DALLAS, Nov. 20, 2006 (PRIMEZONE) -- Frozen Food Express Industries, Inc. (Nasdaq:FFEX) said today that it will complete the divestiture of its remaining interests in AirPro Mobile Air, LLC ("AMA"), an entity that bought most of its operating assets from FFEX during 2005. AMA is a manufacturer and distributor of motor vehicle air conditioning parts and systems.
FFEX sold certain assets to AMA during 2005, including accounts receivable, trade names, inventory and equipment. Since then, FFEX has continued to own a 20% equity interest in AMA. The equity interest had a book value of just over $200 thousand as of September 30, 2006. Also since the 2005 transaction, FFEX has held a $715 thousand note receivable from AMA and $75 thousand of notes receivable from the principals who own the rest of AMA. Due to the equity interest in and the support it has provided to AMA since the 2005 transaction, FFEX has continued to include the financial statements of AMA in the consolidated financial statements of FFEX, in accordance with the requirements of FIN 46(r), which was issued by the Financial Accounting Standards Board during 2003. As of September 30, 2006, the total assets of FFEX were $194 million, of which about $5 million was from the AMA consolidation. Upon completion of the note and equity-related transactions described herein, AMA will no longer be included in the consolidated financial statements of FFEX.
FFEX will receive cash from AMA to purchase the equity interest at book value. AMA will also pay $465 thousand against the note that it owes to FFEX. The notes FFEX holds from the other owners of AMA will be paid in full. At that point, FFEX will no longer own any equity interest in AMA, nor will there be any debt owed to FFEX by the principals of AMA.
AMA operates from a facility in Mesquite, Texas that FFEX owns mortgage-free. FFEX will also sell the property to AMA. When the sale of the building closes after the completion of all required surveys, title searches and other actions, FFEX will receive cash of approximately $2.15 million from the sale of the property, which had a net book value of $1.95 million as of September 30, 2006.
At the time of the 2005 transaction, Stoney M. (Mit) Stubbs, Jr., Chairman and CEO of FFEX, said: "We have been working to focus our operations more closely with changing demands. We directed our attention and our capital more closely to our core business, where we believe we can earn the greatest return on invested capital." As an update to those thoughts, Mr. Stubbs commented about recent events: "In the context of our recent announcements regarding our stock buybacks, the first cash dividend on our stock since 1999 and our plans to concentrate on what we do best, monetizing these non-core assets and using the funds for the benefit of our shareholders only makes sense. By wrapping up our involvement with AMA, we enable its new owners to concentrate on what they do best, we remove non-core assets from our balance sheet, and we receive nearly $3 million in cash in the bargain. We will continue to explore similar opportunities."
The pending transactions have been agreed to in the form of a letter of intent among the parties that was signed last Friday. The transaction is expected to close and be effective before December 31, 2006.
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, 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. These risks and uncertainties are detailed from time to time in reports filed by FFEX with the Securities and Exchange Commission, including Forms 8-K, 10-Q, and 10-K.