UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1997 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 1-12149 CONSOLIDATED FREIGHTWAYS CORPORATION STOCK AND SAVINGS PLAN Consolidated Freightways Corporation Incorporated in the State of Delaware I.R.S. Employer Identification No. 77-0425334 175 Linfield Drive, Menlo Park, CA 94025 Telephone Number (650) 326-1700 SIGNATURE 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. Consolidated Freightways Corporation Stock and Savings Plan June 26, 1998 /s/Stephen D. Richards Stephen D. Richards Senior Vice President and General Counsel CONSOLIDATED FREIGHTWAYS CORPORATION STOCK AND SAVINGS PLAN FINANCIAL STATEMENTS AND SCHEDULES AS OF DECEMBER 31, 1997 AND 1996 TOGETHER WITH AUDITORS' REPORT REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Compensation Committee of the Consolidated Freightways Corporation Board of Directors: We have audited the accompanying statements of net assets available for benefits of the Consolidated Freightways Corporation Stock and Savings Plan (the Plan) as of December 31, 1997 and 1996, and the related statements of changes in net assets available for benefits, with fund information, for the year ended December 31, 1997 and for the period from inception through December 31, 1996. These financial statements and the schedules referred to below are the responsibility of the Plan's management. 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 benefits of the Plan as of December 31, 1997 and 1996 and the changes in net assets available for benefits, with fund information, for the year ended December 31, 1997 and for the period from inception through 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 purposes of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the 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 benefits and the statements of changes in net assets available for 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 5, 1998 CONSOLIDATED FREIGHTWAYS CORPORATION STOCK AND SAVINGS PLAN AS OF DECEMBER 31, 1997 AND 1996 INDEX TO REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS, FINANCIAL STATEMENTS AND SCHEDULES REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS FINANCIAL STATEMENTS: Statement of Net Assets Available for Plan Benefits with Fund Information as of December 31, 1997 1 Statement of Net Assets Available for Plan Benefits with Fund Information as of December 31, 1996 2 Statement of Changes in Net Assets Available for Plan Benefits with Fund Information for the Year Ended December 31, 1997 3 Statement of Changes in Net Assets Available for Plan Benefits with Fund Information for the Period From Inception Through December 31, 1996 4 NOTES TO FINANCIAL STATEMENTS AND SCHEDULES 5 SUPPLEMENTAL SCHEDULES: Schedule I:Item 27(a) - Schedule of Assets Held for Investment Purposes as of December 31, 1997 9 Schedule II:Item 27(d) - Schedule of Reportable Transactions for the Year Ended December 31, 1997 10 CONSOLIDATED FREIGHTWAYS CORPORATION STOCK AND SAVINGS PLAN STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION AS OF DECEMBER 31, 1997 Participant Directed . Equity International Growth New Bond U.S. Treasury Science and Index Stock Stock Income Index Money Market Technology Trust Fund Fund Fund Trust Trust Fund ASSETS: Investments, at fair value- T. Rowe Price: Shares in registered investment companies $ - $6,289,478 $38,607,096 $8,314,130 $ - $ - $23,514,992 Common trust funds 4,630,072 - - - 663,123 15,543,814 - Corporate - - - - - - - equities Participant loans - - - - - - - Total investments 4,630,072 6,289,478 38,607,096 8,314,130 663,123 15,543,814 23,514,992 Contributions receivable- Participants 13,997 17,282 56,831 13,651 1,979 26,292 49,022 Employer - - - - - - - Total contributions receivable 13,997 17,282 56,831 13,651 1,979 26,292 49,022 Net assets available for Plan benefits $4,644,069 $6,306,760 $38,663,927 $8,327,781 $665,102 $15,570,106 $23,564,014 <FN> The