EX-99.1 CHARTER 2 ex99_1.htm EXHIBIT 99.1 Exhibit 99.1
Exhibit 99.1
 

Company Contacts:
Stoney M. (“Mit”) Stubbs, Jr., CEO
F. Dixon McElwee, Jr., CFO
Email: ir@ffex.net
(214) 630-8090


Frozen Food Express Reports Third Quarter 2005 Results
--Net Income Rises 41% on 12% Revenue Gain--

Dallas, Texas - October 24, 2005 - Frozen Food Express Industries, Inc. (Nasdaq: FFEX) today announced its financial and operating results for the three and nine month periods ended September 30, 2005.

For the quarter ended September 30, 2005, total revenue increased 11.7%, to $137.5 million from $123.1 million during the same quarter of 2004. Third quarter 2005 total revenue included fuel surcharges of $18.7 million, compared to $8.0 million for the same quarter of 2004.

Operating income during 2005’s third quarter gained 83.2% to $8.9 million from $4.8 million during the same period of 2004. Net income increased 41.4%, to $5.0 million or $.26 per diluted share as compared to $3.5 million or $.20 per diluted share during the comparable period of 2004.

Third quarter 2005 results were favorably impacted by higher freight rates, lower claims costs due to improved experience levels in number and severity of incidents, and incremental gains on the sale of equipment which were partially offset by a higher effective tax rate in the period.

For the nine months ended September 30, 2005, total revenue increased 9.2%, to $382.2 million from $350.2 million during the comparable period of 2004. Total revenue during the first nine months of 2005 included fuel surcharges of $43.5 million, compared to $20.2 million during the same period of 2004.

Operating income for the first nine months of 2005 increased 55.8% to $20.5 million from $13.2 million in the comparable period of 2004. Net income for the nine months ended September 30, 2005 was $14.1 million or $0.75 per diluted share as compared to $9.0 million or $0.50 per diluted share during the comparable period of 2004.

Chairman and CEO, Stoney M. Stubbs, Jr. commented, “Our strong performance in 2005’s third quarter reflected the continued favorable pricing environment and effective management of our fuel surcharge programs allowing us to offset dramatic increases in fuel costs. Linehaul mileage was down for the quarter due to the nature of the tasks associated with hurricane clean-up efforts, but we posted operating income gains due to strong demand for our dedicated fleet and special project services and the addition of some higher margin services to the overall revenue mix. The special projects included $1.9 million associated with services provided in the aftermath of Hurricanes Katrina and Rita. All of these factors contributed to a freight operating ratio of 93.7%, an improvement of 240 basis points as compared to the third quarter of 2004.

“Our management team remains committed to improving key performance indicators in truckload operations. Our sales and operations group continues to offer the highest level of service to our customer, which enables us to improve our freight pricing. Our average truckload linehaul revenue per loaded mile increased 9.9% to $1.55 from $1.41 during the same period last year.

“Our Less-than-truckload (LTL) operation which comprised 32.0% of our total linehaul and dedicated freight revenue for the third quarter 2005 enjoyed revenue growth of 6.3% to $35.5 million from $33.4 million during the comparable period of 2004. Total LTL volume increased 3.0% to 2.4 million hundredweight during the third quarter of 2005 as compared to the same quarter of 2004,” continued Mr. Stubbs.

“Our company continues to face challenges associated with driver retention, rising cost of fuel, and maintaining balance of capacity over regions of our freight network. We have a number of ongoing initiatives to improve our performance. We reduced employee driver turnover by 22% as compared to the same quarter of last year. We intend to aggressively pursue additional compensation for deadhead miles while we tighten our freight network. In addition, we remain focused on increasing higher margin service offerings, including dedicated service and non-asset based intermodal transportation.

“Regarding asset productivity and revenue growth, we are meeting with customers to review specific lane profitability enabling us to achieve targeted return on investment criteria. Our revenue per truck per week, which is our measure of productivity, increased 6.2% to $3,706 as compared to $3,491 during the same quarter of 2004.

“Finally, we believe that to sustain competitive advantage our company needs to continue its progress in improving equipment utilization, increase density levels inside our defined network, and use technology to tighten our freight network. While we had a good quarter and we are trending in the right direction on a number of our key metrics, we fully recognize that there is much to be done and will continue our efforts to improve performance,” concluded Mr. Stubbs.


