A P P L E S U P P LY C H A I N C O - O P , I N C .

2014 Annual Report

continuity

mission/vision

missionTo assure that Member restaurants receive the benefit of continuously

available Goods, Equipment, and Distribution Services in adequate quantities at the lowest possible

sustainable delivered prices, and to coordinate with DineEquity and its franchisor entities in DineEquity’s

ongoing development and innovation of Goods and Equipment in support and

promotion of the Concepts.

vision Be the leading experts in restaurant

supply chain solutions for the benefit of our Members, their guests, and our team.

messagesCSCS Board Chairman ............................................3Apple Supply Chain Co-op Board Chairman ...................................................4

CSCS President & CEO ............................................5

resultsAccomplishments ...................................................7Procurement ............................................................8Logistics ............................................................... 11Brand Programs ...................................................13Awards ....................................................................14Administration ......................................................15

board of directorsCentralized Supply Chain Services .................... 16Apple Supply Chain Co-op ................................... 16

contents

1

2014 continuity

3

2014 continuity

message

cscs board chairman

Peter DeGast

The mission of CSCS was founded on three primary tenets - continuity of supply, lowest sustainable prices, and coordination with the Brands in development and innovation. These directives were consciously prioritized within the mission statement with the understanding that the latter two goals were unachievable without continuously available goods. Your CSCS team, led by President & CEO Mike Leikam, navigated a year full of supply continuity challenges headlined by the bankruptcy and closure of our largest combined supplier, Quantum Foods. The team successfully replaced over fifteen million pounds of product in less than five months with minimal impact to our restaurants. There were also supply continuity challenges in other key categories such as eggs, poultry, and pork. The value these accomplishments provide can’t be measured in dollars saved, but the avoided impact on our collective businesses should not be underestimated.

In many respects, these supply challenges were caused by difficult commodity markets impacted by natural causes, agricultural or livestock disease, government policy, and worldwide demand. Despite these headwinds, Mark Smith, Chief Procurement Officer, and the rest of the CSCS team delivered net positive financial impact (including cost avoidances) of over $46 million across both Brands. This achievement was reflected in both market baskets, especially when compared to a similarly weighted version of the Producer Price Index (PPI). The spread between our market basket inflation and this modified PPI represents real value delivered by your Co-op each year.

With additional distribution centers removed from the combined system in 2014, it marks the end of the multi-year distribution optimization project. Results from this project have been impressive, moving from 57 distribution centers to 24 in about five years. The savings generated from this combined effort will continue to pay dividends for years to come. At the same time, we must continue to collaborate in the areas of freight management and distribution to unlock value, especially during times when food commodities are under pressure.

The Brand Programs teams have the formidable task of managing the supply chain elements of menu changes. These teams, led by Don Ikemoto and Chris McNutt, had outstanding years despite increased menu activity from both Brands. The Administration team, led by Dustin Pittman, conducted the second annual internal audit to ensure proper systems and controls are in place to solidify the foundation upon which the Co-op operates. Increased levels of data visibility and business intelligence are now possible through the enterprise system, with more exciting enhancements being released in 2015. Improving overall data quality from our distributors and suppliers was a focus this year, which will unlock new possibilities for future system initiatives.

Thank you to your CSCS Board Members David Paradise, Tom Emrey, Matt Fairbairn, Mark Justice, Steve Layt, Michael Olander, and Joe Scripture for their leadership, governance, and counsel required for the CSCS team to stay focused on results and for building a healthy and collaborative environment between the Pancake and Apple Co-op Members. As a Member of the CSCS Co-op, you should be confident in its leadership, strategic direction, and passion for identifying creative ways to add incremental value to our restaurants. As was also prevalent in 2014, sometimes value can be invisible to us and comes in the form of avoided disruptions. And while it’s difficult to recognize the magnitude of success in these instances, it’s hard to imagine a more historic year of supply continuity challenges. Congratulations to the CSCS team for a job well done, and thank you for your continued feedback and commitment to system excellence.

