BOARD OF DIRECTORS

Barry Queen, Chairman David Ball Danny Boyle Jim Brown John Clarke Victor Cosentino Queen’s Enterprises - Paola, KS Four B Corp Country Boy Markets Doc’s Food Stores County Fair Cosentino’s Kansas City, KS Harrah, OK Bixby, OK Food Store Prairie Village, KS Mitchell, SD

Don Woods, Jr., Vice-Chairman Kim Eskew Alan Larsen Jay Lawrence Alan McKeever Chuck Murfin Woods Supermarkets - Bolivar, MO Harp's Foods Houchens Industries Lawrence Brothers McKeever’s Ozark Supermarkets Springdale, AR Bowling Green, KY Sweetwater, TX Independence, MO Ozark, MO

James Neumann Dave Nicholas Pat Raybould Jeff Reasor Randy Stepherson Erick Taylor Dale Trahan Valu Market, Inc. Nicholas B&R Stores Reasor’s Superlo Foods RPCS, Inc. Dale Trahan Louisville, KY Supermarkets Lincoln, NE Tahlequah, OK Memphis, TN Springfield, MO Enterprises Boonville, MO Rayne, LA DEAR SHAREHOLDERS

March 22, 2017 Dear Shareholders, combined efforts and Your Board of Directors and management are a common purpose. pleased to present the audited results for our fiscal Beyond just our year 2016. Consolidated company sales reached operating results, another record of $9.18 billion, up 2.78%. Total year- AWG and VMC members also benefited from end patronage after retainage was $201.7 million, meaningful cost of goods reductions. In 2016, another record, which was 2.78% of qualifying sales. our merchant team worked closely with our Total distribution including patronage, allowances vendor partners to establish and build upon and interest back to members was $546.5 million, relationships that would further leverage an increase of $2.1 million even after reflecting an our collective membership’s scale of over increase in the amount of promotional allowances $20 billion in retail sales. These improved that converted to EDLP programs. Additionally, AWG and new vendor arrangements have an stock trading value increased 4.4 percent to $2,000 annualized cost of goods impact over $30.9 per share. million, span multiple product categories AWG achieved these strong financial results and include both national brand and store despite record product price deflation and significant brand products. changes in our membership base. Cooperative net In summary, 2016 was a year of change sales were $7.67 billion, up 1.21% from the prior and growth. These changes affected AWG year, running counter to year-over-year product and member companies alike. We are very price deflation of 2.5% and overcoming the loss of thankful for the new members formerly with a significant member which initiated self-supply. AFM and new business in our Great Lakes These positive sales results are due primarily to the and Nebraska Divisions. The confidence to fourth quarter supply initiation to approximately undertake that unification project came from 800 new members’ stores in conjunction with the you, our members, and your support of our Affiliated Foods Midwest (AFM) unification. To all of cooperative model. It has worked well for 90 those new members, thank you! years and we are very excited about all we will This year marks the end of our 90th anniversary accomplish together in the coming decades. of our cooperative. Due to the support and continued AWG is proud of our heritage and will continue growth of our member stores and their collective to strive to serve you well as a primary resource in business, AWG has achieved a compounded annual the ongoing retail battle, while seeking additional sales growth rate of 8.69% and compounded annual ways to lower costs and provide new sources of patronage growth rate of 11.81% for the past 50 growth, revenue and ongoing success. years. These results position your company as the Sincerely, top performing grocery wholesaler in the U.S. This is David Smith a strong testimonial to the vision set by a handful of President/CEO independent grocers who founded our company and way of doing business in 1926. These visionaries Barry Queen knew that they could achieve so much more through Chairman of the Board

1 2012 2013 2014 2015 2016 FIVE-YEAR TREND Founded in 1926, Associated and hold 15 shares of "Class A" port team provided operational Wholesale Grocers, Inc. (AWG) was stock to be supplied on a coopera- and administrative support to all established to provide its family tive basis. eleven distribution centers, located owned retail member ​stores the The remaining two facilities were in Springfield, Missouri; Oklahoma essential building blocks needed operated by our wholly-owned City, Oklahoma; Ft. Worth, Texas; to establish strategic positions in subsidiary, Valu Merchandisers Southaven, Mississippi; Memphis, their unique retail marketplaces. Company, which primarily provid- Tennessee; Pearl River, Louisiana; This Annual Report marks 90 years ed wholesale supply of health and Goodlettsville, Tennessee; Ft. Scott, of providing products, support ser- beauty care, general merchandise, Kansas; Norfolk, Nebraska; Kenosha, vices and financial returns to our pharmaceutical supplies, and spe- Wisconsin and Kansas City, Kansas. member retailers. The collective cialty, natural, organic and inter- AWG achieved sales on a con- strength of our cooperative model national foods to our cooperative solidated basis, after eliminations, has provided ongoing opportuni- as well as non-member retailers. of $9.18 billion. Within the co- ties for our members to develop Additionally, AWG operated ​whol- operative, net sales were $7.67 and grow unique and sustainable ly-owned subsidiaries including​ billion. Operating income was businesses that have survived, as Always Fresh, Inc., a military chan- $188.7 million, with net income of well as thrived, in an ever-changing nel distribution company, providing $189.9 million. retail environment. products to commissaries and base Total patronage returned to Operating eleven distribution exchanges on a non-member basis​ shareholders was $201.7 million, centers during the 2016 fiscal year, , Media Solutions Corporation, a distributed on a 60/40 basis (the AWG delivered grocery and related digital marketing services compa- payout consisting of 60% cash products to active retailers through- ny, Retail Accounting Services, Inc., and 40% certificates). As a percent out the midwestern,​ southwestern​ an accounting and payroll services to qualifying sales, the patronage and southeastern United States. company, and Super Market Devel- payout was 2.78%, and AWG stock Nine of the eleven facilities are opers, Inc., AWG's commercial real trading value increased by ​4.4 ​per- full-line divisions, dedicated to pro- estate and development service cent to $2,000​ per share. Total viding service to AWG cooperative arm for cooperative members. members’ investment and equity members in various retail locations. Headquartered in Kansas City, ended the year valued at $544.3 Members are required to purchase Kansas, the AWG corporate sup- million.

CONSOLIDATED RESULTS (thousands) 2012 2013 2014 2015 2016

Net Sales $ 7,852,006 $ 8,380,214 $ 8,934,239 $ 8,935,915 $ 9,183,802 Operating Income 176,513 201,406 231,622 202,620 188,709 Net Income 175,949 192,490 226,920 198,919 189,907 Weeks 52 52 52 52 53

COOPERATIVE OPERATIONS (before eliminations)*

Net Sales $ 6,713,047 $ 7,148,757 $ 7,685,985 $ 7,579,129 $ 7,671,138 Distribution to Members Interest 1,522 227 223 406 553 Promotional Allowances 311,201 338,828 351,820 350,155 344,219 Year-End Patronage 172,872 182,576 194,675 193,815 201,731 Total Distribution to Members $ 485,595 $ 521,631 $ 546,718 $ 544,376 $ 546,503

Members’ Investments $ 9,308 $ 10,846 $ 9,411 $ 22,105 $ 36,162 Members’ Equity 386,850 422,979 439,632 455,610 508,172 Total Members’ Investments & Equity $ 396,158 $ 433,825 $ 449,043 $ 477,715 $ 544,334 *Includes the accounts of members/subsidiaries.

2 $9.18 NET SALES BILLION $8.93 $8.94 Consolidated BILLION (after eliminations) BILLION

$8.38 BILLION

$7.85 BILLION

2012 2013 2014 2015 2016 52 WEEKS 52 WEEKS 52 WEEKS 52 WEEKS 53 WEEKS

$205.0 Patronage Dollars $201.7 6.0% Total Gross Profit (Millions) (Co-op only, includes cash discount) $195.0 5.9% *As percent of total net sales 5.90% $185.0 $194.7 $193.8 5.8% 5.83% $175.0 $182.6 5.71% $172.9 5.7% 5.76% $165.0 5.69% 5.6% $155.0

2012 2013 2014 2015 2016 2012 2013 2014 2015 2016

Co-op Patronage (Percentage to qualifying sales) 3.5% Selling, General & Administrative Expense 2.90% 3.4% (Co-op only) 2.81% 3.32% *As percent of total net sales 2.77% 2.79% 2.78% 2.80% 2.76% 3.3% 3.25% 3.22% 3.13% 2.70% 3.2% 3.12%

2012 2013 2014 2015 2016 2012 2013 2014 2015 2016

3 AWG WELCOMES AFM OVER 3,800 MEMBER STORES IN 36 STATES

As mentioned in the Letter I could not be more proud to serve and CEO of AFM stated, "Before to Shareholders, 2016 this great group of new members.” our members voted to unify, they was a special year for Then on October 23, 2016, learned how they would benefit Associated Wholesale Grocers, AWG and AFM combined the from a lower cost of goods and Inc. (AWG) due to the successful two cooperatives’ distribution an expanded array of services. unification with Affiliated Foods businesses, converted to a common Our boards knew that unifying Midwest Cooperative, Inc. (AFM). operating platform, and shared a the cooperatives would produce This project became a reality at common purpose. This unification substantial financial rewards for the Annual Shareholders Meeting was made possible by the support the retailer-members and would of AFM on September 10, 2016, and approval of AWG’s Board of produce long-term growth.” Arter where AFM shareholders approved Directors, AFM’s Board of Directors, also noted that many AFM members the transaction by a vote of 410 a virtually unanimous vote of have told him "AWG’s retailers to 2 and executed agreements to AFM’s shareholders, and the hard are just like us." Following the become part of their new co-op. work of hundreds of AWG and transaction, Arter assumed the AFM teammates from throughout position of Senior Vice President the organizations. To all our and Manager of the Northern Region new members, THANK YOU and of AWG overseeing operations for WELCOME ABOARD! the new Nebraska and Great Lakes Because of this transaction, Divisions. AWG is very excited to the expanded AWG now provides have Martin as a new leader with products and services to approx- his fantastic track record of meeting imately 3,800 independently and exceeding members' needs, as owned member stores located well as his experience, knowledge, in 36 states from nine full-line and passion. Under his leadership wholesale divisions, making it we expect tremendous growth and the nation's largest cooperative an improved service and support David Smith, President and CEO food wholesaler. It also provides to not only the Northern Region of AWG, was overwhelmed by the our cooperative members the members, but throughout AWG. support from AFM’s membership. additional scale and buying power AFM, its leadership team, “While we were anticipating of more than $20 billion in retail and its retailer owners are to tremendous support for the volume, and provides us the be commended for many class- unification by AFM’s members, best of both cooperatives from leading services and offerings I was humbled by the virtually implementing the best practices of they developed and leveraged unanimous vote in favor and by the each cooperative. Combining our to make their retailer members enthusiasm and standing ovation distribution center networks and jobs easier and to allow them to the members demonstrated at support infrastructure allows us to compete favorably. They developed AFM’s shareholders meeting. AWG more effectively serve independent several unique retailer tools, such will indeed be stronger together member-retailers, strengthen our as Connect®, a customer portal for by joining forces with this amazing relationship and ability to perform virtually all store communications, group of like-minded retailers. I for the vendor community, reduces interactions, and services. As a have also been very impressed by our operating expenses and part of the combined cooperative, the progressive nature of these subsequent cost of goods, and this program will continue to be retailers. They are very attuned to further enhances our ability to supported by AWG for our new their customers, clearly know what support and serve our growing membership as we design and they need to successfully compete membership for the challenges develop Connect 2.0®, its cloud- and communicate that to us we will collectively face in the based replacement capable of effectively, and are very supportive future. supporting stores throughout the of the cooperative business model. Martin Arter, former President AWG and VMC network.

4 Kenosha

Norfolk

Combining our companies and the related benefits of this exciting unification are aligned well with our company’s Mission and Vision:

MISSION STATEMENT “Our mission is to provide our member-retailers all the tools, products, and services they need to compete favorably in all markets served. This includes VISION top quality supermarket “To be the most retailer-focused merchandise and support and highest performing services, all at the lowest member-owned food whole- possible cost.” saler.”

