EXHIBIT 99.3
FROZEN FOOD EXPRESS INDUSTRIES, INC.
401(k) SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31, 2000 and 1999
2000 1999
---- ----
Investments $14,968,072 $12,100,503
Participant notes receivable 1,096,355 1,561,234
Employer contributions receivable 94,173 108,290
Employee contributions receivable 121,333 132,096
---------- ----------
Total assets 16,279,933 13,902,123
Less:
Benefits payable 2,302,598 936,195
---------- ----------
Net assets available for plan benefits $13,977,335 $12,965,928
========== ==========
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, 2000, 1999 and 1998
2000 1999 1998
---- ---- ----
Investment income:
Dividend income $ 200,154 $ 231,742 $ 283,865
Interest income 198,558 161,774 164,271
--------- --------- ---------
Net investment income 398,712 393,516 448,136
Administration expense (196,995) (137,977) -
Realized (loss) gain (1,329,717) 175,135 (52,022)
Net unrealized depreciation
in market value of
investments (3,898,991) (8,236,868) (2,163,017)
Employee contributions 2,371,661 2,154,142 1,886,367
Employer contributions 1,309,519 1,361,160 1,092,765
--------- --------- ---------
(1,744,523) (4,290,892) 1,212,229
(Decrease) increase in fair
market value of plan
benefits payable to
participants (3,248,303) (1,591,272) 180,226
--------- --------- ---------
Net (decrease) increase (4,594,114) (5,882,164) 1,392,455
Assets transferred from:
FFE Transportation
Services, Inc.Employee
Stock Ownership Plan 5,063,801 - -
Conwell Corporation
Employee
Stock Ownership Plan
(Note 4) 541,720 - -
Net assets available for plan
benefits at beginning
of year 12,965,928 18,848,092 17,455,637
---------- ---------- ----------
Net assets available for plan
benefits at end of year $13,977,335 $12,965,928 $18,848,092
========== ========== ==========
See accompanying notes and report of independent public accountants.
FROZEN FOOD EXPRESS INDUSTRIES, INC.
401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
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
$2,072,414, $1,848,504, and $1,619,485 in 2000, 1999, and 1998,
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 2000 and 1999 ranged from 9.00% to 10.50%. 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,
2000, 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 Janus 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 MFS
Massachusetts Investment Trust Fund-Class A and the Dreyfus
Appreciation fund as the investment vehicles 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
Managers Special Equity 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 Deutsche
International Equity Investment Fund as the investment vehicle for
this fund.
Technology Sector Fund - This fund invests primarily in stocks of
companies engaged in technology-related fields, such as computers,
communications, video and electronics. The Savings Plan committee
has selected Investco Technology II 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.
Forfeited accounts - At December 31, 2000, forfeited nonvested accounts
totaled $229,482. These accounts will be used to reduce employer
expenses. Also, in 2000, employer contributions were reduced by $151,744
from forfeited nonvested accounts.
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, 2000 and
1999:
2000 1999
---- ----
Frozen Food Express Industries, Inc.
Common Stock 4,538,307 and
2,008,290 shares, respectively $ 7,542,338* $ 7,680,579*
Deutsche International Equity Fund,
7,440 and 3,154 shares, respectively 171,932 101,343
Baron Asset Fund,
5,803 and 3,154 shares, respectively 299,835 181,316
Dreyfus Appreciation Fund,
12,248 and 6,287 shares, respectively 472,039 278,987
Schwab S&P 500 Index Fund,
26,760 and 18,017 shares, respectively 507,497 382,405
MFS Massachusetts Investment Trust
Fund - Class A,
57,940 and 52,833 shares, respectively 1,072,259 986,585
Janus Balanced Fund,
54,302 and 25,607 shares, respectively 1,048,161 578,521
PIMCO Total Return Institutional Fund,
61,388 and 46,384 shares, respectively 596,504 421,755
Invesco Technology II, 289 shares 17,243 -
Managers Special Equity Fund, 99 shares 7,623 -
Schwab Institutional Advantage Money Fund,
1,226,442 and 849,056 shares, respectively 1,145,549 793,203
---------- ----------
$12,880,980 $11,404,694
========== ==========
* Nonparticipant-directed shares at December 31, 2000 and 1999
respectively were 3,211,860, and 1,362,037 with net asset value of
$6,323,511 and $5,277,892.
