-----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, MJbK7rqAEWM+2Q9Vn6MlZvlgsifFPpwXtA9jWwfXxu2dquyjCvI+RhyiNOVtaSyS cifxVQE59EfP2stZJGv5Og== 0000930661-98-001437.txt : 19980626 0000930661-98-001437.hdr.sgml : 19980626 ACCESSION NUMBER: 0000930661-98-001437 CONFORMED SUBMISSION TYPE: 10-K405/A PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980625 SROS: NASD 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-K405/A SEC ACT: SEC FILE NUMBER: 001-10006 FILM NUMBER: 98654081 BUSINESS ADDRESS: STREET 1: 1145 EMPIRE CENTRAL PLACE CITY: DALLAS STATE: TX ZIP: 75247 BUSINESS PHONE: 2146308090 10-K405/A 1 AMENDMENT NO. 2 TO FORM 10-K405 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K/A Amendment No. 2 [X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 1997. [ ] 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. Texas 75-1301831 (State of Incorporation) (I.R.S. Employer Identification No.) 1145 Empire Central Place Dallas, Texas 75247-4309 (2l4) 630-8090 ______________________ 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 18, 1998, the latest practicable date, there were 16,897,587 shares outstanding 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, 1997, 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 Savings Plan for Employees of Frozen Food Express Industries, Inc. (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. 1 ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. - -------- (a) 1. & 2. FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES: Filed as Items 14(a) 1 and 2 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1997 and incorporated herein by reference. 3. EXHIBITS: 3.1 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, as amended (filed as Exhibit 3.2 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1991; 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; and incorporated herein by reference). 10.2 Amended and Restated Credit Agreement, dated December 30, 1992 among the registrant and its subsidiaries and First Interstate Bank of Texas, N.A.: Texas Commerce Bank, National Association; and First City, Texas - Dallas, as agent (filed as Exhibit 10.5 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1992; and incorporated herein by reference.). 10.3 First Amendment to amended and restated credit agreement described at Exhibit 10.5 (filed as Exhibit 10.6 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1993; and incorporated herein by reference). 10.4 Form of Master Lease Agreement by and between Stoney M. Stubbs, Jr., and Charles G. Robertson and Conwell Corporation (filed as Exhibit 10.12 to Registrants' Annual Report on Form 10-K for the fiscal year ended December 31, 1991; and incorporated herein by reference). 10.5 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). 2 10.6 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). 10.7 FFE Transportation Services, Inc., Executive Bonus and Phantom Stock Plan, as amended (filed as Exhibit 10.7 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., Employee Stock Ownership Plan (filed as Exhibit 10.8 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1994 and incorporated herein by reference). 10.9 Savings Plan for Employees of Frozen Food Express Industries, Inc. (filed as Exhibit 10.9 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1994 and incorporated herein by reference). 10.10 Conwell Corporation Employee Stock Ownership Plan (filed as Exhibit 10.10 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1994 and incorporated herein by reference). 10.11 Amendment to Frozen Food Express Industries, Inc., 1992 Incentive and Nonstatutory Stock Option Plan (filed as Exhibit 10.11 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1994 and incorporated herein by reference). 10.12 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). 10.13 FFE Transportation Services, Inc. 401(k) Wrap Plan (filed as Exhibit 10.13 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1996 and incorporated herein by reference). 10.14 First through Sixth Amendments to Savings Plan for Employees of Frozen Food Express Industries, Inc. (filed as Exhibit 10.14 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1996 and incorporated herein by reference). 10.15 Amendment 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). 10.16 Amendment Number 2 to the 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). 3 11.1 Computation of net income per share of common stock, assuming full dilution (incorporation 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, 1997 and incorporated herein by reference). 13.1 Annual Report to Shareholders of the Registrant for the year ended December 31, 1997. 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, 1997 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, 1997 and incorporated herein by reference). 23.1 Consent of Independent Public Accountants 25.1 A Power of Attorney was filed on page 15 of the Annual Report on Form 10-K for the fiscal year ended December 31, 1997 and is incorporated herein by reference. 27.1 Financial Data Schedule (filed as Exhibit 27.1 to Registrant's Annual Report on Form-10K for the fiscal year ended December 31, 1997 and incorporated herein by reference). 27.2 Restated Financial Data Schedule for the three, six and nine month reporting periods ended March 3, June 30 and September 30, 1997, respectively. (filed as Exhibit 27.2 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1997 and incorporated herein by reference). 