**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 JUNE 30, 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
August 2, 2005, 18,095,359shares
of the registrant's common stock, $1.50 par value, were
outstanding.
   **RETURN TO INDEX**
  
 
 **INDEX**
 
 **PART
      I**
    **FINANCIAL
      INFORMATION**
    **Page
      No.****Item l**
    Financial
      Statements (Unaudited)Consolidated
      Condensed Balance Sheets
      June
      30, 2005 and December 31, 2004.
    1Consolidated
      Condensed Statements of Income
      Three
      and six months ended June 30, 2005 and 2004.
    2Consolidated
      Condensed Statements of Cash Flows
      Six
      months ended June 30, 2005 and 2004.
    3Notes
      to Consolidated Condensed Financial Statements
    4**Item 2**
    Management's
      Discussion and Analysis of
      Financial
      Condition and Results of Operations
    6**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 4**
    Submission
      of Matters to a Vote of Security Holders
    17**Item 6**
    Exhibits
    18
 
 
   -i-
 **RETURN TO INDEX**
  
 **PART
I.  FINANCIAL INFORMATION**
 
 **ITEM 1.**  **Financial
Statements**
 
 **FROZEN
FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES**
 **Consolidated
Condensed Balance Sheets**
 (In
thousands)
 
 **Assets**
    
    June
      30,
      2005
      (unaudited)
    
    Dec.
      31,
      2004Current
      assetsCash
      and cash equivalents
    
    $
    9,429
    
    $
    3,142Accounts
      receivable, net
    
    
    56,712
    
    
    57,954Inventories
    
    
    2,453
    
    
    1,818Tires
      on equipment in use
    
    
    4,724
    
    
    5,157Deferred
      federal income tax
    
    
    4,081
    
    
    3,473Other
      current assets
    
    
    7,112
    
    
    9,103Total
      current assets
    
    
    84,511
    
    
    80,647Property
      and equipment, net
    
    
    78,284
    
    
    78,039Other
      assets
    
    
    12,133
    
    
    12,006$
    174,928
    
    $
    170,692**Liabilities
      and Shareholders' Equity**Current
      liabilitiesAccounts
      payable
    
    $
    24,128
    
    $
    31,985Accrued
      claims
    
    
    13,386
    
    
    13,068Accrued
      payroll
    
    
    9,449
    
    
    9,070Income
      tax payable
    
    
    224
    
    
    -Accrued
      liabilities
    
    
    3,637
    
    
    2,147Total
      current liabilities
    
    
    50,824
    
    
    56,270Long-term
      debt
    
    
    -
    
    
    2,000Deferred
      federal income tax
    
    
    7,941
    
    
    8,551Accrued
      claims
    
    
    6,482
    
    
    6,82565,247
    
    
    73,646Shareholders'
      equityPar
      value of common stock ( 18,072 and 17,653 shares
    outstanding)
    
    
    27,108
    
    
    26,480Capital
      in excess of par value
    
    
    5,540
    
    
    2,518Retained
      earnings
    
    
    77,709
    
    
    68,603110,357
    
    
    97,601Less
      - Treasury stock ( 133 and 130 shares), at cost
    
    
    676
    
    
    555Total
      shareholders' equity
    
    
    109,681
    
    
    97,046$
    174,928
    
    $
    170,692*See
      accompanying notes to consolidated condensed financial
      statements.*
 
 
 
  Page 1 of
20
 **RETURN TO INDEX**
  
 **FROZEN
      FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES****Consolidated
      Condensed Statements of Income****Three
      and Six Months Ended June 30,**(Unaudited
      and in thousands, except per share amounts)**Three
      Months**
    
    **Six
      Months****2005**
    
    **2004**
    
    **2005**
    
    **2004**RevenueFreight
      revenue
    
    $
    123,250
    
    $
    114,746
    
    $
    239,122
    
    $
    221,235Non-freight
      revenue
    
    
    3,430
    
    
    3,392
    
    
    5,587
    
    
    5,834126,680
    
    
    118,138
    
    
    244,709
    
    
    227,069Cost
      and expensesSalaries,
      wages and related exp.
    
    
    32,628
    
    
    30,670
    
    
    63,254
    
    
    59,680Purchased
      transportation
    
    
    31,605
    
    
    32,281
    
    
    61,171
    
    
    62,693Fuel
    
    
    19,090
    
    
    14,467
    
    
    35,809
    
    
    27,556Supplies
      and expenses
    
    
    15,901
    
    
    13,767
    
    
    31,067
    
    
    26,078Revenue
      equipment rent
    
    
    7,301
    
    
    7,888
    
    
    14,078
    
    
    16,138Depreciation
    
    
    5,493
    
    
    4,878
    
    
    11,315
    
    
    9,490Communication
      and utilities
    
    
    900
    
    
    942
    
    
    1,926
    
    
    1,916Claims
      and insurance
    
    
    3,151
    
    
    2,910
    
    
    6,588
    
    
    5,798Operating
      taxes and licenses
    
    
    1,026
    
    
    1,163
    
    
    2,202
    
    
    2,291Gains
      on disposition of equipment
    
    
    (1,493
    )
    
    (604
    )
    
    (2,650
    )
    
    (965
    )Miscellaneous
      expenses
    
    
    1,697
    
    
    1,797
    
    
    2,885
    
    
    2,663117,299
    
    
    110,159
    
    
    227,645
    
    
    213,338Non-freight
      costs and operating expenses
    
    
    3,288
    
    
    2,960
    
    
    5,440
    
    
    5,422120,587
    
    
    113,119
    
    
    233,085
    
    
    218,760Operating
      income
    
    
    6,093
    
    
    5,019
    
    
    11,624
    
    
    8,309Interest
      and other income
    
    
    (3,445
    )
    
    (349
    )
    
    (3,355
    )
    
