-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, E+ZnUHa1C4fMN3QUhMf2KRE9WvGk0OKzLEnB42RCdSitUg0h1OjSnguNiAZXutIP eLLDAB526Jl1DJMCI5foPw== 0000023675-03-000021.txt : 20030627 0000023675-03-000021.hdr.sgml : 20030627 20030626183433 ACCESSION NUMBER: 0000023675-03-000021 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20021231 FILED AS OF DATE: 20030627 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CNF INC CENTRAL INDEX KEY: 0000023675 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 941444798 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05046 FILM NUMBER: 03759390 BUSINESS ADDRESS: STREET 1: 3240 HILLVIEW AVE CITY: PALO ALTO STATE: CA ZIP: 94304 BUSINESS PHONE: 6504942900 MAIL ADDRESS: STREET 1: 1717 NW 21ST AVE CITY: PORTLAND STATE: OR ZIP: 97209 FORMER COMPANY: FORMER CONFORMED NAME: CNF TRANSPORTATION INC DATE OF NAME CHANGE: 19970509 FORMER COMPANY: FORMER CONFORMED NAME: CONSOLIDATED FREIGHTWAYS INC DATE OF NAME CHANGE: 19920703 11-K 1 ctasp02.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS AND SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 _X_ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2002 OR ___ TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from N/A to N/A ----- ----- COMMISSION FILE NUMBER 1-5046 CNF INC. THRIFT AND STOCK PLAN CNF INC. Incorporated in the State of Delaware I.R.S. Employer Identification No. 94-1444798 3240 Hillview Avenue, Palo Alto, California 94304 Telephone Number (650) 494-2900 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons administering the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. CNF Inc. Thrift and Stock Plan June 27, 2003 /s/ Mark C. Thickpenny ---------------------------- Mark C. Thickpenny Chairman, CNF Inc. Benefits Administrative Committee CNF INC. THRIFT AND STOCK PLAN FINANCIAL STATEMENTS AND SCHEDULE AS OF DECEMBER 31, 2002 AND 2001 AND FOR THE YEAR ENDED DECEMBER 31, 2002 TOGETHER WITH AUDITORS' REPORT Independent Auditors' Report To the Compensation Committee of the CNF Inc. Board of Directors: We have audited the accompanying statements of net assets available for benefits of the CNF Inc. Thrift and Stock Plan as of December 31, 2002 and 2001, and the related statement of changes in net assets available for benefits for the year ended December 31, 2002. These financial statements are the responsibility of the plan administrator. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2002 and 2001, and the changes in its net assets available for benefits for the year ended December 31, 2002, in conformity with accounting principles generally accepted in the United States of America. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets (held at end of year) is presented for purposes of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects, in relation to the basic financial statements taken as a whole. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The fund information in the statements of net assets available for benefits and statement of changes in net assets available for benefits is presented for purposes of additional analysis rather than to present the net assets available for benefits and changes in net assets available for benefits of each fund. The fund information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects, in relation to the basic financial statements taken as a whole. /s/ KPMG LLP Portland, Oregon, June 20, 2003 CNF INC. THRIFT AND STOCK PLAN DECEMBER 31, 2002 AND 2001 INDEX TO FINANCIAL STATEMENTS AND SCHEDULE FINANCIAL STATEMENTS: Statement of Net Assets Available for Benefits as of December 31, 2002 1 Statement of Net Assets Available for Benefits as of December 31, 2001 2 Statement of Changes in Net Assets Available for Benefits for the Year Ended December 31, 2002 3 NOTES TO FINANCIAL STATEMENTS 4 SUPPLEMENTAL SCHEDULE: Schedule I: Schedule H, Line 4i - Schedule of Assets (Held at End of Year) as of December 31, 2002 10 PAGE 1 CNF INC. THRIFT AND STOCK PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS AS OF DECEMBER 31, 2002
