**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**WASHINGTON,      DC 20549**

**FORM      10-Q**

**x QUARTERLY      REPORT      PURSUANT TO SECTION 13 OR 15(d) OF THE**

**SECURITIES      EXCHANGE ACT OF 1934**

**FOR      THE QUARTERLY PERIOD ENDED JUNE 30, 2006**

**OR**

**o TRANSITION      REPORT      PURSUANT TO SECTION 13 OR 15(d) OF THE**

**SECURITIES      EXCHANGE ACT OF 1934**

**FOR      THE TRANSITION PERIOD FROM _____________ TO ______________**

**FROZEN      FOOD EXPRESS INDUSTRIES, INC.**

| **Texas**(State                or other jurisdiction of incorporation or organization)                                                               | **1-10006**CommissionFile                Number | **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) |

**x**
**o**

**o**
**x**
**o**

**o**
**x**

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**RETURN          TO INDEX**

**INDEX**

| **PART                I**  | **FINANCIAL                INFORMATION**                                                                                   | **Page                No.** |
|----------------------------|----------------------------------------------------------------------------------------------------------------------------|-----------------------------|
|                       |                                                                                                                       |                        |
| **ITEM                1**  | Financial                Statements (Unaudited)                                                                            |                        |
|                       | Consolidated                Condensed Balance SheetsJune                30, 2006 and December 31, 2005                     | 1                      |
|                       |                                                                                                                       |                        |
|                       | Consolidated                Condensed Statements of IncomeThree                and six months ended June 30, 2006 and 2005 | 2                      |
|                       |                                                                                                                       |                        |
|                       | Consolidated                Condensed Statements of Cash FlowsSix                months ended June 30, 2006 and 2005       | 3                           |
|                       |                                                                                                                       |                        |
|                       | Notes                to Consolidated Condensed Financial                Statements                                         | 4                           |
|                       |                                                                                                                       |                        |
| **ITEM                2**  | Management's                Discussion and Analysis ofFinancial                Condition and Results of Operations         | 8                           |
|                       |                                                                                                                       |                        |
| **ITEM                3**  | Quantitative                and Qualitative Disclosures About Market Risk                                                  | 21                          |
|                       |                                                                                                                       |                        |
| **ITEM                4**  | Controls                and Procedures                                                                                     | 22                     |
|                       |                                                                                                                       |                        |
| **PART                II** | **OTHER                INFORMATION**                                                                                       |                        |
|                       |                                                                                                                       |                        |
| **ITEM                1**  | Legal              Proceedings                                                                                             | 24                     |
|                       |                                                                                                                       |                        |
| **ITEM                1A** | Risk              Factors                                                                                                  | 24                          |
|                       |                                                                                                                       |                        |
| **ITEM                2**  | Unregistered                Sales of Equity Securities and Use of Proceeds                                                 | 25                          |
|                       |                                                                                                                       |                        |
| **ITEM                3**  | Defaults              Upon Senior Securities                                                                               | 25                          |
|                       |                                                                                                                       |                        |
| **ITEM                4**  | Submission                of Matters to a Vote of Security Holders                                                         | 25                          |
|                       |                                                                                                                       |                        |
| **ITEM                5**  | Other              Information                                                                                             | 25                          |
|                            |                                                                                                                       |                        |
| **ITEM                6**  | Exhibits                                                                                                                   | 26                          |
|                       |                                                                                                                       |                        |

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**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,****2006****(unaudited)** | ** ** | ** ** | **December                31,****2005** |   |
|---------------------------------------------------------------------------------------------------------------|--------|--------|----------------------------------------------------|------------|------------|-----------------------------------------|--------|
| Current                assets                                                                                 |   |   |                                                    |       |       |                                         |   |
| Cash                and cash equivalents                                                                      |   | $      | 9,283                                              |       | $          | 10,957                                  |   |
| Accounts                receivable, net                                                                       |   |   | 55,871                                             |       |       | 68,216                                  |   |
| Inventories                                                                                                   |   |   | 2,627                                              |       |       | 1,982                                   |   |
| Tires                on equipment in use                                                                      |   |   | 4,887                                              |       |       | 4,899                                   |   |
| Deferred                income taxes                                                                          |   |   | 4,087                                              |            |       | 4,354                                   |   |
| Other                current assets                                                                           |   |   | 14,304                                             |       |       | 7,550                                   |   |
| Total                current assets                                                                           |   |   | 91,059                                             |       |       | 97,958                                  |   |
|                                                                                                          |   |   |                                               |       |       |                                         |   |
| Property                and equipment, net                                                                    |   |   | 97,734                                             |       |       | 92,110                                  |   |
| Other                assets                                                                                   |   |   | 11,700                                             |       |       | 10,887                                  |   |
| Total                assets                                                                                   |   | $      | 200,493                                            |       | $          | 200,955                                 |   |
| **Liabilities                and shareholders' equity**                                                       |   |   |                                               |       |       |                                         |   |
| Current                liabilities                                                                            |   |   |                                               |       |       |                                         |   |
| Accounts                payable                                                                               |   | $      | 29,713                                             |       | $          | 28,292                                  |   |
| Accrued                claims                                                                                 |   |   | 12,272                                             |       |       | 14,455                                  |   |
| Accrued                payroll                                                                                |   |   | 9,264                                              |       |       | 12,661                                  |   |
| Income                taxes payable                                                                           |   |   | --                                                 |       |       | 2,932                                   |   |
| Accrued                liabilities                                                                            |   |   | 2,486                                              |       |       | 2,947                                   |   |
| Debt                of variable interest entity                                                               |   |   | 3,195                                              |       |       | 3,622                                   |   |
| Total                current liabilities                                                                      |   |   | 56,930                                             |       |       | 64,909                                  |   |
|                                                                                                          |   |   |                                               |       |       |                                         |   |
| Long-term                debt                                                                                 |   |   | --                                                 |       |       | --                                      |   |
| Deferred                income taxes                                                                          |   |   | 7,873                                              |       |       | 7,318                                   |   |
| Accrued                claims and liabilities                                                                 |   |   | 10,375                                             |       |       | 9,536                                   |   |
| Total                liabilities                                                                              |   |   | 75,178                                             |       |       | 81,763                                  |   |
|                                                                                                          |   |   |                                               |       |       |                                         |   |
| **Shareholders'                equity**                                                                       |   |   |                                               |       |       |                                         |   |
| Par                value of common stock (18,297 and                18,137 shares                outstanding) |   |   | 27,445                                             |       |       | 27,206                                  |   |
| Paid-in                capital                                                                                |   |   | 6,879                                              |       |       | 6,081                                   |   |
| Unvested                restricted stock (62 and                0 shares)                                     |   |   | (637                                               | )          |       | --                                      |   |
| Retained                earnings                                                                              |   |   | 93,088                                             |       |       | 89,040                                  |   |
|                                                                                                          |   |   | 126,775                                            |       |       | 122,327                                 |   |
| Less                - treasury stock (148 and 331                shares)                                 |   |   | 1,460                                              |       |       | 3,135                                   |   |
| Total                shareholders' equity                                                                     |   |   | 125,315                                            |       |       | 119,192                                 |   |
| Total                liabilities and shareholders' equity                                                     |   | $      | 200,493                                            |       | $          | 200,955                                 |   |

