-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GmJjML0I451lLLWme5ap0PX5DSHEOzB8kAudUExR+Y7ylIyFy0FcNf3MNCarAjWL gqcYok3TTbkrZDuJq1I5dQ== /in/edgar/work/0000039273-00-000020/0000039273-00-000020.txt : 20000714 0000039273-00-000020.hdr.sgml : 20000714 ACCESSION NUMBER: 0000039273-00-000020 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000713 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FROZEN FOOD EXPRESS INDUSTRIES INC CENTRAL INDEX KEY: 0000039273 STANDARD INDUSTRIAL CLASSIFICATION: [4213 ] IRS NUMBER: 751301831 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 001-10006 FILM NUMBER: 672325 BUSINESS ADDRESS: STREET 1: 1145 EMPIRE CENTRAL PLACE CITY: DALLAS STATE: TX ZIP: 75247 BUSINESS PHONE: 2146308090 10-K/A 1 0001.txt 1UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K/A Amendment No. 1 [X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 1999. [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ____________________ to ____________________ Commission File Number 1-10006 FROZEN FOOD EXPRESS INDUSTRIES, INC. ------------------------------------------------------------- (Exact name of registrant as specified on its charter) Texas 75-1301831 ------------------------------------------------------------- (State of or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 1145 Empire Central Place Dallas, Texas 75247-4309 ------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (2l4) 630-8090 ------------------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No At June 28, 2000, the latest practicable date, there were outstanding 16,327,079 shares of Common Stock, $1.50 par value. Item 14 of the Form 10-K is amended by adding the information, financial statements and exhibits required to be filed on Form 11-K for the fiscal year ended December 31, 1999, with respect to the FFE Transportation Services, Inc. Employee Stock Ownership Plan (the "FFE Plan"), the Conwell Corporation Employee Stock Ownership Plan (the "Conwell Plan") and the Frozen Food Express Industries, Inc. 401(k) Savings Plan (the "Savings Plan") pursuant to Securities and Exchange Commission Rule 15d-21 promulgated under the Securities Exchange Act of 1934, as amended. Because each of the plans reported on herein are subject to the reporting requirement of the Employee Retirement Income Security Act of 1974 ("ERISA"), the financial statements and schedules included herein have been prepared in accordance with the requirements of ERISA. Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. (a) 3. Exhibits: 3.l Articles of Incorporation of the Registrant and all amendments to date (filed as Exhibit 3.1 to Registrant's annual report on Form 10-K for the fiscal year ended December, 31, 1993; SEC File Number 1-10006 and incorporated herein by reference). 3.2 Bylaws of the Registrant, as amended to date (filed as Exhibit 3.2 to Registrant's annual report on Form 10-K for the fiscal year ended December, 31, 1998; SEC File Number 1-10006 and incorporated herein by reference). 3.3 Amendment, dated June 14, 2000, to Bylaws of the Registrant, (filed as Exhibit 3.1 to Registrant's 8-K dated June 28, 2000, SEC File Number 1-10006 and incorporated herein by reference). 10.1 Frozen Food Express Industries, Inc., 1987 Non- Employee Director Stock Plan (filed as Exhibit 10.2 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1991; SEC File Number 1-10006 and incorporated herein by reference). 10.2 Second Amended and Restated Credit Agreement among Wells Fargo Bank (Texas) National Association as agent for itself and other banks and FFE Transportation Services, Inc. as Borrower and certain of its affiliates. (Filed as Exhibit 10.2 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999, and incorporated herein by reference). 10.3 First Amendment to Second Amended and Restated Credit Agreement (filed as Exhibit 10.1 to Registrant's Current Report on Form 8-K dated June 9, 2000; SEC file number 1-10006 and incorporated herein by reference). 10.4 Frozen Food Express Industries, Inc., 1992 Incentive and Nonstatutory Stock Option Plan (filed as Exhibit 4.3 to Registrant's Registration #33-48494 as filed with the Commission, and incorporated herein by reference). 10.5 Amendment No. 1 to Frozen Food Express Industries, Inc. 1992 Incentive and Nonstatutory Stock Option Plan (filed as Exhibit 4.4 to Registrant's Registration #333-38133 and incorporated herein by reference). 10.6 Amendment No. 2 to Frozen Food Express Industries, Inc. 1992 Incentive Stock Option Plan (filed as Exhibit 4.5 to Registrant's Registration #333-38133 and incorporated herein by reference). 10.7 Amendment No. 3 to Frozen Food Express Industries, Inc. 1992 Incentive and Nonstatutory Stock Option Plan (filed as Exhibit 4.6 to Registrant's Registration Statement #333-87913 and incorporated herein by reference). 10.8 FFE Transportation Services, Inc., 1994 Incentive Bonus Plan, as amended (filed as Exhibit 10.6 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1994; SEC File Number 1-10006 and incorporated herein by reference). 10.9 FFE Transportation Services, Inc., 1999 Executive Bonus and Phantom Stock Plan. (filed as Exhibit 10.8 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999; SEC file number 1- 10006 and incorporated herein by reference). 10.10 Frozen Food Express Industries, Inc. 401(k) Savings Plan. (filed as Exhibit 10.9 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999, SEC file number 1-10006 and incorporated herein by reference). 10.11 Frozen Food Express Industries, Inc. Employee Stock Option Plan (filed as Exhibit 4.1 to Registrant's Registration #333-21831 as filed with the Commission, and incorporated herein by reference). 10.12 Amendment to the Frozen Food Express Industries, Inc. Employee Stock Option Plan (filed as Exhibit 4.4 to Registrant's Registration Statement #333-52701 and incorporated herein by reference). 