27.3 Restated Financial Data Schedule for the three, six and nine month reporting periods ended March 3, June 30 and September 30, 1996, respectively. (filed as Exhibit 27.3 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1997 and incorporated herein by reference). 99.1 FFE Transportation Services, Inc. Employee Stock Ownership Plan Statements of Net Assets Available for Plan Benefits as of December 31, 1997 and 1996 and Statements of Changes in Net Assets Available for Plan Benefits for each of the three years in the period ended December 31, 1997 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, 1997 and 1996 and Statements of 4 Changes in Net Assets Available for Plan Benefits for each of the three years in the period ended December 31, 1997 with notes thereto and Report of Independent Public Accountants thereon. 99.3 Savings Plan for Employees of Frozen Food Express Industries, Inc. Statements of Net Assets Available for Plan Benefits as of December 31, 1997 and 1996 and Statements of Changes in Net Assets Available for Plan Benefits for each of the three years in the period ended December 31, 1997 with notes thereto and Report of Independent Public Accountants thereon. 5 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed by the undersigned hereunto duly authorized. CONWELL CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN June 24, 1998 By: /s/ Stoney M. Stubbs, Jr. ------------------------------------------ Stoney M. Stubbs, Jr. Member of the Administrative Committee Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed by the undersigned hereunto duly authorized. FFE TRANSPORTATION SERVICES, INC. EMPLOYEE STOCK OWNERSHIP PLAN June 24, 1998 By: /s/ Stoney M. Stubbs, Jr. ------------------------------------------ Stoney M. Stubbs, Jr. Member of the Administrative Committee Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed by the undersigned hereunto duly authorized. SAVINGS PLAN FOR EMPLOYEES OF FROZEN FOOD EXPRESS INDUSTRIES, INC. June 24, 1998 By: /s/ Stoney M. Stubbs, Jr. ------------------------------------------ Stoney M. Stubbs, Jr. Member of the Administrative Committee 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. June 25, 1998 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: June 25, 1998 By: /s/Stoney M. Stubbs, Jr. * ------------------------------------------ Stoney M. Stubbs, Jr., Chairman of the Board of Directors and President (Principal Executive Officer) June 25, 1998 By: /s/Burl G. Cott * ------------------------------------------ Burl G. Cott Senior Vice President and Director (Principal Financial and Accounting Officer) June 25, 1998 By: /s/Charles G. Robertson * ------------------------------------------ Charles G. Robertson, Executive Vice President and Director June 25, 1998 By: /s/Edgar O. Weller * ------------------------------------------ Edgar O. Weller, Vice Chairman of the Board of Directors June 25, 1998 By: /s/Brian R. Blackmarr * ------------------------------------------ Brian R. Blackmarr, Director June 25, 1998 By: /s/Leroy Hallman * ------------------------------------------ Leroy Hallman, Director June 25, 1998 By: /s/Grogan Lord * ------------------------------------------ W. Grogan Lord, Director June 25, 1998 By: /s/T. Michael O'Connor * ------------------------------------------ T. Michael O'Connor, Director June 25, 1998 By: /s/ W, Mike Baggett * ------------------------------------------ W. Mike Baggett, Director *By: /s/ Stoney M. Stubbs, Jr. ------------------------- Stoney M. Stubbs, Jr. Attorney-in-Fact EXHIBIT INDEX ------------- Sequentially Exhibit Description Numbered 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, 1997 and 1996 and Statements of Changes in Net Assets Available for Plan Benefits for each of the three years in the period ended December 31, 1997 with notes thereto and Report of Independent Public Accountants thereon. 8 99.2 Conwell Corporation Employee Stock Ownership Plan Statements of Net Assets Available for Plan Benefits as of December 31, 1997 and 1996 and Statements of Changes in Net Assets Available for Plan Benefits for each of the three years in the period ended December 31, 1997 with notes thereto and Report of Independent Public Accountants thereon. 19 99.3 Savings Plan for Employees of Frozen Food Express Industries, Inc. Statements of Net Assets Available for Plan Benefits as of December 31, 1997 and 1996 and Statements of Changes in Net Assets Available for Plan Benefits for each of the three years in the period ended December 31, 1997 with notes thereto and Report of Independent Public Accountants thereon. 30 6 EX-23.1 2 CONSENT OF WATERS, MURRAY & ASSOCIATES 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. 33-16988) pertaining to the Savings Plan for Employees of Frozen Food Express Industries, Inc., and in the related Prospectus of our reports dated June 23, 1998, with respect to the financial statements of FFE Transportation Services, Inc., Employee Stock Ownership Plan, Conwell Corporation Employee Stock Ownership Plan, and Savings Plan for Employees of Frozen Food Express Industries, Inc., all of which are included in this Amendment No. 2 to the Annual Report (Form 10-K) of Frozen Food Express Industries, Inc., for the year ended December 31, 1997. Waters, Murray & Associates Mansfield, Texas June 23, 1998 7 EX-99.1 3 FFE TRANSPORTATION EMPLOYEE STOCK OWNERSHIP PLAN EXHIBIT 99.1 8 FFE TRANSPORTATION SERVICES, INC. EMPLOYEE STOCK OWNERSHIP PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS December 31, 1997 and 1996 1997 1996 ----------- ----------- Money market fund $ 318,878 $ 358,292 Frozen Food Express Industries, Inc. common stock 23,305,860 24,332,526 Due from related trust -- 91,863 Other receivables 1,512 1,604 ----------- ----------- Total assets 23,626,250 24,784,285 ----------- ----------- Less: Benefits payable 5,481,717 5,258,948 Due to related trust 57,818 -- ----------- ----------- Total liabilities 5,539,535 5,258,948 ----------- ----------- Net assets available for plan benefits $18,086,715 $19,525,337 =========== =========== See accompanying notes and independent public accountants' report. 