*See      accompanying notes*
*to      consolidated condensed financial statements.*

----

**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** |   |
|-----------------------------------------------------------------|--------|-----------------------------------|---------|---------------------------------|--------|
|                                                            |   | **2006**                          |    | **2005**                        |   | **2006** |   | **2005** |   |
| Revenue                                                         |   |                              |         |                            |   |  |   |   |  |   |   |  |   |
| Freight                  revenue                                |   | $                                 | 123,554 |                            | $      | 123,250 |   | $ | 247,152 |   | $ | 239,122 |   |
| Non-freight                  revenue                            |   |                              | 3,252   |                            |   | 3,430 |   |   | 5,722 |   |   | 5,587 |   |
|                                                            |   |                              | 126,806 |                            |   | 126,680 |   |   | 252,874 |   |   | 244,709 |   |
| Cost                  and expenses                              |   |                              |    |                            |   |  |   |   |   |   |   |  |   |
| Salaries,                  wages and related expenses           |   |                              | 32,887  |                            |   | 32,632 |   |   | 66,875 |   |   | 63,258 |   |
| Purchased                  transportation                       |   |                              | 29,583  |                            |   | 31,605 |   |   | 57,899 |   |   | 61,171 |   |
| Fuel                                                            |   |                              | 23,651  |                            |   | 19,090 |   |   | 44,469 |   |   | 35,809 |   |
| Supplies                  and expenses                          |   |                              | 13,859  |                            |   | 15,897 |   |   | 29,281 |   |   | 31,063 |   |
| Revenue                  equipment rent                         |   |                              | 7,660   |                            |   | 7,004 |   |   | 15,616 |   |   | 13,454 |   |
| Depreciation                                                    |   |                              | 5,060   |                            |   | 5,697 |   |   | 10,243 |   |   | 11,744 |   |
| Communication                  and utilities                    |   |                              | 970     |                            |   | 900 |   |   | 2,056 |   |   | 1,926 |   |
| Claims                  and insurance                           |   |                              | 5,066   |                            |   | 3,151 |   |   | 9,061 |   |   | 6,588 |   |
| Operating                  taxes and licenses                   |   |                              | 944     |                            |   | 1,026 |   |   | 2,245 |   |   | 2,202 |   |
| Gain                  on disposition of equipment               |   |                              | (1,017  | )                               |   | (1,493 | ) |   | (1,651 | ) |   | (2,650 | ) |
| Miscellaneous                  expenses                         |   |                              | 1,510   |                            |   | 1,697 |   |   | 4,188 |   |   | 2,885 |   |
|                                                            |   |                              | 120,173 |                            |   | 117,206 |   |   | 240,282 |   |   | 227,450 |   |
| Non-freight                  costs and operating expenses       |   |                              | 3,165   |                            |   | 3,428 |   |   | 5,812 |   |   | 5,580 |   |
|                                                            |   |                              | 123,338 |                            |   | 120,634 |   |   | 246,094 |   |   | 233,030 |   |
| Operating                  income                               |   |                              | 3,468   |                            |   | 6,046 |   |   | 6,780 |   |   | 11,679 |   |
| Interest                  and other expense (income)            |   |                              |    |                            |   |   |   |   |   |   |   |   |   |
| Interest                  expense                               |   |                              | 81      |                            |   | 76 |   |   | 154 |   |   | 186 |   |
| Interest                  income                                |   |                              | (219    | )                               |   | (115 | ) |   | (336 | ) |   | (182 | ) |
| Equity                  in earnings of limited partnership |   |                              | (116    | )                               |   | (104 | ) |   | (252 | ) |   | (137 | )  |
| Life                  insurance and other                       |   |                              | (100    | )                               |   | (3,349 | ) |   | (192 | ) |   | (3,167 | ) |
|                                                            |   |                              | (354    | )                               |   | (3,492 | ) |   | (626 | ) |   | (3,300 | ) |
| Income                  before income tax                       |   |                              | 3,822   |                            |   | 9,538 |   |   | 7,406 |   |   | 14,979 |   |
|                                                            |   |                              |    |                            |   |  |   |   |   |   |   |  |   |
| Income                  tax provision                           |   |                              | 1,709   |                            |   | 3,739 |   |   | 3,358 |   |   | 5,873 |   |
|                                                            |   |                              |    |                            |   |  |   |   |   |   |   |  |   |
| Net                  income                                     |   | $                                 | 2,113   |                            | $      | 5,799 |   | $ | 4,048 |   | $ | 9,106 |   |
|                                                            |   |                              |    |                            |   |  |   |   |   |   |   |  |   |
| Net                  income per share of common stock           |   |                              |    |                            |   |  |   |   |   |   |   |  |   |
| Basic                                                           |   | $                                 | 0.12    |                            | $      | 0.33 |   | $ | 0.22 |   | $ | 0.51 |   |
| Diluted                                                         |   | $                                 | 0.11    |                            | $      | 0.31 |   | $ | 0.21 |   | $ | 0.49 |   |
|                                                            |   |                              |    |                            |   |  |   |   |   |   |   |  |   |
| Basic                  shares                                   |   |                              | 18,059  |                            |   | 17,843 |   |   | 18,019 |   |   | 17,750 |   |
| Diluted                  shares                                 |   |                              | 18,839  |                            |   | 18,759 |   |   | 18,864 |   |   | 18,751 |   |

*See      accompanying notes*
*to      consolidated condensed financial statements.*