During 2000, the Plan's investments (including gains and losses on
investments bought and sold, as well held during the year) appreciated in
value by $1,476,286 as follows:
Mutual Funds $ 1,614,528
Common Stock (138,242)
---------
$ 1,476,286
=========
4. Merger
------
On January 1, 2000, the Conwell Corporation and FFE Transportation
Services, Inc. Employee Stock Ownership Plans (the "ESOP'S") were merged into
the FFE Transportation Services, Inc. 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 separate accounts of the ESOP'S.
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, 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
Frozen Food Express Industries, Inc. 401(k) Savings Plan, as of December 31,
2000 and 1999, and the changes in net assets available for plan benefits in
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
- -------------------------------------
June 27, 2001
ADDITIONAL INFORMATION
FROZEN FOOD EXPRESS INDUSTRIES, INC.
401(k) SAVINGS 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
- ----------------- ------------------------- ---- -------------
Cash $ 256,689 $ 256,689
*Frozen Food Express
Industries, Inc. 4,538,307 shares
common stock 18,509,836 8,935,019
Deutsche International 7,440 shares
Equity Fund common stock 210,890 188,315
Baron Asset Fund 5,803 shares
common stock 335,627 315,604
Dreyfus Appreciation
Fund 12,248 shares
common stock 555,533 525,916
Schwab S&P 500 Index
Fund 26,760 shares
common stock 580,233 544,041
MFS Massachusetts
Investment Trust Fund - 57,940 shares
Class A common stock 1,206,327 1,159,954
Janus Balanced Fund 54,302 shares
common stock 1,223,663 1,153,376
PIMCO Total Return
Institutional Fund 61,388 shares
common stock 616,904 637,825
Invesco Technology II 289 shares 23,469 17,268
Managers Special Equity
Fund 99 shares 8,548 7,623
Schwab Institutional
Advantage Money Fund 1,226,442 shares
common stock 1,226,442 1,226,442
---------- ----------
$24,754,161 $14,968,072
========== ==========
Participants' notes Interest bearing notes
receivable at 9.50%-10.50% N/A $ 1,096,355
* 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, 2000
(a) (b) (c) (d)
Identity of Issue Description of Investment Cost Proceeds
- ----------------- ------------------------- ---- --------
Frozen Food
Express
Industries, Inc. 425,657 shares
Common Stock FFEX Common Stock* $2,455,793 $1,126,076
* 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 that were both acquired and disposed of
during the plan year were interests issued by a company registered under the
Investment Company Act of 1940. 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
Year Ended December 31, 2000
Purchases
---------------------
Identity Of Shares/ Market
Party Involved Description Units Cost Value
------------- ----------- ------ ---- ------
2000
- ----
Frozen Food
Express
Industries,
Inc. * Common Stock 603,687 $1,845,290 $1,188,539
MFS Trust Large-cap Stock 20,692 426,067 414,254
Schwab Stable Value 718,176 718,176 718,176
PIMCO Intermediate Bond 32,009 319,706 332,574
Baron Mid-cap Stock 3,973 229,499 214,460
Deutsche International Stock 6,410 190,668 162,237
Dreyfus Large-cap Stock 8,435 383,463 362,199
Janus Balanced Investment 37,662 869,251 799,941
Schwab Stock Index 19,113 419,837 388,567
Invesco Technology 290 23,567 17,333
Managers Small-cap Stock 102 8,717 7,834
* Party in interest to the Plan