4

This year’s annual report theme of “continuity”is timely and appropriate. Ensuring continuously available goods and services has been a significant focus for your CSCS team in 2014, led by President and CEO Mike Leikam. Whether managing the bankruptcy of our largest supplier and the millions of pounds of beef products that exited the market with it or the temporary shortage of chicken broilers across the U.S., the CSCS team works tirelessly on our behalf to ensure we have the right products in our restaurants in the right quantities. But the concept of continuity goes well beyond that of goods and services. In order to sustainably run a successful supply chain organization, continuity of people and partnerships are just as important. In times where avoiding the impacts of market disruptions such as the Quantum bankruptcy are necessary, those people and partnerships make all the difference.

Volatility in the commodity markets continued in 2014 and was an underlying cause for challenges as our suppliers were faced with covering unfavorable raw material positions. This put added pressure on the Procurement team, led by Chief Procurement Officer Mark Smith, as they were forced to secure incremental product on the spot market to cover supplier shortages. Mark and his team managed to deliver net positive financial impact of over $26 million to the Apple Co-op Members over the past year despite these challenges. Inflation in the Applebee’s market basket of goods was also favorable to a version of the Producer Price Index (PPI) weighted to reflect the commodities we purchase. The team continues to strive for creative approaches to purchasing, such as their use of an industry aggregator last year for buying non-proprietary products.

Product and menu innovation have been even more critical over the past year for Applebee’s, and the Brand Programs team led by Chris McNutt was center stage in the Co-op’s role of supporting the Brand’s culinary and marketing endeavors. The Administration team worked with a new vendor to revamp the Member website, produced the sixth consecutive clean financial audit, and fully implemented a supplier risk monitoring program to get a view into potential future supply continuity risk. Several steps were taken last year towards delivering on the vision of true end-to-end supply chain visibility by expanding the enterprise system footprint and the business intelligence dashboards that are embedded. Technology is continuously becoming a strategic element to delivering on supply chain programs.

When the Co-op was launched, one of the pillars for delivering value was the effective management and control of the distribution network. Without it, delivering results in any other area would be made much more difficult. The multi-year distribution optimization project came to a conclusion in 2014 with additional distribution centers removed from the system, from a total of 57 centers when CSCS was formed in 2009 to only 24 today. This has resulted in savings that have not only exceeded the original forecasts but will continue to produce synergies into the future. The transportation industry is facing its own set of labor shortage challenges, which will require our full attention to mitigate the resulting price threats.

Thank you to the other Apple Co-op and CSCS Board Members for devoting their time and talents to providing the right levels of governance and direction to the CSCS management team. And thank you to all CSCS Members for staying committed to system excellence through the supply chain. Much of what has been and will be accomplished is only possible through teamwork, coordination, and “continuity of partnership.”

board chairmanapple supply chain co-op

David Paradise

message

5

president & ceocentralized supply chain services

Mike Leikam

message

The concept of Continuity is a fitting theme for our 2014 Annual Report. As both David Paradise and Peter DeGast point out in their messages to Membership, ensuring continuity of supply is the first tenet of our mission statement and foundational for all of the value that we deliver to you, our Member owners.

2014 presented us with continuity of supply challenges we had not faced since the formation of CSCS. The bankruptcy of our largest supplier, Quantum Foods, put at risk our ability to deliver adequate supplies of steak related products to the system. Unprecedented challenges in the poultry and pork markets resulted in low supply availability. With each case, the team developed plans and aggressively worked them to ensure we were able to support the system. I have never been more proud of what the team accomplished. All of the “behind the scenes” work was incredible.

I want to thank the Apple Supply Chain Co-op Board of Directors for their support. They authorized our supply contingency plan very early on in the process and worked with us every step of the way.

Beyond ensuring supply, there was also Continuity in the results CSCS delivered for the Applebee’s system in 2014.

Under the direction of Mark Smith and Mary Hempfling, the Procurement team provided over $26 million in Net Positive Financial Impact and outperformed the market. The Applebee’s Market Basket was up 4% versus the market being up 6.7% for the same set of goods. Mark’s team also made significant progress in re-introducing the national produce program to the system, expanding the scope of contracts offered in the Services category, and working with the Board’s Risk Oversight Committee to implement commodity hedging strategies.

Paul Allegri and the Logistics team eliminated two more distribution centers from the combined system. That makes 33 distribution centers eliminated since the formation of CSCS. Paul and his team’s focus will transition from optimizing the distribution network to managing distributor service performance improvements and garnering additional freight opportunities.

