##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  FORM 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2005oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)  OF
    THE SECURITIES EXCHANGE ACT OF 1934For the Transition Period
    From          
    to   Commission file number 1-5046
  CNF INC.
 (Exact name of registrant as
    specified in its charter)
  Delaware

94-1444798(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)2855 Campus Drive,
    Suite 300, San Mateo, CA(Address of principal
    executive offices)

94403(Zip Code)   Registrants telephone number, including area code:
    (650) 378-5200
  Securities Registered Pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which
    RegisteredCommon Stock ($.625 par value)

New York Stock Exchange   Securities Registered Pursuant to Section 12(g) of the
    Act:
 87/8% Notes Due
    2010
 (Title of class)
  6.70% Senior Debentures due 2034
 (Title of class)
  þ o
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  þ o o
  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
   Form 10-K).




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##### 



CNF
    INC.FORM 10-K
    Year Ended December 31, 2005
    INDEX
  Item



PagePART I1.


Business


31A.


Risk Factors


91B.


Unresolved Staff
    Comments


102.


Properties


103.


Legal
    Proceedings


114.


Submission of
    Matters to a Vote of Stockholders


11Executive Officers
    of the Registrant


12PART II5.


Market for
    Registrants Common Equity, Related Stockholder Matters,
    and Issuer Purchases Of Equity Securities


136.


Selected Financial
    Data


147.


Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


167A.


Quantitative and
    Qualitative Disclosures About Market Risk


338.


Financial
    Statements and Supplementary Data


369.


Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


679A.


Controls and
    Procedures


679B.


Other
    Information


69PART III10.


Directors and
    Executive Officers of the Registrant


6911.


Executive
    Compensation


6912.


Security Ownership
    of Certain Beneficial Owners and Management and Related
    Stockholder Matters


6913.


Certain
    Relationships and Related Transactions


6914.


Principal
    Accounting Fees and Services


69PART IV15.


Exhibits and
    Financial Statement Schedules


69EXHIBIT 10.9EXHIBIT 10.13EXHIBIT 12EXHIBIT 21EXHIBIT 23EXHIBIT 31EXHIBIT 32   2




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##### Table of Contents



CNF
    INC.FORM 10-K
    Year Ended December 31, 2005
 PART I  ITEM 1.
    BUSINESS  Legal
    Organization
        Reporting
    Segments
    Con-Way Transportation Services reporting segment
    (Con-Way).
  Menlo Worldwide reporting segment.
  CNF Other reporting segment.
 3




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##### Table of Contents



Information
    Available on Website
  Form 10-K, Form 10-Q, Form 8-K,
      Regulatory
    Certifications
  Sarbanes-Oxley
  Con-Way
    Transportation Services
  Con-Way
    Regional Carriers
  less-than-truckload
  pickup-and-delivery
  Con-Way
    Supply Chain Services Group
     4




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Competition
    Menlo
    Worldwide
    Menlo
    Worldwide  Logistics
    state-of-the-art
   5




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##### Table of Contents



Con-Way
    Logistics Integration
    Competition
    Menlo
    Worldwide  Vector
    and/or
    CNF
    Other
   6




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##### Table of Contents



Discontinued
    Operations
  Menlo
    Worldwide Forwarding
    Priority
    Mail Contract
    Spin-Off
    of CFC
    General
  Employees
    Cyclicality
    and Seasonality
      Price
    and Availability of Fuel
    Regulation
  Ground
    Transportation
   7




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##### Table of Contents



Environmental
      clean-up
  Homeland
    Security
     8




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##### Table of Contents



ITEM 1A.
    RISK
    FACTORS  Business
    Interruption
    Customer
    Concentration
    Cyclicality
    Employees
    Con-Way Con-Way lower-quality
  Employee
    Benefit Costs
   9




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##### Table of Contents



Government
    Regulation
    Price and
    Availability of Fuel
  Con-Way) Con-Ways Con-Way Con-Ways Con-Way Con-Way Con-Way Con-Ways Con-Ways Con-Ways Con-Ways Con-Ways Con-Ways
  ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES  and/or Con-Ways Con-Ways
  Con-Way
    Transportation Services
  Con-Ways Con-Way, and/or
 10




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##### Table of Contents



meet-and-turn Con-Way
    Con-Way
  Menlo
    Worldwide Logistics
      CNF
    Other
    ITEM 3.
    LEGAL
    PROCEEDINGS        ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF STOCKHOLDERS   11




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##### Table of Contents



EXECUTIVE
    OFFICERS OF THE REGISTRANT    Con-Way, Con-Way. Con-Ways Con-Way Con-Way Con-Way
  Con-Way Con-Way Con-Way
    Con-Way Con-Ways Con-Way Con-Way Con-Way Con-Way Con-Way Con-Way
  Con-Way Con-Way Con-Way
    Con-Way Con-Way
 12




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##### Table of Contents



PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder
    Matters, and Issuer Purchases of Equity Securities        Total Number


Maximumof Shares


Dollar Value ofPurchased as


Shares thatPart of


May Yet BeTotal Number





Publicly


Purchasedof Shares


Average Price


Announced


Under thePurchased[1]


Paid per Share


Program[1]


Program[1]October 1,
    2005  October 31, 2005


128,000


$
53.34



128,000


$
181,610,884November 1,
    2005  November 30, 2005


289,000



57.53



289,000



164,985,621December 1,
    2005  December 31, 2005


248,900



56.40



248,900



150,947,481Total


665,900


$
56.30



665,900


$
150,947,481      13




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##### Table of Contents



Item 6.
    Selected
    Financial Data  CNF
    Inc.
    Five-Year Financial Summary
  2005


2004


2003


2002


2001(Dollars in thousands except per
    share data)SUMMARY OF OPERATIONSRevenuesCon-Way Transportation Services

$
2,816,647


$
2,532,201


$
2,163,668


$
1,981,918


$
1,891,769Menlo Worldwide Logistics


1,339,674



1,174,831



1,063,011



1,008,588



948,312CNF Other


13,269



5,347



287



2,841



7,442$
4,169,590


$
3,712,379


$
3,226,966


$
2,993,347


$
2,847,523Operating Income (Loss) [a]Con-Way Transportation Services

$
331,104


$
247,169


$
189,106


$
142,756
[c]

$
155,951Menlo Worldwide Logistics


26,672



22,718



17,481



22,768



(29,902
)Vector


20,257



18,253



20,718



18,188



(9,415
)46,929



40,971



38,199



40,956



(39,317
)CNF Other


(3,095
)


(3,973
)


(2,357
)


(3,369
)


(2,540
)374,938



284,167



224,948



180,343



114,094Reconciliation of segments to
    consolidated amount:Income tax related to Vector, an
    equity-method investment


(4,196
)














$
370,742


$
284,167


$
224,948


$
180,343


$
114,094Depreciation and Amortization, net
    of Accretion

$
123,762


$
115,096


$
113,417


$
117,084


$
123,743Interest Expense


37,501



39,695



29,597



22,825



27,009Income from Continuing Operations
    Before Taxes


351,121



246,823



197,517



152,328



85,007Income Tax Provision


121,873
[b]


96,378



77,032



38,234
[d]


32,124Net Income from Continuing
    Operations


221,520



142,206



112,246



105,844



44,600Gain (Loss) from Disposal, net of
    tax


(6,219
)


(278,749
)






(12,398
)


38,975Income (Loss) from Discontinued
    Operations, net of tax [a]






12,415



(28,461
)


115



(486,449
)Net Income (Loss) Applicable to
    Common Shareholders

$
215,301


$
(124,128
)

$
83,785


$
93,561


$
(402,874
)EARNINGS (LOSS) PER COMMON
    SHAREBasicNet Income from Continuing
    Operations

$
4.24


$
2.82


$
2.27


$
2.15


$
0.91Gain (Loss) from Disposal, net of
    tax


(0.11
)


(5.53
)






(0.25
)


0.80Income (Loss) from Discontinued
    Operations, net of tax






0.25



(0.58
)






(9.97
)Net Income (Loss) Applicable to
    Common Shareholders

$
4.13


$
(2.46
)

$
1.69


$
1.90


$
(8.26
) 14




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##### Table of Contents



2005


2004


2003


2002


2001(Dollars in thousands except per
    share data)DilutedNet Income from Continuing
    Operations

$
3.96


$
2.57


$
2.07


$
1.96


$
0.87Gain (Loss) from Disposal, net of
    tax


(0.11
)


(4.94
)






(0.22
)


0.74Income (Loss) from Discontinued
    Operations, net of tax






0.22



(0.50
)






(9.18
)Net Income (Loss) Applicable to
    Common Shareholders

$
3.85


$
(2.15
)

