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, 1996
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 TRANSPORTATION INC. THRIFT AND STOCK PLAN
CNF TRANSPORTATION INC.
Incorporated in the State of Delaware
I.R.S. Employer Identification No. 94-1444798
3240 Hillview Avenue, Palo Alto, California 94304
Telephone Number (415) 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 Transportation Inc. Thrift and Stock Plan
June 27, 1997 /s/Eberhard G.H. Schmoller
--------------------------
Eberhard G.H. Schmoller
Senior Vice President and
General Counsel
CNF TRANSPORTATION INC.
(FORMERLY CONSOLIDATED FREIGHTWAYS, INC.)
THRIFT AND STOCK PLAN
FINANCIAL STATEMENTS AND SCHEDULES
AS OF DECEMBER 31, 1996 AND 1995
TOGETHER WITH AUDITORS' REPORT
CNF TRANSPORTATION INC.
-----------------------
(FORMERLY CONSOLIDATED FREIGHTWAYS, INC.)
-----------------------------------------
THRIFT AND STOCK PLAN
---------------------
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
-------------------------------------------
AS OF DECEMBER 31, 1996 AND 1995
--------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
FINANCIAL STATEMENTS:
Statement of Net Assets Available for Plan Benefits with Fund Information
as of December 31, 1996
Statement of Net Assets Available for Plan Benefits with Fund Information
as of December 31, 1995
Statement of Changes in Net Assets Available for Plan Benefits with Fund
Information for the Year Ended December 31, 1996
NOTES TO FINANCIAL STATEMENTS AND SCHEDULES
SUPPLEMENTAL SCHEDULES:
Schedule I: Item 27a - Schedule of Assets Held for Investment Purposes as of
December 31, 1996
Schedule II: Item 27d - Schedule of Reportable Transactions for the Year Ended
December 31, 1996
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Compensation Committee of the
CNF Transportation Inc. Board of Directors:
We have audited the accompanying statements of net assets available for plan
benefits of the CNF TRANSPORTATION INC. (FORMERLY CONSOLIDATED FREIGHTWAYS,
INC.) THRIFT AND STOCK PLAN as of December 31, 1996 and 1995, and the related
statement of changes in net assets available for plan benefits for the year
ended December 31, 1996. These financial statements and the schedules referred
to below are the responsibility of the Plan's administrator. Our responsibility
is to express an opinion on these financial statements and schedules based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 plan benefits as of December
31, 1996 and 1995, and the changes in its net assets available for plan benefits
for the year ended December 31, 1996, in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes and reportable transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by Department of
Labor Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The Fund Information in the statements
of net assets available for plan benefits and the 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 supplemental
schedules and Fund Information have been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ Arthur Andersen LLP
Portland, Oregon,
June 25, 1997
CNF TRANSPORTATION INC.
(FORMERLY CONSOLIDATED FREIGHTWAYS, INC.)
THRIFT AND STOCK PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
AS OF DECEMBER 31, 1996
Participant Directed
------------------------------------------------------------------------------------
Science and
Growth New Income Equity Technology International
Stock Fund Fund Income Fund Fund Stock Fund
----------- ----------- ----------- ----------- -------------
ASSETS:
Investments, at fair value
Mutual Funds $59,611,145 $18,522,000 $52,400,240 $43,503,247 $15,079,537
Common Trust Funds - - - - -
Participant Loans - - - - -
CNF Equity - - - - -
CFC Equity - - - - -
----------- ----------- ----------- ----------- -----------
Total investments 59,611,145 18,522,000 52,400,240 43,503,247 15,079,537
Contributions receivable-
Participants 214,136 67,845 179,153 221,556 78,446
Company - - - - -
----------- ----------- ----------- ----------- -----------
Total contributions
receivable 214,136 67,845 179,153 221,556 78,446
Due from Preferred Stock Fund-
Unallocated - - - - -
Dividend receivable - - - - -
Cash - - - - -
----------- ----------- ----------- ----------- -----------
Total assets 59,825,281 18,589,845 52,579,393 43,724,803 15,157,983
----------- ----------- ----------- ----------- -----------
LIABILITIES:
Notes payable - - - - -
Accrued interest payable - - - - -
Due to Preferred Stock Fund-
Allocated - - - - -
----------- ----------- ----------- ----------- -----------
Total liabilities - - - - -