accompanying notes are an integral part of this statement. CONSOLIDATED FREIGHTWAYS CORPORATION STOCK AND SAVINGS PLAN STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION AS OF DECEMBER 31, 1997 Participant Directed Retirement Retirement Retirement Strategy Unrestriced Equity Strategy Strategy Trust - CNF Common Income Trust - Trust - Conservative Stock Fund Balanced Income Plus Growth Fund ASSETS: Investments, at fair value- T. Rowe Price: Shares in registered investment companies $38,160,985 $ - $ - $ - $ - Common trust funds - 2,713,969 402,806 1,339,649 - Corporate equities - - - - 33,665,352 Participant loans - - - - - Total investments 38,160,985 2,713,969 402,806 1,339,649 33,665,352 Contributions receivable- Participants 54,255 6,778 1,561 4,715 - Employer - - - - - Total contributions receivable 54,255 6,778 1,561 4,715 - Net assets available for Plan benefits $38,215,240 $2,720,747 $404,367 $1,344,364 $33,665,352 CONSOLIDATED FREIGHTWAYS CORPORATION STOCK AND SAVINGS PLAN STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION AS OF DECEMBER 31, 1997 Participant Directed Non Participant Unrestricted Directed CFC Common Restricted Stock Participant CFC Common Fund Loans Stock Fund Total ASSETS: Investments, at fair value- T. Rowe Price: Shares in registered investment companies - $ - $ - $114,886,681 Common trust funds - - - 25,293,433 Corporate equities 9,047,145 - 5,462,720 48,175,217 Participant loans - 9,798,112 - 9,798,112 Total investments 9,047,145 9,798,112 5,462,720 198,153,443 Contributions receivable- Participants 17,159 - - 263,522 Employer - - 616,680 616,680 Total contributions receivable 17,159 - 616,680 880,202 Net assets available for Plan benefits $9,064,304 $9,798,112 $6,079,400 $199,033,645 The accompanying notes are an integral part of this statement. CONSOLIDATED FREIGHTWAYS CORPORATION STOCK AND SAVINGS PLAN STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION AS OF DECEMBER 31, 1996 Participant Directed Equity International Growth New Bond U.S. Treasury Science and Equity Index Stock Stock Income Index Money Market Technology Income Trust Fund Fund Fund Trust Trust Fund Fund ASSETS: Investments, at fair value- T. Rowe Price: Shares in registered investment companies $ - $6,864,226 $30,593,814 $8,445,842 $ - $ - $22,632,569 $28,208,089 Common trust funds 1,627,421 - - - 255,912 16,853,412 - - Corporate - - - - - - - - equities Participant loans - - - - - - - - Total investments 1,627,421 6,864,226 30,593,814 8,445,842 255,912 16,853,412 22,632,569 28,208,089 Contributions receivable Participants 9,068 23,765 64,942 17,544 1,303 32,463 63,386 55,121 Employer - - - - - - - - Total contributions receivable 9,068 23,765 64,942 17,544 1,303 32,463 63,386 55,121 Due from other plan - - - - - - - - Net assets available for Plan benefits $1,636,489 $6,887,991 $30,658,756 $8,463,386 $257,215 $16,885,875 $22,695,955 $28,263,210 <FN> The accompanying notes are an integral part of this statement. CONSOLIDATED FREIGHTWAYS CORPORATION STOCK AND SAVINGS PLAN STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION AS OF DECEMBER 31, 1996 Participant Directed Retirement Retirement Retirement Strategy Unrestriced Strategy Strategy Trust - CNF Common Trust - Trust - Conservative Stock Balanced Income Plus Growth Fund ASSETS: Investments, at fair value- T. Rowe Price: Shares in registered investment companies $ - $ - $ - $ - Common trust funds 2,073,629 98,151 915,922 - Corporate equities - - - 23,871,581 Participant loans - - - - Total investments 2,073,629 98,151 915,922 23,871,581 Contributions receivable Participants 6,326 2,534 4,944 - Employer - - - - Total contributions receivable 6,326 2,534 4,944 - Due from other plan - - - 1,514,771 Net assets available for Plan benefits $2,079,955 $100,685 $920,866 $25,386,352 The accompanying notes are an integral part of this statement. CONSOLIDATED FREIGHTWAYS CORPORATION STOCK AND SAVINGS PLAN STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION