-----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, U62mxOgU3BOi/bX1xZsuQNQngse1DZozvgQf3LgW3nohPsDPcbVGNVOc9tQ7lMVj sV6HcBs+7esD/bK8jZR9EQ== 0000039273-03-000039.txt : 20030627 0000039273-03-000039.hdr.sgml : 20030627 20030627153946 ACCESSION NUMBER: 0000039273-03-000039 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20021231 FILED AS OF DATE: 20030627 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FROZEN FOOD EXPRESS INDUSTRIES INC CENTRAL INDEX KEY: 0000039273 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 751301831 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-10006 FILM NUMBER: 03761207 BUSINESS ADDRESS: STREET 1: 1145 EMPIRE CENTRAL PLACE CITY: DALLAS STATE: TX ZIP: 75247 BUSINESS PHONE: 2146308090 10-K/A 1 ka060603.txt STATEMENT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A AMENDMENT No. 1 (MARK ONE) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002 OR [ ] 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 IN ITS CHARTER) TEXAS 75-1301831 --------------------------------------------------------------------------- (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 1145 EMPIRE CENTRAL PLACE, DALLAS, TEXAS 75247-4309 --------------------------------------------------------------------------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) Registrant's telephone number, including area code: (214) 630-8090 Securities registered pursuant to Section 12(b) of the Act: NONE Securities registered pursuant to section 12(g) of the Act: i) Common Stock $1.50 par value ii) Rights to purchase Common Stock --------------------------------------------------------------------------- Indicate by check mark whether the registrant (l) has filed all reports required to be filed by Section 13 or 15(d) of the Securities change 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. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-(2). Yes [ ] No [X] As of June 24, 2003, 16,961,375 shares of the registrant's common stock, $l.50 par value, were outstanding. The aggregate market value of voting and non-voting common equity held by non-affiliates as of June 24, 2003 was $41,867,731. This amount is based on the closing sale price of the registrant's common stock as reported by Nasdaq on such date. Item 14. Controls and Procedures Within 90 days prior to the date of the filing of this report, the company carried out an evaluation, under the supervision and with the participation of the company's management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and the operation of the company's disclosure controls and procedures pursuant to Exchange Act Rules 13a-14 and 15d-14. Based on the evaluation, the company's Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures are effective for gathering, analyzing and disclosing the information the company is required to disclose in the reports it files under the Securities Exchange Act of 1934, within the time periods specified in the SEC's rules and forms. There have been no significant changes in the company's internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation. Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. Item 15 of the Form 10-K is amended by adding as Exhibit 99.3 the information, financial statements and exhibits required to be filed on Form 11-K for the fiscal year ended December 31, 2002, with respect to 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 the plan 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. (a) 1. & 2. FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES: The financial statements listed in the index to financial statements and financial statement schedules required by Item 8 of Form 10-K were filed as part of the Registrant's Annual Report on Form 10-K on March 28, 2003. 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 and incorporated herein by reference). 3.2 Bylaws of the Registrant (filed as Exhibit 3.2 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1998 and incorporated herein by reference). 3.3 Amendment to Bylaws of the Registrant, dated June 14,2000 (filed as Exhibit 3.1 to Registrant's Report on Form 8-K filed with the Commission on June 28, 2000 and incorporated herein by reference). 3.4 Amendment to Bylaws of the Registrant, dated April 3, 2002, (filed as Exhibit 3.4 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2001 and incorporated herein by reference). 3.5 Amendment to Bylaws of Registrant dated March 25, 2003,(filed as Exhibit 3.5 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2002 and incorporated herein by reference). 