**UNITED
STATES**
 **SECURITIES
AND EXCHANGE COMMISSION**
 **WASHINGTON,
DC 20549**
 
 **FORM
10-Q**
 
 [MARK
ONE]
 **[x]QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE**
 **SECURITIES
EXCHANGE ACT OF 1934**
 
 **FOR
THE QUARTERLY PERIOD ENDED MARCH 31, 2005**
 
 **OR**
 
 **[
] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE**
 **SECURITIES
EXCHANGE ACT OF 1934**
 
 **FOR
THE TRANSITION PERIOD FROM _____________ TO ______________**
 
 COMMISSION
FILE NUMBER 1-10006
 
 **FROZEN
FOOD EXPRESS INDUSTRIES, INC.**
 (Exact
name of registrant as specified in its charter)
 
 **Texas**
      (State
      or Other Jurisdiction of Incorporation or Organization)
    **75-1301831**
      (IRS
      Employer Identification No.)**1145
      Empire Central Place**
      **Dallas,
      Texas 75247-4309**
      **(Address
      of Principal Executive Offices)**
    **(214)
      630-8090**
      **(Registrant’s
      Telephone Number,**
      **Including
      Area Code)**
 
 
 Indicate
by check mark whether the registrant (l) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
 
 **[x]** Yes    [ ]
No
 
 Indicate
by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Exchange Act).
 
 **[x]** Yes    [ ]
No
 
 As of May
6, 2005, 17,885,710  shares of
the registrant's common stock, $1.50 par value, were outstanding.
 -
      -
  
  
 
 **INDEX**
 
 **PART
      I**
    **FINANCIAL
      INFORMATION**
    **Page
      No.****Item
      l**
    Financial
      Statements (Unaudited)Consolidated
      Condensed Balance Sheets
      March
      31, 2005 and December 31, 2004.
    1Consolidated
      Condensed Statements of Income
      Three
      months ended March 31, 2005 and 2004
    2Consolidated
      Condensed Statements of Cash Flows
      Three
      months ended March 31, 2005 and 2004
    3Notes
      to Consolidated Condensed Financial Statements
    4**Item
      2**
    Management's
      Discussion and Analysis of
      Financial
      Condition and Results of Operations
    7**Item
      3**
    Quantitative
      and Qualitative Disclosures About Market Risk
    16**Item
      4**
    Controls
      and Procedures
    17**PART
      II**
    **OTHER
      INFORMATION****Item
      2**
    Unregistered
      Sales of Equity Securities and Use of Proceeds
    17**Item
      5**
    Other
      Information
    18**Item
      6**
    Exhibits
    18
 
 
 -ii
      -
 
  
  **PART
I**
 
 **ITEM
1.**  **FINANCIAL
STATEMENTS**
 
 **FROZEN
FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES**
 **Consolidated
Condensed Balance Sheets**
 (In
thousands)
 
 **Assets**
    
    
    Mar.
      31,
      2005
      (unaudited)
    
    
    Dec.
      31,
      2004Current
      assetsCash
      and cash equivalents
    
    $
    1,676
    
    $
    3,142Accounts
      receivable, net
    
    
    55,366
    
    
    57,954Inventories
    
    
    2,013
    
    
    1,818Tires
      on equipment in use
    
    
    4,674
    
    
    5,157Deferred
      federal income tax
    
    
    4,770
    
    
    3,473Other
      current assets
    
    
    5,854
    
    
    9,103Total
      current assets
    
    
    74,353
    
    
    80,647Property
      and equipment, net
    
    
    82,168
    
    
    78,039Other
      assets
    
    
    12,135
    
    
    12,006$
    168,656
    
    $
    170,692**Liabilities
      and Shareholders' Equity**Current
      liabilitiesAccounts
      payable
    
    $
    25,412
    
    $
    31,985Accrued
      claims
    
    
    12,908
    
    
    13,068Accrued
      payroll
    
    
    8,507
    
    
    9,070Accrued
      liabilities
    
    
    1,434
    
    
    2,147Total
      current liabilities
    
    
    48,261
    
    
    56,270Long-term
      debt
    
    
    1,000
    
    
    2,000Deferred
      federal income tax
    
    
    10,247
    
    
    8,551Accrued
      claims
    
    
    6,321
    
    
    6,82565,829
    
    
    73,646Shareholders'
      equityPar
      value of common stock (17,922 and 17,653 shares
    outstanding)
    
    
    26,883
    
    
    26,480Capital
      in excess of par value
    
    
    4,653
    
    
    2,518Retained
      earnings
    
    
    71,910
    
    
    68,603103,446
    
    
    97,601Less
      - Treasury stock (130 and 130 shares), at cost
    
    
    619
    
    
    555Total
      shareholders' equity
    
    
    102,827
    
    
    97,046$
    168,656
    
    $
    170,692*See
      accompanying notes to consolidated condensed financial
      statements.*
 
 
  Page 1 of
24
  
 **FROZEN
      FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES**
      **Consolidated
      Condensed Statements of Income**
      For
      the Three Months Ended March 31,
      (In
      thousands, except per share amounts)
      (Unaudited)**2005**
    
    **2004**RevenueFreight
      revenue
    
    $
    115,872
    
    $
    106,489Non-freight
      revenue
    
    
    2,157
    
    
    2,442118,029
    
    
    108,931Cost
      and expensesSalaries,
      wages and related expenses
    
    
    30,626
    
    
    29,010Purchased
      transportation
    
    
    29,566
    
    
    30,412Fuel
    
    
    16,719
    
    
    13,089Supplies
      and expenses
    
    
    15,166
    
    
    12,311Revenue
      equipment rent
    
    
    6,777
    
    
    8,250Depreciation
    
    
    5,822
    
    
    4,612Communication and
      utilities
    
    
    1,026
    
    
    974Claims
      and insurance
    
    
    3,437
    
    
    2,888Operating
      taxes and licenses
    
    
    1,176
    
    
    1,128Gains
      on disposition of equipment
    
    
    (1,157
    )
    
    (361
    )Miscellaneous
      expenses
    
    
    1,188
    
    
    866110,346
    
    
    103,179Non-freight
      costs and operating expenses
    
    
    2,152
    
    
    2,462112,498
    
    
    105,641Income
      from operations
    
    
    5,531
    
    
    3,290Interest
      and other expense
    
    
    90
    
    
    196Income
      before income tax
    
    
    5,441
    
    
    3,094Income
      tax provision
    
    
    2,134
    
    
    1,154Net
      income
    
    $
    3,307
    
    $
    1,940Net
      income per share of common stockBasic
    
    $
    .19
    
    $
    .11Diluted
    
    $
    .18
    
    $
    .11Basic
      shares
    
    
    17,656
    
    
    17,139Diluted
      shares
    
    
    18,724
    
    
    18,261*See
      accompanying notes to consolidated condensed financial
      statements.*
 
 
  Page 2 of
24
  **FROZEN
FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES**
 **Consolidated
Condensed Statements of Cash Flows**
 For the
Three Months Ended March 31, 2005 and 2004
 (In
thousands)
 (Unaudited)
 
 **2005**
    
    **2004****Net
      cash provided by operating activities**
    
    $
    5,567
    
    $
    8,398**Cash
      flows from investing activities**Expenditures
      for property and equipment
    
    
    (11,344
    )
    
    (4,904
    )Proceeds
      from sale of property and equipment
    
    
    3,362
    
    
    2,443Other
    
    
    62
    
    
    819**Net
      cash used in investing activities**
    
    
    (7,920
    )
    
    (1,642
    )**Cash
      flows from financing activities**Borrowings
    
    
    15,600
    
    
    7,200Payments
      against borrowings
    
    
    (16,600
    )
    
    (14,700
    )Proceeds
      from capital stock transactions
    
    
    1,951
    
    
    -Re-issuances
      of treasury stock
    
    
    71
    
    
    441Purchases
      of treasury stock
    
    
    (135
    )
    
    (5
    )**Net
      cash provided by (used in) financing activities**
    
    
    887
    
    
    (7,064
    )Net
      decrease in cash and cash equivalents
    
    
    (1,466
    )
    
    (308
    )Cash
      and cash equivalents at January 1
    
    
    3,142
    
    
    1,396Cash
      and cash equivalents at March 31
    
    $
    1,676
    
    $
    1,088*See
      accompanying notes**to
      consolidated condensed financial statements.*
 
 
 
  Page 3 of
24
  **FROZEN
FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES**
 **Notes
to Consolidated Condensed Financial Statements**
 March 31,
2005 and 2004
 (Unaudited)
 
 **1.**  **BASIS
OF PRESENTATION**
 These
consolidated condensed financial statements include Frozen Food Express
Industries, Inc., a Texas Corporation and our subsidiary companies, all of which
are wholly-owned. All significant intercompany balances and transactions have
been eliminated in consolidation. The financial statements included herein have
been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission ("SEC"). In the opinion of management, all adjustments
(which consisted only of normal recurring accruals) necessary to present fairly
our financial position, cash flows and results of operations have been made.
Pursuant to SEC rules and regulations, certain information and disclosures
normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America, have been
condensed or omitted from these statements unless significant changes have taken
place since the end of the most recent fiscal year. We believe that the
disclosures contained herein, when read in conjunction with the financial
statements and notes included, or incorporated by reference, in our Annual
Report on Form 10-K filed with the SEC on March 25, 2005, are adequate to make
the information presented not misleading. It is suggested, therefore, that these
financial statements be read in conjunction with the financial statements and
notes (included, or incorporated by reference), in our most recent Annual Report
on Form 10-K.
 
