EXHIBIT 99.1
FFE TRANSPORTATION SERVICES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31, 1999 and 1998
1999 1998
----- ----
Money market fund $ 196,707 $ 285,960
Frozen Food Express Industries,
Inc.
Common Stock 9,262,056 19,731,828
Receivables
976 1,270
--------- ----------
Total assets 9,459,739 20,019,058
Less:
Benefits payable 2,751,107 4,827,428
Trustee payable 18,402 0
Due to related trust 30,107 65,303
--------- ----------
Net assets available for
plan benefits $6,660,123 $15,126,327
========= ==========
See accompanying notes and report of independent public
accountants.
FFE TRANSPORTATION SERVICES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
Years Ended December 31, 1999, 1998 and 1997
1999 1998 1997
---- ---- ----
Investment income:
Dividend income $ 221,602 $ 303,550 $ 316,981
Interest income 8,864 9,957 10,504
-------- ---------- ----------
230,466 313,507 327,485
Net unrealized depreciation
in market value of
investments (10,204,161) (3,439,863) (915,106)
Realized gain on sale of
stock 6,194 19,350 15,099
Recordkeeping fees (18,402) - -
---------- ---------- ----------
(9,985,903) (3,107,006) (572,522)
Increase (decrease) in fair
market value of plan
benefits payable to
Participants 1,519,699 146,618 (866,100)
---------- ---------- ----------
Net decrease (8,466,204) (2,960,388) (1,438,622)
Net assets available for
plan benefits at
beginning of year 15,126,327 18,086,715 19,525,337
---------- ---------- ----------
Net assets available for
plan benefits at
end of year $ 6,660,123 $15,126,327 $18,086,715
========== ========== ==========
See accompanying notes and report of independent public
accountants.
FFE TRANSPORTATION SERVICES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
1.Description of the Plan
-----------------------
The FFE Transportation Services, Inc. Employee Stock Ownership
Plan (the "FFE Plan") is a defined contribution plan designed
to provide retirement income to employees of FFE
Transportation Services, Inc. and other affiliated
participating companies (the "Employer") in compliance with
the Employee Retirement Income Security Act of 1974 ("ERISA").
The FFE Plan is designed to invest primarily in Common Stock
of Frozen Food Express Industries, Inc. ("FFEX"), the parent
corporation of the Employer. Participants should refer to the
FFE Plan agreement for a more complete description of the FFE
Plan's provisions.
Contributions - Contributions by the Employer are at the
discretion of its Board of Directors. No participant shall be
required or permitted to make contributions.
Eligibility - Employees become eligible for participation in
the FFE Plan as of the first entry date, as defined,
concurrent with or next following the employees' completion of
1,000 hours of service.
Benefits and vesting - Participants are entitled to vested
benefits upon attainment of normal or early retirement age,
disability, or other termination of employment, whether
voluntary or involuntary. Participants' beneficiaries are
entitled to benefits if the participant was vested at the time
of death. Participants' benefits from company contributions
begin to vest subsequent to completion of three years of
credited service and vest 100% at completion of seven years of
credited service, as defined by the FFE Plan.
Participants' accounts - A separate account is maintained for
each participant. If no restrictions apply, the participant's
account is adjusted annually for the participant's allocable
share of employer contributions, earnings on employer
contributions, plan forfeitures, realized and unrealized gains
and losses, and any amounts distributed to the participant or
participant's beneficiary from such account. Allocation of
employer contributions and plan forfeitures are based on
annual compensation. FFE Plan earnings are allocated based on
participants' account balances.
Administration - The FFE Plan is administered by a committee
appointed by the Board of Directors of FFEX. Administrative
expenses not paid by the Employer are paid by the FFE Plan.
Tax status - The United States Treasury Department has advised
that the FFE Plan constitutes a qualified trust under Section
401(a) of the Internal Revenue Code (the "Code") and is
therefore exempt from federal income tax under provisions of
Section 501(a) of the Code. Employer contributions and FFE
Plan earnings are not includable in the participant's taxable
income until such amounts are distributed to the participant
or to the participant's beneficiary.
2. Summary of significant accounting policies
------------------------------------------
Basis of accounting - The financial statements of the FFE Plan
are under the accrual method of accounting.
Accounting estimates - The preparation of financial statements
in conformity with generally accepted accounting principles
requires the FFE Plan Committee to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reported
period. Actual outcomes may vary from these estimates.