5 DISTRIBUTING SUCCESS FOR 90 YEARS OUR STORY!

It was an idea by a small Although chains dominated most were becoming very aggressive, group of some 20 grocers markets, AG’s member stores were opening new stores and taking on in Kansas City, Missouri in gathering force with their combined the chain competitors. Consumers 1924, all wanting a way to compete advertising and buying power. AG were becoming more price conscious with chain supermarkets, that launched the Thriftway group and and AWG’s members relied on started it all….. began reaching consumers through AWG for competitive costs as well In 1924, that group of grocers radio and print advertising. as merchandising and operating met for the first time at Ed Glenn’s In the 1940’s, following the war, techniques to help them compete. grocery in Kansas City, Missouri. They suburban areas began, as did the strip The Cash & Carry Department sold began buying groceries together center anchored by a supermarket. single units as well as full and half- and storing them in the back room AG added refrigerated space in the cases, we started a controlled label of a store owned by J.C. Harline Springfield and Joplin warehouses program, and fresh meat as well as at 39th and Troost in Kansas City, as consumer demands changed. AG's health and beauty items were added Missouri. In 1926, we incorporated member stores transformed quickly to the Kansas City warehouse. In the as Associated Grocers of Kansas City from full-service to self-service; thus 1960’s, AWG constructed another (AG) and began operating on the the modern supermarket was born. warehouse in Springfield from the second floor of Morehead Grocery In the 1950’s, to avoid confusion, ground up,which was subsequently Company at 3842 Troost Avenue in Associated Wholesale Grocers, Inc. destroyed by fire and was replaced Kansas City, Missouri. J.C. Harline became the official name of the by an even larger facility in 1972. managed the cooperative along corporation, we paid out our first Later in the 1970’s, AWG developed with his own grocery store. Profits patronage, closed the warehouse in the now very successful licensed from the company were paid back Joplin, and we were up and operating banners of Price Chopper/ Price each year to member stores in the in a newly constructed space on Mart. form of dividends. Rapid growth Fairfax Avenue in Kansas City, By the 1980’s and 1990’s, necessitated a move to the W.E. Kansas along with the warehouse in AWG members collectively were Murray Transfer and Storage building Springfield, Missouri. In 1954, AWG market leaders in the Kansas City where Associated Grocers occupied had sales of $14 million and paid out and Springfield trade areas and the fourth and fifth floors. In 1930, total patronage of $20,441. AWG topped $1 billion in sales. AG moved again into a 16,000 square The 1960’s and 1970’s were AWG developed Best Choice and foot former mattress factory on 23rd great decades for AWG. Our members Always Save store brands, replacing Street. This facility later collapsed, often told that they had too much inventory, and the company moved again to 19th and Troost, which was our home in Kansas City from 1933 until 1956. Following demand, the company purchased warehouses in the 1930’s in Joplin, Missouri and the former United Grocers warehouse in Springfield, Missouri.

1926 1932 1938 1944 1950 1953 1962 1968

6 90TH ANNIVERSARY

Shur Fine and Shur Fresh, and the first Country Mart opened. The competitive landscape required AWG to expand its offerings to include deli and bakery departments. To compete with a rapidly expanding discounter, we opened a new subsidiary – Valu Merchandisers Company (VMC), for low cost supply of health and beauty care and general merchandise. Later in 1995, AWG stepped into its third wholesale division in Oklahoma City. This new operation gave our cooperative the experience and confidence to grow beyond the boundaries of our original trade areas. The Sun Fresh and Apple Market banners were also successfully launched, and additional services such as insurance were added to support the needs of the membership. In 1996, AWG sales topped $3 billion from three Divisions in Kansas City, Springfield and Oklahoma City. In 2003, following the bank- ruptcy of Fleming, AWG expanded east of the Mississippi River into of the Oklahoma City Division. In Foods Midwest, which brought about Southaven, Mississippi (Memphis 2011, due to extraordinary growth our newest divisions in Norfolk, Division) and Nashville Divisions, in the deep south from the Memphis Nebraska (Nebraska Division) and as well as a new VMC facility in and Nashville Divisions, AWG broke Kenosha, Wisconsin (Great Lakes Memphis, Tennessee for specialty ground on our Gulf Coast Division Division). Our expanded footprint is foods, general merchandise, and in Louisiana, which opened in 2013. now over 8 million square feet and seasonal goods. AWG added ice Business in the Gulf Coast Division includes eleven modern facilities, cream and fluid milk to its product exceeded all projections and was and we are well positioned to serve a offerings. In 2007, AWG acquired expanded in 2015 to accommodate growing membership in the midwest, a former Albertsons facility in Fort that increased business. southwest, south and southeast for Worth, Texas and expanded our trade 2016 was another year of growth many decades to come. Thanks to area deeper into the Southwest, and and expansion for the cooperative our visionary founders and members opened a ground-up replacement through the unification with Affiliated for making all this possible!

Lou Fox Ft. Worth Gulf Coast

OKC Memphis Norfolk 1971 1980 1984 1995 2003 2007 2013 2016

7 INITIATIVES NEW DIGITAL SERVICES

mobile-friendly formats, promoted content from a registered dietitian, and optimized sites for search. These programs will continue to expand consumers’ connection to member stores and AWG Brands. Sales and customer engagement also grew with AWG Marketing’s programs focused on enhanced e-mail, text, online and social media C onsumers continue to offerings. These solutions continue change the way they shop to be essential and evolving methods for groceries. AWG’s for retailers in reaching consumers digital marketing programs, with their digital weekly ad, special including an expanded online offers, and in-store offerings. These shopping offering, growth of AWG programs can provide simple, Brands’ social media properties, turnkey solutions to retailers and and revamped e-mail, text, and web growing the connectivity consumers offerings provide retailers a way to are seeking with their retail store in adapt to these changes. digital and mobile communication. Launched in 2016, the AWG The AWG online program op- Marketing online shopping program tions grew in 2016 with the addition provides retailers four distinct of Media Solutions Corporation offerings to meet their needs in (MSC), a new AWG wholly-owned the online shopping space. These subsidiary. Media Solutions provides offerings are geared toward helping unique online, mobile and in-store retailers profitability, and introduce electronic marketing solutions online shopping while making the to assist single-store owners to programs easy-to-use for consumers. multi-store groups with digital and Consumers are seeking convenience online marketing tools. Many MSC and simple time saving solutions; tools were integrated into the AWG AWG’s marketing team helps with Marketing suite of offerings late programs to economically and in 2016 and are being leveraged efficiently launch online shopping by retailers across divisions with solutions. With online sales growth the help of specialists from the in grocery categories rising at a Customer Connect Center within record pace, now is the time to the AWG Marketing team. 2017 will expand members' offerings to be a continued growth area for all include online and mobile shopping things digital and the team is ready solutions. to support members' needs. AWG Marketing and Brands teams continue to expand digital programs, online presence, and customer-friendly solutions to keep up with the consumers digital information needs. On their web properties, AWG Brands introduced video recipes, created food holiday giveaways, adapted websites to

8 INITIATIVES CENTER STORE

Center Store continues to HOT BEVERAGES play a critical role in today’s grocery stores and provides a significant portion of total store sales at retail. Center Store is a key portion of retail basket size, important in consumers' food and non-food needs and is a significant contributor to retail store profits. Consumers’ needs are changing, which highlights the importance of Center Store categories in supporting one-stop shopping, simplified meal BABY solutions and solutions to complete the traditional shopping trip. Though some Center Store categories are experiencing moderate declines, solid growth continues in increased snacking opportunities with consumers, expanding beverage consumption choices, and growing "better-for-you" options within the Center Store. At AWG and VMC, we are driven to provide solutions ORGANIC PET CARE to grow our members' Center Store sales. Creating a vibrant Center Store and increasing shopper engagement are the keys to success. At AWG, we launched multiple aisle-based solutions in 2016 to help retailers capitalize on the latest trends, optimize the store space and aisle layout, and improve product and placement solutions at the shelf. Meeting the consumers’ needs at GRILLING/PICNIC PASTA/SAUCES the shelf each day is critical to sales success in Center Store. Several solutions were needs in these rapidly growing sales basket sizes at retail and improve launched integrating all AWG and categories. the overall sales and margins within VMC departments, private brand By creating simple aisle-based the category. solutions and National Brand solutions for our members and retail In 2017, AWG and VMC will again options by division to provide the stores, AWG is creating programs partner to impact multiple Center optimal regional assortment to that can assist in growing Center Store categories for growth. Our meet the local consumers' needs. Store sales. The Center Store aisle division teams and field resources In addition, several stand-alone initiatives provide a cross-functional are ready to help achieve success wellness solutions were deployed solution for members to achieve in this critical area of the store to in health, wellness and beauty sales growth within the Center compete effectively in the markets care to complement the consumer Store. These solutions will build we serve.

9 ANNUAL REPORT AWG BRANDS

AWG Brands achieved AWG Brands' product develop- record sales in 2016 of ment led to the launch of 186 $1.18 billion. Overall cases new and reformulated products shipped to our members grew across Always Save, Best Choice, by 7.45%! With record deflation IGA, Superior Selection and Clearly in dairy and meat along with Organic. We updated 600 products commodity impacts within frozen through rebranding and product and dry grocery, sales were development in both food and non- negatively impacted in several food with the ongoing conversion areas. AWG Brands' focus on to our new Best Choice logo. AWG improving the sales mix, adding new Brands continues to be committed items in high growth categories and to new item sales growth through trading up the customer to higher category and product innovations value category solutions all helped that meet consumer needs. to offset portions of the deflationary Quality remains the top priority trends in 2016 to achieve an overall within AWG Brands. By utilizing sales gain. a third-party independent lab for 2016 was a successful year in quality testing, our commitment to achieving growth in multiple Center high quality continues with each Store categories that enabled our of our brands. AWG Brands quality members to improve sales with AWG control team members supplement Brands and help achieve margin the third party product testing to goals at retail. The AWG Brands incrementally monitor specifications team successfully leveraged volume and product performance. With growth to lower acquisition costs both independent external testing by over $21 million, (annualized and internal product reviews, AWG incremental to deflation impact) Brands are committed to product enabling improved everyday and safety and high performing products promotional program costs to our that consumers trust. members. The AWG Brands sales teams at With a focus on growing sales each division continue to provide at retail and expanding incremental members with retail support to selling opportunities, AWG Brands drive incremental sales growth. delivered benefits in 2016 by These sales teams are vital to the utilizing the Web Blast program, success of AWG Brands' programs pantry building sales events and and are a valuable asset to our continuous investment into everyday members and the consumer they cost reduction opportunities. This serve. This dedicated AWG staff, in increased activity supplemented partnership with our division teams our ongoing commitment to market- and retail members, are focused on leading aggressive super sales and further growing private brand sales event specials throughout 2016. in 2017. 10 2016 VALU MERCHANDISERS

2016 completed a successful the Natural and Organic marketplace, In 2016, VMC's Pharmacy year for Valu Merchandisers which increased by 16.5% in 2016. program performed an exhaustive Company with record total By leveraging in-depth category service provider search to further net sales of $815 million, up 6.6% reviews, providing educational leverage our members' collective from prior year. VMC’s dedication seminars, hosting VMC trade shows, buying power and collaboratively in supporting consumers’ healthy and converting insights to action entered into a strategic alliance lifestyles and wellness trends to at retail, VMC brings successful with Associated Food Stores in drive same store sales translated solutions to life for our member Utah. By leveraging our collective into growth across all business stores. buying power, we will deliver segments. Through strong The health care industry higher retail margins and lower partnerships with retailers, focusing continues to redefine our pharmacy overall pharmaceutical costs to our on consumers needs and supporting business. Increases in specialty members to continue to meet future retail execution, VMC delivered medications, expansion of generics needs in 2017 and beyond. business solutions, that contributed and the growth of Medicare patients In 2017, VMC is committed to to the overall sales growth. becoming an even larger portion providing the lowest possible cost VMC enables retailers to meet of total prescriptions filled, the Rx of goods, promotional programs to their consumers’ needs in health business continued upward sales meet all retailer needs and deliver and wellness by expanding on trends. Preferred Networks brought full solution sales programs to emerging growth categories. These more customers to our members' ensure our members can exceed high-growth categories aided VMC stores but in turn created overall their customers’ expectations. and our members to grow retail margin compression for the stores. sales. With expanded health and wellness solutions, "better-for-you" products, wholesome snacking and cleaner ingredient-focused food items available through VMC, our members are meeting the needs of their changing consumer. Delivering actionable business plans, consumer focused programs and rapidly evolving innovation in key growth categories, VMC products and services will aid retail stores in delivering on their customers health and wellness needs. With an expanded Power Buy program, Extreme Show Promotions and simple-to-execute End Cap programs, VMC provides retailers $800 the ability to drive profitable sales VMC Total Net Sales (millions) in today’s highly competitive $775 marketplace. Turnkey non-food programs for all seasons made it $750 easy for retailers to capitalize on profitable holiday and seasonal sales opportunities while tying in $725 key general merchandise products, along with core food items for $700 incremental sales success. VMC offers end-to-end solutions 2012 2013 2014 2015 2016 for our retailers to be competitive in 11 EXCELLENCE IN MERCHANDISING CENTER STORE