Under Chris McNutt’s leadership, the Brand Programs team had a tremendous year, supporting 7 promotions, 18 major tests, and 169 new items. Our work in this area and our proactive collaboration with Applebee’s continues to improve.

We would not have been able to achieve the results we did in 2014 without the support and leadership of our Board. It is an honor and privilege to work with such a dedicated group of people.

Dustin PittmanChief Financial

Officer

Mark SmithChief Procurement

Officer

Paul AllegriVice President

Logistics

Don IkemotoVice PresidentSupply Chain

Mary HempflingSenior DirectorProcurement

Chris McNuttSenior Director

Brand Programs

6

2014 team

message

Our CFO, Dustin Pittman, and the Administration team delivered against their commitments. They led the effort to implement HAVI, our new supply chain visibility system. This platform will position us to better manage information to make better business decisions faster, and it will also help us be more efficient through improved internal processes. They paid $1.4 million in patronage dividends and recovered $382 thousand in distributor overcharges. We delivered our results within the Board authorized budget, and the Accounting team earned another clean audit from our third party auditors.

In August 2014, we celebrated our Member Focused company value by again attempting to contact every Member of the Apple and Pancake Supply Chain Co-ops to find out how we can improve and add greater value. Our Member satisfaction scores improved for the third year in a row from 4.52 in 2013 to 4.56 in 2014. We received a tremendous amount of feedback that will aid us in continuing to get better.

Emulating the commitment demonstrated by all of our Members to support their local communities is important to us. The CSCS team again supported the Spofford Home in Kansas City as our company charity. Spofford is a lead provider of prevention and therapeutic treatment services for children 4 to 12 suffering the effects of physical and sexual abuse, neglect, and mental disorders. Through various fundraising activities, the Team raised over $17,500 in donations for Spofford in 2014.

We would not have been able to achieve the results we did in 2014 without the support and leadership of our Board. It is an honor and privilege to work with such a dedicated group of people. I also want to thank the CSCS Management team – Mark Smith, Dustin Pittman, Paul Allegri, Don Ikemoto, Mary Hempfling, and Chris McNutt. They are true professionals in every sense of the word. Finally, I want to thank every member of the CSCS team. They are true “Member Maniacs”, a tireless group of professionals maniacally focused on delivering results to you.

Thank you for your collaboration, feedback, and support in 2014. I hope you find this annual report informative. We will continue to work hard to deliver against our commitments because this company exists for one reason – you our Member owners.

2014 team

7

accomplishments

Administration• Transitioned to supplier-entered pricing, eliminating

the need for hand-keying of pricing data

• Expanded accounting duties while achieving a clean audit opinion for the sixth year in a row

• Implemented a sourcing fee program with over 100 produce distributors

Technology• Launched a new and improved Member website

• Implemented new business intelligence dashboards to support key processes

• Laid the foundation for new RFP sourcing and bid optimization technology

Protein Procurement • Replaced over 15M pounds of beef products following

the bankruptcy of a key supplier

•Converted the system to a fully cooked riblet product

•Saved almost $2M systemwide by introducing a new species for the breaded fish programs

Non-Protein Procurement

•Approved two suppliers to ensure continuity of supply and introduced a new Brioche Bun for Applebee’s

• Completed replacement of the Sargento Mozz stick after the supplier informed us it would stop supplying the Applebee’s mozzarella cheese stick

Brand Programs • Supported the AYCE riblet promotion with no

inventory issues

• Maintained continuity of supply throughout the bankruptcy of CSCS’s largest supplier

Non-food Procurement• Created a Services Council to evaluate new program

opportunities and enhance current programs

• Negotiated 50% discount for NFL Sunday Ticket creating savings of $500K for participating restaurants

• Created savings of over $5M in 2014 for services, furniture, and equipment programs

• Introduced low oil volume fryers that are efficient and better for the environment

Logistics• Completed the multi-year distribution optimization

project by optimizing the Mid-Central Region

• Delivered $423K in freight rebates to Apple Members

• Improved participation in the produce program

procurement

overall commodity costsIn early 2014 we saw a short term “bounce” in overall commodity markets and what we feel may have been a cyclical high

as those broad-based commodity markets peaked in mid-2014 and began a steady move down. World economies (China in

particular) began to cool, the U.S. dollar strengthened, and energy markets dropped significantly.

