MANAGEMENT'S DISCUSSION
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
Revenue (including revenue from non-freight activities) increased by 6.3%
in 1999 to $372,149,000. For 1998, revenue totaled $349,932,000 and was 10.5%
above 1997 revenue of $316,568,000. Freight revenue rose by 1.5% during 1999 and
7.0% in 1998. During 1999, the company incurred a net loss of $12,130,000 as
compared to net income of $9,979,000 and $9,664,000 during 1998 and 1997,
respectively.
During the fourth quarter of 1999 FFEX announced a plan to restructure
certain of its operations. The plan includes closing terminals, eliminating
about 150 non-driver employee positions and the early disposition of certain
trailers previously scheduled for retirement in 2001 and 2002. In connection
with the plan, during 1999's fourth quarter FFEX recorded estimated
restructuring expenses of $3.7 million which included $0.9 million for severance
payments and $2.8 million for expenses associated with the early termination of
trailer leases and the abandonment of a leased facility. The $3.7 million is
classified as restructuring expense on the company's 1999 Consolidated Statement
of Income. It is anticipated that these estimated amounts will be paid during
2000. During 1999, the company's plans to expand its fleet of full-truckload
tractors were not met. In anticipation of success in meeting those plans, the
company had previously expanded its fleet of 53-foot trailers. As a result,
during the fourth quarter of 1999, the company had a surplus of trailers
relative to tractors.
During the fourth quarter of 1999, the company also recorded certain
expenses associated with impairment of long-lived assets (see "Year 2000").
At the end of 1999, the company's full-truckload fleet numbered
approximately 1,620 trucks, as compared to about 1,670 at the end of 1998.
Primarily due to the reduced number of trucks, the number of full-truckload
shipments fell by 0.6% during 1999 as compared to a 5.8% increase during 1998.
During the fourth quarter of 1999, the company purchased the operating
assets of a small refrigerated less than truckload (LTL) competitor. The company
anticipates the traffic patterns of the combined LTL operations will provide
moderate incremental freight revenue with nominal incremental associated costs.
LTL revenue posted an increase of 4.7% in 1998 but fell by 0.7% in 1999. Revenue
per hundredweight and revenue per shipment increased by 4.6% and 5.0%,
respectively, in 1999. The number of LTL shipments declined by 5.2% during 1999.
The company does not plan to add trucks to its company-operated,
full-truckload fleet during 2000. The number of trucks in this fleet increased
by approximately 100 during 1998 and declined by almost 90 to approximately
1,150 during 1999. Continued emphasis will be placed on improving the operating
efficiency and increasing the utilization of this fleet through enhanced driver
training and retention, by reducing the percentage of non-revenue-producing
miles, and by extending the average loaded miles per shipment and through
expansion of dedicated fleet operations.
Prior to 1998, limited operations involving dedicated fleets were
conducted. In such an arrangement, the company contracts to provide service
involving the assignment of specific trucks to handle transportation needs of
its customers. Frequently the company and customer anticipate that dedicated
fleet logistics services will both lower the customer's transportation costs and
improve the quality of the service the customer receives. In late 1998, the
company improved its capability to provide and expanded its efforts to market
such services. By December 31, 1999, 10% of the company-operated, full truckload
fleet was engaged in dedicated fleet operations.
The operation of the company's full-truckload fleet is facilitated by
satellite technology that enhances efficiency and customer service. Position
updates of each tractor are provided by the system and real-time communication
between operations personnel and drivers are facilitated.
During 1999, the company experienced difficulty in attracting qualified
employee-drivers. Throughout 1997 and 1998, the company did not experience
significant shortages of employee-drivers, although excessive turnover
continued. Prior to 1999, it was not unusual for 20 to 40 trucks to be idle due
to a shortage of drivers. During 1999, as many as 100 trucks were out of service
from time to time due to lack of drivers. This shortage was a prime factor in
reducing the size of the company-operated fleet. This situation, which has been
typical in the industry, can increase costs of employee-driver compensation,
training and recruiting. Significant resources are continually devoted to
recruiting and retaining qualified employee-drivers and to improving their job
satisfaction.
================================================================================
7
MANAGEMENT'S DISCUSSION
================================================================================
As a part of its recruiting and training program, the company partners with
driver training schools. The company pre-qualifies candidates and assists in
funding their education, contingent upon successful and continuing employment as
a driver for the company. Bonuses are earned by employee-drivers meeting certain
fuel economy, productivity, safety, tenure and quality of service goals.
Employee-drivers, as well as all other qualified employees, participate in stock
option, 401(k), group health and other benefit programs. Recovery of future cost
increases, if any, associated with driver turnover and compensation will depend
upon competitive freight-market conditions.
Changes in the percentage of freight revenue generated from full-truckload
versus LTL shipments, as well as in the mix of company-provided versus
owner-operator-provided equipment and in the mix of leased versus owned
equipment, contribute to variations in related operating and interest expenses.
Throughout the three years ended December 31, 1999, the company has seen
moderate success in receiving rate increases from its customers. Costs,
particularly associated with employee-driver payroll and equipment operation,
have risen at a pace faster than have the rates charged by the company. The
company expects to intensify its efforts to gain rate increases in order to
offset such rising costs.
Results of operations during 1999 were impacted by several events which
occurred during the latter half of the year. These include adverse claims
experience for work-related injuries and employee health insurance. Such costs
are included in salaries, wages and related expenses which aggregated, as a
percent of freight revenue, 28.7%, 26.9% and 25.5% for 1999, 1998 and 1997,
respectively. The majority of the 1998 increase resulted from increased wages
paid to employee-drivers. Of 1999's $6.7 million increase in salaries, wages and
related expenses, 35% was related to driver wages and 30% was due to increased
non-driver wages. The remainder was due principally to increased work-related
claims and health insurance expenses. Throughout 1998 and 1997, the company
capitalized the salaries paid to certain employees who were directly
contributing to the development of a new management information system (MIS),
which was implemented during mid-1999. Subsequent to the implementation, these
salaries were expensed as incurred.