10.13 Rights Agreement dated as of June 14, 2000, between the Registrant and Fleet National Bank, which includes as exhibits, the form of Right Certificate and the Summary of Rights. (filed as Exhibit 4.1 to Registrant's Registration Statement on Form 8-A dated June 19, 2000 and incorporated herein by reference). 10.14 Form of Change in Control Agreement (filed as Exhibit 10.1 to Registrant's 8-K dated June 28, 2000, SEC File Number 1-10006 and incorporated herein by reference). 11.1 Computation of basic and diluted net income per share of common stock (incorporated by reference to Footnote 8 to the financial statements appearing in the Annual Report to Shareholders of the Registrant for the year ending December 31, 1999). 13.1 Annual Report to Shareholders of the Registrant for the year ended December 31, 1999. Except for those portions of such Annual Report to Shareholders expressly incorporated by reference into this Report, such Annual Report to Shareholders is furnished solely for the information of the Securities and Exchange Commission and shall not be deemed a "Filed" Document. (filed as Exhibit 13.1 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999, SEC file number 1-10006 and incorporated herein by reference). 21.1 Subsidiaries of Frozen Food Express Industries, Inc. (filed as Exhibit 21.1 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999, SEC file number 1-10006 and incorporated herein by reference). 23.1 Consent of Independent Public Accountants 99.1 FFE Transportation Services, Inc. Employee Stock Ownership Plan Statements of Net Assets Available for Plan Benefits as of December 31, 1999 and 1998 and Statements of Changes in Net Assets Available for Plan Benefits for each of the three years in the period ended December 31, 1999 with notes thereto and Report of Independent Public Accountants thereon. 99.2 Conwell Corporation Employee Stock Ownership Plan Statements of Net Assets Available for Plan Benefits as of December 31, 1999 and 1998 and Statements of Changes in Net Assets Available for Plan Benefits for each of the three years in the period ended December 31, 1999 with notes thereto and Report of Independent Public Accountants thereon. 99.3 Frozen Food Express Industries, Inc. 401(k) Savings Plan Statements of Net Assets Available for Plan Benefits as of December 31, 1999 and 1998 and Statements of Changes in Net Assets Available for Plan Benefits for each of the three years in the period ended December 31, 1999 with notes thereto and Report of Independent Public Accountants thereon. (b) Reports on Form 8-K: No reports on Form 8-K were filed by the company during the last quarter of the period covered by this Report. Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has fully caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. FROZEN FOOD EXPRESS INDUSTRIES, INC. --------------------------------------- July 12, 2000 By: /s/ Stoney M. Stubbs, Jr. ----------------------------- Stoney M. Stubbs, Jr., Chairman of the Board of Directors and President (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: July 12, 2000 By: /s/ Stoney M. Stubbs, Jr. ----------------------------- Stoney M. Stubbs, Jr., Chairman of the Board of Directors and President (Principal Executive Officer) July 12, 2000 By: /s/ Charles G. Robertson * ----------------------------- Charles G. Robertson, Executive Vice President and Director July 12, 2000 By: /s/ F. Dixon McElwee * ---------------------------------- F. Dixon Mc Elwee, Senior Vice President and Chief Financial Officer July 12, 2000 By: /s/ Edgar O. Weller * ---------------------------------- Edgar O. Weller, Vice Chairman of the Board of Directors July 12, 2000 By: /s/ W. Mike Baggett * ---------------------------------- W. Mike Baggett, Director July 12, 2000 By: /s/ Brian R. Blackmarr * ---------------------------------- Brian R. Blackmarr, Director July 12, 2000 By: /s/ Leroy Hallman * ---------------------------------- Leroy Hallman, Director July 12, 2000 By: /s/ T. Michael O'Connor * ---------------------------------- T. Michael O'Connor, Director * By: /s/ Stoney M. Stubbs, Jr. -------------------------- Stoney M. Stubbs, Jr. Attorney-in-Fact EXHIBIT INDEX Sequentially Numbered Exhibit Description Page ------- ------------ ----------- 23.1 Consent of Independent Public Accountants 7 99.1 FFE Transportation Services, Inc. Employee Stock Ownership Plan Statements of Net Assets Available for Plan Benefits as of December 31, 1999 and 1998 and Statements of Changes in Net Assets Available for Plan Benefits for each of the three years in the period ended December 31, 1999 with notes thereto and Report of Independent Public Accountants thereon. 9 99.2 Conwell Corporation Employee Stock Ownership Plan Statements of Net Assets Available for Plan Benefits as of December 31, 1999 and 1998 and Statements of Changes in Net Assets Available for Plan Benefits for each of the three years in the period ended December 31, 1999 with notes thereto and Report of Independent Public Accountants thereon. 20 99.3 Frozen Food Express Industries, Inc. 401(k) Savings Plan Statements of Net Assets Available for Plan Benefits as of December 31, 1999 and 1998 and Statements of Changes in Net Assets Available for Plan Benefits for each of the three years in the period ended December 31, 1999 with notes thereto and Report of Independent Public Accountants thereon. 