Non-GAAP financial measures
This Annual Report includes the following
non-GAAP financial measures:
Net sales at constant exchange rates
Identical sales, excluding gasoline net sales
Underlying retail operating income
Core Corporate Center costs
Net debt
Cash flow before financing activities
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Operating and financial review
AHOLD ANNUAL REPORT 2008 23
In certain instances, net sales are presented at constant
exchange rates or in local currencies. We believe these
measures provide a better insight into the operating
performance of our foreign subsidiaries or joint ventures.
Because gasoline prices have experienced greater volatility than
food prices, we believe that by excluding gasoline net sales, this
measure provides a better insight into the growth of identical
stores sales.
Total retail operating income adjusted for impairment of non-
current assets, gains and losses on the sale of assets and
restructuring and related charges. We believe that excluding
these elements provides a better insight into our underlying
operating performance.
Core Corporate Center costs relate to the core responsibilities
of the Corporate Center, including Corporate Finance, Corporate
Strategy, Internal Audit, Legal, Human Resources, Information
Technology, Communications and the Corporate Executive
Board. Total corporate costs also include results from other
activities coordinated centrally but not allocated to any
operating company. We believe that this measure provides a
better insight into the Company's operating performance.
Net debt is the difference between (i) the sum of long-term
debt and short-term debt (i.e., gross debt) and (ii) cash and
cash equivalents. We believe that because cash and cash
equivalents can be used, among other things, to repay
indebtedness, netting this against gross debt is a useful
measure of Ahold's leverage. Net debt may include certain
cash items that are not readily available for repaying debt.
Cash flow before financing activities is the sum of net cash
from operating activities and net cash from investing activities.
We believe that because this measure excludes net cash
from financing activities, this measure is useful where such
financing activities are discretionary, as in the case of
voluntary debt prepayments.
Management believes that these non-GAAP financial measures
allow for a better understanding of Ahold's operating and
financial performance. These non-GAAP financial measures
should be considered in addition to, but not as substitutes
for, the most directly comparable IFRS measures.