 **2.**  **SUBSEQUENT
EVENTS**
 During
April of 2005, we sold the operating assets of AirPro Holdings, Inc. (“AHI”),
our last remaining non-freight business. There was no gain or loss on this
transaction.  The buyer is a newly-formed entity, AIRPRO Mobile Air, LLC
(“AMA”). During 2002, we engaged the services of a consulting firm to design and
implement a strategic plan which could restore the profitability of AHI and
ultimately prepare AHI for divestiture. AHI reported an operating profit of
$810,000 during 2004. During the first quarter of 2005, we received an offer
from the two principal officers of AHI to purchase the assets. After
negotiation, we accepted the offer, which was based on the assets and
liabilities of AHI as of March 1, 2005, as adjusted for cash and other
transactions between such date and the closing date. Each of the two officers
owns a 40% interest in AMA and AHI owns a 20% interest in AMA. As an
accommodation to AMA, AHI has provided certain loans to AMA and each of the two
officers. Such loans are for the purpose of financing AMA’s purchase of the
assets and providing liquidity to AMA as it commences its operations. AMA is
also financed by a secured line of credit from a bank, which is secured by the
assets we sold to AMA and by the personal guarantees of each of the two
officers. AHI’s loans to the two officers and AMA are subordinate to the loans
of the bank, but AHI has not guaranteed the loans of the bank to
AMA.
 Because
AHI continues to be the primary beneficiary of AMA, we will be required by the
Financial Accounting Standards Board’s (“FASB”) Financial Interpretation No. 46
(“FIN No. 46”) to include the financial statements of AMA in our consolidated
financial statements after the closing date until such time as a ‘triggering
event’ (as defined by FIN No. 46) occurs. Such a triggering event could be the
occurrence of a transaction (such as repayment of our debt) that would result in
AMA demonstrating an ability to operate profitably and finance its operations on
a continuing basis without the support of AHI. Accordingly, until such a
triggering event occurs, we will account for the sale of AHI in the manner
promulgated by FIN No. 46.
 During of
April 2005, we sold a fifty percent interest in one of our life insurance
investments. The book value of the asset we sold as of March 31, 2005 was
approximately $2.3 million. As consideration for the sale of the policy, we
received $6.1 million in cash. The resulting non-operating gain of $3.8 million
will be reflected in our consolidated condensed statements of income for the
three and six months ended June 30, 2005.
 
  Page 4 of
24
  
 
 **3.**  **REVENUE
AND EXPENSE RECOGNITION**
 Freight
revenue and associated direct operating expenses are recognized on the date the
freight is picked up from the shipper in accordance with the FASB's Emerging
Issues Task Force's Issue No. 91-9 " *Revenue
And Expense Recognition For Freight Services In Progress* " ("EITF
No. 91-9").
 One
of the preferable methods outlined in EITF No. 91-9 provides for the allocation
of revenue between reporting periods based on relative transit time in each
reporting period with expense recognized as incurred. Changing to this method
would not have a material impact on our quarterly or annual financial
statements.
 We are
the sole obligor with respect to the performance of our freight services and we
assume all of the related credit risk. Accordingly, our freight revenue and our
related direct expenses are recognized on a gross basis. Payments we make to
independent contractors for the use of their trucks in transporting freight are
typically calculated based on the gross revenue generated by their trucks. Such
payments to independent contractors are recorded as purchased transportation
expense.
 
 **4.**  **STOCK-BASED
COMPENSATION**
 We apply
Accounting Principles Board Opinion No. 25 and related interpretations to
account for our stock options. Accordingly, no expense has been recognized for
stock option grants to employees. Had we elected to apply FASB Statement of
Financial Accounting Standards ("SFAS") No. 123 to account for our stock
options, our net income and diluted net income per share of common stock for
each of the three month periods ended March 31, 2005 and 2004 would have been as
follows:
 
 **Pro
      Forma Impact on**
      **Net
      Income (in millions)**
    
    
    **2005**
    
    
    **2004**As
      reported
    
    $
    3.3
    
    $
    1.9Impact
      of SFAS No. 123
    
    
    (0.2
    )
    
    (0.1
    )$
    3.1
    
    $
    1.8
 
 **Pro
      Forma Impact on**
      **Basic
      Net Income Per Share**
    
    
    **2005**
    
    
    **2004**As
      reported
    
    $
    .19
    
    $
    .11Impact
      of SFAS No. 123
    
    
    (.02
    )
    
    (.01
    )$
    .17
    
    $
    .10
 
 **Pro
      Forma Impact on**
      **Diluted
      Net Income Per Share**
    
    
    **2005**
    
    
    **2004**As
      reported
    
    $
    .18
    
    $
    .11Impact
      of SFAS No. 123
    
    
    (.02
    )
    
    (.01
    )$
    .16
    
    $
    .10
 
 On
December 16, 2004, the Financial Accounting Standards Board (“FASB”) issued
Statement No. 123 (revised 2004), “ *Share
Based Payment* ” (“SFAS
No. 123R”), which is a revision of Statement No. 123, “ *Accounting
for Stock-Based Compensation* ” (“SFAS
No. 123”). SFAS No. 123R supersedes APB Opinion No. 25, “ *Accounting
for Stock Issued to Employees* ” and
amends Statement No. 95, “ *Statement
of Cash Flows* ”. Under
SFAS No. 123R, companies must calculate and record in the income statement the
cost of equity instruments, such as stock options, awarded to employees for
services received. Pro forma disclosure is no longer permitted. The cost of the
equity instruments is to be measured based on the fair value of the instruments
on the date they are granted and is required to be recognized over the period
during which the employees are required to provide services in exchange for the
equity instruments.
 On April
21, 2005, the SEC announced the adoption of a new rule that amends the
compliance date for SFAS 123R so that each registrant that is not a small
business issuer will be required to prepare financial statements in accordance
with SFAS 123R beginning with the first reporting period of the registrant’s
first fiscal year beginning on or after June 15, 2005.
 SFAS No.
123R provides two alternatives for adoption: (i) a modified prospective method
in which compensation cost is recognized for all awards granted subsequent to
the effective date of this statement as well as for the unvested portion of
awards outstanding as of the effective date: or (ii) a modified retrospective
method which permits entities to restate prior periods to record compensation
cost calculated under SFAS No. 123 for the pro forma disclosure. We plan to
adopt SFAS No. 123R using the modified prospective method.
 Since we
currently account for stock options granted to employees and shares issued under
our employee stock purchase plans in accordance with the intrinsic value method
permitted under APB Opinion No. 25, no compensation expense is currently
recognized. If we continue to issue stock options to our employees, the adoption
of SFAS No. 123R could have a significant impact on our results of operations,
although it will have no impact on our overall financial position.
 The
impact of adopting SFAS No. 123R cannot be accurately estimated at this time, as
it will depend on the market value and the amount of share-based awards granted
in future periods. Had we adopted SFAS No. 123R in a prior period, the impact
would approximate that as described in the table above.
 SFAS No. 123R
also requires that tax benefits received by companies in excess of compensation
cost be reclassified from operating cash flows to financing cash flows in
statements of cash flows. This change in classification will reduce cash flows
from operating activities and increase cash flows from financing activities in
the periods after adoption. While the amount of this change cannot be estimated
at this time, the amount of cash provided by operating activities from such
stock-based compensation related tax deductions was $378,000 during the first
three months of 2005. No such transactions occurred during the first three
months of 2004.
 
 Page 5 of
24
 **5.**  **LONG-TERM
DEBT**
 As of
March 31, 2005, we had a $50 million secured line of credit pursuant to a
revolving credit agreement with two commercial banks. The agreement expires June
1, 2007.
 Interest
is due monthly. We may elect to borrow at a daily interest rate based on the
bank's prime rate or for specified periods of time at fixed interest rates which
are based on the London Interbank Offered Rate in effect at the time of a fixed
rate borrowing. At March 31, 2005, $1.0 million was borrowed against this
facility and an additional $5.0 million was being used as collateral for letters
of credit. Accordingly, at March 31, 2005 approximately $44.0 million was
available under the agreement. To the extent that the line of credit is not used
for borrowing or letters of credit, we pay a commitment fee to the
banks.
 Loans may
be secured by liens against our inventory, trade accounts receivable and
over-the-road trucking equipment. The agreement also contains a pricing "grid"
where increased levels of profitability and cash flows or reduced levels of
indebtedness can reduce the rates of interest expense we incur. The agreement
restricts, among other things, payments of cash dividends, repurchases of our
stock and the amount of our capital expenditures. The amount we may borrow under
the facility may not exceed the lesser of $50 million, as adjusted for letters
of credit and other debt as defined in the agreement, a borrowing base or a
multiple of a measure of cash flow as described in the agreement. Loans and
letters of credit will become due on the agreement expiration. As of March 31,
2005, we were in compliance with the terms of the agreement.
 
