q for the period ended Sep 10, 2022

FORWARD-LOOKING STATEMENTS AND FACTORS THAT IMPACT OUR OPERATING RESULTS AND TRENDS

This Form 10-Q contains "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 relating to our future operating or financial performance which the Company believes to be reasonable at this time. 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 identify forward-looking statements.

These statements are not guarantees of future performance and are subject to numerous risks and uncertainties which are beyond our control and difficult to predict and could cause actual results to differ materially from the results expressed or implied by the statements. Risks and uncertainties that could cause actual results to differ materially from such statements include:

• changes in macroeconomic conditions and uncertainty regarding the geopolitical environment;
• rates of food price inflation or deflation, as well as fuel and commodity prices;
• changes in market interest rates and wage rates;
• changes in retail consumer behavior, including in the digital space;
• ability to attract and retain qualified associates and negotiate acceptable contracts with labor unions;
• failure to achieve productivity initiatives, unexpected changes in our objectives and plans, inability to implement our strategies, plans, programs and initiatives, or enter into strategic transactions, investments or partnerships in the future on terms acceptable to us, or at all, or to close the transactions contemplated by the Merger Agreement;
• availability and cost of goods used in our food products;
• challenges with our supply chain;
• cybersecurity events affecting us and related costs and impact to the business; and
• health epidemics and pandemics including the continued impact of the COVID-19 pandemic, about which there are still many unknowns and the extent of their impact on our business and the communities we serve.

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 date of this Form 10-Q. We undertake no obligation, other than as required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

In evaluating our financial results and forward-looking statements, you should carefully consider the risks and uncertainties more fully described in the "Risk Factors" section or other sections in our reports filed with the SEC including the most recent annual report on Form 10-K and any subsequent periodic reports on Form 10-Q and current reports on Form 8-K.

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.

Additional Information and Where to Find It

The Company expects to prepare an information statement on Schedule 14C for its stockholders with respect to the approval of the merger between the Company and Kroger. When completed, the information statement will be mailed to the Company's stockholders. You may obtain copies of all documents filed by the Company with the SEC regarding this transaction, free of charge, at the SEC's website, www.sec.gov (http://www.sec.gov) or from the Company's website at https://www.albertsonscompanies.com/investors/overview/.

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, as well as the conversion of Convertible Preferred Stock when it is antidilutive for GAAP. 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, Adjusted net income per Class A common share and Net debt ratio (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, gross margin and net income per Class A common share. These Non-GAAP Measures exclude 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 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.

SECOND QUARTER OF FISCAL 2022 OVERVIEW

As of September 10, 2022, we operated 2,272 retail food and drug stores with 1,722 pharmacies, 402 associated fuel centers, 22 dedicated distribution centers and 19 manufacturing facilities. During the second quarter of fiscal 2022, we executed on our Customer for Life strategy as we continued to invest in our strategic priorities, including deepening our digital connection and engagement with our customers, differentiating our store experience, enhancing what we offer and modernizing our capabilities. Identical sales increased 7.4%, excluding fuel, during the second quarter of fiscal 2022.

Recent Developments

On October 13, 2022 Albertsons Companies, Inc. (the "Company"), The Kroger Co. ("Parent") and Kettle Merger Sub, Inc., a wholly owned subsidiary of Parent ("Merger Sub"), entered into an Agreement and Plan of Merger (the "Merger Agreement"), pursuant to which Merger Sub will be merged with and into the Company (the "Merger"), with the Company surviving the Merger as the surviving corporation and a direct, wholly owned subsidiary of Parent.

Pursuant to the Merger Agreement, (i) each share of Class A common stock, par value $0.01 per share, of the Company issued and outstanding immediately prior to the effective time of the Merger (the "Effective Time"), shall be converted automatically at the Effective Time into the right to receive from Parent $34.10 per share in cash, without interest, and (ii) each share of Series A preferred stock, par value $0.01 per share, of the Company issued and outstanding immediately prior to the Effective Time shall be converted automatically at the Effective Time into the right to receive from Parent $34.10 per share in cash on an as-converted basis, without interest. The $34.10 per share is subject to certain reductions as described in Note 8 - Subsequent Events in the unaudited interim Condensed Consolidated Financial Statements located elsewhere in this Form 10-Q.