----

**RETURN          TO INDEX**

**FROZEN      FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES**

**Consolidated      Condensed Statements of Cash Flows**

*(Unaudited      and in thousands)*

|                                                                                                                      |   |   | **2006** |    |   | **2005** |   |
|---------------------------------------------------------------------------------------------------------------------------|--------|--------|----------|---------|--------|----------|--------|
| **Net                cash provided by operating activities**                                                              |   | $      | 11,897   |    | $      | 10,186   |   |
|                                                                                                                      |   |   |     |    |   |          |   |
| **Cash                flows from investing activities**                                                                   |   |   |     |    |   |          |   |
| Expenditures                for property and equipment                                                                    |   |   | (18,089  | )       |   | (17,487  | )      |
| Proceeds                from sale of property and equipment                                                               |   |   | 4,110    |    |   | 7,797    |   |
| Net                life insurance (expenditures) proceeds                                                                 |   |   | (931     | )       |   | 4,759    |   |
| **Net                cash used in investing activities**                                                        |   |   | (14,910  | )       |   | (4,931   | )      |
|                                                                                                                      |   |   |     |    |   |          |   |
| **Cash                flows from financing activities**                                                                   |   |   |     |    |   |          |   |
| Borrowings                under revolving credit agreement                                                                |   |   | 2,100    |    |   | 21,600   |   |
| Payments                against revolving credit agreement                                                                |   |   | (2,100   | )       |   | (23,600  | )      |
| Debt                repaid by variable interest entities                                                                  |   |   | (427     | )       |   | (426     | )      |
| Common                stock issued                                                                                        |   |   | 1,572    |    |   | 2,780    |   |
| Treasury                stock re-issued                                                                                   |   |   | --       |    |   | 120      |   |
| Treasury                stock reacquired                                                                        |   |   | --       |    |   | (241     | )      |
| Income                tax benefit from stock options exercised                                                            |   |   | 196      |    |   | --       |   |
| Other                                                                                                                     |   |   | (2       | )  |   | 799      |   |
| **Net                cash provided by financing activities**                                                              |   |   | 1,339    |    |   | 1,032    |   |
|                                                                                                                      |   |   |     |    |   |          |   |
| Net                (decrease) increase  in cash and cash equivalents                                                 |   |   | (1,674   | )       |   | 6,287    |   |
| Cash                and cash equivalents at January 1                                                                     |   |   | 10,957   |    |   | 3,142    |   |
|                                                                                                                      |   |   |     |    |   |          |   |
| Cash                and cash equivalents at June 30                                                                       |   | $      | 9,283    |    | $      | 9,429    |   |
|                                                                                                                      |   |   |          |    |   |          |   |
|  *See                accompanying notes* *to                consolidated condensed financial statements.*  |

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**RETURN          TO INDEX**

**FROZEN      FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES**

**Notes      to Consolidated Condensed Financial      Statements**

*(Unaudited)*

**1.      **
**BASIS      OF PRESENTATION**

*Share-Based      Payment*
*Accounting      for Stock Issued to Employees*
*Accounting      for Stock-Based Compensation*

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**RETURN          TO INDEX**

**2.      **
**REVENUE      AND EXPENSE RECOGNITION**

*Revenue      and Expense Recognition for Freight Services In Progress”*

**3.      **
** **
**STOCK-BASED      COMPENSATION**

*Share-Based      Payment*

| **Pro                Forma Impact                on** |   |  **Three                Months** |   |  **Six                Months** |   |
|-------------------------------------------------------|--------|---------------------------------------|--------|-------------------------------------|--------|
| **Net                Income (in millions)**           |   | **2005 **                        |   | **2005 **                      |   |
| As                reported                            |   | $                                     | 5.8    |                                | $      | 9.1 |   |
| Impact                of SFAS No. 123, net of tax     |   |                                  | (0.2   | )                                   |   | (0.4 | ) |
|                                                  |   | $                                     | 5.6    |                                | $      | 8.7 |   |

| **Pro                Forma Impact                on** |   |  **Three                Months** |   |  **Six                Months** |   |
|-------------------------------------------------------|--------|---------------------------------------|--------|-------------------------------------|--------|
| **Basic                Net Income Per Share**         |   | **2005 **                        |   | **2005 **                      |   |
| As                reported                            |   | $                                     | 0.33   |                                | $      | 0.51 |   |
| Impact                of SFAS No. 123, net of tax     |   |                                  | (0.02  | )                                   |   | (0.02 | ) |
|                                                  |   | $                                     | 0.31   |                                | $      | 0.49 |   |

| **Pro                Forma Impact                on** |   |  **Three                Months** |   |  **Six                Months** |   |
|-------------------------------------------------------|--------|---------------------------------------|--------|-------------------------------------|--------|
| **Diluted                Net Income Per Share**       |   | **2005 **                        |   | **2005 **                      |   |
| As                reported                            |   | $                                     | 0.31   |                                | $      | 0.49 |   |
| Impact                of SFAS No. 123, net of tax     |   |                                  | (0.01  | )                                   |   | (0.03 | ) |
|                                                  |   | $                                     | 0.30   |                                | $      | 0.46 |   |

----

**RETURN            TO INDEX**

| **Options**                                     |   | **Shares****(in                  thousands)** |   | **Weighted-Average****Exercise****Price** |   | **Weighted-Average****Remaining                  Contractual****Term****(Years)** |   | **Aggregate                  Intrinsic****Value****(in                  thousands)** |   |
|-------------------------------------------------|--------|-----------------------------------------------|--------|-------------------------------------------|--------|-----------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------|--------|
| Outstanding                  at January 1, 2006 |   |                                          | 2,988  |                                      | $      | 5.89                                                                              |   |                                                                                 |   |   |   |   |   |
| Granted                                         |   |                                          | --     |                                      |   | --                                                                                |   |                                                                                 |   |   |   |   |   |
| Exercised                                       |   |                                          | (256   | )                                         |   | 6.14                                                                              |   |                                                                                 |   |   |   |   |   |
| Forfeited                  or expired           |   |                                          | (49    | )                                         |   | 9.78                                                                              |   |                                                                                 |   |   |   |   |   |
| Outstanding                  at June 30, 2006   |   |                                          | 2,683  |                                      | $      | 5.78                                                                              |   |                                                                                 | 5.92   |   | $ | 14,082 |   |
| Exercisable                  at June 30, 2006   |   |                                          | 2,082  |                                      | $      | 4.42                                                                              |   |                                                                                 | 4.92   |   | $ | 13,761 |   |

| **Restricted                    Stock**         |   | **Shares** |    | **Weighted-Average****Grant-Date****Fair                    Value** |   |
|-------------------------------------------------|--------|------------|---------|---------------------------------------------------------------------|--------|
| Nonvested                    at January 1, 2006 |   |       | --      |                                                                | $      | -- |   |
| Granted                                         |   |       | 74,979  |                                                                |   | 10.43 |   |
| Vested                                          |   |       | --      |                                                                |   | -- |   |
| Forfeited                                       |   |       | (13,160 | )                                                              |   | 11.03 |   |
| Nonvested                    at June 30, 2006   |   |       | 61,819  |                                                                | $      | 10.30 |   |