 **6.**  **COMMITMENTS
AND CONTINGENCIES**
 We have
accrued for costs related to public liability, cargo and work-related injury
claims. When an incident occurs we record a reserve for the incident's estimated
outcome. As additional information becomes available, adjustments are made.
Accrued claims liabilities include all such reserves and our estimate for
incidents which have been incurred but not reported.
  **7.**  **NET
INCOME PER SHARE OF COMMON STOCK**
 Our basic
income per share was computed by dividing our net income by the weighted average
number of shares of common stock outstanding during the period. The table below
sets forth information regarding weighted average basic and diluted shares for
each of the three months ended March 31, 2005 and 2004 (in
thousands):
 
 **2005**
    
    
    **2004**Basic
      shares
    
    
    17,656
    
    
    17,139Common
      stock equivalents
    
    
    1,068
    
    
    1,122Diluted
      shares
    
    
    18,724
    
    
    18,261
 
 For the
three months ended March 31, 2004, we excluded 900,000 stock options from
our calculation of common stock equivalents because their exercise prices
exceeded the market price of our stock, which would have caused anti-dilution.
For the three month period ended March 31, 2005, no such stock options were
excluded.
 
 **8.**  **OPERATING
SEGMENTS**
 At March
31, 2005 and 2004, we had two operating segments. The larger segment consists of
our motor carrier operations, which are conducted in a number of divisions and
subsidiaries and are similar in nature. Our primary motor carrier division
provides both less-than-truckload ("LTL") and full-truckload refrigerated
transportation services. Our full-truckload and LTL services are commonly
managed and we constantly redeploy our trucks and trailers between these types
of service. Many of the division's customers use both types of service
throughout the year. Accordingly, we report all of our motor carrier operations
as one segment.
 AirPro
Holdings, Inc. our non-freight segment, was engaged in the sale and service of
air conditioning and refrigeration components. We have presented below financial
information for each of the three month periods ended March 31, 2005 and 2004
(in millions):
 
 **2005**
    
    **2004****Freight
      Operations**Revenue
    
    $
    115.9
    
    $
    106.5Operating
      income
    
    
    5.5
    
    
    3.3Total
      assets
    
    
    171.3
    
    
    149.0**Non-Freight
      Operations**Revenue
    
    $
    2.2
    
    $
    2.4Operating
      income (loss)
    
    
    -
    
    
    -Total
      assets
    
    
    11.3
    
    
    12.8**Intercompany
      Eliminations**Total
      assets
    
    $
    (13.9
    )
    $
    (15.1
    )**Consolidated**Revenue
    
    $
    118.0
    
    $
    108.9Operating
      income
    
    
    5.5
    
    
    3.3Total
      assets
    
    
    168.7
    
    
    146.7
 
 Page 6 of
24
 **ITEM
2.**  **MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION** **AND
RESULTS OF OPERATIONS**
 
 **GENERAL**
 The
following management's discussion and analysis describes the principal factors
affecting our results of operations, liquidity, and capital resources. This
discussion should be read in conjunction with the accompanying unaudited
consolidated condensed financial statements and our Annual Report on Form 10-K
for the year ended December 31, 2004, which include additional information about
our business, our significant accounting policies and other relevant information
that underlies our financial results. Without limiting the foregoing, the
"Overview" and "Critical Accounting Policies and Estimates" sections under Item
7. “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” of our last Annual Report on Form 10-K should be read in conjunction
with this Quarterly Report.
 Our
website address is www.ffex.net. All of our filings with the SEC are available
free of charge through our website as soon as reasonably practicable after we
file them with the SEC.
 
 **RESULTS
OF OPERATIONS**
 ***THREE
MONTH PERIODS ENDED MARCH 31, 2005 AND 2004***
 
 ******  ***Freight
Revenue*** : Our
freight revenue is derived from five types of transactions. Linehaul revenue is
order-based and earned by transporting cargo for our customers using tractors
and trailers that we control by ownership, long-term leases or by agreements
with independent contractors (sometimes referred to as “owner-operators”).
Within our linehaul freight service portfolio we offer both full-truckload and
less-than-truckload (“LTL”) services. Over 90% of our LTL linehaul shipments
must be temperature-controlled to prevent damage to the cargo. We operate fleets
that focus on refrigerated or “temperature-controlled” LTL shipments,
full-truckload temperature-controlled shipments and full-truckload
non-refrigerated or “dry” shipments. Our freight brokerage provides freight
transportation services to customers using third-party trucking companies.
 Our
dedicated fleet operation consists of fleets of tractors and trailers that haul
only freight for a specific customer. Dedicated fleet revenue is asset based.
Customers typically pay us weekly for trucks assigned to their
service.
 Income
from equipment rental represents amounts we charge to independent contractors
for the use of trucks which we own and lease to the owner-operator.
 The rates
we charge for our services include fuel adjustment charges. In periods when the
price we incur for diesel fuel is high, we raise our prices in an effort to
recover this increase from our customers. The opposite is true when fuel prices
decline.
 The
following table summarizes and compares the significant components of freight
revenue for each of the three-month periods ended March 31, 2005 and
2004:
 
 **Freight
      revenue from**
    
    
    **2005**
    
    
    **2004**Full-truckload
      linehaul services (a)
    
    $
    65.1
    
    $
    64.2Dedicated
      fleets (a)
    
    
    5.4
    
    
    4.0Total
      full-truckload (a)
    
    
    70.5
    
    
    68.2Less-than-truckload
      linehaul services (a)
    
    
    28.5
    
    
    27.4Fuel
      adjustments (a)
    
    
    10.8
    
    
    5.0Freight
      brokerage (a)
    
    
    4.8
    
    
    4.3Equipment
      rental (a)
    
    
    1.3
    
    
    1.6Total
      freight revenue (a)
    
    $
    115.9
    
    $
    106.5Total
      full-truckload revenue (a)
    
    $
    70.5
    
    $
    68.2Less-than-truckload
      linehaul revenue (a)
    
    
    28.5
    
    
    27.4Total
      linehaul and dedicated fleet revenue(a)
    
    $
    99.0
    
    $
    95.6Weekly
      average trucks in service
    
    
    2,290
    
    
    2,305Revenue
      per truck per week (b)
    
    $
    3,362
    
    $
    3,190
 
 **Computational
notes:**
 (a) In
millions.
 (b) Total
linehaul revenue divided by number of weeks in period divided by weekly average
trucks in service.
 
 Fuel
adjustment charges comprised 61.7% of the $9.4 million increase in freight
revenue during the three months ended March 31, 2005, as compared to the
comparable period of 2004. Excluding fuel adjustment charges, total linehaul and
dedicated fleet revenue from our freight operations increased by $3.4 million
(3.6%) between the three-month periods ended March 31, 2004 and 2005. Dedicated
fleet revenue increased by $1.4 million (35%) between the three-month periods,
reflecting our continuing efforts to expand our dedicated fleet customer base.
The following discussions reflect changes in our full-truckload and LTL linehaul
revenue, excluding fuel adjustment charges.
  Page 7 of
24
 The
following table summarizes and compares our revenue from full-truckload linehaul
services excluding fuel adjustment charges and related data for each of the
three-month periods ended March 31, 2005 and 2004:
 
 **2005**
    
    **2004**Revenue
      from full-truckload linehaul servicesTemperature-controlled
      fleet (a)
    
    $
    43.4
    
    $
    43.2Dry-freight
      fleet (a)
    
    
    21.7
    
    
    21.0$
    65.1
    
    $
    64.2Total
      linehaul miles (a)
    
    
    45.6
    
    
    49.8Total
      loaded miles (a)
    
    
    40.8
    
    
    45.2Empty
      mile ratio (b)
    
    
    10.5
    %
    
    9.2
    %Number
      of linehaul shipments (c)
    
    
    47.5
    
    
    49.6Linehaul
      revenue per total mile (d)
    
    $
    1.43
    
    $
    1.29Linehaul
      revenue per loaded mile (e)
    
    $
    1.60
    
    $
    1.42Linehaul
      revenue per shipment (f)
    
    $
    1,371
    
    $
    1,294Average
      loaded miles per shipment (g)
    
    
    859
    
    
    911
 
 **Computational
notes:**
 (a)
    In
      millions.(b)
    One
      minus (total loaded miles divided by total linehaul
  miles).(c)
    In
      thousands.(d)
    Revenue
      from full-truckload linehaul services divided by total linehaul
      miles.(e)
    Revenue
      from full-truckload linehaul services divided by total loaded
      miles.(f)
    Revenue
      from full-truckload linehaul services divided by number of linehaul
      shipments.(g)
    Total
      loaded miles divided by number of linehaul
shipments.
 