9 FFE TRANSPORTATION SERVICES, INC. EMPLOYEE STOCK OWNERSHIP PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS Years Ended December 31, 1997, 1996 and 1995 1997 1996 1995 ------------ ------------ ------------- Investment income: Dividend income $ 316,981 $ 328,981 $ 332,523 Interest income 10,504 10,700 11,135 Interest expense -- -- (51,681) ----------- ----------- ------------ Net investment income 327,485 339,681 291,977 Net unrealized appreciation (depreciation) in market value of Investments (915,106) 50,547 (11,062,339) ----------- ----------- ------------ Realized gain on sale of stock 15,099 -- 6,848 Employer contributions -- -- 943,033 ----------- ----------- ------------ Total (reductions) additions (572,522) 390,228 (9,820,481) (Decrease) increase in fair market value of plan benefits payable to Participants (866,100) (2,971,767) 954,993 ----------- ----------- ------------ Net decrease (1,438,622) (2,581,539) (8,865,488) Net assets available for plan benefits at beginning of year 19,525,337 22,106,876 30,972,364 ----------- ----------- ------------ Net assets available for plan benefits at end of year $18,086,715 $19,525,337 $ 22,106,876 =========== =========== ============ See accompanying notes and independent public accountants' report. 10 FFE TRANSPORTATION SERVICES, INC. EMPLOYEE STOCK OWNERSHIP PLAN NOTES TO FINANCIAL STATEMENTS December 31, 1997 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 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 retirement age, 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. 11 Termination of the Plan - The Employer made no contributions during the ----------------------- year ended December 31, 1997. The FFE Plan provides that the Employer may suspend, terminate, or completely discontinue contributions. In the event the FFE Plan is terminated or contributions are permanently discontinued: (a) ERISA provides that each participant's interest in the trust becomes fully vested. (b) The FFE Plan provides that the net assets of the FFE Plan shall be allocated among the participants and beneficiaries of the FFE Plan as provided by ERISA. 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. Plan Merger - Management plans to merge the FFE Transportation Services, ----------- Inc. Employee Stock Ownership Plan into the Savings Plan for Employees of Frozen Food Express Industries, Inc. during 1998. 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 ------------------------ 2,589,540 and 2,703,614 shares at December 31, 1997 and 1996, respectively, is valued at the quoted market price on the last day of each year. 12 3. Net unrealized (depreciation) appreciation in market value of investments ------------------------------------------------------------------------- The 1997, 1996 and 1995 net unrealized (depreciation) appreciation in market value of investments was as follows: For the Year Ended December 31, ---------------------------------------- 1997 1996 1995 ------------ ------------ ------------ Investment at market $ 23,305,860 $ 24,332,526 $ 23,853,996 Investment at cost (5,692,963) (5,804,523) (5,376,540) ------------ ------------ ------------ Unrealized appreciation at end of year 17,612,897 18,528,003 18,477,456 Unrealized appreciation at beginning of year (18,528,003) (18,477,456) (29,539,795) ------------ ------------ ------------ Net unrealized (depreciation) appreciation in market value of investments during the year $ (915,106) $ 50,547 $(11,062,339) ============ ============ ============ 4. Trust Agreement --------------- Pursuant to a trust agreement, Chase Bank of Texas holds all investment assets of the FFE Plan and executes all transactions therein. 13 INDEPENDENT PUBLIC ACCOUNTANTS' REPORT -------------------------------------- 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, 1997 and 1996, 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, 1997. 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 Savings Plan for Employees of Frozen Food Express Industries, Inc., as of December 31, 1997 and 1996, and the changes in net assets available for plan benefits for each of the three years in the period ended December 31, 1997 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 pages 16, 17 and 18 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 16, 17 and 18 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 basic financial statements taken as a whole. Waters, Murray & Associates Mansfield, Texas June 23, 1998 14 ADDITIONAL INFORMATION 15 FFE TRANSPORTATION SERVICES, INC. EMPLOYEE STOCK OWNERSHIP PLAN ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES December 31, 1997
(a) (b) Identity of Issue (c) Description of Investment (d) Cost (e) Current Value ---------------------- ----------------------------- ---------- ------------- Chase Bank of Texas, NA Money Market Fund $ 318,878 $ 318,878 * FFEX 2,589,540 shares common stock $5,692,963 $23,305,860