    (153
    )Pre-tax
      income
    
    
    9,538
    
    
    5,368
    
    
    14,979
    
    
    8,462Income
      tax provision
    
    
    3,739
    
    
    1,876
    
    
    5,873
    
    
    3,030Net
      income
    
    $
    5,799
    
    $
    3,492
    
    $
    9,106
    
    $
    5,432Net
      income per share of common stockBasic
    
    $
    0.33
    
    $
    0.20
    
    $
    0.51
    
    $
    0.32Diluted
    
    $
    0.31
    
    
    0.19
    
    $
    0.49
    
    $
    0.30Basic
      shares
    
    
    17,843
    
    
    17,209
    
    
    17,750
    
    
    17,174Diluted
      shares
    
    
    18,759
    
    
    17,937
    
    
    18,751
    
    
    17,894
 
 *See
accompanying notes*  *to
consolidated condensed financial statements.*
 
  Page 2 of
20
 **RETURN TO INDEX**
  
 **FROZEN
FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES**
 **Consolidated
Condensed Statements of Cash Flows**
 For the
Six Months Ended June 30,
 (In
thousands)
 (Unaudited)
 
 **2005**
    
    **2004****Net
      cash provided by operating activities**
    
    $
    9,760
    
    $
    22,418**Cash
      flows from investing activities**Expenditures
      for property and equipment
    
    
    (17,487
    )
    
    (12,747
    )Proceeds
      from sale of property and equipment
    
    
    7,797
    
    
    4,812Net
      life insurance proceeds (expenditures)
    
    
    4,759
    
    
    (275
    )**Net
      cash used in investing activities**
    
    
    (4,931
    )
    
    (8,210
    )**Cash
      flows from financing activities**Borrowings
    
    
    21,600
    
    
    18,400Payments
      against borrowings
    
    
    (23,600
    )
    
    (31,400
    )Proceeds
      from capital stock transactions
    
    
    2,780
    
    
    248Re-issuances
      of treasury stock
    
    
    120
    
    
    -Purchases
      of treasury stock
    
    
    (241
    )
    
    -Other
    
    
    799
    
    
    -**Net
      cash provided by (used in) financing activities**
    
    
    1,458
    
    
    (12,752
    )Net
      increase in cash and cash equivalents
    
    
    6,287
    
    
    1,456Cash
      and cash equivalents at January 1
    
    
    3,142
    
    
    1,396Cash
      and cash equivalents at June 30
    
    $
    9,429
    
    $
    2,852*See
      accompanying notes**to
      consolidated condensed financial statements.*
 
 
 
 
  Page 3 of
20
 **RETURN TO INDEX**
  
 **FROZEN
FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES**
 **Notes
to Consolidated Condensed Financial Statements**
 June 30,
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.**  **DIVESTITURES**
 During April  of 2005, we sold
certain operating assets of our remaining non-freight subsidiary, AirPro
Holdings, Inc. (“AHI”). The buyer was a newly-formed entity, AIRPRO Mobile Air,
LLC (“AMA”). After the sale, AHI owns 20% of AMA. Because AHI remains the
primary beneficiary of AMA, we are required by Financial Accounting Standards
Board Interpretation No. 46, (revised) to consolidate the financial statements
of AMA.During
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
is reflected in our consolidated condensed statements of income for the three
and six months ended June 30, 2005.
 
 **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**
 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 SFAS No. 123, “ *Accounting
for Stock-Based Compensation* ” (“SFAS
No. 123”). SFAS No. 123R supersedes Accounting Principles Board (“APB”) Opinion
No. 25, “ *Accounting
for Stock Issued to Employees* ” and
amends SFAS 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.
 We apply
APB 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 SFAS No. 123R to account for our stock
options, our net income and diluted net income per share of common stock for
each of the three and six month periods ended June 30, 2005 and 2004 would have
been as follows:
  Page 4 of
20
 **RETURN TO INDEX**
  **Three
      Months**
    
    **Six
      Months****Pro
      Forma Impact on**
      **Net
      Income (in millions)**
    
    **2005**
    
    **2004**
    
    **2005**
    
    **2004**As
      reported
    
    $
    5.8
    
    $
    $3.5
    
    $
    9.1
    
    $
    $5.4Impact
      of SFAS No. 123
    
    
    (0.2
    )
    
    (0.2
    )
    
    (0.4
    )
    
    (0.3
    )$
    5.6
    
    $
    $3.3
    
    $
    8.7
    
    $
    $5.1
 
 **Three
      Months**
    
    **Six
      Months****Pro
      Forma Impact on**
      **Basic
      Net Income Per Share**
    
    **2005**
    
    **2004**
    
    **2005**
    
    **2004**As
      reported
    
    $
    0.33
    
    $
    0.20
    
    $
    0.51
    
    $
    0.32Impact
      of SFAS No. 123
    
    
    (0.02
    )
    
    (0.01
    )
    
    (0.02
    )
    
    (0.02
    )$
    0.31
    
    $
    0.19
    
    $
    0.49
    
    $
    0.30
 
 **Three
      Months**
    
    **Six
      Months****Pro
      Forma Impact on**
      **Diluted
      Net Income Per Share**
    
    **2005**
    
    **2004**
    
    **2005**
    
    **2004**As
      reported
    
    $
    0.31
    
    $
    0.19
    
    $
    0.49
    
    $
    0.30Impact
      of SFAS No. 123
    
    
    (0.01
    )
    
    (0.01
    )
    
    (0.03
    )
    
    (0.01
    )$
    0.30
    
    $
    0.18
    
    $
    0.46
    
    $
    0.29
 
 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. During 2006, 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. The amount of cash provided by
operating activities from such stock based payments was $610,000 during the
first six months of 2005. No such transactions occurred during the first six
months of 2004.
 