----------- ----------- ----------- ----------- -----------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS $59,825,281 $18,589,845 $52,579,393 $43,724,803 $15,157,983
=========== =========== =========== =========== ===========
Participant Directed
---------------------------------------------------------------------------------
U.S. Retirement
Treasury Retirement Strategy
Equity Bond Money Strategy Trust-
Index Index Market Trust- Conservative
Trust Trust Trust Balanced Growth
---------- -------- ----------- ----------- ------------
ASSETS:
Investments, at fair value
Mutual Funds $ - $ - $ - $ - $ -
Common Trust Funds 2,857,793 702,304 36,237,785 8,645,052 2,806,610
Participant Loans - - - - -
CNF Equity - - - - -
CFC Equity - - - - -
---------- -------- ----------- ---------- ----------
Total investments 2,857,793 702,304 36,237,785 8,645,052 2,806,610
Contributions receivable-
Participants 32,862 6,360 142,050 50,884 29,682
Company - - - - -
---------- -------- ----------- ---------- ----------
Total contributions
receivable 32,862 6,360 142,050 50,884 29,682
Due from Preferred Stock Fund-
Unallocated - - - - -
Dividend receivable - - - - -
Cash - - - - -
---------- -------- ----------- ---------- ----------
Total assets 2,890,655 708,664 36,379,835 8,695,936 2,836,292
---------- -------- ----------- ---------- ----------
LIABILITIES:
Notes payable - - - - -
Accrued interest payable - - - - -
Due to Preferred Stock Fund-
Allocated - - - - -
---------- -------- ----------- ---------- ----------
Total liabilities - - - - -
---------- -------- ----------- ---------- ----------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS $2,890,655 $708,664 $36,379,835 $8,695,936 $2,836,292
========== ======== =========== ========== ==========
Participant Directed
------------------------------------------------------------
Retirement
Strategy CNF CFC
Trust- Common Common
Income Plus Stock Fund Stock Fund Loan Fund
----------- ------------ ------------ -----------
ASSETS:
Investments, at fair value
Mutual Funds $ - $ - $ - $ -
Common Trust Funds 990,889 - - -
Participant Loans - - - 20,550,234
CNF Equity - 4,849,158 - -
CFC Equity - - 4,979,738 -
---------- ---------- ---------- -----------
Total investments 990,889 4,849,158 4,979,738 20,550,234
Contributions receivable-
Participants 10,601 26,502 - -
Company - - - -
---------- ---------- ---------- -----------
Total contributions
receivable 10,601 26,502 - -
Due from Preferred Stock Fund-
Unallocated - - - -
Dividend receivable - - - -
Cash - - - -
---------- ---------- ---------- -----------
Total assets 1,001,490 4,875,660 4,979,738 20,550,234
---------- ---------- ---------- -----------
LIABILITIES:
Notes payable - - - -
Accrued interest payable - - - -
Due to Preferred Stock Fund-
Allocated - - - -
---------- ---------- ---------- -----------
Total liabilities - - - -
---------- ---------- ---------- -----------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS $1,001,490 $4,875,660 $4,979,738 $20,550,234
========== ========== ========== ===========
Non-Participant Directed
----------------------------------------------------------------
CNF Preferred Preferred
Common Stock Fund- Stock Fund-
Stock Fund Allocated Unallocated Total
---------- --------- ----------- -----
ASSETS:
Investments, at fair value
Mutual Funds $ - $ - $ - $ 189,116,169
Common Trust Funds - - - 52,240,433
Participant Loans - - - 20,550,234
CNF Equity 20,523,982 27,968,500 132,191,526 185,533,166
CFC Equity - - - 4,979,738
----------- ----------- ------------- -------------
Total investments 20,523,982 27,968,500 132,191,526 452,419,740
Contributions receivable-
Participants - - - 1,060,077
Company 1,359,164 - 447,821 1,806,985
----------- ----------- ------------- -------------
Total contributions
receivable 1,359,164 - 447,821 2,867,062
Due from Preferred Stock Fund-
Unallocated - 1,969,568 - 1,969,568
Dividend receivable - - 6,117,834 6,117,834
Cash 46,383 - - 46,383
----------- ----------- ------------- -------------
Total assets 21,929,529 29,938,068 138,757,181 463,420,587
----------- ----------- ------------- -------------
LIABILITIES:
Notes payable - - (146,900,000) (146,900,000)
Accrued interest payable - - (6,367,966) (6,367,966)
Due to Preferred Stock Fund-
Allocated - - (1,969,568) (1,969,568)
----------- ----------- ------------- -------------
Total liabilities - - (155,237,534) (155,237,534)
----------- ----------- ------------- -------------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS $21,929,529 $29,938,068 $ (16,480,353) $ 308,183,053
The accompanying notes are an integral part of this statement.
4
CNF TRANSPORTATION INC.
(FORMERLY CONSOLIDATED FREIGHTWAYS, INC.)