* Party-in-interest to the plan. 16 FFE TRANSPORTATION SERVICES, INC. EMPLOYEE STOCK OWNERSHIP PLAN ITEM 27a - SCHEDULE OF ASSETS ACQUIRED AND SOLD December 31, 1997 (a) Identity of Issue (b) Description of Investment (c) Cost (d) Proceeds ----------------- ------------------------- ---- -------- None N/A N/A N/A 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. 17 FFE TRANSPORTATION SERVICES, INC. EMPLOYEE STOCK OWNERSHIP PLAN ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS Years Ended December 31, 1997 and 1996 Purchases -------------- Shares/ Market Identity of Party Involved Description Units Cost Value - --------------------------- ----------- ------- ---- ------ 1997 - ---- NONE N/A N/A N/A N/A 1996 - ---- NONE N/A N/A N/A N/A 18 EX-99.2 4 CONWELL CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN EXHIBIT 99.2 19 CONWELL CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS December 31, 1997 and 1996 1997 1996 ---------- ---------- Money market fund $ 3,405 $ 39,301 Frozen Food Express Industries, Inc. common stock 1,013,670 1,181,592 Due from related Trust 100,091 -- Receivable from employer 16 -- ---------- ---------- Total assets 1,117,182 1,220,893 ---------- ---------- Less: Benefits payable 274,614 242,759 Due to related trust -- 11,376 ---------- ---------- Total Liabilities 274,614 254,135 ---------- ---------- Net assets available for plan benefits $ 842,568 $ 966,758 ========== ========== See accompanying notes and independent public accountants' report. 20 CONWELL CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS Years Ended December 31, 1997, 1996 and 1995 1997 1996 1995 ---------- ----------- ----------- Investment income: Dividend income $ 15,072 $ 14,324 $ 10,835 Interest income 1,678 1,759 664 --------- ---------- ---------- Net investment income 16,750 16,083 11,499 Net unrealized appreciation (depreciation) in market value of investments (16,495) 12,757 (363,034) Realized gain on sale of stock 1,436 99 20,173 Employer contributions -- -- 155,000 --------- ---------- ---------- Total additions (reductions) 1,691 28,939 (176,362) Decrease in fair market value of plan benefits payable to participants (125,881) (108,539) (11,637) --------- ---------- ---------- Net (decrease) increase (124,190) (79,600) (187,999) Net assets available for plan benefits at beginning of year 966,758 1,046,358 1,234,357 --------- ---------- ---------- Net assets available for plan benefits at end of year $ 842,568 $ 966,758 $1,046,358 ========= ========== ========== See accompanying notes and independent public accountants' report. 21 CONWELL CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN NOTES TO FINANCIAL STATEMENTS December 31, 1997 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 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 retirement age, 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. 22 Termination of the Plan - - The Employer made no contributions during the ----------------------- year ended December 31, 1997. The Conwell Plan provides that the Employer may suspend, terminate, or completely discontinue contributions. In the event the Conwell Plan is terminated or contributions are permanently discontinued: (a) ERISA provides that each participant's interest in the trust becomes fully vested. (b) The Conwell Plan provides that the net assets of the Conwell Plan shall be allocated among the participants and beneficiaries of the Conwell Plan as provided by ERISA. 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. Plan Merger - Management plans to merge the Conwell Employee Stock ----------- Ownership Plan into the Savings Plan for Employees of Frozen Food Express Industries, Inc. during 1998. 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 ------------------------ 112,630 and 131,288 shares at December 31, 1997 and 1996, respectively, is valued at the quoted market price on the last day of each year. 23 3. Net unrealized (depreciation) appreciation in market value of investments ------------------------------------------------------------------------- The 1997, 1996 and 1995 net unrealized (depreciation) appreciation in market value of investments was determined as follows:
For the Year Ended December 31, --------------------------------------------------- 1997 1996 1995 ----------- ---------- ---------- Investment at market $1,013,670 $1,181,592 $1,015,394 Investment at cost (678,495) (829,921) (676,480) ---------- ---------- ---------- Unrealized appreciation at end of year 335,175 351,671 338,914 Unrealized appreciation at beginning of year (351,670) (338,914) (701,948) ---------- ---------- ---------- Net unrealized (depreciation) appreciation in market value of investments during the year $ (16,495) $ 12,757 $ (363,034) ========== ========== ==========
4. Trust Agreement --------------- Pursuant to a trust agreement, Chase Bank of Texas holds all investment assets of the Conwell Plan and executes all transactions therein. 24 INDEPENDENT PUBLIC ACCOUNTANTS' REPORT -------------------------------------- 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, 1997 and 1996, 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, 1997. 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, 1997 and 1996, and the changes in net assets available for plan benefits for each of the three years in the period ended December 31, 1997 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 pages 27, 28 and 29 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 27, 28 and 29 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 basic financial statements taken as a whole. Waters, Murray & Associates Mansfield, Texas June 23, 1998 25 ADDITIONAL INFORMATION 26 CONWELL CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES December 31, 1997