The company has traditionally relied on owner-operator provided equipment
to transport much of its customers' freight. As competition for employee-drivers
has increased, other trucking companies have initiated or expanded
owner-operator fleets. The number of trucks provided by owner-operators rose by
about 20 during 1999, and by about 45 during 1998. Beginning in mid-1998, the
company intensified its solicitation for and retention of owner-operator
provided equipment. Due to a decline in the number of such trucks during 1997's
first half that was not reversed until 1998's second half, the percentage of
total full-truckload revenue from such equipment declined during 1998. As a
result of these fluctuations in the quantity and revenue contribution of such
equipment, the percent of freight revenue absorbed by purchased transportation
declined from 23.1% in 1997 to 21.9% in 1998 and then rose to 22.6% in 1999. The
company is considering programs designed to further expand its fleet of
owner-operator trucks during 2000.
Of 1999's $5,538,000 increase in supplies and expenses, 58% was the result
of increased expenditures for fuel and fuel taxes. Another 15% was due to
increased expenses associated with revenue equipment repairs and maintenance.
Sudden and dramatic fuel price volatility can impact the company's
profitability. A number of factors tend to diminish the impact of such
volatility. Owner-operators are responsible for all costs associated with their
equipment, including fuel. Therefore, the cost of such fuel is not a direct
expense of the company. With regard to fuel expenses for company-operated
equipment, the company attempts to mitigate the impact of fluctuating fuel costs
by purchasing more fuel-efficient tractors and aggressively managing fuel
purchasing. Also, certain rates charged by the company for its services are
adjustable by reference to fuel prices. Relatively high or low fuel prices can
result in upward or downward adjustment of freight rates, further mitigating the
impact of such volatility on the company's profits. Such fluctuations result
from many external market factors that cannot be influenced or predicted by the
company. In addition, each year several states increase fuel taxes. Recovery of
future increases or realization of future decreases in fuel prices and fuel
taxes, if any, will continue to depend upon competitive freight-market
conditions.
The total of revenue equipment rent and depreciation expense increased to
12.4% of freight revenue in 1999 from 11.4% for 1998 and 11.2% for 1997. These
increases were due in part to the increased use of leasing to finance the
company's fleet. Equipment rental includes a component of interest-related
expense that is classified as non-operating expense when the company incurs debt
to acquire equipment. Equipment rent and depreciation also are affected by the
replacement of less expensive (three year old) company-operated tractors and
(seven year old) trailers with more expensive new equipment. Depreciation
expense associated with the new MIS was also a component of the 1999 increase.
================================================================================
8
MANAGEMENT'S DISCUSSION
================================================================================
Claims and insurance expense, as a percent of freight revenue, was 6.0% in
1999, 4.0% in 1998 and 4.1% in 1997. Claims against the company for highway
accidents are the primary component of claims and insurance expense. These
expenses tend to vary with miles traveled and with changes in the mix of
full-truckload versus LTL operations. Insurance premiums do not significantly
contribute to costs, partially because the company carries large deductibles
under its policies of liability insurance. Claims and insurance costs on a
per-mile basis declined by 3% during 1998 but rose by 49% during 1999. The 1999
increase was due primarily to adverse claims experience, particularly during the
fourth quarter.
Such expenses vary significantly from year to year. Reserves representing
the company's estimate of ultimate claims outcomes are established based on
information available at the time of an incident. As additional information
becomes available, previously recorded amounts may be revised. The amount of
open claims, some of which involve litigation, is significant. In the opinion of
management, these claims can be resolved without a material adverse effect on
the company's financial position or its results of operations.
Gains on the disposition of equipment fell from $1,149,000 in 1997 to
$840,000 in 1998 and to $594,000 in 1999. The amount of such gains depends
primarily upon conditions in the market for used equipment.
Miscellaneous expenses rose by $3.5 million during 1999, almost 90% of
which was due to increased provisions for uncollectable accounts receivable.
Accounts receivable, net, a main component of working capital, increased by 49%
between 1997 and 1999, as compared to an 18% increase in revenue. Before offset
of allowances for doubtful accounts, the 1997 through 1999 increase was 60%.
Much of the increase occurred during the last 6 months of 1999. This was
partially a result of delays in the company's collection cycle. During 1999, the
company completed a computer systems conversion. Following this conversion, the
company experienced problems regarding the presentation of invoices to some of
its customers, contributing to increased past-due receivables. During the fourth
quarter of 1999, an analysis resulted in an increased estimate of such
receivables that may not ultimately be collected.
The company also has a non-freight segment engaged in the sale and service
of refrigeration equipment and of trailers used in freight transportation.
Revenue from these operations was $61,247,000 in 1999, $43,819,000 during 1998
and $30,470,000 during 1997. Operating profits from this segment of $992,000,
$1,862,000 and $1,076,000 were posted for 1999, 1998 and 1997, respectively.
Revenue continued to expand throughout the three-year period. However, increased
competition in the used transportation marketplace has narrowed margins and
increased selling and administrative expenses. During the fourth quarter of
1999, the non-freight segment also recorded a reserve for potentially obsolete
inventory, estimated warranty claims and uncollectable accounts of approximately
$625,000.
For 1999, the company incurred a loss from operations of $15,235,000 as
compared to income from operations of $16,753,000 and $15,060,000 for 1998 and
1997, respectively.
For 1999, 1998 and 1997, interest and other expense was $4,019,000,
$1,038,000 and $1,244,000, respectively. Increased interest costs associated
with borrowed funds and reduced interest income contributed to this increase
(See "Liquidity and Capital Resources"). Interest and other expenses were also
impacted during 1999 by a company-owned life insurance ("COLI") program and
other life insurance programs and investments.
The company's 1999 loss before benefit from income taxes was $19,254,000.
Pre-tax income was $15,715,000 and $13,816,000 for 1998 and 1997, respectively.
The effective income tax rate was 37.0% of pre-tax income for 1999, as compared
to 36.5% for 1998 and 30.1% for 1997. Prior to 1998, fluctuations in effective
income tax rates were primarily attributable to the presence of non-taxable
income from COLI. Offsetting this non-taxable income were tax-deductible
interest costs associated with the program. The combination of non-taxable COLI
income and this tax-deductible interest expense negatively impacted pre-tax
income from 1994 through 1997. The effect was to reduce income taxes through the
deductibility of such interest costs. Due to legislation enacted during 1996
that limited the deductibility of COLI-related interest expense, a phase-out of
COLI was implemented during 1998. Tax savings from related interest costs were
reduced resulting in increased effective tax rates.