THRIFT AND STOCK PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
AS OF DECEMBER 31, 1995
Participant Directed
-------------------------------------------------------------------------------
Science and
Growth New Income Equity Technology International
Stock Fund Fund Income Fund Fund Stock Fund
----------- ----------- ----------- ----------- -------------
ASSETS:
Investments, at fair value-
Mutual Funds $70,271,798 $26,907,453 $62,913,764 $51,057,218 $15,341,296
Common Trust Funds - - - - -
Participant Loans - - - - -
CNF Equity - - - - -
----------- ----------- ----------- ----------- -----------
Total investments 70,271,798 26,907,453 62,913,764 51,057,218 15,341,296
Contributions receivable-
Participants 357,010 145,496 279,897 355,133 132,720
Company - - - - -
----------- ----------- ----------- ----------- -----------
Total contributions receivable 357,010 145,496 279,897 355,133 132,720
Due from Preferred Stock Fund- Unallocated - - - - -
Dividend receivable - - - - -
Cash - - - - -
----------- ----------- ----------- ----------- -----------
Total assets 70,628,808 27,052,949 63,193,661 51,412,351 15,474,016
----------- ----------- ----------- ----------- -----------
LIABILITIES:
Notes payable - - - - -
Accrued interest payable - - - - -
Due to Preferred Stock Fund- Allocated - - - - -
Due to Company - - - - -
----------- ----------- ----------- ----------- -----------
Total liabilities - - - - -
----------- ----------- ----------- ----------- -----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $70,628,808 $27,052,949 $63,193,661 $51,412,351 $15,474,016
=========== =========== =========== =========== ===========
Participant Directed
------------------------------------------------------------------------------
Retirement
Retirement Strategy
Equity Bond U.S. Treasury Strategy Trust-
Index Index Money Market Trust- Conservative
Trust Trust Trust Balanced Growth
----------- -------- ------------- ------------ -------------
ASSETS:
Investments, at fair value-
Mutual Funds $ - $ - $ - $ - $ -
Common Trust Funds 1,872,055 510,721 50,927,186 7,338,683 1,836,594
Participant Loans - - - - -
Corporate Equity - - - - -
---------- -------- ----------- ---------- ----------
Total investments 1,872,055 510,721 50,927,186 7,338,683 1,836,594
Contributions receivable-
Participants 33,398 10,469 254,711 87,121 28,783
Company - - - - -
---------- -------- ----------- ---------- ----------
Total contributions receivable 33,398 10,469 254,711 87,121 28,783
Due from Preferred Stock Fund- Unallocated - - - - -
Dividend receivable - - - - -
Cash - - - - -
---------- -------- ----------- ---------- ----------
Total assets 1,905,453 521,190 51,181,897 7,425,804 1,865,377
---------- -------- ----------- ---------- ----------
LIABILITIES:
Notes payable - - - - -
Accrued interest payable - - - - -
Due to Preferred Stock Fund- Allocated - - - - -
Due to Company - - - - -
---------- -------- ----------- ---------- ----------
Total liabilities - - - - -
---------- -------- ----------- ---------- ----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $1,905,453 $521,190 $51,181,897 $7,425,804 $1,865,377
========== ======== =========== ========== ==========
Participant Directed
----------------------------------------------
Retirement
Strategy
Trust- CNF Common
Income Plus Stock Fund Loan Fund
----------- ---------- -----------
ASSETS:
Investments, at fair value-
Mutual Funds $ - $ - $ -
Common Trust Funds 508,047 - -
Participant Loans - - 19,948,131
CNF Equity - 7,422,576 -
-------- ---------- -----------
Total investments 508,047 7,422,576 19,948,131
Contributions receivable-
Participants 16,982 46,176 -
Company - - -
-------- ---------- -----------
Total contributions receivable 16,982 46,176 -
Due from Preferred Stock Fund- Unallocated - - -
Dividend receivable - - -
Cash - - -
-------- ---------- -----------
Total assets 525,029 7,468,752 19,948,131
-------- ---------- -----------
LIABILITIES:
Notes payable - - -
Accrued interest payable - - -
Due to Preferred Stock Fund- Allocated - - -
Due to Company - - -
-------- ---------- -----------
Total liabilities - - -
-------- ---------- -----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $525,029 $7,468,752 $19,948,131
======== ========== ===========
Non-Participant Directed
---------- -----------------------------------------------------------------
ESOP Preferred Preferred
Common CNF Common Stock Fund- Stock Fund-
Stock Fund Stock Fund Allocated Unallocated Total
---------- ---------- ----------- ----------- -------------
ASSETS:
Investments, at fair value-
Mutual Funds $ - $ - $ - $ - $226,491,529
Common Trust Funds - - - - 62,993,286
Participant Loans - - - - 19,948,131
CNF Equity 13,459,767 19,043,615 33,215,905 134,086,017 207,227,880
----------- ----------- ----------- ------------ ------------
Total investments 13,459,767 19,043,615 33,215,905 134,086,017 516,660,826
Contributions receivable-
Participants - - - - 1,747,896
Company - 1,502,222 - 218,966 1,721,188
----------- ---------- ----------- ------------ ------------
Total contributions receivable - 1,502,222 - 218,966 3,469,084
Due from Preferred Stock Fund- Unallocated - - 2,189,540 - 2,189,540
Dividend receivable - - - 6,194,442 6,194,442
Cash - 46,383 - - 46,383
----------- ----------- ----------- ------------ ------------
Total assets 13,459,767 20,592,220 35,405,445 140,499,425 528,560,275
----------- ----------- ----------- ------------ ------------
LIABILITIES:
Notes payable - - - (149,000,000) (149,000,000)
Accrued interest payable - - - (6,413,408) (6,413,408)
Due to Preferred Stock Fund- Allocated - - - (2,189,540) (2,189,540)
Due to Company - - - (9,863) (9,863)
----------- ----------- ----------- ------------ ------------
Total liabilities - - - (157,612,811) (157,612,811)
----------- ----------- ----------- ------------ ------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $13,459,767 $20,592,220 $35,405,445 $(17,113,386) $370,947,464
=========== =========== =========== ============ ============
The accompanying notes are an integral part of this statement.
5
CNF TRANSPORTATION INC.
(FORMERLY CONSOLIDATED FREIGHTWAYS, INC.)