31 EX-23 2 0002.txt EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 33-10581) pertaining to the FFE Transportation Services, Inc., Employee Stock Ownership Plan and in the related Prospectus, the Registration Statement (Form S-8 No. 33-11150) pertaining to the Conwell Corporation Employee Stock Ownership Plan and in the related Prospectus, and in the Registration Statement (Form S-8 No. 333-87915) pertaining to the Frozen Food Express Industries, Inc 401(k) Savings Plan, and in the related Prospectus of our reports dated June 28, 1999, with respect to the financial statements of FFE Transportation Services, Inc., Employee Stock Ownership Plan, Conwell Corporation Employee Stock Ownership Plan, and Frozen Food Express Industries, Inc. 401(k) Savings Plan, all of which are included in this Amendment No. 1 to the Annual Report (Form 10-K) of Frozen Food Express Industries, Inc., for the year ended December 31, 1999. /s/ Waters, Wright & Associates, RLLP - ------------------------------------- Mansfield, Texas July 12, 2000 EX-99 3 0003.txt EXHIBIT 99.1 FFE TRANSPORTATION SERVICES, INC. EMPLOYEE STOCK OWNERSHIP PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS December 31, 1999 and 1998 1999 1998 ----- ---- Money market fund $ 196,707 $ 285,960 Frozen Food Express Industries, Inc. Common Stock 9,262,056 19,731,828 Receivables 976 1,270 --------- ---------- Total assets 9,459,739 20,019,058 Less: Benefits payable 2,751,107 4,827,428 Trustee payable 18,402 0 Due to related trust 30,107 65,303 --------- ---------- Net assets available for plan benefits $6,660,123 $15,126,327 ========= ========== See accompanying notes and report of independent public accountants. FFE TRANSPORTATION SERVICES, INC. EMPLOYEE STOCK OWNERSHIP PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS Years Ended December 31, 1999, 1998 and 1997 1999 1998 1997 ---- ---- ---- Investment income: Dividend income $ 221,602 $ 303,550 $ 316,981 Interest income 8,864 9,957 10,504 -------- ---------- ---------- 230,466 313,507 327,485 Net unrealized depreciation in market value of investments (10,204,161) (3,439,863) (915,106) Realized gain on sale of stock 6,194 19,350 15,099 Recordkeeping fees (18,402) - - ---------- ---------- ---------- (9,985,903) (3,107,006) (572,522) Increase (decrease) in fair market value of plan benefits payable to Participants 1,519,699 146,618 (866,100) ---------- ---------- ---------- Net decrease (8,466,204) (2,960,388) (1,438,622) Net assets available for plan benefits at beginning of year 15,126,327 18,086,715 19,525,337 ---------- ---------- ---------- Net assets available for plan benefits at end of year $ 6,660,123 $15,126,327 $18,086,715 ========== ========== ========== See accompanying notes and report of independent public accountants. FFE TRANSPORTATION SERVICES, INC. EMPLOYEE STOCK OWNERSHIP PLAN NOTES TO FINANCIAL STATEMENTS December 31, 1999 1.Description of the Plan ----------------------- The FFE Transportation Services, Inc. Employee Stock Ownership Plan (the "FFE Plan") is a defined contribution plan designed to provide retirement income to employees of FFE Transportation Services, Inc. and other affiliated participating companies (the "Employer") in compliance with the Employee Retirement Income Security Act of 1974 ("ERISA"). The FFE Plan is designed to invest primarily in Common Stock of Frozen Food Express Industries, Inc. ("FFEX"), the parent corporation of the Employer. Participants should refer to the FFE Plan agreement for a more complete description of the FFE Plan's provisions. Contributions - Contributions by the Employer are at the discretion of its Board of Directors. No participant shall be required or permitted to make contributions. Eligibility - Employees become eligible for participation in the FFE Plan as of the first entry date, as defined, concurrent with or next following the employees' completion of 1,000 hours of service. Benefits and vesting - Participants are entitled to vested benefits upon attainment of normal or early retirement age, disability, or other termination of employment, whether voluntary or involuntary. Participants' beneficiaries are entitled to benefits if the participant was vested at the time of death. Participants' benefits from company contributions begin to vest subsequent to completion of three years of credited service and vest 100% at completion of seven years of credited service, as defined by the FFE Plan. Participants' accounts - A separate account is maintained for each participant. If no restrictions apply, the participant's account is adjusted annually for the participant's allocable share of employer contributions, earnings on employer contributions, plan forfeitures, realized and unrealized gains and losses, and any amounts distributed to the participant or participant's beneficiary from such account. Allocation of employer contributions and plan forfeitures are based on annual compensation. FFE Plan earnings are allocated based on participants' account balances. Administration - The FFE Plan is administered by a committee appointed by the Board of Directors of FFEX. Administrative expenses not paid by the Employer are paid by the FFE Plan. Tax status - The United States Treasury Department has advised that the FFE Plan constitutes a qualified trust under Section 401(a) of the Internal Revenue Code (the "Code") and is therefore exempt from federal income tax under provisions of Section 501(a) of the Code. Employer contributions and FFE Plan earnings are not includable in the participant's taxable income until such amounts are distributed to the participant or to the participant's beneficiary. 