Newspaper article The Florida Times Union

Winn-Dixie's Stock Options Just a Blip

Newspaper article The Florida Times Union

Winn-Dixie's Stock Options Just a Blip

Article excerpt

Byline: Mark Basch, Times-Union business writer

Over the past month, there has been a lot of hullabaloo over how companies account for stock options granted to employees. A number of major companies have announced that they will include the cost of issuing stock options as an expense against earnings, and financial pundits have hailed this as a great event for shareholders who are concerned about questionable accounting practices.

But is this a big deal? Not if you look at Winn-Dixie Stores Inc.'s recent earnings reports.

Jacksonville-based Winn-Dixie has been credited as one of the few large U.S. corporations that has been including the expense of issuing stock options in its financial statements for the last several years. But those costs don't seem to be having a dramatic impact on the supermarket chain's earnings. During its quarterly conference call with analysts last week, Chief Financial Officer R.P. McCook noted that Winn-Dixie's expense for stock compensation was $1 million in the fourth quarter ended June 26. That's out of total operating and administrative expenses of $720.1 million.

For the entire fiscal year ended June 26, the compensation costs were $4.5 million, while total operating and administrative expenses were $3.05 billion.

Over the last seven years, the biggest stock compensation expense the company had was $10.1 million in fiscal 1997, according to its annual reports. And in two of those years, Winn-Dixie actually recorded net income on compensation because of reversals of some of those expenses.

So, is Winn-Dixie just an unusual example? Well, Regency Centers Corp. is another Jacksonville-based company that would see a minimal impact from that accounting treatment.

"If options were expensed in 2001, earnings per share would have been reduced by 1 cent per share," said Regency Chief Executive Officer Martin E. "Hap" Stein Jr. last week in a conference call. Regency earned $1.69 per diluted share last year. …

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