Conference Call and Web Cast
FFEX will hold a telephonic conference call tomorrow morning, October 25th at 10 am Central Time (11 am Eastern Time) to discuss the three months and nine months 2005 operating results. Individuals wishing to participate in the conference call may do so by dialing (800) 798-2864 for domestic (617) 614-6206 for international calls and entering the pass code 57001288 prior to the beginning of the call. There will also be a live web cast of the conference call that can be accessed by clicking on the web cast icon http://www.ffex.net. A replay of the web cast will be available on the company’s website or by telephone at (888) 286-8010 for domestic calls and (617) 801-6888 for international calls for 30 days following the live web cast. The pass code for the replay will be 54309367.

About FFEX
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, and into Mexico. The refrigerated trucking company is the only one serving this market that is full-service - providing full-truckload, less-than-truckload and dedicated fleet transportation of refrigerated and frozen products. Its refrigerated less-than-truckload operation is also the largest on the North American continent. The company also provides full-truckload transportation of non-temperature-sensitive goods through its non-refrigerated trucking fleet, American Eagle Lines. Additional information about Frozen Food Express Industries, Inc. can be found at the company’s web site, http://www.ffex.net.


Forward-Looking Statements
This report contains information and forward-looking statements that are based on management’s current beliefs and expectations and assumptions which are based upon information currently available. Forward-looking statements include statements relating to plans, strategies, objectives, expectations, intentions, and adequacy of resources, and 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 current expectations and are subject to uncertainty and change.

Although management believes that the expectations reflected in such forward-looking statements are reasonable, there can be 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 expected.

Among the key factors that are not within management’s control and that may have a bearing on operating results are demand for the company’s services and products, and its 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, the 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 the company operates, operational risks and insurance, risks associated with the technologies and systems used and the other risks and uncertainties described in the company’s filings with the Securities and Exchange Commission.



FROZEN FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Income
For the Three and Nine Months Ended September 30,
(In thousands, except per-share amounts)
(Unaudited)

 
  
Three Months
  
Nine Months
  
 
  
2005
  
2004
  
2005
  
2004
  
Revenue
    
   
   
   
 
      Freight revenue
  
$
135,136
  
$
120,531
  
$
374,258
  
$
341,766
  
      Non-freight revenue
    
2,403
    
2,590
    
7,990
    
8,424
  
 
    
137,539
    
123,121
    
382,248
    
350,190
  
Costs and expenses
    
   
   
   
 
      Salaries, wages and related expenses
    
33,892
    
31,257
    
97,146
    
90,937
  
      Purchased transportation
    
32,190
    
30,704
    
93,361
    
93,397
  
      Fuel
    
22,862
    
15,990
    
58,671
    
43,546
  
      Supplies and expenses
    
17,006
    
16,241
    
48,073
    
42,319
  
      Revenue equipment rent
    
8,150
    
7,765
    
22,228
    
23,903
  
      Depreciation
    
4,888
    
4,827
    
16,203
    
14,317
  
      Communications and utilities
    
1,087
    
1,020
    
3,013
    
2,936
  
      Claims and insurance
    
4,293
    
5,598
    
10,881
    
11,396
  
      Operating taxes and licenses
    
1,218
    
1,197
    
3,420
    
3,488
  
      Gains on sale of equipment
    
(923
)
  
(415
)
  
(3,573
)
  
(1,380
)
      Miscellaneous operating expenses
    
1,959
    
1,626
    
4,844
    
4,289
  
 
    
126,622
    
115,810
    
354,267
    
329,148
  
Non-freight costs and operating expenses
    
2,042
    
2,466
    
7,482
    
7,888
  
 
    
128,664
    
118,276
    
361,749
    
337,036
  
Income from operations
    
8,875
    
4,845
    
20,499
    
13,154
  
 
    
   
   
   
 
Interest and other expense (income)
   
517
    
(516
)
  
(2,838
)
  
(669
)
 
    
   
   
   
 
Income before income tax
    
8,358
    
5,361
    
23,337
    
13,823
  
Income tax provision
    
3,382
    
1,841
    
9,255
    
4,871
  
Net income
  
$
4,976
  
$
3,520
  
$
14,082
  
$
8,952
  
 
    
   
   
   
 
Net income per share of common stock
    
   
   
   
 
      Basic
  
$
0.28
  
$
0.20
  
$
0.79
  
$
0.52
  
      Diluted
  
$
0.26
  
$
0.20
  
$
0.75
  
$
0.50
  
 
    