 **5.**  **LONG-TERM
DEBT**
 As of
June 30, 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 June 30, 2005, nothing was borrowed against this facility and
$4.3 million was being used as collateral for letters of credit. Accordingly, at
June 30, 2005 approximately $45.7 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 June 30,
2005, we were in compliance with the terms of the agreement.
  Page 5 of
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 **6.**  **NET
INCOME PER SHARE OF COMMON STOCK**
 Our basic
net 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 and six months ended June 30, 2005 and 2004 (in
thousands):
 
 
 **Three
      Months**
    
    **Six
      Months****2005**
    
    ******2004**
    
    ******2005**
    
    ******2004**Basic
      shares
    
    
    17,843
    
    
    17,209
    
    
    17,750
    
    
    17,174Common
      stock equivalents
    
    
    916
    
    
    728
    
    
    1,001
    
    
    720Diluted
      shares
    
    
    18,759
    
    
    17,937
    
    
    18,751
    
    
    17,894
 
 
 For the
three and six months ended June 30, 2004, we excluded 1.1 million 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 and six month periods ended June 30, 2005, 14,000
such stock options were excluded.
 
 
 **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
Internet address is www.ffex.net. All of our filings with the Securities
and Exchange Commission ("SEC") are available free of charge through our
website as soon as reasonably practicable after we file them with the SEC.
 During
April of 2005, we sold certain operating assets of our remaining non-freight
subsidiary, AirPro Holdings, Inc. (“AHI”). The buyer was a newly-formed entity,
AIRPRO Mobile Air, LLC (“AMA”). After the sale, AHI owns 20% of AMA. Because AHI
remains the primary beneficiary of AMA, we are required by Financial Accounting
Standards Board Interpretation No. 46, (revised) to consolidate the financial
statements of AMA.
 **RESULTS
OF OPERATIONS**
 ***Three
and Six Month Ended June 30, 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.
  Page 6 of
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  The
following table summarizes and compares the significant components of freight
revenue for each of the three and six-month periods ended June 30, 2005 and
2004:
 
 **Three
      Months**
    
    **Six
      Months****Freight
      revenue from**
    
    **2005**
    
    **2004**
    
    **2005**
    
    **2004**Full-truckload
      linehaul services (a)
    
    $
    67.6
    
    $
    65.4
    
    $
    132.7
    
    $
    129.6Dedicated
      fleets (a)
    
    
    5.6
    
    
    4.3
    
    
    11.0
    
    
    8.3Total
      full-truckload (a)
    
    
    73.2
    
    
    69.7
    
    
    143.7
    
    
    137.9Less-than-truckload
      linehaul services (a)
    
    
    31.5
    
    
    30.2
    
    
    60.0
    
    
    57.6Total
      linehaul and dedicated fleet revenue (a)
    
    
    104.7
    
    
    99.9
    
    
    203.7
    
    
    195.5Fuel
      adjustments (a)
    
    
    14.0
    
    
    7.2
    
    
    24.8
    
    
    12.2Freight
      brokerage (a)
    
    
    3.1
    
    
    6.0
    
    
    7.9
    
    
    10.3Equipment
      rental (a)
    
    
    1.4
    
    
    1.6
    
    
    2.7
    
    
    3.2Total
      freight revenue (a)
    
    $
    123.2
    
    $
    114.7
    
    $
    239.1
    
    $
    221.2Weekly
      average trucks in service
    
    
    2,269
    
    
    2,296
    
    
    2,282
    
    
    2,300Revenue
      per truck per week (b)
    
    $
    3,550
    
    $
    3,349
    
    $
    3,452
    
    $
    3,271
 
 **Computational
notes:**
 (a) In
millions.
 (b) Total
linehaul and dedicated fleet revenue divided by number of weeks in period
divided by weekly average trucks in service.
 
 Fuel
adjustment charges comprised 80% of the $8.5 million increase in freight revenue
during the three months ended June 30, 2005, as compared to the comparable
period of 2004. The following discussions reflect changes in our total linehaul
and dedicated fleet revenue, exclusive of fuel surcharges.
 Revenue
from our linehaul and dedicated fleet activities increased by $4.8 million
(4.8%) and $8.2 million (4.2%), respectively, between the three and six-month
periods ended June 30, 2004 and 2005. Dedicated fleet revenue increased by $1.3
million (30.2%) and $2.7 million (32.5%), respectively, between the three and
six-month periods, reflecting our continuing efforts to expand our dedicated
fleet customer base.
 Freight
brokerage revenue declined by $2.9 million (48.3%) and $2.4 million (23.3%),
respectively, between the three and six month periods ended June 30, 2004 and
2005. Our freight brokerage provides transportation services to our customers by
using equipment belonging to the third party trucking companies. Such
third-party trucking companies are paid fees, which are negotiated for each
load. Such fees are recorded as purchased transportation expense.
 We employ
specialists knowledgeable in our freight network in our freight brokerage
operation. During the three months ended June 30, 2005, we determined that
certain of the specialists we had been using would be replaced. We are presently
exploring ways to improve the level and quality of our freight brokerage
revenue.
 The
following table summarizes and compares our revenue from full-truckload linehaul
services and related data for each of the three and six-month periods ended June
30, 2005 and 2004:
 
 **Three
      Months**
    
    ******Six
      Months****Revenue
      from full-truckload linehaul services**
    
    **2005**
    
    ******2004**
    
    ******2005**
    
    ******2004**Temperature-controlled
      fleet (a)
    
    $
    45.2
    
    $
    44.3
    
    $
    88.6
    
    $
    87.5Dry-freight
      fleet (a)
    
    
    22.4
    
    
    21.1
    
    
    44.1
    
    
    42.1$
    67.6
    
    $
    65.4
    
    $
    132.7
    
    $
    129.6Total
      linehaul miles (a)
    
    
    45.6
    
    
    48.4
    
    
    91.2
    
    
    98.2Total
      loaded miles (a)
    
    
    41.0
    
    
    43.9
    
    
    81.8
    
    
    89.1Empty
      mile ratio (b)
    
