UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001
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 28, 2002 /s/ Mark C. Thickpenny
Mark C. Thickpenny
Vice President and Treasurer
The report of Arthur Andersen LLP covering the 2000 financial statements
is a copy of a report previously issued by Andersen on June 22, 2001. We
have not been able to obtain a re-issued report from Andersen. Andersen
has not consented in this Annual Report on Form 11-K to the incorporation
by reference of its report into the registration statement (No. 333-48733,
333-56667, 333-92399, 333-36180, 333-54558). Because Andersen has not
consented in this filing to the incorporation by reference of its report
into the aforementioned registration statement, it may be more difficult
for you to seek remedies against Andersen and your ability to seek relief
against Andersen may be impaired.
CNF INC.
THRIFT AND STOCK PLAN
FINANCIAL STATEMENTS AND SCHEDULE
AS OF DECEMBER 31, 2001 AND 2000
AND FOR THE YEAR ENDED DECEMBER 31, 2001
TOGETHER WITH AUDITORS' REPORT
Independent Auditors' Report
To the Compensation Committee of the
CNF Inc. Board of Directors:
We have audited the accompanying statement of net assets available for
plan benefits of the CNF Inc. Thrift and Stock Plan as of December 31,
2001, and the related statement of changes in net assets available for
plan benefits for the year ended December 31, 2001. These financial
statements are the responsibility of the plan administrator. Our
responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audit 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 audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for plan
benefits of the Plan as of December 31, 2001, and the changes in its
net assets available for plan benefits for the year ended December 31,
2001, in conformity with accounting principles generally accepted in
the United States of America.
Our audit was 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 managment. 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 audit was performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The fund information in
the statement of net assets available for plan benefits and statement of
changes in net assets available for plan benefits is presented for
purposes of additional analysis rather than to present the net assets
available for plan benefits and changes in net assets available for plan
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 finanical statements taken as a whole.
/s/ KPMG LLP
KPMG LLP
Portland, Oregon,
June 24, 2002
THIS REPORT IS A COPY OF A PREVIOUSLY ISSUED ARTHUR ANDERSEN LLP REPORT
AND HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN LLP.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Compensation Committee of the
CNF Inc. Board of Directors:
We have audited the accompanying statements of net assets available for plan
benefits of the CNF Transportation Inc. Thrift and Stock Plan as of December
31, 2000 and 1999, and the related statement of changes in net assets
available for plan benefits for the year ended December 31, 2000. These
financial statements and the schedule referred to below are the responsibility
of the Plan's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the 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 financial status of the Plan as of December 31, 2000
and 1999, and the changes in its financial status for the year ended December
31, 2000, in conformity with accounting principles generally accepted in the
United States.
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 the purpose of additional analysis and is
not a required part of the basic financial statements but is supplementary
information required by Department of Labor Rules and Regulations for Reporting
and Disclosure under the Employee Retirement Income Security Act of 1974. The
supplemental schedule has been subjected to the auditing procedures applied in
the audits 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/ Arthur Andersen LLP
Portland, Oregon,
June 22, 2001
CNF INC.
THRIFT AND STOCK PLAN
DECEMBER 31, 2001 AND 2000
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
FINANCIAL STATEMENTS:
Statement of Net Assets Available for Plan Benefits as of
December 31, 2001 1
Statement of Net Assets Available for Plan Benefits as of
December 31, 2000 2
Statement of Changes in Net Assets Available for Plan
Benefits for the Year Ended December 31, 2001 3
NOTES TO FINANCIAL STATEMENTS AND SCHEDULE 4
SUPPLEMENTAL SCHEDULE:
Schedule I: Schedule H, Part IV, Line 4i - Schedule of Assets
Held at End of Year as of December 31, 2001 10
PAGE 1
CNF INC.
THRIFT AND STOCK PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN 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
Company - 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 566,029,581 53,804,484 69,231,887 114,906,279 803,972,231
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 PLAN BENEFITS $ 566,029,581 $ 53,804,484 $ 69,231,887 $ (13,564,633)$675,501,319
See accompanying notes to financial statements.
PAGE 2
CNF INC.