THRIFT AND STOCK PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1996
Participant Directed
----------------------------------------------------------------------------------------------------------------
U.S. Retirement
Science and Equity Bond Treasury Strategy
Growth New Income Equity Technology International Index Index Money Trust-
Stock Fund Fund Income Fund Fund Stock Fund Trust Trust Market Trust Balanced
---------- ---- ----------- ---- ---------- ----- ----- ------------ --------
ADDITIONS:
Participant
contributions $10,206,994 $ 3,458,800 $7,942,153 $10,425,676 $ 3,923,969 $1,094,491 $ 365,447 $6,861,468 $ 2,644,311
Company
contributions - - - - - - - - -
Allocation of
preferred
shares to
participants - - - - - - - - -
Dividend and
interest
income 4,721,683 1,696,186 3,965,925 4,710,866 401,218 - - 2,471,654 -
Net appreciation
(depreciation)
in fair value 10,853,476 (1,047,193) 9,206,845 3,986,513 2,283,517 682,092 33,459 - 1,183,697
of investments
Transfers in
from other
plans 17,254 4,073 16,561 16,531 5,188 4,235 - 605 4,157
------------ ----------- ------------ ------------ ----------- ---------- ------- ---------- -----------
Total
additions 25,799,407 4,111,866 21,131,484 19,139,586 6,613,892 1,780,818 398,906 9,333,727 3,832,165
------------ ----------- ------------ ------------ ----------- ---------- -------- ---------- -----------
DEDUCTIONS:
Conversion -
CFC transfer
out (Note 1) (30,322,511) (8,488,283) (28,020,893) (23,109,772) (6,636,255) (1,628,632) (258,873) (17,259,403) (2,048,172)
Distributions to
participants (3,649,489) (1,157,487) (3,114,111) (2,412,942) (701,818) (290,247) (36,672) (4,268,910) (389,484)
Allocation of
preferred
shares to
participants - - - - - - - - -
Interest expense - - - - - - - - -
------------ ----------- ------------ ------------ ----------- ---------- -------- --------- -----------
Total
deductions (33,972,000) (9,645,770) (31,135,004) (25,522,714) (7,338,073) (1,918,879) (295,545) (21,528,313) (2,437,656)
------------ ----------- ------------ ------------ ----------- ---------- -------- --------- -----------
INTERFUND
TRANSFERS, net (2,630,934) (2,929,200) (610,748) (1,304,420) 408,148 1,123,263 84,113 (2,607,476) (124,377)
------------ ----------- ------------ ------------ ----------- ---------- -------- --------- -----------
Net increase
(decrease) (10,803,527) (8,463,104) (10,614,268) (7,687,548) (316,033) 985,202 187,474 (14,802,062) 1,270,132
------------ ----------- ------------ ------------ ----------- ---------- -------- --------- -----------
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS,
December 31,
1995 70,628,808 27,052,949 63,193,661 51,412,351 15,474,016 1,905,453 521,190 51,181,897 7,425,804
------------ ----------- ------------ ------------ ----------- ----------- --------- ---------- -----------
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS,
December 31,
1996 $59,825,281 $18,589,845 $52,579,393 $ 43,724,803 $15,157,983 $2,890,655 $ 708,664 $36,379,835 $ 8,695,936
============ =========== ============ ============ =========== =========== ========= ========== ===========
Participant Directed Non-Participant Directed
----------------------------------------------------------- ------------------------------------
Retirement
Strategy Retirement
Trust- Strategy CNF CFC ESOP CNF CFC
Conservative Trust- Common Common Common Common Common
Growth Income Plus Stock Fund Stock Fund Loan Fund Stock Fund Stock Fund Stock Fund
------ ----------- ---------- ---------- --------- ---------- ---------- ----------
ADDITIONS:
Participant
contributions $1,100,854 $ 537,337 $ 1,322,281 $ - $ - $ - $ - $ -
Company
contributions - - - - - - 6,414,449 -
Allocation of
preferred
shares to
participants - - - - - - - -
Dividend and
interest
income - - 103,201 - 2,136,776 146,470 341,975 -
Net appreciation
(depreciation)
in fair value 430,322 89,997 2,807,156 1,488,175 - (1,004,370) (1,963,587) 378,271
of investments
Transfers in
from other
plans 5,143 40 - - - - - -
----------- ---------- ------------ ---------- ------------ ------------ ----------- -----------
Total
additions 1,536,319 627,374 4,232,638 1,488,175 2,136,776 (857,900) 4,792,837 378,271
----------- ---------- ------------ ---------- ------------ ------------ ----------- -----------
DEDUCTIONS:
Conversion -
CFC transfer
out (Note 1) (901,875) (99,755) (25,157,835) (455,722) (8,999,251) - - (1,925,553)
Distributions
to participants (131,758) (49,260) (289,389) (203) (1,664,951) (584,994) (2,414,583) -
Allocation of
preferred
shares to
participants - - - - - - - -
Interest expense - - - - - - - -
----------- ---------- ------------ ---------- ------------ ------------ ----------- -----------
Total
deductions (1,033,633) (149,015) (25,447,224) (455,925) (10,664,202) (584,994) (2,414,583) (1,925,553)
----------- ---------- ------------ ---------- ------------ ------------ ----------- -----------
INTERFUND
TRANSFERS, net 468,229 (1,898) 18,621,494 3,947,488 9,129,529 (12,016,873) (1,040,945) 1,547,282
----------- ---------- ------------ ---------- ------------ ------------ ----------- -----------
Net increase 970,915 476,461 (2,593,092) 4,979,738 602,103 (13,459,767) 1,337,309 -
(decrease) ----------- ---------- ------------ ---------- ------------ ------------ ----------- -----------
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS,
December 31,
1995 1,865,377 525,029 7,468,752 - 19,948,131 13,459,767 20,592,220 -
----------- ---------- ------------ ---------- ------------ ------------ ----------- -----------
