Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, February 11, 1994 TAG: 9402140309
SECTION: BUSINESS PAGE: A-7 EDITION: METRO
SOURCE: MEGAN SCHNABEL
DATELINE: LENGTH: Medium
The chain posted a $3.9 million net profit for its fiscal year ended Jan. 1, compared with earnings of $178 million the year before.
For employees, such as those at the Food Lion on Williamson Road in Roanoke, the figures are more than just abstract numbers for upper management to worry about. They have direct bearing on their futures.
Through the company's profit-sharing pension program, Food Lion each year contributes to an employee trust fund that is reinvested in stocks, certificates of deposit and other equities, Food Lion spokesman Mike Mozingo said.
The amount the company contributes is a percentage of eligible employees' salaries and is determined by the company's profitability, he said.
Employees put none of their own money into the program, Mozingo said. By law, Food Lion may contribute up to 15 percent of employee salaries to the fund, he said, and in recent years, the company has given the maximum amount.
But the poor showing in 1993, due in part to $170 million in costs associated with closings 88 unprofitable stores mainly in the Southwest, meant $22 million less was contributed to the fund, which in turn will lead to lower returns for employees. The results also came after allegations in late 1992 that the chain had allowed tainted meat and fish to be sold.
The company opted to contribute 10 percent of employee salaries - or $58 million - rather than last year's 15 percent - $80 million - Mozingo said. The fund now stands at more than $450 million, he said.
Waiting Thursday afternoon for Food Lion to release its 1993 figures, Carl Hale, an associate produce manager at the Williamson Road store, was nervous.
"Hopefully, [profits] will double and everything will be all right and I'll be happy," he said with a slight laugh.
Hale is one of about 30,000 employees nationwide who are part of the company's profit-sharing plan. Although Food Lion has 66,000 employees nationwide, only those who have worked for a full calendar year and have logged at least 1,000 hours during that period are eligible for profit sharing. Participating employees must be eligible for five years before they are fully vested.
Because their retirement packages are so closely linked to the company's yearly profits, employees such as Hale tend to keep a close eye on corporate performance.
"All the employees are concerned, simply because this is what you're working for," said Hale, who has worked for Food Lion for six years. "Your future is tied to this."
The Williamson Road store's manager, Lesley Johnson, has worked for Food Lion for five years. He, too, was concerned.
"It's the largest investment in my portfolio," he said. "I'm concerned because a good portion of my retirement plan is based on Food Lion."
As of December, 12.3 percent of the trust fund was invested back into Food Lion stock, Mozingo said. Because of the store-closing costs, year-end earnings per share were less than 1 cent, down from 37 cents at the end of 1992.
This may be another cause of concern for employees who are part of the profit-sharing program. If earnings on the Food Lion stock do not pick up, employees may see even less money going into their pension funds.
Until the company's recent troubles, however, Mozingo said Food Lion stock had performed well and had been a positive contributing factor to the profit-sharing program.
Despite the uncertainty, Johnson remained optimistic.
"One year may set me back slightly," he said. "As long as I'm getting some contribution, I should be fine."
\ FOOD LION RESULTS\ \ Food Lion Inc. reported sales of $7.61 billion for the fiscal year ended Jan. 1, up 5.8 percent from $7.19 billion a year earlier.\ \ Net income, after special charges for store closings and other items, were $3.85 million, or 0.008 cents per share last year. Year-earlier earnings were $178 million, or 36.8 cents per share.\ \ In its fourth quarter, Food Lion had a net loss of $73.4 million, compared with a year-earlier profit of $27.3 million. Sales in the quarter were $2.39 billion, up 5.6 percent from year-earlier $2.27 billion.\ Source: The company
by CNB