10 BOX Choice labels, attractive signage HARPS throughout the store guides CONWAY, AR shoppers to great savings down every aisle. 10 Box, what’s that? Now Wooden bins, bunkers, and trending in Conway, Arkansas, it’s pallet displays are highlighted THE place to save on groceries. with Hot Price Zone signs In April 2016, Harps transformed throughout the store. Roll- this former traditional store into around bunkers are utilized to an up-to-date savings mecca. cross merchandise end displays Operating in a cost-plus format, for great deals in every aisle. sales volume has exploded. Week While 10 Box pricing is DIVISION WINNERS after week, sales continue to low, quality and freshness are outpace prior year by over 200%! hallmarks of the perishable #0466 - Ray’s Apple Market, Beloit, KS 10 Box displays every item at departments with the “Pick 5 #4195 - Homeland Cash Saver, cost and then for $19.95” meat program and Oklahoma City, OK adds just 10% locally-grown seasonal items. at checkout. There’s no card or member- #7136 - JD’s Supermarket, Austin, TX Offering ship required to save at 10 Box! #3068 - Piggly Wiggly, Haynesville, LA both national With a philosophy to stack it #3476 - Edward’s Cash Saver, brands and high and sell it cheap, 10 Box Jacksonville, AR Always Save is synonymous with saving in and Best Conway. #5872 - Food Giant, Calvert, KY

EXCELLENCE IN MERCHANDISING VMC

ROUSES anxiously await each new edition. DONALD ROUSE For the health conscious KENNER, LA customers, Rouses partners with local dietitians to educate their Under the leadership of customer and promote the ‘Eat Mike O'Shell, the Rouses team Right’ program. Store displays emphasizes a total customer and on-site dietitians answer experience in their Kenner, LA questions and make it easy to store. From buying and promoting promote healthy products. local flavor, merchandising Health With attractively built and Wellness, featuring displays displays and taking advantage of organic products and creating of the many CATEGORY WINNERS a seasonal treasure hunt, Rouses VMC TPRs, #0237 - Super Saver, Lincoln, NE is considered to be "my store" in Power Buys each of the communities it serves. and show #4818 - Reasor's, Owasso, OK Falling right behind "Southern deals, Rouses #6801 - Rouses, Baton Rouge, LA Living" magazine in popularity, drives #2282 - Murfin's Market, Clever, MO the "My Rouses Everyday" sales and publication is customer-focused profitability #2477 - Woods Supermarket, with local recipes that utilize the across the Sunrise Beach, MO products they sell. Customers whole store.

12 EXCELLENCE IN MERCHANDISING MEAT

REED'S PIGGLY WIGGLY Reed’s has seven frozen MIKE REED food doors dedicated to fish BATESVILLE, MS and seafood and another twelve doors of frozen meats. They are The team at Reed’s Piggly cashing in on these categories Wiggly developed a plan to and experiencing major growth! overcome the challenges with The sales floor is always other grocery retailers in the staffed ready and willing to greet same town and they not only and assist with any request. survived, they thrived! Their commitment to superior The meat department played customer service resonates an integral role in their strategy throughout the store. DIVISION WINNERS to ‘win’ in this highly competitive market. They offer over #0036 - Prenger Foods, Brookfield, MO 1,400 linear feet of #2833 - Ron’s Supermarket, Pittsburg, KS selling space, and a large #4950 - Jumbo Foods, Enid, OK variety of fresh meat along with processed and #7224 - Cash Saver, Odessa, TX frozen meat, allowing #6924 - Adrien’s, Lafayette, LA Reed's to achieve a 38% #5772 - Alexandria County Market, meat distribution! Alexandria, KY

EXCELLENCE IN MERCHANDISING SEAFOOD

HEN HOUSE specifications. This convenience, DAVID BALL along with well-planned cross- LEAWOOD, KS merchandising and suggestive selling is quickly making this Closed for an eight-month department a ‘destination’ for remodel, this Ball’s Hen House re- seafood lovers. opened with a magnificent state- A knowledgeable, well- of-the-art store with an additional trained team that is focused on 20,000 sq. ft. Serving an affluent, customer service is the winning upscale community, it was a combination in this store. The strategic decision to enhance the department enjoys a staggering seafood department. 88.88% increase since the The new and improved remodel. DIVISION WINNERS seafood department features a The entire Hen House team #2908 - Food Pyramid, Bartlesville, OK full service showcase with fresh was involved in this new and catches from around the world, a expanded department and has #4814 - Reasor’s, Broken Arrow, OK live lobster tank, and a full line of set the new standard for what #6810 - Rouses Market, Mobile, AL frozen seafood. a seafood department can and Upon request, customers can should be. #3362 - Vowell’s Marketplace, Starkville, MS order individually steamed items #1473 - Buehler’s IGA, Evansville, IN or any other items cooked to their

13 EXCELLENCE IN MERCHANDISING PRODUCE ROUSES team the department’s mission DONALD ROUSE and set the expectation to NEW ORLEANS, LA provide the freshest produce available. Through department Located in the highly section assignment, the team is competitive Mid-Town New committed to merchandise and Orleans market, this store uses a maintain the highest quality tailored variety and high quality specifications and attractiveness. standards as their strength A knowledgeable team also to drive customers into the allows customer assistance with department. buying decisions. Team spirit, personal pride, To cement their ‘fresh’ innovation and the expectation commitment, during peak DIVISION WINNERS to be the best are the key factors shopping hours, four associates #1305 - Cash Saver, Des Moines, IA creating the outstanding success maintain the fresh cut fruit and of this department. “The best veggie bar and develop value #2477 - Woods Supermarket, in freshness, the best in variety added items such as trays and Sunrise Beach, MO and the best in service and baskets. With high volume and #4335 - Pruett’s Food, Naples, TX knowledge” exemplify their double digit sales distribution, #3559 - Cash Saver, Hot Springs, AR foundation principles. it takes a well-trained and Jeff Winding, produce committed staff to be picture- #5372 - Hackleburg Market, Hackleburg, AL manager, has instilled in his perfect every day!

EXCELLENCE IN MERCHANDISING BAKERY REASOR'S buy. Their selection covers every JEFF REASOR customer's ‘sweet tooth’ craving BROKEN ARROW, OK from brownies to cannolis. The skilled bakery team is available Reasor’s bakery in Broken to create special order cakes Arrow delights their customers for any occasion. This premier with an outstanding variety to bakery’s merchandising and tempt every shopper. After a customer service reputation has remodel in 2014, their creations made it a ‘foodie’ destination. are now highlighted in state-of- the-art display cases, including DIVISION WINNERS a one-of-a-kind specialty bread kiosk with a Bezerber slicer for #0006 - Queens Price Chopper, Overland Park, KS their large selection of artisan, organic, and store-made fresh #2255 - Town & Country Discount Foods, breads. Customers love having Mountain Home, AR their bread sliced to their exact #7738 - Cash Saver, Nashville, AR specifications. #6888 - Ramey’s, Purvis, MS Mouth-watering displays of gourmet cakes and a large #3913 - Big Star, West Memphis, AR variety of single serve upscale #5417 - Cooke’s, Cleveland, TN desserts entice the customers to

14 EXCELLENCE IN MERCHANDISING DELI REASOR'S rotisserie chickens are slowly JEFF REASOR turned, roasted and cooked in TULSA, OK flame fired ovens. For those customers who After a remodel in 2016, want a quick lunch, there’s a wide this deli has found no order too variety of grab-and-go specialty big or too small and continues sandwiches and signature salads, to grow in percent-to-total store both prepared daily at the store. sales. Showcased within the This special deli also entices department are a state-of-the-art their customers with gourmet hot line, salad and soup bars, plus selections exclusively crafted for a fruit and yogurt bar, offering the store by Reasor’s including healthy options and convenience. party trays and holiday meal Customers are drawn to a preparation. DIVISION WINNERS fresh olive bar to pair with a large #0405 - Cosentino’s Price Chopper, variety of domestic and foreign Ottawa, KS gourmet cheeses, which can be #2423 - Price Chopper, Rolla, MO cut and wrapped to order. Reasor’s offers hot, cold, #6108 - PIggly Wiggly, Wiggins, MS single-serve and family-style #3682 - Food Giant, Cape Girardeau, MO meals. Delicious daily specials are served out of Dutch ovens and #5632 - Price Less IGA, Bowling Green, KY

EXCELLENCE IN MERCHANDISING FLORAL PRICE CHOPPER impulse to purchase. GOTT FAMILY Throughout spring and fall, ROLLA, MO floral displays expand outdoors and are the destination for Conveniently located just shoppers. From a vast selection inside the front entrance, this of colorful bedding plants, innovative floral department has shade-loving ferns to colorful quickly become “the” place to mums, shoppers find these shop for fresh flowers and plants. high-impulse items filling their There’s always something new shopping baskets before ever and exciting inside this dynamic stepping inside the store! full-service floral shop to help Creative, ever-changing commemorate those extra displays, cross-merchandising special moments or everyday throughout the store, and helpful, DIVISION WINNERS needs. knowledgeable employees are a The talented team of floral winning combination. This floral #0424 - Balls Hen House, Leawood, KS designers has mastered the art of department has enjoyed double #4008 - Crest Fresh Market, creating massive sales-building digit sales increases week after Oklahoma City, OK displays for every holiday and week. #6586 - McDade’s Market, Jackson, MS season. Artfully decorated for every occasion or event, #3760 - Hays Supermarket, Wynne, AR shoppers are unable to resist the #5417 - Cooke’s, Cleveland, TN

15 Our Birthday Wi sh... EXCELLENCE IN MERCHANDISING IS TO SERVE YOU AND YOUR FAMILY FOR ANOTHER 100 YEARS Lucyy Greer Greer’ss COME CELEBRATE Got It! at your local Greer’s all month long!! ACTIVITIES AND PRIZES GALORE! OUTSTANDING EVENT SEE DETAILS IN THE STORE! NEED EXTRA CASH IS HUNTING, A NEW FOR THE FISHING OR FARMING CAR? SUMMER? YOUR THING? REGISTER TO WIN! REGISTERREGISTER ININ ANYANY OF OOURUUR 3322 ST STORES!ORES! GREER'S CASH SAVER activities to engage the next YOUR CHOICE OF GREER FAMILY generation of shoppers.

