Exhibit 99
CON-WAY INC.
2855 CAMPUS DRIVE, SUITE 300
SAN MATEO, CA 94403
(650) 378-5200 NEWS RELEASE
Contacts:
Media - Gary Frantz
(650) 378-5335
Investors - Patrick Fossenier
(650) 378-5353
FOR IMMEDIATE RELEASE
CON-WAY INC. REPORTS SECOND-QUARTER 2006 RESULTS
Revenues reach record while freight transportation and contract logistics
post solid profit gains
SAN MATEO, Calif.-July 18, 2006-Con-way Inc. (NYSE:CNW) today reported net
income from continuing operations for the second quarter of 2006 of $74.1
million (after preferred stock dividends), or $1.40 per diluted share. The
results were an increase of 11.0 percent over second- quarter 2005 net income
from continuing operations (after preferred stock dividends) of $66.8
million, or $1.20 per diluted share.
Earnings from continuing operations in both the 2006 and 2005 second quarters
included the effect of discrete tax items, which reduced the tax provision by
$6.9 million, or 13 cents per diluted share in 2006, and $7.0 million, or 12
cents per diluted share in 2005.
Operating income in the 2006 second quarter was $111.8 million, up 7.4
percent from $104.1 million earned in the second quarter a year ago. Revenue
was $1.10 billion, an increase of 7.7 percent over last year's second-quarter
revenue of $1.02 billion.
Net income available to common shareholders in the 2006 second quarter was
$68.9 million, or $1.30 per diluted share. This compares to previous-year
second-quarter net income of $69.1 million, or $1.24 per diluted share. Both
the 2006 and 2005 second-quarter net income to common shareholders included
the results of discontinued operations. These operations had a net loss of 10
cents per diluted share in the 2006 second quarter, and a net gain of 4 cents
per diluted share in the comparable period of 2005.
Reported within discontinued operations in the 2006 second quarter were the
results of Con-way Forwarding, the company's domestic air freight forwarding
subsidiary, which was closed effective June 2. The closure resulted in an
after-tax charge of $5.1 million in the quarter. The prior year was restated
to conform to the current-year presentation.
As of January 1, 2006 the company adopted SFAS 123R, using the modified
prospective method for calculating expense on stock-based compensation.
Adoption of SFAS 123R reduced net income in the second quarter by 2 cents per
diluted share and increased operating expense by $1.5 million in the quarter.
Under this method, prior-period results are not restated.
Douglas W. Stotlar, Con-way's president and CEO, commented that the company
was seeing the results of a concerted effort to improve yields. "Over the
past eight months we conducted a detailed, strategic review of our customer
base to bring LTL yields more in line with our premium service offerings,"
Stotlar said. "We've been successful in this effort, as yields have improved
while balanced against modest growth."
Stotlar noted that the business environment for LTL freight, while
competitive, continued to support rational pricing. "We finished the quarter
with a typical seasonal increase in volumes," he said. "Our employees are
delivering a consistent, superior service product which is being recognized
and embraced by customers. That remains our principal formula for growth and
creating increased value for our shareholders."
The effective tax rate for the 2006 second quarter was 31.2 percent compared
to 30.1 percent in the same period of 2005, with both periods impacted by the
previously mentioned discrete tax items.
The company continued to make stock repurchases under its $400 million
buyback program, authorized by Con-way's Board in April. In the second
quarter of 2006, the company acquired 3.8 million shares for a total purchase
price of $224.3 million. The company is authorized to make share repurchases
under the program through the second quarter of 2007.
CON-WAY FREIGHT AND TRANSPORTATION
For the second quarter of 2006, Con-way Freight, the company's regional less-
than-truckload (LTL) operation, and Con-Way Transportation, which consists of
the company's truckload, expedite, brokerage and trailer manufacturing
divisions, reported the following results:
* Record operating income of $102.3 million, an increase of 6.5 percent
over the $96.0 million earned in the year-ago period. It was the first
time operating income from Con-way's freight and transportation segments
surpassed $100 million in a quarter.
* Revenues of $754.4 million, up 7.1 percent compared to the prior-year
second-quarter revenues of $704.5 million.
* Total tonnage per day handled by Con-way Freight increased 2.7 percent
over the previous-year second quarter.
* Total yield for Con-way Freight was up 6.1 percent from the previous-
year second quarter. Excluding the fuel surcharge, yield was up 2.4
percent.
* Con-way Freight achieved an operating ratio of 86.7 in the 2006 second
quarter compared to 86.3 in second-quarter 2005.
MENLO WORLDWIDE
For the second quarter of 2006, Menlo Worldwide reported:
* Total segment operating income of $12.9 million, a 21.7 percent increase
from $10.6 million in the second quarter of 2005.
* Menlo Logistics revenue of $345.7 million, up 9.0 percent from the
previous-year second-quarter revenue of $317.0 million.
* Operating income from Menlo Logistics of $6.1 million, an increase of
8.1 percent over the previous-year second quarter of $5.6 million.
* Operating income for Vector SCM of $6.8 million, a 37.2 percent increase
over the $4.9 million earned in the second quarter of 2005. The 2006
quarter included additional income from the successful completion of an
international project.