2. Summary of significant accounting policies ------------------------------------------ Basis of accounting - The financial statements of the FFE Plan are under the accrual method of accounting. Accounting estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires the FFE Plan Committee to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Actual outcomes may vary from these estimates. Valuation of investments - Investment in FFEX Common Stock, consisting of 2,390,208 and 2,506,265 shares at December 31, 1999 and 1998, respectively, is valued at the quoted market price on the last day of the year. 3. Net unrealized appreciation in market value of investments ---------------------------------------------------------- The 1999, 1998 and 1997 net unrealized depreciation in market value of investments was as follows: For the Year Ended December 31, ------------------------------- 1999 1998 1997 ----- ----- ----- Investment at market $ 9,262,056 $19,731,828 $23,305,860 Investment at cost (5,293,183) (5,558,794) (5,692,963) --------- --------- ---------- Unrealized depreciation at end of year 3,968,873 14,173,034 17,612,897 Unrealized depreciation at beginning of year (14,173,034) (17,612,897) (18,528,003) ---------- ---------- ---------- Net unrealized depreciation in market value of investments during the year $(10,204,161) $(3,439,863) $ (915,106) ========== ========== ========== 4. Trust Agreement --------------- As of December 31, 1999 pursuant to a trust agreement, Chase Bank of Texas, N.A. held all investment assets of the FFE Plan and executed all transactions therein. 5. Subsequent Event ---------------- On January 1, 2000, the FFE Plan was merged into the Frozen Food Express Industries, Inc. 401(k) Savings Plan (the "Savings Plan"). The transfer of net assets was credited to separate participant accounts of the Savings Plan as of January 1, 2000 in amounts equal to their balances as previously carried in the accounts of the FFE Plan. No employer contributions were made to the FFE Plan during the year and no future employer contributions will be made. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ---------------------------------------- The Administrative Committee of the FFE Transportation Services, Inc. Employee Stock Ownership Plan: We have audited the accompanying statements of net assets available for plan benefits of the FFE Transportation Services, Inc. Employee Stock Ownership Plan (the "Plan") as of December 31, 1999 and 1998, and the related statements of changes in net assets available for plan benefits for each of the three years in the period ended December 31, 1999. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the FFE Transportation Services, Inc. Employee Stock Ownership Plan, as of December 31, 1999 and 1998, and the changes in net assets available for plan benefits for each of the three years in the period ended December 31, 1999 in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules on the following pages are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedules on the following pages have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the foregoing basic financial statements taken as a whole. /s/ Waters, Wright & Associates, RLLP - ------------------------------------- July 12, 2000 ADDITIONAL INFORMATION FFE TRANSPORTATION SERVICES, INC. EMPLOYEE STOCK OWNERSHIP PLAN ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES December 31, 1999 (a) (b) (c) Description (d) (e) Current Identity of Issue of Investment Cost Value - --- ------------------ ---------------- ------- --------- Chase Bank of Money Market Fund $ 196,707 $ 196,707 Texas, NA * FFEX 2,390,208 shares Common Stock of Frozen Food Express Industries, Inc. $5,293,183 $9,262,056 * Party-in-interest to the plan. FFE TRANSPORTATION SERVICES, INC. EMPLOYEE STOCK OWNERSHIP PLAN ITEM 27a - SCHEDULE OF ASSETS ACQUIRED AND SOLD December 31, 1999 (a) (b) Description (c) (d) Current Identity of Issue of Investment Cost Value ------------------ ---------------- ------- ------- None * 1,617 shares Frozen Food Express Industries, Inc. Common Stock $6,964 $14,553 * These are total shares sold within the plan year, not necessarily just those shares acquired and disposed within the plan year. All other investment assets which were both acquired and disposed of during the plan year were interests issued by money market funds. Therefore, these transactions are excluded from this schedule in accordance with the Specific Instructions for Form 5500. FFE TRANSPORTATION SERVICES, INC. EMPLOYEE STOCK OWNERSHIP PLAN ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS Years Ended December 31, 1999 and 1998 Purchases ----------- Identity of Shares/ Market Party Involved Description Units Cost Value - --------------- ------------ -------- ----- ------- 1999 - ----- None N/A N/A N/A N/A 1998 - ----- None N/A N/A N/A N/A EX-99 4 0004.txt EXHIBIT 99.2 CONWELL CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS December 31, 1999 and 1998 1999 1998 ----- ----- Money market fund $ 14,366 $ 24,880 Frozen Food Express Industries, Inc. Common Stock 369,625 818,370 Due from related trust 30,107 97,283 Employer Receivable 15,736 159 Other Receivable 75 0 ------- ------- Total assets 429,909 940,692 ------- ------- Less: Benefits payable 129,521 196,792 Trustee payable 3,481 0 ------- ------- Net assets available for plan $296,907 $743,900 benefits ======= ======= See accompanying notes and report of independent public accountants. CONWELL CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS Years Ended December 31, 1999, 1998 and 1997 1999 1998 1997 ----- ----- ----- Investment income: Dividend income $ 9,292 $ 13,096 $ 15,072 Interest income 699 593 1,678 -------- ------- -------- 9,991 13,689 16,750 Net unrealized depreciation in market value of Investments (430,493) (122,284) (16,495) (Loss) gain realized on sale of stock (10,396) (11,212) 1,436 Recordkeeping fees (3,481) 0 0 --------- --------- -------- (434,379) (119,807) 1,691 (Decrease) increase in fair market value of plan benefits payable to Participants (12,614) 21,139 (125,881) -------- ------- ------- Net decrease (446,993) (98,668) (124,190) Net assets available for plan benefits at beginning of year 743,900 842,568 966,758 -------- -------- -------- Net assets available for plan benefits at end of year $ 296,907 $ 743,900 $ 842,568 ======== ======== ======== See accompanying notes and report of independent public accountants. CONWELL CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN NOTES TO FINANCIAL STATEMENTS December 31, 1999 1.Description of the Plan ------------------------ The Conwell Corporation Employee Stock Ownership Plan (the "Conwell Plan") is a defined contribution plan designed to provide retirement income to employees of Conwell Corporation (the "Employer") in compliance with the Employee Retirement Income Security Act of 1974 ("ERISA"). The Conwell Plan is designed to invest primarily in Common Stock of Frozen Food Express Industries, Inc. ("FFEX"), the parent corporation of the Employer. Participants should refer to the Conwell Plan agreement for a more complete description of the Conwell Plan's provisions. Contributions - Contributions by the Employer are at the discretion of its Board of Directors. No participant shall be required or permitted to make contributions. Eligibility - Employees become eligible for participation in the Conwell Plan as of the first entry date, as defined, concurrent with or next following the employees' completion of 1,000 hours of service. Benefits and vesting - Participants are entitled to vested benefits upon attainment of normal or early retirement age, disability, or other termination of employment, whether voluntary or involuntary. Participants' beneficiaries are entitled to benefits if the participant was vested at the time of death. Participants' benefits from company contributions begin to vest subsequent to completion of three years of credited service and vest 100% at completion of seven years of credited service, as defined by the Conwell Plan. Participants' accounts - A separate account is maintained for each participant. If no restrictions apply, the participant's account is adjusted annually for the participant's allocable share of employer contributions, earnings on employer contributions, plan forfeitures, realized and unrealized gains and losses, and any amounts distributed to the participant or participant's beneficiary from such account. Allocation of employer contributions and plan forfeitures are based on annual compensation. Conwell Plan earnings are allocated based on participants' account balances. Administration - The Conwell Plan is administered by a committee appointed by the Board of Directors of FFEX. Administrative expenses not paid by the Employer are paid by the Conwell Plan. Tax status - The United States Treasury Department has advised that the Conwell Plan constitutes a qualified trust under Section 401(a) of the Internal Revenue Code (the "Code") and is therefore exempt from federal income tax under provisions of Section 501(a) of the Code. Employer contributions and plan earnings are not includable in the participant's taxable income until such amounts are distributed to the participant or to the participant's beneficiary. 2.Summary of significant accounting policies ------------------------------------------ Basis of accounting - The financial statements of the Conwell Plan are under the accrual method of accounting. Accounting estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires the Conwell Plan Committee to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Actual outcomes may vary from these estimates. Valuation of investments - Investment in FFEX Common Stock, consisting of 95,387 and 103,920 shares at December 31, 1999 and 1998, respectively, is valued at the quoted market price on the last day of the year. 3.Net unrealized (depreciation) in market value of investments ------------------------------------------------------------ The 1999, 1998 and 1997 net unrealized depreciation in market value of investments was determined as follows: For the Year Ended December 31, ------------------------------------ 1999 1998 1997 ----- ----- ----- Investment at market $ 369,625 $ 818,370 $1,013,670 Investment at cost (587,227) (605,479) (678,495) -------- -------- -------- Unrealized (depreciation) appreciation at end of year (217,602) 212,891 335,175 Unrealized depreciation at beginning of year (212,891) (335,175) (351,670) -------- -------- -------- Net unrealized depreciation in market value of investments during the year $(430,493) $(122,284) $ (16,495) ======== ======== ======== 4.Trust Agreement ---------------- As of December 31, 1999 pursuant to a trust agreement, Chase Bank of Texas, N.A. held all investment assets of the Conwell Plan and executed all transactions therein. 5.Subsequent Event ---------------- On January 1, 2000, the Conwell Plan was merged into the Frozen Food Express Industries, Inc. 401(k) Savings Plan (the "Savings Plan"). The transfer of net assets was credited to separate participant accounts of the Savings Plan as of January 1, 2000 in amounts equal to their balances as previously carried in the accounts of the Conwell Plan. No employer contributions were made to the Conwell Plan during the year and no future employer contributions will be made. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ---------------------------------------- The Administrative Committee of the Conwell Corporation Employee Stock Ownership Plan: We have audited the accompanying statements of net assets available for plan benefits of the Conwell Corporation Employee Stock Ownership Plan (the "Plan") as of December 31, 1999 and 1998, and the related statements of changes in net assets available for plan benefits for each of the three years in the period ended December 31, 1999. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Conwell Corporation Employee Stock Ownership Plan, as of December 31, 1999 and 1998, and the changes in net assets available for plan benefits for each of the three years in the period ended December 31, 1999 in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules on the following pages are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedules on the following pages have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the foregoing basic financial statements taken as a whole. /s/ Waters, Wright & Associates, RLLP - ------------------------------------- July 12, 2000 ADDITIONAL INFORMATION CONWELL CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES December 31, 1999 (a) (b) Identity (c) Description (d) Cost (e) Current of Issue of Investment Value ---------------- ------------------ ------- -------- Chase Bank of Money Market Fund $ 14,366 $ 14,366 Texas, NA * FFEX 95,387 shares Common Stock of Frozen Food Express Industries, Inc. $587,227 $369,625 * Party-in-interest to the plan. CONWELL CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN ITEM 27a - SCHEDULE OF ASSETS ACQUIRED AND SOLD December 31, 1999 (a) (b) (c) (d) Identity of Description of Issue Investment Cost Proceeds - ------------- ----------------------- -------- -------- FFEX *6,480 shares Common Stock $61,271 $51,030 * These are total shares sold within the plan year, not necessarily just those shares acquired and disposed within the plan year. All other investment assets which were both acquired and disposed of during the plan year were interests issued by money market funds. Therefore, these transactions are excluded from this schedule in accordance with the Specific Instructions for Form 5500. CONWELL CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS Years Ended December 31, 1999 and 1998 Purchases ------------------ Identity of Party Shares/ Market Involved Description Units Cost Value - ------------------- ----------- ------- ----- ------ 1999 - ---- None N/A N/A N/A N/A 1998 - ---- FFEX N/A N/A N/A N/A EX-99 5 0005.txt EXHIBIT 99.3 FROZEN FOOD EXPRESS INDUSTRIES, INC. 401(k) SAVINGS PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS December 31, 1999 and 1998 1999 1998 ----- ----- Investments $12,100,503 $17,792,839 Participant notes receivable 1,561,234 1,799,898 Employer contributions receivable 132,096 417,065 Employee contributions receivable 108,290 0 ---------- ---------- Total assets 13,902,123 20,009,802 Less: Benefits payable 936,195 1,129,730 Due to related trust 0 31,980 ---------- ---------- Net assets available for plan benefits $12,965,928 $18,848,092 ========== ========== See accompanying notes and report of independent public accountants. FFE TRANSPORTATION SERVICES, INC. 401(k) SAVINGS PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS Years Ended December 31, 1999, 1998 and 1997 1999 1998 1997 ----- ----- ----- Investment income: Dividend income $ 231,742 $ 283,865 $ 224,304 Interest income 161,774 164,271 137,212 -------- --------- -------- Net investment income 393,516 448,136 361,516 Administration expense (137,977) 0 0 Realized gain (loss) 175,135 (52,022) 455,433 Net unrealized depreciation in market value of investments (8,236,868) (2,163,017) (948,741) Employee contributions 2,154,142 1,886,367 1,621,793 Employer contributions 1,361,160 1,092,765 1,496,274 ---------- ---------- ---------- (4,290,892) 1,212,229 2,986,275 (Decrease) increase in fair market value of plan benefits payable to participants (1,591,272) 180,226 (3,423,221) ---------- ---------- ---------- Net (decrease) increase (5,882,164) 1,392,455 (436,946) Net assets available for plan benefits at beginning of year 18,848,092 17,455,637 17,892,583 ---------- ---------- ---------- Net assets available for plan benefits at end of year $12,965,928 $18,848,092 $17,455,637 ========== ========== ========== See accompanying notes and report of independent public accountants. FROZEN FOOD EXPRESS INDUSTRIES, INC. 401(k) SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS December 31, 1999 1.Description of the Plan ------------------------ The Frozen Food Express Industries, Inc. 401(k) Savings Plan (the "Savings Plan") is a defined contribution plan covering substantially all employees of Frozen Food Express Industries, Inc. (the "Employer" or "FFEX") and its wholly owned subsidiaries. The Savings Plan is designed to comply with the Employee Retirement Income Security Act of 1974 ("ERISA") and to allow employees the option of investing in common stock of the Employer or in other investment funds designated by the Savings Plan committee. Participants should refer to the Savings Plan agreement for a more complete description of the Savings Plan's provisions. Contributions - Participants may elect to contribute to the Savings Plan through periodic payroll deductions, subject to limits defined by the Savings Plan. Employee contributions, excluding rollovers, amounted to $1,848,504, $1,619,485, and $1,307,776 in 1999, 1998, and 1996, respectively. In addition, the Employer contributes to the Savings Plan on a quarterly basis amounts subject to limits defined by the Savings Plan. Eligibility - Employees become eligible for participation in the Savings Plan as of the first entry date, as defined, concurrent with or next following the employees' completion of one-half year of service as defined by the Savings Plan. Participants' accounts - Each participant account is credited with the participant's contributions and an allocation of (a) the Employer's contributions, (b) plan earnings, and (c) forfeitures of terminated participants' non-vested accounts. Allocations of plan earnings are based on participants' account balances, allocation of employer's contributions are based on participants' quarterly contributions, and allocations of forfeitures are based on the participants' annual compensation. Participants' Notes Receivable - Participants may borrow from their fund accounts an amount not to exceed the lesser of $50,000 or 50% of the participant's vested account balance. Loan transactions are treated as a transfer to (from) the investment fund and from (to) Participant Notes Receivable. Loan terms range from one to five years or up to ten years for the purchase of a primary residence. The loans are secured by the balance in the participant's account and bear interest at a reasonable rate as determined by the Savings Committee. The interest rates charged for loans in 1999 and 1998 ranged from 8.75% to 9.50%. Principal and interest payments are due in substantially level amortized payments payable not less than quarterly through payroll deductions. Vesting - Upon termination of employment, participants are entitled to receive 100% of their contributions and any earnings thereon. Participants' benefits from employer contributions begin to vest subsequent to completion of three years of credited service and vest 100% at completion of seven years of credited service as defined by the Savings Plan. Investment options -During each of the three years ending December 31, 1999, participants could direct employee contributions in any of nine investment options. Stable Value Fund - The fund invests in assets whose principal value remains stable regardless of stock and bond market fluctuations. The Savings Plan committee has selected the Schwab Institutional Advantage Money Fund as the investment vehicle for this fund. Intermediate Bond Fund - The fund invests in fixed-income securities including corporate bonds, U.S. government securities, mortgage-related securities, and money-market instruments. The Savings Plan committee has selected the PIMCO Total Return Institutional Fund as the investment vehicle for this fund. Mixed Investment Fund - The fund may invest a large portion of its assets in common stock and convertible securities. Prospective dividends and earnings are major considerations in these purchases. The Savings Plan committee has selected the Janis Balanced Fund as the investment vehicle for this fund. Stock Index Fund - The fund attempts to replicate the aggregate return and risk of the Standard & Poor's 500 index. The fund will purchase all, or a representative sample of all the stocks held in the S&P 500 index. The Savings Plan committee has selected the Schwab S&P 500 Index Fund as the investment vehicle for this fund. Basic Stock Fund - The fund seeks capital appreciation by investing primarily in securities that are expected to grow at an above-average rate. The Savings Plan committee has selected the Schwab S&P 500 Index Fund as the investment vehicle for this fund. The Savings Plan committee has selected the MFS Massachusetts Investment Trust Fund-Class A as the investment vehicle for this fund. Growth Stock Fund - The fund invests primarily in common stocks and favors securities of companies expected to benefit from special favors or trends. The Savings Plan committee has selected the Dreyfus Appreciation Fund as the investment vehicle for this fund. Small Cap Stock Fund - The fund seeks capital growth by investing in small-sized companies that are currently considered undervalued or demonstrate growth in earnings and revenue. The Savings Plan committee has selected the Baron Asset Fund as the investment vehicle for this fund. International Stock Fund - The fund invests primarily in stocks and debt securities of companies and governments outside the United States. The Savings Plan committee has selected the BT Investment International Equity Fund as the investment vehicle for this fund. Frozen Food Express Industries, Inc. Common Stock - Funds that are invested in the common stock of Frozen Food Express Industries, Inc. Administration - The Savings Plan is administered by a committee appointed by the Board of Directors of the Employer. Administrative expenses not paid by FFEX are paid by the Savings Plan. Termination of the Plan - While the Employer has not expressed any intent to discontinue its contributions, it is free to discontinue contributions and may terminate the Savings Plan at any time. If terminated, net assets of the Savings Plan would be distributed to participants and beneficiaries as prescribed by the terms of the Savings Plan, in accordance with ERISA. Upon termination of the Savings Plan, participants' accounts become 100% vested. Tax status - The United States Treasury Department has advised that the Savings Plan constitutes a qualified trust under Section 401(a) of the Internal Revenue Code (the "Code") and is therefore exempt from federal income tax under provisions of Section 501(a) of the Code. Participant contributions, employer contributions, and earnings from the Savings Plan are not includable in the participant's taxable income until such amounts are distributed to the participant or to the participant's beneficiary. 2. Summary of significant accounting policies ------------------------------------------- Basis of accounting - The financial statements of the Savings Plan are under the accrual method of accounting. Accounting estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires the Savings Plan Committee to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Actual outcomes may vary from these estimates. Valuation of investments - Investments in FFEX common stock and other investment funds are valued based on the quoted market price on the last day of the year. The change in the difference between current market value and cost of the investment is reflected in the statement of changes in net assets available for plan benefits by investment fund as net unrealized appreciation or depreciation in market value of investments. 