$
1.57


$
1.74


$
(7.57
)Common dividends per share

$
0.40


$
0.40


$
0.40


$
0.40


$
0.40Common shareholders equity
    per share

$
16.34


$
13.68


$
15.21


$
13.43


$
12.04STATISTICSTotal assets

$
2,480,572


$
2,496,401


$
2,773,640


$
2,786,874


$
2,953,622Long-term obligations


581,469



601,344



554,981



571,299



560,121Capital expenditures


210,186



151,460



127,763



75,831



168,279Effective tax provision rate


34.7
%


39.0
%


39.0
%


25.1
%


37.8
%Basic average shares


52,192,539



50,455,006



49,537,945



49,139,134



48,752,480Market price range

$
41.38-$59.79


$
30.50-$50.96


$
24.44-$35.77


$
27.36-$38.28


$
21.05-$39.88Number of shareholders at
    December 31


7,204



7,435



8,006



8,131



8,561Approximate number of regular
    full-time employees


21,800



20,700



20,000



19,600



18,800     [a]
    As more fully discussed in Note 2, Discontinued
    Operations, in Item 8, Financial Statements and
    Supplementary Data, continuing operations has been
    allocated general corporate overhead charges that were
    previously allocated to the discontinued Forwarding segment.
    These corporate overhead charges were allocated from
    discontinued operations to the Con-Way and Logistics reporting
    segments based on segment revenue and capital employed.  [b]
    Includes tax benefits of $7.8 million from the reversal of
    accrued taxes related to the settlement with the IRS of previous
    tax filings.  [c]
    Includes an $8.7 million first-quarter net gain,
    $5.3 million after tax, ($0.09 per diluted share) from
    the sale of a property.  [d]
    Includes a $14.0 million third-quarter ($0.25 per
    diluted share) reversal of accrued taxes related to the
    settlement with the IRS of aircraft maintenance issues. 15




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##### Table of Contents



ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  Introduction
    
    Overview of Business
    Results of Operations and Related Information
    Liquidity and Capital Resources
    Estimates and Critical Accounting Policies
    Other Matters  Overview
    of Business
  Con-Way (Con-Way), less-than-truckload
  Con-Way
   16




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##### Table of Contents



Results
    of Operations
    2005


2004


2003(Dollars in thousands, except
    per share amounts)Net Income (Loss)Continuing Operations(1)(2)

$
221,520


$
142,206


$
112,246Discontinued Operations(2)


(6,219
)


(266,334
)


(28,461
)Applicable to Common Shareholders

$
215,301


$
(124,128
)

$
83,785Diluted Earnings (Loss) per ShareContinuing Operations

$
3.96


$
2.57


$
2.07Discontinued Operations


(0.11
)


(4.72
)


(0.50
)Applicable to Common Shareholders

$
3.85


$
(2.15
)

$
1.57     (1)
    
    After preferred stock dividends(2)
    
    As required by EITF 87-24, Allocation of Interest to
    Discontinued Operations, for periods prior to the
    disposition of MWF in 2004, continuing operations has been
    allocated general corporate overhead charges that were
    previously allocated to the discontinued Forwarding segment.
    These corporate overhead charges of $16.9 million in 2004,
    and $14.0 million in 2003 were allocated from discontinued
    operations to Con-Way and Logistics based on segment revenue and
    capital employed.     17




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##### Table of Contents



Continuing
    Operations
  2005


2004


2003(Dollars in thousands)RevenuesCon-Way Transportation Services

$
2,816,647


$
2,532,201


$
2,163,668Menlo Worldwide Logistics


1,339,674



1,174,831



1,063,011CNF Other


13,269



5,347



287$
4,169,590


$
3,712,379


$
3,226,966Operating Income (Loss)Con-Way Transportation Services

$
331,104


$
247,169


$
189,106Menlo WorldwideLogistics


26,672



22,718



17,481Vector


20,257



18,253



20,71846,929



40,971



38,199CNF Other


(3,095
)


(3,973
)


(2,357
)374,938



284,167



224,948Reconciliation of segments to
    consolidated amount:Income tax related to Vector, an
    equity-method investment


(4,196
)






$
370,742


$
284,167


$
224,948   Overview  2005
    Compared to 2004
       18




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##### Table of Contents



Overview  2004
    Compared to 2003
      Con-Way
    Transportation Services
    2005


2004


2003Summary of Operating ResultsRevenues

$
2,816,647


$
2,532,201


$
2,163,668Operating Income


331,104



247,169



189,106Operating Margin


11.8
%


9.8
%


8.7
%   2005 vs. 2004


2004 vs. 2003Selected Regional-Carrier
    Operating StatisticsRevenue per day


+12.4
%


+16.0
%Weight per day (weight)


+7.9



+12.5Revenue per hundredweight
    (yield)


+4.2



+3.1Weight per shipment


+3.6



+4.3    19




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##### Table of Contents



Menlo
    Worldwide
     20




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##### Table of Contents



2005


2004


2003Summary of Operating ResultsLogisticsRevenues

$
1,339,674


$
1,174,831


$
1,063,011Purchased Transportation


(972,266
)


(829,882
)


(746,375
)Net Revenues


367,408



344,949



316,636Operating Income


26,672



22,718



17,481Operating Margin on Revenues


2.0
%


1.9
%


1.6
%Operating Margin on Net Revenues


7.3
%


6.6
%


5.5
%VectorOperating Income

$
20,257


$
18,253


$
20,718   Menlo
    Worldwide  Logistics
        start-up
 21




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##### Table of Contents



Menlo
    Worldwide  Vector
  Operating
    Results
    North
    America
  and/or
    International
   22




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##### Table of Contents



Call
    Right and Put Right
  8-year
  CNF
    Other
    Discontinued
    Operations
    MWF
  Impairment
    Charge
    Stock
    Purchase Agreement
  and/or
 23




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##### Table of Contents



Form 8-K Form 8-K
  Disposition
    of MWF
      Excluded
    Assets and Liabilities
   24




---



##### Table of Contents



EWA
      Liquidity
    and Capital Resources
   25




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##### Table of Contents



2005


2004


2003(Dollars in thousands)Operating ActivitiesNet income (loss)

$
223,029


$
(115,889
)

$
92,024Discontinued operations


6,219



266,334



28,461Non-cash adjustments(1)


138,939



138,106



140,439368,187



288,551



260,924Changes in assets and liabilitiesReceivables


(124,322
)


(34,870
)


(12,373
)Accounts payable and accrued
    liabilities, excluding accrued incentive compensation


29,460



43,289



(11,309
)Accrued incentive compensation


(20,077
)


29,367



(27,876
)Income taxes


20,166



22,009



28,267Employee benefits


(78,597
)


(24,658
)


(4,178
)Deferred charges and credits


27,496



67,081



17,415Other


(4,757
)


(11,144
)


(24,693
)(150,631
)


91,074



(34,747
)Net Cash Provided by Operating
    Activities


217,556



379,625



226,177Net Cash Provided by (Used in)
    Investing Activities


179,269



(224,273
)


(303,436
)Net Cash Provided by (Used in)
    Financing Activities


(216,429
)


175,479



(33,639
)Net Cash Provided by (Used in)
    Continuing Operations


180,396



330,831



(110,898
)Net Cash Provided by (Used in)
    Discontinued Operations


(12,959
)


(22,117
)


7,268Increase (Decrease) in Cash and
    Cash Equivalents

$
167,437


$
308,714


$
(103,630
)     (1)
    
    Non-cash adjustments refer to depreciation,
    amortization, deferred income taxes, provision for uncollectible
    accounts, equity in earnings of joint venture, and other
    non-cash gains and losses.  Continuing
    Operations
  Operating
    Activities
  non-cash customer-negotiated corporate-owned
 26




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##### Table of Contents



Investing
    Activities
    Financing
    Activities
        Defined
    Benefit Pension Plans
   27




---



##### Table of Contents



Contractual
    Cash Obligations
    Payments Due by Period2011 &Total


2006


2007-2008


2009-2010


Thereafter(Dollars in thousands)Long-Term Debt and Guarantees(1)

$
1,246,181


$
58,788


$
124,548


$
290,495


$
772,350Operating Leases


148,057



52,841



62,017



23,762



9,437Purchase Obligations


18,096



18,096











Total

$
1,412,334


$
129,725


$
186,565


$
314,257


$
781,787     (1)
    
    A portion of the interest payable in 2006 is reflected in the
    Consolidated Balance Sheets. Refer to Note 4, Accrued
    Liabilities, of Item 8, Financial Statements
    and Supplementary Data.         28




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##### Table of Contents



Other
      Discontinued
    Operations
    Estimates
    and Critical Accounting Policies
    Self-Insurance
    Accruals
    Income
    Taxes
   29




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##### Table of Contents



Disposition
    and Restructuring Estimates
    Uncollectible
    Accounts Receivable
    Defined
    Benefit Pension Plans
    2006


2005


2004


2003(Dollars in thousands)Weighted-average assumptions:Discount rate


6.00
%


6.25
%


6.25
%


6.75
%Expected long-term rate of return
    on plan assets


8.50
%


8.50
%


9.00
%


9.00
%   Aa-or-better
  20-year
  and/or
 30




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##### Table of Contents



Property,
    Plant and Equipment and Other Long-Lived Assets
    and/or
    Other
    Matters
  New
    Accounting Standards
   31




