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, 2003
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
MENLO WORLDWIDE FORWARDING, INC. 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.
Menlo Worldwide Forwarding, Inc.
Savings Plan
June 21, 2004
/s/ Mark C. Thickpenny
---------------------------------
Mark C. Thickpenny
Chairman, CNF Inc. Benefits
Administrative Committee
MENLO WORLDWIDE FORWARDING, INC. SAVINGS PLAN
FINANCIAL STATEMENTS AND SCHEDULE
AS OF DECEMBER 31, 2003 AND 2002
AND FOR THE YEAR ENDED DECEMBER 31, 2003
TOGETHER WITH REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Report of Independent Registered Public Accounting Firm
To the Finance Committee of the
CNF Inc. Board of Directors:
We have audited the accompanying statements of net assets available for
benefits of the Menlo Worldwide Forwarding, Inc. Savings Plan as of December
31, 2003 and 2002, and the related statement of changes in net assets
available for benefits for the year ended December 31, 2003. 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 the standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as
of December 31, 2003 and 2002, and the changes in its net assets available
for benefits for the year ended December 31, 2003, in conformity with U.S.
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 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 11, 2004
MENLO WORLDWIDE FORWARDING, INC. SAVINGS PLAN
DECEMBER 31, 2003 AND 2002
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
FINANCIAL STATEMENTS: Page
Statement of Net Assets Available for Benefits as of December 31, 2003 1
Statement of Net Assets Available for Benefits as of December 31, 2002 2
Statement of Changes in Net Assets Available for Benefits for the Year
Ended December 31, 2003 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, 2003 7
MENLO WORLDWIDE FORWARDING, INC. SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2003
Participant
Directed Non-Participant Directed Total
----------- ------------------------ -----------
Restricted
CNF CNF
Common Preferred
Stock Fund Stock Fund
---------- ----------
ASSETS:
Investments, at fair
value-
Shares in registered
investment companies $11,310,920 $ - $ - $11,310,920
Common trust funds 3,707,023 - - 3,707,023
Participant loans 407,271 - - 407,271
CNF equity 491,954 508,641 1,218,497 2,219,092
----------- ---------- ---------- -----------
Total investments 15,917,168 508,641 1,218,497 17,644,306
Participant contributions
receivable 10,354 - - 10,354
Cash 30 86 - 116
----------- ---------- ---------- ----------
NET ASSETS AVAILABLE FOR
BENEFITS $15,927,552 $ 508,727 $1,218,497 $17,654,776
=========== ========== ========== ===========
See accompanying notes to financial statements.
MENLO WORLDWIDE FORWARDING, INC. SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2002
Participant
Directed Non-Participant 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.
MENLO WORLDWIDE FORWARDING, INC. SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2003
Participant Non-Participant Directed Total
Directed
------------ ------------------------- ------------
Restricted
CNF CNF
Common Preferred
Stock Fund Stock Fund
----------- -----------
ADDITIONS (DEDUCTIONS):
Participant contributions $ 580,086 $ - $ - $ 580,086
Allocation of preferred
shares to participants
at cost (Note 1) - - 80,216 80,216
Dividend and interest income 49,424 7,053 - 56,477
Transfers in from other plans 8,244 1,273 1,183 10,700
Net appreciation (depreciation)
in fair value of investments
(Note 3) 3,275,488 (6,423) (20,189) 3,248,876
Distributions to
participants (Note 1) (3,105,438) (332,771) - (3,438,209)
------------ ----------- ----------- ------------
Total additions
(deductions) 807,804 (330,868) 61,210 538,146
INTERFUND TRANSFERS, net 30,443 161,089 (191,532) -
------------ ----------- ----------- ------------
Net increase (decrease) 838,247 (169,779) (130,322) 538,146
NET ASSETS AVAILABLE FOR
BENEFITS, December 31, 2002 $15,089,305 $ 678,506 $1,348,819 $17,116,630
------------ ----------- ----------- ------------
NET ASSETS AVAILABLE FOR
BENEFITS, December 31, 2003 $15,927,552 $ 508,727 $1,218,497 $17,654,776
============ =========== =========== ============
See accompanying notes to financial statements.
MENLO WORLDWIDE FORWARDING, INC. SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. Description of Plan
The following description of the Menlo Worldwide Forwarding, Inc.
Savings Plan ("the Plan"), formerly the CNF Inc. EWW Savings 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 Finance Committee of CNF's Board
of Directors. Menlo Worldwide Forwarding, Inc. is a subsidiary of Menlo
Worldwide, LLC, a wholly owned subsidiary of CNF Inc. The Plan's
trustee, T. Rowe Price Trust Company ("the Trustee"), is responsible
for the management and control of the Plan's assets, which are held in
individual investment accounts, collectively known as "the Trust."
Amendments: During 2000, CNF amended the CNF Thrift and Stock Plan
("TASP") and the Plan. Effective September 19, 2000, the pilots of
Emery Worldwide Airlines ("EWA") ceased participation in the TASP and
their elective deferrals began being contributed to the Plan. The
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 model amendment pursuant to
Rev. Proc. 2002-29. The changes made in this amendment were
generally effective January 1, 2002, except for the changes made with
respect to Code section 401(a)(9), which were 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
one year of service during which the employee works 750 hours.