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS,
December 31,
1996 $2,836,292 $1,001,490 $ 4,875,660 $4,979,738 $ 20,550,234 $ - $21,929,529 $ -
=========== ========== ============ ========== ============ ============ =========== ===========
Non-Participant Directed
----------------------------------------
Preferred Preferred
Stock Fund- Stock Fund-
Allocated Unallocated Total
--------- ----------- ------------
ADDITIONS:
Participant
contributions $ - $ - 49,883,781
Company
contributions - 2,547,821 8,962,270
Allocation of
preferred
shares to
participants 6,211,836 - 6,211,836
Dividend and
interest
income - 12,288,110 32,984,064
Net appreciation
(depreciation)
in fair value
of investments 383,462 4,744,869 34,536,701
Transfers in
from other
plans - - 73,787
----------- ----------- -------------
Total
additions 6,595,298 19,580,800 132,652,439
----------- ----------- -------------
DEDUCTIONS:
Conversion -
CFC transfer out - - (155,312,785)
(Note 1)
Distributions
to participants - - (21,156,298)
Allocation of
preferred
shares to
participants - (6,211,836) (6,211,836)
Interest expense - (12,735,931) (12,735,931)
------------ ------------ ------------
Total
deductions - (18,947,767) (195,416,850)
------------ ------------ ------------
INTERFUND
TRANSFERS, net (12,062,675) - -
------------ ------------ ------------
Net increase (5,467,377) 633,033 (62,764,411)
(decrease) ------------ ------------ ------------
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS,
December 31,
1995 35,405,445 (17,113,386) 370,947,464
----------- ------------ ------------
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS,
December 31,
1996 $29,938,068 $(16,480,353) $ 308,183,053
=========== ============ =============
The accompanying notes are an integral part of this statement.
6
CNF TRANSPORTATION INC.
------------------------
(FORMERLY CONSOLIDATED FREIGHTWAYS, INC.)
-----------------------------------------
THRIFT AND STOCK PLAN
---------------------
NOTES TO FINANCIAL STATEMENTS AND SCHEDULES
-------------------------------------------
AS OF DECEMBER 31, 1996 AND 1995
--------------------------------
1. DESCRIPTION OF PLAN:
--------------------
The following description of the CNF Transportation Inc. (formerly Consolidated
Freightways, Inc.) Thrift and Stock Plan (the Plan) is provided for general
information purposes only. Participants should refer to the Employee Benefits
Handbook for more complete information.
General
- -------
CNF Transportation Inc. (the Company) established the Consolidated Freightways,
Inc. (CFI) Retirement Savings Plan, effective January 1, 1984, for the purpose
of providing retirement benefits for the employees of the Company. The Plan has
been amended several times since its inception. Effective January 1, 1988, the
Company amended and restated the Retirement Savings Plan as the Thrift Plan.
Effective June 30, 1988, the Thrift Plan was amended to include the former
Consolidated Freightways, Inc. Employee Stock Ownership Plan (ESOP). Effective
May 1, 1989, the Company amended and restated the Thrift Plan as the Thrift and
Stock Plan. Effective January 1, 1991, the Thrift and Stock Plan was amended to
provide for the transfer to the Plan of certain accounts of the Purolator Stock
Ownership/Savings Plan and the merger of the Emery Personal Retirement Account.
The restated Thrift and Stock Plan consists of a profit-sharing portion and a
stock bonus portion thereby offering eligible employees the opportunity to save
for their retirement and to increase their proprietary interest in the Company
by accumulating Company stock.
On December 2, 1996, the Company distributed to shareholders two shares of
common stock of Consolidated Freightways Corporation (CFC), the Company's former
Longhaul, less-than-truckload carrier, for every one share of CNF common stock
(the Spin-off). In connection with the Spin-off, CFC participant account
balances and loans outstanding totaling $146,313,534 and $8,999,251,
respectively, were transferred out of the Plan to a similar qualified plan of
CFC.
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).
Employees are eligible to participate in the Plan if the participant is not
covered by a collective bargaining agreement, is not a leased employee or is not
a nonresident alien.
Overall responsibility for administering the Plan rests with the CNF
Transportation Inc. Administrative Committee (the Committee) which is appointed
by the Chief Executive Officer of the Company. The Administrative 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.
Contributions
- -------------
Participants may contribute up to 15% of their compensation, as defined by the
Plan and subject to certain limitations. The Company makes matching
contributions equal to 50% of a participant's contribution, but not exceeding
1.5% of the participant's 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 Transportation Inc. Common Stock
(Common Stock) or in the form of cash. Cash dividends on Preferred Stock are
used to repay the notes payable (refer to Note 4). Participants are allocated
additional Preferred Stock as a substitute for the cash dividends used for debt
service. The Company will make an additional cash contribution to the Preferred
Stock Fund - Unallocated when debt service requirements exceed preferred cash
dividends received by the Plan. This additional Company contribution was
$2,547,821 for the year ended December 31, 1996, as reported in the accompanying
financial statements.