 Full-truckload
linehaul revenue increased by $0.9 million (1.4%) during the three months ended
March 31, 2005, as compared to the comparable period of 2004. Revenue per loaded
mile increased by 12.7%, to $1.60, but our average length of haul declined by
5.7%, to 859 miles. The number of full-truckload linehaul shipments we
transported during the first quarter of 2005 also declined to 47,500, from
49,600 during the year-ago quarter. Throughout 2004, we sought and obtained rate
increases from our customers in an effort to compensate us for increased
operating costs, and to reflect diminished capacity of the trucking industry to
meet expanding customer demand for trucking services. Those rate increases were
the principal contributor to increased per-mile revenue. Factors mitigating the
increased per-mile revenue during the first three months of 2005, as compared to
the comparable period of 2004 included the reduced number of linehaul shipments
we hauled, a shorter average length of haul for such shipments and a moderate
increase in the proportion of our empty, or non-revenue-producing to loaded, or
revenue-producing, miles. Redeployment of trucks from our linehaul service to
dedicated fleets also impacted full-truckload linehaul revenue during the first
three months of 2005, as indicated by a 35% increase in dedicated fleet revenue
between the three-month periods. The loss of approximately 100 owner-operator
provided tractors between March 31, 2004 and 2005 has also negatively impacted
our ability to expand our full-truckload linehaul service.
  Page 8 of
24
  The
following table summarizes and compares our revenue from less-than-truckload
linehaul services and related data for each of the three-month periods ended
March 31, 2005 and 2004:
 
 **2005**
    
    **2004**Revenue
      from less-than-truckload linehaul services (a)
    
    $
    28.5
    
    $
    27.4Total
      linehaul miles (a)
    
    
    10.6
    
    
    10.3Total
      loaded miles (a)
    
    
    9.7
    
    
    9.7Empty
      mile ratio (b)
    
    
    8.5
    %
    
    5.8
    %Number
      of linehaul shipments (c)
    
    
    63.0
    
    
    65.6Linehaul
      revenue per total mile (d)
    
    $
    2.69
    
    $
    2.66Linehaul
      revenue per loaded mile (e)
    
    $
    2.94
    
    $
    2.82Linehaul
      revenue per shipment (f)
    
    $
    452
    
    $
    418Hundredweight
      (c)
    
    
    1,928
    
    
    1,889Average
      weight per shipment (g)
    
    
    3,060
    
    
    2,880Linehaul
      revenue per hundredweight (h)
    
    $
    14.78
    
    $
    14.51
 
 **Computational
notes** :
 (a)
    In
      millions.(b)
    One
      minus (total loaded miles divided by total linehaul
  miles).(c)
    In
      thousands.(d)
    Revenue
      from less-than-truckload linehaul services divided by total linehaul
      miles.(e)
    Revenue
      from less-than-truckload linehaul services divided by total loaded
      miles.(f)
    Revenue
      from less-than-truckload services divided by number of linehaul
      shipments.(g)
    Hundredweight
      times 100 divided by number of shipments.(h)
    Revenue
      from less-than-truckload services divided by
  hundredweight.
 
 LTL
linehaul revenue also improved by $1.1 million (4.0%) during the three-months
ended March 31, 2005 as compared to the comparable period of 2004. The number of
LTL shipments transported declined by 4.0% between the first quarters of 2005
and 2004, but the average weight of the shipments transported increased by 6.3%,
and average linehaul revenue per LTL shipment improved by 8.1%, to
$452.
 The
following table summarizes and compares the makeup of our fleets between
full-truckload and LTL and between company-provided tractors and tractors
provided by owner-operators as of March 31, 2005 and 2004:
 
 **2005**
    
    
    **2004****Full-truckload
      tractors**Company-provided
    
    
    1,444
    
    
    1,411Owner-operator
    
    
    547
    
    
    598Total
      full-truckload
    
    
    1,991
    
    
    2,009**LTL
      tractors**Company-provided
    
    
    95
    
    
    111Owner-operator
    
    
    150
    
    
    184Total
      LTL
    
    
    245
    
    
    295Total
      company-provided
    
    
    1,539
    
    
    1,522Total
      owner-operator
    
    
    697
    
    
    782Tractors
      in service
    
    
    2,236
    
    
    2,304Trailers
      in service
    
    
    3,952
    
    
    3,753
 
  Page 9 of
24
  
 Recent
high operating expenses, particularly for maintenance and fuel has resulted in a
sharp decline in the number of independent contractor, owner-operators providing
equipment to the trucking industry. Our ability to mitigate this industry-wide
trend by expanding our company-operated fleets has been constrained by an
industry-wide lack of drivers qualified to operate the equipment.
 
 ***Freight
Operating Expenses:*** The
following table sets forth, as a percentage of freight revenue, certain major
operating expenses for each of the three-month periods ended March 31, 2005 and
2004:
 
 **2005**
    
    ******2004**Salaries,
      wages and related expenses
    
    
    26.4
    %
    
    27.2
    %Purchased
      transportation
    
    
    25.5
    
    
    28.6Fuel
    
    
    14.4
    
    
    12.3Supplies
      and expenses
    
    
    13.1
    
    
    11.6Revenue
      equipment rent and depreciation
    
    
    10.9
    
    
    12.1Claims
      and insurance
    
    
    3.0
    
    
    2.7Other
    
    
    1.9
    
    
    2.4Total
      freight operating expenses
    
    
    95.2
    %
    
    96.9
    %
 
 ******  ***Salaries,
Wages and Related Expenses*** *:* Salaries, wages and related expenses increased by $1.6 million (5.6%) during the
first three months of 2005 as compared to the comparable period of 2004. The
following table summarizes and compares the major components of these expenses
for each of the three month periods ended March 31, 2005 and 2004 (in
millions):
 
 **Amount
      of Salaries, Wages and**
      **Related
      Expenses Attributable to:**
    
    **2005**
    
    **2004**Driver
      salaries and per-diem expenses
    
    $
    17.9
    
    $
    16.9Non-driver
      salaries
    
    
    7.9
    
    
    8.3Payroll
      taxes
    
    
    2.3
    
    
    2.3Work-related
      injuries
    
    
    0.6
    
    
    0.6Health
      insurance and other
    
    
    1.9
    
    
    0.9$
    30.6
    
    $
    29.0
 
 Employee
full-truckload linehaul drivers are typically paid a certain rate per mile. The
number of such miles increased during the first three months of 2005, as
compared to the comparable period of 2004. The increased number of miles
contributed to the increases in driver salaries and per-diem
expenses.
 Employee
dedicated fleet drivers are typically paid by the hour or by the day. During
2005, we have added trucks to our dedicated fleet operations. Those increases
also contributed to increases in driver salaries and per-diem
expenses.
 We
sponsor a 401(k) wrap plan which enables employees to defer a portion of their
current salaries to their post-retirement years. Because the wrap plan’s assets
are held by a grantor or “rabbi” trust, we are required to include the wrap
plan’s assets and liabilities in our consolidated financial statements. As of
December 31, 2004 and March 31, 2005, such assets included 130,000 shares of our
common stock, which are classified as treasury stock in our consolidated balance
sheet.
 We are
required to value the assets and liabilities of the wrap plan at market value on
our periodic balance sheets, but we are precluded from reflecting the treasury
stock portion of the wrap plan’s assets at market value. This results in upward
pressure on non-driver salaries and wage expense, when the market value of our
common stock rises. The opposite is true when our common stock price falls.
During the first three months of 2005, the per-share market price of our stock
declined by $1.38, to $11.52. This resulted in a reduction of approximately
$180,000 in 2005’s first quarter non-driver salary and wage expense, as compared
to the comparable period of 2004. Also, our executive bonus and phantom stock
plan is partially denominated in approximately 171,000 “phantom” shares of our
stock, the liability for which is also determined by the value of our stock.
That resulted in an additional $200,000 reduction in non-driver salaries and
wage expense during the first three months of 2005, as compared to the
comparable period of 2004.
 
 ***Purchased
Transportation:*** Purchased transportation expense declined by $0.8 million (2.8%) during the
first three months of 2005 as compared to the comparable period of 2004. The
following table summarizes our purchased transportation expense for each of the
three-month periods ended March 31, 2005 and 2004 , by type
of service (in millions):
 
 **Amount
      of Purchased**
      **Transportation
      Expense****Incurred
      for**
    
    **2005**
    
    **2004**Linehaul
      service
    
    $
    23.1
    
    $
    24.8Fuel
      adjustments
    
    
    2.7
    
    
    1.5Freight
      brokerage and other
    
    
    3.8
    
    
    4.1$
    29.6
    
    $
    30.4
 
 Purchased
transportation for linehaul service primarily represents payments to
owner-operators in exchange for our use of their vehicles to transport
shipments. The $1.7 million decrease in such expenses during the first three
months of 2005 as compared to the comparable period of 2004 is primarily a
result of a decrease in the number of owner-operator provided tractors in our
fleets, from 782 as of March 31, 2004 to 697 as of March 31,
2005.
 Purchased
transportation for fuel adjustments represents incremental payments to
owner-operators to compensate them for currently high fuel costs.
Owner-operators are responsible for all expenses associated with the operation
of their tractors, including labor, maintenance and fuel. When retail fuel
prices are high, we charge our customers incremental fuel adjustment charges to
defray such higher costs. To the extent that shipments are transported by
owner-operators, we pass the amount of these fuel surcharges through to the
owner-operators, in order to offset their incremental fuel expense.
 
 Page 10 of
24
 ***Fuel:*** Fuel
expense increased by $3.6 million (27.7%) during the first three months of 2005
as compared to the same period of 2004. The following table summarizes and
compares the relationship between fuel expense and freight linehaul revenue
during each of the
three-month periods ended March 31, 2005 and 2004 :
 
 **2005**
    
    **2004**Total
      linehaul and dedicated fleet revenue
    
    $
    99.0
    
    $
    95.6Fuel
      expense
    
    
    16.7
    
    
    13.1Fuel
      expense as a percent of total linehaul and dedicated fleet
      revenue
    
    
    16.9
    %
    
    13.7
    %
 
 The
per-gallon price of fuel we incurred during the first three months of 2005 was
30% more than during the comparable year-ago period.
 Because
fuel adjustment charges do not fully compensate us for our increased fuel costs,
fuel price volatility impacts our profitability. We have in place a number of
strategies that mitigate, but do not eliminate, the impact of such volatility.
Pursuant to the contracts and tariffs by which our freight rates are determined,
those rates in most cases automatically fluctuate as diesel fuel prices rise and
fall because of the fuel adjustment charges.
 Factors
that prevent us from fully recovering fuel cost increases include the presence
of deadhead (empty) miles, tractor engine idling and fuel to power our trailer
refrigeration units. Such fuel consumption often cannot be attributable to a
particular load and, therefore, there is no revenue to which a fuel adjustment
may be applied. Also, our fuel adjustment charges are computed by reference to
federal government indices that are released weekly for the price week. When
prices are rising, the price we incur in a given week is more than the price the
government reports for the preceding week. Accordingly, we are unable to recover
the excess of the current week’s actual price to the preceding week’s indexed
price.
 With
regard to fuel expenses for company-operated equipment, we attempt to further
mitigate the impact of fluctuating fuel costs by operating more fuel-efficient
tractors and aggressively managing fuel purchasing. Also, owner-operators are
responsible for all costs associated with their equipment, including fuel.
Therefore, the cost of such fuel is not a direct expense of ours, but to the
extent such fuel adjustment charges are passed through by us to owner-operators,
fuel price volatility may impact purchased transportation expenses.
 We use
computer software to optimize our routing and fuel purchasing. The software
enables us to select the most efficient route for a trip. It also assists us in
deciding on a real-time basis how much fuel to buy at a particular fueling
station.
 