AS OF DECEMBER 31, 1996 Participant Directed Non Participant Unrestricted Directed CFC Common Restricted Stock Participant CFC Common Fund Loans Stock Fund Total ASSETS: Investments, at fair value- T. Rowe Price: Shares in registered investment companies $ - $ - $ - $96,744,540 Common trust funds - - - 21,824,447 Corporate equities 818,925 - 2,303,362 26,993,868 Participant loans - 8,735,025 - 8,735,025 Total investments 818,925 8,735,025 2,303,362 154,297,880 Contributions receivable Participants 6,883 - - 288,279 Employer - - 510,740 510,740 Total contributions receivable 6,883 - 510,740 799,019 Due from other plan 266,138 - - 1,780,909 Net assets available for Plan benefits $1,091,946 $8,735,025 $2,814,102 $156,877,808 The accompanying notes are an integral part of this statement. CONSOLIDATED FREIGHTWAYS CORPORATION STOCK AND SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION FOR THE YEAR ENDED DECEMBER 31, 1997 Participant Directed . Equity International Growth New Bond U.S. Treasury Science and Equity Index Stock Stock Income Index Money Market Technology Income Trust Fund Fund Fund Trust Trust Fund Fund ADDITIONS: Participant contributions $ 394,678 $ 842,183 $ 2,396,634 $ 618,869 $ 53,450 $ 1,165,223 $ 2,207,038 $ 2,165,827 Employer contributions - - - - - - - - Transfers in (out) from (to) other plans 7,986 27,693 1,956 (14,818) 15,620 (46,723) 191,585 (40,150) Dividend and interest income - - - - - 862,832 - - Net appreciation in fair value of investments 827,865 177,320 8,142,093 743,879 36,298 - 398,334 8,430,913 Total additions 1,230,529 1,047,196 10,540,683 1,347,930 105,368 1,981,332 2,796,957 10,556,590 DEDUCTIONS: Distributions to participants 262,712 545,732 2,156,562 525,684 10,271 1,754,418 1,412,967 1,776,231 Total deductions 262,712 545,732 2,156,562 525,684 10,271 1,754,418 1,412,967 1,776,231 Net increase (decrease) prior to interfund transfers, net 967,817 501,464 8,384,121 822,246 95,097 226,914 1,383,990 8,780,359 Interfund transfers, net 2,039,763 (1,082,695) (378,950) (957,851) 312,790 (1,542,683) (515,931) 1,171,671 Net increase (decrease) 3,007,580 (581,231) 8,005,171 (135,605) 407,887 (1,315,769) 868,059 9,952,030 NET ASSETS AVAILABLE FOR PLAN BENEFITS, as of December 31, 1996 1,636,489 6,887,991 30,658,756 8,463,386 257,215 16,885,875 22,695,955 28,263,210 NET ASSETS AVAILABLE FOR PLAN BENEFITS, as of December 31, 1997 $4,644,069 $6,306,760 $38,663,927 $8,327,781 $665,102 $15,570,106 $23,564,014 $38,215,240 <FN> The accompanying notes are an integral part of this statement. CONSOLIDATED FREIGHTWAYS CORPORATION STOCK AND SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION FOR THE YEAR ENDED DECEMBER 31, 1997 Participant Directed Non Participant Retirement Retirement Retirement Strategy Unrestriced Unrestricted Directed Strategy Strategy Trust - CNF Common CFC Common Restricted Trust - Trust - Conservative Stock Stock Participant CFC Common Balanced Income Plus Growth Fund Fund Loans Stock Fund Total ADDITIONS: Participant contributions $ 258,037 $ 41,989 $ 188,719 $ - $ 529,068 $ - $ - $ 10,861,715 Employer contributions - - - - - - 2,177,633 2,177,633 Transfers in (out) from (to) other plans 70,181 26,422 21,642 16,843 28,995 (32,934) (14,819) 259,479 Dividend and interest income - - - 370,160 6,823 823,382 - 2,063,197 Net appreciation in fair value of investments 413,821 45,654 196,671 15,874,221 1,659,396 - 1,382,183 38,328,648 Total additions 742,039 114,065 407,032 16,261,224 2,224,282 790,448 3,544,997 53,690,672 DEDUCTIONS: Distributions to participants 200,997 10,731 44,217 1,692,336 68,742 854,557 218,678 11,534,835 Total deductions 200,997 10,731 44,217 1,692,336 68,742 854,557 218,678 11,534,835 Net increase (decrease) prior to interfund transfers, net 541,042 103,334 362,815 14,568,888 2,155,540 (64,109) 3,326,319 42,155,837 Interfund transfers, net 99,750 200,348 60,683 (6,289,888) 5,816,818 1,127,196 (61,021) - Net increase (decrease) 640,792 303,682 423,498 8,279,000 7,972,358 1,063,087 3,265,298 42,155,837 NET ASSETS AVAILABLE FOR PLAN BENEFITS, as of December 31, 1996 2,079,955 100,685 920,866 25,386,352 1,091,946 8,735,025 2,814,102 156,877,808 NET ASSETS AVAILABLE FOR PLAN BENEFITS, as of December 31, 1997 $2,720,747 $404,367 $1,344,364 $33,665,352 $9,064,304 $9,798,112 $6,079,400 $199,033,645 <FN> The accompanying notes are an integral part of this statement. CONSOLIDATED FREIGHTWAYS CORPORATION STOCK AND SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION FOR THE PERIOD FROM INCEPTION THROUGH DECEMBER 31, 1996 Participant Directed . Equity International Growth New Bond U.S. Treasury Science and Equity Index Stock Stock Income Index Money Market Technology Income Trust Fund Fund Fund Trust Trust Fund Fund ADDITIONS: Participant contributions $ 28,025 $ 86,206 $ 236,275 $ 66,326 $ 4,122 $ 126,008 $ 228,730 $ 197,548 Employer contributions - - - - - - - - Transfers in from other plans 1,628,634 6,636,255 30,322,511 8,488,283 258,873 17,259,403 23,109,772 28,020,893 Dividend and interest income - - - - - 61,427 - - Net appreciation (depreciation) in fair value of investments (5,811) 65,436 139,512 (44,379) (783) - (903,036) 133,375 Total additions 1,650,848 6,787,897 30,698,298 8,510,230 262,212 17,446,838 22,435,466 28,351,816 DEDUCTIONS: Distributions to participants 21,022 29,990 137,416 67,621 5,725 162,399 86,359 162,247 Total deductions 21,022 29,990 137,416 67,621 5,725 162,399 86,359 162,247 Net increase prior to interfund transfers, net 1,629,826 6,757,907 30,560,882 8,442,609 256,487 17,284,439 22,349,107 28,189,569 Interfund transfers, net 6,663 130,084 97,874 20,777 728 (398,564) 346,848 73,641 Net increase 1,636,489 6,887,991 30,658,756 8,463,386 257,215 16,885,875 22,695,955 28,263,210 NET ASSETS AVAILABLE FOR PLAN BENEFITS, as of December 2, 1996 - - - - - - - - NET ASSETS AVAILABLE FOR PLAN BENEFITS, as of December 31, 1996 $1,636,489 $6,887,991 $30,658,756 $8,463,386 $257,215 $16,885,875 $22,695,955 $28,263,210 <FN> The accompanying notes are an integral part of this statement. CONSOLIDATED FREIGHTWAYS CORPORATION STOCK AND SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION FOR THE PERIOD FROM INCEPTION THROUGH DECEMBER 31, 1996 Participant Directed Non Participant Retirement Retirement Retirement Strategy Unrestriced Unrestricted Directed Strategy Strategy Trust - CNF Common CFC Common Restricted Trust - Trust - Conservative Stock Stock Participant CFC Common Balanced Income Plus Growth Fund Fund Loans Stock Fund Total ADDITIONS: Participant contributions $ 40,461 $ 3,820 $ 21,398 $ - $ 22,786 $ - $ - $ 1,061,705 Employer contributions - - - - - - 510,740 510,740 Transfers in from other plans 2,048,172 99,755 901,875 23,906,762 678,095 8,999,251 1,547,282 153,905,816 Dividend and interest income - - - 63,946 - 59,018 - 184,391 Net appreciation (depreciation) in fair value of investments (2,398) (201) 239 1,806,658 146,129 - 767,845 2,102,586 Total additions 2,086,235 103,374 923,512 25,777,366 847,010 9,058,269 2,825,867 157,765,238 DEDUCTIONS: Distributions to participants 7,483 - 4,445 132,846 201 57,911 11,765 887,430 Total deductions 7,483 - 4,445 132,846 201 57,911 11,765 887,430 Net increase prior to interfund transfers, net 2,078,752 103,374 919,067 25,644,520 846,809 9,000,358 2,814,102 156,877,808 Interfund transfers, net 1,203 (2,689) 1,799 (258,168) 245,137 (265,333) - - Net increase 2,079,955 100,685 920,866 25,386,352 1,091,946 8,735,025 2,814,102 156,877,808 NET ASSETS AVAILABLE FOR PLAN BENEFITS, as of December 2, 1996 - - - - - - - - NET ASSETS AVAILABLE FOR PLAN BENEFITS, as of December 31, 1996 $2,079,955 $100,685 $920,866 $25,386,352 $1,091,946 $8,735,025 $2,814,102 $156,877,808 <FN> The accompanying notes are an integral part of this statement. CONSOLIDATED FREIGHTWAYS CORPORATION STOCK AND SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS AND SCHEDULES AS OF DECEMBER 31, 