Participant Accounts
- --------------------
The Plan allows participants to select the type of investment fund in which to
invest their contributions. The Company's matching contribution cannot be
directed by the participant and is deposited into the non-participant directed
Preferred Stock Fund - Allocated and CNF Common Stock Fund. Upon reaching age 55
and having completed at least 10 years of participation in the Plan, the
participant may elect once each year to transfer up to 100% of his/her assets
from the CNF Common Stock Fund and Preferred Stock Fund - Allocated to
investment options other than Company stock.
Allocations of the Company's matching contribution are based upon a percentage
of participant contributions as described above. Allocations of net Plan
earnings are based upon participant account balances, as defined. The benefit to
which a participant is entitled is the benefit that can be provided from the
participants' vested account.
Vesting
- -------
Participants' contributions plus earnings thereon are immediately vested. The
Company's matching contributions are fully vested when credited to the
participants' account, which occurs quarterly beginning at the end of the
quarter in which the participant completes two years of service with the
Company.
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 the employee contributions
and can generally be no less than $1,000 and cannot exceed the lesser of $50,000
or 50% of the employee's vested account balance. Loan transactions are treated
as a transfer to (from) the various investment funds from (to) the Loan Fund.
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%). Loans outstanding at
December 31, 1996 and 1995 bear interest at rates ranging from 7% to 11%.
Principal and interest are paid ratably through payroll deductions.
Terminations and Withdrawals
- ----------------------------
Participants can receive a total distribution from their accounts upon death or
termination of employment. Disabled participants can receive a distribution of
their account upon attaining early retirement age (age 55). Other types of
withdrawals are permitted by the Plan in limited situations. A participant can
elect to have his/her account 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) the participants' accounts invested in
Common Stock can, at the direction of the participant, be paid in shares and (2)
the 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 each participant
in the amount credited to his/her account.
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, 1996 and 1995
except for (1) participant loans outstanding which are valued at cost which
approximates fair value and (2) Preferred Stock which does not have a quoted
market value but which 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, 1996 and
1995 was approximately $166,000,000 for both years. Fair value is calculated
based on the expected future payments discounted at market rates.
Income Recognition
- ------------------
The difference in market value from one period to the next is included in net
appreciation in fair value of investments in the accompanying statement of
changes in net assets available for plan benefits with fund information. The net
appreciation 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.
Operating Expenses
- ------------------
During 1996, all administrative expenses of the Plan were paid by the Company.
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 generally accepted accounting principles. 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 Plan allows participants to select the type of investment fund in which to
invest their contributions. A description of each investment option follows:
Growth Stock Fund - This fund invests primarily in common stocks of
-----------------
well-established growth companies whose earnings have grown faster than the
rate of inflation and the economy in general.
New Income Fund - This fund invests primarily in corporate bonds, bank
---------------
obligations, U.S. government, and mortgage-backed securities.
Equity Income Fund - This fund invests primarily in common stocks of
------------------
established companies that pay above-average dividends and have prospects
of future dividend increases.
Science and Technology Fund - This fund invests primarily in stocks of
---------------------------
companies that are expected to benefit from the development, advancement
and use of science and technology.
International Stock Fund - This fund invests primarily in the stocks of
------------------------
established growth companies outside of the United States such as Europe,
the Far East, Australia, Canada and other areas.
Equity Index Trust - This fund invests primarily in common stocks that make
------------------
up the S&P 500 Stock Index.
Bond Index Trust - This fund invests primarily in U.S. and foreign
----------------
government securities and corporate bonds as well as other securities.
U.S. Treasury Money Market Trust - This fund invests primarily in
--------------------------------
short-term U.S. treasury obligations and repurchase agreements
collateralized by U.S. Treasury obligations.
Retirement Strategy Trust - Balanced - This fund invests primarily in
------------------------------------
domestic and international stocks (60%) and fixed income securities (40%).
Retirement Strategy Trust - Conservative Growth - This fund invests
-----------------------------------------------
primarily in domestic and international stocks (80%) and fixed income
securities (20%).
Retirement Strategy Trust - Income Plus - This fund invests primarily in
---------------------------------------
fixed income securities (60%) and common stocks (40%).
CNF Common Stock Fund - This fund invests in the common stock of CNF
---------------------
Transportation Inc.
CFC Common Stock Fund - This fund invests in the common stock of
---------------------
Consolidated Freightways Corporation. It was initially established to
receive the CFC stock, for participants employed by CNF, which was issued
in connection with the Spin-off. Participants have three years to direct
balances out of this fund after which the Administrative Committee will
transfer the assets into an alternative participant-directed investment
fund.
The Plan also includes non-participant directed investments which are described
as follows:
CNF Common Stock Fund - This fund invests in the common stock of CNF
---------------------
Transportation Inc.
ESOP Common Stock Fund - This fund represented an investment in the
----------------------
common stock of CNF Transportation Inc. When the Plan was amended and
restated to include the former Consolidated Freightways, Inc. ESOP., this
fund investment was transferred into the Plan. In 1996, the Company
transferred the fund's assets from the ESOP Common Stock Fund to the CNF
Common Stock Fund.
CFC Common Stock Fund - This fund invested in the common stock of
---------------------
Consolidated Freightways Corporation for participants employed by CFC
received in connection with the Spin-off. The stock received from the
Spin-off was subsequently transferred to the CFC plan.