 ***Supplies
and Expenses*** *:* Supplies
and expenses increased by $2.9 million (23.2%) during the first three months of
2005 as compared to the comparable period of 2004. The following table
summarizes and compares the major components of supplies and expenses for each of the
three-month periods ended March 31, 2005 and 2004 (in
millions):
  **Amount
      of Supplies and**
      **Expenses
      Incurred for**
    
    **2005**
    
    **2004**Fleet
      repairs and maintenance
    
    $
    6.1
    
    $
    3.9Freight
      handling
    
    
    2.6
    
    
    2.6Driver
      travel expense
    
    
    0.7
    
    
    0.8Tires
    
    
    1.4
    
    
    1.7Terminal
      and warehouse expenses
    
    
    1.7
    
    
    1.3Driver
      recruiting
    
    
    0.9
    
    
    0.7Other
    
    
    1.8
    
    
    1.3$
    15.2
    
    $
    12.3
 
 Fleet
maintenance and repair expenses represented more than 75% of the total increase
in our total supplies and expenses during the first quarter of 2005, as compared
to the year-ago quarter. Expenses for tractor repair and maintenance increased
by $1.2 million, and trailer repair expenses increased by $750,000.
 With regard
to tractor repairs, during 2002 we agreed with our primary tractor manufacturer
to extend our tractor replacement cycle from 36 months to up to 48 months
thereby causing our tractor fleet to consist of older vehicles. Older, high
mileage vehicles typically are more expensive to maintain than newer, low
mileage vehicles. With regard to our newer tractors, we have incurred
significant expenses to maintain tractor engines than was previously the case.
Such engines use anti-pollution devices that cause the engine to run at higher
temperatures, which creates more stress and results in higher maintenance
expenses. We are working with the manufacturers of the engines and the tractors
to find a solution to these problems.
 Trailer
maintenance expenses increased during the first quarter of 2005 as compared to
the comparable year-ago quarter due to the addition of 200 trailers to our
fleets between March 31, 2004 and March 31, 2005. Also, during 2004 as older
leased trailers reached the end of their 7-year lease terms, we negotiated with
the lessors to extend the leases for up to one year, at significantly lower
monthly rental amounts. While such extensions resulted in lower revenue
equipment rental expense, those savings were partially offset by the higher
costs associated with maintaining the older trailers.
 ******
 ***Rentals and
Depreciation*** *:* The
total of revenue equipment rent expense and depreciation expense decreased by
$0.3 million (2.0%) the first three months of 2005 as compared to the comparable
period of 2004. This change was due in part to a decreased use of leasing to
finance our fleet. Equipment rental includes a component of interest-related
expense that is classified as non-operating expense when we incur debt to
acquire equipment. Equipment rent and depreciation also are affected by the
replacement of less expensive, older model company-operated tractors and
trailers with more expensive new equipment.
  Page 11 of
24
  
 ***Claims
and Insurance:*** Claims
and insurance expenses increased by $0.5 million (19.0%) the first three months
of 2005, as compared to the comparable period of 2004. The following table
summarizes and compares the major components of claims and insurance expenses
for each of the
three-month periods ended March 31, 2005 and 2004 (in
millions):
 
 **Amount
      of Claims and**
      **Insurance
      Expense Incurred for**
    
    **2005**
    
    **2004**Liability
    
    $
    2.4
    
    $
    1.7Cargo
    
    
    0.4
    
    
    0.8Physical
      damage, property and other
    
    
    0.6
    
    
    0.4$
    3.4
    
    $
    2.9
 The
changes in the amounts of liability and cargo claims and insurance expense we
incurred between the first three months of 2005 and 2004 resulted primarily from
differences in the number and severity of incidents which occurred during the
periods involved.
 We have
accrued for our estimated costs related to our liability claims. When an
incident occurs we record a reserve for the incident's estimated outcome. As
additional information becomes available, adjustments are made.
 Accrued
claims and liabilities in our balance sheet include reserves for over the road
accidents, work-related injuries, self-insured employee medical expenses and
cargo losses. Employee-related insurance costs are included in salaries, wages
and related expenses in our statement of income. It is probable that the
estimates we have accrued at any point in time will change in the
future.
 Claims
and insurance expenses can vary significantly from year to year. The amount of
open claims is significant. There can be no assurance that these claims will be
settled without a material adverse effect on our financial position or our
results of operations.
 ******
 ***Gains on
Disposition of Equipment*** **:** Gains on
the disposition of equipment were nearly $1.2 million during the first three
months of 2005, as compared to $0.4 million during the comparable period of
2004. The periodic amount of such gains depends primarily upon conditions in the
market for previously-owned equipment and on the quantity of retired equipment
sold.
  ***Miscellaneous
Expenses:*** Miscellaneous operating expenses increased by $0.3 million (37.2%) during the
first three months of 2005, as compared to the comparable period of
2004.
 Such
expenses consist primarily of professional fees for legal services, auditing
fees, rentals associated with freight terminals, costs associated with
compliance with the Sarbanes-Oxley Act of 2002 and our provisions for
uncollectible accounts receivable. Audit fees were the category with the largest
increase from the year-ago quarter.
 
 ***Operating
Income:*** Income
from operations increased by $2.2 million during the first three months of 2005,
as compared to the comparable period of 2004. The following table summarizes and
compares our operating results from our freight and non-freight operations for
each of the
three-month periods ended March 31, 2005 and 2004 (in
thousands):
 
 **Operating
      Income (Loss) from**
    
    **2005**
    
    **2004**Freight
      operations
    
    $
    5,526
    
    $
    3,310Non-freight
      operations
    
    
    5
    
    
    (20
    )$
    5,531
    
    $
    3,290
 
  Page 12 of
24
  
 During
April of 2005, we sold the operating assets of AirPro Holdings, Inc. (“AHI”),
our last remaining non-freight business. There was no gain or loss on this
transaction.  The buyer is a newly-formed entity, AIRPRO Mobile Air, LLC
(“AMA”). During 2002, we engaged the services of a consulting firm to design and
implement a strategic plan which could restore the profitability of AHI and
ultimately prepare AHI for divestiture. AHI reported an operating profit of
$810,000 during 2004. During the first quarter of 2005, we received an offer
from the two principal officers of AHI to purchase the assets. After
negotiation, we accepted the offer, which was based on the assets and
liabilities of AHI as of March 1, 2005, as adjusted for cash and other
transactions between such date and the closing date. Each of the two officers
owns a 40% interest in AMA and AHI owns a 20% interest in AMA. As an
accommodation to AMA, AHI has provided certain loans to AMA and each of the two
officers. Such loans are for the purpose of financing AMA’s purchase of the
assets and providing liquidity to AMA as it commences its operations. AMA is
also financed by a secured line of credit from a bank, which is secured by the
assets we sold to AMA and by the personal guarantees of each of the two
officers. AHI’s loans to the two officers and AMA are subordinate to the loans
of the bank, but AHI has not guaranteed the loans of the bank to AMA. Because
AHI continues to be the primary beneficiary of AMA to the operations of AMA, we
will be required by the Financial Accounting Standards Board’s Financial
Interpretation No. 46 (“FIN No. 46”) to include the financial statements of AMA
in our consolidated financial statements after the closing date until such time
as a ‘triggering event’ (as defined by FIN No. 46) occurs. Such a triggering
event could be the occurrence of a transaction (such as repayment of our debt)
that would result in AMA demonstrating an ability to operate profitably and
finance its operations on a continuing basis without the support of AHI.
Accordingly, until such a triggering event occurs, we will account for the sale
of AHI in the manner promulgated by FIN No. 46.
 ******
 ***Interest and
Other*** *:* The
following table summarizes and compares our interest and other expenses for each of the
three-month periods ended March 31, 2005 and 2004 (in
thousands):
 
 **Amount
      of Interest and**
      **Other
      Expense (Income) from**
    
    **2005**
    
    **2004**Interest
      expense
    
    $
    68
    
    $
    122Interest
      income
    
    
    (12
    )
    
    (15
    )Equity
      in earnings of limited partnership
    
    
    (33
    )
    