BLACK 2016 BAYOU LA BATRE, AL Jan Greer Endfinger, ACCENT SE BAD BOY $10,000 RECOIL Marketing Director, and her CASH! BUGGY! ANNOUNCED Autry Greer and Sons turned team executed a sound plan Grand Prize Winner JULY 30TH! $100 GREER’S Pr izes their 100th anniversary into a and enthusiasm to ensure GIFT CARD GALORE winner in each s tore FOR KIDS OF ALL AGES! nearly year-long celebration. It success. Social media included

WIN WHAT BIKES, TVS, GRILLS,S, YOU SPEND LAWNMOWERS, started with a grand reception ‘Throwback Thursday’ pricing of winner in each s tore GIFT BASKETS & more! REGISTER TO WIN every time you s hop! ALL MONTH LONG! honoring and thanking vendor by gone days, a sweepstakes with For special updates & a CHANCE TO WIN text Greers100 to 72727 $1,000 CASH! By texting Greers100 to 72727, I agree to receive periodic recurring marketing text messages via automatic telephone dialing system to the mobile number provided. I understand that the number of marketing text messages may vary. Message and data rates may apply. I understand that I am not required to agree to partners and community leaders. several items including a car as the receipt of autodialed text messages as a condition of purchase. After activation, text STOP to 72727 to opt-out.

www.greers.com Download Our VISIT OUR WEBSITE FOR RECIPES, COOKING VIDEOS, COUPONS AND MORE. DOWNLOAD SAVINGS STRAIGHT TO YOUR PHONE! VIEW SPECIALS WHILE YOU SHOP AND SAVE EVEN MORE! MOBILE APP GCCS1_6688 GCCS1_BASE_ISERTFR_071316_4C Next, they hosted ‘Family Day’ the grand prize, along with local aboard the legendary battleship TV, radio and print sharing the DIVISION WINNERS U.S.S. Alabama anchored in celebration story line. While the Mobile Bay for nearly 700 customers were enjoying the fun, #0044 - Ball’s Sun Fresh, Kansas City, KS employees. Lastly, the stage Greer’s was also enjoying record #2673 - Dave’s Supermarket, was set for the company-wide sales throughout the company! Southwest City, MO celebration recognizing and Current management at appreciating the customer. Greer’s is known as G3 and G4 #4334 - Pruett’s Food, De Queen, AR Each store displayed a (generation 3 and 4). G5 and #7830 - Metro Foods, Mineral Wells, TX banner thanking their community beyond will have a great model #3752 - Greenwood Marketplace, and in-store celebrations created to follow for future benchmark Greenwood, MS the fun. Customers were greeted anniversaries as they live out this with Greer’s 100th birthday year’s slogan “Greer’s 100-Here #5112 - HG Hill Market, Springfield, TN cakes, giveaways, and children’s for Good!”

EXCELLENCE IN MERCHANDISING AWG BRANDS CASH SAVER Walls of Value, dump bins and SKYLAR THOMPSON large pallet drops are dominated BEAUMONT, TX by AWG Brands and WOW pricing is featured prominently throughout the store, keeping As one of our newest Cash Saver competitive in their members, Skylar Thompson trade area. has recognized the value that Their customers have a strong store brands program embraced the Best Choice brings to their store which Save-A-Label program and the was recently converted to the annual fundraising coupon book. Cash Saver format. The team Their website contains links to developed a marketing campaign AWGBrands.com so customers DIVISION WINNERS to introduce Best Choice and can easily search for recipes, Always Save to its customers and nutritional information and #0405 - Cosentino’s Price Chopper, have made it a key component promotions. Ottawa, KS in their new format. TV spots With an amazing 33.2% #2329 - Hometown Market, Cave City, AR feature Best Choice and Always penetration, their commitment to #4199 - Phelps Foods, Mannford, OK Save products in weekly ads. AWG Brands has been a significant They also showcase the product contributor to the overall sales #7918 - Minyard Food Stores, Dallas, TX quality using the Best Choice in- increase experienced with the #3033 - Garvin’s Cash Saver, Newton, MS store demo program. conversion to Cash Saver.

16 EXCELLENCE IN MERCHANDISING MARKETING CAMPAIGN RIESBECK'S FOOD MARKETS store. Seasonal themed end caps and clever posts and RICHARD RIESBECK, CEO AND PRESIDENT; BILL RIESBECK, EXECUTIVE reflecting the new everyday low promoted contests VICE PRESIDENT cost on AWG Brands stimulated based on’ likes’ and ST. CLAIRSVILLE, OH consumer interest. Product ‘shares’. Who wouldn’t quality was highlighted at in- want to “Take a Selfie After joining AWG in early store demonstrations of Best with your favorite Best 2016, Riesbeck’s adopted the AWG Choice and Always Save items. Choice Product” for a Store Brands program. By creating The entire campaign chance of winning a $50 gift certificate? an aggressive marketing campaign, and marketing strategy was Facebook Live and online videos they achieved a 25.83% Store presented to the customers introduced AWG Brands allowing customers to Brands penetration by the end of through a strong print ad like, share, and post comments. A “Riesbeck’s 2016, more than doubling their program and social media. The Events” Facebook page with 11,000 followers previous penetration percentage! power of social media created a was also utilized to communicate their Huge displays of AWG Brands buzz on the Riesbeck’s Facebook upcoming promotions and events during the products are arranged at store page which received more than campaign. entrances, plus strategically placed 24,000 likes. They leveraged displays throughout the entire their following with engaging ??

EXCELLENCE IN MERCHANDISING JERRY WARD HOMELAND #267 STORE MANAGER OKLAHOMA CITY, OK Jerry Ward of Homeland is of the team to the next level. AWG’s 2016 recipient of the Store Jerry communicates overall Manager of the Year award. For the company goals, transforming the past eleven years, Jerry’s store has information into team objectives. experienced sales growth of 2-4%, He empowers his leadership even with increased competitive team to make things happen but, pressure. Jerry’s passion for Jerry knows follow-up is vital to in fund-raisers such as March of Dimes and extraordinary customer service maintain focus. At weekly staff St. Jude’s Children’s Hospital, along with contributes to his success and meetings, he communicates with donating fresh fruit and toothbrushes to local outstanding customer satisfaction. passion the ultimate goal: to charities. To Jerry, customers are friends and make the customer happy. “Jerry has a true passion for leading his he knows keeping the customer Jerry is an exceptional staff and helping people in his community," happy and training his staff to do leader and demonstrates care said Marc Jones, CEO Homeland Stores. "Jerry's the same will keep the customers for his customers, staff and the key strength is humility, and he pushes himself coming back. community. Mystery shopping is and his team to be their best every single day Jerry has a gift of also a program Jerry embraces. no matter the circumstances. He has very high merchandising and promoting Results are communicated to standards and consistently delivers the best products that trigger impulse sales the team for training, teaching, of Homeland to his customers and community and boosting profits. He regularly and mentoring opportunities. every day." hosts events such as crawfish and Employees recognized by name shrimp boils, Hatch chili roasts are rewarded ‘Super Stars’ for and his popular weekend ribeye exceptional customer service. grilling sale. These events always In honor of the lives lost span the entire store including during the 1995 Oklahoma City products from every department. bombing, Jerry volunteers at a Jerry has mastered the refreshment stop for Memorial creation of a productive Marathon runners. Jerry donates management team. He uses this his time to the VA Hospital in group to help him inspire the rest Oklahoma City and participates

17 2016 LOU FOX AWARD

Odessa, Texas. Roger married his wife, Marilyn in 1978 and they were married for 32 years until her passing in 2011. They raised two beautiful daughters, Lauren and Lindsey. Roger and Marilyn moved to Springdale, Arkansas in 1986 when Roger joined the Harps family business as Vice President of Finance and CFO. From there he was promoted to Executive ROGER COLLINS Vice President in 1995 and CEO in SPRINGDALE, AR 2000. After 30 years with Harps, The Lou Fox Community Roger has now stepped down from Award for his work in governmental Service Award is given in honor of his CEO position but still serves affairs affecting the independent Lou Fox, president of Associated as a guiding voice for the board of grocer. He was also elected as the Wholesale Grocers from 1955 directors as their Chairman. Chairman of the Board of the NGA through 1983. Throughout his Roger has a passion for ‘giving Foundation at the 2017 NGA Show in life, Lou was highly regarded as a back’ and he shared this with his Las Vegas, Nevada. philanthropist and civic supporter. leadership team at Harps. They Since 2002, Roger has also This award is presented at the established the Harps Charity served on AWG's Board of Directors Annual Shareholders Meeting each Golf tournament 22 years ago in and later was elected to AWG’s year to an AWG retailer who follows efforts to help a local family with a Finance Committee, roles he took in the Lou Fox tradition of giving special needs child. Since then, this very seriously. In his role as a board back to the community that helped successful charity has raised over $2.6 member, Roger was an integral make them successful. The spirit million. Roger was also instrumental part of the purchase of the former of Lou Fox lives in each of these in introducing and establishing the Fleming warehouses in Memphis recipients. Snack Pack program in the public and Nashville and traveled to those This year’s Lou Fox Community schools to provide nutritional food new divisions to present a very Service Award is presented to Roger for children on the weekends. compelling comparison of AWG Collins of Springdale, Arkansas. Roger served as a board member against the voluntary wholesale Roger is a humble and blessed of the Northwest Arkansas Center for competitors. He has always been, and man who believes giving back Sexual Assault where he provided continues to be, a staunch supporter to his community creates strong valuable leadership, guidance of the cooperative, continually relationships, and in return, yields and financial contributions. In challenging the status quo and strong local store performance. appreciation, they established an providing great financial wisdom. He Roger has given back to the award in his name. Other agencies is well respected by all grocers and is Northwest Arkansas area for almost Roger is involved with include; known widely as one of the smartest three decades. Not only has he Faith in Action, National Grocers men in our industry. helped many charitable agencies Association, Theater Squared, and Roger’s also a “life example” financially, he also provides Hope Cancer Resources. leader to his church community, mentoring and leadership and is a Roger established the Collins as well as instilling his devotion, firm believer that it takes true team Family Research Fund at the compassion and ethics down through effort to succeed. Cleveland Clinic and he provides his family line. Roger truly leads by The legendary Texas Friday Endowment Scholarships to his Alma example of his own words: “There’s a Night Lights and a new football Mater, Rice University, and to Illinois fine line between being average and coach, helped a young Roger Wesleyan University, in honor of his being great. If you can get everyone Collins realize the success of late wife Marilyn’s Alma Mater, and to on the same page and develop a teamwork early on. Roger’s high the NGA for students contemplating a passion that everybody feels, then school football team won the career in the grocery industry. Roger you can really do great things. very first state championship in was recently awarded the 2017 NGA Without that, you’re just going to be Permian High School history in Thomas F. Wenning Pinnacle PAC average.”

18 ASSOCIATED WHOLESALE GROCERS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2016 and December 26, 2015 (dollars in thousands)

ASSETS ______2016 ______2015 Current Assets: Cash and cash equivalents...... $ 160,372 $ 166,221 Restricted cash...... ------729 Receivables, net of allowance for doubtful accounts of $4,363 in 2016 and $2,954 in 2015. . . 296,347 295,359 Notes receivable from members, current maturities, net of allowance for doubtful accounts of $6,911 in 2016 and $0 in 2015 ...... 11,505 12,251 Inventories ...... 564,360 452,669 Other current assets...... ______35,579 ______19,675 Total current assets ...... 1,068,163 946,904 Notes receivable from members, maturing after one year, net of allowance for doubtful accounts of $3,230 in 2016 and $7,292 in 2015...... 30,613 43,187 Property and equipment, net (note 6)...... 505,340 405,099 Investments ...... 619 619 Intangibles, net of accumulated amortization of $21,703 in 2016 and $19,329 in 2015 (note 3)...... 6,559 8,933 Deferred income taxes (note 10)...... 23,966 28,988 Other assets ...... ______40,515 ______41,564 Total assets...... ______$ 1,675,775 ______$ 1,475,294 LIABILITIES AND EQUITY Current Liabilities: Accounts payable...... $ 676,080 $ 572,067 Cash portion of current year patronage...... 115,262 110,423 Member deposits...... 36,217 22,106 Accrued expenses and other current liabilities...... ______107,431 ______113,261 Total current liabilities...... 934,990 817,857 Long-term debt maturing after one year (note 7)...... 171,338 146,188 Deferred income and other liabilities...... ______79,443 ______48,517 Total liabilities ...... ______1,185,771 ______1,012,562

Commitments and contingent liabilities (note 12)

Equity: Common stock, $100 par value: Class A, voting; 35,000 shares authorized; 16,935 and 9,120 shares issued in 2016 and 2015 ...... 1,691 911 Class B, nonvoting; 150,000 shares authorized; 13,444 and 14,249 shares issued in 2016 and 2015...... 1,341 1,423 Additional paid-in capital...... 26,725 12,797 Retained earnings ...... 457,864 444,964 Accumulated other comprehensive loss (notes 9 and 11)...... ______(19,535) ______(21,745) Total members’ equity...... 468,086 438,350 Noncontrolling interest ...... ______21,918 ______24,382 Total equity...... ______490,004 ______462,732 Total liabilities and equity...... ______$ 1,675,775 ______$ 1,475,294

See accompanying notes to consolidated financial statements.