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##### Table of Contents



Forward-Looking
    Statements
      
    changes in general business and economic conditions, including
    the global economy;
    the creditworthiness of CNFs customers and their ability
    to pay for services rendered;
    increasing competition and pricing pressure;
    changes in fuel prices or fuel surcharges;
    the effects of the cessation of EWAs air carrier
    operations;
    the possibility that CNF may, from time to time, be required to
    record impairment charges for long-lived assets; 32




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##### Table of Contents




    the possibility of defaults under CNFs $400 million
    credit agreement and other debt instruments, and the possibility
    that CNF may be required to repay certain indebtedness in the
    event that the ratings assigned to its long-term senior debt by
    credit rating agencies are reduced;
    labor matters, including the grievance by furloughed EWA pilots
    and crew members, labor organizing activities, work stoppages or
    strikes;
    enforcement of and changes in governmental regulations,
    including the effects of new regulations issued by the
    Department of Homeland Security;
    environmental and tax matters;
    matters relating to CNFs 1996 spin-off of CFC, including
    the possibility that CFCs multi-employer pension plans may
    assert claims against CNF, that CNF may not prevail in those
    proceedings and may not have the financial resources necessary
    to satisfy amounts payable to those plans;
    matters relating to the sale of MWF, including CNFs
    obligation to indemnify UPS for certain losses in connection
    with the sale; and
    matters relating to CNFs defined benefit pension plans.    ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK    Interest
    Rates
    December 312005


2004(Dollars in thousands)Carrying value

$
596,502


$
714,071Estimated fair value


630,000



760,000Change in estimated fair value
    given a hypothetical 10% change in interest rates


30,000



30,000    33




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##### Table of Contents



Fuel
    Foreign
    Currency
   34




---



##### Table of Contents



Report
    of Independent Registered Public Accounting Firm
            KPMG
    LLP
  
 35




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##### Table of Contents



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  CNF
    Inc.
    Consolidated Balance Sheets
  December 31,2005


2004(Dollars in thousands)AssetsCurrent AssetsCash and cash equivalents
    (Note 1)

$
514,334


$
346,897Marketable securities (Note 1)


202,350



486,300Trade accounts receivable, net
    (Note 1)


548,896



425,783Other accounts receivable
    (Notes 1 and 2)


42,529



134,577Operating supplies, at lower of
    average cost or market


19,069



16,665Prepaid expenses


53,916



48,092Deferred income taxes (Note 7)


49,812



51,453Assets of discontinued operations
    (Note 2)


13,141



5,128Total Current Assets


1,444,047



1,514,895Property, Plant, and Equipment, at
    costLand


150,413



142,857Buildings and leasehold improvements


649,941



618,698Revenue equipment


778,958



677,499Other equipment


219,545



210,1021,798,857



1,649,156Accumulated depreciation and
    amortization


(847,315
)


(789,835
)Net Property and Equipment


951,542



859,321Other AssetsDeferred charges and other assets
    (Note 3)


40,691



56,618Capitalized software, net
    (Note 1)


44,292



50,347Assets of discontinued operations
    (Note 2)






15,22084,983



122,185Total Assets

$
2,480,572


$
2,496,401    36




---



##### Table of Contents



CNF
    Inc.
    Consolidated Balance Sheets
  December 31,2005


2004(Dollars in thousandsexcept per share data)Liabilities and Shareholders
    EquityCurrent LiabilitiesAccounts payable

$
276,097


$
252,867Accrued liabilities (Note 4)


214,883



226,437Self-insurance accruals
    (Note 1)


91,354



86,095Current maturities of long-term
    debt (Note 5)


15,033



112,727Liabilities of discontinued
    operations (Note 2)


34,129



34,705Total current liabilities


631,496



712,831Long-Term LiabilitiesLong-term debt and guarantees
    (Note 5)


581,469



601,344Self-insurance accruals
    (Note 1)


102,416



102,512Employee benefits (Note 9)


212,824



245,989Other liabilities and deferred
    credits


18,714



20,296Deferred income taxes (Note 7)


22,735



29,200Liabilities of discontinued
    operations (Note 2)






6,862Total Liabilities


1,569,654



1,719,034Commitments and Contingencies
    (Notes 2, 5, 6 and 11)Shareholders Equity
    (Note 8)Preferred stock, no par value;
    authorized 5,000,000 shares:Series B, 8.5% cumulative,
    convertible, $.01 stated value; designated
    1,100,000 shares; issued 641,359 and 742,995 shares,
    respectively


6



7Additional paid-in capital,
    preferred stock


97,544



113,002Deferred compensation, Thrift and
    Stock Plan (Note 9)


(40,628
)


(49,117
)Total Preferred Shareholders
    Equity


56,922



63,892Common stock, $.625 par value;
    authorized 100,000,000 shares; issued 61,204,263 and
    58,544,254 shares, respectively


38,253



36,590Additional paid-in capital, common
    stock


528,743



429,134Retained earnings


620,565



426,300Deferred compensation, restricted
    stock (Note 10)


(3,078
)


(5,744
)Cost of repurchased common stock
    (8,928,008 and 6,364,868 shares, respectively)


(293,380
)


(157,069
)Total Common Shareholders
    Equity


891,103



729,211Accumulated Other Comprehensive
    Loss (Note 8)


(37,107
)


(15,736
)Total Shareholders Equity


910,918



777,367Total Liabilities and
    Shareholders Equity

$
2,480,572


$
2,496,401    37




---



##### Table of Contents



CNF
    Inc.
  Statements of Consolidated Operations
  Years ended
    December 31,2005


2004


2003(Dollars in thousands except per
    share data)Revenues

$
4,169,590


$
3,712,379


$
3,226,966Costs and ExpensesOperating expenses (Note 3)


3,349,972



3,014,143



2,606,230Selling, general and administrative
    expenses


335,671



311,644



294,744Depreciation


113,205



102,425



101,0443,798,848



3,428,212



3,002,018Operating Income


370,742



284,167



224,948Other Income (Expense)Investment income


22,730



7,485



2,527Interest expense


(37,501
)


(39,695
)


(29,597
)Miscellaneous, net


(4,850
)


(5,134
)


(361
)(19,621
)


(37,344
)


(27,431
)Income from Continuing Operations
    Before Income Tax Provision


351,121



246,823



197,517Income Tax Provision (Note 7)


121,873



96,378



77,032Income from Continuing Operations


229,248



150,445



120,485Discontinued Operations, net of tax
    (Note 2)Loss from Disposal


(6,219
)


(278,749
)


Income (Loss) from Discontinued
    Operations






12,415



(28,461
)(6,219
)


(266,334
)


(28,461
)Net Income (Loss)


223,029



(115,889
)


92,024Preferred Stock Dividends


7,728



8,239



8,239Net Income (Loss) Applicable to
    Common Shareholders

$
215,301


$
(124,128
)

$
83,785Weighted-Average Common
    Shares Outstanding (Note 1)Basic


52,192,539



50,455,006



49,537,945Diluted


56,213,049



56,452,629



56,725,667Earnings (Loss) Per Common Share
    (Note 1)Basic Net Income from Continuing
    Operations

$
4.24


$
2.82


$
2.27Loss from Disposal, net of tax


(0.11
)


(5.53
)


Income (Loss) from Discontinued
    Operations, net of tax






0.25



(0.58
)Net Income (Loss) Applicable to
    Common Shareholders

$
4.13


$
(2.46
)

$
1.69Diluted Net Income from Continuing
    Operations

$
3.96


$
2.57


$
2.07Loss from Disposal, net of tax


(0.11
)


(4.94
)


Income (Loss) from Discontinued
    Operations, net of tax






0.22



(0.50
)Net Income (Loss) Applicable to
    Common Shareholders

$
3.85


$
(2.15
)

$
1.57    38




---



##### Table of Contents



CNF
    Inc.
  Statements
    of Consolidated Cash Flows
  Years ended
    December 31,2005


2004


2003(Dollars in thousands)Cash and Cash Equivalents,
    Beginning of Year

$
346,897


$
38,183


$
141,813Operating ActivitiesNet income (loss)


223,029



(115,889
)


92,024Adjustments to reconcile net income
    (loss) to net cash provided by operating activities:Discontinued operations, net of tax


6,219



266,334



28,461Depreciation and amortization, net
    of accretion


123,762



115,096



113,417Increase in deferred income taxes


16,543



22,528



27,052Amortization of deferred
    compensation


10,520



13,244



9,376Provision for uncollectible accounts


4,814



5,103



5,425Equity in earnings of joint venture


(16,061
)


(18,253
)


(20,718
)Loss (Gain) on sales of property
    and equipment, net


(639
)


88



2,182Loss from equity ventures






300



3,705Changes in assets and liabilities:Receivables


(124,322
)


(34,870
)


(12,373
)Prepaid expenses


(5,824
)


(2,978
)


(10,472
)Accounts payable


27,414



42,372



(18,812
)Accrued incentive compensation


(20,077
)


