Frozen Food Express has restated its financial results for the past three years, due a change in an accounting method, approved earlier by them and auditors Arthur Anderson.

This change has resulted in the company reporting net losses for the past three years totaling $14.1 million, compared to the originally reported loss of $13.9 million, but narrowed their reported loss in 2001 from $600,000 to $200,000. FFE officials also believe the change will result in lower future earnings.
The decision involves the manner in which the company accounted for a life insurance policy that it acquired in 1993. The life insurance policy, with a death benefit of at least $17.25 million, was purchased to provide the company funds with which it could purchase a large number of shares of the company's common stock owned by a non-employee shareholder. To the extent the company determined that the sale of such shares in the open market by the estate would have an adverse effect on the market price of the company's stock, FFE could use the life insurance proceeds to purchase the shares directly from the estate.
In a statement FFE said, “Beginning in 1993, the company and its independent public accountants believed that capitalizing the premium payments as an investment to purchase the shares in the future was an acceptable accounting policy. The retroactive action announced today will change the manner by which the company accounts for the insurance policy. With this non-cash change, the company will expense the excess of the premiums over the amount that could actually be realized by the company under the insurance contract as of the date of the related financial statements.”
According to published reports the company has no plans to drop Arthur Anderson, which has been at the heart of the Enron scandal.