Notes to the consolidated financial statements
8 Expenses by nature
9 Net financial expense
31 www.ahold.com/reports2008
Financial statements
AHOLD ANNUAL REPORT 2008 64
The aggregate of cost of sales and operating expenses can be specified by nature as follows:
million
2008
2007
Cost of product
17,888
17,167
Employee benefit expenses
3,365
3,497
Other store expenses
1,646
1,530
Depreciation and amortization
661
671
Rent expenses
506
511
Impairment losses and reversals
13
34
Gains on the sale of assets
(46)
(35)
Other expenses
491
450
Total expenses
24,524
23,825
million
2008
2007
Interest income
110
133
Interest expense
(344)
(427)
Gains on foreign exchange
87
13
Fair value losses on financial instruments
(66)
(11)
Other financial expense
(1)
(8)
Net financial expense
(214)
(300)
Interest income is mainly attributable to the interest on cash and cash equivalents (EUR 95 million in 2008 and EUR 121 million
in 2007). Interest expense primarily originates from financial liabilities measured at amortized cost (mainly loans, finance lease
liabilities and preferred financing shares) and interest accretions to provisions.
The gains on foreign exchange in 2008 mainly include a foreign exchange retranslation gain on the GBP 250 million notes. This is
partly offset by fair value changes of the related GBP 250 million swaps, which do not qualify for hedge accounting treatment, and
which are recorded in fair value losses on financial instruments. For more information on fair value gains (losses) on financial
instruments, see Note 29.
Foreign exchange results on financing transactions and on financial assets and liabilities, including amounts released from the cash
flow hedging reserve, are presented as part of net financial expense. Foreign exchange results arising from the purchase of goods for
sale or goods and services consumed in Ahold's operations are included in cost of sales or in the appropriate element of operating
expenses, respectively. In 2008, the Company included net exchange losses of EUR 10 million in operating income (2007: loss of
EUR 6 million).