29,367



(27,876
)Accrued liabilities, excluding
    accrued incentive compensation


2,046



917



7,503Self-insurance accruals


3,861



(2,956
)


(25,654
)Income taxes


20,166



22,009



28,267Employee benefits


(78,597
)


(24,658
)


(4,178
)Deferred charges and credits


27,496



67,081



17,415Other


(2,794
)


(5,210
)


11,433Net Cash Provided by Operating
    Activities


217,556



379,625



226,177Investing ActivitiesCapital expenditures


(210,186
)


(151,460
)


(127,763
)Software expenditures


(8,377
)


(10,960
)


(12,442
)Proceeds from sales of property and
    equipment, net


5,516



14,007



6,209Proceeds from sale of discontinued
    operations


108,366



150,000



Net decrease (increase) in
    marketable securities


283,950



(225,860
)


(169,440
)Net Cash Provided by (Used in)
    Investing Activities


179,269



(224,273
)


(303,436
)Financing ActivitiesNet proceeds from issuance of
    long-term debt






292,587



2,156Repayment of long-term debt and
    guarantees


(112,730
)


(142,925
)


(12,142
)Proceeds from exercise of stock
    options


76,054



56,081



6,389Payments of common dividends


(21,036
)


(20,323
)


(19,850
)Payments of preferred dividends


(9,664
)


(9,941
)


(10,192
)Repurchases of common stock


(149,053
)






Net Cash Provided by (Used in)
    Financing Activities


(216,429
)


175,479



(33,639
)Net Cash Provided by (Used in)
    Continuing Operations


180,396



330,831



(110,898
)Discontinued Operations
    (Revised  See Note 1)Net Cash Provided by (Used in)
    Operating Activities


(12,959
)


(17,417
)


5,151Net Cash Provided by (Used In)
    Investing Activities






(4,538
)


7,074Net Cash Used in Financing
    Activities






(162
)


(4,957
)Net Cash Provided by (Used in)
    Discontinued Operations


(12,959
)


(22,117
)


7,268Increase (Decrease) in Cash and
    Cash Equivalents


167,437



308,714



(103,630
)Cash and Cash Equivalents, End of
    Year

$
514,334


$
346,897


$
38,183Supplemental DisclosureCash Paid (Refunded) for income
    taxes, net

$
80,893


$
59,797


$
(14,548
)Cash Paid for interest of
    continuing operations, net of amounts capitalized

$
46,987


$
37,267


$
29,210    39




---



##### Table of Contents



CNF
    INC.
  STATEMENTS OF CONSOLIDATED SHAREHOLDERS EQUITY
  AccumulatedPreferred Stock
    Series B


Common Stock


Additional








Repurchased


OtherNumber of





Number of





Paid-in


Deferred


Retained


Common


Comprehensive


ComprehensiveShares


Amount


Shares


Amount


Capital


Compensation


Earnings


Stock


Income (Loss)


Income (Loss)(Dollars in thousands except per
    share data)Balance, December 31,
    2002


784,007


$
8



56,046,790


$
35,029


$
464,293


$
(69,433
)

$
506,816


$
(161,841
)

$
(56,874
)Net income


























92,024










$
92,024Other comprehensive income:Unrealized gain on marketable
    securities, net of deferred tax of $1,307


































2,044



2,044Foreign currency translation
    adjustment (Note 1)


































6,509



6,509Change in fair value of cash flow
    hedges, net of deferred tax of $252


































394



394Minimum pension liability
    adjustment, net of deferred tax of $7,036


































11,004



11,004Comprehensive income





































$
111,975Exercise of stock options,
    including tax benefits of $1,120










276,206



172



7,336















Stock-based compensation










113,985



72



3,752



(2,478
)






34



TASP deferred compensation






















8,036











Repurchased common stock issued for
    conversion of preferred stock


(20,333
)














(2,534
)










2,534



Common dividends declared
    ($.40 per share)


























(19,850
)






Series B, Preferred dividends
    ($12.93 per share), net of tax benefits of $1,833


























(8,239
)






Balance, December 31,
    2003


763,674



8



56,436,981



35,273



472,847



(63,875
)


570,751



(159,273
)


(36,923
)Net loss


























(115,889
)









$
(115,889
)Other comprehensive income (loss):Unrealized gain on marketable
    securities, net of deferred tax of $1,307


































(2,044
)


(2,044
)Foreign currency translation
    adjustment (Note 1)


































18,283



18,283Minimum pension liability
    adjustment, net of deferred tax of $3,163


































4,948



4,948Comprehensive loss





































$
(94,702
)Exercise of stock options,
    including tax benefits of $12,647










2,080,380



1,300



67,429















Stock-based compensation










26,893



17



4,262



444







(198
)


TASP deferred compensation






















8,570











Repurchased common stock issued for
    conversion of preferred stock


(20,679
)


(1
)










(2,402
)










2,402



Common dividends declared
    ($.40 per share)


























(20,323
)






Series B, Preferred dividends
    ($12.93 per share), net of tax benefits of $1,558


























(8,239
)






Balance, December 31,
    2004


742,995



7



58,544,254



36,590



542,136



(54,861
)


426,300



(157,069
)


(15,736
)Net income


























223,029










$
223,029Other comprehensive income (loss):Foreign currency translation
    adjustment (Note 1)


































124



124Minimum pension liability
    adjustment, net of deferred tax of $13,742


































(21,495
)


(21,495
)Comprehensive income





































$
201,658Exercise of stock options,
    including tax benefits of $22,490










2,688,272



1,680



96,864















Stock-based compensation










(28,263
)


(17
)


62



2,666







(33
)


TASP deferred compensation






















8,489











Repurchased common stock issued for
    conversion of preferred stock


(101,636
)


(1
)










(12,775
)










12,775



Treasury stock repurchases






























(149,053
)Common dividends declared
    ($.40 per share)


























(21,036
)






Series B, Preferred dividends
    ($12.93 per share), net of tax benefits of $1,386


























(7,728
)






Balance, December 31,
    2005


641,359


$
6



61,204,263


$
38,253


$
626,287


$
(43,706
)

$
620,565


$
(293,380
)

$
(37,107
)     40




---



##### Table of Contents



CNF
    Inc.
   Notes to Consolidated Financial Statements
   1.
    Principal
    Accounting Policies  Organization:
          Principles of Consolidation:
  Recognition of Revenues:
    Cash Equivalents and Marketable
    Securities:
    Trade Accounts Receivable, Net:
 41




---



##### Table of Contents



Property, Plant and Equipment:
    Capitalized Software: item-by-item
  Goodwill and Long-Lived Assets:
      Income Taxes:
  Self-Insurance Accruals:
   42




---



##### Table of Contents



Foreign Currency Translation:
  Earnings (Loss) Per Share (EPS):
  Years ended
    December 31,2005


2004


2003(Dollars in thousands except per
    share data)Numerator:Continuing operations (after
    preferred stock dividends), as reported

$
221,520


$
142,206


$
112,246Add-backs:Dividends on Series B
    preferred stock, net of replacement funding


1,156



1,337



1,379Interest expense on convertible
    subordinated debentures, net of trust dividend income






1,590



3,816Continuing operations


222,676



145,133



117,441Discontinued operations


(6,219
)


(266,334
)


(28,461
)Applicable to common shareholders

$
216,457


$
(121,201
)

$
88,980Denominator:Weighted-average common shares
    outstanding


52,192,539



50,455,006



49,537,945Stock options and restricted stock


1,000,988



1,197,519



467,340Series B preferred stock


3,019,522



3,498,021



3,595,382Convertible subordinated debentures






1,302,083



3,125,00056,213,049



56,452,629



56,725,667Earnings (Loss) per Diluted Share:Continuing operations

$
3.96


$
2.57


$
2.07Discontinued operations


(0.11
)


(4.72
)


(0.50
)Applicable to common shareholders

$
3.85


$
(2.15
)

$
1.57     Derivative Instruments and Hedging
    Activities:
 43




---



##### Table of Contents



Stock-Based Compensation:
    Years ended
    December 31,2005


2004


2003(Dollars in thousands, except
    per share data)Net income (loss) applicable to
    common shareholders, as reported

$
215,301


$
(124,128
)

$
83,785Stock-based compensation cost
    included in reported income, net of related tax effects


1,239



2,852



817Additional compensation cost, net
    of tax, that would have been included in net income (loss) if
    the fair-value method had been applied


(5,931
)


(11,476
)


(9,631
)Pro forma net income (loss) as if
    the fair-value method had been applied

$
210,609


$
(132,752
)

$
74,971Earnings (loss) per shareBasic:As reported

$
4.13


$
(2.46
)

$
1.69Pro forma

$
4.04


$
(2.63
)

$
1.51Diluted:As reported

$
3.85


$
(2.15
)

$
1.57Pro forma

$
3.77


$
(2.30
)

$
1.41   New Accounting Standards:
     44




---



##### Table of Contents



Estimates:
  Reclassification and Revisions:
        2.
    Discontinued
    Operations     45