3.The following presents net assets of investments at December 31, 1999 and 1998: 1999 1998 ----- ----- Frozen Food Express Industries, Inc. Common Stock 2,008,290 and 2,104,742 shares, respectively $7,680,579 * $15,002,925 * BT Investment International Equity Fund, 3,525 shares 101,343 0 Baron Asset Fund, 3,154 shares 181,316 0 Dreyfus Appreciation Fund, 6,287 shares 278,987 0 Schwab S&P 500 Index Fund, 18,017 shares 382,405 0 MFS Massachusetts Investment Trust Fund - Class A, 52,833 shares 986,585 0 Janus Balanced Fund, 25,607 shares 578,521 0 PIMCO Total Return Institutional Fund, 46,384 shares 421,755 0 Schwab Institutional Advantage Money Fund, 849,056 shares 793,203 0 Avesta Trust Money Market Fund, 619,880 shares 586,356 Avesta Trust Core Equity Income Fund, 1,163,574 45,649 shares Avesta Trust Income Fund, 15,179 shares 295,339 ---------- ---------- $11,404,694 $17,048,194 ========== ========== * Nonparticipant-directed shares at December 31, 1999 and 1998 respectively were 1,362,037 and 2,008,118 with net asset value of $5,277,892 and $2,008,118, respectively. During 1999, the Plan's investments (including gains and losses on investments bought and sold, as well held during the year) depreciated in value by $8,236,863 as follows: Mutual Funds $ (213,579) Common Stock (8,023,284) --------- $ (8,236,863) ========= 4. Subsequent Event ----------------- On January 1, 2000, the Conwell Corporation Employee Stock Ownership Plan (the "Conwell Plan") and FFE Transportation Services, Inc. Stock Ownership Plan (the "FFE Plan") were merged into the Savings Plan. The transfer of net assets was credited to separate participant accounts of the Savings Plan as of January 1, 2000 in amounts equal to their balances as previously carried in the accounts of the FFE Plan and the Conwell Plan. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ----------------------------------------- The Administrative Committee of the Frozen Food Express Industries, Inc. 401(k) Savings Plan: We have audited the accompanying statements of net assets available for plan benefits of the Savings Plan for Employees of Frozen Food Express Industries, Inc. 401(k) Savings Plan (the "Plan") as of December 31, 1999 and 1998, and the related statements of changes in net assets available for plan benefits for each of the three years in the period ended December 31, 1999. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Frozen Food Express Industries, Inc. 401(k) Savings Plan, as of December 31, 1999 and 1998, and the changes in net assets available for plan benefits for each of the three years in the period ended December 31, 1999 in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules on the following pages are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedules on the following pages have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the foregoing basic financial statements taken as a whole. /s/ Waters, Wright & Associates, RLLP - ------------------------------------- July 12, 2000 ADDITIONAL INFORMATION FROZEN FOOD EXPRESS INDUSTRIES, INC. 401(k) SAVINGS PLAN ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES December 31, 1999 (a) (b) Identity (c) Description of (d) (e) Current of Issue Investment Cost Value - --- ----------------- ----------------- --------- --------- Cash $ 320,082 $ 320,082 * FFEX 2,008,290 shares Common Stock 13,757,076 7,782,123 BT Investment International 3,525 shares Equity Fund common stock 83,858 103,951 Baron Asset Fund 3,154 shares 181,154 185,375 common stock Dreyfus 6,287 shares 284,224 287,520 Appreciation Fund common stock Schwab S&P 500 18,017 shares 382,998 407,383 Index Fund common stock MFS Massachusetts Investment Trust Fund - Class A 52,833 shares common stock 1,105,258 1,106,854 Janus Balanced Fund 25,607 shares 555,824 598,955 common stock PIMCO Total Return 46,384 shares 468,073 459,204 Institutional Fund common stock Schwab Institutional 849,056 shares 849,056 849,056 Advantage Money common stock ---------- ---------- $17,987,603 $12,100,503 ========== ========== Participants' Interest bearing notes receivable notes at 8.75%-9.50% N/A $ 1,561,234 * Party-in-interest to the plan. FROZEN FOOD EXPRESS INDUSTRIES, INC. 401(k) SAVINGS PLAN ITEM 27a - SCHEDULE OF ASSETS ACQUIRED AND SOLD December 31, 1999 (a) Identity (b) Description (c) (d) of Issue of Investment Cost Proceeds ------------ --------------------- --------- --------- FFEX *383,065 shares FFEX Common Stock $2,661,485 $2,451,595 * These are total shares sold within the plan year, not necessarily just those shares acquired and disposed within the plan year. All other investment assets which were both acquired and disposed of during the plan year were interests issued by money market funds. Therefore, these transactions are excluded from this schedule in accordance with the Specific Instructions for Form 5500. FROZEN FOOD EXPRESS INDUSTRIES, INC. 401(k) SAVINGS PLAN ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS Years Ended December 31, 1999 and 1998 Purchases ------------------ Identity Of Shares/ Market Party Involved Description Units Cost Value ------------ ----------- ----- ----- ------ 1999 ---- FFEX * FFEX Common Stock 459,022 $3,127,201 $1,778,710 Schwab Stable Value 1,239,719 1,239,719 1,239,719 Schwab Basic Stock 90,149 1,899,026 1,888,629 PIMCO Intermediate Bond 61,850 641,973 612,318 Baron Small-cap Stock 3,579 205,818 210,344 BT Investment International Stock 3,417 87,966 109,228 Dreyfus Growth Stock 8,140 367,830 372,229 Janus Mixed Investment 28,885 626,522 675,622 Schwab Stock Index 19,849 421,923 448,777 1998 ----- FFEX * FFEX Common Stock 334,546 $3,012,325 $2,634,550 AVESTA Money Market Fund 175,405 175,405 175,405 AVESTA Equity Income Fund 24,590 580,181 652,127 AVESTA Income Fund 7,823 160,412 160,137 * Party in interest to the Plan -----END PRIVACY-ENHANCED MESSAGE-----