4.1 Rights Agreement dated as of June 14, 2000, between the Registrant and Fleet National Bank, which includes as exhibits, the form of the Rights Certificate and the Summary of Rights (filed as Exhibit 4.1 to Registrant's Form 8-A Registration Statement filed on June 19, 2000 and incorporated herein by reference). 10.1 Frozen Food Express Industries, Inc., 1995 Non-Employee Director Stock Plan (filed as Exhibit 4.3 to Registrant's Registration Statement #033-59645 as filed with the Commission and incorporated herein by reference). 10.2 Credit Agreement among Comerica Bank-Texas as administrative agent for itself and other banks, LaSalle Bank National Association, as collateral agent and syndication agent for itself and other banks and FFE Transportation Services, Inc. as Borrower and certain of its affiliates as of May 30, 2002 (filed as Exhibit 10.1 to Registrant's Quarterly Report on Form 10-Q for the period ended June 30, 2002). 10.3* Frozen Food Express Industries, Inc., 1992 Incentive and Nonstatutory Stock Option Plan (filed as Exhibit 4.3 to Registrant's Registration Statement #333-48494 as filed with the Commission and incorporated herein by reference). 10.4* 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 Statement #333-38133 and incorporated herein by incorporated herein by reference). 10.5* Amendment No. 2 to Frozen Food Express Industries, Inc. 1992 Incentive and Nonstatutory Stock Option Plan (filed as Exhibit 4.5 to Registrant's Registration Statement #333-38133 and incorporated herein by reference). 10.6* 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). 10.7* 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 and incorporated herein by reference). 10.8* 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 and incorporated herein by reference). 10.9* Frozen Food Express Industries, Inc. 401(K) Savings Plan (filed as Exhibit 10.13 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2001 and incorporated herein by reference). 10.10* First Amendment to the Frozen Food Express Industries, Inc. 401(K) Savings Plan (filed as Exhibit 10.14 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2001 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 Statement #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* FFE Transportation Services, Inc. 401(K) Wrap Plan (filed as Exhibit 4.4 to Registrant's Registration Statement #333-56248 and incorporated herein by reference). 10.14* Form of Change in Control Agreement (filed as Exhibit 10.1 to Registrant's Report on Form 8-K filed with the Commission on June 28, 2000 and incorporated herein by reference). 10.15* Frozen Food Express Industries, Inc. Incentive and Nonstatutory Stock Option Plan (filed as Exhibit 10.15 to Registrant's Annual Report on Form 10-K for fiscal year ended December 31, 2002 and incorporated herein by reference). 11.1 Computation of basic and diluted net income or loss per share of common stock (incorporated by reference to Footnote 10 to the financial statements appearing in the Annual Report to Shareholders of the Registrant for the year ending December 31, 2002). 13.1 Annual Report to Shareholders of the Registrant for the year ended December 31, 2002. Except for those portions of such Annual Report to Shareholders expressly incorporated by reference to 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. 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, 2002 and incorporated herein by reference). 23.1 Consent of Independent Public Accountants. 99.1 Certification of Chief Executive Officer (filed herewith). 99.2 Certification of Chief Financial Officer (filed herewith). 99.3 Frozen Food Express Industries, Inc. 401(K) Savings Plan Statements of Net Assets Available for Plan Benefits as of December 31, 2002 and 2001 and Statements of Changes in Net Assets Available for Plan Benefits for each of the three years in the period ended December 31, 2002 with Report of Independent Public Accountants thereon (filed herewith). * Executive compensation plans and arrangements required to be filed as an exhibit on this Form 10-K. 