Participant Directed Non-Participant Directed ------------- -------------------------------------------- Restricted CNF Preferred CNF Preferred CNF Common Stock Fund- Stock Fund- Stock Fund Allocated Unallocated Total --------------- ------------- -------------- -------------- ------------- ASSETS: Investments, at fair value- Shares in registered investment companies $ 285,376,840 $ - $ - $ - $285,376,840 Common trust funds 147,310,760 - - - 147,310,760 Participant loans 44,596,428 - - - 44,596,428 CNF equity 36,590,663 56,917,091 70,296,253 95,348,592 259,152,599 --------------- ------------- -------------- -------------- ------------- Total investments 513,874,691 56,917,091 70,296,253 95,348,592 736,436,627 Contributions receivable- Participants 2,101,154 - - - 2,101,154 CNF - 1,741,339 - - 1,741,339 --------------- ------------- -------------- -------------- ------------- Total contributions receivable 2,101,154 1,741,339 - - 3,842,493 Due from CNF Preferred Stock Fund - Unallocated - 981,383 3,096,095 - 4,077,478 Dividend receivable - - - 5,123,532 5,123,532 Cash 7,608 - - - 7,608 --------------- ------------- -------------- -------------- ------------- Total assets 515,983,453 59,639,813 73,392,348 100,472,124 749,487,738 --------------- ------------- -------------- -------------- ------------- LIABILITIES: Notes payable (Note 4) - - - (111,800,000) (111,800,000) Accrued interest payable - - - (4,142,150) (4,142,150) Due to CNF Restricted Common Stock Fund - - - (981,383) (981,383) Due to CNF Preferred Stock Fund - Allocated - - - (3,096,095) (3,096,095) --------------- ------------- -------------- -------------- ------------- Total liabilities - - - (120,019,628) (120,019,628) --------------- ------------- -------------- -------------- ------------- NET ASSETS AVAILABLE FOR BENEFITS $ 515,983,453 $ 59,639,813 $ 73,392,348 $ (19,547,504) $629,468,110 =============== ============= ============== ============== ============= See accompanying notes to financial statements.
PAGE 2 CNF INC. THRIFT AND STOCK PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS AS OF DECEMBER 31, 2001
Participant Directed Non-Participant Directed ------------- -------------------------------------------- Restricted CNF Preferred CNF Preferred CNF Common Stock Fund- Stock Fund- Stock Fund Allocated Unallocated Total --------------- ------------- -------------- -------------- ------------- ASSETS: Investments, at fair value- Shares in registered investment companies $ 340,254,896 $ - $ - $ - $340,254,896 Common trust funds 140,715,551 - - - 140,715,551 Participant loans 43,657,726 - - - 43,657,726 CNF equity 39,299,517 51,528,893 66,533,565 109,507,587 266,869,562 --------------- ------------- -------------- -------------- ------------- Total investments 563,927,690 51,528,893 66,533,565 109,507,587 791,497,735 Contributions receivable- Participants 2,101,891 - - - 2,101,891 CNF - 1,406,151 - - 1,406,151 --------------- ------------- -------------- -------------- ------------- Total contributions receivable 2,101,891 1,406,151 - - 3,508,042 Due from CNF Preferred Stock Fund - Unallocated - 869,440 2,698,322 - 3,567,762 Dividend receivable - - - 5,273,576 5,273,576 Cash 125,116 - - - 125,116 --------------- ------------- -------------- -------------- ------------- Total assets 566,154,697 53,804,484 69,231,887 114,781,163 803,972,231 --------------- ------------- -------------- -------------- ------------- LIABILITIES: Notes payable (Note 4) - - - (120,500,000) (120,500,000) Accrued interest payable - - - (4,403,150) (4,403,150) Due to CNF Restricted Common Stock Fund - - - (869,440) (869,440) Due to CNF Preferred Stock Fund - Allocated - - - (2,698,322) (2,698,322) --------------- ------------- -------------- -------------- ------------- Total liabilities - - - (128,470,912) (128,470,912) --------------- ------------- -------------- -------------- ------------- NET ASSETS AVAILABLE FOR BENEFITS $ 566,154,697 $ 53,804,484 $ 69,231,887 $ (13,689,749) $675,501,319 =============== ============= ============== ============== ============= See accompanying notes to financial statements.
