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. EWW SAVINGS 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. EWW Savings Plan
June 27, 2003 /s/ Mark C. Thickpenny
-------------------------------
Mark C. Thickpenny
Chairman, CNF Inc. Benefits
Administrative Committee
CNF INC. EWW SAVINGS 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. EWW Savings 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. EWW SAVINGS PLAN
DECEMBER 31, 2002 AND 2001
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
Page
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 7
PAGE 1
CNF INC. EWW SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2002
Participant Non-Participant
Directed Directed Total
------------- ---------------------------- -------------
Restricted CNF
CNF Common Preferred
Stock Fund Stock Fund
------------- -------------
ASSETS:
Investments, at fair
value-
Shares in registered
investment companies $ 9,479,974 $ - $ - $ 9,479,974
Common trust funds 4,488,288 - - 4,488,288
Participant loans 520,735 - - 520,735
CNF equity 589,779 678,423 1,348,819 2,617,021
------------- ------------- ------------- -------------
Total investments $ 15,078,776 $ 678,423 1,348,819 17,106,018
Participant contributions
receivable 10,332 - - 10,332
Cash 197 83 - 280
------------- ------------- ------------- -------------
NET ASSETS AVAILABLE FOR
BENEFITS $ 15,089,305 $ 678,506 $ 1,348,819 $ 17,116,630
============= ============= ============= =============
See accompanying notes to financial statements.
PAGE 2
CNF INC. EWW SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2001
Participant Non-Participant
Directed Directed Total
------------- ---------------------------- -------------
Restricted CNF
CNF Common Preferred
Stock Fund Stock Fund
------------- -------------
ASSETS:
Investments, at fair
value-
Shares in registered
investment companies $ 17,854,028 $ - $ - $ 17,854,028
Common trust funds 6,943,956 - - 6,943,956
Participant loans 1,463,142 - - 1,463,142
CNF equity 1,178,447 1,217,867 2,062,085 4,458,399
------------- ------------- ------------- -------------
Total investments 27,439,573 1,217,867 2,062,085 30,719,525
Participant contributions
receivable 19,958 - - 19,958
Cash - - 16,843 16,843
------------- ------------- ------------- -------------
NET ASSETS AVAILABLE FOR
BENEFITS $ 27,459,531 $ 1,217,867 $ 2,078,928 $ 30,756,326
============= ============= ============= =============
See accompanying notes to financial statements.
PAGE 3
CNF INC. EWW SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2002
Participant Non-Participant
Directed Directed Total
-------------- ------------------------------ --------------
Restricted CNF
CNF Common Preferred
Stock Fund Stock Fund
-------------- --------------
ADDITIONS/(DEDUCTIONS):
Participant contributions $ 606,964 $ - $ - $ 606,964
Dividend income (Note 1) - - 103,182 103,182
Interest income 80,405 9,617 - 90,022
Transfers in from other
plans 377,228 19,997 37,021 434,246
Net depreciation in fair
value of investments
(Note 3) (3,910,829) (28,666) (243,651) (4,183,146)
Distributions to
participants (Note 1) (9,560,192) (1,130,772) - (10,690,964)
-------------- -------------- -------------- --------------
Total deductions (12,406,424) (1,129,824) (103,448) (13,639,696)
INTERFUND TRANSFERS, net 36,198 590,463 (626,661) -
-------------- -------------- -------------- --------------
Net decrease (12,370,226) (539,361) (730,109) (13,639,696)
NET ASSETS AVAILABLE FOR
BENEFITS,
December 31, 2001 27,459,531 1,217,867 2,078,928 30,756,326
-------------- -------------- -------------- --------------
NET ASSETS AVAILABLE FOR
BENEFITS,
December 31, 2002 $ 15,089,305 $ 678,506 $ 1,348,819 $ 17,116,630
============== ============== ============== ==============
See accompanying notes to financial statements.
PAGE 4
CNF INC. EWW SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS AND SCHEDULE
1. Description of Plan
The following description of the CNF Inc. EWW Savings Plan ("the
Plan") is provided for general information purposes only.
Participants should refer to the Employee Benefits Handbook or the
Plan document for more complete information.
General: The Plan is a defined contribution plan and is subject to
the provisions of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"). Overall responsibility for administering the
Plan rests with the CNF Inc. ("CNF") Administrative Committee ("the
Committee"), which is appointed by the Chief Executive Officer of CNF.
The Committee reports directly to the Compensation Committee of CNF's
Board of Directors. The Plan's trustee, T. Rowe Price Trust Company
("the Trustee"), is responsible for the management and control of the
Plan's assets.
In connection with CNF's announcement of the cessation of Emery
Worldwide Airlines' ("EWA") air carrier operations on December 5,
2001, EWA terminated the employment of all of its pilots and
crewmembers, bringing the total number of terminated employees in 2001
to 800. Distributions to participants in 2002 of $10,690,964, as
reported in the Statement of Changes in Net Assets Available for
Benefits, reflects these employee terminations.
Amendments: During 2000, CNF amended the CNF Thrift and Stock Plan
("TASP") and the Plan. Effective September 19, 2000, the pilots of
EWA ceased participation in the TASP and their elective deferrals
began being contributed to the Plan. The EWW pilots' vested
balance in the TASP was transferred to the Plan effective
December 20, 2000.
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: The Plan covers all eligible employees of CNF who are
covered by a collective bargaining unit that specifically provides for
participation in the Plan. Employees become eligible to participate
in the Plan upon hire if they are regular full-time employees.
Supplemental or part-time employees become eligible upon completion of
750 hours and one year of service.