LIQUIDITY AND CAPITAL RESOURCES
During 1999, cash used in operating activities was $2.6 million as compared
to cash provided by operations of $13.9 million and $28.5 million for 1998 and
1997, respectively. These fluctuations have resulted from declines in overall
profitability coupled with fluctuating working capital. (See "Results of
Operations".)
================================================================================
9
MANAGEMENT'S DISCUSSION
================================================================================
Expenditures for property and equipment totaled $28.3 million in 1999,
$27.7 million during 1998 and $14.7 million during 1997. In addition, the
company financed, through operating leases, the acquisition of revenue equipment
valued at approximately $40 million in 1999, $28 million during 1998 and $27
million during 1997.
From 1992 until the end of 1999, the company had in place a $50 million
unsecured revolving credit facility. Interest rates were at prime or below, and
no commitment fee was payable. The 1992 agreement imposed certain financial
limitations on the company regarding interest coverage, financial leverage and
dividend payments. During the fourth quarter of 1999, the company informed the
banks that it expected to be in violation of certain of these limitations as of
December 31, 1999. Accordingly, the 1992 agreement was amended to exclude those
limitations that the company expected to violate. The amendment also increased
the interest rates payable under the agreement and set a March 1, 2000
expiration date. During January and February 2000, the company and the same
three banks as were involved in the 1992 agreement successfully negotiated
(pending final documentation agreeable to all parties) a proposed new credit
agreement.
The proposed new agreement provided for loans to be secured by the
company's accounts receivable and inventories. Interest rates and other fees
payable to the banks were increased under the proposed new agreement which
contained a pricing "grid" where increased levels of profitability and cash flow
on reduced levels of indebtedness would reduce such interest rates and other
fees. The proposed agreement restricted payments of cash dividends, repurchases
of company stock and the amount of capital expenditures. The term of the
proposed agreement was two years. The proposed agreement was between the company
and three banks, each of whom had participated in the 1992 agreement since its
inception. Closing was scheduled for March 1, 2000.
On February 28, 2000 one of the banks announced its unwillingness to commit
to the proposed two-year term, and limited its participation to 90 days.
Accordingly, the term of the proposed agreement was shortened to expire on June
1, 2000. The other terms and conditions of the proposed agreement were
substantially unchanged and closing of the proposed agreement occurred on March
1, 2000. Based upon discussions with the remaining two banks and other advisors,
the company expects to obtain a suitable replacement facility prior to June 1,
2000. There can be no assurance, however, that such a facility will be in place
by June 1, 2000. Accordingly, the company is considering alternative strategies
which would accommodate the company's financial requirements beyond June 1,
2000.
Because the credit agreement is set to expire on June 1, 2000, the amount
borrowed as of December 31, 1999 has been reflected on the company's balance
sheet as a current liability. The amended 1992 agreement and the agreement that
replaced it are also used to support letters of credit issued in connection with
the company's insurance and risk management programs. At the end of 1999,
approximately $18.5 million was available under the credit line.
In connection with its restructuring efforts, the company does not expect
to add tractors or trailers to its company-operated fleet during 2000.
Approximately 350 three-year old tractors, presently scheduled for retirement
during 2000, are expected to be replaced. These expenditures will be financed
with internally generated funds, borrowings under available credit agreements
and leasing. Subject to the successful negotiation of a replacement credit
facility, management believes these sources of capital will be sufficient to
finance the company's operations.
YEAR 2000 ("Y2K")
Neither the Company nor its significant suppliers nor customers experienced
significant malfunctions or errors in its operating or business systems when the
date changed from 1999 to 2000. Based on operations since January 1, 2000, the
Company does not expect any significant impact to its ongoing business as a
result of the Y2k issue.
The Company expended approximately $10 million through December 31, 1999,
on a systems conversion project that totally replaced a non-Y2k compliant
mainframe system with a Y2k compliant system. These efforts included replacing
outdated, non-compliant hardware and software as well as remediating other Y2k
problems.
In connection with its effort to prepare for the Y2k switchover, the
company concluded a five-year systems development effort during 1999. Subsequent
to the conversion to the new MIS, the company commenced a review of the
functions it provided. The review, which was completed during the fourth quarter
of 1999 revealed numerous features of the system which the company no longer
intends to utilize. Those features have been abandoned. Of the approximately
$10.0 million which was expended to develop the new MIS, approximately $2.7
million was allocated to the abandoned portion of the MIS. Such amount is
reflected on the company's 1999 Consolidated Statement of Income as "impairment
of long-lived assets".
================================================================================
10
TEN-YEAR STATISTICS AND FINANCIAL DATA 1999 1998 1997 1996
- --------------------------------------------------------------------- -------------- -------------- -------------- --------------
(unaudited and in thousands, except ratio, rate, equipment and
per-share amounts)
SUMMARY OF OPERATIONS
Revenue 372,149 349,932 316,568 311,428
Operating expenses 387,384 333,179 301,508 296,283
Net (loss) income (12,130) 9,979 9,664 8,533
Pre-tax margin (5.2)% 4.5% 4.4% 3.8%
After-tax return on equity (13.4)% 10.4% 10.9% 10.7%
Net (loss) income per common share, diluted (.74) .59 .57 .51
FINANCIAL DATA
Working capital 12,054 39,353 44,979 34,162
Current ratio 1.2 2.2 2.4 2.1
Cash (used in) provided by operations (2,559) 13,877 28,460 10,800
Capital expenditures, net 23,917 22,236 7,955 7,191
Short and long-term debt 26,500 -- -- --
Shareholders' equity 83,121 98,277 93,077 83,953
Debt-to-equity ratio .3 -- -- --
COMMON STOCK
Average shares outstanding, diluted 16,352 17,039 17,056 16,838
Book value per share 5.09 5.96 5.53 5.04