PAGE 3 CNF INC. THRIFT AND STOCK PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEAR ENDED DECEMBER 31, 2002
Participant Directed Non-Participant Directed ------------- -------------------------------------------- Restricted CNF Preferred CNF Preferred CNF Common Stock Fund- Stock Fund- Stock Fund Allocated Unallocated Total --------------- ------------- -------------- -------------- ------------- ADDITIONS: Participant contributions $ 60,069,481 $ - $ - $ - $ 60,069,481 CNF contributions - 9,248,496 - 6,650,661 15,899,157 Rollover contributions 3,063,891 - - - 3,063,891 Allocation of preferred shares to TASP participants at cost - - 7,574,624 - 7,574,624 Dividend and interest income 5,001,119 656,079 - 10,333,639 15,990,837 Net depreciation in fair value of investments (Note 3) (84,996,894) (813,583) (584,404) (6,879,949) (93,274,830) --------------- ------------- -------------- -------------- ------------- Total additions (16,862,403) 9,090,992 6,990,220 10,104,351 9,323,160 DEDUCTIONS: Distributions to participants (33,861,648) (5,137,057) - - (38,998,705) Transfers to other plans (338,453) (19,997) (37,108) - (395,558) Allocation of preferred shares to TASP participants at cost - - - (7,574,624) (7,574,624) Allocation of preferred shares to CNF EWW Savings Plan participants at cost - - - (103,182) (103,182) Interest expense - - - (8,284,300) (8,284,300) --------------- ------------- -------------- -------------- ------------- Total deductions (34,200,101) (5,157,054) (37,108) (15,962,106) (55,356,369) INTERFUND TRANSFERS, net 891,260 1,901,391 (2,792,651) - - --------------- ------------- -------------- -------------- ------------- Net increase (decrease) (50,171,244) 5,835,329 4,160,461 (5,857,755) (46,033,209) --------------- ------------- -------------- -------------- ------------- NET ASSETS AVAILABLE FOR BENEFITS, December 31, 2001 566,154,697 53,804,484 69,231,887 (13,689,749) 675,501,319 --------------- ------------- -------------- -------------- ------------- NET ASSETS AVAILABLE FOR BENEFITS, December 31, 2002 $ 515,983,453 $ 59,639,813 $73,392,348 $ (19,547,504) $629,468,110 =============== ============= ============== ============== ============= See accompanying notes to financial statements.
PAGE 4 CNF INC. THRIFT AND STOCK PLAN NOTES TO FINANCIAL STATEMENTS AND SCHEDULE 1. Description of Plan The following description of the CNF Inc. Thrift and Stock Plan ("the Plan" or "TASP") is provided for general information purposes only. Participants should refer to the Employee Benefits Handbook for more complete information. General: The Plan, which is administered by CNF Inc. ("CNF"), consists of a profit-sharing portion and a stock bonus portion that provides eligible employees the opportunity to save for their retirement and to increase their ownership in CNF by accumulating CNF stock. The Plan is intended to qualify as a profit sharing plan under Section 401(a) of the Internal Revenue Code ("the Code"), with a salary deferral feature qualified under Section 401(k) of the Code and is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The Plan also operates, in relevant part, as a leveraged employee stock ownership plan ("ESOP"), and is designed to comply with Section 4975(e)(7) of the Code. Overall responsibility for administering the Plan rests with the CNF Inc. Benefits Administrative Committee ("the Committee"), which is appointed by the Chief Executive Officer of CNF. The Committee reports directly to the Compensation Committee of the CNF's Board of Directors. The Plan's trustee, T. Rowe Price ("the Trustee"), is responsible for the management and control of the Plan's assets. Amendment: During 2000, CNF amended the Plan and the CNF Inc. EWW Savings Plan ("EWW Savings Plan"). Effective September 19, 2000, the pilots of Emery Worldwide Airlines ceased participation in the Plan and their elective deferrals began being contributed to the EWW Savings Plan. Transfer of the EWW pilots' vested balance in the Plan was transferred to the EWW Savings Plan effective December 20, 2000. The transferred EWW Savings Plan participant accounts will continue to be allocated additional shares of CNF's Series B Cumulative Convertible Preferred Stock ("Preferred Stock") as a substitute for Preferred Stock cash dividends used for debt service, as described below. In December 2002, the Plan was amended to reflect certain provisions of the Economic Growth and Tax Relief and Reconciliation Act of 2001 ("EGTRRA"), and to reflect compliance with final regulations under Internal Revenue Code ("Code") section 401(a)(9) by adoption of the Internal Revenue Service ("IRS") model amendment pursuant to Rev. Proc. 2002-29. The changes made in this amendment were effective generally January 1, 2002, except for the changes made with respect to Code