THRIFT AND STOCK PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 31, 2000
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 $ 398,436,046 $ - $ - $ - $ 398,436,046
Common trust funds 129,702,963 - - - 129,702,963
Participant loans 45,242,438 - - - 45,242,438
CNF equity 40,657,900 49,384,105 61,897,800 119,580,640 271,520,445
------------- ------------ ------------ ------------- ------------
Total investments 614,039,347 49,384,105 61,897,800 119,580,640 844,901,892
Contributions receivable-
Participants 2,496,919 - - - 2,496,919
Company - 1,737,410 - - 1,737,410
------------- ------------ ------------ ------------- ------------
Total contributions receivable 2,496,919 1,737,410 - - 4,234,329
Due from CNF Preferred Stock Fund - Unallocated - 747,626 2,722,797 - 3,470,423
Dividend receivable - - - 5,375,777 5,375,777
Cash - - - 145,088 145,088
------------- ------------ ------------ ------------- ------------
Total assets 616,536,266 51,869,141 64,620,597 125,101,505 858,127,509
LIABILITIES:
Notes payable (Note 4) - - - (128,000,000)(128,000,000)
Accrued interest payable - - - (4,628,150) (4,628,150)
Due to CNF Restricted Common Stock Fund - - - (747,626) (747,626)
Due to CNF Preferred Stock Fund - Allocated - - - (2,722,797) (2,722,797)
Due to EWW Savings Plan for net assets to
be transferred (Note 1) (26,510,152) (1,954,825) (2,250,395) - (30,715,372)
------------- ------------ ------------ ------------ ------------
Total liabilities (26,510,152) (1,954,825) (2,250,395) (136,098,573)(166,813,945)
------------- ------------ ------------ ------------ ------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 590,026,114 $ 49,914,316 $ 62,370,202 $ (10,997,068)$691,313,564
============= ============ ============ ============ ============
See accompanying notes to financial statements.
PAGE 3
CNF INC.
THRIFT AND STOCK PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2001
Participant
Directed Non-Participant Directed
------------- ---------------------------------------
Restricted CNF Preferred CNF Preferred
CNF Common Stock Fund - Stock Fund -
Stock Fund Allocated Unallocated Total
------------- ----------- ----------- ----------- -------------
ADDITIONS:
Participant contributions $ 60,959,323 $ - $ - $ - $ 60,959,323
Company contributions - 6,920,085 - 7,500,000 14,420,085
Excess preferred stock dividends (Note 1) - 1,799,284 - - 1,799,284
Rollover contributions 3,221,417 - - - 3,221,417
Liquidating transfer in from Common
Stock Fund 6,232,716 - - - 6,232,716
Allocation of preferred shares
to participants at cost - - 7,282,245 - 7,282,245
Dividend and interest income 6,977,722 591,256 - 10,606,570 18,175,548
Net appreciation (depreciation) in fair
value of investments (Note 3) (65,555,287) 371,284 2,245,671 (2,786,306) (65,724,638)
Total additions 11,835,891 9,681,909 9,527,916 15,320,264 46,365,980
DEDUCTIONS:
Excess preferred stock dividends (Note 1) - - - (1,799,284) (1,799,284)
Distributions to participants (39,158,828) (5,131,530) (38) - (44,290,396)
Allocation of preferred shares
to participants - - - (7,282,245) (7,282,245)
Interest expense - - - (8,806,300) (8,806,300)
Total deductions (39,158,828) (5,131,530) (38) (17,887,829) (62,178,225)
INTERFUND TRANSFERS, net 3,326,404 (660,211) (2,666,193) - -
Net increase (decrease) (23,996,533) 3,890,168 6,861,685 (2,567,565) (15,812,245)
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, December 31, 2000 590,026,114 49,914,316 62,370,202 (10,997,068) 691,313,564
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, December 31, 2001 $ 566,029,581 $53,804,484 $69,231,887 $(13,564,633) $ 675,501,319
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. (formerly CNF
Transportation Inc. and referred to as the Company or 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 the Company 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 the Company. The Committee reports
directly to the Compensation Committee of the Company'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, the Company amended the Plan and the EWW
Savings Plan. Effective September 19, 2000, the Emery Worldwide (EWW)
pilots 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 unvested portion of each pilot's
account will remain in the Plan until vested. Any balances remaining
in the Plan until transferred to the EWW Savings Plan will continue to
be invested as provided under the Plan. The pilots' vested balances,
which were reported as a payable to the EWW Savings Plan as of
December 31, 2000, were transferred in 2001 to the EWW Savings Plan.
Effective July 31, 2001, the Company's Board of Directors voted to
terminate the CNF Transportation Inc. Common Stock Fund (Common Stock
Fund). Prior to its termination, a participant of the Common Stock
Fund could elect to transfer the actuarial equivalent annuity value of
the participant's vested Common Stock Fund account balance to the Plan
upon retirement or termination. Upon termination of the Common Stock
Fund, participants elected to transfer their fully vested Common Stock
Fund account balances to either the Plan or the Company's Retirement
Plan. As a result of participant elections, an actuarial equivalent
annuity value of $6,232,716 was transferred in 2001 from the Common
Stock Fund to the Plan.
