The restructuring will eliminate approximately 150 non-driver employee positions and return excess trailers to equipment lessors.
The after-tax restructuring costs of approximately $2.5 million will affect the company's fourth-quarter financial statements. Other factors affecting the financial results include the company's recent conversion to a new Management Information System and recent adverse developments regarding claims, insurance and inventories.
"1999 was a difficult year, with the excessive costs to develop and convert to a new MIS and driver turnover," said Stoney M. (Mit) Stubbs, Jr., president and chief executive officer. "Our history of profitability dates to the 1940s. We don't like losing money. Our goal is to slim down our overhead and return to profitability."
FFE will reduce the size of its trailer fleet by more than 20%. The company increased the size of its trailer fleet earlier last year in anticipation of growing its tractor fleet. However, that did not occur, due in part to attrition in the independent contractor fleet. The company will dispose of certain leased 48-foot trailers in 2000 that normally would have been retired during 2001 and 2002.
Following the MIS conversion, the company experienced invoicing problems, resulting in an increase in past-due accounts receivable. As the quality of billing continues to improve, the company expects that problem should be solved in the coming months.
Stubbs also said that FFE has experienced too many claims with regard to accidents, work-related injuries and other events. "These costs hit us particularly hard in the fourth quarter of 1999, and I intend to identify and address the causes of these events promptly."