19 ASSOCIATED WHOLESALE GROCERS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME Fiscal years ended December 31, 2016, December 26, 2015, and December 27, 2014 (dollars in thousands)

______2016 ______2015 ______2014

Net sales ...... $ 9,183,802 $ 8,935,915 $ 8,934,239 Cost of goods sold ...... ______8,480,375 ______8,244,604 ______8,243,483 Gross profit ...... 703,427 691,311 690,756 General and administrative expenses ...... ______514,718 ______488,691 ______459,134 Operating income...... 188,709 202,620 231,622 Other income (expenses): Interest income (note 1)...... 3,986 3,879 1,910 Interest expense (note 7)...... (3,222) (3,810) (3,426) Other, net ...... ______3,255 ______2,804 ______89 Income before income taxes ...... 192,728 205,493 230,195 Income taxes (note 10)...... ______2,821 ______6,574 ______3,275 Net income ...... 189,907 198,919 226,920

Other comprehensive income (loss) Change in funded status of pension plan, net of taxes (note 9) ...... ______2,210 ______(4,587) ______(12,202) Comprehensive income ...... ______$ 192,117 ______$ 194,332 ______$ 214,718

Amounts attributable to noncontrolling interest

Comprehensive income ...... $ 192,117 $ 194,332 $ 214,718 Comprehensive (income) loss attributable to noncontrolling interest . ______2,464 ______(8,014) ______(8,839) Comprehensive income attributable to AWG, Inc. and subsidiaries . . ______$ 194,581 ______$ 186,318 ______$ 205,879

Net income ...... $ 189,907 $ 198,919 $ 226,920 Net (income) loss attributable to noncontrolling interest ...... ______2,464 ______(8,014) ______(8,839) Net income attributable to AWG, Inc. and subsidiaries ...... ______$ 192,371 ______$ 190,905 ______$ 218,081 ______

See accompanying notes to consolidated financial statements. 20 ASSOCIATED WHOLESALE GROCERS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF RETAINED EARNINGS Fiscal years ended December 31, 2016 and December 26, 2015 (dollars in thousands)

______2016 ______2015 Allocated Balances at beginning of year...... $ 337,658 $ 322,810 Patronage certificates (note 8): Issued...... 76,840 73,637 Redeemed...... (62,680) (58,372) Class B certificates: Issued ...... ------Redeemed...... ______------______( 4 1 7 ) Balances at end of year...... ______$ 351,818 ______$ 337,658 Unallocated Balances at beginning of year...... $ 107,306 $ 101,973 Net income...... 189,907 198,919 Net income (loss) attributable to noncontrolling interest (note 9)...... 2,464 (8,014) Less allocated earnings (note 8): Patronage certificates ...... (76,840) (73,637) Class B certificates...... ------Less cash portion of current year patronage...... (115,262) (110,423) Redemption and retirement of common stock...... ______(1,529) ______(1,512) Balances at end of year...... ______$ 106,046 ______$ 107,306 Total retained earnings ...... ______$ 457,864 ______$ 444,964

See accompanying notes to consolidated financial statements. 21 ASSOCIATED WHOLESALE GROCERS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Fiscal years ended December 31, 2016, December 26, 2015, and December 27, 2014 (dollars in thousands)

______2016 ______2015 ______2014 Cash flows from operating activities: Net income ...... $ 189,907 $ 198,919 $ 226,920 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization...... 47,419 45,147 44,189 Impairment of assets and liabilities...... 569 ------9,463 Deferred income taxes...... 5,022 (6,001) (10,521) Loss/(gain) on disposition of property and equipment ...... (4,657) 868 (533) Changes in assets and liabilities, net of effects of acquisitions: Receivables...... (988) (29,416) (42,045) Inventories ...... (40,281) (16,875) 27,150 Other assets...... (14,856) 5,552 5,161 Accounts payable, accrued expenses and other liabilities ...... ______64,545 ______81,694 ______(51,426) Net cash provided by operating activities...... ______246,680 ______279,888 ______208,358 Cash flows from investing activities: Reductions in restricted cash...... 729 (729) — Additions to intangibles...... ------(1,675) (2,336) Proceeds from investments ...... ------5 8 Loans to members ...... (1,432) (51,253) (18,105) Repayment of loans by members...... 35,084 31,352 12,156 Additions to property and equipment...... (54,686) (80,074) (47,578) Proceeds from sale of property and equipment...... 26,323 7,579 10,382 Acquisition of assets, net of cash acquired (note 4)...... ______(103,697) ______(8,726) ______— Net cash used in investing activities...... ______(97,679) ______(103,526) ______(45,423) Cash flows from financing activities: Year-end patronage distributions...... (110,423) (130,101) (104,534) Redemption of prior year's patronage refund certificates...... (62,680) (58,788) (56,625) Issuance of common stock ...... 1,251 1,419 815 Redemption and retirement of common stock ...... (3,065) (2,763) (2,966) Net advances (repayments) under credit facilities ...... 25,150 13,250 (16,109) Net proceeds (repayments) of member deposits...... ______(5,083) ______12,693 ______(1,433) Net cash used in financing activities...... ______(154,850) ______(164,290)______(180,852) Net increase (decrease) in cash and cash equivalents...... (5,849) 12,072 (17,917) Cash and cash equivalents at beginning of year...... ______166,221 ______154,149 ______172,066 Cash and cash equivalents at end of year...... ______$ 160,372 ______$ 166,221 ______$ 154,149

Supplemental cash flow statement information: Cash paid for interest, net of amount capitalized ...... ______$ 3,186 ______$ 3,649 ______$ 3,476 Cash paid for income taxes...... $______9,177 ______$ 5,886 $______17,635

See accompanying notes to consolidated financial statements. 22 ASSOCIATED WHOLESALE GROCERS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (dollars in thousands unless otherwise indicated)

(1) Summary of Significant Accounting Policies General Associated Wholesale Grocers, Inc. predominately operates on a cooperative basis (see Patronage) procuring grocery merchandise for distribution to its retailer/shareholders (“Members”) throughout the Midwestern, Southwestern and Southeastern United States. Non-Cooperative businesses include nonfood distribution centers, military distribution and retail supermarkets that operate under the banners of Homeland, United Supermarkets, Cash Saver and Price Chopper. The cooperative represents approximately 82% of total net sales. "AWG" and "Company" refer to Associated Wholesale Grocers, Inc. and its subsidiaries.

Principles of Consolidation and Use of Estimates The consolidated financial statements include the accounts of AWG, its subsidiaries and variable interest entities where the Company is considered the primary beneficiary. All significant intercompany transactions have been eliminated. The financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America. In preparing financial statements, management makes informed judgments and estimates that affect the reported amounts of assets and liabilities as of the date of the statements and affects the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates. The Company’s fiscal year ends on the last Saturday in December. Fiscal 2016 included 53 weeks of operations. Fiscal 2015 and 2014 included 52 weeks of operations.

Variable Interest Entity In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 810, “Consolidations” (“ASC 810”), the Company consolidates any variable interest entity (“VIE”) in which the Company has a controlling financial interest and, therefore, is the VIE’s primary beneficiary. ASC 810 states that a controlling financial interest in an entity is present when an enterprise has the power to direct the activities of a VIE that most significantly affect the VIE’s economic performance and the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company has determined that HAC, Inc. Employee Stock Ownership Plan and Trust (“ESOP”) is a VIE pursuant to certain financing provided by the Company in the sale of its retail grocery operation (see note 4) and has included the ESOP in the Company’s consolidated financial statements for the fiscal years ended December 31, 2016, December 26, 2015 and December 27, 2014.

Business and Credit Concentrations The majority of the Company’s sales are to Members/retailers located in Kansas, Missouri, Oklahoma, Arkansas, Texas, Louisiana, Mississippi, Kentucky, Alabama and Tennessee. No single customer accounted for more than 10% of sales in any year presented. Lease and equipment financ- ing through AWG is available to qualified retailers for acquisitions/expansion, improvements and opening inventory purchases. Loans to Members are generally collateralized by the Member’s inventory, property and equipment, and the Members’ AWG equity. The Company’s lending rate is generally one percent over the prime rate with borrowing terms to 10 years. For the fiscal years 2016, 2015, and 2014, the Company earned interest income on loans of $2.5 million, $2.7 million and $2.1 million, respectively. Interest is recorded when earned.

Trade accounts receivable primarily consists of receivables from Members and are stated at the amount the Company expects to collect, net of allowance. Trade receivables are generally secured (see Note 5).

The Company establishes an allowance for doubtful accounts based on collectability, which reflects management’s best estimate of probable losses determined principally on the basis of historical experience, financial analysis of the retail customer and loan guarantors, and evaluation of the loan collateral.

Changes in Notes Receivable allowance for doubtful accounts are as follows: ______2016 ______2015 Beginning balance...... $ 7,292 $ 5,945 Provision for doubtful accounts ...... 2,849 1,347 Write-offs / Recoveries ...... ______— ______— Ending balance ...... ______$ 10,141 ______$ 7,292

23 ASSOCIATED WHOLESALE GROCERS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements—(Continued) (dollars in thousands unless otherwise indicated)

(1) Summary of Significant Accounting Policies (continued) Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Proceeds due from credit and debit card transactions with settlement terms of less than five days are also included. The Company maintains cash balances at major financial institutions. At times such cash balances may be in excess of the Federal Deposit Insurance Corporation coverage limit. The Company does not fund its disbursement accounts for checks it has written until the checks are presented to the bank for payment. The amount of outstanding checks is recorded in accounts payable. The change in outstanding checks is included in the change in accounts payable, accrued expenses and other liabilities on the consolidated statement of cash flows.

Restricted Cash Restricted cash consisted of $0.0 million in 2016 and $0.8 million in 2015 that had been placed in escrow to be paid to the contractor upon completion of the expansion of the Company’s distribution center in Louisiana.

Inventories Merchandise is valued at the lower of cost or market. Cost for 74% and 70% of inventories in both 2016 and 2015, respectively, is determined using the last-in, first-out (LIFO) method. Cost for perishables, general merchandise, health care and retail store inventories is determined using the first-in, first-out (FIFO) method. Had all products been valued at FIFO, inventories would have increased by $113.1 million at December 31, 2016, and $112.6 million at December 26, 2015.

Property and Equipment Expenditures for improvements, which significantly increase property lives, are capitalized. Interest costs incurred during the construction of facilities are included in the cost of such properties. Depreciation and amortization are calculated using the straight-line method over the assets estimated useful lives, which range from 15 to 50 years for buildings; 3 to 10 years for equipment; and 3 to 5 years for vehicles. Leasehold improvements are amortized over the respective lease terms.

Investments The Company has all investments stated at cost; fair value is not assessable or practical to estimate.

Patronage Income from cooperative operations, less a nominal amount authorized by the Board of Directors to be retained, is returned to the Members in the form of year-end patronage. At each year-end, a percentage of net income to be distributed is paid in cash (60%) with the remainder paid in the form of patronage certificates (see notes 5 and 8). Such amounts are apportioned to the Members based on qualifying warehouse purchases. Patronage source income derived from an extraordinary event of significant magnitude may be distributed to members separately based on the quantity of the business done proportionately with a member, which may span multiple years or a combination of years, as provided in the bylaws, as amended.

Sales and Cost of Goods Sold The Company recognizes sales of merchandise when products are shipped and promotional allowances related to selling products to customers are recorded as a reduction in sales. Fees and upfront monies received from vendors are recorded as a reduction of the cost of goods sold in the period in which they are earned, based on contractual commitments to achieve certain milestones in purchases or prorated over the duration of the agreement.