(a) (b) Identity of Issue (c) Description of Investment (d) Cost (e) Current Value ------------------------ --------------------------- -------- ------------- Chase Bank of Texas, NA Money Market Fund $ 3,405 $ 3,405 * FFEX 112,630 shares common stock $678,495 $1,013,670
* Party-in-interest to the plan. 27 CONWELL CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN ITEM 27a - SCHEDULE OF ASSETS ACQUIRED AND SOLD December 31, 1997
(a) Identity of Issue (b) Description of Investment (c) Cost (d) Proceeds ----------------- ------------------------- ---- -------- None *2,616 shares common stock $23,320 $24,756
* 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. 28 CONWELL CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS Years Ended December 31, 1997 and 1996 Purchases ---------------- Shares/ Market Identity of Party Involved Description Units Cost Value - -------------------------- ----------- ------- ---- ------ 1997 - ---- None N/A N/A N/A N/A 1996 - ---- None N/A N/A N/A N/A 29 EX-99.3 5 SAVINGS PLAN FOR EMPLOYEES OF FROZEN FOOD EXPRESS EXHIBIT 99.3 30 SAVINGS PLAN FOR EMPLOYEES OF FROZEN FOOD EXPRESS INDUSTRIES, INC. STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS December 31, 1997 and 1996 1997 1996 ----------- ----------- Investments $17,880,896 $17,367,803 Participant notes receivable 1,738,150 1,443,270 Contributions receivable and other 818,567 891,479 ----------- ----------- Total assets 20,437,613 19,702,552 ----------- ----------- Less: Benefits payable 2,939,703 1,729,482 Due to related trust 42,273 80,487 ----------- ----------- Total liabilities 2,981,976 1,809,969 ----------- ----------- Net assets available for plan benefits $17,455,637 $17,892,583 =========== =========== See accompanying notes and independent public accountants' report. 31 SAVINGS PLAN FOR EMPLOYEES OF FFE TRANSPORTATION SERVICES, INC. STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS Years Ended December 31, 1997, 1996 and 1995 1997 1996 1995 ------------ ------------ ------------ Investment income: Dividend income $ 224,304 $ 210,363 $ 195,543 Interest income 137,212 142,252 111,251 ----------- ----------- ----------- Net investment income: 361,516 352,615 306,794 Realized gain 455,433 330,317 585,376 Net unrealized depreciation In market value of investments (948,741) (391,095) (7,192,030) Employee contributions 1,621,793 1,531,707 1,496,401 Employer contributions 1,496,274 1,653,869 961,941 ----------- ----------- ----------- Total additions (reductions) 2,986,275 3,477,413 (3,841,518) Decrease in fair market value of plan Benefits payable to participants (3,423,221) (883,340) (1,191,930) ----------- ----------- ----------- Net increase (decrease) (436,946) 2,594,073 (5,033,448) Net assets available for plan benefits at Beginning of year 17,892,583 15,298,510 20,331,958 ----------- ----------- ----------- Net assets available for plan benefits at end of year $17,455,637 $17,892,583 $15,298,510 =========== =========== =========== See accompanying notes and independent public accountants' report. 32 SAVINGS PLAN FOR EMPLOYEES OF FROZEN FOOD EXPRESS INDUSTRIES, INC. NOTES TO FINANCIAL STATEMENTS December 31, 1997 1. Description of the Plan ----------------------- The Savings Plan for Employees of Frozen Food Express Industries, Inc. (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 $1,619,485, $1,307,776, and $1,378,905 in 1997, 1996, and 1995, 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' nonvested 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 1997 and 1996 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. 33 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 - Upon enrollment in the Savings Plan, a participant may ------------------ direct employee contributions in any of four investment options. Avesta Trust Income Fund - The fund invests in a diversified mix of primarily fixed income securities with a portion of the portfolio invested in equities and money market assets. Avesta Trust, Core Equity Fund - The fund invests in a diversified group of common stocks of large well established companies. Avesta Trust Money Market - The fund invests primarily in short-term U.S. Government, federal agency and instrumentality, securities, certificates of deposit, commercial paper, bankers' acceptances and repurchase agreements. Frozen Food Express Industries, Inc. Common Stock - Funds that are invested in the common stock of Frozen Food Express Industries, Inc. Participants may change their investment options semi-annually. 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. Plan Merger - Management plans to merge the Conwell Employee Stock ----------- Ownership Plan and FFE Transportation Services, Inc. Employee Stock Ownership Plan into the Savings Plan for Employees of Frozen Food Express Industries, Inc. during 1998. 34 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 as net unrealized appreciation (depreciation) in market value of investments. 35 3. Investments and cumulative unrealized appreciation (depreciation) in market --------------------------------------------------------------------------- value of investments -------------------- Investments are held by the plan trustee and are invested under a discretionary trust agreement. The following represents the cost, fair value, and cumulative unrealized appreciation of investments at December 31, 1997, 1996, and 1995.