    
    10.1
    %
    
    9.3
    %
    
    10.3
    %
    
    9.3
    %Number
      of linehaul shipments (c)
    
    
    48.7
    
    
    48.4
    
    
    96.2
    
    
    98.0Linehaul
      revenue per total mile (d)
    
    $
    1.48
    
    $
    1.35
    
    $
    1.46
    
    $
    1.32Linehaul
      revenue per loaded mile (e)
    
    $
    1.65
    
    $
    1.49
    
    $
    1.62
    
    $
    1.45Linehaul
      revenue per shipment (f)
    
    $
    1,388
    
    $
    1,351
    
    $
    1,379
    
    $
    1,322Average
      loaded miles per shipment (g)
    
    
    842
    
    
    907
    
    
    850
    
    
    909
 
  Page 7 of
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 **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 $2.2 million (3.4%) and $3.1 million (2.4%),
respectively, between the three and six months ended June 30, 2005, as compared
to the comparable periods of 2004. For the three months ended June 30, 2005,
revenue per loaded mile increased by 10.7%, as compared to the comparable period
of 2004 but our average length of haul declined by 7.2%, to 842 miles. The
number of full-truckload linehaul shipments we transported during
the second quarter of 2005 rose to 48,700, from 48,400 during the year-ago
quarter. Throughout 2004 and 2005, we have 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 six months of 2005, as compared to the
comparable period of 2004 included a shorter average length of haul for such
shipments and a moderate increase in the proportion of our empty, or
non-revenue-producing versus loaded, or revenue-producing, miles. Redeployment
of trucks from our linehaul service to dedicated fleets also impacted
full-truckload linehaul revenue during the first six months of 2005, as
indicated by a more than 30% increase in dedicated fleet revenue between the
three and six-month periods.
 
 The
following table summarizes and compares our revenue from less-than-truckload
linehaul services and related data for each of the three and six-month periods
ended June 30, 2005 and 2004:
 
 **Three
      Months**
    
    ******Six Months****2005**
    
    ******2004**
    
    ******2005**
    
    ******2004**Revenue
      from less-than-truckload linehaul services (a)
    
    $
    31.5
    
    $
    30.2
    
    $
    60.0
    
    $
    57.6Total
      linehaul miles (a)
    
    
    11.5
    
    
    11.0
    
    
    22.1
    
    
    21.3Total
      loaded miles (a)
    
    
    10.6
    
    
    10.3
    
    
    20.3
    
    
    20.0Empty
      mile ratio (b)
    
    
    7.8
    %
    
    6.4
    %
    
    8.1
    %
    
    6.1
    %Number
      of linehaul shipments (c)
    
    
    68.4
    
    
    70.7
    
    
    131.4
    
    
    136.3Linehaul
      revenue per total mile (d)
    
    $
    2.74
    
    $
    2.75
    
    $
    2.71
    
    $
    2.70Linehaul
      revenue per loaded mile (e)
    
    $
    2.97
    
    $
    2.93
    
    $
    2.96
    
    $
    2.88Linehaul
      revenue per shipment (f)
    
    $
    461
    
    $
    427
    
    $
    457
    
    $
    423Hundredweight
      (c)
    
    
    2,123
    
    
    2,095
    
    
    4,051
    
    
    3,984Average
      weight per shipment (g)
    
    
    3,104
    
    
    2,963
    
    
    3,083
    
    
    2,923Linehaul
      revenue per hundredweight (h)
    
    $
    14.84
    
    $
    14.42
    
    $
    14.81
    
    $
    14.46
 
 **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 improved by $1.3 million (4.3%) and $2.4 million (4.2%),
respectively, during the three and six-months ended June 30, 2005 as compared to
the comparable periods of 2004. The number of LTL shipments transported declined
over 3% between the 2005 and 2004 periods, but the average weight of the
shipments transported increased by approximately 5%, and average linehaul
revenue per LTL shipment improved by 8% during both the three and six month
periods ended June 30, 2005, as compared to the comparable periods of
2004.
  Page 8 of
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  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 June 30, 2005 and 2004:
 
 **2005**
    
    **2004****Full-truckload
      tractors**
    
    
    
    
    
    ****Company-provided
    
    
    1,464
    
    
    1,453Owner-operator
    
    
    567
    
    
    534Total
      full-truckload
    
    
    2,031
    
    
    1,987**LTL
      tractors**Company-provided
    
    
    95
    
    
    99Owner-operator
    
    
    142
    
    
    179Total
      LTL
    
    
    237
    
    
    278Total
      company-provided
    
    
    1,559
    
    
    1,552Total
      owner-operator
    
    
    709
    
    
    713Tractors
      in service
    
    
    2,268
    
    
    2,265Trailers
      in service
    
    
    4,288
    
    
    3,861
 
 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 and six-month periods ended June 30,
2005 and 2004:
 
 **Three
      Months**
    
    **Six Months****2005**
    
    **2004**
    
    **2005**
    
    **2004**Salaries,
      wages and related expenses
    
    
    26.5
    %
    
    26.7
    %
    
    26.5
    %
    
    27.0
    %Purchased
      transportation
    
    
    25.6
    
    
    28.1
    
    
    25.6
    
    
    28.3Fuel
    
    
    15.5
    
    
    12.6
    
    
    15.0
    
    
    12.5Supplies
      and expenses
    
    
    12.9
    
    
    12.0
    
    
    13.0
    
    
    11.8Revenue
      equipment rent and depreciation
    
    
    10.4
    
    
    11.1
    
    
    10.6
    
    
    11.6Claims
      and insurance
    
    
    2.6
    
    
    2.5
    
    
    2.8
    
    
    2.6Other
    
    
    1.7
    
    
    3.0
    
    
    1.7
    
    
    2.6Total
      freight operating expenses
    
    
    95.2
    %
    
    96.0
    %
    
    95.2
    %
    
    96.4
    %
 
 ***Salaries,
Wages and Related Expenses*** *:* Salaries, wages and related expenses increased by $2.0 million (6.4%) and $3.6
million (6.0%), respectively, during the three and six month periods ended June
30, 2005 as compared to the comparable periods of 2004. The following table
summarizes and compares the major components of these expenses for each of the
three and six month periods ended June 30, 2005 and 2004 (in
millions):
 