   
   
   
 
Weighted average shares outstanding
    
   
   
   
 
      Basic
    
17,944
    
17,235
    
17,817
    
17,196
  
      Diluted
    
18,873
    
17,971
    
18,791
    
17,926
  
 
    
   
   
   
 







 FROZEN FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES
Operating Statistics
Three and Nine Months Ended September 30,
 
  
 
  
Three Months
  
Nine Months
  
Freight revenue from [a]: 
    
2005
    
2004
    
2005
    
2004
  
Full-truckload linehaul services
 
$
67.9
  
$
64.6
  
$
200.6
  
$
194.2
  
Dedicated Fleets
   
7.7
    
6.1
    
18.6
    
14.4
  
Total full-truckload
   
75.6
    
70.7
    
219.2
    
208.6
  
Less-than-truckload (“LTL”) services
    
35.5
    
33.4
    
95.6
    
91.1
  
Fuel surcharges
   
18.7
    
8.0
    
43.5
    
20.2
  
Freight brokerage
   
3.8
    
7.1
    
11.7
    
17.4
  
Equipment rental
   
1.5
    
1.3
    
4.3
    
4.5
  
Total freight revenue
   
135.1
    
120.5
    
374.3
    
341.8
  
Freight operating expenses 
    
126.6
    
115.8
    
354.3
    
329.1
  
Income from freight operations
 
$
8.5
  
$
4.7
  
$
20.0
  
$
12.7
  
Freight operating ratio [b] 
    
93.7
%
  
96.1
%
  
94.7
%
  
96.3
%
 
                          
Total full-truckload revenue
 
$
75.6
  
$
70.7
  
$
219.2
  
$
208.6
  
LTL revenue
   
35.5
    
33.4
    
95.6
    
91.1
  
Total linehaul and dedicated fleet revenue
 
$
111.1
  
$
104.1
  
$
314.8
  
$
299.7
  
Weekly average trucks in service
    
2,281
    
2,269
    
2,282
    
2,289
  
Revenue per truck per week [c]
  
$
3,706
  
$
3,491
  
$
3,537
  
$
3,345
  
 
Statistical and revenue data [d]: 
                          
Full-truckload total linehaul miles [e]
    
48.8
    
50.5
    
147.2
    
155.7
  
Full-truckload loaded miles [e]
    
43.7
    
45.7
    
132.3
    
141.3
  
Full-truckload empty mile ratio [f]
    
10.4
%
  
9.5
%
  
10.1
%
  
9.2
%
Full-truckload linehaul revenue per total mile
 
$
1.39
  
$
1.28
  
$
1.36
  
$
1.25
  
Full-truckload linehaul revenue per loaded mile
  
$
1.55
  
$
1.41
  
$
1.52
  
$
1.37
  
Full-truckload linehaul shipments [g]
    
45.9
    
46.2
    
139.5
    
142.5
  
Full-truckload loaded miles per shipment
    
952
    
989
    
948
    
992
  
LTL hundredweight [g]
    
2,352
    
2,284
    
6,502
    
6,326
  
LTL linehaul revenue per hundredweight
  
$
15.09
  
$
14.62
  
$
14.70
  
$
14.40
  
 
    
   
   
   
 
Tractors in service as of September 30
   
2,314
    
2,283
    
2,314
    
2,283
  
Trailers in service as of September 30
   
4,378
    
4,244
    
4,378
    
4,244
  
Average age of tractors (in years)
    
1.8
    
2.1
    
1.8
    
2.1
  
Non-driver employees as of September 30
    
1,024
    
996
    
1,024
    
996
  

Notes:
a)  
Revenue amounts are stated in millions of dollars.  The totals presented in the table may not agree to the amounts shown in the accompanying statement of income due to rounding.
b)  
Freight operating expenses divided by total freight revenue.
c)  
Total linehaul and dedicated fleet revenue divided by number of weeks in period divided by average trucks in service.
d)  
The year-to-date and quarterly data presented in the table for the third quarters of 2005 and 2004 reflect changes in the manner in which data regarding the numbers of miles, shipments and hundredweight is tabulated.  Accordingly, the addition of the quarterly data presented in the table to the year-to-date data reported in previous reports will not necessarily agree with the year-to-date data reported in this table. 
e)  
In millions.
f)  
One minus the quotient of full-truckload loaded miles divided by full-truckload total linehaul miles.
g)  
In thousands.