Valuation of investments - Investment in FFEX Common Stock,
consisting of 2,390,208 and 2,506,265 shares at December 31,
1999 and 1998, respectively, is valued at the quoted market
price on the last day of the year.
3. Net unrealized appreciation in market value of investments
----------------------------------------------------------
The 1999, 1998 and 1997 net unrealized depreciation in market
value of investments was as follows:
For the Year Ended December 31,
-------------------------------
1999 1998 1997
----- ----- -----
Investment at market $ 9,262,056 $19,731,828 $23,305,860
Investment at cost (5,293,183) (5,558,794) (5,692,963)
--------- --------- ----------
Unrealized depreciation
at end of year 3,968,873 14,173,034 17,612,897
Unrealized depreciation
at beginning of year (14,173,034) (17,612,897) (18,528,003)
---------- ---------- ----------
Net unrealized depreciation
in market value of
investments during
the year $(10,204,161) $(3,439,863) $ (915,106)
========== ========== ==========
4. Trust Agreement
---------------
As of December 31, 1999 pursuant to a trust agreement, Chase
Bank of Texas, N.A. held all investment assets of the FFE Plan
and executed all transactions therein.
5. Subsequent Event
----------------
On January 1, 2000, the FFE Plan was merged into the Frozen
Food Express Industries, Inc. 401(k) Savings Plan (the
"Savings Plan"). The transfer of net assets was credited to
separate participant accounts of the Savings Plan as of
January 1, 2000 in amounts equal to their balances as
previously carried in the accounts of the FFE Plan. No
employer contributions were made to the FFE Plan during the
year and no future employer contributions will be made.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
The Administrative Committee of the FFE
Transportation Services, Inc.
Employee Stock Ownership Plan:
We have audited the accompanying statements of net assets
available for plan benefits of the FFE Transportation Services,
Inc. Employee Stock Ownership Plan (the "Plan") as of December
31, 1999 and 1998, and the related statements of changes in net
assets available for plan benefits for each of the three years in
the period ended December 31, 1999. These financial statements
are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the net assets
available for plan benefits of the FFE Transportation Services,
Inc. Employee Stock Ownership Plan, as of December 31, 1999 and
1998, and the changes in net assets available for plan benefits
for each of the three years in the period ended December 31, 1999
in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental
schedules on the following pages are presented for the purpose of
additional analysis and are not a required part of the basic
financial statements but are supplementary information required
by the Department of Labor's Rules and Regulations for Reporting
and Disclosure under the Employee Retirement Income Security Act
of 1974. The supplemental schedules on the following pages have
been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, are fairly
stated in all material respects in relation to the foregoing
basic financial statements taken as a whole.
/s/ Waters, Wright & Associates, RLLP
- -------------------------------------
July 12, 2000
ADDITIONAL INFORMATION
FFE TRANSPORTATION SERVICES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD
FOR INVESTMENT PURPOSES
December 31, 1999
(a) (b) (c) Description (d) (e) Current
Identity of Issue of Investment Cost Value
- --- ------------------ ---------------- ------- ---------
Chase Bank of Money Market Fund $ 196,707 $ 196,707
Texas, NA
* FFEX 2,390,208 shares
Common Stock
of Frozen
Food Express
Industries, Inc. $5,293,183 $9,262,056
* Party-in-interest to the plan.
FFE TRANSPORTATION SERVICES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
ITEM 27a - SCHEDULE OF ASSETS ACQUIRED AND SOLD
December 31, 1999
(a) (b) Description (c) (d) Current
Identity of Issue of Investment Cost Value
------------------ ---------------- ------- -------
None * 1,617 shares Frozen
Food Express
Industries, Inc.
Common Stock $6,964 $14,553
* These are total shares sold within the plan year, not
necessarily just those shares acquired and disposed within the
plan year.
All other investment assets which were both acquired and
disposed of during the plan year were interests issued by
money market funds. Therefore, these transactions are
excluded from this schedule in accordance with the Specific
Instructions for Form 5500.
FFE TRANSPORTATION SERVICES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
Years Ended December 31, 1999 and 1998
Purchases
-----------
Identity of Shares/ Market
Party Involved Description Units Cost Value
- --------------- ------------ -------- ----- -------
1999
- -----
None N/A N/A N/A N/A
1998
- -----
None N/A N/A N/A N/A