On June 29, Con-way disclosed that General Motors Corporation (NYSE: GM) had
exercised its call right to purchase Vector SCM LLC, the joint venture
formed by Con-way and GM in December 2000 to deliver lead logistics provider
services for GM's global supply chain. The companies have entered into
discussions intended to establish a valuation for Vector and proposed
transition terms, a process which could take several months. Con-way will
report Vector's results in continuing operations, and Vector will continue
providing services to GM, until such time as a purchase transaction is
completed and transition of services is concluded.
THIRD-QUARTER 2006 OUTLOOK
Third-quarter 2006 diluted earnings per share from continuing operations are
expected to be between $1.21 and $1.29, based on an expected average number
of diluted shares outstanding of 51.2 million in the quarter. Con-way's
effective tax rate is expected to be 38 percent in the third quarter.
INVESTOR CONFERENCE CALL
Con-way Inc. will host a conference call for the investment community at
11:00 a.m. Eastern Daylight Time (8:00 a.m. Pacific) on Wednesday, July 19th.
On the call, management will review the results of the quarter ended June 30.
The call can be accessed by dialing (866) 264-3634 or (706) 643-3632 (for
international callers) and is expected to last approximately one
hour. Callers are requested to dial in at least five minutes before the start
of the call. The call will also be available through a live internet web cast
at www.con-way.com, at the investor relations page. Related financial and
operating statistics to be discussed on the conference call are available on
the company's web site at www.con-way.com in the Investor Relations section.
An audio replay will be available for two weeks following the call by dialing
(800) 642-1687 or (706) 645-9291 (for international callers) and using access
code 2142349. The replay will also be available at the same web-casting site
providing access to the live call.
Con-way Inc. (NYSE:CNW) is a $ 4.2 billion freight transportation and
logistics company with businesses in less-than-truckload and full truckload
freight services, expedite, brokerage, logistics, warehousing, supply chain
management and trailer manufacturing. The company and its subsidiaries
operate across North America and in 20 countries. Further information about
Con-way Inc. and additional press releases are available via the Internet at
www.con-way.com.
FORWARD-LOOKING STATEMENTS
Certain statements in this press release constitute "forward-looking
statements" and are subject to a number of risks and uncertainties and should
not be relied upon as predictions of future events. All statements other than
statements of historical fact are forward-looking statements, including any
projections and objectives of management for future operations, any
statements concerning proposed new products or services, any statements
regarding Con-way's estimated future contributions to pension plans, any
statements as to the adequacy of reserves, any statements regarding the
outcome of any claims that may be brought against Con-way, any statements
regarding future economic conditions or performance, any statements of
estimates or belief and any statements or assumptions underlying the
foregoing. Specific factors that could cause actual results and other matters
to differ materially from those discussed in such forward-looking statements
include: changes in general business and economic conditions, the
creditworthiness of Con-way'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 the air carrier
operations of Emery Worldwide Airlines, the possibility that Con-way may,
from time to time, be required to record impairment charges for long-lived
assets, the possibility of defaults under Con-way's $400 million credit
agreement and other debt instruments (including defaults resulting from
unusual charges), and the possibility that Con-way 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, enforcement
of and changes in governmental regulations, environmental and tax matters,
matters relating to the 1996 spin-off of Consolidated Freightways Corporation
(CFC), including the possibility that CFC's multi-employer pension plans may
assert claims against Con-way, matters relating to the sale of Menlo
Worldwide Forwarding, Inc., including Con-way's obligation to indemnify the
buyer for certain losses in connection with the sale, and matters relating to
Con-way's defined benefit pension plans. The factors included herein and in
Item 7 of Con-way's 2005 Annual Report on Form 10-K as well as other filings
with the Securities and Exchange Commission could cause actual results and
other matters to differ materially from those in such forward-looking
statements. As a result, no assurance can be given as to future financial
condition, cash flows, or results of operations.