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 18% of their
compensation, as defined by the Plan and subject to certain
limitations. The Company makes matching contributions equal to 50% of
participants' contributions, but not exceeding 1.5% of their
compensation, as defined. Company contributions are in the form of
allocations of the Company's Series B Cumulative Convertible Preferred
Stock (Preferred Stock) and CNF Inc. Common Stock (Common Stock) or in
the form of cash. 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, 2001, annual
interest requirements were less than annual Preferred Stock cash
dividends received by the Plan. At December 31, 2001, $869,440 of
cash dividends in excess of interest payments was available to reduce
Company matching contributions and was included in Due from CNF
Preferred Stock Fund and Due to CNF Restricted Stock Fund on the
Statement of Net Assets Available for Plan Benefits. Total excess
cash dividends of $1,799,284 were used by the Company to purchase
Common Stock for matching contributions during 2001.
PAGE 5
For the year ended December 31, 2001, contributions to the Plan
consisted of the following:
Matching Contributions:
Preferred Stock
Company match of Preferred Stock $ 3,355,408
Forfeited Preferred Stock 64,603
Common Stock
Company match of Common Stock 6,920,085
Forfeited Common Stock 165,167
Preferred Stock dividends in
excess of interest requirements 1,799,284
$12,304,547
The Company match of Preferred Stock is included in the allocation
of preferred shares to participants of $7,282,245 shown in the
Statement of Changes in Net Assets Available for Plan Benefits for the
year ended December 31, 2001.
In addition to its match of Preferred and Common Stock, the Company
in 2001 contributed $7,500,000 to the Plan for payment of the notes
payable described in Note 4.
Participant Accounts: The Plan allows participants to select the
type of investment fund in which their contributions can be invested.
The Company'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 Company stock.
Allocations of the Company'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. The Company's matching contributions are fully
vested after two years of service with the Company have been
completed. If the employee is terminated prior to two years of
service with the Company, the matching contributions are forfeited.
Forfeited shares of common and preferred stock are used to reduce
future Company 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 generally 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 2001 and 2000). Loans
outstanding at December 31, 2001 bear interest at rates ranging from
7.00% 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 the Company'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 the Company 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, 2001 and 2000 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, 2001 and 2000 was approximately $126,000,000 and
$135,000,000, 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 Plan Benefits.
Income Recognition: The difference in market value from one period
to the next is included in net appreciation (depreciation) in fair
value of investments in the accompanying Statement of Changes in Net
Assets Available for Plan Benefits. The net appreciation
(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 2001, the Company paid all administrative
expenses of the Plan.
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 2001. Two new funds were added as investment options for
participants, while three funds were removed from the Plan.
The following presents investments that represent 5 percent or more
of the Plan's net assets as of December 31, 2001 and 2000.
December 31,
2001 2000
Participant Directed Investments:
Shares in Registered Investment Companies:
T. Rowe Price Growth Stock Fund, 4,951,431
and 5,098,030 shares, respectively $119,725,591 $138,666,405
T. Rowe Price Equity Income Fund,
3,617,790 and 3,288,744 shares,
respectively 85,560,736 81,133,316
T. Rowe Price Science and Technology Fund,
3,866,038 and 3,577,241 shares,
respectively 80,877,515 127,242,469
Common Trust Funds:
T. Rowe Price U.S. Treasury Money Market
Trust, 70,383,475 and 58,856,859 shares,
respectively 70,383,475 58,856,859
T. Rowe Price Retirement Strategy Trust -
Balanced, 1,703,991 and 953,356 shares,
respectively 35,766,765 21,097,770
Participant Loans 43,657,726 45,242,438
Unrestricted CNF Common Stock, 1,171,372
and 1,202,452 shares, respectively 39,299,517 40,657,900
Non-Participant Directed Investments:
Restricted CNF Common Stock, 1,535,884
and 1,460,526 shares, respectively 51,528,893 49,384,105
CNF Preferred Stock - Allocated, 301,056
and 281,354 shares, respectively 66,533,565 61,897,800
CNF Preferred Stock - Unallocated,
495,509 and 543,548 shares, respectively 109,507,587 119,580,640
During 2001, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year)
appreciated (depreciated) in value as follows:
Shares in registered investment companies $ (64,413,967)
Common trust funds (4,965,281)
CNF Common Stock 4,195,245
CNF Preferred Stock (540,635)
$ (65,724,638)
PAGE 8
In May 1989, the Plan purchased 986,259 shares of the Company's
Series B Cumulative Convertible Preferred Stock (Preferred Stock) for
$150,009,863 using proceeds from the issuance of notes (see 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 the Company'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, 2001 and 2000, 318,797 and 299,255 shares of
Preferred Stock, respectively, had been allocated and 477,768 and
525,647 shares, respectively, were unallocated and were pledged as
collateral against the Plan Notes, as defined below. Preferred Stock
of 17,741 and 17,901 shares were allocated to participant accounts
after December 31, 2001 and 2000, respectively, but related to
participant activity for the years ended December 31, 2001 and 2000,
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.
