EXHIBIT 99.3
FROZEN FOOD EXPRESS INDUSTRIES, INC.
401(k) SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31, 1999 and 1998
1999 1998
----- -----
Investments $12,100,503 $17,792,839
Participant notes receivable 1,561,234 1,799,898
Employer contributions receivable 132,096 417,065
Employee contributions receivable 108,290 0
---------- ----------
Total assets 13,902,123 20,009,802
Less:
Benefits payable 936,195 1,129,730
Due to related trust 0 31,980
---------- ----------
Net assets available for plan
benefits $12,965,928 $18,848,092
========== ==========
See accompanying notes and report of independent public
accountants.
FFE TRANSPORTATION SERVICES, INC.
401(k) SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
Years Ended December 31, 1999, 1998 and 1997
1999 1998 1997
----- ----- -----
Investment income:
Dividend income $ 231,742 $ 283,865 $ 224,304
Interest income
161,774 164,271 137,212
-------- --------- --------
Net investment income 393,516 448,136 361,516
Administration expense (137,977) 0 0
Realized gain (loss) 175,135 (52,022) 455,433
Net unrealized depreciation
in market value of
investments (8,236,868) (2,163,017) (948,741)
Employee contributions 2,154,142 1,886,367 1,621,793
Employer contributions 1,361,160 1,092,765 1,496,274
---------- ---------- ----------
(4,290,892) 1,212,229 2,986,275
(Decrease) increase in fair
market value of plan
benefits payable to
participants (1,591,272) 180,226 (3,423,221)
---------- ---------- ----------
Net (decrease) increase (5,882,164) 1,392,455 (436,946)
Net assets available for
plan benefits at
beginning of year 18,848,092 17,455,637 17,892,583
---------- ---------- ----------
Net assets available for
plan benefits at
end of year $12,965,928 $18,848,092 $17,455,637
========== ========== ==========
See accompanying notes and report of independent public
accountants.
FROZEN FOOD EXPRESS INDUSTRIES, INC.
401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
1.Description of the Plan
------------------------
The Frozen Food Express Industries, Inc. 401(k) Savings Plan
(the "Savings Plan") is a defined contribution plan covering
substantially all employees of Frozen Food Express Industries,
Inc. (the "Employer" or "FFEX") and its wholly owned
subsidiaries. The Savings Plan is designed to comply with the
Employee Retirement Income Security Act of 1974 ("ERISA") and
to allow employees the option of investing in common stock of
the Employer or in other investment funds designated by the
Savings Plan committee. Participants should refer to the
Savings Plan agreement for a more complete description of the
Savings Plan's provisions.
Contributions - Participants may elect to contribute to the
Savings Plan through periodic payroll deductions, subject to
limits defined by the Savings Plan. Employee contributions,
excluding rollovers, amounted to $1,848,504, $1,619,485, and
$1,307,776 in 1999, 1998, and 1996, respectively. In
addition, the Employer contributes to the Savings Plan on a
quarterly basis amounts subject to limits defined by the
Savings Plan.
Eligibility - Employees become eligible for participation in
the Savings Plan as of the first entry date, as defined,
concurrent with or next following the employees' completion of
one-half year of service as defined by the Savings Plan.
Participants' accounts - Each participant account is credited
with the participant's contributions and an allocation of (a)
the Employer's contributions, (b) plan earnings, and (c)
forfeitures of terminated participants' non-vested accounts.
Allocations of plan earnings are based on participants'
account balances, allocation of employer's contributions are
based on participants' quarterly contributions, and
allocations of forfeitures are based on the participants'
annual compensation.
Participants' Notes Receivable - Participants may borrow from
their fund accounts an amount not to exceed the lesser of
$50,000 or 50% of the participant's vested account balance.
Loan transactions are treated as a transfer to (from) the
investment fund and from (to) Participant Notes Receivable.
Loan terms range from one to five years or up to ten years for
the purchase of a primary residence. The loans are secured by
the balance in the participant's account and bear interest at
a reasonable rate as determined by the Savings Committee. The
interest rates charged for loans in 1999 and 1998 ranged from
8.75% to 9.50%. Principal and interest payments are due in
substantially level amortized payments payable not less than
quarterly through payroll deductions.
Vesting - Upon termination of employment, participants are
entitled to receive 100% of their contributions and any
earnings thereon. Participants' benefits from employer
contributions begin to vest subsequent to completion of three
years of credited service and vest 100% at completion of seven
years of credited service as defined by the Savings Plan.
Investment options -During each of the three years ending
December 31, 1999, participants could direct employee
contributions in any of nine investment options.
Stable Value Fund - The fund invests in assets whose
principal value remains stable regardless of stock and
bond market fluctuations. The Savings Plan committee has
selected the Schwab Institutional Advantage Money Fund as
the investment vehicle for this fund.