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: June 27, 2003 By: /s/ Stoney M. Stubbs, Jr. ----------------------------------- Stoney M. Stubbs, Jr., Chairman of the Board of Directors and President (Principal Executive Officer) June 27, 2003 By: /s/ F. Dixon McElwee ---------------------------------- F. Dixon McElwee, Senior Vice President and Chief Financial 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: June 27, 2003 By: /s/ Stoney M. Stubbs, Jr. ----------------------------------- Stoney M. Stubbs, Jr., Chairman of the Board of Directors and President (Principal Executive Officer) June 27, 2003 By: /s/ Charles G. Robertson * ----------------------------------- Charles G. Robertson, Executive Vice President and Director June 27, 2003 By: /s/ F. Dixon McElwee ---------------------------------- F. Dixon McElwee, Senior Vice President and Chief Financial Officer June 27, 2003 By: /s/ Jerry T. Armstrong * ---------------------------------- Jerry T. Armstrong, Director June 27, 2003 By: /s/ W. Mike Baggett* ---------------------------------- W. Mike Baggett, Director June 27, 2003 By: /s/ Brian R. Blackmarr * ---------------------------------- Brian R. Blackmarr, Director June 27, 2003 By: /s/ Leroy Hallman * ---------------------------------- Leroy Hallman, Director June 27, 2003 By: /s/ T. Michael O'Connor * ---------------------------------- T. Michael O'Connor, Director * By:/s/ Stoney M. Stubbs, Jr. -------------------------- Stoney M. Stubbs, Jr. Attorney-in-Fact CERTIFICATION Pursuant to Section 302 of the Sarbanes Oxley Act of 2002 I, Stoney M. Stubbs, Jr., certify that: 1. I have reviewed this first amendment to the annual report on Form 10-K of Frozen Food Express Industries, Inc.; 2. Based on my knowledge, annual report as amended does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this amended annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this amended annual report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by those entities, particularly during the period in which this amended annual report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this amended annual report (the "Evaluation Date"); and c) Presented in this amended annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies (if any) in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: June 27, 2003 /s/ Stoney M. Stubbs, Jr. - -------------------------- Stoney M. Stubbs, Jr. Chairman of the Board and Chief Executive Officer CERTIFICATION Pursuant to Section 302 of the Sarbanes Oxley Act of 2002 I, F. Dixon McElwee, Jr., certify that: 1. I have reviewed this first amendment to the annual report on Form 10-K of Frozen Food Express Industries, Inc.; 2. Based on my knowledge, annual report as amended does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this amended annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this amended annual report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by those entities, particularly during the period in which this amended annual report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this amended annual report (the "Evaluation Date"); and c) Presented in this amended annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies (if any) in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: June 27, 2003 /s/ F. Dixon McElwee, Jr. - -------------------------- F. Dixon McElwee, Jr. Senior Vice President and Chief Financial Officer EXHIBIT INDEX ------------- Sequentially Exhibit Description Numbered Page - ------- ------------ ------------- 23.1 Consent of Independent Public Accountants 10 99.1 Certification of Chief Executive Officer 11 99.2 Certification of Chief Financial Officer 12 99.3 Frozen Food Express Industries, Inc. 401(k) 14-25 Savings Plan Statements of Net Assets Available for Plan Benefits as of December 31, 2002 and 2001 and Statements of Changes in Net Assets Available for Plan Benefits for each of the three years in the period ended December 31, 2002 with notes thereto and Report of Independent Public Accountants thereon. EX-23 3 exh23.txt CONSENT Exhibit 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-56204) pertaining to the Savings Plan for Employees of Frozen Food Express Industries, Inc., and in the related Prospectus of our reports dated June 19, 2003, with respect to the financial statements of FFE Transportation Services, Inc., Savings Plan for Employees of Frozen Food Express Industries, Inc., 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, 2002. /s/ Waters, Wright & Associates LLP - ----------------------------------- Waters, Wright & Associates, LLP Mansfield, Texas June 19, 2003 EX-99 4 exh991.txt CEO CERT EXHIBIT 99.1 Frozen Food Express Industries, Inc. Certification of CEO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 I, Stoney M. Stubbs, Jr., certify, pursuant to 18 U.S.C. Section 1350,as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report Frozen Food Express Industries, Inc. on Form 10-K for the fiscal year ended December 31, 2002 as amended by this first amendment on Form 10-K/A fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-K fairly presents in all material respects the financial condition and results of operations of Frozen Food Express Industries, Inc. A signed original of this written statement required by Section 