Applebee’s market basket of goods increased by 4.0% for 2014, driven primarily by shrimp, beef, and dairy categories, and

partially offset by lower oil category costs.

Applebee’s 2014 Market Basket — change versus 2013

increases in shrimp, beef, and dairy costsHigher shrimp costs were the most significant driver of increased ingredient costs for 2014. These higher costs were

planned for due to significant loss of supply in primary growing areas in Southeast Asia in mid/late 2013. Higher shrimp

costs were fully responsible for what we originally forecast would be a full year impact of 1.1% to ingredient costs.

While beef markets continued to increase, 2014 being the fifth straight year of higher cattle costs, CSCS went into 2014

with contracted/protected pricing on the majority of Applebee’s steak items. In February, one of our primary beef suppliers,

Quantum Foods, filed for bankruptcy protection. Quick action prior to the bankruptcy enabled us to secure contingent supply

while maintaining our agreed-upon products/pricing from Quantum for as long as possible. CSCS balanced what it could

to support Quantum’s attempts to reorganize and continue operations with our primary mission of ensuring continuity of

supply for Applebee’s restaurants. Ultimately, a chapter 7 liquidation and closure of Quantum in May put us into a strong

marketplace for beef for some of our replacement supply.

Dairy markets were record strong in 2014, with Chinese demand being the primary driver in pushing U.S. dairy markets to

levels never seen. The marketplace, including us, was surprised these markets were as strong and sustained as they were.

8

Category Spend/Store Per Year $ Change Fav/(Unfav) % Change Fav/(Unfav)Beef $104,995 ($4,618) (4.6%)

Pork $28,653 $216 0.7%

Poultry $101,965 ($2,850) (2.9%)

Seafood $36,857 ($6,413) (21.1%)

Dairy $37,404 ($3,026) (8.8%)

Produce $21,810 ($468) (2.2%)

Oils $7,793 $1,034 11.7%

Bakery $26,373 ($91) (0.3%)

Grocery $40,355 ($412) (1.0%)

Dressings, Sauces & Soups

$40,692 ($785) (2.0%)

Paper & Packaging $11,311 ($156) (1.4%)

Chemicals $1,980 ($16) (0.8%)

Grand Total $460,188 ($17,586) (4.0%)

lower oil and pork costsOf significant importance, U.S. grain (corn and soybean) harvests were record high in 2014, which had immediate impact

on oil costs and sets the stage for lower input costs on animal production for proteins and dairy products over the medium/

longer term.

Applebee’s pork costs were flat to down slightly, while pork markets were up nearly 10% (Producer Price Index) in 2014

caused primarily by the impact of the Porcine Epidemic Virus (PED). This disease had up to a 100% mortality rate on affected

piglets in some operations and drove a 1.4% decrease in pork production in 2014. Forward pricing programs in place helped

insulate Applebee’s against some of the market increases in the pork category.

strong results over past five yearsIn the past five years, Applebee’s market basket has averaged a 2.6% increase per year, versus a marketplace that has

increased by over 5% per year on average as measured by the Producer Price Index.

political actionCSCS is engaged with DineEquity, our industry peers, and trade groups to seek to understand, communicate, and influence

political, regulatory, and social activities that have a threat or create opportunity to the Applebee’s Supply Chain. We are

working with The National Council of Chain Restaurants (NCCR) as they seek a repeal of the Renewable Fuels Mandate that

requires the conversion of Food to Energy and results in higher costs of goods to your restaurants. A bill is on the Senate

floor to vote for repeal of that law in late 2015.

9

actual modified PPI

actual modified PPI

2012 2013 2014

2010 2011 2012 2013 2014

-0.4% .1%1.3%3.3% 2.8%

7.9%

-1.3

%

5.1%

3.4%

7.8%

4.7%

4.1%

2.4%

5.2%

4%

6.7%

produceIn our second full year of involvement in produce, the Procurement team is supporting the DineEquity requirement for

operator use of only approved product from approved grower/shippers on mandated items. While the CSCS Logistics team

works with the 100+ produce distribution centers to administer the program, the Procurement team has been focused

on securing agreements with approved Grower/Shippers on the mandated items, as well as key secondary items. As

participation in the program increases, we continue to look for creative ways to leverage system-wide spend to save

money.