Market value per share
High 8.500 10.500 10.250 13.875
Low 3.250 5.688 8.375 7.875
Cash dividends per share .09 .12 .12 .12
REVENUE
Full-truckload 211,545 206,098 190,576 195,458
Less-than-truckload 99,357 100,015 95,522 92,496
TL/LTL % revenue contribution 57/27 59/29 60/30 63/30
EQUIPMENT IN SERVICE AT YEAREND
Tractors
Company operated 1,240 1,328 1,220 1,202
Provided by owner-operators 690 672 628 703
Total 1,930 2,000 1,848 1,905
Trailers
Company operated 3,335 2,940 2,784 2,998
Provided by owner-operators 23 22 23 20
Total 3,358 2,962 2,807 3,018
FULL-TRUCKLOAD
Revenue 211,545 206,098 190,576 195,458
Loaded miles 157,248 155,045 143,902 145,785
Shipments 165.0 166.0 156.9 158.1
Revenue per shipment 1,282 1,242 1,215 1,236
Loaded miles per load 953 934 917 922
Revenue per loaded mile 1.35 1.33 1.32 1.34
Shipments per business day 655 659 623 627
Revenue per business day 839 817 756 776
LESS-THAN-TRUCKLOAD
Revenue 99,357 100,015 95,522 92,496
Hundredweight 8,075 8,502 8,537 8,652
Shipments 277.9 293.1 293.1 304.6
Revenue per hundredweight 12.30 11.76 11.19 10.69
Revenue per shipment 358 341 326 304
Revenue per business day 394 397 379 367
Pounds per shipment 2,906 2,901 2,913 2,840
- --------------------------------------------------------------------- -------------- -------------- -------------- --------------
12
1995 1994 1993 1992 1991 1990
-------------- -------------- -------------- -------------- -------------- --------------
292,345 274,620 227,389 194,888 176,995 160,171
276,961 255,484 211,999 183,179 167,033 152,370
9,253 11,874 9,441 7,144 5,202 3,618
4.5% 6.5% 6.3% 5.8% 4.8% 3.6%
13.3% 20.4% 20.1% 18.6% 16.0% 12.6%
.56 .72 .58 .45 .34 .25
25,024 25,623 20,823 16,949 15,612 13,085
1.7 1.8 1.8 1.8 2.1 1.9
24,180 20,025 17,482 16,395 14,968 9,022
8,383 8,160 18,453 18,375 (2,423) 16,285
-- 9,000 17,000 12,000 5,000 19,200
75,021 64,288 51,983 41,799 35,059 30,005
-- .1 .3 .3 .1 .6
16,519 16,451 16,276 15,910 15,249 14,519
4.59 4.03 3.31 2.72 2.42 2.11
13.900 15.000 15.000 11.475 4.088 2.700
8.500 11.000 7.275 3.938 1.800 1.838
.12 .096 .096 .079 .06 .06
180,598 163,988 129,549 109,178 103,582 90,043
87,783 88,328 80,965 72,864 65,068 64,589
62/30 60/32 57/36 56/37 59/37 56/40
1,149 1,099 945 800 737 739
667 505 457 432 421 386
1,816 1,604 1,402 1,232 1,158 1,125
2,770 2,406 2,027 1,609 1,475 1,419
27 21 32 24 28 38
2,797 2,427 2,059 1,633 1,503 1,457
180,598 163,988 129,549 109,178 103,582 90,043
135,469 121,106 97,753 83,247 80,663 69,800
142.9 128.1 106.6 92.9 85.5 75.8
1,264 1,280 1,215 1,175 1,211 1,188
948 945 917 896 943 921
1.33 1.35 1.33 1.31 1.28 1.29
567 508 423 367 339 301
717 651 514 431 411 357
87,783 88,328 80,965 72,864 65,068 64,589
8,296 8,670 8,116 6,848 6,211 6,314
292.1 305.2 292.0 253.3 231.3 241.7
10.58 10.19 9.98 10.64 10.48 10.23
301 289 277 288 281 267
348 351 321 288 258 256
2,840 2,841 2,779 2,704 2,685 2,612
-------------- -------------- -------------- -------------- -------------- --------------
13
CONSOLIDATED STATEMENTS OF INCOME
- ------------------------------------------------------------------------------------------------------------
Frozen Food Express Industries, Inc. and Subsidiaries
December 31, 1999, 1998, and 1997
(in thousands, except per-share amounts)
1999 1998 1997
- ------------------------------------------------------------------------------------------------------------
Revenue
Freight revenue $ 310,902 $ 306,113 $ 286,098
Non-freight revenue 61,247 43,819 30,470
------------------------------------------
372,149 349,932 316,568
------------------------------------------
Costs and expenses
Freight operating expenses
Salaries, wages and related expenses 89,174 82,479 72,989
Purchased transportation 70,353 67,124 65,988
Supplies and expenses 88,430 82,892 78,854
Revenue equipment rent 26,949 25,578 22,349
Depreciation 11,752 9,381 9,643
Communications and utilities 3,949 4,321 3,294
Claims and insurance 18,577 12,207 11,634
Operating taxes and licenses 5,488 4,908 4,857
Gain on disposition of equipment (594) (840) (1,149)
Miscellaneous expense 6,674 3,172 3,655
Impairment of long-lived assets 2,656 -- --
Restructuring expense 3,721 -- --
------------------------------------------
327,129 291,222 272,114
Non-freight costs and operating expenses 60,255 41,957 29,394
------------------------------------------
387,384 333,179 301,508
------------------------------------------
(Loss) income from operations (15,235) 16,753 15,060
Interest and other expense 4,019 1,038 1,244
------------------------------------------
(Loss) income before income tax (19,254) 15,715 13,816
(Benefit from) provision for income tax (7,124) 5,736 4,152
------------------------------------------
Net (loss) income $ (12,130) $ 9,979 $ 9,664
===========================================
Net (loss) income per share of common stock
Basic $ (.74) $ .59 $ .58
Diluted $ (.74) $ .59 $ .57
===========================================
See accompanying notes.
- -------------------------------------------------------------------------------------------------------------
14
CONSOLIDATED BALANCE SHEETS
- ----------------------------------------------------------------------------------------------------------
Frozen Food Express Industries, Inc. and Subsidiaries
December 31, 1999 and 1998
(in thousands)
1999 1998
- ----------------------------------------------------------------------------------------------------------
ASSETS
Current assets
Cash and cash equivalents $ 1,613 $ 6,023
Accounts receivable, net 52,312 43,802
Inventories 17,719 12,575
Tires on equipment in use 5,036 5,276
Deferred federal income tax 289 --
Other current assets 3,978 3,259
------------------------------
Total current assets 80,947 70,935
Property and equipment, net 73,640 64,405
Other assets 15,496 14,340
------------------------------
$ 170,083 $ 149,680
==============================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 24,797 $ 17,153
Accrued claims 6,631 3,801
Accrued payroll 5,890 5,759
Federal income tax payable -- 1,104
Deferred federal income tax -- 212
Short-term debt 26,500 --
Accrued liabilities 5,075 3,553
------------------------------
Total current liabilities 68,893 31,582
Deferred federal income tax 2,795 8,418
Accrued claims and liabilities 15,274 11,403
Commitments and contingencies -- --
------------------------------
Total liabilities and deferred credits 86,962 51,403
------------------------------
Shareholders' equity
Common stock, 17,281 shares issued 25,921 25,921
Additional paid-in capital 5,056 5,323
Retained earnings 59,399 73,001
------------------------------
90,376 104,245
Less - Treasury stock, at cost 7,255 5,968
------------------------------
Total shareholders' equity 83,121 98,277
------------------------------
$ 170,083 $ 149,680
==============================
See accompanying notes.