In connection with the Merger Agreement, on October 14, 2022, the Company declared a special cash dividend of $6.85 per share of Class A common stock (the "Special Dividend"). The Special Dividend, not to exceed $4 billion, is payable on November 7, 2022, to stockholders of record as of the close of business on October 24, 2022, and will be funded using approximately $2.5 billion of cash on hand with the remainder in borrowings under the Company's existing ABL Facility.

Second quarter of fiscal 2022 highlights

In summary, our financial and operating highlights for the second quarter of fiscal 2022 include:

• Identical sales increased 7.4%
• Digital sales increased 36%
• Loyalty members increased 16% to 31.8 million
• Net income of $343 million, or $0.59 per Class A common share
• Adjusted net income of $418 million, or $0.72 per Class A common share
• Adjusted EBITDA of $1,049 million

Stores

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

The following table summarizes our stores by size:

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

RESULTS OF OPERATIONS

Comparison of the Second Quarter of Fiscal 2022 and the First 28 weeks of Fiscal 2022 to the Second Quarter of Fiscal 2021 and the First 28 weeks of Fiscal 2021.

The following tables and related discussion set forth certain information and comparisons regarding the components of our Condensed Consolidated Statements of Operations for the 12 and 28 weeks ended September 10, 2022 ("second quarter of fiscal 2022" and "first 28 weeks of fiscal 2022") to the 12 and 28 weeks ended September 11, 2021 ("second quarter of fiscal 2021" and "first 28 weeks of fiscal 2021") (dollars in millions, except per share data).

Net Sales and Other Revenue

Net sales and other revenue increased 8.6% to $17,919.4 million for the second quarter of fiscal 2022 from $16,505.7 million for the second quarter of fiscal 2021. The increase in Net sales and other revenue was driven by our 7.4% increase in identical sales and higher fuel sales, with retail price inflation driving the identical sales increase.

Net sales and other revenue increased 9.1% to $41,229.7 million for the first 28 weeks of fiscal 2022 from $37,775.1 million for the first 28 weeks of fiscal 2021. The increase in Net sales and other revenue was driven by our 7.1% increase in identical sales and higher fuel sales, with retail price inflation driving the identical sales increase.

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 12 and 28 weeks ended September 10, 2022 and the 12 and 28 weeks ended September 11, 2021, respectively, were:

The following table represents Net sales and other revenue by product type (dollars in millions):

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

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

(3) Consists primarily of produce, meat, deli and prepared foods, bakery, floral and seafood.

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

Gross Margin

Gross margin 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 margin rate decreased to 27.9% during the second quarter of fiscal 2022 compared to 28.6% during the second quarter of fiscal 2021. Excluding the impact of fuel and LIFO expense, gross margin rate decreased 43 basis points compared to the second quarter of fiscal 2021. The decrease was primarily driven by increases in product and supply chain costs, increases in picking and delivery costs related to the growth in digital sales, and fewer COVID-19 vaccines in the second quarter of fiscal 2022, partially offset by the benefits of ongoing productivity initiatives.

Gross margin rate decreased to 28.0% during the first 28 weeks of fiscal 2022 compared to 28.9% during the first 28 weeks of fiscal 2021. Excluding the impact of fuel and LIFO expense, gross margin rate decreased 34 basis points compared to the first 28 weeks of fiscal 2021. The decrease was primarily driven by increases in product and supply chain costs, fewer COVID-19 vaccines in the first 28 weeks of fiscal 2022, partially offset by the benefits of ongoing productivity initiatives.

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 decreased to 25.0% of Net sales and other revenue during the second quarter of fiscal 2022 compared to 25.6% during the second quarter of fiscal 2021. Excluding the impact of fuel, Selling and administrative expenses as a percentage of Net sales and other revenue decreased 31 basis points. The decrease in Selling and administrative expenses was primarily attributable to the benefit of ongoing productivity initiatives, together with lower COVID-19 related expenses and sales leverage, partially offset by investments related to the acceleration of our digital and omnichannel capabilities, market-driven wage rate increases and higher depreciation and amortization.