servicesWe continue to offer a number of services to our Members under CSCS negotiated contracts, with terms and conditions in

place to provide the proper protections to our Members. At the end of 2014, we had over 20 programs being offered and

had grown our Member participation by 33% for the year. These service offerings are available to you in more detail on the

CSCS Member website.

member participation spend in services programs

10

procurement

Applebee’smanaged spend as of 01/01/14 $16,200,000managed spend as of 12/31/14 $22,301,861increase in managed spend $6,101,861percentage increase 38%

service programs offered to our members

background checksoil management

television programmingmusic programming

carbon dioxideprintingpest controlfood safety solutions

water filtrationfacility maintenanceemployee purchase programslinens

music licensingoffice supplieswaste managementsecurity

utilitiesuniforms

credit card processingfirst aid

logisticsDistribution OptimizationWe further consolidated the distribution network by eliminating one distributor in the Mid-Central region that serviced only Applebee’s restaurants. The 137 locations in Oklahoma, Tennessee, Mississippi, Arkansas, Missouri, Illinois, and Kansas now receive distribution service from four existing centers that service both Applebee’s and IHOP restaurants. This move generated $1.2M in savings to those Members.

We continue to evaluate opportunities across the country as distribution agreements are set to expire to ensure that the program in place provides the best value to our Members.

Additional agreements in the Mid-Central, Northeast, and Northwest are scheduled to expire in 2015. We are evaluating the best options for cost and service to each region. The results of this work will either result in recommendations to extend agreements or change distribution partners. Recommendations will be presented to Member Operator Oversight Committees prior to any final decisions.

Distributor ServiceDistributor performance is a key component of the CSCS Logistics Department’s responsibility. We monitor and report key performance metrics and use the results to improve service to our Member operators. Activities include collection, preparation, and reporting of distributor performance, as well as initiation and implementation of service issue resolution.

Distributor Business ReviewsCSCS schedules and conducts annual business reviews with distributors that service Applebee’s and IHOP restaurants. During the reviews we discuss distributor performance, brand program management, quality assurance, and freight management. We provide distributors with updates on CSCS initiatives such as distribution optimization and discuss the distributor’s strategic approach to providing improved service to our Members. CSCS captures and follows up on open issues and tasks from the meetings to insure the meetings are beneficial.

To enhance the value of the meetings, we started inviting Members to participate in 2014. Members were encouraged to represent all operators serviced and share challenges and concerns, complements, and ideas with their distributor and CSCS. In 2015 we will continue to invite Members serviced by the distributor and request feedback and discussion topics prior to the meeting. At the conclusion of each review, CSCS will provide an executive summary of the meeting to all Members serviced by that distributor.

11

logistics

12

ProduceDineEquity has developed a produce program that requires certain items be purchased from approved suppliers. CSCS monitors each produce distribution center to ensure compliance with the mandated program and CSCS negotiated pricing. Our goal is to create visibility to produce purchases while managing costs throughout the supply chain.

In May, we divided all 106 produce distribution centers into eight groups, and each month we conducted a webinar inviting a group of distribution centers and operators. We walked through the program in detail and introduced each group to the mandate list and the requirements needed to continue to operate within the guidelines of the DineEquity produce program.

Communication occurs weekly with the distribution centers regarding supply and price. The graph below reflects our progress from June 2014 to January 2015 for pricing opportunity (the amount the distributor is charging over the contract price). CSCS works with the produce distributors to reclaim these price variances.

Supporting core menu requires produce items that are not included on the mandate list. We have high volume items contracted, and our focus for produce in 2015 will be communicating those items to each of our Members in an effort to leverage our volume scale with growers to manage produce costs effectively. Members that are participating in these contracts are receiving the following benefits: • Contracted supply• Insurance protection• Price monitoring • Product availability and price protection during crop shortages and active markets

We post an updated market report weekly indicating active markets and crop quality for most produce items.

LogisticsTo reduce freight costs, CSCS leverages third-party logistics partners (3PL’s), distributor freight managers, and external redistribution companies (ReD).