section 401(a)(9) which are effective January 1, 2003. Eligibility: An employee is eligible to participate in the Plan if the employee is not covered by a collective bargaining agreement, is not a leased employee or is not a nonresident alien. There are no age or service requirements for eligibility except that a supplemental employee must perform 1 year of service and complete 1000 hours before entering the Plan. Contributions: Participants may contribute up to 50% of their compensation, as defined by the Plan and subject to certain limitations. CNF makes matching contributions equal to 50% of participants' contributions, but not exceeding 1.5% of their compensation, as defined. CNF contributions are in the form of allocations of Preferred Stock and CNF Inc. Common Stock ("Common Stock") or in the form of cash. PAGE 5 For the year ended December 31, 2002, contributions to the Plan consisted of the following: Matching Contributions: Preferred Stock CNF match of Preferred Stock $ 3,477,056 Forfeited Preferred Stock 63,913 Common Stock CNF match of Common Stock 9,248,496 Forfeited Common Stock 51,100 ------------- $12,840,565 ============= Cash dividends on Preferred Stock are used for debt service on the notes payable (see Note 4). Participants are allocated additional Preferred Stock as a substitute for the cash dividends used for debt service. For the year ended December 31, 2002, annual interest requirements were less than annual Preferred Stock cash dividends received by the Plan. As reported in the Statement of Changes in Net Assets Available for Plan Benefits for the year ended December 31, 2002, preferred shares were allocated to TASP and EWW Savings Plan participants at a historical cost of $7,574,624 and $103,182, respectively. The total allocation to TASP and EWW Savings Plan participants consisted of $3,477,056 from CNF's match of preferred stock and $4,200,750 from additional preferred stock allocated to participants as a substitute for the cash dividends used for debt service. In addition to its match of Preferred and Common Stock, CNF made contributions to the Plan for repayment of the notes payable described in Note 4. Principal of $8,700,000 was paid in 2002 with $6,650,661 of CNF cash contributions and $2,049,339 from Preferred Stock cash dividends in excess of interest expense on the notes payable. Participant Accounts: The Plan allows participants to select any one or more of the twelve investment funds established under the Plan in which contributions can be invested. CNF's matching contributions cannot be directed by the participant and are deposited into the Preferred Stock Fund - Allocated and Restricted CNF Common Stock Fund. Upon reaching age 55 and having completed at least 10 years of participation in the Plan, participants may elect once each year to transfer up to 100% of their assets from the Restricted CNF Common Stock Fund and Preferred Stock Fund - Allocated to investment options other than CNF stock. Allocations of CNF's matching contributions are based upon a percentage of participant contributions, as described above. Allocations of net Plan earnings are based upon participants' account balances, as defined. The benefits to which participants are entitled are the benefits that can be provided from participants' vested accounts. Vesting: Participants' contributions plus earnings thereon are immediately vested. CNF's matching contributions are fully vested after two years of service with CNF. If the employee is terminated prior to two years of service with CNF, the matching contributions are forfeited. Forfeited shares of common and preferred stock are used to reduce future CNF contributions. Participant Loans: The Plan has a loan provision allowing participants access to funds on a tax-free basis. Loans are allowed to the extent of employee contributions and can be no less than $1,000 and cannot exceed the lesser of $50,000 or 50% of a participant's vested account balance. Loans can be made for a term not to exceed 4- 1/2 years and bear interest at a rate determined by the loan committee (prime rate plus 1% for 2002). Loans outstanding at December 31, 2002 bear interest at rates ranging from 5.75% to 11.00%. Principal and interest are paid ratably through payroll deductions. PAGE 6 Payments and Benefits: Participants can receive a total distribution from their accounts upon death or termination of employment. Disabled participants can receive a distribution of their accounts upon determination of disability by the U.S. Social Security Administration or CNF's benefit department. Other types of withdrawals are permitted by the Plan in limited situations. Participants can elect to have their accounts distributed in a single lump sum or in a series of substantially equal annual installments, as defined by the Plan. Distributions will be made in cash except that (1) participants' accounts invested in Common Stock can, at the direction of the participant, be paid in shares and (2) participants' allocation of Preferred Stock will be converted into shares of Common Stock and can, at the direction of the participant, be paid in shares or in cash. Plan Termination: Although CNF has no intention of terminating the Plan, it may do so at any time by resolution of the Board of Directors. In the event that the Plan is terminated, the net assets of the Plan shall be distributed to participants in the amount credited to their accounts. 