----

**RETURN          TO INDEX**

**4.      **
**RELATED      PARTY TRANSACTIONS**

----

**RETURN          TO INDEX**

**5.**
**LONG-TERM      DEBT**

**6.**
**COMMITMENTS      AND CONTINGENCIES**

**7.**
**NET      INCOME PER SHARE OF COMMON STOCK**

|                                    |   | **Three                Months** |   | **Six                Months** |   |
|-----------------------------------------|--------|---------------------------------|--------|-------------------------------|--------|
|                                    |   | **2006 **                  |   | **2005 **                |   | **2006 ** |   | **2005 ** |   |
| Basic                shares             |   |                            | 18,059 |                          |   | 17,843 |   |   | 18,019 |   |   | 17,750 |   |
| Common                stock equivalents |   |                            | 780    |                          |   | 916 |   |   | 845 |   |   | 1,001 |   |
| Diluted                shares           |   |                            | 18,839 |                          |   | 18,759 |   |   | 18,864 |   |   | 18,751 |   |

**ITEM      2.**
 
**Management's      Discussion and Analysis of Financial Condition and Results of      Operations**

**GENERAL**

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**RETURN          TO INDEX**

**RESULTS      OF OPERATIONS**

***Three      and Six Months Ended June 30, 2006 and 2005***

***Freight      Revenue***

|                                                            |   | **Three                Months** |     | **Six                Months** |   |
|-----------------------------------------------------------------|--------|---------------------------------|----------|-------------------------------|--------|
| Freight                revenue from (a):                        |   |                            | **2006** |                          |   | **2005****(d)** |   |   | **2006** |   |   | **2005****(d)** |   |
| Temperature-controlled                fleet                     |   | $                               | 42.2     |                          | $      | 45.2 |   | $ | 83.9 |   | $ | 88.6 |   |
| Dry-freight                fleet                                |   |                            | 20.2     |                          |   | 22.4 |   |   | 40.8 |   |   | 44.1 |   |
| Total                truckload linehaul services                |   |                            | 62.4     |                          |   | 67.6 |   |   | 124.7 |   |   | 132.7 |   |
| Dedicated                fleets                                 |   |                            | 5.3      |                          |   | 5.6 |   |   | 11.3 |   |   | 11.0 |   |
| Total                full-truckload                             |   |                            | 67.7     |                          |   | 73.2 |   |   | 136.0 |   |   | 143.7 |   |
| Less-than                truckload linehaul services            |   |                            | 30.7     |                          |   | 31.5 |   |   | 63.1 |   |   | 60.0 |   |
| Fuel                surcharges                                  |   |                            | 20.2     |                          |   | 14.0 |   |   | 37.2 |   |   | 24.8 |   |
| Freight                brokerage                                |   |                            | 3.1      |                          |   | 3.1 |   |   | 6.0 |   |   | 7.9 |   |
| Equipment                rental                       |   |                            | 1.9      |                          |   | 1.4 |   |   | 4.9 |   |   | 2.7 |   |
| Total                freight revenue                            |   | $                               | 123.6    |                          | $      | 123.2 |   | $ | 247.2 |   | $ | 239.1 |   |
| Freight                operating expenses(a)                    |   | $                               | 120.2    |                          | $      | 117.2 |   | $ | 240.3 |   | $ | 227.4 |   |
| Income                from freight operations (a)               |   | $                               | 3.4      |                          | $      | 6.0 |   | $ | 6.9 |   | $ | 11.7 |   |
| Freight                operating ratio (b)                      |   |                            | 97.3     | %                             |   | 95.1 | % |   | 97.2 | % |   | 95.1 | % |
| Total                full-truckload revenue                     |   | $                               | 67.7     |                          | $      | 73.2 |   | $ | 136.0 |   | $ | 143.7 |   |
| Less-than-truckload                linehaul revenue             |   |                            | 30.7     |                          |   | 31.5 |   |   | 63.1 |   |   | 60.0 |   |
| Total                linehaul and dedicated fleet revenue  |   | $                               | 98.4     |                          | $      | 104.7 |   | $ | 199.1 |   | $ | 203.7 |   |
| Weekly                average trucks in service                 |   |                            | 2,235    |                          |   | 2,269 |   |   | 2,267 |   |   | 2,282 |   |
| Revenue                per truck per week (c)                   |   | $                               | 3,387    |                          | $      | 3,550 |   | $ | 3,397 |   | $ | 3,452 |   |

| **Computational                notes:** |
|-----------------------------------------|
| (a)                                     | Revenue                and expense amounts are stated in million of dollars.  The amounts                presented in the table may not agree to the amounts shown in the                accompanying statements of income due to rounding. |
| (b)                                     | Freight                operating expenses divided by total freight revenue. |
| (c)                                     | Average                daily revenue times seven, divided by weekly average trucks in                service. |
| (d)                                     | Due                to changes in the way we tabulated the underlying data for 2006 and                in                order to provide a valid comparison to the 2006 statistical data,                amounts                reported for 2005 may differ from amounts previously                reported. |

----

**RETURN          TO INDEX**

|                                                                          |       |       | **Three                Months ** | ** ** |   | ** ** | **Six Months ** | ** ** |
|-------------------------------------------------------------------------------|------------|------------|---------------------------------------|------------|--------|------------|---------------------------|------------|
| **Truckload**                                                                 | ** ** | ** ** | **2006**                              | ** ** |   | ** ** | **2005(j)**               | ** ** |   | ** ** | **2006** | ** ** |   | ** ** | **2005(j)** |   |
|     Total                linehaul miles (a)               |       |       | 46.5                                  |       |   |       | 50.0                      |       |   |   | 93.6 |   |   |   | 98.4 |   |
|     Loaded                miles (a)                       |       |       | 42.0                                  |       |   |       | 45.1                      |       |   |   | 84.7 |   |   |   | 88.6 |   |
|     Empty                mile ratio (b)                   |       |       | 9.7                                   | %          |   |       | 9.8                       | %          |   |   | 9.5 | % |   |   | 10.0 | % |
|     Linehaul                revenue per total mile (c)    |       | $          | 1.34                                  |       |   | $          | 1.35                      |       |   | $ | 1.33 |   |   | $ | 1.35 |   |
|     Linehaul                revenue per loaded mile (d)   |       | $          | 1.49                                  |       |   | $          | 1.50                      |       |   | $ | 1.47 |   |   | $ | 1.50 |   |
|     Linehaul                shipments (e)                 |       |       | 43.8                                  |       |   |       | 47.4                      |       |   |   | 88.1 |   |   |   | 93.5 |   |
|     Loaded                miles per shipment (f)          |       |       | 959                                   |       |   |       | 951                       |       |   |   | 961 |   |   |   | 948 |   |
| **Less-than-truckload**                                                  |       |       |                                  |       |   |       |                      |       |   |   |   |   |   |   |   |   |
|     Hundredweight                (e)                      |       |       | 2,043                                 |       |   |       | 2,167                     |       |   |   | 4,143 |   |   |   | 4,150 |   |
|     Shipments                (e)                          |       |       | 65.5                                  |       |   |       | 69.7                      |       |   |   | 132.1 |   |   |   | 134.1 |   |
|     Linehaul                revenue per hundredweight (g) |       | $          | 15.03                                 |       |   | $          | 14.54                     |       |   | $ | 15.23 |   |   | $ | 14.46 |   |
|     Linehaul                revenue per shipment (h)      |       | $          | 469                                   |       |   | $          | 452                       |       |   | $ | 478 |   |   | $ | 447 |   |
|     Average                weight per shipment (i)        |       |       | 3,119                                 |       |   |       | 3,109                     |       |   |   | 3,136 |   |   |   | 3,095 |   |