    (30
    )Life
      insurance and other
    
    
    67
    
    
    119$
    90
    
    $
    196
 
 During
April of 2005, we sold a fifty percent interest in one of our life insurance
investments. The book value of the asset we sold as of March 31, 2005 was
approximately $2.3 million. As consideration for the sale of the policy, we
received $6.1 million in cash. The resulting non-operating gain of $3.8 million
will be reflected in our statements of income for the three and six months ended
June 30, 2005.
 ******
 ***Pre-Tax and
Net Income*** *:* During
the first three months of 2005, we earned pre-tax income of $5.4 million as
compared to $3.1 million during the comparable period of 2004. During the first
three months of 2005 and 2004, we incurred income tax expense of $2.1 million
and $1.2 million, respectively.
 During the
first three months of 2005 and 2004 we reported net income of $3.3 million and
$1.9 million, respectively.
  Page 13 of
24
  
 **LIQUIDITY
AND CAPITAL RESOURCES**
 ***Debt
and Working Capital*** *:* Cash
from our freight revenue is typically collected between 30 and 50 days after the
service has been provided. We continually seek to accelerate our collection of
accounts receivable to enhance our liquidity and reduce our debt. Our freight
business is highly dependent on the use of fuel, labor, operating supplies and
equipment provided by owner-operators. We are typically obligated to pay for
these resources within seven to fifteen days after we use them, so our payment
cycle is a significantly shorter interval than is our collection cycle. This
disparity between cash payments to our suppliers and cash receipts from our
customers can create significant needs for borrowed funds to finance our working
capital, especially during the busiest time of our fiscal year.
 Our
primary needs for capital resources are to finance working capital, expenditures
for property and equipment and, from time to time, acquisitions. Working capital
investment typically increases during periods of sales expansion when higher
levels of receivables and, with regard to non-freight operations, inventories
are present.
 We had
long-term debt of $1.0 million as of March 31, 2005, and, the unused portion of
the company's $50 million revolving credit facility was approximately $44.0
million. We believe that the funds available to us from our working capital,
future operating cash flows and our credit and leasing facilities will be
sufficient to finance our operation during the next twelve months.
 
 ***Cash
Flows*** : During
the three-month period ended March 31, 2005, net cash provided by
operating activities was $5.6 million as compared to $8.4 million during the
year-ago three-month period. Impacting cash flows from operating activities
during the first three months of 2005 as compared to the comparable period of
2004 was 2005’s improved net income, which from a cash flow perspective was more
than offset by a significant reduction in our accounts payable, as compared to
the year-ago quarter.
 Cash used
in investing activities increased from $1.6 million during the first three
months of 2004 to $7.9 million during the comparable period of 2005. Higher
expenditures for new property and equipment (principally tractors and trailers),
net of proceeds from the sale of used property and equipment were the principal
cause of this increase.
 Cash used
in financing activities was $7.1 million during the first three months of 2004,
as compared to cash provided by financing activities of $0.9 million during the
first three months of 2005. We began 2004 and 2005, respectively, with $14
million and $2 million in long-term debt. Most of the cash used in financing
activities during the first three months of 2004 was directed to paying down our
long-term debt by $7.5 million. During the first three months of 2005, $1
million of our cash used in financing activities was for the purpose of reducing
our long-term debt position. Increased proceeds from the issuance of common
stock or re-issuance of treasury stock also served to reduce net cash used in
financing activities during the first thee months of 2005.
  Page 14 of
24
  
 **OBLIGATIONS
AND COMMITMENTS**
 The table
below sets forth information as to the amounts of our obligations and
commitments as well as the year in which they will become due (in
millions):
 
 **Payments
      Due by Year**
    
    **Total**
    
    **2005**(1)
    
    **2006**
    
    **2007**
    
    **2008**
    
    **2009**
    
    **After**
      **2009**Debt
      and letters of credit
    
    $
    6.0
    
    $
    -
    
    $
    -
    
    $
    6.0
    
    $
    -
    
    $
    -
    
    $
    -Obligations
      for the purchase of property and equipment(2)
    
    
    22.3
    
    
    22.3
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -Operating
      leases forRentals
    
    
    79.8
    
    
    20.3
    
    
    21.4
    
    
    14.3
    
    
    10.3
    
    
    7.1
    
    
    6.4Residual
      guarantees
    
    
    10.5
    
    
    5.1
    
    
    3.3
    
    
    1.1
    
    
    0.4
    
    
    0.6
    
    
    -Accounts
      payable
    
    
    25.4
    
    
    25.4
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -Accrued
      payroll
    
    
    4.8
    
    
    4.8
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -148.8
    
    $
    77.9
    
    $
    24.7
    
    $
    21.4
    
    $
    10.7
    
    $
    7.7
    
    $
    6.4Deferred
      compensationPhantom
      stock(3)
    
    
    1.9Rabbi
      trust(4)
    
    
    1.8Total
    
    $
    152.5
 
 (1)
    Represents
      amounts due from April 1 through December 31, 2005.(2)
    Represents
      non-cancelable commitments for the acquisition of property and equipment,
      principally tractors and trailers. Such equipment acquisitions will be
      financed either by operating cash flows, borrowings under our credit
      agreement or by our leasing arrangements.(3)
    Represents
      the current value of 171,000 restricted phantom stock units awarded
      pursuant to the company’s Executive Bonus and Phantom Stock Plan and a
      Supplemental Executive Retirement Plan. An officer may elect to cash out
      any number of the phantom stock units between December 1 and December 15
      of any year selected by the officer with the payout amount with respect to
      each phantom stock unit being generally equal to the greater of (i) the
      actual price of the company’s common stock on December 31 of the year of
      an officer’s election to cash out the unit, or (ii) the average of the 12
      month-end values of such stock during the year in which an officer elects
      to cash out. Accordingly, we are unable to anticipate the year this
      currently unfunded obligation will be paid in cash or the amount of cash
      ultimately payable.(4)
    Represents
      the obligations of a "grantor" (or "rabbi") trust established in
 
 **OUTLOOK**
 This
report contains information and forward-looking statements that are based on our
current beliefs and expectations and assumptions we made based upon information
currently available. Forward-looking statements include statements relating to
our plans, strategies, objectives, expectations, intentions, and adequacy of
resources, and may be identified by words such as "will", "could", "should",
"believe", "expect", intend", "plan", "schedule", "estimate", "project" and
similar expressions. These statements are based on current expectations and are
subject to uncertainty and change.
 Although
we believe that the expectations reflected in such forward-looking statements
are reasonable, actual results could differ materially from the expectations
reflected in such forward-looking statements. Should one or more of the risks or
uncertainties underlying such expectations not materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those we
expect.
 Factors
that are not within our control which could contribute to such differences and
may have a bearing on operating results include demand for our services and
products, and our ability to meet that demand, which may be affected by, among
other things, competition, weather conditions and the general economy, the
availability and cost of labor, our ability to negotiate favorably with lenders
and lessors, the effects of terrorism and war, the availability and cost of
equipment, fuel and supplies, the market for previously-owned equipment, the
impact of changes in the tax and regulatory environment in which we operate,
operational risks and insurance, risks associated with the technologies and
systems used and the other risks and uncertainties described elsewhere in our
filings with the Securities and Exchange Commission.  We do not assume any
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
 
 **OFF-BALANCE
SHEET ARRANGEMENTS**
 Our liquidity
is not materially affected by off-balance sheet arrangements. Like many other
trucking companies, we often utilize non-cancelable operating leases to finance
a portion of our revenue equipment acquisitions. As of March 31, 2005, we leased
974 tractors and 2,057 trailers under operating leases with varying termination
dates ranging from 2005 to 2012. Vehicles held under operating leases are not
carried on our balance sheet, and lease payments for such vehicles are reflected
in our income statements in the line item “Revenue Equipment Rent Expense”. Our
rental expense related to operating leases involving vehicles during the three
months ended March 31, 2005 and 2004 was $6.8 million and $8.3 million,
respectively.
 
 Page 15 of
24
 **NEW
ACCOUNTING PRONOUNCEMENTS**
 On December
16, 2004, the Financial Accounting Standards Board (“FASB”) issued Statement No.
123 (revised 2004), “ *Share
Based Payment* ” (“SFAS
No. 123R”), which is a revision of Statement No. 123, “ *Accounting
for Stock-Based Compensation* ” (“SFAS
No. 123”). SFAS No. 123R supersedes APB Opinion No. 25, “ *Accounting
for Stock Issued to Employees* ” and
amends Statement No. 95, “ *Statement
of Cash Flows* ”. Under
SFAS No. 123R, companies must calculate and record in the income statement the
cost of equity instruments, such as stock options, awarded to employees for
services received. Pro forma disclosure is no longer permitted. The cost of the
equity instruments is to be measured based on the fair value of the instruments
on the date they are granted and is required to be recognized over the period
during which the employees are required to provide services in exchange for the
equity instruments.
 On April
21, 2005, the SEC announced the adoption of a new rule that amends the
compliance date for SFAS 123R so that each registrant that is not a small
business insurer will be required to prepare financial statements in accordance
with SFAS 123R beginning with the first interim or annual reporting period of
the registrant’s first fiscal year beginning on or after June 15,
2005.
 SFAS No.
123R provides two alternatives for adoption: (i) a modified prospective method
in which compensation cost is recognized for all awards granted subsequent to
the effective date of this statement as well as for the unvested portion of
awards outstanding as of the effective date: or (ii) a modified retrospective
method which permits entities to restate prior periods to record compensation
cost calculated under SFAS No. 123 for the pro forma disclosure. We plan to
adopt SFAS No. 123R using the modified prospective method.
 Since we
currently account for stock options granted to employees and shares issued under
our employee stock purchase plans in accordance with the intrinsic value method
permitted under APB Opinion No. 25, no compensation expense is currently
recognized. If we continue to issue stock options to our employees, the adoption
of SFAS No. 123R could have a significant impact on our results of operations,
although it will have no impact on our overall financial position.
 The
impact of adopting SFAS No. 123R cannot be accurately estimated at this time, as
it will depend on the market value and the amount of share-based awards granted
in future periods. Had we adopted SFAS No. 123R in a prior period, the impact
would approximate the impact of SFAS No. 123 as described in the disclosure of
pro forma net income and earnings per share in Note 1 to our consolidated
financial statements.
 SFAS No.
123R also requires that tax benefits received by companies in excess of
compensation cost be reclassified from operating cash flows to financing cash
flows in statements of cash flows. This change in classification will reduce
cash flows from operating activities and increase cash flows from financing
activities in the periods after adoption. While the amount of this change cannot
be estimated at this time, the amount of cash provided by operating activities
from such stock-based compensation related tax deductions was $378,000 during
the first three months of 2005. No such transactions occurred during the first
three months of 2004.
 