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 and participants who transfer from non-
contractual to contractual positions within CNF, are awarded CNF
preferred stock as a substitute for cash dividends. For 2003, these
participants received CNF preferred stock with a historical cost of
$80,216, 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. There were no supplemental employer contributions in
2003.
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.
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 (subject to
administrative adjustment to assure compliance with the 50% limit).
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
2003). Loans outstanding at December 31, 2003 bear interest at rates
ranging from 5.00% 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, 2003 and 2002 except for (1) participant
loans outstanding that are valued at cost, which approximates fair
value and (2) CNF 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 appreciation (depreciation) in fair
value of investments in the accompanying Statement of Changes in Net
Assets Available for Benefits. The net appreciation (depreciation) in
fair value of investments also includes realized gains and losses.
Interest income is recorded on the accrual basis. Dividends are
recorded on the ex-dividend date. Purchases and sales of securities
are recorded on the trade-date basis.
The Plan is charged a wrap fee for each investment transaction
recorded in the Trust. Accordingly, these costs result in an overall
reduction in the investment returns recorded by each underlying asset.
Operating Expenses: During 2003, all administrative expenses of the
Plan were paid by CNF.
Payment of Benefits: Benefits paid to participants are recorded upon
distribution.
Estimates: CNF makes estimates and assumptions when preparing the
financial statements in conformity with U.S. generally accepted
accounting principles. These estimates and assumptions affect the
amounts reported in the accompanying financial statements and notes.
Actual results could differ from those estimates.
3. Investments
The following presents investments that represent 5 percent or more
of the Plan's net assets
December 31,
-------------------------
2003 2002
Participant Directed Investments: ----------- ----------
Shares in Registered Investment
Companies:
T. Rowe Price Growth Stock Fund,
155,705 and 175,802 shares,
respectively $3,788,311 $3,266,398
T. Rowe Price Science and Technology
Fund, 178,730 and 210,428 shares,
respectively 3,360,129 2,615,616
T. Rowe Price Equity Income Fund,
98,158 and 99,769 shares
respectively 2,371,486 1,974,431
Common Trust Funds:
T. Rowe Price U.S. Treasury Money
Market Trust, 2,239,651 and
3,051,871 shares, respectively 2,239,651 3,051,871
Non-Participant Directed Investments:
CNF Preferred Stock, 5,641 and 6,332
shares, respectively 1,218,497 1,348,819
During 2003, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year)
appreciated (depreciated) in value as follows:
Shares in registered investment
companies $ 2,996,680
Common trust funds 276,280
CNF common stock (3,895)
CNF preferred stock (20,189)
------------
$ 3,248,876
============
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.
6. Subsequent Event
Effective January 1, 2004, the Plan was amended to permit in-
service withdrawals for financial hardship, in accordance with the
four "safe harbor" reasons (medical expenses, college tuition,
purchase of primary residence, or to prevent eviction). Participants
who are receiving benefits under a CNF-sponsored long-term disability
plan are eligible for in-service withdrawals from the Plan.
Previously, such withdrawals were only available if the participant
qualified for Social Security disability benefits.
SCHEDULE I
MENLO WORLDWIDE FORWARDING, INC. SAVINGS PLAN
EIN 94-1444798
PLAN NO. 112
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
AS OF DECEMBER 31, 2003
Identity
of Issue
Borrower, Description of Investment
Lessor Including Maturity Date,
or Similar Rate of Interest, Collateral, Current
Party Par or Maturity Value Cost Value
-------------- ----------------------------------- ---------- -----------
Shares in Registered Investment
Companies:
*T. Rowe Price Growth Stock Fund (155,705.309 shares) $3,960,380 $ 3,788,311
*T. Rowe Price Equity Income Fund (98,157.519 shares) 2,311,421 2,371,486
*T. Rowe Price Science and Technology Fund
(178,730.273 shares) 4,929,742 3,360,129
*T. Rowe Price International Stock Fund
(72,451.317 shares) 928,440 832,466
*T. Rowe Price Small-Cap Stock Fund (10,703.949
shares) 262,327 299,496
PIMCO PIMCO Total Return Fund (59,897.674
shares) 639,853 641,504
Undiscovered Undiscovered Managers Small-Cap Growth
Managers LLC Fund (1,678.863 shares) 12,930 17,527
Common Trust Funds:
*T. Rowe Price Equity Index Trust(18,544.263 shares) 591,318 572,462
*T. Rowe Price Bond Index Trust (8,903.433 shares) 167,917 187,684
*T. Rowe Price U.S. Treasury Money Market
Trust (2,239,651.360 shares) 2,239,651 2,239,651
*T. Rowe Price Retirement Strategy Trust -
Balanced (31,032.327 shares) 660,500 707,227
*Plan Participant Loans with interest
participants from 5.00% to 10.50% and maturity
dates from 2004 to 2008 - 407,271
Common Stock:
*CNF Inc. Unrestricted CNF Common Stock
(14,511.896 shares) 409,771 491,954
*CNF Inc. Restricted CNF Common Stock Fund
(15,004.200 shares) 408,402 508,641
Preferred Stock:
*CNF Inc. CNF Preferred Stock
(5,641.192 shares) 857,808 1,218,497
-----------
Total Investments $17,644,306
===========
*Represents a party-in-interest transaction as of December 31, 2003.
NOTE: Cost is calculated using the historical rolling-average-cost
method.
See accompanying report of independent registered public accounting firm.