Shipping and Handling Costs Shipping and handling costs incurred to deliver product to our customers are included as a component of general and administrative expenses in the consolidated statements of operations and comprehensive income. Shipping and handling costs for the fiscal years 2016, 2015, and 2014 were $158.4 million, $143.8 million and $153.9 million, respectively.

24 ASSOCIATED WHOLESALE GROCERS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements—(Continued) (dollars in thousands unless otherwise indicated)

(1) Summary of Significant Accounting Policies (continued)

Advertising Expense Advertising costs are charged to expense as incurred and are included as a component of general and administrative expenses in the consolidated statements of operations and comprehensive income. Advertising expense for the fiscal years 2016, 2015, and 2014 were $7.3 million, $7.6 million and $7.6 million, respectively.

Income Taxes AWG and its subsidiaries file a consolidated federal income tax return. Deferred income taxes are accounted for under the asset and liability method. Patronage distributions from cooperative operations are deductible for income tax purposes. Deferred income taxes result primarily from differences in financial reporting bases for net receivables, depreciation, insurance, deferred compensation, and the deferred gain on the sale of HAC not yet recog- nized in the financial statements. The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. The company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. During 2016, 2015 and 2014, the Company did not recognize any interest or penalties.

Recently Adopted and Recently Issued Authoritative Accounting Standards In February 2016, the FASB issued ASU No. 2016-02, Leases. The new standard requires lessees to recognize a right-of-use asset and lease liability for almost all lease contracts based on the present value of lease payments. There is an exemption for short-term leases. The ASU provides new guidelines for identifying and classifying a lease and classification affects the pattern and income statement line item for the related expense. The ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company is currently assessing the timing and impacts of adopting this standard.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). ASU No. 2014-09 supersedes the revenue recognition requirements in Revenue Recognition (Topic 605), and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The new revenue recognition standard also requires disclosures that sufficiently describe the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers, deferral of the effective date, which defers the effective date of the new revenue recognition standard by one year. As a result, the ASU No. 2014-09 is effective retrospectively for fiscal years beginning after December 15, 2018 and interim reporting periods within annual reporting periods beginning after December 15, 2019. The Company has not yet selected a transition method and is currently evaluating the impact on its consolidated financial statements and related disclosures.

(2) Fair Value Measurements 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. Assets and liabilities recorded at fair value are categorized using defined hierarchical levels directly related to the amount of subjectivity associated with the inputs to fair value measurements 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; Level 3 – Unobservable inputs in which little or no market activity exists, requiring an entity to develop its own assumptions about the assump- tions that market participants would use in valuation. For certain of the Company’s financial instruments, including cash and cash equivalents, accounts and short term notes receivables and accounts payable, the fair values approximate book values due to their short term maturities.

Since there is no market for long term notes receivables, it is impractical to assess whether the carrying amounts, which are reported on the con- solidated balance sheets for these items, approximate fair value.

25 ASSOCIATED WHOLESALE GROCERS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements—(Continued) (dollars in thousands unless otherwise indicated)

(2) Fair Value Measurements (continued) Property, equipment and intangible assets are reviewed for impairment whenever events or circumstances indicate the carrying amount may not be recoverable. Recoverability of assets held and used is assessed based on the undiscounted future cash flows. Assets to be disposed of are pre- sented at the lower of cost or fair value less costs of disposal. During the fiscal years ended December 31, 2016, December 26, 2015, and December 27, 2014, the Company recorded (in millions) $0.6, $0.0, and $9.5 respectively, for impairment charges on real property and ongoing lease liabilities, which were measured at fair value using Level 3 inputs. The impairment charges are a component of the general and administrative expenses in the consolidated statements of operations. The carrying amounts of the Company’s long-term debt reported on the consolidated balance sheets approximate fair value since their interest rates are periodically adjusted to reflect market conditions.

(3) Intangible Assets The Company has intangible assets subject to amortization that include wholesale volume agreements and non-compete agreements of $20.7 million for both 2016 and 2015, respectively, which are being amortized over 15 years and have accumulated amortization of $18.2 million and $16.8 million for 2016 and 2015, respectively. The Company’s VIE has recorded goodwill at December 31, 2016 and December 26, 2015 of $5.6 million, which is being amortized over a useful life of 10 years and has accumulated amortization of $1.6 million and $1.0 million, respectively. The Company’s VIE also has gross deferred financing costs of $1.9 million for both 2016 and 2015, respectively, which are being amortized over 5 years, the term of the loan, and has accumulated amortization of $1.9 million and $1.5 million at December 31, 2016 and December 26, 2015, respectively. Amortization expense for intangible assets was $2.4 million in 2016, $2.2 million in 2015 and $2.2 million in 2014. Amortization expense for the next five fiscal years is estimated to be as follows (in millions): 2017 - $1.9; 2018 - $1.4; 2019 - $0.7; 2020 - $0.7 and 2021 - $0.6. (4) Acquisitions, Divestitures and Certain Transactions with Members

In December 2011, the Company sold its subsidiary retail grocery operation, Associated Retail Grocers, Inc. (“ARG”), whose only asset consisted of an investment in HAC, Inc. The operation is commonly referred to as Homeland Stores, which operated grocery stores situated in Oklahoma (72), Texas (4) and Kansas (1) at the time of the transaction. The purchaser, ESOP (see Variable Interest Entity in note 1), bought 100% of the controlling stock of ARG in a transaction valued at $145 million subject to a working capital adjustment of $10.1 million. The Company provided financing in a series of loan tranches, with maturity dates of 5 to 11 years. On December 31, 2016, the Company entered into a new loan agreement (Tranche A1) replacing, refinancing and restating Tranches A, B, C, E, E2, E3 and E4 Term notes in their entirety.

Tranche A1 – $117.7 million, to be reduced by future AWG patronage certificates and quarterly principal payments beginning on March 31, 2017. Weekly interest-only payments will begin on January 6, 2017 (subject to floating rate adjustments based on the Monthly LIBOR Rate + 3% margin). The loan balance outstanding at December 31, 2016 under the restated and consolidated Tranche A1 note was $117.7 million. The aggregate loan balance outstanding at December 26, 2015 under all consolidated notes (Tranche A, B, C, E, E2, E3, and E4) was $125.4 million. $7.7 million of principal payments were made during the year ended December 31, 2016. The total outstanding balance as of December 31, 2015 was $121.1 million for Tranches A, B, and C with the interest rate ranging from 3.25 to 7 percent. Traches E, E2, E3 and E4 were non-interest bearing and had an outstanding balance of $4.3 million as of December 31, 2015. Beneficial terms of the transaction require ESOP to maintain its purchase concentration of current and future stores for a stated period beyond the final repayment of all the outstanding obligations. The Company provides ESOP access to a line of credit up to $15 million to manage its seasonal bor- rowing needs at a borrowing rate of Prime, which was drawn at $1.3 million at December 31, 2016 and $2.5 million at December 26, 2015. The ESOP paid the $2.5 million obligation on January 2, 2016. On December 17, 2015, the Company provided a guaranty to Bank of America, up to $2.5 million, for Letters of Credit issued by Bank of America for the benefit of HAC. On October 28, 2016 the guaranty provided to Bank of America by the Company was increased to $7.5 million. The amount available under the line of credit is reduced by the amount guaranteed to Bank of America. The guaranteed balance at December 31, 2016 and December 26, 2015 was (in millions) $1.3 and $1.3, respectively.

ESOP is considered a VIE, requiring its continuing operations to be combined with the Company’s consolidated financial statements. Therefore, the Company will not reflect the gain on the sale of the subsidiary until such time as the Company determines it is no longer the primary beneficiary of ESOP.

In March 2015, DGS-Acquisitions, LLC and DGS-RE, LLC, wholly owned subsidiaries of AWG, purchased certain assets of Foods, Inc., Dahl’s Food Mart, Inc. and Dahl’s Holdings I, LLC through the U. S. Bankruptcy Court for the Southern District of Iowa, including 7 supermarket locations and 2 fuel centers in Des Moines, Iowa. The $9.1 million purchase price was allocated as follows: cash - $0.4 million, inventory - $5.8 million, real estate - $1.0 million and property and equipment - $1.9 million. These stores currently operate under the Price Chopper and Cash Saver banners and the results of their operations since the transaction date have been included in the consolidated financial statements.

26 ASSOCIATED WHOLESALE GROCERS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements—(Continued) (dollars in thousands unless otherwise indicated)

(4) Acquisitions, Divestitures and Certain Transactions with Members (continued) On October 23, 2016, the Company purchased certain assets and liabilities of Affiliated Foods Midwest Cooperative, Inc. (“AFM”) for $139.7 million to expand the distribution area into several adjoining states and add over 800 new member stores. The following table summarizes the allocation of the purchase price to the assets acquired and the liabilities assumed at the date of acquisition: Inventory...... $ 71.4 Personal property & equipment...... 24.3 Real property...... 85.1 Notes receivable...... 20.3 Accrued liabilities...... (27.3) Member deposit liability...... (19.2) Equity ...... ______(14.9) Total ...... ______$ 139.7 ______In connection with its acquisition of AFM, the Company has agreed to pay additional consideration in future periods of up to an aggregate of $33.8M (undiscounted) payable to the members based on their annual purchases with breakage payable to AFM. Key assumptions include (a) a discount rate range of 1.0%-1.9% and (b) a payout probability factor of 100%. As of December 31, 2016, the amount recognized for the contingent consideration arrangement, the range of outcomes, and the assumptions used to develop the estimates had not changed. The contingent consideration liabilities are considered Level 3 measurements and are included in both Short-term and Long-term liabilities. 521 members were issued 15 shares of class A stock with 336 Member Deposit Certificates issued to collateralize open accounts receivables.

The Company incurred expenses of approximately $4.9 million in conjunction with the acquisition. The Company has expensed all acquisition related costs, which are recorded as a component of general and administrative expenses.

(5) Patronage Refunds and Deposits Patronage Refund Certificates are issued to Members as part of annual distributions of net income from cooperative operations. Member deposits represent interest-bearing accounts that may be required to collateralize weekly purchases of products. Interest expense incurred on patronage certificates, member deposits, and member savings in 2016, 2015 and 2014 was $0.6 million, $0.4 million and $0.2 million, respectively. Since there is no market for Patronage Refund Certificates and Member Deposits, it is impractical to assess whether the carrying amounts, which are reported on the consolidated balance sheets for these items, approximate fair value. In 2010, AWG filed a lawsuit against a group of suppliers of commodity goods and related affiliates for antitrust and unlawful price fixing activities. In August 2015, a special patronage dividend was paid to its members consisting of monies obtained as a result of entering into separate confidential settlement agreements with individual defendants during 2014. Because the proceeds related to multiple years, the patronage dividend was allocated among the members and was paid separately from the annual distribution in 2015.

(6) Property and Equipment Property and equipment are summarized as follows: ______2016 ______2015 Land ...... $ 62,610 $ 54,718 Buildings and leasehold improvements...... 464,208 378,971 Equipment...... 379,963 340,321 Construction in progress and other...... ______5,190 ______11,380 $ 911,971 $ 785,390 Less accumulated depreciation ...... ______(406,631) ______(380,291) Property and equipment, net...... ______$ 505,340 ______$ 405,099

Depreciation expense incurred in 2016, 2015, and 2014 was (in millions) $45.0, $41.1 and $40.1, respectively. In 2016, 2015 and 2014, the Company capitalized an aggregate total of (in millions) $0.1, $0.1 and $0.0, respectively, of capitalized construction period interest.