906 has been provided to Frozen Food Express Industries, Inc. and will be retained by Frozen Food Express Industries, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. June 27, 2003 /s/ Stoney M. Stubbs, Jr. ------------------------ Stoney M. Stubbs, Jr. Chief Executive Officer EX-99 5 exh992.txt CFO CERT EXHIBIT 99.2 Frozen Food Express Industries, Inc. Certification of CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 I, F. Dixon McElwee, Jr., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report Frozen Food Express Industries, Inc. on Form 10-K for the fiscal year ended December 31, 2002 as amended by this first amendment on Form 10-K/A fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-K fairly presents in all material respects the financial condition and results of operations of Frozen Food Express Industries, Inc. A signed original of this written statement required by Section 906 has been provided to Frozen Food Express Industries, Inc. and will be retained by Frozen Food Express Industries, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. June 27, 2003 /s/ F. Dixon McElwee, Jr. ------------------------ F. Dixon McElwee, Jr. Chief Financial Officer EX-99.3 OTHER FIN ST 6 ex993.txt PLAN EXHIBIT 99.3 FROZEN FOOD EXPRESS INDUSTRIES, INC. 401(k) SAVINGS PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS December 31, 2002 and 2001 2002 2001 ---- ---- Investments $16,325,132 $16,295,625 Participant notes receivable 1,318,015 1,215,761 Employer contributions receivable 58,232 43,239 Employee contributions receivable 146,816 143,697 ---------- ---------- Total investments 17,848,195 17,698,322 Less: Benefits payable 1,691,987 1,893,432 ---------- ---------- Net assets available for plan benefits $16,156,208 $15,804,890 ========== ========== See accompanying notes and report of independent public accountants. FROZEN FOOD EXPRESS INDUSTRIES, INC. 401(k) SAVINGS PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS Years Ended December 31, 2002, 2001 and 2000 2002 2001 2000 ---- ---- ---- Investment income: Dividend income $ 67,851 $ 94,463 $ 200,154 Interest income 187,686 219,148 198,558 ---------- ---------- --------- 255,537 313,611 398,712 ---------- ---------- --------- Administration expense (189,212) (158,408) (196,995) Realized loss (1,440,830) (1,450,177) (1,329,717) Net unrealized appreciation (depreciation)in market value of investments 2,630,175 1,519,821 (3,898,991) Employee contributions 1,759,504 2,159,034 2,371,661 Employer contributions 581,903 991,054 1,309,519 ---------- ---------- ---------- 3,341,540 3,061,324 (1,744,523) Decrease in fair market value of plan benefits payable to participants (2,555,376) (1,547,380) (3,248,303) ---------- ---------- ---------- Net increase (decrease) 1,041,701 1,827,555 (4,594,114) Assets transferred from: FFE Transportation Services, Inc. Employee Stock Ownership Plan -- -- 5,063,801 Conwell Corporation Employee Stock Ownership Plan -- -- 541,720 Assets transferred to W&B (690,383) -- -- Net assets available for plan benefits at beginning of year 15,804,890 13,977,335 12,965,928 ---------- ---------- ---------- Net assets available for plan benefits at end of year $16,156,208 $15,804,890 $13,977,335 ========== ========== ========== See accompanying notes and report of independent public accountants. FROZEN FOOD EXPRESS INDUSTRIES, INC. 401(k) SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS December 31, 2002 1. Description of the Savings 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. ("FFEX") and its wholly-owned subsidiaries (the "Employer"). 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 $1,665,054, $2,126,687, and $2,072,414, in 2002, 2001, and 2000, respectively. In addition, Employer cash contributions to the Savings Plan amounted to $1,084, $928,615, and $1,309,519 in 2002, 2001 and 2000, respectively. During 2002, 2001, and 2000, 243,028, 29,059 shares, and 0 shares, respectively, of FFEX treasury stock, valued at $580,819 and $62,439 and 0 respectively, were contributed to the Savings Plan. Eligibility - An Employee who completes 90 days of employment with an Employer may enter the Savings Plan on the first business day of the month thereafter. Participants' accounts - Each Participant account is credited with the Participant's contributions and an allocation of (a) the Employer's contributions, and (b) plan earnings. Allocations of plan earnings are based on Participants' account balances, allocation of Employers' contri- butions are based on Participants' quarterly contributions, and allocations of forfeitures are based on the participants' annual compensation. Participant 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 made in 2002 and 2001 ranged from 5.25% to 10.50%, respectively. 