 **Three
      Months**
    
    ******Six Months****Amount
      of Salaries, Wages and Related Expenses Incurred
    for**
    
    **2005**
    
    **2004**
    
    **2005**
    
    **2004**Driver
      salaries and per-diem expenses
    
    $
    18.3
    
    $
    17.8
    
    $
    36.2
    
    $
    34.7Non-driver
      salaries
    
    
    8.9
    
    
    8.9
    
    
    16.8
    
    
    17.2Payroll
      taxes
    
    
    2.0
    
    
    2.0
    
    
    4.3
    
    
    4.3Work-related
      injuries
    
    
    1.5
    
    
    0.8
    
    
    2.1
    
    
    1.4Health
      insurance and other
    
    
    1.9
    
    
    1.2
    
    
    3.9
    
    
    2.1$
    32.7
    
    $
    30.7
    
    $
    63.3
    
    $
    59.7
 
 Employee
full-truckload linehaul drivers are typically paid a certain rate per mile. The
number of such miles increased during the three and six months ended June 30,
2005, as compared to the comparable periods 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.
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  We
sponsor a 401(k) wrap plan which enables employees to defer a portion of their
current salaries to their postretirement 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 June 30, 2005, such assets included 133,000 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. When the market value
of our common stock rises, this results in upward pressure on non-driver
salaries and wage expense. The opposite is true when our common stock price
falls. During the first six months of 2005, the per-share market price of our
stock declined by $1.58 to $11.32. This resulted in a reduction of approximately
$210,000 in 2005’s first six months 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 $270,000 reduction in non-driver salaries and
wage expense during the first six months of 2005, as compared to the comparable
period of 2004.
 
 ***Purchased
Transportation:*** Purchased transportation expense declined by $0.7 million (2.1%) and $1.5
million (2.4%) during the three and six month periods ended June 30, 2005 as
compared to the comparable periods of 2004. The following table summarizes and
compares our purchased transportation expense for each of the three and
six-month periods ended June 30, 2005 and 2004, by type of service (in
millions):
 
 **Three
      Months**
    
    ******Six Months****Amount
      of Purchased Transportation Expense Incurred for**
    
    **2005**
    
    ******2004**
    
    ******2005**
    
    ******2004**Linehaul
      service
    
    $
    25.6
    
    $
    25.2
    
    $
    48.7
    
    $
    50.0Fuel
      adjustments
    
    
    3.3
    
    
    2.2
    
    
    6.0
    
    
    3.7Freight
      brokerage and other
    
    
    2.7
    
    
    4.9
    
    
    6.5
    
    
    9.0$
    31.6
    
    $
    32.3
    
    $
    61.2
    
    $
    62.7
 
 Purchased
transportation for linehaul service primarily represents payments to
owner-operators in exchange for our use of their vehicles to transport
shipments. The $1.5 million decrease in such expenses during the first six
months of 2005, as compared to the comparable period of 2004 is primarily a
result of a decrease in the average number of owner-operator provided tractors
in our fleets, from about 713 during the six month period ended June 30,
2004 to approximately 709 during the comparable period of
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. The per-gallon price
of fuel we incurred during the first six months of 2005 was 28% more than during
the comparable year-ago period. 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. When retail fuel prices rise, 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.
 Purchased
transportation expenses associated with our freight brokerage and other
(principally intermodal) service offerings declined by $2.5 million between the
2005 and 2004 six month periods. Nearly 90% of that decline occurred during the
three months ended June 30, 2005 as compared to the comparable period of 2004.
Freight brokerage purchased transportation expense is highly correlated to
freight brokerage revenue, which declined by $2.9 million between the three
month periods.
 
 ***Fuel:*** Fuel
expense increased by $4.6 million (32.0%) and $8.3 million (30.0%),
respectively, during the three and six month periods ended June 30, 2005 as
compared to the same periods of 2004. The following table summarizes and
compares the relationship between fuel expense and total linehaul and dedicated
fleet revenue during each of the three and six-month periods ended June 30, 2005
and 2004:
 
 **Three
      Months**
    
    ******Six Months****2005**
    
    ******2004**
    
    ******2005**
    
    ******2004**Total
      linehaul and dedicated fleet revenue
    
    $
    104.7
    
    $
    99.9
    
    $
    203.7
    
    $
    195.5Fuel
      expense
    
    
    19.1
    
    
    14.5
    
    
    35.8
    
    
    27.6Fuel
      expense as a percent of total linehaul and dedicated fleet
      revenue
    
    
    18.2
    %
    
    14.5
    %
    
    17.6
    %
    
    14.1
    %
 
 The
per-gallon price of fuel we incurred during the first six months of 2005 was 28%
more than during the comparable year-ago period. Fuel adjustment charges do not
always fully compensate us and our independent contractors for increased fuel
costs. Accordingly, fuel price volatility can impact 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.
  Page 10 of
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 Factors
that might 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 prior 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 $2.1 million (15.5%) and $5.0 million (19.1%),
respectively, between the three and six month periods ended June 30, 2004 and
2005. The following table summarizes and compares the major components of
supplies and expenses for each of the three and six-month periods ended June 30,
2005 and 2004 (in millions):
 