- ----------------------------------------------------------------------------------------------------------
15
CONSOLIDATED STATEMENTS OF CASH FLOWS
- ---------------------------------------------------------------------------------------------------------------------------
Frozen Food Express Industries, Inc. and Subsidiaries
December 31, 1999, 1998 and 1997
(in thousands)
1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities
Net (loss) income $ (12,130) $ 9,979 $ 9,664
Non-cash items involved in net income
Depreciation and amortization 13,564 10,854 10,331
Provision for losses on accounts receivable 5,296 2,285 1,964
Deferred federal income tax (6,124) 997 1,079
Gain on disposition of equipment (594) (840) (1,149)
Impairment of long-lived assets 2,656 -- --
Restructuring expense 3,721 -- --
Non-cash contribution to employee benefit plans -- 1,370 1,631
Change in assets and liabilities
Accounts receivable (13,359) (10,817) 2,508
Inventories (5,144) (1,967) (2,168)
Tires on equipment in use 240 (501) 742
Other current assets (719) (85) 2,313
Accounts payable 6,505 4,553 (1,384)
Accrued claims and liabilities 5,377 (2,773) 1,993
Accrued payroll (744) 517 292
Federal income tax payable (1,104) 305 644
---------------------------------------
Net cash (used in) provided by operating activities (2,559) 13,877 28,460
---------------------------------------
Cash flows from investing activities
Expenditures for equipment (28,294) (27,722) (14,656)
Proceeds from sale of equipment 4,377 5,486 6,701
Other (1,408) (2,787) (1,686)
---------------------------------------
Net cash used in investing activities (25,325) (25,023) (9,641)
---------------------------------------
Cash flows from financing activities
Borrowings under revolving credit agreement 72,500 2,000 19,000
Payments against revolving credit agreement (46,000) (2,000) (19,000)
Dividends paid (1,472) (2,016) (2,012)
Proceeds from sale of treasury stock 198 1,546 1,513
Purchases of treasury stock (1,752) (5,679) (1,672)
---------------------------------------
Net cash provided by (used in) by financing activities 23,474 (6,149) (2,171)
---------------------------------------
Net (decrease) increase in cash and cash equivalents (4,410) (17,295) 16,648
Cash and cash equivalents at beginning of year 6,023 23,318 6,670
---------------------------------------
Cash and cash equivalents at end of year $ 1,613 $ 6,023 $ 23,318
=======================================
See accompanying notes.
- -------------------------------------------------------------------------------------------------------------------------
16
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
- ------------------------------------------------------------------------------------------------------------------------------------
Frozen Food Express Industries, Inc. and Subsidiaries
December 31, 1999
Shares of Par Value of Additional Shares of Cost of Total
Common Common Paid-In Retained Treasury Treasury Shareholders'
Stock Issued Stock Capital Earnings Stock Stock Equity
- -------------------------------------- ---------------------------------------------------------------------------------------------
At December 31, 1996 17,281 $ 25,921 $ 3,462 $ 57,386 639 $ 2,816 $ 83,953
Net income -- -- -- 9,664 -- -- 9,664
Cash dividends paid -- -- -- (2,012) -- -- (2,012)
Treasury stock reacquired -- -- -- -- 183 1,686 (1,686)
Treasury stock reissued -- -- 1,377 -- (304) (1,475) 2,852
Exercise of stock options -- -- (60) -- (73) (366) 306
---------------------------------------------------------------------------------------------
At December 31, 1997 17,281 25,921 4,779 65,038 445 2,661 93,077
Net income -- -- -- 9,979 -- -- 9,979
Cash dividends paid -- -- -- (2,016) -- -- (2,016)
Treasury stock reacquired -- -- -- -- 694 5,679 (5,679)
Treasury stock reissued -- -- 673 -- (250) (1,645) 2,318
Exercise of stock options -- -- (129) -- (107) (727) 598
---------------------------------------------------------------------------------------------
At December 31, 1998 17,281 25,921 5,323 73,001 782 5,968 98,277
Net loss -- -- -- (12,130) -- -- (12,130)
Cash dividends paid -- -- -- (1,472) -- -- (1,472)
Treasury stock reacquired -- -- -- -- 239 1,752 (1,752)
Exercise of stock options -- -- (267) -- (61) (465) 198
---------------------------------------------------------------------------------------------
At December 31, 1999 17,281 $ 25,921 $ 5,056 $ 59,399 960 $ 7,255 $ 83,121
=============================================================================================
See accompanying notes.
- ------------------------------------------------------------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION -- Frozen Food Express Industries, Inc., a
Texas corporation, and its subsidiaries, all of which are wholly-owned
(collectively, "FFEX"), are primarily engaged in motor carrier transportation of
perishable commodities, providing service for full-truckload and
less-than-truckload shipments throughout North America. The consolidated
financial statements include FFEX. All significant intercompany balances and
transactions have been eliminated in consolidation.
ACCOUNTING ESTIMATES -- The preparation of financial statements in
conformity with generally accepted accounting principles requires estimates and
assumptions that affect the value of assets, liabilities, revenue and expenses.
Estimates and assumptions also influence the disclosure of contingent assets and
liabilities. Actual outcomes may vary from these estimates and assumptions.
CASH EQUIVALENTS -- FFEX considers all highly liquid investments with a
maturity of three months or less at the time of purchase to be cash equivalents.
- --------------------------------------------------------------------------------
17
ACCOUNTS RECEIVABLE -- FFEX extends trade credit to customers primarily
located in the United States. Accounts receivable from customers are stated net
of allowances for doubtful accounts of $8,392,000 and $3,246,000 as of December
31, 1999 and 1998, respectively.