As of December 31, 1997 ---------------------------------------------------------------------------------- Number of Cumulative Participating Shares/ Fair Unrealized Employees Units Cost Value Appreciation --------------- ------------ --------------- --------------- ----------------- FFEX common stock and Cash 2,070 1,922,426 $12,572,458 $16,599,330 $4,026,872 AVESTA Trust Money Market Fund 153 494,677 494,677 494,677 -- AVESTA Trust Core Equity Income Fund 160 26,902 462,615 571,666 109,051 AVESTA Trust Income Fund 111 10,665 189,374 215,223 25,849 ----------- ----------- ---------- $13,719,124 $17,880,896 $4,161,772 =========== =========== ==========
36 3. Investments and cumulative unrealized appreciation (depreciation) in market --------------------------------------------------------------------------- value of investments (Continued) --------------------
As of December 31, 1996 ---------------------------------------------------------------------------------- Number of Cumulative Participating Shares/ Fair Unrealized Employees Units Cost Value Appreciation --------------- ------------ --------------- --------------- ----------------- FFEX common stock and Cash 2,219 1,811,750 $11,230,013 $16,305,751 $5,075,738 AVESTA Trust Money Market Fund 148 526,141 526,141 526,141 -- AVESTA Trust Core Equity Income Fund 151 19,888 303,894 316,961 13,067 AVESTA Trust Income Fund 110 11,797 197,243 218,950 21,707 ----------- ----------- ---------- $12,257,291 $17,367,803 $5,110,512 =========== =========== ==========
37 3. Investments and cumulative unrealized appreciation (depreciation) in market --------------------------------------------------------------------------- value of investments (Continued) --------------------
As of December 31, 1995 ----------------------------------------------------------------------------------- Cumulative Number of Unrealized Participating Shares/ Fair Appreciation Employees Units Cost Value (Depreciation) --------------- ------------ --------------- --------------- ------------------ FFEX common stock and Cash 2,327 1,718,398 $ 9,585,362 $15,035,982 $5,450,620 AVESTA Trust Money Market Fund 68 524,516 524,516 524,516 -- AVESTA Trust Equity Income Fund 91 7,111 139,357 170,205 30,848 AVESTA Trust Income Fund 74 10,587 172,622 192,761 20,139 ----------- ----------- ---------- $10,421,857 $15,923,464 $5,501,607 =========== =========== ==========
38 4. Statement of net assets available for plan benefits by investment fund ---------------------------------------------------------------------- As of December 31, 1997:
Core FFEX Money Equity Participants' Common Stock Market Income Income Notes and Cash Fund Fund Fund Receivable Total ----------------- ------------ ------------- ------------ ----------------- ---------------- Investments $16,599,330 $494,677 $571,666 $215,223 $ -- $17,880,896 Participant's notes receivable -- -- -- -- 1,738,150 1,738,150 Contributions receivable 818,567 -- -- -- -- 818,567 ----------- -------- -------- -------- ---------- ----------- Total Assets 17,417,897 494,677 571,666 215,223 1,738,150 20,437,613 ----------- -------- -------- -------- ---------- ----------- Due to related trust 42,273 -- -- -- -- 42,273 Benefits payable 2,851,144 16,426 38,800 33,333 -- 2,939,703 ----------- -------- -------- -------- ---------- ----------- Total Liabilities 2,893,417 16,426 38,800 33,333 -- 2,981,976 ----------- -------- -------- -------- ---------- ----------- Net assets available for Plan benefits $14,524,480 $478,251 $532,866 $181,890 $1,738,150 $17,455,637 =========== ======== ======== ======== ========== ===========
39 4. Statement of net assets available for plan benefits by investment fund ---------------------------------------------------------------------- As of December 31, 1996:
Core FFEX Money Equity Participants' Common Stock Market Income Income Notes and Cash Fund Fund Fund Receivable Total ------------------ ------------- -------------- ------------- ----------------- ----------------- Investments $16,305,751 $526,141 $316,961 $218,950 $ -- $17,367,803 Participant's notes receivable -- -- -- -- 1,443,270 1,443,270 Contributions receivable 928,624 (38,306) 754 407 -- 891,479 ----------- -------- -------- -------- ---------- ----------- Total Assets 17,234,375 487,835 317,715 219,357 1,443,270 19,702,552 ----------- -------- -------- -------- ---------- ----------- Due to related trust (80,487) -- -- -- -- (80,487) Benefits payable (1,595,425) (44,239) (39,114) (50,704) -- (1,729,482) ----------- -------- -------- -------- ---------- ----------- Total Liabilities (1,675,912) (44,239) (39,114) (50,704) -- (1,809,969) ----------- -------- -------- -------- ---------- ----------- Net assets available for plan benefits $15,558,463 $443,596 $278,601 $168,653 $1,443,270 $17,892,583 =========== ======== ======== ======== ========== ===========