| **Computational                notes:** |
|-----------------------------------------|
| (a)                                     | In                millions. |
| (b)                                     | Total                linehaul miles minus loaded miles, divided by total linehaul                miles. |
| (c)                                     | Revenue                from linehaul services divided by total linehaul miles. |
| (d)                                     | Revenue                from linehaul services divided by loaded miles. |
| (e)                                     | In                thousands. |
| (f)                                     | Total                loaded miles divided by number of linehaul shipments. |
| (g)                                     | LTL                revenue divided by hundredweight. |
| (h)                                     | LTL                revenue divided by number of shipments. |
| (i)                                     | LTL                hundredweight times one hundred, divided by number of                shipments.  |
| (j)                                     | Due                to changes in the way we tabulated the underlying data for 2006 and                in                order to provide a valid comparison to the 2006 statistical data,                amounts                reported for 2005 may differ from amounts previously                reported. |

----

**RETURN            TO INDEX**

|                                  |   | ** 2006** |   |  **2005** |   |
|---------------------------------------|--------|----------------|--------|----------------|--------|
| **Truckload                tractors** |   |           |        |           |   |  |   |
| Company-provided                      |   |           | 1,428  |           |   | 1,464 |   |
| Owner-operator                        |   |           | 464    |           |   | 567 |   |
| Total                truckload        |   |           | 1,892  |           |   | 2,031 |   |
| **LTL                tractors**       |   |           |   |           |   |   |   |
| Company-provided                      |   |           | 110    |           |   | 95 |   |
| Owner-operator                        |   |           | 145    |           |   | 142 |   |
| Total                LTL              |   |           | 255    |           |   | 237 |   |
|                                  |   |           |   |           |   |  |   |
| Total                company-provided |   |           | 1,538  |           |   | 1,559 |   |
| Total                owner-operator   |   |           | 609    |           |   | 709 |   |
| Tractors                in service    |   |           | 2,147  |           |   | 2,268 |   |
| Trailers                in service    |   |           | 4,040  |           |   | 4,288 |   |

----

**RETURN          TO INDEX**

***Freight      Operating Expenses:***

|                                                   |       |       | **Three                Months** | ** ** | ** ** | **Six                Months** | ** ** |
|--------------------------------------------------------|------------|------------|---------------------------------|------------|------------|-------------------------------|------------|
| ** **                                             | ** ** | ** ** | **2006**                        | ** ** | ** ** | **2005**                      | ** ** | ** ** | **2006** | ** ** | ** ** | **2005** |   |
| Salaries,                wages and related expenses    |       |       | 26.6                            | %          |       | 26.5                          | %          |   | 27.1 | % |   | 26.5 | % |
| Purchased                transportation                |       |       | 23.9                            |       |       | 25.6                          |       |   | 23.4 |   |   | 25.6 |   |
| Fuel                                                   |       |       | 19.1                            |       |       | 15.5                          |       |   | 18.0 |   |   | 15.0 |   |
| Supplies                and expenses                   |       |       | 11.2                            |       |       | 12.9                          |       |   | 11.8 |   |   | 13.0 |   |
| Revenue                equipment rent and depreciation |       |       | 10.3                            |       |       | 10.3                          |       |   | 10.5 |   |   | 10.5 |   |
| Claims                and insurance                    |       |       | 4.1                             |       |       | 2.6                           |       |   | 3.7 |   |   | 2.8 |   |
| Other                                                  |       |       | 2.1                             |       |       | 1.7                           |       |   | 2.7 |   |   | 1.7 |   |
| Total                freight operating expenses        |       |       | 97.3                            | %          |       | 95.1                          | %          |   | 97.2 | % |   | 95.1 | % |

*** Salaries,      Wages and Related Expenses***
*:*

|                                                                                          |   | **Three                Months** | ** ** | **Six                Months** |   |
|-----------------------------------------------------------------------------------------------|--------|---------------------------------|------------|-------------------------------|--------|
| **Amount                of Salaries, Wages and Related Expenses Incurred                for** |   | **2006**                        |       |  **2005**                |   |  **2006** |   |  **2005** |   |
| Driver                salaries and per diem expenses                                          |   | $                               | 19.3       |                          | $      | 18.3 |   | $ | 38.5 |   | $ | 36.2 |   |
| Non-driver                salaries                                                            |   |                            | 9.8        |                          |   | 9.0 |   |   | 19.2 |   |   | 17.9 |   |
| Payroll                taxes                                                                  |   |                            | 1.9        |                          |   | 2.1 |   |   | 4.5 |   |   | 4.4 |   |
| Work-related                injuries                                                          |   |                            | 0.3        |                          |   | 1.5 |   |   | 2.0 |   |   | 2.1 |   |
| Health                insurance and other                                                     |   |                            | 1.6        |                          |   | 1.8 |   |   | 2.7 |   |   | 2.7 |   |
|                                                                                          |   | $                               | 32.9       |                          | $      | 32.7 |   | $ | 66.9 |   | $ | 63.3 |   |

----

**RETURN          TO INDEX**

***Purchased      Transportation:***

|                                                                       |   | **Three                Months** |   | **Six                Months** |   |
|----------------------------------------------------------------------------|--------|---------------------------------|--------|-------------------------------|--------|
| **Amount                of Purchased Transportation Expense Incurred for** |   | **2006 **                  |   | **2005 **                |   | **2006 ** |   | **2005**  |   |
| Linehaul                service                                            |   | $                               | 22.8   |                          | $      | 25.7 |   | $ | 44.9 |   | $ | 48.8 |   |
| Fuel                adjustments                                            |   |                            | 4.2    |                          |   | 3.3 |   |   | 8.0 |   |   | 6.0 |   |
| Freight                brokerage and other                                 |   |                            | 2.6    |                          |   | 2.6 |   |   | 5.0 |   |   | 6.4 |   |
|                                                                       |   | $                               | 29.6   |                          | $      | 31.6 |   | $ | 57.9 |   | $ | 61.2 |   |