Contributions: Participants may contribute up to 50% of their
compensation into the Plan, as defined by the Plan and subject to
certain limitations. Each participating employee may direct
contributions in any one or more of the investment funds established
under the Plan. CNF makes no matching contributions for participants
of the Plan.
Participants who formerly participated in the TASP, as discussed
under "-Amendments" above, are awarded Preferred Stock as a substitute
for cash dividends. For 2002, these participants received Preferred
Stock with a historical cost of $103,182, as shown on the Statement of
Changes in Net Assets Available for Benefits.
The Plan allows for a supplemental employer contribution of up to
10 days of unused forfeited vacation and sick days for those
participants whose collective bargaining agreements provide for such
contributions.
Participant Accounts: A separate account is maintained for each
participant of the Plan. Each account is credited with the
participant's and employer contributions, if any, and an allocation of
the Plan's net earnings. The Plan's net earnings are allocated to the
separate funds in each participant's account based upon the value of
the individual's account fund balance in relation to the Plan's total
fund balance.
Vesting: Participants are fully vested at all times in all
contributions made to the Plan plus net earnings thereon.
PAGE 5
Participant Loans: The Plan has a loan provision allowing
participants access to funds on a tax-free basis. Each participant
may borrow from a minimum of $1,000 up to a maximum of $50,000 from
the participant's fund account, reduced by the excess of the
participant's highest outstanding loan balance during the one-year
period on the day before the loan is made over the participant's
current outstanding loan balance on the date of the loan. Loans may
not exceed 50% of a participant's vested account balance. The loans
are secured by the vested balance in the participant's account. Loans
must be repaid within 4 1/2 years and bear interest at a rate
determined by the loan committee (the prime rate plus 1% in 2002).
Loans outstanding at December 31, 2002 bear interest at rates ranging
from 5.75% to 10.50%. Principal and interest are paid ratably through
payroll deductions.
Distribution to Participants: Employees become eligible for
distribution upon termination of employment, disability, retirement or
death. Distributions are payable in the form of lump sum payments or
in a series of substantially equal annual installments.
Plan Termination: Although it has not expressed any intent to do
so, CNF has the right under the Plan to terminate the Plan subject to
the provisions of ERISA. In the event of Plan termination, CNF shall
direct the Trustee with respect to the distribution of accounts to or
for the exclusive benefit of participants or their beneficiaries.
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.
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.
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.
PAGE 6
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,
175,802 and 242,540 shares,
respectively $ 3,266,398 $ 5,864,629
T. Rowe Price Science and Technology
Fund, 210,428 and 289,852 shares,
respectively 2,615,616 6,063,702
T. Rowe Price Equity Income Fund,
99,769 and 137,544 shares,
respectively 1,974,431 3,252,920
Common Trust Funds:
T. Rowe Price US Treasury Money
Market Trust, 3,051,871 and
4,311,262 shares, respectively 3,051,871 4,311,262
Non-Participant Directed Investments:
CNF Preferred Stock, 6,332 and 9,331
shares, respectively 1,348,819 2,062,085
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 $ (3,623,969)
Common trust funds (276,558)
CNF Common stock (38,968)
CNF Preferred stock (243,651)
-------------
$ (4,183,146)
=============
4. 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.
5. Related Party Transactions
Certain Plan investments are shares in funds managed by T. Rowe
Price Trust Company, the trustee as defined by the Plan. Therefore,
these investments and investment transactions qualify as party-in-
interest.
PAGE 7
SCHEDULE I
CNF INC. EWW SAVINGS PLAN
EIN 94-1444798
PLAN NO. 112
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
AS OF DECEMBER 31, 2002
Identity
of Issue
Borrower, Description of Investment
Lessor Including Maturity Date, Rate of
or Similar Interest, Collateral, Par or Current
Party Maturity Value Cost Value
- -------------- -------------------------------------- ----------- -----------
Shares in Registered Investment
Companies:
*T. Rowe Price Growth Stock Fund (175,801.816 shares) $ 4,515,289 $ 3,266,398
*T. Rowe Price Equity Income Fund (99,769.104 shares) 2,390,658 1,974,431
*T. Rowe Price Science and Technology Fund
(210,427.679 shares) 5,913,040 2,615,616
*T. Rowe Price International Stock Fund
(80,338.461 shares) 1,050,782 713,406
*T. Rowe Price Small-Cap Stock Fund (11,414.975
shares) 275,320 245,422
*T. Rowe Price PIMCO Total Return Fund
(61,871.598 shares) 660,071 660,170
*T. Rowe Price Undiscovered Managers Small
Cap Growth Fund (740.381 shares) 4,439 4,531
Common Trust Funds:
*T. Rowe Price Equity Index Trust (22,902.396 shares) 742,800 550,116
*T. Rowe Price Bond Index Trust (10,742.573 shares) 200,020 217,430
*T. Rowe Price U.S. Treasury Money Market
Fund (3,051,871.070 shares) 3,051,871 3,051,871
*T. Rowe Price Retirement Strategy Trust -
Balanced (35,129.758 shares) 752,784 668,871
*Plan Participant Loans with interest
participants from 5.75% to 10.50% and
maturity dates from 2003 to 2007 - 520,735
Common Stock:
*CNF Inc. Unrestricted CNF Common Stock 513,833 589,779
(17,743.051 shares)
*CNF Inc. Restricted CNF Common Stock
Fund (20,409.845 shares) 552,788 678,423
Preferred Stock:
*CNF Inc. CNF Preferred Stock - Allocated
(6,332.484 shares) 962,920 1,348,819
-----------
Total Investments $17,106,018
===========
*Represents a party-in-interest transaction as of December 31, 2002.
NOTE: Cost is calculated using the historical rolling-average-cost
method.
See accompanying independent auditors' report.