Third party logistics companies and distributor freight managers analyze transportation cost by freight lane. CSCS works with the 3PL or distributor freight manager to coordinate lane movements that result in overall savings to Co-op Members. Savings generated through distributor freight managers are returned to Members in the form of freight rebate payments. In 2014, $423K in freight rebates were paid to Apple Co-op Members.

Redistributors purchase products and consolidate loads into full truckloads. By redirecting slow moving products through redistribution, we reduced freight costs by $598K in 2014.

80706050403020100

250000

200000

150000

100000

50000

0

January 15

June 14

June 14

January 15

Compliance

Price Opportunity

71%

24%

$227,637

$69,418

freight savings – Apple

25%Apple DC Rebates 67%

ReD Savings – Apple

8%3 PL

brand programsThe Brand Programs team is responsible for working with Applebee’s to support new product development, testing,

promotions, and menu changes. It starts with the new product development process and ends with the implementation

of promotions or menu changes. For new product development, our Brand Programs team works with the Applebee’s

Marketing and Culinary groups to identify and leverage the appropriate suppliers in the item development process.

When promotions or new menu changes are implemented, our team then works to ensure continuity of supply to

support these initiatives.

The Brand Programs team supported eighteen tests, seven promotions, and five new menu conversions,

encompassing 169 new items throughout 2014. For every menu or promotional event supported, a detailed scorecard

is completed measuring our performance and identifying areas for improvement. These scorecards are reviewed with

the Apple Co-op Board of Directors.

In 2014, we continued to make improvements with how we manage product availability for our Members to ensure

continuity of supply as reflected in a cumulative “Exceeds Expectations” rating as tracked by our promotion scorecard.

We continue to evaluate our internal controls and process to mitigate outages and obsolete inventory.

Applebee’s Event CSCS Score

C1 – U550 / WW M

C2 – Flavors of the Southwest E

C3 – Seasons Best E

C4 – Take Two E

C5.1 – AYCE Cross Cut Ribs M

C5.2 – Fan Favorites E

C6 – All in Burgers E

E = Exceeds / M = Meets / U = Underperforming

13

brand programs

14

2014 awards

The 2014 Applebee’s Distributor of the Year recipient was Sysco Lincoln. Sysco Lincoln services a large number of Applebee’s and is very focused on the needs of the Brand and its franchisees. At the distribution center they have assembled a team of supply chain professionals who thoroughly understand the products and inventory requirements of Applebee’s, resulting in service scores that are consistently above contract standards. Compliance with CSCS programs and pricing is strong, and when issues do arise, they are addressed quickly and to satisfaction. Sysco Lincoln exceeded the overall performance expectations of CSCS more than any other distribution center in the system in 2014.

distributor vendor of the year

This prestigious honor is awarded annually by CSCS, Applebee’s, and DineEquity to the vendor partner that best delivers against the following criteria: Value, Product Quality & Consistency, Service & Responsiveness, Reliability, and Innovation. Input is solicited from representatives of Applebee’s Senior Management, Menu Development & Innovation, and Design & Development teams, as well as DineEquity Quality Assurance and CSCS. The 2014 Applebee’s Vendor of the Year (food category) recipient was Stampede Meat for the contributions made in managing supply during a challenging commodity environment.

food vendor of the year

The Administration team is responsible for support functions at the Co-op, including cost management reporting, communications, membership services, accounting, finance, auditing, information technology, compliance, and human resources. The team also manages third-party vendors who provide additional services in these areas.

Co-op membership and active participation are foundational to building the volume and credibility required to unlock savings that only large-scale systems can realize. At the end of 2014, 100% of the Applebee’s restaurants in the U.S. were Members in the Apple Supply Chain Co-op. The Apple Supply Chain Co-op Board of Directors and the Board committees met throughout the year to provide oversight and guidance on the Co-op’s activities to ensure proper alignment with Member interests.

The Co-op relies on system-wide supplier, distributor, and restaurant data to achieve our vision of end-to-end supply chain visibility. Co-op activities such as contract negotiations, inventory management, and pricing compliance all depend on timely and accurate information. A new enterprise data management system was implemented on January 1, 2014, in partnership with HAVI Global Solutions. Over the course of the year, the CSCS team worked to expand the system footprint and simultaneously enhance the quality of data received from vendor partners which is integrated into the system. Work was also initiated to implement the RFP sourcing module of HAVI, which streamlines the distribution of RFPs, the collection of responses, and analysis of results.