Amounts transferred between funds are allocated at historical cost and
the historical cost of all shares of Preferred Stock allocated in the
year ended December 31, 2001 was $7,282,245.
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 original Plan Notes, which are
guaranteed by the Company, consisted of $88,000,000 of Series A and
$62,000,000 of Series B Notes. The proceeds from the sale of the Plan
Notes were used to repay the $150,000,000 bridge loan from the Company
to the Plan. The bridge loan had earlier been made to finance the
purchase of the Preferred Stock.
On July 1, 1999, the Company refinanced $45,250,000 of Series A and
$27,150,000 of Series A restructured notes. These notes, with
respective interest rates of 8.42% and 9.04%, were replaced with
$72,400,000 of new notes with a rate of 6.0% and are due in varying
installments with a maturity date of January 1, 2006. At December 31,
2001, $58,500,000 was outstanding under these refinanced notes, which
contain financial covenants that require the Company to maintain
minimum amounts of net worth and fixed-charge coverage. The remaining
$62,000,000 of Series B TASP notes outstanding at December 31, 2001
are subject to redemption at the option of the holders should a
designated event occur or ratings by both Moody's and Standard & Poors
of senior unsecured indebtedness decline below investment grade. The
Series B Plan Notes bear interest at 8.5% per annum and are repayable
in variable annual installments from January 1, 2007 to January 1,
2009.
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, 2001 and 2000, principal payments were
$7,500,000 and $6,400,000, respectively.
PAGE 9
Future maturities of the notes payable to be paid from preferred
cash dividends and/or additional cash contributions from the Company
are as follows:
Series Series B Total
A
2002 $ 8,700,000 $ - $ 8,700,000
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
Thereafter - 62,000,000 62,000,000
$ 58,500,000 $ 62,000,000 $120,500,000
5. Income Tax Status
The Internal Revenue Service has determined and informed the Company
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, PART IV, LINE 4i - SCHEDULE OF ASSETS HELD AT END OF YEAR
AS OF DECEMBER 31, 2001
(Note 6)
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
(4,951,430.583 shares) $136,366,103 $119,725,591
*T. Rowe Price Equity Income Fund
(3,617,790.124 shares) 82,659,491 85,560,736
*T. Rowe Price Science and Technology Fund
(3,866,037.997 shares) 142,442,884 80,877,515
*T. Rowe Price International Stock Fund
(1,617,569.033 shares) 22,898,602 17,777,084
*T. Rowe Price Small-Cap Stock Fund
(375,122.217 shares) 8,900,035 9,505,597
*T. Rowe Price PIMCO Total Return Fund
(2,562,941.938 shares) 27,307,826 26,808,373
Common Trust Funds:
*T. Rowe Price Equity Index Trust
(827,233.092 shares) 25,627,544 25,503,288
*T. Rowe Price Bond Index Trust
(440,961.927 shares) 7,394,389 8,148,976
*T. Rowe Price U.S. Treasury Money Market
Trust (70,383,475.260
shares) 70,383,475 70,383,475
*T. Rowe Price Retirement Strategy
Trust-Balanced
(1,703,990.696 shares) 32,794,972 35,766,765
Morgan Stanley Morgan Stanley Institutional
Fund Trust Mid Cap Growth
Portfolio (53,114.987
shares) 958,920 913,047
*Plan Participant loans with
Participants interest from 7.00% to
11.00% and maturity dates
from 2002 to 2006 - 43,657,726
Common Stock:
*CNF Inc. Unrestricted CNF Common Stock
(1,171,371.599 shares) 33,286,218 39,299,517
*CNF Inc. Restricted CNF Common Stock
(1,535,883.537 shares) 41,756,025 51,528,893
Preferred Stock:
*CNF Inc. CNF Preferred Stock -
Allocated (301,055.855
shares) 45,790,618 66,533,565
*CNF Inc. CNF Preferred Stock -
Unallocated (495,509.445
shares) 75,230,485 109,507,587
$791,497,735
*Represents a party-in-interest as of December 31, 2001.
NOTE: Cost is calculated using the moving average method.
See accompanying independent auditors' report.