(7) Long-term Debt In May 2015, the Company entered into a five year revolving Credit Agreement, which provides a $300 million revolving credit facility and a $75 million tax exempt bond facility. At December 31, 2016, total borrowings and outstanding letters of credit were $203 million, which includes a $72.1 million tax-exempt bond loan. Variable interest rates are based on the London Interbank Borrowing Rate and ranged from 0.69% to 1.44% during 2016 (which included a base rate mark-up charged by the lenders). Daily borrowings during 2016 averaged $126.2 million. At December 31, 2016, the Company had an additional $104 million available for borrowing under this agreement. 27 ASSOCIATED WHOLESALE GROCERS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements—(Continued) (dollars in thousands unless otherwise indicated)

(7) Long-term Debt (continued) The Company’s credit facility contains certain financial covenants related to cash flow leverage and minimum tangible net worth. The Company was in compliance with all covenants at December 31, 2016.

(8) Allocated Earnings At December 31, 2016 and December 26, 2015, $76.8 and $73.6 million of the current year non-maturing patronage has been allocated within Retained Earnings. The pertinent provisions of these patronage certificates (issued in 2008 or after) are as follows: (a) the certificates are not transferable; (b) AWG has the right to offset, but the certificate holder does not; (c) no interest is accrued on outstanding certificates; (d) the certificates have no stated maturity date, and (e) the certificates are subordinate to the claims of all creditors of AWG. In July 2005, the Board of Directors created another form of patronage certificate (“Class B Certificates”) for members who are delinquent with their obli- gations owed to the Company. The Class B Certificates are non-interest bearing and have no maturity date. These certificates are only redeemed upon the dissolution of the Company and the redemption of all other patronage certificates. The Class B Certificates are included in Retained Earnings and amounted to $0.1 million as of December 31, 2016 and December 26, 2015, respectively.

(9) Equity All members of the cooperative are required to hold 15 shares of Class A Common Stock. The bylaws of AWG contain restrictions concerning the trans- fer of common stock, which serves as collateral to secure members’ indebtedness. Each member holding Class A Common Stock is entitled to one vote in shareholder matters. The Board of Directors of the Company declared a 2-for-1 stock dividend effective March 22, 2009 for shareholders of record, whereby every shareholder of A and B stock received additional shares in the form of B stock. All issuances and redemptions since March 20, 2016 have been made at $1,915 per share. Issuances and redemptions between March 22, 2015 and March 19, 2016 were made at $1,840 per share. Issuances and redemptions between March 23, 2014 and March 21, 2015 were made at $1,770 per share. The following table describes the number of authorized and outstanding shares of AWG Class A and Class B stock at December 31, 2016 and December 26, 2015: OUTSTANDING AT ______CLASS AUTHORIZED 2016 2015 Class A Stock, $100 par value 35,000 16,935 9,120 Class B Stock, $100 par value 150,000 13,444 14,249 The changes in common stock for the fiscal years ended December 31, 2016 and December 26, 2015 were as follows: Total ______Class A ______Class B ______Common Stock ______Members Balances at December 27, 2014 Shares...... 9,045 15,099 24,144 603 Dollar Value...... ______$ 903 ______$ 1,508 ______$ 2,411 Issued Shares...... 795 — 795 53 Dollar Value...... ______$ 80 ______$ — ______$ 80 Redeemed Shares...... (720) (850) (1,570) (48) Dollar Value...... ______$ (72) ______$ (85) ______$ (157) Balances at December 26, 2015 Shares...... 9,120 14,249 23,369 608 Dollar Value...... ______$ 911 ______$ 1,423 ______$ 2,334 Issued Shares...... 8,625 — 8,625 575 Dollar Value...... ______$ 861 ______$ — ______$ 861 Redeemed Shares...... (810) (805) (1,615) (54) Dollar Value...... ______$ (81) ______$ (82) ______$ (163) Balances at December 31, 2016 Shares...... 16,935 13,444 30,379 1,129 Dollar Value...... ______$ 1,691 ______$ 1,341 ______$ 3,032

28 ASSOCIATED WHOLESALE GROCERS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements—(Continued) (dollars in thousands unless otherwise indicated)

(9) Equity (continued)

Accumulated Other Comprehensive Loss Changes in accumulated other comprehensive loss attributable to the Company for the fiscal years ended December 31, 2016 and December 26, 2015 were as follows: ______2016 ______2015 Balances, beginning of year...... $ (21,745) $ (17,158) Change in funded status of pension plan, net of $1,255 in tax in 2016 and ($1,956) in tax credits in 2015...... ______2,210 ______(4,587) Balances, end of year...... ______$ (19,535) ______$ (21,745)

Additional Paid in Capital

Changes in additional paid in capital attributable to the Company for the fiscal years ended December 31, 2016 and December 26, 2015, were as follows: ______2016 ______2015 Balances, beginning of year...... $ 12,797 $ 12,551 Stock purchase or redemption surplus value paid in/(out)...... ______13,928 ______246 Balances, end of year...... ______$ 26,725 ______$ 12,797

Noncontrolling Interest Changes in noncontrolling interest for the years ended December 31 2016, and December 26, 2015, were as follows: ______2016 ______2015 Balances, beginning of year...... $ 24,382 $ 16,368 Income (loss) attributable to noncontrolling interest...... ______(2,464) ______8,014 Balances, end of year...... ______$ 21,918 ______$ 24,382

(10) Income Taxes The significant components of income tax expense are summarized as follows: ______2016 ______2015 ______2014 Federal: Current ...... $ (426) $ 9,110 $ 5,092 Deferred ...... ______1,065 ______(4,270) ______(2,012) Total federal ...... ______639 ______$ 4,840 ______$ 3,080 State: Current ...... $ (506) $ 1,509 $ 972 Deferred ...... ______2,688 ______225 ______(777) Total state ...... ______$ 2,182 ______$ 1,734 ______$ 195 Total income tax ...... ______$ 2,821 ______$ 6,574 ______$ 3,275

29 ASSOCIATED WHOLESALE GROCERS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements—(Continued) (dollars in thousands unless otherwise indicated)

(10) Income Taxes (continued) The effects of temporary differences and other items that give rise to deferred income tax assets and liabilities are presented below: Deferred income tax assets: ______2016 ______2015 Gain on sale of subsidiary...... $ 6,693 $ 5,631 Pension ...... 4,976 11,009 Insurance ...... 4,605 4,062 Compensation...... 13,502 13,538 Accounts receivable...... 5,307 3,885 Inventory ...... 2,612 2,394 State credit carryover ...... 3,942 3,686 Other ...... ______1,474 ______1,679 Deferred income tax assets...... 43,111 45,884 Valuation allowance ...... ______(3,500) ______(2,070) Total deferred income tax assets...... ______$ 39,611 ______$ 43,814

Deferred income tax liabilities: Fixed assets ...... $ 13,382 $ 12,739 Prepaid expenses ...... 2,240 2,041 Other ...... ______23 ______46 Total deferred income tax liabilities ...... ______$ 15,645 ______$ 14,826

Net deferred income tax assets...... ______$ 23,966 ______$ 28,988 ______The Company or one of its subsidiaries files income tax returns in the U.S. Federal jurisdiction, and various states and municipalities. At this time, the Company is not subject to U.S. federal or state income tax examinations. As of December 31, 2016 and December 26, 2015, respectively, a valuation allowance of $3,500 and $2,070 was required to reduce deferred income tax assets to a level, which more likely than not, will be realized as future ben- efits. The differences between income taxes expected at the U.S. federal statutory income tax rate of 35% and the reported income tax (benefit) expense are comprised of nonmaterial, reconciling items including, but not limited to patronage dividend, state and local income taxes and HPIP credit. Effective December 31, 2006, the Company early adopted the provisions of ASC 740 - Income Taxes. The impact of ASC 740 was not material to the financial state- ments upon adoption or for the years ending December 31, 2016 and December 26, 2015. The Company previously adopted Accounting Standards Update (ASC) 2015-17, “Balance Sheet Classification of Deferred Taxes” for the year ended December 26, 2015. The Company’s early adoption of ASU 2015-17 simplifies the presentation of deferred federal income taxes, as it requires all balances to be classified as noncurrent on the balance sheet.

(11) Employee Benefit Plans Substantially all employees of the Company and its subsidiaries are covered by various contributory and non-contributory pension or profit sharing plans. Union employees participate in multi-employer retirement plans under collective bargaining agreements, unless the collective bargaining agreement provides for participation in plans sponsored by the Company. The Company sponsors a defined benefit pension plan, both qualified and non-qualified (“the DB Plan”), and several defined contribution pension plans. The DB Plan covers 1,268 and 1,415 participants for the fiscal years ended December 31, 2016, and December 26, 2015, respectively, which is comprised mainly of non-union ware- house, clerical and managerial employees. Beginning November 1, 2012, the Company’s DB Plan was closed to new employees and replaced with an enhanced contribution to the existing defined contribution plan. At present, the Company continues to accrue service costs for eligible participants of the DB Plan. The Company provides no health care, life insurance, nor disability plans to former and inactive employees after retirement under post-employment benefit plans.

30 ASSOCIATED WHOLESALE GROCERS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements—(Continued) (dollars in thousands unless otherwise indicated)

(11) Employee Benefit Plans (continued)

The benefit obligation (which is the projected benefit obligation or “PBO”), fair value of plan assets, and funded status of the Company’s DB Plan is as follows:

Change in benefit obligation (PBO) ______2016 ______2015 Benefit obligation at beginning of year...... $ 158,202 $ 175,029 Service cost ...... 9,758 11,420 Interest cost...... 6,177 7,007 Benefits paid...... (36,555) (34,517) Actuarial (gain)/loss...... ______9,332 ______(737) Benefit obligation at end of year ...... ______$ 146,914 ______$ 158,202 Change in plan assets Fair value of plan assets at beginning of year ...... $ 127,871 $ 151,777 Actual return (loss) on plan assets ...... 6,415 (8,396) Employer contributions...... 34,575 19,007 Benefits paid...... ______(36,555) ______(34,517) Fair value of plan assets at end of year ...... ______$ 132,306 ______$ 127,871

Funded status, end of year ______$ (14,608) ______$ (30,331)

Benefit calculations for the Company's sponsored DB Plan for primarily non-union eligible participants are generally based on years of service and the participants' highest compensation during five consecutive years during the last ten years of employment. The Company's accumulated benefit obligation for the DB Plan was $127,634 and $139,332 at December 31, 2016 and December 26, 2015, respectively. The amounts recognized for the DB Plan in the Company's accumulated other comprehensive loss consisted of the following:

______2016 ______2015 Prior service cost ...... $ (129) $ (330) Net actuarial loss...... ______(30,766) ______(34,006) Total recognized in AOCI, before tax...... ______$ (30,895) ______$ (34,336) Total recognized in AOCI, net of tax...... ______$ (19,535) ______$ (21,745)

The estimated future benefit payments to be paid from the DB Plan, which reflect expected future service, are as follows: Fiscal year DB______Plan Benefits 2017 ...... $ 17,159 2018 ...... 14,348 2019 ...... 14,971 2020 ...... 19,249 2021 ...... 16,389 Years 2022-2026...... 81,449

______2016 ______2015 ______2014 Net periodic benefit expense for the DB Plan consisted of the following: Service cost --- benefits earned during the period ...... $ 9,758 $ 11,420 $ 11,913 Interest cost on projected benefit obligations ...... 6,177 7,007 7,581 Expected return on plan assets ...... (9,053) (10,365) (9,963) Amortization of prior service cost ...... 201 271 538 Amortization of net actuarial loss ...... 8,123 4,256 4,738 Settlement loss ...... ______7,086 ______6,991 ______2,928

Net periodic benefit expense ...... ______$ 22,292 ______$ 19,580 ______$ 17,735

31 ASSOCIATED WHOLESALE GROCERS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements—(Continued) (dollars in thousands unless otherwise indicated)

(11) Employee Benefit Plans (continued)

The estimated prior service cost and net actuarial loss that will be amortized from accumulated other comprehensive income/loss into net periodic benefit cost for the DB Plan over the next fiscal year are $129 and $201, respectively. The majority of the unfunded non-qualified por- tion of the plan has been expensed.