Intermediate Bond Fund - The fund invests in fixed-income
securities including corporate bonds, U.S. government
securities, mortgage-related securities, and money-market
instruments. The Savings Plan committee has selected the
PIMCO Total Return Institutional Fund as the investment
vehicle for this fund.
Mixed Investment Fund - The fund may invest a large
portion of its assets in common stock and convertible
securities. Prospective dividends and earnings are major
considerations in these purchases. The Savings Plan
committee has selected the Janis Balanced Fund as the
investment vehicle for this fund.
Stock Index Fund - The fund attempts to replicate the
aggregate return and risk of the Standard & Poor's 500
index. The fund will purchase all, or a representative
sample of all the stocks held in the S&P 500 index. The
Savings Plan committee has selected the Schwab S&P 500
Index Fund as the investment vehicle for this fund.
Basic Stock Fund - The fund seeks capital appreciation by
investing primarily in securities that are expected to
grow at an above-average rate. The Savings Plan
committee has selected the Schwab S&P 500 Index Fund as
the investment vehicle for this fund. The Savings Plan
committee has selected the MFS Massachusetts Investment
Trust Fund-Class A as the investment vehicle for this
fund.
Growth Stock Fund - The fund invests primarily in common
stocks and favors securities of companies expected to
benefit from special favors or trends. The Savings Plan
committee has selected the Dreyfus Appreciation Fund as
the investment vehicle for this fund.
Small Cap Stock Fund - The fund seeks capital growth by
investing in small-sized companies that are currently
considered undervalued or demonstrate growth in earnings
and revenue. The Savings Plan committee has selected the
Baron Asset Fund as the investment vehicle for this fund.
International Stock Fund - The fund invests primarily in
stocks and debt securities of companies and governments
outside the United States. The Savings Plan committee
has selected the BT Investment International Equity Fund
as the investment vehicle for this fund.
Frozen Food Express Industries, Inc. Common Stock - Funds
that are invested in the common stock of Frozen Food
Express Industries, Inc.
Administration - The Savings Plan is administered by a
committee appointed by the Board of Directors of the Employer.
Administrative expenses not paid by FFEX are paid by the
Savings Plan.
Termination of the Plan - While the Employer has not expressed
any intent to discontinue its contributions, it is free to
discontinue contributions and may terminate the Savings Plan
at any time. If terminated, net assets of the Savings Plan
would be distributed to participants and beneficiaries as
prescribed by the terms of the Savings Plan, in accordance
with ERISA. Upon termination of the Savings Plan,
participants' accounts become 100% vested.
Tax status - The United States Treasury Department has advised
that the Savings Plan constitutes a qualified trust under
Section 401(a) of the Internal Revenue Code (the "Code") and
is therefore exempt from federal income tax under provisions
of Section 501(a) of the Code. Participant contributions,
employer contributions, and earnings from the Savings Plan are
not includable in the participant's taxable income until such
amounts are distributed to the participant or to the
participant's beneficiary.
2. Summary of significant accounting policies
-------------------------------------------
Basis of accounting - The financial statements of the Savings
Plan are under the accrual method of accounting.
Accounting estimates - The preparation of financial statements
in conformity with generally accepted accounting principles
requires the Savings Plan Committee to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reported
period. Actual outcomes may vary from these estimates.
Valuation of investments - Investments in FFEX common stock
and other investment funds are valued based on the quoted
market price on the last day of the year. The change in the
difference between current market value and cost of the
investment is reflected in the statement of changes in net
assets available for plan benefits by investment fund as net
unrealized appreciation or depreciation in market value of
investments.
3.The following presents net assets of investments at December
31, 1999 and 1998:
1999 1998
----- -----
Frozen Food Express Industries, Inc.
Common Stock 2,008,290 and 2,104,742
shares, respectively $7,680,579 * $15,002,925 *
BT Investment International Equity
Fund, 3,525 shares 101,343 0
Baron Asset Fund, 3,154 shares 181,316 0
Dreyfus Appreciation Fund, 6,287 shares 278,987 0
Schwab S&P 500 Index Fund, 18,017 shares 382,405 0
MFS Massachusetts Investment Trust Fund
- Class A, 52,833 shares 986,585 0
Janus Balanced Fund, 25,607 shares 578,521 0
PIMCO Total Return Institutional Fund,
46,384 shares 421,755 0
Schwab Institutional Advantage Money
Fund, 849,056 shares 793,203 0
Avesta Trust Money Market Fund,
619,880 shares 586,356
Avesta Trust Core Equity Income Fund, 1,163,574
45,649 shares
Avesta Trust Income Fund, 15,179 shares 295,339
---------- ----------
$11,404,694 $17,048,194
========== ==========
* Nonparticipant-directed shares at December 31, 1999 and 1998
respectively were 1,362,037 and 2,008,118 with net asset value
of $5,277,892 and $2,008,118, respectively.