Statements of Consolidated Income
(Dollars in thousands except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
2006 2005 2006 2005
----------- ----------- ----------- -----------
REVENUES $1,100,052 $1,021,565 $2,146,044 $1,957,160
Costs and Expenses
Operating Expenses 867,039 807,348 1,713,492 1,565,036
Selling, general and
administrative expenses [a] 89,428 82,926 178,987 160,586
Depreciation 31,752 27,179 63,824 53,576
----------- ----------- ----------- -----------
988,219 917,453 1,956,303 1,779,198
----------- ----------- ----------- -----------
OPERATING INCOME 111,833 104,112 189,741 177,962
Other Expense, net 1,463 5,646 2,187 12,577
----------- ----------- ----------- -----------
Income Before Taxes 110,370 98,466 187,554 165,385
Income Tax Provision 34,418[c] 29,622[d] 63,609[c] 55,078[d]
----------- ----------- ----------- -----------
Income from Continuing
Operations 75,952 68,844 123,945 110,307
----------- ----------- ----------- -----------
Discontinued Operations,
net of tax [f]
Gain (Loss) from Disposal (4,044) 2,951 (4,850) (6,825)
Loss from Discontinued
Operations (1,176) (688) (1,929) (1,300)
----------- ----------- ----------- -----------
(5,220) 2,263 (6,779) (8,125)
Net Income 70,732 71,107 117,166 102,182
Preferred Stock
Dividends 1,808 2,036 3,571 4,025
----------- ----------- ----------- -----------
NET INCOME
AVAILABLE TO
COMMON SHAREHOLDERS $ 68,924 $ 69,071 $ 113,595 $ 98,157
=========== =========== =========== ===========
NET INCOME FROM
CONTINUING
OPERATIONS
(after preferred dividends)
$ 74,144 $ 66,808 $ 120,374 $ 106,282
=========== =========== =========== ===========
Weighted-Average Common
Shares Outstanding
Basic 49,676,912 52,166,814 50,793,078 52,257,396
Diluted [b] 53,104,005 56,016,513 54,228,769 56,333,732
Earnings (Loss) Per
Common Share
Basic
Net income from
Continuing operations $ 1.49 $ 1.28 $ 2.37 $ 2.03
Gain (Loss) from
Disposal (0.08) 0.05 (0.09) (0.13)
Loss from
Discontinued
Operations (0.02) (0.01) (0.04) (0.02)
----------- ----------- ----------- -----------
$ 1.39 $ 1.32 $ 2.24 $ 1.88
=========== =========== =========== ===========
Diluted [b]
Net income from
Continuing Operations $ 1.40 $ 1.20 $ 2.23 $ 1.90
Gain (Loss) from
Disposal (0.08) 0.05 (0.09) (0.13)
Loss from
Discontinued
Operations (0.02) (0.01) (0.04) (0.02)
----------- ----------- ----------- -----------
$ 1.30 $ 1.24 $ 2.10 $ 1.75
=========== =========== =========== ===========
Operating Segments [e] [f]
REVENUES
Con-way Freight
and Transportation $ 754,353 $ 704,529 $1,450,483 $1,338,175
Menlo Worldwide
Logistics 345,699 317,036 695,561 618,985
----------- ----------- ----------- -----------
$1,100,052 $1,021,565 $2,146,044 $1,957,160
=========== =========== =========== ===========
OPERATING INCOME (LOSS)
Con-way Freight and
Transportation $ 102,276 $ 96,014 $ 169,079 $ 160,168
Menlo Worldwide
Logistics 6,093 5,634 12,278 10,664
Vector 6,777 4,941 12,049 8,976
----------- ----------- ----------- -----------
12,870 10,575 24,327 19,640
----------- ----------- ----------- -----------
Con-way Other (1,201) (955) (475) (324)
----------- ----------- ----------- -----------
113,945 105,634 192,931 179,484
Reconciliation of segments
to consolidated amount:
Income tax related
to Vector, an
equity-method investment (2,112) (1,522) (3,190) (1,522)
----------- ----------- ----------- -----------
$ 111,833 $ 104,112 $ 189,741 $ 177,962
=========== =========== =========== ===========
[a] Periods in 2006 reflect adoption of SFAS 123R, "Share-Based Payment,"
effective January 1, 2006. Con-way adopted SFAS 123R under the modified
prospective method, and accordingly, prior-period financial statements
have not been reclassified.
[b] Includes the dilutive effect of restricted stock, stock options and
Series B preferred stock. In 2006, dilution associated with stock
options was calculated in accordance with SFAS 123R,
"Share-Based Payment."
[c] Includes a $6.9 million second-quarter tax credit ($0.13 per diluted
share) related to the settlement with the IRS of previous tax filings.
[d] Includes a $7.0 million second-quarter tax benefit ($0.12 per diluted
share)from the reversal of accrued taxes related to the settlement with
the IRS of previous tax filings.
[e] Effective January 1, 2006, the results of Road Systems, a trailer
manufacturer, are reported in the Con-way Freight and Transportation
operating segment rather than the Con-way Other segment. The
prior-period segment results have been reclassified.
[f] In June 2006, Con-way closed its domestic air freight forwarding
subsidiary, Con-way Forwarding, and recorded a $5.1 million
second-quarter loss from disposal, which is reported as
discontinued operations. Effective in the second quarter of 2006, the
results of Con-way Forwarding are reported as discontinued operations
rather than in the Con-way Freight and Transportation segment.
The prior-period results have been reclassified to conform to the
current-period presentation.
Con-way Inc.
Condensed Balance Sheets
(Dollars in thousands)
June 30, December 31,
2006 2005
------------- -------------
ASSETS
Current assets $1,201,455 $1,423,047
Current assets of discontinued operations 17,997 21,000
Property, plant and equipment, net 1,049,958 950,998
Other assets 81,030 85,527
------------- -------------
Total Assets $2,350,440 $2,480,572
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 621,786 $ 590,941
Current liabilities of discontinued operations 31,409 40,555
Long-term debt and guarantees 560,332 581,469
Other long-term liabilities and deferred
credits 366,813 356,689
Shareholders' equity 770,100 910,918
------------- -------------
Total Liabilities and Shareholders' Equity $2,350,440 $2,480,572
============= =============