Weighted average assumptions used for the DB Plan are as follows: ______2016 ______2015 ______2014 Weighted-average assumptions used to determine benefit obligations: Discount rate ...... 4.50% 4.65% 4.35% Rate of compensation increase ...... 2.50%, 3.00% 2.50%, 3.00% 3.00%

Weighted-average assumptions used to determine net periodic benefit cost: Discount rate ...... 4.65% 4.35% 5.10% Rate of compensation increase ...... 2.50%, 3.00% 3.00% 3.00% Expected return on plan assets ...... 7.25% 7.25% 7.25%

The fair value of the Company’s DB Plan assets at the end of the 2016 calendar year, by asset category, are as follows:

Asset Category ______Total ______Level 1 ______Level 2 ______Level 3 Money Market Funds...... $ 1,232 $ 1,232 $ ---- $ ---- Mutual Funds ...... 123,201 123,201 ------Limited Partnership...... ______7,873 ______---- ______---- ______7,873 Totals ...... ______$ 132,306 ______$ 124,433 ______$ ---- ______$ 7,873

The fair value of the Company’s DB Plan assets at the end of the 2015 calendar year, by asset category, are as follows:

Asset Category ______Total ______Level 1 ______Level 2 ______Level 3

Money Market Funds...... $ 2,023 $ 2,023 $ ---- $ ---- Mutual Funds ...... 110,560 110,560 ------Government Securities...... ------Corporate Bonds ...... ------Limited Partnership...... ______15,288 ______---- ______---- ______15,288 Totals ...... ______$ 127,871 ______$ 112,583 ______$ ---- ______$ 15,288

The following is a description of the valuation methodologies used for assets measured at fair value at December 31, 2016 and December 31, 2015: Money Market Funds, Mutual Funds and Common Stocks are valued at the closing price reported on the active market on which the individual securities are traded. Corporate Bonds are valued at the closing price reported on the active market on which the individual securities are traded. If no active market is available, they are valued by Interactive Data Corporation based on quoted prices for similar assets or liabilities in an active market. Limited Partnerships that are hedge funds are valued based on estimates for the fair value of investment funds held by the partnership that have calculated net asset value per share as a practical expedient in accordance with the specialized accounting guidance for investment companies. Another limited partnership is valued based on the contributions paid into the fund through year end, which approximates fair value. The majority of Limited Partnerships held as investments are subject to redemption restrictions of a quarterly frequency with 95 day notice periods and a minimum investment period of one year.

32 ASSOCIATED WHOLESALE GROCERS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements—(Continued) (dollars in thousands unless otherwise indicated)

(11) Employee Benefit Plans (continued) A reconciliation of the beginning and ending balances of financial assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the fiscal year ended December 31, 2016 and December 26, 2015 is as follows: ______2016 ______2015 Fair value, beginning balance...... $ 15,288 $ 15,138 Unrealized gains/(losses)...... 43 (385) Purchases ...... 836 573 Distributions ...... ______(8,294) ______(38) Fair value, ending balance ...... ______$ 7,873 ______$ 15,288

The Company's investment policy reflects the nature of the DB Plan's funding obligations. The assets are invested to provide the opportunity for both income and growth of principal. This objective is pursued as a goal designed to provide required benefits for participants without undue risk. It is expected that this objective can be achieved through a well-diversified asset portfolio. Investment managers are directed to maintain equity portfolios at a risk level approximately equivalent to that of the specific benchmark established for the portfolio. The expected rate of return on DB Plan assets was determined based on expectations of future returns for the DB Plan's investments based on the target asset allocation of the DB Plan's investments. The Company expects to contribute approximately $17.2 million to the DB Plan during 2017. The Company also makes contributions to its defined contribution plans. The total expense for these plans amounted to (in millions) $8.5, $7.7 and $6.5 in 2016, 2015 and 2014, respectively. The 2005 Non Qualified Deferred Compensation Plan is available for officers of the Company to elect, by the required deadlines in the preceding year, to have a designated portion of their wages set aside for their own personal tax planning purposes, in a trust held by Wells Fargo. At the time of election, the date for future distribution of wages to the participant is established, according to allowable parameters within the plan documents. Both the asset and offsetting liability recorded at December 31, 2016 and December 26, 2015 were $27.0 million and $27.2 million, respectively.

The fair value of the Company’s Deferred Compensation plan assets at the end of 2016 and 2015 calendar year, by asset category are as follows: ______2016 ______Level 1 ______Level 2 ______Level 3 Money Market Funds...... $ 11,820 $ 11,820 $ ---- $ ---- Corporate Bonds...... 109 ---- 109 ---- Common Stocks ...... 11,784 11,784 ------Mutual Funds ...... ______3,305 ______3,305 ______---- ______---- Totals ...... ______$ 27,018 ______$ 26,909 ______$ 109 ______$ ----

______2015 ______Level 1 ______Level 2 ______Level 3 Money Market Funds...... $ 5,318 $ 5,318 $ ---- $ ---- Corporate Bonds...... 1,245 ---- 1,245 ---- Common Stocks ...... 10,446 10,446 ------Mutual Funds ...... ______10,143 ______10,143 ______---- ______---- Totals ...... ______$ 27,152 ______$ 25,907 ______$ 1,245 ______$ ----

33 ASSOCIATED WHOLESALE GROCERS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements—(Continued) (dollars in thousands unless otherwise indicated)

(12) Commitments and Contingent Liabilities The Company is obligated as lessee under various noncancelable long-term supermarket property leases with minimum annual rent- als of approximately $38.8 million. These leases have an average remaining life of 6 years. It is expected in the ordinary course of busi- ness that these leases will be renewed or replaced. The Company has subleased the majority of its supermarket properties to Members (except for properties operated by the Company’s subsidiaries) for substantially the same lease terms and rental amounts. Rental income received was (in millions) $40.7, $40.1 and $41.3 in 2016, 2015 and 2014, respectively. Rents charged to general and administra- tive expenses for operating leases, other than supermarket properties, were (in millions) $3.4, $3.1 and $3.0 in 2016, 2015 and 2014, respectively. Operating lease rent expense, expected to be incurred over the next five years, is approximately $3.3 million per year.

The Company is a guarantor of loans issued to members in the amount of $32.5 million and $3.5 million for December 31, 2016 and December 26, 2015, respectively. In December 2015, the Company entered into a limited guaranty with the Bank of America on behalf of HAC, Inc. Amended in 2016, this limited guaranty allows HAC, Inc. to issue standby letters of credit in amounts up to $7.5 million without requiring HAC to maintain a cash collateral account with Bank of America. The Company is able to revoke the limited guaranty at any time in respect to future transactions. The Company will, however, be at risk for existing indebtedness at the time of revocation.

In September 2016, the Company entered into a limited guaranty with Bank of Oklahoma on behalf of one of its members. This guaranty of payment is limited to $25 million of outstanding debt of the member with Bank of Oklahoma.

The Company is involved in various claims and litigation arising in the normal course of business. In the opinion of management, the ultimate resolution of these actions will not have a material adverse effect on the Company’s consolidated financial statements.

(13) Multi-employer Plans The Company contributes to a single multi-employer defined benefit pension plan under the terms of the collective-bargaining agreements that cover its union-represented employees. The risks of participating in a multi-employer plan are different from single-employer plans in the following aspects: a. Assets contributed to the multi-employer plan by one employer are used to provide benefits to employees of other participating employers. b. If a participating employer stops contributing to the plan, the unfunded obligations of the plan are borne by the remaining participating employers. c. If the Company chooses to stop participating in its multi-employer plan, then it is required to pay that plan an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

34 ASSOCIATED WHOLESALE GROCERS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements—(Continued) (dollars in thousands unless otherwise indicated)

(13) Multi-employer Plans (continued)

The Company’s participation in this plan for the annual period ended December 31, 2016, is outlined in the table below. The “EIN and Pension Plan Number” column provides the Employee Identification Number (EIN) and the three-digit plan number. Unless otherwise noted, the most recent Pension Protection Act (PPA) zone status available in 2016 and 2015 is for the plan’s year-end at December 31, 2015 and December 31, 2014, respectively. The zone status is based on information that the Company received from the plan and is certified by the plan’s actuary. Among other factors, plans in the red zone are generally less than 65 percent funded, plans in the yellow zone are more than 65, but less than 80 percent funded and plans in the green zone are at least 80 percent funded. Based on its projected insolvency, the plan has been deemed to be in “critical and declining” status for 2015 and 2016. The “FIP/RP Status Pending/Implemented” column indicates plans for which a financial improvement plan (FIP) or a rehabilitation plan (RP) is either pending or has been implemented. The last column lists the expiration date of the collective-bargaining agreements to which the plan is subject. Finally, there have been no significant changes that affect the comparability of 2016, 2015 and 2014 contributions. Expiration Date EIN and Pension Protection Act of Collective- Pension Pension Plan Zone Status FIP/RP Status Company Contributions Surcharge Bargaining Fund Number 2016 2015 Implemented 2016 2015 2014 Imposed Agreements ______Central States, 36-6044243 Red Red Yes $14,001 $13,184 $13,069 No April 4, 2020 Southeast and Plan 001 Southwest Areas Pension Fund The Company was not listed in the plan’s Form 5500 as providing more than 5% of the total contributions for the plan years ending in 2015 and 2014. At the date the Company’s consolidated financial statements were issued, the plan’s Form 5500 was not available for the plan year ending in 2016.

(14) Subsequent Events

Subsequent events have been evaluated through March 6, 2017, which is the date the financial statements were available to be issued. On January 3, 2017, AWG Patronage Certificates owned by HAC, dated 2012 through 2015, were offset and applied against the Tranche A1 loan balance. The amount of the Patronage Certificates applied to the loan were $13.5 million. An early redemption fee will be charged to HAC, Inc. if certain covenants are not met. There were no additional material events requiring recognition or disclosure.

35 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Board of Directors Associated Wholesale Grocers, Inc. and Subsidiaries

We have audited the accompanying consolidated financial statements of Associated Wholesale Grocers, Inc. (a Kansas corporation) and subsidiaries, which comprise the consolidated balance sheets as of December 31, 2016 and December 26, 2015, and the related consolidated statements of operations and comprehensive income, retained earnings, and cash flows for each of the three years in the period ended December 31, 2016, and the related notes to the financial statements.

Management’s responsibility for the financial statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the prepara- tion and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United Stated of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial state- ments, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Associated Wholesale Grocers, Inc. and subsidiaries as of December 31, 2016 and December 26, 2015, and the results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Kansas City, Missouri March 6, 2017

36 2017 AWG

Tye Anthony Steve Arnold Martin Arter Stephanie Becker Tim Bellanti Randy Berry OFFICERS Vice President Sr. Vice President Sr. Vice President Vice President Sr. Vice President Vice President Great Lakes Oklahoma City Northern Region Deputy General Springfield Information Counsel Technology

David Carl Bob Durand Jerry Edney Dan Funk David Gates Bo Hawkins Robert Henry Gary Jennings Sr. Vice President, Sr. Vice President Vice President Executive Vice Sr. Vice President Vice President, Vice President, Sr. Vice President Finance Gulf Coast Kansas City President, Kansas City Meat Corporate Controller Memphis Merchandising & Marketing

Richard Kearns Dan Koch Gary Koch Danny Lane Linda Lawson John Likens James Lukens Charlie Lynn Executive Vice Vice President, Executive Vice Sr. Vice President, Sr. Vice President Sr. Vice President Vice President Vice President President, Distribution Bakery and Deli President, Chief Grocery Fort Worth Nashville Media Solutions Springfield and Logistics Financial Officer Corporation

Anna Mancini Tim Myers Jeff Olson Jeff Pedersen Bob Pessel Patrick Reeves Brian Rehagen Terry Roberts Vice President Vice President Vice President, Executive Vice Vice President Sr. Vice President, Vice President Vice President VMC Nebraska Real Estate and President, Division VMC Chief Human Oklahoma City Nashville Engineering Operations Resources Officer

Frank Schmitt Mike Schumacher David Smith Tony Stafford Dave Sutton James Vaughan Jack Wall Scott Welman Vice President President President and Vice President President President Vice President Executive Vice Memphis Always Fresh Chief Executive Officer VMC VMC DGS Gulf Coast President and General Counsel ASSOCIATED WHOLESALE GROCERS, INC. 2016 ANNUAL REPORT