 **ITEM
3.**  **QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**
 As of
March 31, 2005, we held no market risk sensitive instruments for trading
purposes. For purposes other than trading, we held the following market risk
sensitive instruments as of March 31, 2005:
 
 **Description**
    **Discussion**Long-term
      debt, $1.0 million
    The
      value of our debt at March 31, 2005 was $1.0 million, which approximates
      fair market value. Our debt is incurred pursuant to our credit agreement,
      which matures on May 30, 2007.Rabbi
      Trust investment in 130,000 shares of our stock, $1.8 million,
      and
      liabilities for stock-based deferred compensation arrangements, $1.9
      million.
    Our
      consolidated financial statements include the assets and liabilities of a
      Rabbi Trust established to hold the investments of participants in our 401
      (k) Wrap Plan and for deferred compensation Liabilities under our
      Executive Bonus and Phantom Stock Plan. Such liabilities are adjusted from
      time to time to reflect changes in the market price of our Common Stock.
      Accordingly, our future compensation expense and income will be impacted
      by fluctuations in the market price of our Common
Stock.Cash
      surrender value of life insurance policies,
      $6.9
      million
    The
      cash surrender value of our life insurance policies is a function of the
      amounts we pay to the insurance companies, the insurance charges taken by
      the insurance companies and the investment returns earned by or losses
      incurred by the insurance company. Changes in any of these factors will
      impact the cash surrender value of our life insurance policies. Insurance
      charges and investment performance have a proximate effect on the value of
      our life insurance assets and on our net
income.
 
 We had no
other material market risk-sensitive instruments (for trading or non-trading
purposes) that would involve significant relevant market risks, such as equity
price risk. Accordingly, the potential loss in our future earnings resulting
from changes in such market rates or prices is not significant.
 
 Page 16 of
24
 **ITEM
4.**  **CONTROLS
AND PROCEDURES**
 **(a)
Disclosure Controls and Procedures:** As of
March 31, 2005, we evaluated, under the supervision and with the participation
of our management, including the Chief Executive Officer and the Chief Financial
Officer, the effectiveness of the design and the operation of our disclosure
controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15 of the
Securities Exchange Act of 1934. Based on this evaluation, our Chief Executive
Officer and Chief Financial Officer concluded that our disclosure controls and
procedures were not effective as of March 31, 2005, because of the material
weaknesses discussed below.
 **(b)
Management’s Report on Internal Control over Financial Reporting:** Our
management is responsible for establishing and maintaining an adequate system of
internal control over financial reporting, as defined in Rules 13a-15(f) or
15d-15(f) of the Securities Exchange Act of 1934.  Management assessed the
effectiveness of our internal control over financial reporting as of December
31, 2004.  In making this assessment, our management used criteria set
forth by the Committee of Sponsoring Organizations (COSO) of the Treadway
Commission in *Internal
Control - Integrated Framework* .
 Through
this assessment, management identified three internal control deficiencies that
constitute material weaknesses as defined by the Public Company Accounting
Oversight Board’s Accounting Standard No. 2. The Company has concluded that it
lacked sufficient controls to (i) ensure the reconciliation of certain accrued
liability accounts; (ii) ensure the proper calculation of deferred tax assets
and liabilities attributable to differences in the book and tax basis of each
component of the Company’s consolidated balance sheet; and (iii) ensure the
Commitments and Contingencies Note to the consolidated financial statements as
of December 31, 2004 accurately reflects the Company’s lease obligations.
Because of the material weaknesses described above, our management has concluded
that as of December 31, 2004 our internal controls over financial
reporting were not effective.  Such material weaknesses in internal control
continue to exist as of March 31, 2005.
 **(c)
Changes in Internal Controls Over Financial Reporting:**  As part
of our ongoing analysis of internal controls over financial reporting and the
issues identified above, management has made and is making changes to our
internal controls. These changes include recruiting to increase staffing in
certain areas of the financial organization, redeploying key personnel,
strengthening of controls over the accounting for certain accounting estimates,
formalizing accounting procedures, establishing additional monitoring controls,
and the retaining of an independent accounting firm to assist with the income
tax preparation and controls. Other than the changes discussed above, there have
been no changes to the Company’s internal control over financial reporting that
occurred since the beginning of the Company’s first quarter of 2005 that
have materially affected, or are reasonably likely to materially affect, the
Company’s internal control over financial reporting.
 
 **PART
II.** **** **OTHER
INFORMATION**
 
 Items
1, 3, and 4 of Part II are omitted due to a lack of updated information to
disclose pursuant to said items.
 
 **ITEM
2.**  **UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**
 
 Issuer
Purchases of Equity Securities for Quarter Ended March 31, 2005
 **Period**
    
    
    **Total
      Number of Shares Purchased**
    
    
    **Average
      Price Paid per Share**
    
    
    **Total
      Number of Shares Purchased as Part of Publicly Announced Plans or
      Programs**
    
    
    **Maximum
      Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased
      Under the Plans or Programs (1)**
    ****January
      1 to January 31, 2005
    
    
    --
    
    
    --
    
    
    --
    
    
    --February
      1 to February 28, 2005
    
    
    --
    
    
    --
    
    
    --
    
    
    --March
      1 to March 31, 2005
    
    
    --
    
    
    --
    
    
    --
    
    
    --**Total**
    
    
    --
    
    
    --
    
    
    --
    
    
    593,200
 
 (1)
    On August
      11, 2004, the Board of Directors authorized the purchase of up to
      750,000 shares of the Company’s common stock from time to time on the open
      market or through private transactions at such times as management deems
      appropriate.  The authorization did not specify an expiration
      date.  Purchases may be increased, decreased or discontinued by the
      Board of Directors at any time without prior
notice.
 
  Page 17 of
24
  
 **ITEM
5.**  **OTHER
INFORMATION**
 Our
Annual Meeting of Shareholders was held on May 5, 2005. Of the 17,876,874 shares
eligible to vote, 17,075,076 shares were represented at the meeting. The
following table summarizes the results of at the Annual Meeting.
 
 **Proposal****Number**
    
    **Subject
      of Proposal**
    
    **Results**1.
    
    
    To
      elect two Class I directors:
      --Jerry
      T. Armstrong
      --Leroy
      Hallman
    
    
    Approved
      Approved2.
    
    
    Approval
      of the 2005 Non-Employee Director Restricted Stock Plan
    
    
    Approved3.
    
    
    Approval
      of the 2005 Executive Bonus and Restricted Stock Plan
    
    
    Approved4.
    
    
    Approval
      of the 2005 Stock Incentive Plan
    
    
    Approved
 **ITEM
6.**  **EXHIBITS**
 
 **Exhibits**
 
 3.1
    Articles
      of Incorporation of the Registrant and all amendments to date (filed as
      Exhibit 3.1 to the Registrant's Annual Report on Form 10-K for the fiscal
      year ended December 31, 1993 and incorporated herein by
      reference).
 
 3.2
    Bylaws
      of the Registrant, as amended (filed as Exhibit 3.2 to the Registrant's
      Annual Report on Form 10-K for the fiscal year ended December 31, 2004 and
      incorporated herein by reference).
 
 10.1
    Form
      of Purchase Agreement and Absolute Assignment of Life Insurance Policy
      (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K
      filed on April 26, 2005 and incorporated herein by
    reference).
 
 10.2
    Fourth
      Amendment to Credit Agreement between Comerica Bank-Texas, as
      administrative agent for itself and other banks, LaSalle Bank National
      Association, as collateral agent and syndication agent for itself and
      other banks and FFE Transportation Services, Inc. as Borrower and certain
      of its affiliates as of April 15, 2005 (filed as Exhibit 10.1 to the
      Registrant’s Current Report on Form 8-K filed on April 29, 2005 and
      incorporated herein by reference.)
 
 31.1
    Certification
      of Chief Executive Officer Required by Rule 13a-14(a)(17 CFR
      240.13a-14(a)).
 
 31.2
    Certification
      of Chief Financial Officer Required by Rule 13a-14(a)(17 CFR
      240.13a-14(a)).
 
 32.1
    Certification
      of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
      Pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.
 
 32.2
    Certification
      of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
      Pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.
  
 Page 18 of
24
 **SIGNATURES**
 
 Pursuant
to the requirements of the Securities Exchange Act of l934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, hereunto
duly authorized.
 