During 1999, the Plan's investments (including gains and
losses on investments bought and sold, as well held during the
year) depreciated in value by $8,236,863 as follows:
Mutual Funds $ (213,579)
Common Stock (8,023,284)
---------
$ (8,236,863)
=========
4. Subsequent Event
-----------------
On January 1, 2000, the Conwell Corporation Employee Stock
Ownership Plan (the "Conwell Plan") and FFE Transportation
Services, Inc. Stock Ownership Plan (the "FFE Plan") were
merged into the Savings Plan. The transfer of net assets was
credited to separate participant accounts of the Savings Plan
as of January 1, 2000 in amounts equal to their balances as
previously carried in the accounts of the FFE Plan and the
Conwell Plan.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
The Administrative Committee of the Frozen Food
Express Industries, Inc. 401(k) Savings Plan:
We have audited the accompanying statements of net assets
available for plan benefits of the Savings Plan for Employees of
Frozen Food Express Industries, Inc. 401(k) Savings Plan (the
"Plan") as of December 31, 1999 and 1998, and the related
statements of changes in net assets available for plan benefits
for each of the three years in the period ended December 31,
1999. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the net assets
available for plan benefits of the Frozen Food Express
Industries, Inc. 401(k) Savings Plan, as of December 31, 1999 and
1998, and the changes in net assets available for plan benefits
for each of the three years in the period ended December 31, 1999
in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental
schedules on the following pages are presented for the purpose of
additional analysis and are not a required part of the basic
financial statements but are supplementary information required
by the Department of Labor's Rules and Regulations for Reporting
and Disclosure under the Employee Retirement Income Security Act
of 1974. The supplemental schedules on the following pages have
been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, are fairly
stated in all material respects in relation to the foregoing
basic financial statements taken as a whole.
/s/ Waters, Wright & Associates, RLLP
- -------------------------------------
July 12, 2000
ADDITIONAL INFORMATION
FROZEN FOOD EXPRESS INDUSTRIES, INC.
401(k) SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD
FOR INVESTMENT PURPOSES
December 31, 1999
(a) (b) Identity (c) Description of (d) (e) Current
of Issue Investment Cost Value
- --- ----------------- ----------------- --------- ---------
Cash $ 320,082 $ 320,082
* FFEX 2,008,290 shares
Common Stock 13,757,076 7,782,123
BT Investment
International 3,525 shares
Equity Fund common stock 83,858 103,951
Baron Asset Fund 3,154 shares 181,154 185,375
common stock
Dreyfus 6,287 shares 284,224 287,520
Appreciation Fund common stock
Schwab S&P 500 18,017 shares 382,998 407,383
Index Fund common stock
MFS Massachusetts
Investment Trust
Fund - Class A 52,833 shares
common stock 1,105,258 1,106,854
Janus Balanced Fund 25,607 shares 555,824 598,955
common stock
PIMCO Total Return 46,384 shares 468,073 459,204
Institutional Fund common stock
Schwab Institutional 849,056 shares 849,056 849,056
Advantage Money common stock
---------- ----------
$17,987,603 $12,100,503
========== ==========
Participants' Interest bearing
notes receivable notes at 8.75%-9.50% N/A $ 1,561,234
* Party-in-interest to the plan.
FROZEN FOOD EXPRESS INDUSTRIES, INC.
401(k) SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS ACQUIRED AND SOLD
December 31, 1999
(a) Identity (b) Description (c) (d)
of Issue of Investment Cost Proceeds
------------ --------------------- --------- ---------
FFEX *383,065 shares
FFEX Common Stock $2,661,485 $2,451,595
* These are total shares sold within the plan year, not
necessarily just those shares acquired and disposed within the
plan year.
All other investment assets which were both acquired and
disposed of during the plan year were interests issued by
money market funds. Therefore, these transactions are
excluded from this schedule in accordance with the Specific
Instructions for Form 5500.
FROZEN FOOD EXPRESS INDUSTRIES, INC.
401(k) SAVINGS PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
Years Ended December 31, 1999 and 1998
Purchases
------------------
Identity Of Shares/ Market
Party Involved Description Units Cost Value
------------ ----------- ----- ----- ------
1999
----
FFEX * FFEX Common Stock 459,022 $3,127,201 $1,778,710
Schwab Stable Value 1,239,719 1,239,719 1,239,719
Schwab Basic Stock 90,149 1,899,026 1,888,629
PIMCO Intermediate Bond 61,850 641,973 612,318
Baron Small-cap Stock 3,579 205,818 210,344
BT Investment International Stock 3,417 87,966 109,228
Dreyfus Growth Stock 8,140 367,830 372,229
Janus Mixed Investment 28,885 626,522 675,622
Schwab Stock Index 19,849 421,923 448,777
1998
-----
FFEX * FFEX Common Stock 334,546 $3,012,325 $2,634,550
AVESTA Money Market Fund 175,405 175,405 175,405
AVESTA Equity Income Fund 24,590 580,181 652,127
AVESTA Income Fund 7,823 160,412 160,137
* Party in interest to the Plan