EXHIBIT 99.1
FFE TRANSPORTATION SERVICES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31, 2000 and 1999
2000 1999
---- ----
Money market fund $ - $ 196,707
Frozen Food Express Industries, Inc.
Common Stock - 9,262,056
Receivables - 976
--------- ---------
Total assets - 9,459,739
Less:
Benefits payable - 2,751,107
Trustee payable - 18,402
Due to related trust - 30,107
--------- ---------
Net assets available for plan
benefits $ - $6,660,123
========= =========
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, 2000, 1999 and 1998
2000 1999 1998
---- ---- ----
Investment income:
Dividend income $ - $ 221,602 $ 303,550
Interest income 1,937 8,864 9,957
Other income 8,323 - -
--------- --------- --------
10,260 230,466 313,507
Net unrealized depreciation
in market value of
investments (3,968,873) (10,204,161) (3,439,863)
Realized (loss) gain on
sale of stock (30,173) 6,194 19,350
Professional fees - (18,402) -
Assets transferred to
Frozen Food Express
Industries, Inc. 401(k)
Savings Plan - Note 1 (5,063,801) - -
--------- --------- ---------
(9,052,587) (9,985,903) (3,107,006)
Benefits paid to participants 161,250 - -
Increase in fair market
value of plan
benefits payable
to Participants 2,231,214 1,519,699 146,618
--------- ---------- ---------
Net decrease (6,660,123) (8,466,204) (2,960,388)
Net assets available for plan
benefits at beginning
of year 6,660,123 15,126,327 18,086,715
--------- ---------- ----------
Net assets available for plan
benefits at end of year $ - $ 6,660,123 $15,126,327
========= ========== ==========
See accompanying notes and report of independent public accountants.
FFE TRANSPORTATION SERVICES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
1. Merger
----------------
On January 1, 2000, The FFE Transportation Services, Inc. Employee Stock
Ownership Plan (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. Upon the merger, the
existence of the FFE Plan was terminated.
2. Description of the Plan
-----------------------
The FFE Plan was 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 was 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 were at the discretion of
its Board of Directors. No participant shall be required or permitted to
make contributions.
Eligibility - Employees became 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 were 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
began 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 was maintained for each
participant. If no restrictions applied, the participant's account was
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 were based on
annual compensation. FFE Plan earnings were allocated based on
participants' account balances.
Administration - The FFE Plan was administered by a committee appointed
by the Board of Directors of FFEX. Administrative expenses not paid by the
Employer were paid by the FFE Plan.
Tax status - The United States Treasury Department had advised that the
FFE Plan constitutes a qualified trust under Section 401(a) of the
Internal Revenue Code (the "Code") and was therefore exempt from federal
income tax under provisions of Section 501(a) of the Code. Employer
contributions and FFE Plan earnings were not includable in the
participant's taxable income until such amounts were distributed to the
participant or to the participant's beneficiary.
3. Summary of significant accounting policies
------------------------------------------
Basis of accounting - The financial statements of the FFE Plan were
under the accrual method of accounting.
Accounting estimates - The preparation of financial statements in
conformity with generally accepted accounting principles required 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 shares at December 31, 1999, and is valued at the quoted market
price on the last day of the year.
4. Net unrealized appreciation in market value of investments
----------------------------------------------------------
The 2000, 1999 and 1998 net unrealized depreciation in market value of
investments was as follows:
For the Year Ended December 31,
----------------------
2000 1999 1998
---- ---- ----
Investment at market $ - $ 9,262,056 $19,731,828
Investment at cost - (5,293,183) (5,558,794)
---------- ---------- ----------
Unrealized depreciation at
end of year - 3,968,873 14,173,034
Unrealized depreciation at
beginning of year (3,968,873) (14,173,034) (17,612,897)
---------- ---------- ----------
Net unrealized depreciation
in market value of
investments during the year $(3,968,873) $(10,204,161) $(3,439,863)
========== ========== ==========
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, 2000 and 1999, and the related
statements of changes in net assets available for plan benefits for each of
the three years in period ended December 31, 2000. These financial
statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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, 2000 and 1999, and the changes in net assets available for plan benefits
for each of the three years ended in December 31, 2000 in conformity with
accounting principles generally accepted in the United States.
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
- -------------------------------------
June 27, 2001
ADDITIONAL INFORMATION
FFE TRANSPORTATION SERVICES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 2000
(a) (b) (c) (d)
Identity of Issue Description of Investment Cost Current Value
- ----------------- ------------------------- ---- -------------
None N/A N/A N/A
FFE TRANSPORTATION SERVICES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
ITEM 27a - SCHEDULE OF ASSETS ACQUIRED AND SOLD
December 31, 2000
(a) (b) (c) (d)
Identity of Issue Description of Investment Cost Proceeds
- ---------------- ------------------------- ---- --------
None 14,517 shares of Frozen
Food Express Industries, Inc.
Common Stock* $100,778 $70,605
* These are total shares sold within the plan year, not necessarily just the
shares acquired and disposed within the plan year.
All other investment assets that were both acquired and disposed of during the
plan year were interests issued by 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 TRANSACTION
Years Ended December 31, 2000 and 1999
Purchases
---------
Identity of Shares/ Market
Party Involved Description Units Cost Value
- --------------- ----------- ------- ---- ------
2000
- ----
None N/A N/A N/A N/A
1999
- ----
None N/A N/A N/A N/A