 **Three
      Months**
    
    ******Six Months****Amount
      of Supplies and Expenses Incurred for**
    
    **2005**
    
    ******2004**
    
    ******2005**
    
    ******2004**Fleet
      repairs and maintenance
    
    $
    5.8
    
    $
    4.4
    
    $
    11.9
    
    $
    8.3Freight
      handling
    
    
    2.8
    
    
    2.8
    
    
    5.4
    
    
    5.4Driver
      travel expense
    
    
    0.7
    
    
    0.7
    
    
    1.4
    
    
    1.5Tires
    
    
    1.3
    
    
    1.5
    
    
    2.7
    
    
    3.2Terminal
      and warehouse expenses
    
    
    1.9
    
    
    1.5
    
    
    3.6
    
    
    2.8Driver
      recruiting
    
    
    1.0
    
    
    0.8
    
    
    1.9
    
    
    1.5Other
    
    
    2.4
    
    
    2.1
    
    
    4.2
    
    
    3.4$
    15.9
    
    $
    13.8
    
    $
    31.1
    
    $
    26.1
 
 Fleet repair
and maintenance expenses represented approximately 70% of the total increase in
our total supplies and expenses during three and six month periods ended June
30, 2005, as compared to comparable year-ago periods. During the six months
ended June 30, 2005, expenses for tractor repair and maintenance increased by
$2.0 million, and trailer repair expenses increased by $1.4 million, each as
compared to the first half of 2004.
 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 second quarter of 2005 as compared to
the comparable year-ago quarter due to the addition of approximately 425
trailers to our fleets between June 30, 2004 and June 30, 2005. Also, during
2004 as older leased trailers reached the end of their seven-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 rental and depreciation expense did not change
appreciably between the three month periods ended June 30, 2004 and 2005. For
the six months ended June 30, 2005, such expenses declined by $235,000 (0.9%) to
$25.4 million.
  Page 11 of
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 ***Claims
and Insurance:*** Claims
and insurance expenses increased by $241,000 (8.3%) and $790,000 (13.6%),
respectively, between the three and six month periods ended June 30, 2004 and
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 and six-month periods ended June 30, 2005 and 2004 (in
millions):
 
 **Three
      Months**
    
    ******Six Months****Amount
      of Claims and Insurance Expense Incurred for**
    
    **2005**
    
    ******2004**
    
    ******2005**
    
    ******2004**Liability
    
    $
    2.7
    
    $
    2.2
    
    $
    5.1
    
    $
    3.9Cargo
    
    
    0.3
    
    
    -
    
    
    0.7
    
    
    0.8Physical
      damage
    
    
    0.2
    
    
    0.7
    
    
    0.8
    
    
    1.1$
    3.2
    
    $
    2.9
    
    $
    6.6
    
    $
    5.8
 
 The
changes in the amounts of liability and cargo claims and insurance expense we
incurred between three and six-month periods ended June 30, 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, cargo losses, and employee related claims, such as work-related
injuries and employee health insurance. Expenses for employee-related claims 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.
 On June
1, 2005, our liability insurance arrangements expired and were replaced with a
new coverage, which will remain in place through May 31, 2006. A comparison
between the expired policy and the new policy is as follows (dollar amounts in
millions):
 **Amount
      of Risk**
      **We
      Retained Under****For
      Losses Between**
    
    ******Expired**
      **Policy**
    
    **New**
      **Policy**$
      0.0 -   3.0
    
    $
    3.00
    
    $
    3.003.0 -   5.0
    
    
    -
    
    
    0.505.0 - 10.0
    
    
    2.50
    
    
    1.2510.0 - 25.0
    
    
    -
    
    
    -$
    5.50
    
    $
    4.75
 Under the new
policy, we reduced our exposure from any single incident by $750,000. During the
term of the expired policy, no loss was of a magnitude that is expected to
approach the $3 million level.
 
 ***Gains on
Disposition of Equipment*** **:** Gains on
the disposition of equipment were $2.65 million during the first six months of
2005, as compared to $1.0 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 $0.2 million (8.3%) during the
first six 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
comparable year-ago period.
  Page 12 of
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 ***Operating
Income:*** Income
from operations increased by $1.1 million (22.0%) and $3.3 million (39.8%),
respectively, between the three and six-month periods ended June 30, 2004 and
2005. The following table summarizes and compares our operating results from our
freight and non-freight operations for each of the three and six-month periods
ended June 30, 2005 and 2004 (in thousands):
 
 **Three
      Months**
    
    ******Six Months****Operating
      Income from**
    
    **2005**
    
    ******2004**
    
    ******2005**
    
    ******2004**Freight
      operations
    
    $
    6.0
    
    $
    4.6
    
    $
    11.5
    
    $
    7.9Non-freight
      operations
    
    
    0.1
    
    
    0.4
    
    
    0.1
    
    
    0.4$
    6.1
    
    $
    5.0
    
    $
    11.6
    
    $
    8.3
 
 During April  of 2005, we
sold certain operating assets of our remaining non-freight subsidiary, AirPro
Holdings, Inc. (“AHI”). The buyer was a newly-formed entity, AIRPRO Mobile Air,
LLC (“AMA”). After the sale, AHI owns 20% of AMA. Because AHI remains the
primary beneficiary of AMA, we are required by Financial Accounting Standards
Board Interpretation No. 46, (revised) to consolidate the financial statements
of AMA.
 ***Interest and
Other*** *:* The
following table summarizes and compares our interest and other income for each
of the three and six-month periods ended June 30, 2005 and 2004 (in
thousands):
 
 **Three
      Months**
    
    **Six Months****Amount
      of Interest and Other (Income) Expense from**
    
    **2005**
    
    **2004**
    
    **2005**
    
    **2004**Life
      insurance and other
    
    $
    (3,460
    )
    $
    (307
    )
    $
    (3,393
    )
    $
    (188
    )Equity
      in former subsidiaries
    
    
    153
    
    
    (124
    )
    
    120
    
    
    (154
    )Interest
      expense
    
    
    21
    
    
    84
    
    
    89
    
    
    206Interest
      income
    
    
    (159
    )
    
    (2
    )
    
    (171
    )
    
    (17
    )$
    (3,445
    )
    $
    (349
    )
    $
    (3,355
    )
    $
    (153
    )
 