Preferred Stock Fund - Allocated and Preferred Stock Fund - Unallocated -
---------------------------------------------------------------------
These funds invest in the Series B Cumulative Convertible Preferred Stock
of CNF Transportation Inc.
In May 1989, the Plan purchased 986,259 shares of the Company's Series B
Cumulative Convertible Preferred Stock (Series B stock) for $150,009,863 using
proceeds from the issuance of notes (Note 4). The Preferred Stock is issuable
only to the Plan Trustee. The shares are held by the Trustee and allocated to
participant accounts. Upon allocation, the shares are used to pay the Preferred
Stock cash dividend on shares previously allocated to the participants with the
remainder used to offset the Company's matching contribution requirement. In
connection with the termination of an employee's participation in 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, 1996 and 1995, 163,596
and 201,979 Preferred Shares, respectively, had been allocated to participants
and 711,595 and 752,433 shares, respectively, were unallocated and were pledged
as collateral against the Plan Notes. In connection with the Spin-off of CFC,
67,222 allocated shares held by CFC participants were converted to common stock
and transferred to the CFC plan.
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 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 which
had earlier been made to finance the purchase of the Preferred Stock. The
Company has guaranteed repayment of the Plan Notes. Of the remaining
$146,900,000 notes, $115,062,500 are subject to earlier repurchase by the
Company at the option of the holders, with a yield protection penalty, in the
event the Company's long-term senior unsecured indebtedness should be rated by
both Moody's and Standard & Poor's as below investment grade. Of the remaining
$84,900,000 of the Series A TASP Notes, the terms of $31,837,500 of these notes
have been modified to exclude the holder's early repurchase option. In exchange,
the interest rates on the notes were enhanced by .5% to 9.0% per annum. The
other $53,062,500 in Series A Notes bear interest at 8.4% per annum. The
$62,000,000 Series B 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 the 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. Principal payments on the TASP notes were $2,100,000 and
$1,000,000 for the years ended December 31, 1996 and 1995, respectively.
Future maturities of the notes payable to be paid from preferred cash dividends
and/or additional cash contributions from the Company are as follows:
Restructured
Series A Series A Series B
-------- -------- --------
1997 $ 1,937,500 $ 1,162,500 $ -
1998 2,625,000 1,575,000 -
1999 3,250,000 1,950,000 -
2000 4,000,000 2,400,000 -
2001 4,687,500 2,812,500 -
Thereafter 36,562,500 21,937,500 62,000,000
----------- ----------- -----------
$53,062,500 $31,837,500 $62,000,000
=========== =========== ===========
5. INCOME TAX STATUS:
------------------
The Internal Revenue Service has determined and informed the Company by a letter
dated December 26, 1995 that the Plan and related trust are designed in
accordance with applicable sections of the Code. Therefore, the Plan
administrator believes that the Plan is designed and is currently being operated
in compliance with the applicable requirements of the Code.
6. RELATED PARTY TRANSACTIONS:
---------------------------
Certain Plan investments are shares in 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.
SCHEDULE I
CNF TRANSPORTATION INC.
-----------------------
(FORMERLY CONSOLIDATED FREIGHTWAYS, INC.)
-----------------------------------------
THRIFT AND STOCK PLAN
---------------------
EIN 94-1444798
--------------
PLAN NUMBER 003
---------------
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
----------------------------------------------------------
AS OF DECEMBER 31, 1996
-----------------------
Identity of Issue Description of Investment Including
Borrower, Lessor Maturity Date, Rate of Interest, Current
Similar Party Collateral, Par or Maturity Value Cost Value
- ------------------ ---------------------------------------------------------- ------------ ------------
Mutual Funds:
*T. Rowe Price Growth Stock Fund (2,276,972.691 shares) $ 48,153,727 $ 59,611,145
*T. Rowe Price New Income Fund (2,083,464.544 shares) 18,431,247 18,522,000
*T. Rowe Price Equity Income Fund (2,324,766.656 shares) 40,869,121 52,400,240
*T. Rowe Price Science and Technology Fund (1,464,242.781 shares) 38,650,957 43,503,247
*T. Rowe Price International Stock Fund (1,092,720.042 shares) 13,367,233 15,079,537
Common Trust Funds:
*T. Rowe Price Equity Index Trust (153,727.422 shares) 2,403,648 2,857,793
*T. Rowe Price Bond Index Trust (54,064.942 shares) 659,260 702,304
*T. Rowe Price U.S. Treasury Money Market Trust (36,237,785.420 shares) 36,237,785 36,237,785
*T. Rowe Price Retirement Strategy Trust-Balanced (605,820.026 shares) 7,027,478 8,645,052
*T. Rowe Price Retirement Strategy Trust-Conservative Growth (191,316.291 shares) 2,351,511 2,806,610
*T. Rowe Price Retirement Strategy Trust-Income Plus (75,010.503 shares) 892,342 990,889
Consolidated
Freightways Corp. CFC Common Stock Fund (561,097.272 shares) 3,545,067 4,979,738
Participant Loans:
*Plan Participants Participant loans with interest from 7% to 11% and maturity dates
from 1/97 to 6/01 20,550,234 20,550,234
Common Stock:
*CNF Transportation Inc. CNF Common Stock Fund - Participant Directed (217,939.687 shares) 4,443,835 4,849,158
*CNF Transportation Inc. CNF Common Stock Fund - Non-partipant Directed (922,426.151 shares) 17,947,889 20,523,982
Preferred Stock:
*CNF Transportation Inc. Preferred Stock Fund - Allocated (163,596.000 shares) 22,913,384 27,968,500
*CNF Transportation Inc. Preferred Stock Fund - Unallocated (711,595.397 Shares) 110,203,228 132,191,526
------------ ------------
$388,647,946 $452,419,740
============ ============
*Represents a party-in-interest as of December 31, 1996.