 **FROZEN
      FOOD EXPRESS INDUSTRIES, INC.**(Registrant)Dated:
      May 11, 2005
    By
    /s/
      Stoney M. Stubbs, Jr.Stoney
      M. Stubbs, Jr.
      Chairman
      of the Board
      and
      Chief Executive Officer
 
 
 **FROZEN
      FOOD EXPRESS INDUSTRIES, INC.**(Registrant)Dated:
      May 11, 2005
    By
    /s/
      F. Dixon McElwee, Jr.F.
      Dixon McElwee, Jr.
      Senior
      Vice President
      Principal
      Financial and
      Accounting
      Officer
 
 
 
 
  Page 19 of
24
   
 **EXHIBIT
INDEX**
 
 
 3.1
    Articles
      of Incorporation of the Registrant and all amendments to date (filed as
      Exhibit 3.1 to the Registrant's Annual Report on Form 10-K for the fiscal
      year ended December 31, 1993 and incorporated herein by
      reference).
 
 3.2
    Bylaws
      of the Registrant, as amended (filed as Exhibit 3.2 to the Registrant's
      Annual Report on Form 10-K for the fiscal year ended December 31, 2004 and
      incorporated herein by reference).
 
 10.1
    Form
      of Purchase Agreement and Absolute Assignment of Life Insurance Policy
      (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K
      filed on April 26, 2005 and incorporated herein by
    reference).
 
 10.2
    Fourth
      Amendment to Credit Agreement between Comerica Bank-Texas, as
      administrative agent for itself and other banks, LaSalle Bank National
      Association, as collateral agent and syndication agent for itself and
      other banks and FFE Transportation Services, Inc. as Borrower and certain
      of its affiliates as of April 15, 2005 (filed as Exhibit 10.1 to the
      Registrant’s Current Report on Form 8-K filed on April 29, 2005 and
      incorporated herein by reference.)
 
 31.1
    Certification
      of Chief Executive Officer Required by Rule 13a-14(a)(17 CFR
      240.13a-14(a)).
 
 31.2
    Certification
      of Chief Financial Officer Required by Rule 13a-14(a)(17 CFR
      240.13a-14(a)).
 
 32.1
    Certification
      of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
      Pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.
 
 32.2
    Certification
      of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
      Pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.
 
 
 
  Page 20 of
24
  
 **EXHIBIT
31.1**
 
 **CERTIFICATION
OF CHIEF EXECUTIVE OFFICER**
 **REQUIRED
BY RULE 13a-14(a)**
 
 I, Stoney
M. Stubbs, Jr., certify that:
 
 1.  I have
reviewed this Quarterly Report on Form 10-Q of Frozen Food Express Industries,
Inc.;
 
 2.
    Based
      on my knowledge, this report does not contain any untrue statement of a
      material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were made, not misleading with respect to the period covered by this
      report;
 
 3.
    Based
      on my knowledge, the financial statements, and other financial information
      included in this report, fairly present in all material respects the
      financial condition, results of operations and cash flows of the
      registrant as of, and for, the periods presented in this
      report;
 
 4.
    The
      registrant's other certifying officer and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
      control over financial reporting (as defined in Exchange Act Rules
      13a-15(e) and 15d-15(f)) for the registrant and
have:
 
 a)
    Designed
      such disclosure controls and procedures, or caused such disclosure
      controls and procedures to be designed under our supervision, to ensure
      that material information relating to the registrant, including its
      consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this report is being
      prepared;
 
 b)
    Designed
      such internal control over financial reporting, or caused such internal
      control over financial reporting to be designed under our supervision, to
      provide reasonable assurance regarding the reliability of financial
      reporting and the preparation of financial statements for external
      purposes in accordance with generally accepted accounting
      principles;
 
 c)
    Evaluated
      the effectiveness of the registrant's disclosure controls and procedures
      and presented in this report our conclusions about the effectiveness of
      the disclosure controls and procedures, as of the end of the period
      covered by this report based on such evaluation;
and
 
 d)
    Disclosed
      in this report any change in the registrant's internal control over
      financial reporting that occurred during the registrant's most recent
      fiscal quarter (the registrant's fourth fiscal quarter in the case of an
      annual report) that has materially affected, or is reasonably likely to
      materially affect, the registrant's internal control over financial
      reporting; and
 
 5.
    The
      registrant's other certifying officer and I have disclosed, based on our
      most recent evaluation of internal control over financial reporting, to
      the registrant's auditors and the audit committee of the registrant's
      board of directors (or persons performing the equivalent
      functions):
 
 a)
    All
      significant deficiencies and material weaknesses in the design or
      operation of internal control over financial reporting which are
      reasonably likely to adversely affect the registrant's ability to record,
      process, summarize and report financial information;
and
 
 b)
    Any
      fraud, whether or not material, that involves management or other
      employees who have a significant role in the registrant's internal control
      over financial reporting.
 
 Dated:
      May 11, 2005
    
    /s/
      Stoney M. Stubbs, Jr.Stoney
      M. Stubbs, Jr.
      Chairman
      of the Board
      and
      Chief Executive Officer
  Page 21 of
24
  **EXHIBIT
31.2**
 
 **CERTIFICATION
OF CHIEF FINANCIAL OFFICER**
 **REQUIRED
BY RULE 13a-14(a)**
 
 
 I, F.
Dixon McElwee, Jr., certify that:
 
 1.
    I
      have reviewed this Quarterly Report on Form 10-Q of Frozen Food Express
      Industries, Inc.;
 
 2.
    Based
      on my knowledge, this report does not contain any untrue statement of a
      material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were made, not misleading with respect to the period covered by this
      report;
 
 3.
    Based
      on my knowledge, the financial statements, and other financial information
      included in this report, fairly present in all material respects the
      financial condition, results of operations and cash flows of the
      registrant as of, and for, the periods presented in this
      report;
 
 4.
    The
      registrant's other certifying officer and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
      control over financial reporting (as defined in Exchange Act Rules
      13a-15(e) and 15d-15(f)) for the registrant and
have::
 
 a)
    Designed
      such disclosure controls and procedures, or caused such disclosure
      controls and procedures to be designed under our supervision, to ensure
      that material information relating to the registrant, including its
      consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this report is being
      prepared;
 
 b)
    Designed
      such internal control over financial reporting, or caused such internal
      control over financial reporting to be designed under our supervision, to
      provide reasonable assurance regarding the reliability of financial
      reporting and the preparation of financial statements for external
      purposes in accordance with generally accepted accounting
      principles;
 
 c)
    Evaluated
      the effectiveness of the registrant's disclosure controls and procedures
      and presented in this report our conclusions about the effectiveness of
      the disclosure controls and procedures, as of the end of the period
      covered by this report based on such evaluation;
and
 
 d)
    Disclosed
      in this report any change in the registrant's internal control over
      financial reporting that occurred during the registrant's most recent
      fiscal quarter (the registrant's fourth fiscal quarter in the case of an
      annual report) that has materially affected, or is reasonably likely to
      materially affect, the registrant's internal control over financial
      reporting; and
 
 5.
    The
      registrant's other certifying officer and I have disclosed, based on our
      most recent evaluation of internal control over financial reporting, to
      the registrant's auditors and the audit committee of the registrant's
      board of directors (or persons performing the equivalent
      functions):
 
 a)
    All
      significant deficiencies and material weaknesses in the design or
      operation of internal control over financial reporting which are
      reasonably likely to adversely affect the registrant's ability to record,
      process, summarize and report financial information;
and
 
 b)
    Any
      fraud, whether or not material, that involves management or other
      employees who have a significant role in the registrant's internal control
      over financial reporting.
 Dated:
      May 11, 2005
    
    /s/
      F. Dixon McElwee, Jr.F.
      Dixon McElwee, Jr.
      Senior
      Vice President
      Principal
      Financial and Accounting Officer
 
  Page 22 of
24
  
  **EXHIBIT
32.1**
 
 **FROZEN
FOOD EXPRESS INDUSTRIES, INC.**
 **CERTIFICATION
OF CHIEF EXECUTIVE OFFICER**
 **PURSUANT
TO 18 U.S.C. SECTION BSO, AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002**
 
 
 In
connection with the Quarterly Report of Frozen Food Express Industries, Inc.
(the "Company") on Form 10-Q for the fiscal quarter ended March 31, 2005 as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), I, Stoney M. Stubbs, Jr., Chief Executive Officer of the Company,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that (a) the Report fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and (b) the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
 
 Dated:
      May 11, 2005
    
    /s/
      Stoney M. Stubbs, Jr.Stoney
      M. Stubbs, Jr.
      Chairman
      of the Board
      and
      Chief Executive Officer
 
 
  Page 23 of
24
  
 
 **EXHIBIT
32.2**
 
 **FROZEN
FOOD EXPRESS INDUSTRIES, INC.**
 **CERTIFICATION
OF CHIEF FINANCIAL OFFICER**
 **PURSUANT
TO 18 U.S.C. SECTION BSO, AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002**
 
 
 In
connection with the Quarterly Report of Frozen Food Express Industries, Inc.
(the "Company") on Form 10-Q for the fiscal quarter ended March 31, 2005 as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), I, F. Dixon McElwee, Jr., Chief Financial Officer of the Company,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that (a) the Report fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and (b) the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
 
 Dated:
      May 11, 2005
    
    /s/
      F. Dixon McElwee, Jr.F.
      Dixon McElwee, Jr.
      Senior
      Vice President
      Principal
      Financial and
      Accounting
      Officer
 
  Page 24 of
24