 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 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 was reflected in our statements
of income for the three and six-month ended June 30, 2005.
 The
decline in interest expense and the increase in interest income between the
three and six-month periods ended June 30, 2004 and 2005 are primarily related
to the receipt and investment of the cash from the sale of the life insurance
investment.
 The three
and six-month's income from equity in former subsidiaries for 2004 was from our
20% equity interest in W&B Refrigeration Services, LLP. We account for that
investment by the equity method of accounting. For the three and six-month
periods ended June 30, 2005, respectively, this investment generated income of
$114,000 and $147,000, respectively.
 The
remainder of the three and six month 2005 equity in former subsidiaries is
related to the sale during the second quarter of 2005 of our remaining
non-freight business. In connection with that transaction, we also retained a
20% equity interest in the buyer, but as we are required to account for that
investment not by the equity method, but by including the financial statements
of the buyer in our consolidated financial statements. As a result, we have
reduced interest and other income by $225,000 to reflect the 80% majority
interest in the buyers' income that we do not own.
 ******
 ***Pre-Tax and
Net Income*** *:* Pre-tax
income increased by $4.2 million (77.7%) and $6.5 million (77.0%), respectively,
between the three and six-month periods ended June 30, 2004 and 2005. Net
income increased by $2.3 million (66.1%) and $3.7 million (67.6%), respectively,
between the three and six month periods ended June 30, 2004 and
2005.
  Page 13 of
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 Non-deductible per
diem expenses from employee-drivers are
expected to increase
our effective tax rate (income
tax provision divided by pre-tax income) for
fiscal 2005 by 8 %. The
gain on the sale of the life insurance investment described above is not
taxable, which reduced our effective tax rate for fiscal 2005 by approximately 6%. As a
result of the non-deductible expenses, state income taxes, and the non-taxable
gain on the sale of the life insurance investment, our effective tax rate for
the three and six-month periods ended June 30, 2005 was 39.2% , which
includes 2% for state income tax, net of federal benefit .
 **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 no
long-term debt as of June 30, 2005, and the unused portion of the company's $50
million revolving credit facility was approximately $45.7 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 six-month period ended June 30, 2005, cash provided by operating
activities was $9.8 million as compared to $22.4 million during the comparable
2004 six-month period. A primary cause of 2005's lower year-to-date cash
provided by operating activities was fluctuations in our accounts payable. 
By way of comparison, cash provided by operating activities for the six months
ended June 30, 2003 was $2.1 million. Pre-tax income increased between the first
six months of 2004 and 2005 by $6.5 million, and the non-cash items involved in
net income (principally depreciation and amortization) increased by
$948,000.
 As of
December 31, 2004, our working capital (current assets minus current
liabilities) was $24.4 million, as compared to $33.7 million as of June 30,
2005. This change, which was mostly related to lower accounts payable at June
30, 2005, is the principal reason for 2005’s lower year-to-date cash flows
provided by operating activities.
 Cash
provided by financing activities was $1.2 million during the first six months of
2005, as compared to cash used in financing activities of $12.8 million during
the first six months of 2004. 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 six months of 2004 was directed to paying down our
long-term debt. During the first six months of 2005, $2 million of our cash used
in financing activities was for the purpose of reducing our long-term debt
position to zero. Increased proceeds from the issuance of common stock or
re-issuance of treasury stock (both in connection with the exercise of stock
options) also served to increase net cash provided by financing activities
during the first six months of 2005.
 Cash used
in investing activities decreased from $8.2 million during the first six months
of 2004 to $4.9 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 a life insurance investment and used property
and equipment were the principal causes of this increase.
  Page 14 of
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 **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
    
    $
    4.3
    
    $
    -
    
    $
    -
    
    $
    4.3
    
    $
    -
    
    $
    -
    
    $
    -Obligations
      for the purchase of property and equipment(2)
    
    
    22.3
    
    
    22.3
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -Operating
      leases forRentals
    
    
    78.3
    
    
    13.8
    
    
    22.7
    
    
    15.7
    
    
    11.7
    
    
    7.7
    
    
    6.7Residual
      guarantees
    
    
    10.7
    
    
    5.1
    
    
    3.3
    
    
    1.1
    
    
    0.4
    
    
    0.8
    
    
    -Accounts
      payable
    
    
    24.1
    
    
    24.1
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -Accrued
      payroll
    
    
    5.7
    
    
    5.7
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -145.4
    
    $
    71.0
    
    $
    26.0
    
    $
    21.1
    
    $
    12.1
    
    $
    8.5
    
    $
    6.7Deferred
      compensationPhantom
      stock(3)
    
    
    1.9Rabbi
      trust(4)
    
    
    1.8Total
    
    $
    149.1
 
 (1)
    Represents
      amounts due from July 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
      connection with our 401(k) Wrap Plan to hold company assets to satisfy
      obligations under the Wrap Plan. The trust obligations include
      approximately 130,000 shares of the company’s common stock and will be
      cashed out either upon the eligibility of the obligations to be
      transferred to our 401(k) Savings Plan or upon the retirement of
      individual wrap plan participants. Accordingly, we are unable to
      anticipate the year this currently funded amount will be paid in cash or
      the amount of cash ultimately payable.
 
 **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 SEC.  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**
 We utilize
non-cancelable operating leases to finance a portion of our revenue equipment
acquisitions. As of June 30, 2005, we leased 1,052 tractors and 2,044 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 six months ended June 30, 2005
and 2004 was $14.1 million and $16.1 million, respectively.
  Page 15 of
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 **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. During 2006, 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. The amount of cash provided by
operating activities from such stock-based compensation related tax deductions
was $610,000 during the first six months of 2005. No such transactions occurred
during the first six months of 2004.
 