1997 AND 1996 1. DESCRIPTION OF PLAN: The following description of the Consolidated Freightways Corporation Stock and Savings Plan (the Plan) is provided for general information purposes only. Participants should refer to the Summary Plan Description or Plan document for more complete information. General Consolidated Freightways Corporation (the Company) established the Consolidated Freightways Corporation Stock and Savings Plan, effective December 2, 1996, for the purpose of providing retirement benefits for the employees of the Company. The Plan was subsequently amended. Prior to December 2, 1996, the Company's employees participated in the Consolidated Freightways Inc. Thrift and Stock Plan sponsored by Consolidated Freightways Inc., the former parent. In connection with the Company's spin-off from Consolidated Freightways Inc. on December 2, 1996, the Company's employees' account balances and loans outstanding were transferred to the Plan. The Plan is a profit- sharing plan offering the employees the opportunity to save for their retirement and to increase their proprietary interest in the Company by accumulating Company 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 related trust is intended to comply with Section 501 of the Code. Employees are eligible to participate in the Plan if the participant is not covered by a collective bargaining agreement, is not a leased employee, and is not a nonresident alien. Employees of subsidiaries with substantially all operations outside of the United States, unless the Employer makes contributions under the Federal Insurance Contributions Act on behalf of the employees and they do not accrue benefits under a Company funded pension plan other than the Consolidated Freightways Corporation Pension Plan, are not eligible. Overall responsibility for administering the Plan rests with the Consolidated Freightways Corporation Administrative Committee (the Committee) which is appointed by the Chief Executive Officer of the Company. The Plan 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 the participant's contribution, but not exceeding 1.5% of the participant's compensation, as defined. The Company's matching contributions occur quarterly beginning at the end of the quarter in which the participant completes two years of service with the Company. Company contributions are in the form of the Company's Common Stock or in cash and may be discontinued at any time. Participant Accounts The Plan allows participants to select the type of investment fund in which to invest their contributions. The Company's contribution cannot be directed by the participant and is deposited into the nonparticipant-directed Restricted CFC Common Stock Fund. The amount of the Company's matching contribution is based upon a percentage of participant contributions as described above. Allocations of net Plan earnings are based upon participant account balances in relation to the Plan's total fund balance. The benefit to which a participant is entitled is the balance of the participant's account. Vesting Participants' accounts are fully vested. Participant Loans The Plan has a loan provision allowing participants access to funds in their accounts. Participants can have up to three loans outstanding at one time. Loans can be no less than $1,000 and in aggregate cannot exceed the lesser of the participant's elective contributions and related earnings, 45% of the employee's account balance or $50,000, reduced by the highest aggregate loan balance within the preceding 12 months. 