INVENTORIES -- Inventories are valued at the lower of cost (principally
weighted average cost or specific identification method) or market.
FREIGHT REVENUE AND EXPENSE RECOGNITION -- Freight revenue and associated
direct operating expenses are recognized on the date the freight is picked up
from the shipper.
INCOME TAXES -- Deferred income taxes are provided for temporary
differences between the tax basis of assets and liabilities and their financial
reporting amounts. Deferred taxes are recorded based upon statutory tax rates
anticipated to be in effect when temporary differences are expected to reverse.
LONG-LIVED ASSETS -- FFEX periodically evaluates whether the remaining
useful life of long-lived assets may require revision or whether the remaining
unamortized balance is recoverable. When factors indicate that an asset should
be evaluated for possible impairment, FFEX uses an estimate of the asset's
discounted cash flow in evaluating its recoverable value. Included in other
non-current assets are costs associated with life insurance policies and related
investments owned by FFEX.
2. PROPERTY AND EQUIPMENT
Property and equipment is carried at historical cost and consists of the
following (in thousands):
December 31, Estimated
------------------------ Useful Life
1999 1998 (Years)
------------------------------------------------------------------------
Land $ 4,845 $ 3,273 -
Buildings and improvements 15,599 14,971 20 - 30
Revenue equipment 64,046 55,822 3 - 7
Service equipment 16,642 14,887 2 - 20
Computer, software and
related equipment 18,292 19,425 3 - 12
-----------------------------
119,424 108,378
Less accumulated depreciation 45,784 43,973
-----------------------------
$ 73,640 $ 64,405
=========================================
3. SHORT-TERM DEBT, SUBSEQUENT EVENT
As of December 31, 1999, FFEX had a $50 million unsecured line of credit
pursuant to a revolving credit agreement with three commercial banks. The
agreement was amended in December 1999. The amendment revised certain convenants
and was structured to accommodate FFEX's 1999 operating results and to set a
March 1, 2000 expiration. As amended, the agreement was terminable by any party
upon sixty days' notice, with repayment due over 4 years commencing 13 months
following termination. Interest was due quarterly at the prime rate of one of
the banks. Alternately, FFEX may elect to borrow for specified periods of time
at fixed interest rates which are based on the London Interbank Offered Rate in
effect at the time of a fixed rate borrowing. At December 31, 1999, $26.5
million was borrowed against this facility.
On March 1, 2000, FFEX entered into an amended and restated agreement. The
new facility, which is secured by liens against FFEX's inventory and trade
accounts receivable, is with the same banks as the credit agreement it replaced.
The new agreement also contains a pricing "grid" where increased levels of
profitability and cash flows or reduced levels of indebtedness can reduce the
rates of interest expense incurred by FFEX. The agreement restricts payments of
cash dividends, repurchase of FFEX stock and the amount of capital expenditures.
The amount which FFEX may borrow under the new facility may not exceed the
lesser of $50 million, as adjusted for letters of credit and other debt as
defined in the new agreement, or a multiple of a measure of cashflow as
described in the new agreement. The amended and restated credit agreement
matures on June 1, 2000 and contains no provision to enable FFEX to convert the
amount then borrowed into a term loan, as was the case pursuant to the facility
which expired on March 1, 2000.
At December 31, 1999, approximately $18.5 million was available under the
agreement. Total interest payments under the credit line during 1999, 1998 and
1997 were $1,341,000, $5,000 and $149,000, respectively. The weighted average
interest rate incurred by the company during 1999 was 6.1%.
- --------------------------------------------------------------------------------
18
4. COMMITMENTS AND CONTINGENCIES
FFEX leases real estate and equipment. The aggregate future minimum rentals
under non-cancelable operating leases at December 31, 1999, are (in thousands):
Third Related
Parties Parties Total
-----------------------------------------------------
2000 $ 21,302 $ 1,539 $ 22,841
2001 17,011 1,057 18,068
2002 10,811 515 11,326
2003 6,667 -- 6,667
2004 4,785 -- 4,785
After 2004 4,370 -- 4,370
---------------------------------------
Total $ 64,946 $ 3,111 $ 68,057
=======================================
Leases with related parties involve tractors leased from certain officers
of FFEX under three year non-cancelable operating leases. Rentals are determined
by reference to amounts paid by FFEX to unaffiliated third-party lessors. For
1999, 1998 and 1997, payments under these leases were approximately $1,414,000,
$1,389,000, and $1,191,000, respectively.
At December 31, 1999, FFEX had purchase commitments of approximately $26.3
million for the purchase of revenue equipment during 2000.
FFEX has accrued for costs related to public liability, cargo and
work-related injury claims. When an incident occurs, FFEX records a reserve for
the incident's estimated outcome. As additional information becomes available,
adjustments are made. Such liabilities represent all such reserves and FFEX's
estimate for incidents which may have been incurred but not reported. In the
opinion of management, any additional costs incurred over amounts incurred to
resolve these claims will not materially deviate from the aggregate amounts
accrued. At December 31, 1999, FFEX had established approximately $5 million of
irrevocable letters of credit in favor of insurance companies and pursuant to
certain insurance agreements. The letters of credit may be drawn upon in the
event of default for failure to pay claims.
5. FINANCING AND INVESTING ACTIVITIES NOT AFFECTING CASH
During 1998 and 1997, FFEX funded contributions to its Employee Savings
Plan and one of its Employee Stock Ownership Plans and Trusts (ESOPs) by
transferring 140,194 and 179,998 shares, respectively, of treasury stock to the
trustees of the plans. No shares were contributed in 1999. The fair market value
of the shares, at the time of the contributions, was approximately $1,370,000
and $1,631,000 for 1998 and 1997, respectively.
As of December 31, 1999, accounts payable included $1,100,000 for the
purchase of equipment delivered during 1999. As of December 31, 1999 and 1998,
accounts receivable included $735,000 and $794,000, respectively, from the sale
of equipment retired and sold during 1999 and 1998.
6. SAVINGS PLAN
FFEX sponsors a 401(k) Savings Plan (the Plan) for its employees.
