Albertsons 2014 Annual Report Download - page 42

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Non-GAAP Financial Measures
The Company’s Consolidated Financial Statements are prepared and presented in accordance with generally
accepted accounting principles (“GAAP”). In addition to the above analysis of results of operations to assess the
performance of our businesses, the Company also considers certain other non-GAAP financial measures. The
measures and items identified below, such as Adjusted EBITDA, are provided as a supplement to our results of
operations and related analysis, and should not be considered superior to, a substitute for or an alternative to any
financial measure of performance prepared and presented in accordance with GAAP. Investors are cautioned that
there are material limitations associated with the use of non-GAAP financial measures as an analytical tool.
Certain adjustments to our GAAP financial measures reflected below exclude certain items that are occasionally
recurring in nature and may be reflected in our financial results for the foreseeable future. These measurements
and items may be different from non-GAAP financial measures used by other companies. All measurements are
provided with a reconciliation from a GAAP measurement. Management believes the measurements and items
identified below are important measures of business performance that provide investors with useful supplemental
information. The Company utilizes certain non-GAAP measures to analyze underlying core business trends to
understand operating performance. In addition, management utilizes certain non-GAAP measures as a
compensation performance measure. Non-GAAP financial measures below should only be considered as an
additional supplement to the Company’s financial results reported in accordance with GAAP and should be
reviewed in conjunction with the Company’s results reported in accordance with GAAP in this Annual Report on
Form 10-K.
Adjusted EBITDA is a non-GAAP supplemental performance measure the Company uses to facilitate operating
performance comparisons of our businesses on a consistent basis. Adjusted EBITDA provides additional
understanding of other factors and trends affecting our business which are used in the business planning process
to understand expected performance, to evaluate results against those expectations, and as one of the
compensation performance measures to determine achievement under the guidance of certain compensation
programs and plans.
The Company defines Adjusted EBITDA as Net earnings (loss) from continuing operations, plus Income tax
provision (benefit), and Interest expense, net calculated in accordance with GAAP, plus non-GAAP adjustments
for Depreciation and amortization, LIFO charges (credit), certain non-recurring or unusual employee-related
costs and pension related items, including severance costs, accelerated stock-based compensation charges,
multiemployer pension withdrawal charges and other items, charges and costs related to debt financing activities,
non-cash asset impairment and other charges and gains (including store closures, market exits and certain gains
on the sale of property), goodwill and intangible asset impairment charges, legal settlement charges and gains
and contract breakage costs and certain other non-cash charges or unusual items. The non-GAAP items are
omitted either because they are non-cash items or are items that are not considered in our supplemental
assessment of on-going business performance. Certain of these adjustments are considered in similar
supplemental analyses by other companies, such as Depreciation and amortization, LIFO charges and certain
other adjustments. Adjusted EBITDA is less disposed to variances in actual performance resulting from
depreciation, amortization and other non-cash charges and more reflective of other factors that affect our
underlying operating performance. Depreciation and amortization and LIFO charges utilized in the computation
of Adjusted EBITDA include all such expenses reported in accordance with GAAP in the Company’s
Consolidated Financial Statements.
Using Adjusted EBITDA as a financial measure contains material limitations including, but not limited to, not
reflecting cash expenditures or future requirements for capital expenditures or contractual commitments, changes
in working capital, income taxes and debt service expenses that are recurring in our results of operations.
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