40 4. Statement of net assets available for plan benefits by investment fund ---------------------------------------------------------------------- As of December 31, 1995:
Core FFEX Money Equity Participants' Common Stock Market Income Income Notes and Cash Fund Fund Fund Receivable Total ------------ --------- -------- -------- ------------ ----------- Investments $15,035,982 $ 524,516 $170,205 $192,761 $ -- $15,923,464 Participant's notes receivable -- -- -- -- 1,341,722 1,341,722 Contributions receivable 235,940 -- -- -- -- 235,940 ----------- --------- -------- -------- ---------- ----------- Total Assets 15,271,922 524,516 170,205 192,761 1,341,722 17,501,126 ----------- --------- -------- -------- ---------- ----------- Due to related trust (365,111) -- -- -- -- (365,111) Benefits payable (1,566,503) (193,174) (13,293) (64,535) -- (1,837,505) ----------- --------- -------- -------- ---------- ----------- Total Liabilities (1,931,614) (193,174) (13,293) (64,535) -- (2,202,616) ----------- --------- -------- -------- ---------- ----------- Net assets available for plan benefits $13,340,308 $ 331,342 $156,912 $128,226 $1,341,722 $15,298,510 =========== ========= ======== ======== ========== ===========
41 5. Statement of changes in net assets available for plan benefits by ----------------------------------------------------------------- investment fund --------------- For the Year Ended December 31, 1997
Core FFEX Money Equity Participants' Common Market Income Income Notes Stock Fund Fund Fund Receivable Total ------------ --------- --------- --------- -------------- ------------ Dividend income $ 224,304 $ -- $ -- $ -- $ -- $ 224,304 Interest income 2,738 25,450 -- -- 109,024 137,212 Realized gain 424,606 -- 18,087 12,740 -- 455,433 Net (depreciation) unrealized appreciation in market value of investments (1,048,866) -- 95,984 4,141 -- (948,741) Employee contributions 1,350,825 101,527 102,146 67,295 -- 1,621,793 Employer Contributions 1,496,274 -- -- -- -- 1,496,274 ----------- -------- -------- -------- ---------- ----------- Total 2,449,881 126,976 216,218 84,176 109,024 2,986,275 Transfers between funds (455,753) (48,036) 114,665 (3,385) 392,509 -- Decrease in fair market value of plan benefits payable to participants (3,028,111) (44,285) (76,618) (67,554) (206,653) (3,423,221) ----------- -------- -------- -------- ---------- ----------- Net increase (1,033,983) 34,655 254,265 13,237 294,880 (436,946) Net assets available for plan benefits at beginning of period 15,558,463 443,596 278,601 168,653 1,443,270 17,892,583 ----------- -------- -------- -------- ---------- ----------- Net assets available for plan benefits at end of period $14,524,480 $478,251 $532,866 $181,890 $1,738,150 $17,455,637 =========== ======== ======== ======== ========== ===========
42 5. Statement of changes in net assets available for plan benefits by ----------------------------------------------------------------- investment fund --------------- For the Year Ended December 31, 1996
Core FFEX Money Equity Participants' Common Market Income Income Notes Stock Fund Fund Fund Receivable Total ------------ ---------- --------- --------- ------------- ------------ Dividend income $ 210,363 $ -- $ -- $ -- $ -- $ 210,363 Interest income 3,049 25,414 -- -- 113,789 142,252 Realized gain 271,816 -- 56,488 2,013 -- 330,317 Net unrealized (depreciation) appreciation in market value of investments (374,883) -- (17,782) 1,570 -- (391,095) Employee contributions 1,315,007 89,786 77,449 49,465 -- 1,531,707 Employer contributions 1,653,869 -- -- -- -- 1,653,869 ----------- --------- -------- -------- ---------- ----------- Total 3,079,221 115,200 116,155 53,048 113,789 3,477,413 Transfers between funds (74,182) 1,058 35,825 2,766 34,533 -- Decrease in fair market value of plan benefits payable to participants (786,884) (4,004) (30,291) (15,387) (46,774) (883,340) ----------- --------- -------- -------- ---------- ----------- Net increase 2,218,155 112,254 121,689 40,427 101,548 2,594,073 Net assets available for plan benefits at beginning of period 13,340,308 331,342 156,912 128,226 1,341,722 15,298,510 ----------- --------- -------- -------- ---------- ----------- Net assets available for plan benefits at end of period $15,558,463 $443,596 $278,601 $168,653 $1,443,270 $17,892,583 =========== ========= ======== ======== ========== ===========