Note: Cost is calculated using the moving average method.
The accompanying notes are an integral part of this schedule.
CNF TRANSPORTATION, INC.
------------------------
(FORMERLY CONSOLIDATED FREIGHTWAYS, INC.)
-----------------------------------------
THRIFT AND STOCK PLAN
---------------------
BIN 94-1444790
--------------
PLAN NUMBER 008
---------------
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
----------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1996
------------------------------------
CATEGORY (III) - Series of transactions involving securities of the same issue
- ------------------------------------------------------------------------------
that in the aggregate exceed 5% of the net Plan assets as of the beginning of
- -----------------------------------------------------------------------------
the year:
- --------
Number of
Identity of ------------------- Purchase Selling
Party Involved Description of Asset Purchases Sales Price Price
- ----------------------------- -------------------------- --------- ------ ------------- -------------
Mutual Funds:
*T. Rowe Price International Stock Fund 131 - $ 9,756,091 $ -
*T. Rowe Price International Stock Fund - 112 - 12,301,368
*T. Rowe Price New Income Fund 74 6,946,038 -
*T. Rowe Price New Income Fund - 205 - 14,204,298
*T. Rowe Price Bond Index Fund 97 - 866,657 -
*T. Rowe Price Bond Index Fund - 99 - 708,533
*T. Rowe Price U.S. Treasury Money Market Fund 113 - 27,365,483 -
*T. Rowe Price U.S. Treasury Money Market Fund - 131 - 42,452,887
*T. Rowe Price Science and Technology Fund 127 - 31,987,710 -
*T. Rowe Price Science and Technology Fund - 118 - 43,528,194
*T. Rowe Price Retirement Strategy Trust-Balanced 91 - 3,824,384 -
*T. Rowe Price Retirement Strategy Trust-Balanced - 130 - 3,701,711
*T. Rowe Price Equity Income Fund 120 - 20,393,903 -
*T. Rowe Price Equity Income Fund - 125 - 40,114,273
*T. Rowe Price Retirement Strategy Trust-Income Plus 82 - 808,432 -
*T. Rowe Price Retirement Strategy Trust-Income Plus - 87 - 415,587
*T. Rowe Price Retirement Strategy-Conservative Growth 110 - 2,106,129 -
*T. Rowe Price Retirement Strategy-Conservative Growth - 90 - 1,566,435
Corporate Equity:
*CNF Transportation Inc. Common Stock 262 - 67,091,621 -
*CNF Transportation Inc. Common Stock - 488 - 78,403,783
Expense Current Value
Identity of Lease Incurred with Cost of Incurred with Net Gain
Party Involved Description of Asset Rental Transactions Asset Transactions or (Loss)
- ---------------- -------------------------- ------ ------------- ----------- ------------- -----------
Mutual Funds:
*T. Rowe Price International Stock Fund $ - $ - $ 9,756,091 $ 9,756,091 -
*T. Rowe Price International Stock Fund - - 11,015,813 12,301,368 1,285,555
*T. Rowe Price New Income Fund - - 6,946,038 6,946,038 -
*T. Rowe Price New Income Fund - - 14,110,845 14,284,298 173,453
*T. Rowe Price Bond Index Fund - - 866,657 866,657 -
*T. Rowe Price Bond Index Fund - - 678,709 708,533 29,824
*T. Rowe Price U.S. Treasury Money Market Fund - - 27,365,483 27,365,483 -
*T. Rowe Price U.S. Treasury Money Market Fund - - 42,054,884 42,452,887 398,003
*T. Rowe Price Science and Technology Fund - - 31,987,710 31,987,710 -
*T. Rowe Price Science and Technology Fund - - 34,888,253 43,528,194 8,639,941
*T. Rowe Price Retirement Strategy Trust-Balanced - - 3,824,384 3,824,384 -
*T. Rowe Price Retirement Strategy Trust-Balanced - - 3,023,674 3,701,711 678,037
*T. Rowe Price Equity Income Fund - - 20,393,903 20,393,903 -
*T. Rowe Price Equity Income Fund - - 30,266,289 40,114,273 9,847,984
*T. Rowe Price Retirement Strategy Trust-Income Plus - - 808,432 808,432 -
*T. Rowe Price Retirement Strategy Trust-Income Plus - - 384,118 415,587 31,469
*T. Rowe Price Retirement Strategy-Conservative Growth - - 2,106,129 2,106,129 -
*T. Rowe Price Retirement Strategy-Conservative Growth - 1,353,498 1,566,435 212,937
Corporate Equity:
*CNF Transportation Inc. Common Stock - - 67,091,621 67,091,621 -
*CNF Transportation Inc. Common Stock - - 74,802,357 78,408,783 3,606,426
*Represents a party-in-interest transaction for the year ended December 31, 1996.
Note: Cost is calculated using the moving average method.
The accompanying notes are an integral part of this Schedule.