Contributions by FFEX to the Plan are determined by reference to voluntary
contributions made by each employee. Additional contributions are made at the
discretion of the Board of Directors. FFEX contributions are made in cash. For
1999, 1998 and 1997, total contributions to the Plan were approximately
$1,481,000, $1,653,000 and $1,631,000, respectively.
- --------------------------------------------------------------------------------
19
7. INCOME TAXES
Total federal income taxes paid by FFEX were $5,150,000 and $832,000 for
1998 and 1997, respectively. No such taxes were paid during 1999. The following
presents the changes in the primary components of the net deferred tax liability
(in thousands):
Deferred
December 31, (Provision) December 31,
1998 Benefit 1999
-------------------------------------------------------------------------
Deferred Tax Assets:
Accrued claims $ 4,947 $ 832 $ 5,779
Net operating loss -- 5,934 5,934
Allowance for bad debts 1,049 696 1,745
---------------------------------------
5,996 7,462 13,458
---------------------------------------
Deferred Tax Liabilities:
Prepaid expense (2,498) (403) (2,901)
Fixed assets (11,686) 699 (10,987)
Other (442) (1,634) (2,076)
---------------------------------------
(14,626) (1,338) (15,964)
---------------------------------------
$ (8,630) $ 6,124 $ (2,506)
=======================================
The (benefit from) provision for income tax consists of the following (in
thousands):
1999 1998 1997
-------------------------------------------------------------------------
Taxes currently payable
Federal $(1,104) $ 4,264 $ 2,531
State 104 475 542
Deferred federal taxes (6,124) 997 1,079
---------------------------------------
$(7,124) $ 5,736 $ 4,152
=======================================
The differences between the statutory federal income tax rate and FFEX's
effective income tax rate are as follows:
1999 1998 1997
-------------------------------------------------------------------------
Statutory federal income tax rate 35.0% 34.5% 34.3%
Company-owned life insurance -- -- (3.5)
State income taxes and other 2.0 2.0 (0.7)
-------------------------------------
37.0% 36.5% 30.1%
=====================================
8. NET INCOME OR LOSS PER SHARE OF COMMON STOCK
Basic Earnings Per Share ("EPS") is computed by dividing net income or loss
by the weighted average number of shares of common stock outstanding during the
year. Diluted EPS is determined by dividing net income by the weighted average
shares outstanding assuming the exercise of all dilutive items (using the
treasury stock method).
The table below sets forth information regarding weighted average basic and
diluted shares (in thousands):
1999 1998 1997
-----------------------------------------------------------------
Basic Shares 16,352 16,789 16,767
Common Stock Equivalents -- 250 289
-------------------------------------
Diluted Shares 16,352 17,039 17,056
=====================================
All common stock equivalents result from dilutive stock options. For 1998
and 1997, the percentage of stock options excluded from common stock equivalents
due to exercise prices in excess of average market prices was 52% and 43%,
respectively. For 1999, approximately 81,000 common stock equivalent shares were
excluded because their impact would have been anti-dilutive.
9. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
As of December 31, 1999, long-term debt was $26.5 million, which
approximated fair market value. No short-term debt was present. Also, as of
December 31, 1999, FFEX held no material market risk sensitive instruments (for
trading as well as non-trading purposes) which would involve significant foreign
currency exchange rate risk, commodity price risk or other relevant market
risks, such as equity price risk. Accordingly, the potential loss to FFEX in
future earnings, fair values or cash flows of market risk sensitive investments
resulting from changes in interest rates, foreign currency exchange rates,
commodity prices and other relevant market rates or prices is not significant.
- --------------------------------------------------------------------------------
20
10. SHAREHOLDERS' EQUITY
As of December 31, 1999, 1998 and 1997, there were authorized 40 million
shares of FFEX's $1.50 par value common stock.
Stock options were granted pursuant to stock option plans adopted in 1996,
1994, 1993, 1987 and 1982. The plans provide that options for shares of FFEX
common stock may be granted to officers and employees of FFEX at the fair market
value on the date of grant and to non-employee directors of FFEX at the greater
of $1.00 or 50% of the market value at date of grant. All options expire 10
years from the date of grant. Options may be granted for 10 years following plan
adoption.
The table below sets forth summarized information regarding stock options
(in thousands, except per-share amounts):
1999 1998 1997
- ------------------------------------------ --------------------------------
Options outstanding at Beginning of Year 3,217 2,329 1,363
Cancelled (570) (704) (268)
Granted 592 1,700 1,307
Exercised (57) (108) (73)
--------------------------------
Options outstanding at Year-End 3,182 3,217 2,329
================================
Exercisable options 1,402 1,045 1,031
Options available for future grants 2,045 1,761 1,262
Average price of options
Cancelled during year $8.66 $8.66 $8.69
Granted during year $7.70 $8.48 $8.87
Exercised during year $3.13 $5.20 $4.17
Outstanding at yearend $8.55 $8.03 $8.61
================================
FFEX applies APB Opinion 25 and related interpretations in accounting for
its plans. Accordingly, no expense has been recognized for stock option grants
to employees. Had such expense been determined based on the options' estimated
fair value at the grant dates for awards under those plans consistent with the
method of SFAS No. 123 "Accounting For Stock-owned Compensation", FFEX's net
loss would have increased to $13.3 million or ($0.81 per share, diluted) for
1999. FFEX's net income would have been reduced to $9,167,000 ($0.54 per share,
diluted) for 1998, and $8,784,000 ($.52 per share, diluted) for 1997. The
expense that has been charged against income for grants to non-employee
directors was $35,000, $56,000 and $42,000 for 1999, 1998 and 1997,
respectively. Pro forma information regarding net income and earnings per share
has been determined as if FFEX had accounted for its employee stock options
under the fair value method. For purposes of pro forma disclosures, the
estimated fair value of the options is recognized over the options' vesting
period. The fair value for these options was estimated at the date of grant
using a Black-Scholes option pricing model with the following weighted average
assumptions for 1999, 1998 and 1997:
1999 1998 1997
- -------------------------------------------- ----------------------------------
Risk-free interest rate 4.71% 5.27% 6.25%
Dividend yield 1.50% 1.46% 1.36%
Volatility factor .700 .365 .368
Weighted average expected life (years) 6.2 5.8 6.0
==================================
The Black-Scholes option valuation model uses highly subjective assumptions
and was developed for use in estimating the value of traded options that have no
restrictions on vesting or transferring. FFEX's stock options have such
restrictions. Therefore, in management's opinion, the existing models do not
necessarily provide a reliable single measure of the fair value of its stock
options.