----

**RETURN          TO INDEX**

***Fuel:***

|                                                                                                  |   | **Three                Months    ** |   | **Six Months   ** |   |
|-------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------|--------|---------------------------------------|--------|
|                                                                                                  |   | **2006 **                                          |   | **2005 **                        |   | **2006** |   | **2005**  |   |
| Total                linehaul and dedicated fleet revenue                                             |   | $                                                       | 98.4   |                                  | $      | 104.7 |   | $ | 199.1 |   | $ | 203.7 |   |
| Fuel                expense                                                                           |   |                                                    | 23.7   |                                  |   | 19.1 |   |   | 44.5 |   |   | 35.8 |   |
| Fuel                expense as a percent of total linehaul and dedicated fleet                revenue |   |                                                    | 24.1   | %                                     |   | 18.2 | % |   | 22.4 | % |   | 17.6 | % |

----

**RETURN          TO INDEX**

***     Supplies      and      Expenses***
*:*

|                                                            |   | **Three                Months** | ** ** | **Six                Months** |   |
|-----------------------------------------------------------------|--------|---------------------------------|------------|-------------------------------|--------|
| **Amount                of Supplies and Expenses Incurred for** |   | **2006 **                  |       | **2005 **                |   | **2006 ** |   | **2005**  |   |
| Fleet                repairs and maintenance                    |   | $                               | 4.2        |                          | $      | 5.8 |   | $ | 9.3 |   | $ | 11.9 |   |
| Freight                handling                                 |   |                            | 2.7        |                          |   | 2.8 |   |   | 5.5 |   |   | 5.4 |   |
| Driver                travel expenses                           |   |                            | 0.8        |                          |   | 0.7 |   |   | 1.6 |   |   | 1.4 |   |
| Tires                                                           |   |                            | 1.6        |                          |   | 1.3 |   |   | 3.2 |   |   | 2.7 |   |
| Terminal                and warehouse expenses                  |   |                            | 1.5        |                          |   | 1.9 |   |   | 2.9 |   |   | 3.6 |   |
| Driver                recruiting                                |   |                            | 1.2        |                          |   | 1.1 |   |   | 2.6 |   |   | 2.0 |   |
| Other                                                           |   |                            | 1.9        |                          |   | 2.3 |   |   | 4.2 |   |   | 4.1 |   |
|                                                            |   | $                               | 13.9       |                          | $      | 15.9 |   | $ | 29.3 |   | $ | 31.1 |   |

***Rentals      and Depreciation***
*:*

----

**RETURN          TO INDEX**

***Claims      and Insurance:***

|                                                                                      |   | **Three                Months** | ** ** | **Six                Months** |   |
|-------------------------------------------------------------------------------------------|--------|---------------------------------|------------|-------------------------------|--------|
| **Amount                of Claims and Insurance****Expenses                Incurred for** |   | **2006 **                  |       | **2005 **                |   | **2006 ** |   | **2005**  |   |
| Liability                                                                                 |   | $                               | 3.8        |                          | $      | 2.6 |   | $ | 6.5 |   | $ | 5.1 |   |
| Cargo                                                                                     |   |                            | 0.7        |                          |   | 0.4 |   |   | 1.4 |   |   | 0.7 |   |
| Physical                damage                                                            |   |                            | 0.6        |                          |   | 0.2 |   |   | 1.2 |   |   | 0.8 |   |
|                                                                                      |   | $                               | 5.1        |                          | $      | 3.2 |   | $ | 9.1 |   | $ | 6.6 |   |

***Gains      on Disposition of Equipment:***

***Miscellaneous      Expenses:***

----

**RETURN          TO INDEX**

***Operating      Income:***

|                                            |   | **Three                Months    ** |   | **Six Months   ** |   |
|-------------------------------------------------|--------|---------------------------------------------------------|--------|---------------------------------------|--------|
| **Operating                Income (Loss) from** |   | **2006**                                                |   | **2005**                              |   | **2006** |   | **2005** |   |
| Freight                operations               |   | $                                                       | 3,381  |                                  | $      | 6,044 |   | $ | 6,870 |   | $ | 11,672 |   |
| Non-freight                operations           |   |                                                    | 87     |                                  |   | 2 |   |   | (90 | ) |   | 7 |   |
|                                            |   | $                                                       | 3,468  |                                  | $      | 6,046 |   | $ | 6,780 |   | $ | 11,679 |   |

*** Interest      and Other***
*:*

|                                                                  |   | **Three                Months** |   | **Six                Months** |   |
|-----------------------------------------------------------------------|--------|---------------------------------|--------|-------------------------------|--------|
| **Amount                of Interest and Other Expense (Income) from** |   | **2006**                        |   | **2005**                      |   | **2006** |   | **2005** |   |
| Interest                  expense                                     |   | $                               | 81     |                          | $      | 76 |   | $ | 154 |   | $ | 186 |   |
| Interest              income                                          |   |                            | (219   | )                             |   | (115 | ) |   | (336 | ) |   | (182 | ) |
| Equity                in earnings (loss) of former subsidiaries       |   |                            | (116   | )                             |   | (104 | ) |   | (252 | ) |   | (137 | )  |
| Life                insurance and other                               |   |                            | (100   | )                             |   | (3,349 | ) |   | (192 | ) |   | (3,167 | ) |
|                                                                  |   | $                          | (354   | )                             | $      | (3,492 | )  | $ | (626 | )  | $ | (3,300 | )  |