---



##### Table of Contents



Years Ended December 31
    ,2005


2004


2003(Dollars in thousands)Menlo Worldwide ForwardingRevenues

$



$
2,189,791


$
1,886,048Income (Loss) from Discontinued
    OperationsIncome (loss) before income taxes






1,501



(41,501
)Income tax benefit






10,914



13,040$



$
12,415


$
(28,461
)Income (Loss) from Disposal, net
    of taxMenlo Worldwide Forwarding

$
1,247


$
(276,309
)

$
CFC


1,560



(2,440
)


EWA


(9,026
)






$
(6,219
)

$
(278,749
)

$
     December 31,2005


2004(Dollars in thousands)AssetsDeferred income taxes

$
13,141


$
5,128Prepaid employee benefits and
    long-lived assets






15,220Total Assets


13,141



20,348LiabilitiesAccounts payable and accrued
    liabilities


34,129



34,705Long-term liabilities






6,862Total Liabilities


34,129



41,567Net Liabilities

$
20,988


$
21,219   Impairment
    Charge
   46




---



##### Table of Contents



Stock
    Purchase Agreement
  and/or
  Disposition
    of MWF
      Excluded
    Assets and Liabilities
   47




---



##### Table of Contents



EWA
      3.
    Investment
    in Unconsolidated Joint Venture     48




---



##### Table of Contents



4.
    Accrued
    Liabilities    December 31,2005


2004(Dollars in thousands)Holiday and vacation pay

$
56,883


$
55,739Incentive compensation


33,723



53,800Wages and salaries


31,379



24,719Employee benefits


28,397



24,491Taxes other than income taxes


23,574



20,102Estimated revenue adjustments


8,439



8,753Accrued interest


6,253



6,865Other accrued liabilities


26,235



31,968Total accrued liabilities

$
214,883


$
226,437   5.
    Debt
    and Other Financing Arrangements    December 31,2005


2004(Dollars in thousands)7.35% Notes due 2005
    (interest payable semi-annually)





$
100,000Mortgage note payable, 7.63%, due
    2008 (interest payable monthly)

$
2,072



2,102TASP Notes guaranteed, 6.00% to
    8.54%, due through 2009 (interest payable semi-annually)


77,000



89,70087/8% Notes
    due 2010 (interest payable semi-annually), net of discount and
    including fair market value adjustment


224,712



229,6326.70% Senior Debentures due
    2034 (interest payable semi-annually), net of discount


292,718



292,637596,502



714,071Less current maturities


(15,033
)


(112,727
)Total long-term debt and guarantees

$
581,469


$
601,344  49




---



##### Table of Contents



Revolving Credit Facility:
  Other Uncommitted Credit Facilities:
  Senior Debentures due 2034:
  Thrift and Stock Plan Notes:
    87/8% Notes Due
    2010: 7 8 7 8 7 8 7 8
 50




---



##### Table of Contents



7 8
  Mortgage Note Payable:
  7.35% Notes:
      6.
    Leases    Operating Leases(Dollars in thousands)Year ending December 31:2006

$
52,8412007


37,9352008


24,0822009


14,2802010


9,482Thereafter (through 2013)


9,437Total minimum lease payments

$
148,057         Years ended
    December 31,2005


2004


2003(Dollars in thousands)Minimum rentals

$
87,173


$
89,696


$
90,966Sublease rentals


(3,261
)


(3,899
)


(4,680
)$
83,912


$
85,797


$
86,286  51




---



##### Table of Contents



7.
    Income
    Taxes    Years ended
    December 31,2005


2004


2003(Dollars in thousands)Current provisionFederal

$
95,040


$
57,129


$
37,474State and local


9,255



13,574



10,255Foreign


2,379



1,957



1,634106,674



72,660



49,363Deferred provisionFederal


9,135



24,392



25,821State and local


4,179



335



2,475Foreign


1,885



(1,009
)


(627
)15,199



23,718



27,669$
121,873


$
96,378


$
77,032       Years ended
    December 31,2005


2004


2003Federal statutory tax provision
    rate


35.0
%


35.0
%


35.0
%State income tax provision, net of
    federal income tax benefit


2.9



4.1



4.0Foreign taxes in excess of
    U.S. statutory rate


0.2



0.1



0.1Non-deductible operating expenses






0.9



(0.3
)Foreign tax credits, net


(0.8
)


(0.2
)


IRS Settlement


(2.2
)






Other, net


(0.4
)


(0.9
)


0.2Effective income tax provision rate


34.7
%


39.0
%


39.0
%    52




---



##### Table of Contents



December 31,2005


2004(Dollars in thousands)Deferred tax assetsEmployee benefits

$
111,895


$
105,213Self-insurance accruals


48,857



62,983Capital loss carryforwards


29,966



40,793Operating loss carryforwards


6,263



5,048Credit carryforwards


3,181



Other


7,034



7,682Valuation allowance


(36,274
)


(41,796
)170,922



179,923Deferred tax liabilitiesProperty, plant, and equipment


129,431



137,548Revenue


7,722



6,070Other


6,692



14,052143,845



157,670Net deferred tax asset

$
27,077


$
22,253           8.
    Shareholders
    Equity  Series B Preferred Stock:
 53




---



##### Table of Contents



Accumulated Other Comprehensive Income
    (Loss):
  December 31,2005


2004(Dollars in thousands)Accumulated foreign currency
    translation adjustments (Note 1)

$
(932
)

$
(1,056
)Minimum pension liability
    adjustment, net of deferred tax benefit of $23,128 and $9,386 at
    December 31, 2005 and 2004 respectively (Note 9)


(36,175
)


(14,680
)Accumulated other comprehensive
    loss

$
(37,107
)

$
(15,736
)   Common Stock Repurchase Program:
  9.  Benefit
    Plans
    Retirement Plan:
   54




---



##### Table of Contents



December 31,2005


2004


Target AllocationAsset Category:Domestic Equity


56
%


62
%


60
%International Equity


16
%


17
%


15
%Fixed Income


21
%


18
%


18
%Real Estate


6
%


2
%


7
%Other


1
%


1
%


Total


100
%


100
%


100
%       2005


2004(Dollars in thousands)Accumulated benefit obligation

$
888,073


$
755,908Change in benefit obligation:Projected benefit obligation at
    beginning of year

$
863,111


$
797,992Service
    cost  benefits earned during the year


50,527



56,198Interest cost on projected benefit
    obligation


54,284



49,817Actuarial loss


100,614



25,235Benefits paid


(24,823
)


(19,231
)Curtailment  sale
    of MWF






(46,900
)Projected benefit obligation at
    end of year

$
1,043,713


$
863,111 55




---



##### Table of Contents



2005


2004(Dollars in thousands)Change in plan assets:Fair value of plan assets at
    beginning of year

$
684,821


$
548,426Actual return on plan assets


77,531



65,626CNF contributions


126,500



90,000Benefits paid


(24,823
)


(19,231
)Fair value of plan assets at end
    of year

$
864,029


$
684,821Funded status of the plans

$
(179,684
)

$
(178,290
)Unrecognized actuarial loss


183,296



102,473Unrecognized prior service costs


2,039



2,961Prepaid (accrued) benefit cost

$
5,651


$
(72,856
)Weighted-average assumptions as of
    December 31:Discount rate


6.00
%


6.25
%Expected long-term rate of return
    on plan assets


8.50
%


8.50
%Rate of compensation increase


4.30
%


4.00
%     2005


2004


2003(Dollars in thousands)Service
    cost  benefits earned during the year

$
50,527


$
56,198


$
43,602Interest cost on benefit obligation


54,284



49,817



47,054Expected return on plan assets


(60,467
)


(52,701
)


(37,642
)Net amortization and deferral


3,649



7,414



7,343Net pension expense

$
47,993


$
60,728


$
60,357Weighted-average assumptions:Discount rate


6.25
%


6.25
%


6.75
%Expected long-term rate of return
    on plan assets


8.50
%


9.00
%


9.00
%Rate of compensation increase


4.00
%


4.00
%


4.00
%       Benefit Payments(Dollars in thousands)Year ending December 31:2006

$
23,1092007


25,1072008


27,6502009


30,8612010


34,6512011-2015


257,565   Forwarding Plans:
 56




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##### Table of Contents



Supplemental Pension Plan:
    Minimum Pension Liability Adjustment: net-of-tax
  December 31,2005


2004(Dollars in thousands)Intangible asset reported in Other
    Assets

$
3,849


$
2,270Pension liability adjustment
    reported in Employee Benefits


63,152



26,336Accumulated other comprehensive
    loss reported in Shareholders Equity, net of tax


36,175



14,680   Postretirement Medical Plan:
 57




---



##### Table of Contents



2005


2004(Dollars in thousands)Change in benefit obligation:Projected and accumulated benefit
    obligation at beginning of year