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, 2002, Participants could direct employee contributions in any of ten investment options, as follows: 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 Janus 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 MFS Massachusetts Investment Trust Fund-Class A and the Dreyfus Appreciation fund as the investment vehicles 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 Managers Special Equity 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 Deutsche International Equity Investment Fund as the investment vehicle for this fund. Technology Sector Fund - This fund invests primarily in stocks of companies engaged in technology-related fields, such as computers, communications, video and electronics. The Savings Plan committee has selected Investco Technology II Fund as the investment vehicle for this fund. Frozen Food Express Industries, Inc. Common Stock - Funds that are invested in the common stock of FFEX. Administration - The Savings Plan is administered by a committee appointed by the Board of Directors of FFEX. Administrative expenses not paid by FFEX are paid by the Savings Plan. Termination of the Plan - While no Employer has not expressed any intent to discontinue its contributions, Employers are free to discontinue contributions and FFEX 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. The plan has been amended since receiving the determination letter to conform with recent changes in the tax code. The plan administrator and the plan's tax counsel believe that the plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue 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 Partici- pant's beneficiary. Forfeited accounts - At December 31, 2002, forfeited nonvested accounts totaled $23,762. These accounts will be used to reduce Employer expenses. During 2002, Employer contributions were reduced by $148,507 from forfeited nonvested accounts. 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 accounting principles generally accepted in the United States of America 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 re- ported period. Actual outcomes may vary from these estimates. Valuation of investments - Investments 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, 2002 and 2001: 2002 2001 ----- ----- Frozen Food Express Industries, Inc. Common Stock 3,794,603 and 4,358,964 shares, respectively $8,690,769 $8,025,443* Scudder International Equity Fund, 14,090 and 13,775 shares, respectively 213,859 241,725 Baron Asset Fund, 11,780 and 9,752 shares, respectively 390,337 405,329 Dreyfus Appreciation Fund, 18,615 and 16,895 shares, respectively 551,187 591,261 Schwab S&P 500 Index Fund, 45,462 and 35,961 shares, respectively 590,422 603,865 MFS Massachusetts Investment Trust Fund - Class A, 64,448 and 64,590 shares, respectively 778,211 979,689 Janus Balanced Fund, 76,987 and 71,456 shares, respectively 1,303,684 1,333,973 PIMCO Total Return Institutional Fund, 113,406 and 91,637 shares, respectively 1,152,218 899,202 Invesco Technology II, 2,847 and 1,788 shares, respectively 48,932 58,182 Managers Special Equity Fund, 2,945 and 1,765 shares, respectively 162,090 123,609 Schwab Institutional Advantage Money Fund, 956,484 and 1,387,412 shares, respectively 956,484 1,326,851 --------- ---------- $14,838,193 $ 14,589,129 ========== ========== * Nonparticipant-directed shares at December 31, 2002 and 2001 respectively were 1,783,689 and 2,542,634 with net asset value of $4,632,242 and $5,441,236. During 2002, the Plan's investments (including gains and losses on investments bought and sold, as well held during the year) appreciated in value by $249,064 as follows: Mutual Funds $(416,262) Common Stock 665,326 -------- $ 249,064 ======== 4. Merger ----------- On January 1, 2000, the Conwell Corporation and FFE Transportation Services, Inc. Employee Stock Ownership Plans (the "ESOPs") 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 separate accounts of the ESOPs. 5. Income Tax Status ------------------ The Savings Plan obtained its latest determination letter on August 29, 1996, in which the Internal Revenue Service stated that the plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code. The Savings Plan has been amended since receiving the determination letter. However, the Savings Plan administrator and the tax counsel believe that the Savings Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, no provision for income taxes has been reflected in the Savings Plan's financial statements. 