RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
(52 1
weeks) 1
decision to exit certain businesses. During 2005, currency
exchange differences between the U.S. dollars and
the euro had a minimal effect on net sales as reported
in euros.
Excluding week 53 of 2004, net sales in U.S. dollars
decreased in 2005 by 0.5% to USD 18.5 billion.
Net sales in 2005 were negatively impacted by
approximately 2% as a result of the company's decision
to exit certain businesses.
During 2005, the impact of food cost inflation had
minimal impact on net sales at U.S. Foodservice.
Operating income
The following table sets forth information relating to
operating income for U.S. Foodservice in 2005 and 2004:
Operating income in 2005 increased compared to 2004
due to a higher gross profit margin, which was partially
offset by higher operating expenses, including
restructuring charges of USD 61 million in 2005.
The increase in gross profit margin is primarily a result of
improved sales mix, pricing and product cost reductions
due to improved procurement practices. The restructuring
charges in 2005 related to planned workforce reductions,
lease expenses for facilities to be exited, charges relating
to termination of contracts and included USD 20 million
in impairment losses. These restructuring charges
primarily related to the strategic reorganization into the
Broadline and Multi-Unit operating companies and the
previously announced headcount reductions involving
nearly 700 positions. The increase in operating expenses
was partially offset by a gain of USD 19 million relating to
the sale of Sofco in 2005.
Excluding the restructuring charges and the gain on the
sale of Sofco in 2005, and also excluding the pension
curtailment gain of USD 12 million in 2004, operating
expenses as a percentage of net sales increased slightly
in 2005 compared to 2004. Significantly increased fuel
costs were partially offset by lower bad debt expenses and
operating efficiencies in distribution and warehousing.
U.S. Foodservice experienced improving trends in its key
expense metrics in 2005, including increased cases per
mile and increased average drop sizes.
Operating income in both 2005 and 2004 reflect
approximately USD 42 million of amortization expense
that related to other intangible assets that expires in 2009.
The following table sets forth a reconciliation of net sales in
2005 adjusted to net sales in 2004:
2005
2004
In millions, except
percentages
Change
(53
weeks)
Net sales in EUR
14,872
(2.0)
15,170
Net sales in USD
18,468
(2.0)
18,847
Operating income in EUR
86
59.3
54
Operating income in USD
107
59.7
67
Operating income in USD
as a percentage of net sales
0.6%
0.4%
2005
Adjusted
2004
Last week
2004
2004
In millions
(52 weeks)
(52 weeks)
(1 week)
(53 weeks)
Total Company
EUR
44,496
43,871
739
44,610
Retail
Stop Shop/Giant-Landover Arena
USD
16,346
15,800
305
16,105
Giant-Carlisle/Tops Arena
USD
6,201
6,352
128
6,480
Albert Heijn Arena
EUR
6,585
6,296
122
6,418
Schuitema
EUR
3,128
3,121
60
3,181
Foodservice
U.S. Foodservice
USD
18,468
18,557
290
18,847
This reconciliation has no impact on the Central Europe Arena.
This annual report includes the following non-GAAP financial
measures:
Net sales excluding currency impact. In certain instances,
results exclude the impact of fluctuations in currency
exchange rates used in the translation of our foreign
AHOLD ANNUAL REPORT 2005 73