$
113,869


$
76,690Service
    cost  benefits earned during the year


1,515



1,308Interest cost on projected benefit
    obligation


6,351



5,231Actuarial loss


24,135



35,891Participant contributions


1,905



1,558Curtailment  sale
    of MWF


1,460



Benefits paid


(9,959
)


(6,809
)Projected and accumulated benefit
    obligation at end of year

$
139,276


$
113,869Funded status of the plan

$
(139,276
)

$
(113,869
)Unrecognized actuarial loss


48,369



37,160Unrecognized prior service costs


(197
)


758Accrued benefit cost

$
(91,104
)

$
(75,951
)Discount rate assumption as of
    December 31


5.75
%


6.00
%     2005


2004


2003(Dollars in thousands)Service
    cost  benefits earned during the year

$
1,515


$
1,308


$
1,826Interest cost on benefit obligation


6,351



5,231



5,536Net amortization and deferral


2,184



285



262Curtailment loss


1,007







Net benefit expense

$
11,057


$
6,824


$
7,624Discount rate assumption at
    December 31:


6.00
%


6.25
%


6.75
%       Benefit Payments(Dollars in thousands)Year ending December 31:2006

$
7,9822007


8,4232008


8,9302009


9,5022010


10,1782011-2015


56,042  58




---



##### Table of Contents



2005


2004Change in benefit obligation:Health care cost trend rate
    assumed for next year


10.25
%


11.50
%Rate to which the cost trend rate
    is assumed to decline (the ultimate trend rate)


5.50
%


5.50
%Year that the rate reaches the
    ultimate trend rate


2013



2013     Thrift and Stock Plan:
          Other Compensation Plans:
  10.
    Stock-Based
    Compensation  Stock Options:
   59




---



##### Table of Contents



2005


2004


2003Estimated fair value

$
18.17


$
16.07


$
14.65Risk-free interest rate


3.8
%


3.5
%


3.4
%Expected life (years)


5.53



5.76



5.93Expected volatility


42
%


45
%


48
%Expected dividend yield


1.18
%


1.18
%


1.20
%     Wtd. Avg. ExerciseNumber of Options


PriceOutstanding at December 31,
    2002


6,121,791


$
27.84Granted


455,876



32.90Exercised


(276,206
)


23.13Expired or canceled


(177,032
)


30.17Outstanding at December 31,
    2003


6,124,429


$
28.34Granted


116,800



38.43Exercised


(2,080,380
)


26.96Expired or canceled


(37,472
)


29.87Outstanding at December 31,
    2004


4,123,377


$
29.30Granted


416,373



45.67Exercised


(2,688,272
)


28.29Expired or canceled


(121,928
)


36.78Outstanding at December 31,
    2005


1,729,550


$
34.29Options exercisable as of
    December 31:2005


928,078


$
30.802004


2,711,199


$
29.232003


3,055,314


$
28.58     Outstanding Options


Exercisable OptionsAverage


Wtd. Avg.





Wtd. Avg.Range of Exercise

Number of


Remaining


Exercise


Number of


ExercisePrices

Options


Life in Years


Price


Options


Price$18.05 - $27.06


387,840



5.3


$
25.51



320,765


$
25.59$28.30 - $35.03


816,988



6.5



32.16



470,964



32.06$35.50 - $51.72


524,722



7.6



44.09



136,349



38.67   Restricted Stock:
 60




---



##### Table of Contents



2005


2004


2003Wtd. Avg.





Wtd. Avg.





Wtd. Avg.Shares


Fair Value


Shares


Fair Value


Shares


Fair ValueAwarded


57,737


$
43.91



94,727


$
44.13



129,321


$
32.82Forfeited


86,000



36.00



67,834



35.33



15,336



27.80       11.
    Commitments
    and Contingencies  Spin-Off
    of CFC
            Purchase
    Commitments
    Other
   61




---



##### Table of Contents



60-days 60-days
      12.  Segment
    Reporting
        Financial
    Data
    62




---



##### Table of Contents



Years ended December
    31,2005


2004


2003(Dollars in thousands)RevenuesCon-Way Transportation Services

$
2,816,647


$
2,532,201


$
2,163,668Menlo Worldwide Logistics


1,339,674



1,174,831



1,063,011CNF Other


13,269



5,347



287$
4,169,590


$
3,712,379


$
3,226,966Inter-segment Revenue EliminationsCon-Way Transportation Services

$
82,339


$
52,130


$
33,011Menlo Worldwide Logistics






278



3,309CNF Other


52,672



29,450



21,724$
135,011


$
81,858


$
58,044Revenues before Inter-segment
    EliminationsCon-Way Transportation Services

$
2,898,986


$
2,584,331


$
2,196,679Menlo Worldwide Logistics


1,339,674



1,175,109



1,066,320CNF Other


65,941



34,797



22,011Inter-segment Revenue Eliminations


(135,011
)


(81,858
)


(58,044
)$
4,169,590


$
3,712,379


$
3,226,966Operating Income (Loss)Con-Way Transportation Services

$
331,104


$
247,169


$
189,106Menlo WorldwideLogistics


26,672



22,718



17,481Vector


20,257



18,253



20,71846,929



40,971



38,199CNF Other


(3,095
)


(3,973
)


(2,357
)$
374,938


$
284,167


$
224,948Reconciliation of segments to
    consolidated amount:Income tax related to Vector, an
    equity-method investment (Note 3)


(4,196
)






$
370,742


$
284,167


$
224,948Depreciation and Amortization, net
    of AccretionCon-Way Transportation Services

$
107,534


$
96,685


$
92,922Menlo WorldwideLogistics


8,623



7,843



8,659Other


4



4,117



5,3678,627



11,960



14,026CNF Other


7,601



6,451



6,469$
123,762


$
115,096


$
113,417 63




---



##### Table of Contents



Years ended December
    31,2005


2004


2003(Dollars in thousands)Capital ExpendituresCon-Way Transportation Services

$
197,589


$
144,031


$
117,875Menlo WorldwideLogistics


9,798



5,135



6,329Other






948



2,8159,798



6,083



9,144CNF Other


2,799



1,346



744$
210,186


$
151,460


$
127,763Identifiable AssetsCon-Way Transportation Services

$
1,295,654


$
1,160,808


$
1,074,939Menlo WorldwideLogistics


302,969



219,160



190,917Other


12,255



21,872



29,255315,224



241,032



220,172CNF Other


856,553



1,074,213



543,517Assets of discontinued operations


13,141



20,348



935,012$
2,480,572


$
2,496,401


$
2,773,640   Geographic
    Data
    Years ended December
    31,2005


2004


2003(Dollars in thousands)RevenuesUnited States

$
4,021,147


$
3,604,685


$
3,142,446Canada


63,395



51,993



44,201Other


85,048



55,701



40,319Total

$
4,169,590


$
3,712,379


$
3,226,966  64




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##### Table of Contents



CNF INC.
    AND SUBSIDIARIES
  Quarterly
    Financial Data
 (Unaudited)
  2005  Quarter
    Ended

March 31


June 30


September 30


December 31(Dollars in thousands except per
    share data)Revenues

$
947,683


$
1,033,875


$
1,099,151


$
1,088,881Operating Income


73,256



103,560



103,033



90,893Income from Continuing Operations
    Before Income Tax Provision


65,813



97,395



99,543



88,370Income Tax Provision


24,962



29,239
[a]


35,070



32,602Net Income from Continuing
    Operations (after preferred stock dividends)


38,862



66,120



62,657



53,881Gain (Loss) from Disposal, net of
    tax


(9,776
)


2,951



3,335



(2,729
)Net Income Applicable to Common
    Shareholders

$
29,086


$
69,071


$
65,992


$
51,152Earnings (Loss) Per Common Share:BasicNet Income from Continuing
    Operations

$
0.74


$
1.27


$
1.20


$
1.03Gain (Loss) from Disposal, net of
    tax


(0.18
)


0.05



0.07



(0.05
)Net Income Applicable to Common
    Shareholders

$
0.56


$
1.32


$
1.27


$
0.98DilutedNet Income from Continuing
    Operations

$
0.69


$
1.19


$
1.12


$
0.97Gain (Loss) from Disposal, net of
    tax


(0.17
)


0.05



0.06



(0.05
)Net Income Applicable to Common
    Shareholders

$
0.52


$
1.24


$
1.18


$
0.92Market price range

$
43.39-$50.51


$
41.38-$47.53


$
44.49-$53.43


$
49.85-$59.79Common dividends (paid quarterly)


0.10



0.10



0.10



0.10   2004  Quarter
    Ended

March 31


June 30


September 30


December 31(Dollars in thousands except per
    share data)Revenues

$
846,920


$
924,382


$
973,619


$
967,458Operating Income


55,448



71,279



78,435



79,005Income from Continuing Operations
    Before Income Tax Provision


48,271



58,719



68,712



71,121Income Tax Provision


18,826



22,900



26,798



27,854Net Income from Continuing
    Operations (after preferred stock dividends)


27,423



33,797



39,839



41,147Loss from Disposal, net of tax










(260,490
)