6. Plan Amendment -------------- During the year, the plan was amended to conform with certain changes in the tax code as a result of the Economic Growth and Tax Relief Reconciliation Act of 2001. Changes to the plan included catch-up provisions, new vesting schedule, increases in salary deferral limits and other related items. 7. Divestiture ----------- In May 2002, approximately $690,000 was transferred to the Savings Plan of one of the Sponsor's former subsidiaries and is reflected on the Statement of Changes in Net Assets. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ----------------------------------------- The Administrative Committee of the Savings Plan for Employees of Frozen Food Express Industries, Inc.: We have audited the accompanying statements of net assets available for plan benefits of the Frozen Food Express Industries, Inc. 401(K) Savings Plan (the "Plan") as of December 31, 2002 and 2001, 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, 2002. 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 auditing standards generally accepted in the United States of America. 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 Savings Plan for Employees of Frozen Food Express Industries, Inc. as of December 31,2002 and 2001, and the changes in net assets available for plan benefits in each of the three years in the period ended December 31, 2002 in conformity with accounting principles generally accepted in the United States of America. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules on pages 23, 24, and 25 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 pages 23,24 and 25 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, LLP ------------------------------------- Mansfield, Texas June 19, 2003 SUPPLEMENTAL SCHEDULES FROZEN FOOD EXPRESS INDUSTRIES, INC. 401(k) SAVINGS PLAN PLAN 001 EIN 75-1031831 SCHEDULE H, LINE 4i-SCHEDULE OF ASSETS (HELD AT END OF YEAR) December 31, 2002 (a) (b) (c) (d) (e) Identity of Issue Description of Investment Cost Current Value - -------------------- ------------------------ ----- ------------ Cash United States Dollars $ 6,606 $ 6,606 * Frozen Food Express Industries, Inc. Common Stock 3,794,603 shares 14,289,071 9,854,585 Scudder International Equity Fund 14,090 shares 301,049 220,084 Baron Asset Fund 11,780 shares 558,053 405,455 Dreyfus Appreciation Fund 18,615 shares 738,765 580,796 Schwab S&P 500 Index Fund 45,462 shares 825,549 615,551 MFS Massachusetts Investment Trust Fund - Class A 64,448 shares 1,186,764 829,445 Janus Balanced Fund 76,987 shares 1,579,405 1,376,535 PIMCO Total Return Institutional Fund 113,406 shares 1,188,531 1,210,045 Invesco Technology II 2,847 shares 75,703 48,935 Managers Special Equity Fund 2,945 shares 196,847 162,212 Schwab Institutional Advantage Money Fund 1,014,883 shares 1,014,883 1,014,883 --------- ---------- $21,961,226 $16,325,132 ========== ========== Participants' notes Interest bearing notes at receivable 5.25%-10.50% N/A $ 1,318,015 * Party-in-interest to the plan. FROZEN FOOD EXPRESS INDUSTRIES, INC. 401(k) SAVINGS PLAN PLAN 001 EIN 75-1031831 SCHEDULE H, LINE 4i-SCHEDULE OF ASSETS (ACQUIRED AND DISPOSED OF WITHIN YEAR) December 31, 2002 (a) (b) (c) (d) Identity of Issue Description of Investment Cost Proceeds - ----------------- ------------------------- ---------- --------- Frozen Food Express Industries, Inc. Common Stock 766,997 Shares $2,840,851 $1,691,885 * 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 that were both acquired and disposed of during the plan year were interests issued by a company registered under the Investment Company Act of 1940. 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 PLAN 001 EIN 75-1031831 SCHEDULE H, LINE 4J-SCHEDULE OF REPORTABLE TRANSACTIONS December 31, 2002 Purchases -------------------------- Identity Of Shares/ Market Net Gain Party Involved Description Units Cost Value or (Loss) ------------- ----------- ------ ---- -------- -------- 2002 ---- Frozen Food Express Industries, Inc. * Common Stock 257,102 $630,957 $667,694 $36,737 MFS Trust Large-cap Stock 18,882 275,743 243,008 (32,735) Schwab Stable Value 511,845 511,845 511,845 - PIMCO Intermediate Bond 55,492 592,380 592,099 (281) Baron Mid-cap Stock 5,365 215,769 184,672 (31,097) Scudder International Stock 6,912 120,505 107,968 (12,537) Dreyfus Large-cap Stock 8,256 288,039 257,600 (30,439) Janus Balanced Investment 31,011 585,141 554,480 (30,661) Schwab Stock Index 22,095 341,344 299,173 (42,171) Invesco Technology 3,332 78,381 57,280 (21,101) Managers Small-cap Stock 2,121 133,388 116,826 (16,562) * Party in interest to the Plan -----END PRIVACY-ENHANCED MESSAGE-----