A new Member website was developed in 2014 that offers several important enhancements over the previous site, including password self service and expanded navigation features. The site is built on a content management platform that allows for easier administration of the news and features that are important to our Members.

The Administration team also audited 391 cost impact reports (CIRs), representing over $26M in net positive financial impact, for the Apple Co-op performance metrics calculation. Each cost impact report is audited against an approved methodology to ensure accuracy and consistency, and each quarter actual volumes are applied to determine the overall benefits delivered to our Members. This data-driven process is critical to measuring the Co-op’s performance and provides the information needed to identify ongoing savings opportunities. The CIR process is reviewed every year by the Boards’ Audit and Finance Committees.

Also this year we conducted several new Board Member onboarding sessions, received clean audit opinions for the sixth year in a row, tackled hundreds of information technology requests, conducted our second annual employee engagement survey, conducted our third annual Member Maniac week, implemented several new pricing programs, and the list goes on. In addition to the team’s daily responsibilities, we are looking forward to a year full of new opportunities to continuously improve our processes and programs, resulting in increased value for our Members.

15

administration

Co-op membership and active participation are foundational to building the volume and credibility required to unlock savings that only large-scale systems can realize.

boardCentralized Supply Chain Services, LLC Board of Directors ChairmanPeter DeGastPancake Supply Chain Co-op, Inc.CSCS Compensation Committeepancake71@aol.com201.617.7079

Vice ChairmanDavid ParadiseApple Supply Chain Co-op, Inc.CSCS Compensation Committee, Chairdp@natchezoffice.com601.445.9710

SecretaryMatt FairbairnApple Supply Chain Co-op, Inc.CSCS Compensation Committeem.fairbairn@mac.com904.273.9558

TreasurerMark JusticePancake Supply Chain Co-op, Inc.Pancake Audit & Finance Committee, Chairmjustice@mrstaxinc.com661.294.8877

Steve LaytApple Supply Chain Co-op, Inc.CSCS Compensation Committeesteve.layt@applebees.com913.890.0564

Tom EmreyPancake Supply Chain Co-op, Inc.Pancake Audit & Finance Committeetom.emrey@dineequity.com818.637.3101

Joe ScripturePancake Supply Chain Co-op, Inc.CSCS Compensation Committeejoe.scripture@srmihop.com770.650.9690

Michael OlanderApple Supply Chain Co-op, Inc.doleander1@gmail.com919.846.2577

Mike LeikamNon-Voting MemberCSCS President & CEOmike.leikam@cscscoop.com913.890.0584

Apple Supply Chain Co-op, Inc. Board of Directors ChairmanDavid ParadiseCSCS Compensation Committee, ChairClass I (term expires May 2016)Series D (1 to 55 restaurants) dp@natchezoffice.com601.445.9710

SecretaryMichael OlanderClass III (term expires May 2015)Series C (56 to 249 restaurants)doleander1@gmail.com919.846.2577

TreasurerRoy RaeburnApple Audit & Finance Committee, ChairClass II (term expires May 2017)Series D (1 to 55 restaurants)royr@applemetro.com914.777.2331

Steve LaytClass III (term expires May 2015)Series A (Applebee’s Services, Inc.)steve.layt@applebees.com913.890.0564

Matt FairbairnClass II (term expires May 2017)Series C (56 to 249 restaurants)m.fairbairn@mac.com904.273.9558

Brad PettingerClass III (term expires May 2015)Series B (250 or more restaurants)bpettinger@appleamerican.com206.650.7030

Mark SchostakApple Audit & Finance Committee Class I (term expires May 2016)At-Large (Series B, C, D Franchises)mschostak@schostak.com248.262.1000

Mike LeikamNon-Voting MemberCSCS President & CEOmike.leikam@cscscoop.com913.890.0584

16

financial statementsApple Supply Chain Co-op, Inc.

Centralized Supply Chain Services, LLC

Centralized Supply Chain Services, LLCApple Supply Chain Co-op, Inc.

8140 Ward ParkwayKansas City, Missouri 64114Phone: 913.438.5552Fax: 913.890.9102Email: member.services@cscscoop.comWebsite: www.cscscoop.com

Independent Auditors/Crowe Horwath LLP • Elkhart, Indiana