***Pre-Tax      and Net Income***
*:*

----

**RETURN          TO INDEX**

**LIQUIDITY      AND CAPITAL RESOURCES**

***Debt      and Working Capital***
*:*

***Cash      Flows***

----

**RETURN          TO INDEX**

***Obligations      and Commitments***
*:       *

| **Payments                Due by Year**             |   | **Total** |   | **2006****(2)** |   | **2007** |   | **2008** |   | **2009** |   | **2010** |   | **After                2010** |   |
|-----------------------------------------------------|--------|-----------|--------|-----------------|--------|----------|--------|----------|--------|----------|--------|----------|--------|-------------------------------|--------|
| Long-term                debt and letters of credit |   | $         | 5.3    |            | $      | --       |   | $        | 5.3    |     | $      | --       |   | $                             | --     |   | $ | -- |   | $ | -- |   |
| Purchase                obligations                 |   |      | 33.3   |            |   | 33.3     |   |     | --     |     |   | --       |   |                          | --     |   |   | -- |   |   | -- |   |
| Operating                leases for                 |   |      |   |            |   |     |   |     |   |     |   |     |   |                          |   |   |   |   |   |   |   |   |
| Rentals                (1)                          |   |      | 69.5   |            |   | 13.0     |   |     | 20.5   |     |   | 16.5     |   |                          | 10.1   |   |   | 5.5 |   |   | 3.9 |   |
| Residual                guarantees                  |   |      | 4.1    |            |   | .9       |   |     | 1.1    |     |   | 1.0      |   |                          | 1.1    |   |   | -- |   |   | -- |   |
| Accounts                payable                     |   |      | 29.7   |            |   | 29.7     |   |     | --     |     |   | --       |   |                          | --     |   |   | -- |   |   | -- |   |
| Accrued                payroll                      |   |      | 5.7    |            |   | 5.7      |   |     | --     |     |   | --       |   |                          | --     |   |   | -- |   |   | -- |   |
|                                                |   |      | 147.6  |            | $      | 82.6     |   | $        | 26.9   |     | $      | 17.5     |   | $                             | 11.2   |   | $ | 5.5 |   | $ | 3.9 |   |
| Deferred                compensation                |   |      |   |            |   |     |   |     |   |     |   |     |   |                          |   |   |   |   |   |   |   |   |
| Phantom                stock (3)                    |   |      | 1.8    |            |   |     |   |     |   |     |   |     |   |                          |   |   |   |   |   |   |   |   |
| Rabbi                trust (4)                      |   |      | 1.8    |            |   |     |   |     |   |     |   |     |   |                          |   |   |   |   |   |   |   |   |
| Total                                               |   | $         | 151.2  |            |   |     |   |     |   |     |   |     |   |                          |   |   |   |   |   |   |   |   |

| (1)                   | Our                consolidated condensed financial statements include the financial                statements of a variable interest entity ("VIE") from which we lease                68                tractors.                 The VIE is under the control of our Chairman and Chief Executive                Officer.  Accounting principles generally accepted in the United                States (GAAP) require such consolidation for financial reporting                purposes.  Accordingly, our financial statements reflect                the debt of the VIE as a financial obligation of the company.                 Because the debt of the VIE is a legal obligation of the VIE and                not of                the company, the table above omits the debt of the VIE ($3.2 million                due in 2006) and includes the rentals we are required to pay to the                VIE of                approximately $0.6 million, $1.0 million, $0.7 million and $0.2 million                during                2006, 2007, 2008 and 2009, respectively.          |
|---------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)                        | Represents                amounts due between July 1, 2006 and December 31, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| (3)                        | Represents                the current value of approximately 166,000 phantom                stock units awarded pursuant to our 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 our 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 our 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)                        | Includes                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 148,000 shares                of our common stock that 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 amount will                be paid                in cash or the amount of cash ultimately                payable.                                                                                                                                                                                                                                                                                                                                                                                  |

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**RETURN          TO INDEX**

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**RETURN          TO INDEX**

**NEW      ACCOUNTING PRONOUNCEMENTS**

*Accounting for Uncertainty in Income Taxes-an interpretation of FASB        Statement No. 109*

**OUTLOOK**

**OFF-BALANCE      SHEET ARRANGEMENTS**

**ITEM      3.  **
**Quantitative      and Qualitative Disclosures about Market      Risk**

| **Description**                                                                                                                                                                                                                  |   | **Discussion**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  Rabbi                Trust investment ($1.8 million) including 148,000 shares                of our stock, and                liabilities for stock-based deferred compensation arrangements, $1.8                million. |   |  Our                consolidated condensed 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, $5.5 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, 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. |

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**ITEM      4.  **
**Controls      and Procedures**

**(a)      Disclosure Controls and Procedures:  **

**(b)      Management’s Report on Internal Control over Financial Reporting: **
*Internal      Control - Integrated Framework*

| i)    | The                  Company lacked sufficient personnel resources with adequate expertise                  to                  identify and account for complex or nonroutine transactions. Specifically,                  the Company lacked sufficient personnel resources with adequate                  expertise                  to identify and account for the consolidation of a related party                  entity                  under the control of its Chairman and Chief Executive Officer as                  required                  by Financial Accounting Standards Board’s Financial Interpretation No. 46                  (revised) *Consolidation of Variable Interest Entities.* As a                  result of this deficiency, material errors in accounting for this                  variable                  interest entity were identified in the Company’s interim consolidated                  financial statements for 2004 and 2005, as well as in the annual                  consolidated financial statements contained in its Annual Form                  10-K for                  the year ended December 31, 2004. Those financial statements were                  restated. Also as a result of the deficiency, material errors in                  accounting for the variable interest entity also were identified                  in the                  2005 annual consolidated financial statements. These errors were                  corrected                  prior to the issuance of the 2005 annual consolidated financial                  statements. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ii)   | The                  Company lacked adequately designed controls to ensure the completeness                  and                  accuracy of the reserve for cargo claims. Specifically, the Company                  lacked                  (a) adequate policies and procedures to ensure the timely reporting                  of                  unasserted cargo claims by personnel responsible for the daily                  management                  of those claims, and (b) adequate policies and procedures to provide                  for                  management’s review of all open and incurred but not reported claims. This                  deficiency resulted in material errors in the reserve for cargo                  claims and                  related expenses in the 2005 annual consolidated financial statements.                  These errors were corrected prior to the issuance of the 2005 annual                  consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| iii)            | The                  Company lacked adequately designed controls to ensure the accuracy                  of                  accrued revenues.  Specifically, the review control (a) was not                  properly designed with a sufficient level of precision to adequately                  examine revenue accruals, and (b) did not provide for validation                  of the                  source data. This deficiency resulted in material errors in accrued                  revenues in the 2005 annual consolidated financial statements.                  These                  errors were corrected prior to the issuance of the 2005 annual                  consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| iv)             | The                  Company’s controls to ensure the accuracy of the allowances for doubtful                  accounts were not adequately designed.  Specifically, the management                  review control of the calculation of the allowances for doubtful                  accounts                  did not provide for the tracing of the inputs of the calculation                  to the                  source records. This deficiency resulted in material errors in                  the                  estimated allowances for doubtful accounts in the 2005 interim                  and annual                  consolidated financial statements. These errors were corrected                  prior to                  the issuance of the 2005 interim and annual consolidated financial                  statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |

|              v)                       | The                  procedures related to the Company’s manually billed revenue were not                  adequate to ensure the revenues were properly reflected in the                  general                  ledger. Specifically, the Company had not designed or implemented                  procedures related to manually billed revenue to ensure that: (a)                  manually                  billed revenue is invoiced in a timely manner; (b) manually billed                  revenue                  is reconciled to the general ledger; and (c) supporting documentation                  for                  manually billed revenue exists. These deficiencies resulted in                  material                  errors in revenue in the 2005 annual consolidated financial statements.                  These errors were corrected prior to the issuance of the 2005 annual                  consolidated financial statements. |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**RETURN              TO              INDEX**