2. Summary of Significant Accounting Policies Basis of Accounting: The accompanying financial statements have been prepared using the accrual method of accounting. Financial Instruments: The investments in the accompanying financial statements are stated at quoted market prices, which approximate fair value as of December 31, 2002 and 2001 except for (1) participant loans outstanding that are valued at cost, which approximates fair value and (2) Preferred Stock, which does not have a quoted market value, and is stated at fair value as determined by an annual independent appraisal. The notes payable in the accompanying financial statements are stated at their carrying value. The fair value of the notes payable as of December 31, 2002 and 2001 was approximately $118,000,000 and $126,000,000, respectively. Fair value was estimated based on the expected future payments discounted at market rates. Investments: The Plan invests in various investments. Investment securities are generally exposed to various risks, such as interest rate, credit and overall market volatility risks. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the value of investment securities will occur in the near term and that such changes could materially affect amounts reported in the Statements of Net Assets Available for Benefits. Income Recognition: The difference in market value from one period to the next is included in net depreciation in fair value of investments in the accompanying Statement of Changes in Net Assets Available for Benefits. The net depreciation in fair value of investments also includes realized gains and losses. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Purchases and sales of securities are recorded on the trade-date basis. The Plan is charged a wrap fee for each investment transaction recorded in the Trust. Accordingly, these costs result in an overall reduction in the investment returns recorded by each underlying asset. Operating Expenses: During 2002, all administrative expenses of the Plan were paid by CNF. Payment of Benefits: Benefits paid to participants are recorded upon distribution. PAGE 7 Reclassifications: Certain prior-year amounts have been reclassified to conform with the current-year presentation. Estimates: Management makes estimates and assumptions when preparing the financial statements in conformity with accounting principles generally accepted in the United States of America. These estimates and assumptions affect the amounts reported in the accompanying financial statements and notes thereto. Actual results could differ from those estimates. 3. Investments The investment options available to participants were revised during 2002. A fund with shares in registered investment companies was added as a participant-directed investment option while a common trust fund was removed from the plan. The following presents investments that represent 5 percent or more of the Plan's net assets as of December 31, 2002 and 2001. December 31, 2002 2001 ------------ ------------ Participant Directed Investments: Shares in Registered Investment Companies: T. Rowe Price Growth Stock Fund, 4,960,814 and 4,951,431 shares, respectively $ 92,171,921 $119,725,591 T. Rowe Price Equity Income Fund, 3,777,698 and 3,617,790 shares, respectively 74,760,642 85,560,736 T. Rowe Price Science and Technology Fund, 4,457,776 and 3,866,038 shares, respectively 55,410,154 80,877,515 T. Rowe Price PIMCO Fund, 3,195,715 and 2,562,942 shares, respectively 34,098,275 26,808,373 Common Trust Funds: T. Rowe Price U.S. Treasury Money Market Trust, 79,118,495 and 70,383,475 shares, respectively 79,118,495 70,383,475 T. Rowe Price Retirement Strategy Trust - Balanced, 1,779,598 and 1,703,991 shares, respectively 33,883,548 35,766,765 Participant Loans 44,596,428 43,657,726 Unrestricted CNF Common Stock, 1,100,802 and 1,171,372 shares, respectively 36,590,663 39,299,517 Non-Participant Directed Investments: Restricted CNF Common Stock, 1,712,307 and 1,535,884 shares, respectively 56,917,091 51,528,893 CNF Preferred Stock - Allocated, 330,029 and 301,056 shares, respectively 70,296,253 66,533,565 CNF Preferred Stock - Unallocated, 447,646 