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 reasonable rate determined by the Committee. Loans outstanding at December 31, 1997 bear interest at rates ranging from 7% to 10%. Principal and interest payments are paid ratably through payroll deductions. Terminations and Withdrawals Participants and their beneficiaries can receive a total distribution from their accounts upon death or termination of employment. A participant can elect to have his/her account distributed in (a) a single lump sum, (b) a series of substantially equal annual installments or (c) a direct rollover into an eligible retirement plan. Participants over the age of 59 1/2 may withdraw all or part of their account balance in single sums before termination of employment. Participants over the age of 70 1/2 may withdraw all or part of their account balance in installments before termination of employment. Participants may withdraw certain accounts from prior plans under the former parent company, in single sums, up to two times a year before termination of employment. Distributions will be made in cash except that the participants' accounts invested in the Company's Common Stock can, at the direction of the participant, be paid in shares. 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 accounts of all affected participants shall remain fully vested and nonforfeitable. Upon termination of the Plan, the net assets shall be transferred to a successor defined contribution plan or other qualified plan, or be distributed to each participant in the amount credited to his or 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, 1997 and 1996, except for participant loans outstanding which are valued at cost which approximates fair value. Income Recognition The difference in fair value from one period to the next is included in net realized and unrealized appreciation (depreciation) in fair value of investments in the accompanying statements of changes in net assets available for Plan benefits with fund information. The net realized and unrealized appreciation (depreciation) in fair value of investments also includes realized gains and losses on sales of investments during the year. Interest income is recorded as earned on the accrual basis. Dividends are recorded on the ex-dividend date. Purchases and sales of investments are recorded on a trade date basis. Operating Expenses The Company may elect to pay any and all administrative fees or expenses of the Plan. Otherwise, these expenses and fees shall be paid from Plan assets. During 1997 and 1996, all administrative expenses and fees 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. Those 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: Equity Index Trust - This fund invests primarily in common stocks that make up the S&P 500 Index. 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. 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 economy in general. New Income Fund - This fund invests primarily in corporate bonds, bank obligations, U.S. government and mortgage-backed securities. 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. 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. 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. Retirement Strategy Trust - Balanced - This fund invests primarily in domestic and international stocks (60%) and fixed income securities (40%). Retirement Strategy Trust - Income Plus - This fund invests primarily in fixed income securities (60%) and common stocks (40%). Retirement Strategy Trust - Conservative Growth - This fund invests primarily in domestic and international stocks (80%) and fixed income securities (20%). Unrestricted CFC Common Stock Fund - This fund invests in the common stock of Consolidated Freightways Corporation. The Plan also includes a nonparticipant-directed investment which is described as follows: Restricted CFC Common Stock Fund - This fund invests in the common stock of Consolidated Freightways Corporation. The participants are entitled to full voting rights and all dividends when paid on shares credited to his or her account. The Plan also includes the participant-directed Unrestricted CNF Common Stock Fund. This fund is invested in the common stock of the former parent. Amounts in this fund are the result of transfers from the former parent's plan. Participants currently have the option to sell their shares and reinvest the proceeds in funds other than CNF common stock. Shares of CNF stock remaining unsold at December 31, 1999 will be sold by the Company and the proceeds will be reinvested in the Unrestricted CFC Common Stock Fund. Participants cannot purchase additional shares of CNF common stock. 