Frozen Food Express (FFEX) Offers Additional Cost Savings Plans
Frozen Food Express Industries, Inc. (Nasdaq: FFEX) announced today cost savings initiatives that involve a reduction in non-driver staff levels. To better align the Company's back office cost structure with the previously announced reduction of dry-freight revenue equipment, non-driver staffing levels will be reduced by approximately 12%. In connection with these actions, which are expected to be completed by year-end, the Company expects to incur a cash compensation charge of approximately $0.4 million during the fourth quarter of 2011, and realize annualized cost savings of approximately $5.0 million.
The Company also announced that the progress on the sale of certain assets related to its dry-freight operations were ahead of plan. Per the previously announced agreement with Celadon Trucking Services, Inc., sales to various vendors, and replacement of 240 of its oldest tractors for new equipment, the Company expects to receive approximately $21.9 million in free cash flow, net of related expenditures, during the fourth quarter of 2011 and January of 2012. The $21.9 million in proceeds will be utilized, as received through January of 2012, to reduce bank debt. Additionally, the Company will incur future lease obligations for the 240 replacement tractors of approximately $20.2 million during the fourth quarter.
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The Company also announced that the progress on the sale of certain assets related to its dry-freight operations were ahead of plan. Per the previously announced agreement with Celadon Trucking Services, Inc., sales to various vendors, and replacement of 240 of its oldest tractors for new equipment, the Company expects to receive approximately $21.9 million in free cash flow, net of related expenditures, during the fourth quarter of 2011 and January of 2012. The $21.9 million in proceeds will be utilized, as received through January of 2012, to reduce bank debt. Additionally, the Company will incur future lease obligations for the 240 replacement tractors of approximately $20.2 million during the fourth quarter.
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