43 5. Statement of changes in net assets available for plan benefits by ----------------------------------------------------------------- investment fund (Continued) --------------- For the Year Ended December 31, 1995
FFEX Money Equity Participants' Common Market Income Income Notes Stock Fund Fund Fund Receivable Total ------------ ---------- --------- --------- ------------- ------------ Dividend income $ 195,543 $ -- $ -- $ -- $ -- $ 195,543 Interest income 795 29,818 -- -- 80,638 111,251 Realized gain 582,386 -- 921 2,069 -- 585,376 Net unrealized (depreciation) appreciation in market value of investments (7,255,565) -- 33,161 30,374 -- (7,192,030) Employee contributions 1,355,335 57,564 43,429 40,073 -- 1,496,401 Employer contributions 961,941 -- -- -- -- 961,941 ----------- --------- -------- -------- ---------- ----------- Total (4,159,565) 87,382 77,511 72,516 80,638 (3,841,518) Transfers between funds (422,374) 3,936 26,101 (7,556) 399,893 -- Decrease in fair market value of plan benefits payable to participants (707,689) (378,902) (15,815) (89,524) -- (1,191,930) ----------- --------- -------- -------- ---------- ----------- Net (decrease) increase (5,289,628) (287,584) 87,797 (24,564) 480,531 (5,033,448) Net assets available for plan benefits at beginning of period 18,629,936 618,926 69,115 152,790 861,191 20,331,958 ----------- --------- -------- -------- ---------- ----------- Net assets available for plan benefits at end of period $13,340,308 $ 331,342 $156,912 $128,226 $1,341,722 $15,298,510 =========== ========= ======== ======== ========== ===========
44 INDEPENDENT PUBLIC ACCOUNTANTS' REPORT -------------------------------------- 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 Savings Plan for Employees of Frozen Food Express Industries, Inc. (the "Plan") as of December 31, 1996 and 1995, 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, 1997. 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, 1997 and 1996, and the changes in net assets available for plan benefits for each of the three years in the period ended December 31, 1997 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 pages 47, 48 and 49 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 47, 48 and 49 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 basic financial statements taken as a whole. Waters, Murray & Associates Mansfield, Texas June 23, 1998 45 ADDITIONAL INFORMATION 46 SAVINGS PLAN FOR EMPLOYEES OF FROZEN FOOD EXPRESS INDUSTRIES, INC. ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES December 31, 1997
(a) (b) Identity of Issue (c) Description of Investment (d) Cost (e) Current Value ----------------------- ----------------------------- ----------- ------------- Chase Bank of Texas, NA Money Market $ 87,813 $ 87,813 * FFEX 1,834,613 shares common stock 12,484,645 16,511,517 AVESTA Trust - Money Market 494,677 shares money market 494,677 494,677 AVESTA Trust - Core Equity Fund 26,902 shares growth stocks 462,615 571,666 AVESTA Trust - Income Fund 10,665 shares investment grade Bonds 189,374 215,223 Participants' notes Interest bearing notes at receivable loan 8.75% - 9.50%. $ -- $ 1,738,150
* Party-in-interest to the plan. 47 SAVINGS PLAN FOR EMPLOYEES OF FROZEN FOOD EXPRESS INDUSTRIES, INC. ITEM 27a - SCHEDULE OF ASSETS ACQUIRED AND SOLD December 31, 1997
(a) Identity of Issue (b) Description of Investment (c) Cost (d) Proceeds ----------------- ------------------------------- -------- -------- FFEX *60,442 shares FFEX common stock $374,646 $538,673
* 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. 48 SAVINGS PLAN FOR EMPLOYEES OF FROZEN FOOD EXPRESS INDUSTRIES, INC. ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS Years Ended December 31, 1997 and 1996 Purchases --------------------- Identity Of Shares/ Market Party Involved Description Units Cost Value - -------------- ----------------- ------- ---------- ---------- 1997 - ---- FFEX FFEX common stock 306,457 $2,804,321 $2,758,113 AVESTA Money Market Fund 130,643 130,643 130,643 AVESTA Core Equity Income Fund 12,600 248,223 267,739 AVESTA Income Fund 5,406 104,901 109,102 1996 - ---- FFEX FFEX common stock 229,001 $2,296,650 $2,061,009 AVESTA Money Market Fund 128,092 128,092 128,092 AVESTA Core Equity Income Fund 19,951 304,851 317,959 AVESTA Income Fund 2,855 49,466 52,989 49 -----END PRIVACY-ENHANCED MESSAGE-----