and 495,509 shares, respectively 95,348,592 109,507,587 PAGE 8 During 2002, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) depreciated in value as follows: Shares in registered investment companies $ (76,500,982) Common trust funds (8,318,879) CNF Common Stock (990,616) CNF Preferred Stock (7,464,353) -------------- $ (93,274,830) ============== In May 1989, the Plan purchased 986,259 shares of Preferred Stock for $150,009,863 using proceeds from the issuance of the notes described in Note 4. The Preferred Stock can only be issued to the Plan Trustee. The shares are held by the Trustee and allocated to participant accounts. Upon allocation, the shares are first used to pay the Preferred Stock cash dividend on shares previously allocated to the participants with the remainder used to satisfy a portion of CNF's matching contribution requirement. In connection with a participant's termination from the Plan, the Preferred Stock is automatically converted into Common Stock at a rate generally equal to that number of shares of Common Stock that could be purchased for $152.10, but not less than the minimum conversion rate of 4.708 shares of Common Stock for each share of Preferred Stock. At December 31, 2002, outstanding CNF Preferred Stock of 784,007 shares consisted of 356,718 allocated shares and 427,289 unallocated shares. Allocated shares at December 31, 2002 included 350,385 shares allocated to TASP participant accounts and 6,333 shares allocated to EWW Savings Plan participant accounts. At December 31, 2001, outstanding CNF Preferred Stock of 805,895 shares consisted of 328,128 allocated shares and 477,767 unallocated shares. Allocated shares at December 31, 2001 included 318,797 shares allocated to TASP participant accounts and 9,331 shares allocated to EWW Savings Plan participant accounts. Unallocated shares at December 31, 2002 and 2001 were pledged as collateral against the Plan Notes, as described below. Preferred Stock of 20,356 and 17,741 shares were allocated to participant accounts after December 31, 2002 and 2001, respectively, but related to participant activity for the years ended December 31, 2002 and 2001, respectively. Accordingly, this Preferred Stock is accrued as Due from (Due to) the Preferred Stock Fund - Unallocated (Preferred Stock Fund - Allocated) to reflect the accrued allocation between funds. Preferred Stock is allocated at historical cost. 4. Notes Payable On July 18, 1989, the Plan completed the sale of $150,000,000 in aggregate principal amount of notes ("the Plan Notes") to a group of institutional investors. The proceeds from the sale of the original Plan Notes were used to repay the $150,000,000 bridge loan from CNF to the Plan. The bridge loan had earlier been made to finance the purchase of the Preferred Stock. CNF guarantees the Plan Notes issued by CNF's TASP. As of December 31, 2002, there was $49,800,000 aggregate principal amount of Series A TASP notes outstanding, bearing interest at a rate of 6.00% per annum and maturing on January 1, 2006, and $62,000,000 aggregate principal amount of Series B TASP notes outstanding, bearing interest at a rate of 8.54% per annum and maturing on January 1, 2009. The Series A notes contain financial covenants that require CNF to maintain minimum amounts of net worth and fixed-charge coverage. Holders of the Series B notes issued by CNF's TASP have the right to require CNF to repurchase those notes if, among other things, both Moody's and Standard & Poor's have publicly rated CNF's long-term senior debt at less than investment grade unless, within 45 days, CNF shall have obtained, through a guarantee, letter of credit or other permitted credit enhancement or otherwise, a credit rating for such notes of at least "A" from Moody's or Standard & Poor's (or another nationally recognized rating agency selected by the holders of such notes) and shall maintain a rating on such notes of "A" or better thereafter. As a result, any further decrease in CNF's long-term senior debt ratings by both of these credit rating agencies would give the holders of TASP notes the right to require CNF to repurchase those notes unless CNF was able to obtain appropriate credit enhancement as described above, and there can be no assurance that CNF would be able to do so. The interest expense on all Plan Notes is payable semiannually on January 1 and July 1 and is subject to adjustment in certain circumstances including some changes in applicable tax laws. For the years ended December 31, 2002 and 2001, principal payments were $8,700,000 and $7,500,000, respectively. PAGE 9 Future maturities of the notes payable to be paid from preferred cash dividends and/or additional cash contributions from CNF are as follows: Series A Series B Total ------------ ------------ ------------ 2003 $ 10,100,000 $ - $ 10,100,000 2004 12,000,000 - 12,000,000 2005 12,700,000 - 12,700,000 2006 15,000,000 - 15,000,000 2007 - 18,600,000 18,600,000 Thereafter - 43,400,000 43,400,000 ------------ ------------ ------------ $ 49,800,000 $ 62,000,000 $111,800,000 ============ ============ ============ 5. Income Tax Status The Internal Revenue Service has determined and informed CNF by a letter dated October 3, 2001 that the Plan and related trust are designed in accordance with applicable sections of the Code. The Plan has been amended since receiving the determination letter. However, the Plan administrator believes that the Plan is designed and is currently being operated in compliance with the applicable requirements of the Code. Therefore, the Plan administrator believes that the Plan was qualified and the related trust was tax exempt as of the financial statement date. 6. Related Party Transactions Certain Plan investments are shares in registered investment companies and common trust funds managed by T. Rowe Price. T. Rowe Price is the trustee as defined by the Plan and, therefore, these investments and investment transactions qualify as party-in-interest transactions. PAGE 10 SCHEDULE I CNF INC. THRIFT AND STOCK PLAN EIN 94-1444798 PLAN NO. 003 SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR) AS OF DECEMBER 31, 2002 Identity of Issue Description of Investment Borrower, Lessor Including Maturity Date, Similar Rate of Interest, Collateral, Current Party Par or Maturity Value Cost Value - ----------------- ----------------------------- ------------- ------------ Shares in registered investment companies: *T. Rowe Price Growth Stock Fund (4,960,813.817 shares) $ 131,371,086 $ 92,171,921 *T. Rowe Price Equity Income Fund (3,777,697.953 shares) 85,291,689 74,760,642 *T. Rowe Price Science and Technology Fund (4,457,775.889 shares) 135,755,508 55,410,154 *T. Rowe Price International Stock Fund (1,731,831.148 shares) 22,862,091 15,378,661 *T. Rowe Price Small-Cap Stock Fund (571,298.578 shares) 13,625,145 12,282,919 *T. Rowe Price PIMCO Total Return Fund (3,195,714.663 shares) 34,054,442 34,098,275 *T. Rowe Price Undiscovered Managers Small Cap Growth Fund (208,213.750 shares) 1,247,125 1,274,268 Common Trust Funds: *T. Rowe Price Equity Index Trust (894,629.752 shares) 26,738,263 21,489,007 *T. Rowe Price Bond Index Trust (633,384.891 shares) 11,414,440 12,819,710 *T. Rowe Price U.S. Treasury Money Market Trust (79,118,495.260 shares) 79,118,495 79,118,495 *T. Rowe Price Retirement Strategy Trust-Balanced (1,779,598.118 shares) 34,288,300 33,883,548 *Plan Participant loans with Participants interest from 5.75% to 11.00% and maturity dates from 2003 to 2007 - 44,596,428 Common Stock: *CNF Inc. Unrestricted CNF Common Stock (1,100,802.133 shares) 32,056,661 36,590,663 *CNF Inc. Restricted CNF Common Stock (1,712,307.204 shares) 48,227,667 56,917,091 Preferred Stock: *CNF Inc. CNF Preferred Stock - Allocated (330,029.355 shares) 50,169,542 70,296,253 *CNF Inc. CNF Preferred Stock - Unallocated (447,645.974 shares) 68,086,953 95,348,592 ------------ $736,436,627 ============ *Represents a party-in-interest as of December 31, 2002. NOTE: Cost is calculated using the moving average method. See accompanying independent auditors' report. EX-99 2 ctasp99.txt Exhibit 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report on Form 11-K of the CNF Inc. Thrift and Stock Plan (the "Plan") for the annual period ended December 31, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Mark C. Thickpenny, Chairman, CNF Inc. Benefits Administrative Committee, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Plan. This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Plan for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. /s/ Mark C. Thickpenny - ----------------------------- Name: Mark C. Thickpenny Title: Chairman, CNF Inc. Benefits Administrative Committee Date: June 27, 2003 EX-23 3 ctasp23.txt Exhibit 23 Independent Auditors' Consent To the Compensation Committee of the CNF Inc. Board of Directors: We consent to the incorporation by reference in the registration statements (Nos. 333-48733, 333-92399, 333- 36180, 333-54558, 333-102749, and 333-104803 on Form S-8 and 333-56667 on Form S-3) of CNF Inc. of our report dated June 20, 2003, with respect to the statement of net assets available for benefits of the CNF Inc. Thrift and Stock Plan as of December 31, 2002 and 2001, and the related statement of changes in net assets available for benefits for the year ended December 31, 2002 and the related supplemental schedule as of December 31, 2002, which report appears in the December 31, 2002 annual report on Form 11-K of the CNF Inc. Thrift and Stock Plan. /s/ KPMG LLP Portland, Oregon June 27, 2003 -----END PRIVACY-ENHANCED MESSAGE-----