Selling and administrative expenses decreased to 25.1% of Net sales and other revenue during the first 28 weeks of fiscal 2022 compared to 25.8% during the first 28 weeks of fiscal 2021. Excluding the impact of fuel, Selling and administrative expenses as a percentage of Net sales and other revenue decreased 22 basis points. The decrease in Selling and administrative expenses was primarily attributable to the benefit of ongoing productivity initiatives, together with lower COVID-19 related expenses and sales leverage, partially offset by investments related to the acceleration of our digital and omnichannel capabilities, market-driven wage rate increases, higher depreciation and amortization and higher equity-based compensation expense.

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

For the second quarter of fiscal 2022, net gain on property dispositions and impairment losses was $14.0 million, driven by $14.5 million of gains primarily from the sale of real estate assets, partially offset by $0.5 million of asset impairments. 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 first 28 weeks of fiscal 2022, net gain on property dispositions and impairment losses was $93.4 million, driven by $94.6 million of gains primarily from the sale of real estate assets, partially offset by $1.2 million of asset impairments. For the first 28 weeks of fiscal 2021, net loss on property dispositions and impairment losses was $0.1 million, primarily driven by $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.

Interest Expense, Net

Interest expense, net was $89.8 million during the second quarter of fiscal 2022 compared to $109.3 million during the second quarter of fiscal 2021. 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 second quarter of fiscal 2022 was 5.3%, excluding deferred financing costs and original issue discount, compared to 5.4% during the second quarter of fiscal 2021.

Interest expense, net was $228.7 million during the first 28 weeks of fiscal 2022 compared to $262.6 million during the first 28 weeks of fiscal 2021. 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 2022 was 5.3%, excluding amortization and write-off of deferred financing costs and original issue discount, compared to 5.5% during the first 28 weeks of fiscal 2021.

Other Income, Net

For both the second quarter of fiscal 2022 and second quarter of fiscal 2021, Other income, net was $18.9 million. Other income, net during the second quarter of fiscal 2022 was primarily driven by non-service cost components of net pension and post-retirement expense, income related to our equity investment and unrealized gains from non-operating investments. Other income, net during the second quarter of fiscal 2021 was primarily driven by non-service cost components of net pension and post-retirement expense, including pension settlement gain, and income related to our equity investment, partially offset by unrealized losses from non-operating investments.

For the first 28 weeks of fiscal 2022, Other income, net was $25.2 million compared to $62.4 million for the first 28 weeks of fiscal 2021. Other income, net during the first 28 weeks of fiscal 2022 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 unrealized losses from non-operating investments. 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, including pension settlement gain, realized gains from sale of non-operating investments and income related to our equity investment, partially offset by unrealized losses from non-operating investments.

Income Taxes

Income tax expense was $117.4 million, representing a 25.5% effective tax rate, for the second quarter of fiscal 2022. Income tax expense was $100.3 million, representing a 25.4% effective tax rate, for the second quarter of fiscal 2021.

Income tax expense was $260.7 million, representing a 24.0% effective tax rate, for the first 28 weeks of fiscal 2022. Income tax expense was $232.8 million, representing a 23.9% effective tax rate, for the first 28 weeks of fiscal 2021.

Net Income and Adjusted Net Income

Net income was $342.7 million, or $0.59 per Class A common share, during the second quarter of fiscal 2022 compared to $295.2 million, or $0.52 per Class A common share, during the second quarter of fiscal 2021. Adjusted net income was $418.3 million, or $0.72 per Class A common share, during the second quarter of fiscal 2022 compared to $369.5 million, or $0.64 per Class A common share, during the second quarter of fiscal 2021.

Net income was $826.9 million, or $1.43 per Class A common share, during the first 28 weeks of fiscal 2022 compared to $740.0 million, or $1.26 per Class A common share, during the first 28 weeks of fiscal 2021. Adjusted net income was $1,000.3 million, or $1.72 per Class A common share, during the first 28 weeks of fiscal 2022 compared to $887.0 million, or $1.53 per Class A common share, during the first 28 weeks of fiscal 2021.

Adjusted EBITDA

For the second quarter of fiscal 2022, Adjusted EBITDA was $1,048.5 million, or 5.9% of Net sales and other revenue, compared to $965.4 million, or 5.8% of Net sales and other revenue, for the second quarter of fiscal 2021. For the first 28 weeks of fiscal 2022, Adjusted EBITDA was $2,468.8 million, or 6.0% of Net sales and other revenue, compared to $2,273.5 million, or 6.0% of Net sales and other revenue for the first 28 weeks of fiscal 2021.

