EXHIBIT 99.2
CONWELL CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31, 2000 and 1999
2000 1999
---- ----
Money market fund $ - $ 14,366
Frozen Food Express Industries, Inc.
Common Stock - 369,625
Due from related trust - 30,107
Employer Receivable - 15,736
Other Receivable - 75
------- -------
Total assets - 429,909
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Less:
Benefits payable - 129,521
Trustee payable - 3,481
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Net assets available for plan benefits $ - $296,907
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See accompanying notes and report of independent public accountants.
CONWELL CORPORATION
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 $ - $ 9,292 $ 13,096
Interest income 228 699 593
------- -------- --------
228 9,991 13,689
Net unrealized depreciation in
market value of Investments 217,602 (430,493) (122,284)
Loss realized on sale of
stock (28,597) (10,396) (11,212)
Contributions 7,580 - -
Recordkeeping fees (9,673) (3,481) -
------- -------- --------
187,140 (434,379) (119,807)
Assets Transferred to Frozen
Food Express Industries, Inc.
401(k) Savings Plan (Note 1) (541,720) - -
Increase (Decrease) in fair
market value of plan benefits
payable to Participants 57,673 (12,614) 21,139
------- -------- --------
Net decrease (296,907) (446,993) (98,668)
Net assets available for plan
benefits at beginning of year 296,907 743,900 842,568
------- -------- --------
Net assets available for plan
benefits at end of year $ - $ 296,907 $ 743,900
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See accompanying notes and report of independent public accountants.
CONWELL CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
1. Merger
----------------
On January 1, 2000, the Conwell Corporation Employee Stock Ownership
Plan ("Conwell 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 Conwell Plan. Upon the merger, the existence of
the Conwell Plan was terminated.
2. Description of the Plan
------------------------
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 Common 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 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 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.
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.
3. 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 95,387 shares at December 31, 1999, and is valued at the quoted market
price on the last day of the year.
4. Net unrealized (depreciation) in market value of investments
The 2000, 1999 and 1998 net unrealized depreciation in market value of
investments was determined as follows:
For the Year Ended December 31,
-------------------------------
2000 1999 1998
---- ---- ----
Investment at market $ - $ 369,625 $ 818,370
Investment at cost - (587,227) (605,479)
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Unrealized (depreciation)
appreciation at end of year - (217,602) 212,891
Unrealized depreciation at
beginning of year (217,602) (212,891) (335,175)
------- ------- -------
Net unrealized depreciation in
market value of investments
during the year $(217,602) $(430,493) $(122,284)
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
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, 2000 and 1999, 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, 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
Conwell Corporation Employee Stock Ownership Plan, as of December 31, 2000
amd 1999 and the changes in net assets available for plan benefits for each
of the three years in the period ended 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
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June 27, 2001
ADDITIONAL INFORMATION
CONWELL CORPORATION
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
CONWELL CORPORATION
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 3,430 shares of Frozen Food
Express Industries, Inc.
Common Stock* $41,888 $13,291
*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.
CONWELL CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
Years Ended December 31, 2000 and 1999
Purchases
---------
Shares/ Market
Identity of 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