(18,259
)Income (Loss) from Discontinued
    Operations, net of tax


(3,016
)


1,686



4,444



9,301Net Income (Loss) Applicable to
    Common Shareholders

$
24,407


$
35,483


$
(216,207
)

$
32,189 65




---



##### Table of Contents



2004  Quarter
    Ended

March 31


June 30


September 30


December 31(Dollars in thousands except per
    share data)Earnings (Loss) Per Common Share:BasicNet Income from Continuing
    Operations

$
0.55


$
0.67


$
0.79


$
0.80Loss from Disposal, net of tax










(5.15
)


(0.35
)Income (Loss) from Discontinued
    Operations, net of tax


(0.06
)


0.04



0.09



0.18Net Income (Loss) Applicable to
    Common Shareholders

$
0.49


$
0.71


$
(4.27
)

$
0.63DilutedNet Income from Continuing
    Operations

$
0.50


$
0.61


$
0.72


$
0.74Loss from Disposal, net of tax










(4.70
)


(0.33
)Income (Loss) from Discontinued
    Operations, net of tax


(0.05
)


0.03



0.08



0.17Net Income (Loss) Applicable to
    Common Shareholders

$
0.45


$
0.64


$
(3.90
)

$
0.58Market price range

$
30.50-$35.84


$
33.55-$42.57


$
38.66-$43.01


$
41.67-$50.96Common dividends (paid quarterly)


0.10



0.10



0.10



0.10     [a]
    
    Includes tax benefits of $7.0 million from the reversal of
    accrued taxes related to the settlement with the IRS of previous
    tax filings 66




---



##### Table of Contents



ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES    Rules 13a-15(e)
    Rules 13a-15(f)
    Rules 13a-15(f).
   67




---



##### Table of Contents



Report
    of Independent Registered Public Accounting Firm
  
          .
    KPMG
    LLP
  
 68




---



##### Table of Contents



ITEM 9B.
    OTHER
    INFORMATION   PART III    ITEM 10.
    DIRECTORS
    AND EXECUTIVE OFFICERS OF THE REGISTRANT    Regulation S-K
  Regulation S-K
  ITEM 11.
    EXECUTIVE
    COMPENSATION    ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS    ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS    ITEM 14.
    PRINCIPAL
    ACCOUNTING FEES AND SERVICES    PART IV  ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES  (a)  1.
    FINANCIAL STATEMENTS:
    Report of Independent Registered Public Accounting Firm by
    KPMG LLP dated March 13, 2006
    Consolidated Balance Sheets at December 31, 2005 and
    2004
    Statements of Consolidated Operations for the years ended
    December 31, 2005, 2004 and 2003 69




---



##### Table of Contents



2.
    FINANCIAL STATEMENT SCHEDULE
    Report of Independent Auditors on Financial Statement
    Schedule
    Schedule II  Valuation and Qualifying
    Accounts3.
    EXHIBITS
    Exhibits are being filed in connection with this Report and are
    incorporated herein by reference. The Exhibit Index on
    pages 75 through 77 is incorporated herein by reference. 70




---



##### Table of Contents



Report
    of Independent Registered Public Accounting Firm
   
  Form 10-K Form 10-K
    KPMG
    LLP
      71




---



##### Table of Contents



Schedule II
  CNF Inc.
  Valuation and Qualifying Accounts
 Three Years Ended December 31, 2005
  Description
    Additions(1)


(2)Balance at


Charged to costs


Charged to


Deductions


Balance at endbeginning of period


and expenses


other accounts


(a)


of period(Dollars in thousands)2005

$
6,616


$
4,814


$
803


$
(5,177
)

$
7,0562004


10,958



5,103



203



(9,648
)


6,6162003


12,046



5,425







(6,513
)


10,958     (a)
    
    Accounts written off net of recoveries. 72




---



##### Table of Contents



SIGNATURES
    CNF INC.
    (Registrant)March 13, 2006

/s/  Douglas W.
    StotlarDouglas
    W. Stotlar
    President and Chief Executive OfficerMarch 13, 2006

/s/  Kevin C. SchickKevin
    C. Schick
    Senior Vice President and Chief Financial OfficerMarch 13, 2006

/s/  Kevin S. CoelKevin
    S. Coel
    Vice President and Controller  73




---



##### Table of Contents



SIGNATURES
    March 13, 2006

/s/  W. Keith
    Kennedy, Jr.W.
    Keith Kennedy, Jr.,
    Chairman of the BoardMarch 13, 2006

/s/  Douglas W.
    StotlarDouglas
    W. Stotlar, DirectorMarch 13, 2006

John
    J. Anton, DirectorMarch 13, 2006

/s/  William R.
    CorbinWilliam
    R. Corbin, DirectorMarch 13, 2006

/s/  Margaret G. GillMargaret
    G. Gill, DirectorMarch 13, 2006

Robert
    Jaunich II, DirectorMarch 13, 2006

/s/  Henry H.
    Mauz, Jr.Henry
    H. Mauz, Jr., DirectorMarch 13, 2006

/s/  Michael J.
    MurrayMichael
    J. Murray, DirectorMarch 13, 2006

/s/  John C. PopeJohn
    C. Pope, DirectorMarch 13, 2006

/s/  Robert D. RogersRobert
    D. Rogers, DirectorMarch 13, 2006

/s/  William J.
    SchroederWilliam
    J. Schroeder, DirectorMarch 13, 2006

/s/  Peter W. StottPeter
    W. Stott, DirectorMarch 13, 2006

/s/  Robert P. WaymanRobert
    P. Wayman, DirectorMarch 13, 2006

/s/  Chelsea C.
    White IIIChelsea
    C. White III, Director  74




---



##### Table of Contents



INDEX TO
    EXHIBITS
    ITEM 15(3)
  Exhibit No.(3)


Articles of incorporation and
    by-laws:3
.1



CNF Inc. Certificate of
    Incorporation, as amended (Exhibit 3.1 to CNFs
    Form 10-K
    for the year ended December 31, 2002*).3
.2



CNF Inc. Bylaws, as amended
    April 25, 2005 (Exhibit 3.1 to CNFs Report on
    Form 8-K
    filed on April 28, 2005*).(4)


Instruments defining the rights of
    security holders, including debentures:4
.1



Certificate of Designations of the
    Series B Cumulative Convertible Preferred Stock
    (Exhibit 4.1 as filed on Form SE dated May 25,
    1989*).4
.2



Form of Indenture between CNF
    Transportation Inc. and Bank One Trust Company, National
    Association (Exhibit 4(d) (i) to CNFs
    Form 8-K
    dated March 3, 2000*).4
.3



Form of Security for
    87/8% Notes
    due 2010 issued by CNF Transportation Inc. (Exhibit 4(i) to
    CNFs
    Form 8-K
    dated March 3, 2000*).4
.4



Supplemental Indenture No. 1
    dated as of April 30, 2004 to Indenture dated as of
    March 8, 2000 between CNF Inc. as issuer and The Bank of
    New York, N.A. as successor trustee, relating to 6.70% Senior
    Debentures due 2034 (filed as Exhibit 4.2 to
    Form S-4
    dated June 4, 2004*).4
.5



Form of Global 6.70% Senior
    Debentures due 2034 (included in Exhibit 4.2 to
    Form S-4
    dated June 4, 2004*).4
.6



$400 million Credit Agreement
    dated March 11, 2005 among CNF and various financial
    institutions (Exhibit 4.9 to CNFs
    Form 10-K
    for the year ended December 31, 2004*).4
.7



Subsidiary Guaranty Agreement
    dated as of March 11, 2005, made by Con-Way Transportation
    Services, Inc., Menlo Worldwide, LLC and Menlo Logistics Inc. in
    favor of the banks referred to in 4.6 (Exhibit 4.10 to
    CNFs
    Form 10-K
    for the year ended December 31, 2004*).Instruments defining the rights of
    security holders of long-term debt of CNF Inc., and its
    subsidiaries for which financial statements are required to be
    filed with this
    Form 10-K,
    of which the total amount of securities authorized under each
    such instrument is less than 10% of the total assets of CNF Inc.
    and its subsidiaries on a consolidated basis, have not been
    filed as exhibits to this
    Form 10-K.
    CNF agrees to furnish a copy of each applicable instrument to
    the Securities and Exchange Commission upon request.(10)


Material contracts:10
.1



Distribution Agreement between
    Consolidated Freightways, Inc., and Consolidated Freightways
    Corporation dated November 25, 1996 (Exhibit 10.34 to
    CNFs
    Form 10-K
    for the year ended December 31, 1996*).10
.2



Employee Benefit Matters Agreement
    by and between Consolidated Freightways, Inc. and Consolidated
    Freightways Corporation dated December 2, 1996
    (Exhibit 10.33 to CNFs
    form 10-K
    for the year ended December 31, 1996*#).10
.3



Transition Services Agreement
    between CNF Service Company, Inc. and Consolidated Freightways
    Corporation dated December 2, 1996 (Exhibit to CNFs
    Form 10-K
    for the year ended December 31, 1996*).10
.4