 **ITEM 3.** **Quantitative
and Qualitative Disclosures about Market Risk**
 As of
June 30, 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 June 30, 2005:
 
 **Description**
    **Discussion**Rabbi
      Trust investment in 133,000 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,
      $4.7
      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
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 **ITEM 4.** **Controls
and Procedures**
 **(a)
Disclosure Controls and Procedures:** As of
June 30, 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 June 30, 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. The
first two material weaknesses described above affect our quarterly reports on
Form 10-Q as well as our annual reports on Form 10-K. The third material
weakness described above affects only our annual reports on Form 10-K, but as of
June 30, 2005, the third such material weakness has been remediated. 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 June 30, 2005.
The
remediation of the third such material weakness constituted enhancing the
structure of the computer spreadsheet that we used to tabulate our lease
commitments and strengthening the internal review of the disclosure to ensure
that it appropriately reflects the company’s obligations.
With
regard to the material weakness regarding the reconciliation of certain
liability accounts, our efforts to remediate are on-going, but as yet
incomplete. In the interim, we have increased our activities to review the
transactions that are posted into the involved accounts, and monitor such
activity with increased frequency, to ensure that any questionable entries are
promptly identified and corrected. Our efforts to reconcile the involved
accounts to ensure that period-end balances are properly supported by an open
transaction detail are continuing.
With
regard to the material weakness involving income taxes, we have engaged the
services of a national independent accounting firm to assist us in identifying
and quantifying all book tax differences that comprise the balances in our
deferred tax accounts. Significant progress has been made, but we have not yet
been able to conclude that this weakness has been effectively remediated.
**(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. In addition to the remediation efforts described in (b)
above, 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 in the preceding two sentences, 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 5 of Part II are omitted due to a lack of updated information to
disclose pursuant to these items.
 
 **ITEM 2.** **Unregistered
Sales of Equity Securities and Use of Proceeds**
 In accordance
with the terms of our 2005 Non-Employee Director Stock Plan (the "Plan"), on May
5, 2005, each of our five non-employee directors became eligible to receive
1,288 shares of our common stock.  The related agreements were completed
during July of 2005, and the resulting 6,440 shares of our common stock will be
issued by our transfer agent and registrar during August of 2005.  At this
time, these shares are not registered with the SEC and will be issued to the
directors pursuant to the exemption provided by Section 4 (2) of the Securities
Act of 1933.  We expect to file a registration statement on Form S-8 prior
to September 30, 2005, after which time the shares will be registered with the
SEC. The market value of the shares as of May 5, 2005 was $9.70 per
share.  Because the shares have not yet been registered with the SEC,
upon their issuance, the certificates representing ownership of the shares will
bear a legend indicating that they may not be sold or otherwise transferred
without compliance with applicable federal and state securities laws.  Each
non-employee director's ownership of the shares awarded under the Plan is
subject to the vesting and other conditions as described in the
Plan.
 
 Issuer
Purchases of Equity Securities for Quarter Ended June 30, 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)**April
      1 to April 30, 2005
    
    
    --
    
    
    --
    
    
    --
    
    
    --May
      1 to May 31, 2005
    
    
    --
    
    
    --
    
    
    --
    
    
    --June
      1 to June 30, 2005
    
    
    11,444
    (2)
    
    $ 
      11.51
    
    
    --
    
    
    --**Total**
    
    
    11,444
    
    
    $ 
      11.51
    
    
    --
    
    
    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.(2)
    During
      June of 2005, a non-executive officer of our primary operating subsidiary
      exchanged 11,444 shares that the officer had owned for more than one year
      as consideration for the exercise of stock options, as permitted by our
      stock option plans. Such transactions are not deemed as having been
      purchased as part of our publicly-announced plans or
    programs.
  **ITEM 4.**  **Submission
of Matters to a Vote of Security Holders**
 Part II, Item
5 of our quarterly report on Form10-Q for the period ended March 31, 2005, which
was filed with the SEC on May 11, 2005 is hereby incorporated by
reference.
  Page 17 of
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 **RETURN TO INDEX**
  
 
 **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*
    Sixth Amendment to the Frozen Food
      Express Industries, Inc. 401 (k) Savings Plan.10.2*
    Frozen Food Express Industries, Inc.
      2005 Non-Employee Director Restricted Stock Plan10.2 (a)*
    Form of Restricted Stock Agreement
      Frozen Food Express Industries, Inc. Non-Employee Director Restricted
      Stock Plan10.3*
    FFE Transportation Services, Inc.
      2005 Executive Bonus and Restricted Stock Plan10.4*
    Frozen Food Express Industries, Inc.
      2005 Stock Incentive Plan10.5*
    Form of Incentive Stock Option
      Agreement31.1
    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
20
 **RETURN TO INDEX**
  
 **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, thereunto
duly authorized.
 
 **FROZEN
      FOOD EXPRESS INDUSTRIES, INC.**(Registrant)Dated:
      August 4, 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:
      August 4, 2005
    By
    /s/
      F. Dixon McElwee, Jr.F.
      Dixon McElwee, Jr.
      Senior
      Vice President
      Principal
      Financial and
      Accounting
      Officer
 
 
 
 
 
  Page 19 of
20
 **RETURN TO INDEX**
  
 
 **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*
    Sixth Amendment to the Frozen Food
      Express Industries, Inc. 401 (k) Savings Plan.10.2*
    Frozen Food Express Industries, Inc.
      2005 Non-Employee Director Restricted Stock Plan10.2 (a)*
    Form of Restricted Stock Agreement
      Frozen Food Express Industries, Inc. Non-Employee Director Restricted
      Stock Plan10.3*
    FFE Transportation Services, Inc.
      2005 Executive Bonus and Restricted Stock Plan10.4*
    Frozen Food Express Industries, Inc.
      2005 Stock Incentive Plan10.5*
    Form of Incentive Stock Option
      Agreement31.1
    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.
  *
Executive compensation plans and arrangements required to be filed as an exhibit
on this Form 10-Q.
  
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