**(c)      Changes in Internal Control over Financial Reporting: **

**(d)      Remediation Efforts: **
has      been developing and implementing improved controls to remediate the      conditions described in Item 4 (b) above. **  **

| i)                                                  | Upon                the restatement for the variable interest entity, the Company implemented                disclosure controls to ensure that such relationships are properly                identified, analyzed and correctly reported in its periodic reports                on                Forms 10-Q and 10-K.  Additionally, controls over the identification                of non-routine transactions are being designed and implemented throughout                the Company to ensure that all appropriate personnel are trained                to                identify variable interest entities and are held accountable for                reporting                these items to the appropriate parties so that proper analysis can                be                conducted.                                                                                                                                                                                                                                                                                                           |
|---------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ii)                        | The                Company has developed stricter policies on the timely identification                of                events that may lead to the eventual assertion of claims for loss                of, and                damage to, customer freight in order to assure the proper and timely                matching and recording of such claims in the period in which the                revenue                associated with the loss was recognized. Management has also implemented                procedures where the personnel responsible for the daily management                of                such claims, as of the end of each quarterly period, review the                calculation of the reserve in detail and certify to management that                they                agree with that calculation.  Management’s review of such claims and                the associated accrual is also being improved through better visibility                into open and incurred but not yet reported claims and associated                changes                in reserves. |

| iii)                       | The                components of accrued revenue and related accounts receivable represent                the Company’s estimates of the amounts that customers owe the Company for                revenue transactions and the Company owes to its employees and vendors                for                revenue-related expense transactions that have occurred but which                have not                yet been invoiced to customers. These components have been documented                and management’s review control for these accruals now include                tracing these components to their source records. Additionally, management                instituted a review process to ensure that the components of revenue                are reasonable, based on the comparison of the accrual to previous                periods, expectations as to revenue per mile, expectations of revenue                per                truck per week and reviews to ensure manual bills are recorded in                an                accurate and timely fashion. Furthermore, the alignment of the billing                function within the organization has been modified so that the finance                organization has better insight into these types of revenue transactions                and to ensure that the appropriate information is available at period                end. |
|----------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| iv)                        | The                allowance for doubtful accounts from customers represents the                Company’s estimate of amounts that will not ultimately be                collected from customers. The components of this allowance and                management’s review control for this reserve includes tracing the                components of the reserve to their source records.  Additionally, the                calculation as of the end of each reporting period will be documented                and                tested to ensure that it conforms with management’s                objectives.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |

| v)                        | The                Company is improving its controls over manually billed revenue.                 Specifically, the Company is redefining its processes to ensure that                all                significant revenue transactions are processed through its computerized                information systems ensuring that they are properly reflected in                the                Company’s consolidated financial statements.  Furthermore, the                Company is redefining its policies and procedures for authorizing                and                documenting all such revenue to ensure that it is complete, accurate                and                timely. These procedures include: (a) review of key performance indicators                measuring the timeliness of the invoicing process; (b) monthly                reconciliations of manually billed revenue to the general ledger;                and (c)                more stringent requirements in obtaining supporting documentation                as                evidence that a revenue transaction occurred. Additionally, the alignment                of the billing function within the organization has been modified                to                ensure an increased level of segregation of duties between the sales                and                marketing functions that arrange such non-standard transactions and                the                billing function that is required to approve the supporting documentation,                in order to invoice these transactions in a timely and accurate fashion. |
|--------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**PART      II.  OTHER INFORMATION**

**ITEM      1.**
**         **
**Legal      Proceedings**

**ITEM      1A.**** ****Risk      Factors**

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**ITEM      2.**
**       Unregistered Sales of Equity Securities and Use of      Proceeds**

| **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** |   |
|--------------------------------------------|--------|-----------------------------------------------------|------------|-------------------------------------------------|------------|--------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| April                1 to April 30, 2006   |   |                                                | --         |                                            |       | --                                                                                                                 |       |                                                                                                                                           | --     |   |   | 236,300 |   |
| May                1 to May 31, 2006  |   |                                                | --         |                                            |       | --                                                                                                                 |       |                                                                                                                                           | --     |   |   | 236,300 |   |
| June                1 to June 30, 2006     |   |                                                | --         |                                            |       | --                                                                                                                 |       |                                                                                                                                           | --     |   |   | 236,300 |   |
| **Total**                                  |   |                                                | --         |                                            |       | --                                                                                                                 |       |                                                                                                                                           | --     |   |   |   |   |

| (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. |
|-----------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**ITEM      3.****    ****Defaults      Upon Senior Securities**

**ITEM      4.****   ****Submission      of Matters to a Vote of Security Holders**

**ITEM      5.****   ****Other      Information**

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**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,                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)). (filed herewith)                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                       |
| 31.2   | Certification                of Chief Financial Officer Required by Rule 13a-14(a)(17 CFR                240.13a-14(a)). (filed herewith)                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                       |
| 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. (filed                herewith)                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                       |
| 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. (filed                herewith)                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                       |

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**SIGNATURES**

|                                       |  **FROZEN                FOOD EXPRESS INDUSTRIES, INC.** |                                                                                                                                                  |
|--------------------------------------------|---------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                       |  (Registrant)                                            |                                                                                                                                                  |
|                                       |                                                          |                                                                                                                                                  |   |
|  Dated:                August 9, 2006 |  By                                                      |  /s/                Stoney M. Stubbs, Jr.                                                                                                        |   |
|                                       |                                                          | Stoney                M. Stubbs, Jr.Chairman                of the Board of Directors and President(Principal                Executive Officer)  |   |

|                                       |  **FROZEN                FOOD EXPRESS INDUSTRIES, INC.** |                                                                                                                                                                                 |
|--------------------------------------------|---------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                       |  (Registrant)                                       |                                                                                                                                                                                 |
|  Dated:                August 9, 2006 |  By                                                      |  /s/                Thomas G. Yetter                                                                                                                                            |   |
|                                       |                                                          | Thomas                G. YetterSenior                Vice President and Chief Financial Officer(Principal                Financial and Accounting                Officer)  |   |

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**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,                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)). (filed herewith)                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                       |
| 31.2   | Certification                of Chief Financial Officer Required by Rule 13a-14(a)(17 CFR                240.13a-14(a)). (filed herewith)                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                       |
| 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. (filed                herewith)                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                       |
| 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. (filed                herewith)                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                       |