<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
EXHIBIT 99.1
8
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
ADDITIONAL INFORMATION
15
<PAGE>
FFE TRANSPORTATION SERVICES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD
FOR INVESTMENT PURPOSES
December 31, 1997
<TABLE>
<CAPTION>
(a) (b) Identity of Issue (c) Description of Investment (d) Cost (e) Current Value
---------------------- ----------------------------- ---------- -------------
<S> <C> <C> <C> <C>
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
</TABLE>
* Party-in-interest to the plan.
16
<PAGE>
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
<PAGE>
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
<PAGE>
EXHIBIT 99.2
19
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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:
<TABLE>
<CAPTION>
For the Year Ended December 31,
---------------------------------------------------
1997 1996 1995
----------- ---------- ----------
<S> <C> <C> <C>
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)
========== ========== ==========
</TABLE>
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
<PAGE>
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
<PAGE>
ADDITIONAL INFORMATION
26
<PAGE>
CONWELL CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD
FOR INVESTMENT PURPOSES
December 31, 1997
<TABLE>
<CAPTION>
(a) (b) Identity of Issue (c) Description of Investment (d) Cost (e) Current Value
------------------------ --------------------------- -------- -------------
<S> <C> <C> <C> <C>
Chase Bank of Texas, NA Money Market Fund $ 3,405 $ 3,405
* FFEX 112,630 shares common stock $678,495 $1,013,670
</TABLE>
* Party-in-interest to the plan.
27
<PAGE>
CONWELL CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
ITEM 27a - SCHEDULE OF ASSETS ACQUIRED AND SOLD
December 31, 1997
<TABLE>
<CAPTION>
(a) Identity of Issue (b) Description of Investment (c) Cost (d) Proceeds
----------------- ------------------------- ---- --------
<S> <C> <C> <C>
None *2,616 shares common stock $23,320 $24,756
</TABLE>
* 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
<PAGE>
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
<PAGE>
EXHIBIT 99.3
30
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<TABLE>
<CAPTION>
As of December 31, 1997
----------------------------------------------------------------------------------
Number of Cumulative
Participating Shares/ Fair Unrealized
Employees Units Cost Value Appreciation
--------------- ------------ --------------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
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
=========== =========== ==========
</TABLE>
36
<PAGE>
3. Investments and cumulative unrealized appreciation (depreciation) in market
---------------------------------------------------------------------------
value of investments (Continued)
--------------------
<TABLE>
<CAPTION>
As of December 31, 1996
----------------------------------------------------------------------------------
Number of Cumulative
Participating Shares/ Fair Unrealized
Employees Units Cost Value Appreciation
--------------- ------------ --------------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
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
=========== =========== ==========
</TABLE>
37
<PAGE>
3. Investments and cumulative unrealized appreciation (depreciation) in market
---------------------------------------------------------------------------
value of investments (Continued)
--------------------
<TABLE>
<CAPTION>
As of December 31, 1995
-----------------------------------------------------------------------------------
Cumulative
Number of Unrealized
Participating Shares/ Fair Appreciation
Employees Units Cost Value (Depreciation)
--------------- ------------ --------------- --------------- ------------------
<S> <C> <C> <C> <C> <C>
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
=========== =========== ==========
</TABLE>
38
<PAGE>
4. Statement of net assets available for plan benefits by investment fund
----------------------------------------------------------------------
As of December 31, 1997:
<TABLE>
<CAPTION>
Core
FFEX Money Equity Participants'
Common Stock Market Income Income Notes
and Cash Fund Fund Fund Receivable Total
----------------- ------------ ------------- ------------ ----------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
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
=========== ======== ======== ======== ========== ===========
</TABLE>
39
<PAGE>
4. Statement of net assets available for plan benefits by investment fund
----------------------------------------------------------------------
As of December 31, 1996:
<TABLE>
<CAPTION>
Core
FFEX Money Equity Participants'
Common Stock Market Income Income Notes
and Cash Fund Fund Fund Receivable Total
------------------ ------------- -------------- ------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
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
=========== ======== ======== ======== ========== ===========
</TABLE>
40
<PAGE>
4. Statement of net assets available for plan benefits by investment fund
----------------------------------------------------------------------
As of December 31, 1995:
<TABLE>
<CAPTION>
Core
FFEX Money Equity Participants'
Common Stock Market Income Income Notes
and Cash Fund Fund Fund Receivable Total
------------ --------- -------- -------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
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
=========== ========= ======== ======== ========== ===========
</TABLE>
41
<PAGE>
5. Statement of changes in net assets available for plan benefits by
-----------------------------------------------------------------
investment fund
---------------
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
Core
FFEX Money Equity Participants'
Common Market Income Income Notes
Stock Fund Fund Fund Receivable Total
------------ --------- --------- --------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
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
=========== ======== ======== ======== ========== ===========
</TABLE>
42
<PAGE>
5. Statement of changes in net assets available for plan benefits by
-----------------------------------------------------------------
investment fund
---------------
For the Year Ended December 31, 1996
<TABLE>
<CAPTION>
Core
FFEX Money Equity Participants'
Common Market Income Income Notes
Stock Fund Fund Fund Receivable Total
------------ ---------- --------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
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
=========== ========= ======== ======== ========== ===========
</TABLE>
43
<PAGE>
5. Statement of changes in net assets available for plan benefits by
-----------------------------------------------------------------
investment fund (Continued)
---------------
For the Year Ended December 31, 1995
<TABLE>
<CAPTION>
FFEX Money Equity Participants'
Common Market Income Income Notes
Stock Fund Fund Fund Receivable Total
------------ ---------- --------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
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
=========== ========= ======== ======== ========== ===========
</TABLE>
44
<PAGE>
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
<PAGE>
ADDITIONAL INFORMATION
46
<PAGE>
SAVINGS PLAN FOR EMPLOYEES OF
FROZEN FOOD EXPRESS INDUSTRIES, INC.
ITEM 27a - SCHEDULE OF ASSETS HELD
FOR INVESTMENT PURPOSES
December 31, 1997
<TABLE>
<CAPTION>
(a) (b) Identity of Issue (c) Description of Investment (d) Cost (e) Current Value
----------------------- ----------------------------- ----------- -------------
<S> <C> <C> <C> <C>
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
</TABLE>
* Party-in-interest to the plan.
47
<PAGE>
SAVINGS PLAN FOR EMPLOYEES OF
FROZEN FOOD EXPRESS INDUSTRIES, INC.
ITEM 27a - SCHEDULE OF ASSETS ACQUIRED AND SOLD
December 31, 1997
<TABLE>
<CAPTION>
(a) Identity of Issue (b) Description of Investment (c) Cost (d) Proceeds
----------------- ------------------------------- -------- --------
<S> <C> <C> <C>
FFEX *60,442 shares FFEX common stock $374,646 $538,673
</TABLE>
* 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
<PAGE>
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
