EXHIBIT 99.1
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For: Frozen Food Express Industries, Inc. From: Mike Engleman
Listed: Nasdaq (FFEX) Mike Engleman/Associates
Company Contacts: 11308 Valleydale
Stoney M. (Mit) Stubbs, Jr. (CEO) Dallas, TX 75230
F. Dixon McElwee, Jr. (CFO) (214) 373-6464
(214) 630-8090
For Immediate Release
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Frozen Food Express Industries, Inc. Announces
Change in Accounting and Restatement
Dallas, TX -- April 1, 2002 -- Frozen Food Express Industries, Inc. (Nasdaq:
FFEX) today announced that it has retroactively changed the manner in which it
accounts for a life insurance policy that it acquired in 1993. The life
insurance policy, with a death benefit of at least $17.25 million, was
purchased to provide the Company funds with which it could purchase a large
number of shares of the Company's common stock owned by a non-employee
shareholder. To the extent the Company determined that the sale of such
shares in the open market by the estate would have an adverse effect on the
market price of the Company's stock, the Company could use the life insurance
proceeds to purchase the shares directly from the estate.
Beginning in 1993, the Company and its independent public accountants
believed that capitalizing the premium payments as an investment to purchase
the shares in the future was an acceptable accounting policy. The retroactive
action announced today will change the manner by which the Company accounts
for the insurance policy. With this non-cash change, the Company will expense
the excess of the premiums over the amount that could actually be realized
by the Company under the insurance contract as of the date of the related
financial statements. Accordingly, for 1999 through 2001, the restated
operating income, net loss and shareholders' equity are as follows
(in millions):
2001 2000 1999
Operating income (loss): ---- ---- ----
As previously reported $ 1.7 $ 1.7 $(15.2)
As restated 1.7 1.7 (15.2)
Net loss:
As previously reported $(0.6) $(1.2) $(12.1)
As restated (0.2) (1.3) (12.6)
Shareholders' Equity:
As previously reported N/A $82.0 $ 83.1
As restated $75.0 74.4 75.5
During 2001, the Company began accruing for the difference between the
value of the policy on the Company's books (as determined by the former manner
of accounting) and the amount that the Company could presently receive
pursuant to the policy. As a result of the restatement, the Company recorded
$340,000 in incremental expense during 2001 but the net loss incurred by the
Company, after the reserve was reversed, was reduced by $481,000.
Although this change resulted in a slight improvement to 2001's net loss,
the Company expects this change to result in lower future earnings than would
have been the case using the Company's former method of accounting.
The Company stated that as a result of the change in accounting it will
need additional time to finalize its annual report on Form 10-K, but expects
to file the annual report with the SEC on or before April 15. Due to the
delay in filing the annual report, the Company intends to reschedule the
annual meeting of shareholders to May 8, 2002.
Pending completion of the restatement and the filing of the Company's
restated financial statements with the SEC, the Company's independent public
accountants, Arthur Andersen LLP, has withdrawn its reports on the previously
issued financial statements. Those financial statements and the reports of
the independent public accountants should no longer be relied upon.
The Company stated that it has reviewed this matter with its banks and
has secured the amendments and waivers which are needed to maintain the
Company's compliance with the financial requirements of its credit facility.
Frozen Food Express Industries, Inc. is the largest publicly-owned,
temperature-controlled carrier of perishable goods (primarily food products,
health care supplies and confectionery items) on the North American continent.
Its services extend from Canada, throughout the 48 contiguous United States,
into Mexico. The refrigerated trucking company is the only one serving this
market that is full-service-providing full-truckload, less-than-truckload and
distribution transportation of refrigerated and frozen products. Its
refrigerated less-than-truckload operation is also the largest on the North
American continent.
This report contains information and forward-looking statements that are
based on management's current beliefs and expectations and assumptions we made
based upon information currently available. Forward-looking statements include
statements relating to our plans, strategies, objectives, expectations,
intentions, and adequacy of resources, may be identified by words such as
"will", "could", "should", "believe", "expect", "intend", "plan", "schedule",
"estimate", "project" and similar expressions. These statements are based on
our current expectations and are subject to uncertainty and change.
Although we believe that the expectations reflected in such forward-
looking statements are reasonable, we can give no assurance that such
expectations will be realized. Should one or more of the risks or uncertainties
underlying such expectations not materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those we expect.
Among the key factors that are not within our control and that may have
a bearing on operating results are demand for our services and products, and
our ability to meet that demand, which may be affected by, among other things,
competition, weather conditions and the general economy, the availability and
cost of labor, our ability to negotiate favorably with lenders and lessors,
the effects of terrorism and war, the availability and cost of equipment,
fuel and supplies, the market for previously-owned equipment, the impact of
changes in the tax and regulatory environment in which we operate, operational
risks and insurance, risks associated with the technologies and systems we use
and the other risks and uncertainties described elsewhere in our filings with
the Securities and Exchange Commission.