Tax Sharing Agreement between
    Consolidated Freightways, Inc., and Consolidated Freightways
    Corporation dated December 2, 1996 (Exhibit to CNFs
    Form 10-K
    for the year ended December 31, 1996*).10
.5



Stock Purchase Agreement between
    CNF Inc. and Menlo Worldwide, LLC and United Parcel Service
    dated October 5, 2004 (Exhibit 99.1 to CNFs
    Form 8-K
    dated October 6, 2004*).10
.6



Amendment No. 1 dated
    December 17, 2004 to the Stock Purchase Agreement between
    CNF Inc. and Menlo Worldwide, LLC and United Parcel Service
    dated October 5, 2004 (Exhibit 99.1 to CNFs
    Form 8-K
    dated December 21, 2004*). 75




---



##### Table of Contents



Exhibit No.10
.7



Transition Services Agreement
    between CNF Inc and Menlo Worldwide, LLC and United Parcel
    Service date October 5, 2004 (Exhibit 99.1 to
    CNFs
    Form 8-K
    dated October 6, 2004*).10
.8



Summary of Certain Compensation
    Arrangements (Exhibit 10.3 to CNFs
    Form 10-Q
    for the quarter ended March 31, 2005*#).10
.9



Summary of Certain Compensation
    Arrangements.#10
.10



Summary of Material Executive
    Employee Agreements (Item 1.01 to CNFs Report on
    Form 8-K
    filed on June 6, 2005*#).10
.11



1997 Equity and Incentive Plan
    (2006 Amendment and Restatement) (Exhibit 99.7 to
    CNFs Report on
    Form 8-K
    filed on December 6, 2005*#).10
.12



CNF Inc. Value Management Plan
    (2006 Amendment and Restatement) (Exhibit 99.8 to
    CNFs Report on
    Form 8-K
    filed on December 6, 2005*#).10
.13



CNF Inc. Summary of Incentive
    Compensation plans for 2006.#10
.14



Restricted Stock Award Agreement
    between CNF Inc. and Douglas W. Stotlar dated December 17,
    2004 (Exhibit 10.75 to CNFs
    Form 10-K
    for the year ended December 31, 2004*#).10
.15



Stock Option Agreement between CNF
    Inc. and Douglas W. Stotlar dated December 17, 2004
    (Exhibit 10.76 to CNFs
    Form 10-K
    for the year ended December 31, 2004*#).10
.16



Form of Stock Option Agreement
    (Exhibit 99.10 to CNFs Report on
    Form 8-K
    filed on December 6, 2005*#).10
.17



Form of Restricted Stock Award
    Agreement (Exhibit 99.11 to CNFs Report on
    Form 8-K
    filed on December 6, 2005*#).10
.18



Supplemental Retirement Plan dated
    January 1, 1990 (Exhibit 10.31 to CNFs
    Form 10-K
    for the year ended December 31, 1993*#).10
.19



Supplemental Excess Retirement
    Plan dated January 1, 2005 (Exhibit 99.4 to CNFs
    Form 8-K
    dated December 8, 2004*#).10
.20



CNF Inc. Deferred Compensation
    Plan for Executives 1998 Restatement (Exhibit 10.20 to
    CNFs
    Form 10-K
    for the year ended December 31, 1997*#).10
.21



Amendment No. 1 dated
    June 28, 1999, to the Deferred Compensation Plan for
    Executives 1998 Restatement (Exhibit 10.30 to CNFs
    Form 10-K
    for the year ended December 31, 2002*#).10
.22



Amendment No. 2 dated
    August 21, 2000, to the Deferred Compensation Plan for
    Executives 1998 Restatement (Exhibit 10.31 to CNFs
    Form 10-K
    for the year ended December 31, 2002*#).10
.23



Amendment No. 3 dated
    January 29, 2001, to the Deferred Compensation Plan for
    Executives 1998 Restatement (Exhibit 10.32 to CNFs
    Form 10-K
    for the year ended December 31, 2002*#).10
.24



Amendment No. 4 dated
    May 14, 2001, to the Deferred Compensation Plan for
    Executives 1998 Restatement (Exhibit 10.33 to CNFs
    Form 10-K
    for the year ended December 31, 2002*#).10
.25



Amendment No. 5 dated
    December 4, 2001 to the Deferred Compensation Plan for
    Executives 1998 Restatement (Exhibit 10.34 to CNFs
    Form 10-K
    for the year ended December 31, 2002*#).10
.26



2005 Deferred Compensation Plan
    for Executives, as amended (Exhibit 99.9 to CNFs
    Report on
    Form 8-K
    filed on December 6, 2005*#).10
.27



CNF Inc. Nonqualified Executive
    Benefit Plans Trust Agreement 2004 Restatement dated as of
    December 30, 2004 between CNF Inc. and Wachovia Bank, NA
    (Exhibit 10.5 to CNFs
    Form 10-Q
    dated May 10, 2005*#).10
.28



Form of CNF Inc. Tier I
    Severance Agreement (Exhibit 99.1 to CNFs Report on
    Form 8-K
    filed on December 6, 2005*#). 76




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##### Table of Contents



Exhibit No.10
.29



Form of Subsidiary Tier I
    Severance Agreement (Exhibit 99.2 to CNFs Report on
    Form 8-K
    filed on December 6, 2005*#).10
.30



Form of CNF Inc. Tier II
    Severance Agreement (Exhibit 99.3 to CNFs Report on
    Form 8-K
    filed on December 6, 2005*#).10
.31



Form of Subsidiary Tier II
    Severance Agreement (Exhibit 99.4 to CNFs Report on
    Form 8-K
    filed on December 6, 2005*#).10
.32



Form of Tier II Vector SCM,
    LLC Agreement (Exhibit 99.5 to CNFs Report on
    Form 8-K
    filed on December 6, 2005*#).10
.33



Amended and Restated Executive
    Severance Plan (Exhibit 99.6 to CNFs Report on
    Form 8-K
    filed on December 6, 2005*#).10
.34



CNF Inc. 2003 Equity Incentive
    Plan for Non-Employee Directors(Exhibit 10.2 to CNFs
    Form 10-Q
    for the quarter ended March 31, 2005*#).10
.35



Form of Restricted Stock Award
    Agreement for directors of CNF (Exhibit 99.1 to CNFs
    Form 8-K
    dated April 28, 2005*#).10
.36



CNF Inc. Deferred Compensation
    Plan for Directors 1998 Restatement (Exhibit 10.34 to
    CNFs
    Form 10-K
    for the year ended December 31, 1997*#).10
.37



2005 Deferred Compensation Plan
    for Non-Employee Directors effective January 1, 2005
    (Exhibit 99.2 to CNFs
    Form 8-K
    dated December 8, 2004*#).10
.38



CNF Inc. Nonqualified Director
    Benefit Plans Trust Agreement 2004 Restatement dated as of
    December 30, 2004 between CNF Inc. and Wachovia Bank, NA
    (Exhibit 10.6 to CNFs
    Form 10-Q
    dated May 10, 2005*#).10
.39



Directors
    24-Hour
    Accidental Death and Dismemberment Plan (Exhibit 10.32 to
    CNFs
    Form 10-K
    for the year ended December 31, 1993*#).10
.40



Directors Business Travel
    Insurance Plan (Exhibit 10.36 to CNFs
    Form 10-K
    for the year ended December 31, 1993*#).10
.41



[Emery Air Freight Plan for
    Retirees, effective October 31, 1987 (Exhibit 4.23 to
    the Emery Air Freight Corporation Quarterly Report on
    Form 10-Q
    dated November 16, 1987*#).](12)


Computation of ratios of earnings
    to fixed charges.(21)


Significant Subsidiaries of CNF.(23)


Consent of Independent Registered
    Public Accounting Firm.(31)


Certification of Officers pursuant
    to Section 302 of the Sarbanes-Oxley Act of 2002.(32)


Certification of Officers pursuant
    to Section 906 of the Sarbanes-Oxley Act of 2002.(99)


Additional documents:99
.1



CNF Inc. 2005 Notice of Annual
    Meeting and Proxy Statement filed on Form DEF 14A. (Only
    those portions referenced herein are incorporated in this
    Form 10-K.
    Other portions are not required and, therefore, are not
    filed as a part of this
    Form 10-K.
    *).99
.2



Note Agreement dated as of
    July 17, 1989, between the ESOP, Consolidated Freightways,
    Inc. and the Note Purchasers named therein.
    (Exhibit 28.1 as filed on Form SE dated July 21,
    1989*).99
.3



Guarantee and Agreement dated as
    of July 17, 1989, delivered by Consolidated Freightways,
    Inc. (Exhibit 28.2 as filed on Form SE dated
    July 21, 1989*).   Footnotes
    to Exhibit Index
    *
    
    Previously filed with the Securities and Exchange Commission and
    incorporated herein by reference.#
    
    Designates a contract or compensation plan for Management or
    Directors. 77