4. INCOME TAX STATUS: The Internal Revenue Service has determined and informed the Company by a letter dated February 25, 1998 that the Plan and related trust are designed in accordance with applicable sections of the Code. The Plan administrator believes that the Plan is designed and is currently being operated in compliance with the applicable requirements of the Code. 5. 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 transactions. SCHEDULE I CONSOLIDATED FREIGHTWAYS CORPORATION STOCK AND SAVINGS PLAN EIN 77-0425334 PLAN NO. 002 ITEM 27(a) - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AS OF DECEMBER 31, 1997 (Note 5) Identity of Description of Investment Issue, Borrower, Including Maturity Date, Rate Current Lessor or of Interest, Collateral, Par Cost Value Similar Party or Maturity Value Shares in registered investment companies: *T. Rowe Price International Stock Fund (468,664.560 shares) $6,629,502 $6,289,478 *T. Rowe Price Growth Stock Fund (1,331,738.393 shares) 37,794,666 38,607,096 *T. Rowe Price New Income Fund (916,662.600 shares) 8,216,251 8,314,130 *T. Rowe Price Science and Technology Fund (862,618.914 shares) 27,892,326 23,514,992 *T. Rowe Price Equity Income Fund (1,463,789.204 shares) 34,832,804 38,160,985 COMMON AND COLLECTIVE TRUST FUNDS: *T. Rowe Price Equity Index Trust (186,847.141 shares) 3,937,949 4,630,072 *T. Rowe Price Bond Index Trust (46,567.619 shares) 632,700 663,123 *T. Rowe Price U.S. Treasury Money Market Trust (15,543,814.230 15,543,814 15,543,814 shares) *T. Rowe Price Retirement Strategy Trust- Balanced (160,684.949 2,364,768 2,713,969 shares) *T. Rowe Price Retirement Strategy Trust- Income Plus (25,920.566 371,784 402,806 shares) *T. Rowe Price Retirement Strategy Trust- Conservative Growth (76,246.383 shares) 1,167,473 1,339,649 PARTICIPANT LOANS: *Plan Participants Participant loans with interest rates from 7.0% to 10.0% and maturing through 9,798,112 9,798,112 2002 CORPORATE EQUITY: *Consolidated Common stock (1,064,944.221 11,702,576 14,509,865 Freightways shares) Corporation CNF Common stock (868,783.266 18,201,823 33,665,352 Transportation shares) Inc. $179,086,548 $198,153,443 *Represents a party-in-interest as of December 31, 1997. Note: Cost is calculated using the moving average method. The accompanying notes are an integral part of this schedule. SCHEDULE II CONSOLIDATED FREIGHTWAYS CORPORATION STOCK AND SAVINGS PLAN EIN 77-0425334 PLAN NUMBER 002 ITEM 27(d) - SCHEDULE OF REPORTABLE TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 1997 (Note 5) Category (iii) - Series of transactions of the same issue that exceed 5% of net Plan assets at the beginning of the Plan year Purchases Sales Identity Description of Asset, Including Maturity Date, of Party Rate of Interest, Collateral, Number of Purchase Number of Selling Cost of Net Gain Involved and Par or Maturity Transactions Price Transactions Price Assets or Value (Loss) *T. Rowe Price Growth Stock Fund 100 $12,127,822 149 $7,405,120 $7,207,424 $ 197,696 *T. Rowe Price U.S. Treasury Money Market Trust 113 14,347,942 140 15,844,854 15,844,854 - *T. Rowe Price Science & Technology Fund 119 14,544,807 131 11,762,404 12,597,920 (835,516) *T. Rowe Price Equity Income Fund 129 11,618,266 121 6,254,074 5,921,090 332,984 *T. Rowe Price Unrestricted CNF Common Stock 5 1,720,361 203 7,800,812 5,602,584 2,198,228 *T. Rowe Price Unrestricted CFC Common Stock 171 11,985,575 71 5,416,753 4,410,924 1,005,829 <FN> *Represents a party-in-interest transaction for the year ended December 31, 1997. Note: Cost is calculated using the moving average method. The accompanying notes are an integral part of this schedule.