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):

28

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

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

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

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

(i) Primarily includes adjustments for unconsolidated equity investments and other costs not considered in our core performance.

(4) 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.

(5) 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.

(6) 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.

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

Non-GAAP adjustment classifications within the Condensed Consolidated Statements of Operations:

(a) Cost of sales

(b) Selling and administrative expenses

(c) Interest expense, net

(d) Loss (gain) on interest rate swaps and energy hedges, net:

(e) Depreciation and amortization:

(f) Miscellaneous adjustments:

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):

Net Cash Provided by Operating Activities

Net cash provided by operating activities was $1,652.1 million for the first 28 weeks of fiscal 2022 compared to $2,137.7 million for the second quarter of fiscal 2021. The decrease in cash flow from operations compared to the first 28 weeks of fiscal 2021 was due to changes in working capital primarily related to inventory and accounts payable. These decreases were partially offset by an increase in Adjusted EBITDA and less cash paid for interest and income taxes during the first 28 weeks of fiscal 2022.

Net Cash Used in Investing Activities

Net cash used in investing activities was $977.7 million for the first 28 weeks of fiscal 2022 compared to $790.5 million for the first 28 weeks of fiscal 2021.

For the first 28 weeks of fiscal 2022, cash used in investing activities consisted primarily of payments for property, equipment and intangibles of $1,060.7 million partially offset by proceeds from the sale of long-lived assets of $94.2 million. Payments for property, equipment and intangibles in the first 28 weeks of fiscal 2022 included continued investment in our digital and technology platforms, the completion of 81 remodels and the opening of one new store. For the first 28 weeks of fiscal 2021, cash used in investing activities consisted primarily of payments for property, equipment and intangibles of $822.5 million and payments for business acquisitions of $23.5 million, partially offset by proceeds from the sale of long-lived assets of $24.6 million. Payments for property, equipment and intangibles in the first 28 weeks of fiscal 2021 included continued investment in our digital and technology platforms, the opening of six new stores and the completion of 76 remodels.

Net Cash Used in Financing Activities

Net cash used in financing activities was $226.6 million during the first 28 weeks of fiscal 2022 compared to $214.4 million during the first 28 weeks of fiscal 2021.

Net cash used in financing activities during the first 28 weeks of fiscal 2022 and the first 28 weeks of fiscal 2021 consisted primarily of dividends paid on our Class A common stock and Convertible Preferred Stock, as well as tax withholding payments on vesting of restricted stock units.

Dividends

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. 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. Cash dividends paid to holders of the Convertible Preferred Stock were $34.5 million and $59.1 million during the first 28 weeks of fiscal 2022 and first 28 weeks of fiscal 2021, respectively. On September 15, 2022, we declared a quarterly cash dividend of $11.2 million to holders of Convertible Preferred Stock, which was paid on September 30, 2022.

We have established a dividend policy pursuant to which we intend to pay a quarterly dividend on our Class A common stock. Cash dividends paid on our Class A common stock were $126.7 million ($0.24 per common share) and $93.0 million ($0.20 per common share) during the first 28 weeks of fiscal 2022 and first 28 weeks of fiscal 2021, respectively. On October 18, 2022, we announced the next quarterly dividend payment of $0.12 per share of Class A common stock to be paid on November 14, 2022 to stockholders of record as of the close of business on October 31, 2022.

In connection with the Merger Agreement, on October 14, 2022, we declared a special cash dividend of $6.85 per share of Class A common stock (the "Special Dividend"). The Special Dividend, not to exceed $4 billion, is payable on November 7, 2022, to stockholders of record as of the close of business on October 24, 2022, and will be funded using approximately $2.5 billion of cash on hand with the remainder in borrowings under our existing ABL Facility.

Liquidity

We estimate our liquidity needs over the next 12 months to be approximately $10.0 billion, which includes the Special Dividend, 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 maintain our current debt ratings and 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.

As of September 10, 2022, we had no borrowings outstanding under out ABL Facility and total availability of $3,760.4 million (net of letter of credit usage).

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 26, 2022, filed with the SEC on April 26, 2022, 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.

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 26, 2022, filed with the SEC on April 26, 2022.

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 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 second quarter of fiscal 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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 26, 2022, filed with the SEC on April 26, 2022, under the heading "Risk Factors."