- --------------------------------------------------------------------------------
21
The range of unexercised option prices at December 31, 1999 is as follows:
Quantity of Options
(in thousands) Priced Between
--------------------- ---------------------
143 $1.00 - $5.00
941 $5.01 - $8.00
2,098 $8.01 - $12.40
-----
3,182
===========================================
FFEX has authorized the repurchase of up to one million shares of Company
stock in the open market of which 297,000 shares had been repurchased as of
December 31, 1999. Pursuant to this and previous authorizations, approximately
$1,679,000 was expended to acquire approximately 239,000 shares during 1999.
11. RESTRUCTURING EXPENSE
During the fourth quarter of 1999, FFEX announced a restructuring plan. The
plan calls for the closure of certain terminals, elimination of approximately
150 non-driver employee positions and early disposition of certain 48' trailers
previously scheduled for retirement in 2001 and 2002. In connection with the
plan, during 1999's fourth quarter, FFEX recorded estimated restructuring
expenses of $3.7 million which included $875,000 for severance payments and $2.8
million for early termination of certain operating leases and expenses
associated with abandonment of a leased facility. All of the $3.7 million is
classified as "restructuring expense" on the accompanying FFEX 1999 Consolidated
Statement of Income. Estimated severance payments are included as accrued
payroll on the accompanying FFEX 1999 Consolidated Balance Sheet. The remainder
of the restructuring expense estimate was reflected on the accompanying
Consolidated Balance Sheet as accrued liabilities.
12. IMPAIRMENT OF LONG-LIVED ASSETS
During the first half of 1999, FFEX converted to a management information
system that had been in development for several years. Consistent with AICPA
Statement of Position No. 98-1, FFEX capitalized as a long-lived asset the
direct costs associated with the development effort. During the fourth quarter
1999, FFEX determined that certain components of the system, including links to
the legacy system that is no longer in use and certain modules of the new system
were impaired. In accordance with SFAS No. 121 "Accounting for the Impairment of
Long-Lived Assets" associated costs of $2.7 million were charged to expense
during the fourth quarter 1999.
13. OPERATING SEGMENTS
The operations of FFEX consist of two reportable segments as defined by
SFAS No. 131 "Disclosures About Segments of an Enterprise and Related
Information". The larger segment consists of FFEX's motor carrier operation.
Such operations are conducted in a number of divisions and subsidiaries and are
similar in nature. FFEX has elected to report all motor carrier operations as
one reportable segment. The smaller segment consists of FFEX's non-freight
operations which are engaged primarily in the sale and service of refrigeration
equipment and of trailers used in freight transportation.
- --------------------------------------------------------------------------------
22
Financial information for each reportable segment for each of the 3 years
ended December 31, 1999 is as follows (in millions):
1999 1998 1997
- ------------------------------------- --------------------------------------
Freight Operations
Total Revenue $ 310.9 $ 306.1 $ 286.1
Restructuring Expense 3.7 -- --
Operating (Loss) Income (16.2) 14.9 14.0
Total Assets 156.5 140.3 136.8
Non-Freight Operations
Total Revenue $ 74.7 $ 56.6 $ 36.9
Restructuring Expense -- -- --
Operating (Loss) Income 1.0 1.9 1.1
Total Assets 33.2 23.0 17.1
Intercompany Eliminations
Revenue $ 13.5 $ 12.8 $ 6.4
Restructuring Expense -- -- --
Operating (Loss) Income -- -- --
Total Assets 19.6 13.6 11.2
Consolidated
Revenue $ 372.1 $ 349.9 $ 316.6
Restructuring Expense 3.7 -- --
Operating (Loss) Income (15.2) 16.8 15.1
Total Assets 170.1 149.7 142.7
======================================
Intercompany eliminations of revenue relate to transfers at cost of
inventory such as trailers and refrigeration units from the non-freight segment
for use by the freight segment.
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To Frozen Food Express Industries, Inc.:
We have audited the accompanying consolidated balance sheets of Frozen Food
Express Industries, Inc. and subsidiaries as of December 31, 1999 and 1998, and
the related consolidated statements of income, shareholders' equity and cash
flows for each of the three years in the period ended December 31, 1999. These
financial statements are the responsibility of FFEX's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Frozen Food Express
Industries, Inc. and subsidiaries as of December 31, 1999 and 1998, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1999, in conformity with generally accepted
accounting principles.
Dallas, Texas /S/ ARTHUR ANDERSEN LLP
March 1, 2000
23
QUARTERLY FINANCIAL, STOCK AND DIVIDEND INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
(in thousands, except per-share amounts)
First Second Third Fourth
Quarter Quarter Quarter Quarter Year
- ------------------------------------------------------------------------------------------------------------------------------------
1999
Revenue $88,257 $96,818 $97,171 $89,903 $372,149
Income (loss) from operations 2,435 2,576 (830) (19,416) (15,235)
Net (loss) income 1,263 1,317 (1,166) (13,544) (12,130)
Net (loss) income per share of common stock
Basic .08 .08 (.07) (.83) (.74)
Diluted .08 .08 (.07) (.83) (.74)
Cash dividends per share .03 .03 .03 -- .09
Common stock price per share
High 8.500 7.625 7.625 6.250 8.500
Low 6.000 5.813 4.875 3.250 3.250
Common stock trading volume 1,250 1,560 1,733 2,045 6,588
- ------------------------------------------------------------------------------------------------------------------------------------
1998
Revenue $77,511 $89,416 $93,527 $89,478 $349,932
Income from operations 2,157 5,117 4,846 4,633 16,753
Net income 1,395 3,038 2,850 2,696 9,979
Net income per share of common stock
Basic .08 .18 .17 .16 .59
Diluted .08 .18 .17 .16 .59
Cash dividends per share .03 .03 .03 .03 .12
Common stock price per share
High 10.375 10.500 10.000 9.750 10.500
Low 8.375 9.250 5.625 6.625 5.625
Common stock trading volume 1,379 2,005 2,955 2,237 8,576
====================================================================================================================================
As of March 2, 2000, FFEX had approximately 5,000 beneficial shareholders, including participants in FFEX's retirement plans.
- ------------------------------------------------------------------------------------------------------------------------------------
24