Exhibit 99
Con-way
NEWS RELEASE
Contacts:
Investor: Patrick Fossenier 1-650-378-5353
News Media: Gary Frantz 1-650-378-5335
CON-WAY INC. REPORTS THIRD-QUARTER 2006 RESULTS
SAN MATEO, Calif.-October 17, 2006-Con-way Inc. (NYSE:CNW) today reported net
income from continuing operations for the third quarter of 2006 of $63.0
million (after preferred stock dividends), or $1.24 per diluted share. The
results compare to third-quarter 2005 net income from continuing operations
(after preferred stock dividends) of $63.2 million, or $1.13 per diluted
share. Third quarter earnings per diluted share in 2006 increased 9.7 percent
over the 2005 period due to the accretive effect (11 cents per diluted share)
of the company's share repurchase program.
Earnings from continuing operations in the 2006 third quarter included a gain
of $6.2 million (8 cents per diluted share) from the sale of Con-way
Expedite, and reflected a change in reporting of earnings from Vector SCM,
LLC, the logistics joint venture with General Motors Corp. (NYSE:GM). GM has
exercised its right to buy Con-way's membership interest in Vector. From
June 30, 2006, only profits associated with the settlement of pre-existing
business cases will be reported in quarterly results. Any other profits from
that date forward will be utilized in the valuation of Con-way's membership
interest in Vector.
Operating income in the 2006 third quarter was $102.3 million, a decrease of
1.4 percent from $103.8 million earned in the third quarter a year ago.
Revenues of $1.08 billion were essentially flat compared with last year's
third-quarter revenues.
Net income available to common shareholders in the 2006 third quarter was
$63.0 million, or $1.24 per diluted share. This compares to previous-year
third-quarter net income of $66.0 million, or $1.18 per diluted share. The
2005 third-quarter net income to common shareholders included the results of
discontinued operations and disposals, which were a net gain of 5 cents per
diluted share.
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 third quarter by 2 cents per
diluted share and operating income by $1.6 million in the quarter. Under this
method, prior-period results are not restated.
Reviewing the quarter, Douglas W. Stotlar, Con-way's president and CEO,
commented that, as noted previously, LTL volumes were restrained mostly due
to company-specific yield initiatives. At the same time, the company did not
see tonnage growth typical of the traditional seasonal surge in the business
cycle, which has not been as intense or as early as the previous two years.
"We pushed the lever on yield at a time when the market began to slow, and we
paid for that in lower tonnage," Stotlar said. "Managing volume and yield is
a shifting dynamic that we work to balance constantly. The key is to find
the value point that is compelling for the customer and compensatory for our
service. We are working with our customers to achieve this mutual
objective."
Stotlar added that the company has a number of targeted sales initiatives
under way, which it expects will reinvigorate growth as they are implemented
through the remainder of 2006 and into 2007.
"We continue to receive feedback from customers that our service is market-
leading," Stotlar said. "Productivity and on-time performance in the LTL
operations is the best in five years, measured against the toughest standards
we've ever had."
"We're confident that our value proposition - in both freight transportation
and logistics -- remains one of the strongest in the industry, and is an
excellent foundation that will deliver sustainable, profitable growth," he
concluded.
The effective tax rate for the 2006 third quarter was 34.2 percent compared
to 35.2 percent in the same period of 2005. The 2006 tax rate was affected by
tax benefits of $2.9 million (6 cents per diluted share) associated with the
utilization of a capital loss carryover that offset the gain from the sale of
Con-way Expedite, while the 2005 tax rate was affected by certain tax
benefits and credits.
The company continued to make stock repurchases under its $400 million
buyback program, authorized by Con-way's Board in April. In the third
quarter of 2006, the company acquired 894,700 shares representing $44.1
million, for a total value of $265.4 million repurchased to-date. The company
is authorized to make share repurchases under the program through the second
quarter of 2007.
CON-WAY FREIGHT AND TRANSPORTATION
For the third 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 full-truckload, brokerage and trailer manufacturing divisions,
reported the following results:
* Operating income of $95.5 million, essentially unchanged from the $95.3
million earned in the year-ago period. The 2006 third quarter included a
$6.2 million gain from the sale of Con-way Expedite.
* Revenues of $735.9 million, up 0.9 percent compared to the prior-year
third-quarter revenues of $729.7 million. The 2006 third quarter had 1.5
fewer working days than the previous year period.
* Total tonnage per day handled by Con-way Freight decreased 3.9 percent
from the previous-year third quarter.
* Total yield for Con-way Freight was up 6.4 percent from the previous-
year third quarter. Excluding the fuel surcharge, yield was up 3.1
percent.
* Con-way Freight achieved an operating ratio of 88.0 in the 2006 third
quarter compared to 87.3 in third-quarter 2005.
MENLO WORLDWIDE
For the third quarter of 2006, Menlo Worldwide reported:
* Total segment operating income of $6.5 million, a 46.5 percent decrease
from $12.1 million in the third quarter of 2005. The previous-year
period included $4.2 million of Vector profits. In the second half of
2005, Menlo Logistics also benefited from a short-term transportation
management project for a large retail customer, which provided a one-
time boost to revenues and margins.
* Menlo Logistics revenue of $340.9 million, down 3.9 percent from the
previous-year third-quarter revenue of $354.8 million.
* Operating income from Menlo Logistics of $5.5 million, a decrease of
30.8 percent from the previous-year third quarter of $7.9 million. The
current-period quarter included additional expenses in excess of $1
million for investment in a major bid.
* Segment income for Vector SCM of $1.0 million compared to the $4.2
million earned in the third quarter of 2005. The 2006 results include
only those earnings from existing business cases that were under way
prior to June 30.
The company disclosed earlier that GM exercised its call right to purchase
Con-way's membership interest in Vector. The companies are continuing
discussions toward a valuation agreement and transition terms. As stated
previously, Vector profits resulting from activities after the date GM
exercised its call option are not reported in quarterly results and will be
utilized in the valuation of Con-way's membership interest in Vector. Con-way
will continue to be reimbursed by GM for Vector's operating costs through
close of the transaction, which is expected by the end of the year.
FOURTH-QUARTER 2006 OUTLOOK
Fourth-quarter 2006 diluted earnings per share from continuing operations are
expected to be between $0.81 and $0.87, based on an expected average number
of diluted shares outstanding of 50.0 million in the quarter. Con-way's
effective tax rate is expected to be 38 percent in the fourth quarter.
INVESTOR CONFERENCE CALL
Con-way Inc. will host a conference call to discuss third quarter 2006
results tomorrow, October 18, at 11:00 a.m. Eastern Daylight Time (8:00 a.m.
Pacific). 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 5987919. 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, 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, availability of fuel
and 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, matters relating to GM's exercise of its call right to purchase Vector
SCM, LLC 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.
Con-way Inc.
Statements of Consolidated Income
(Dollars in thousands except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2006 2005 2006 2005
----------- ----------- ----------- -----------
REVENUES $1,076,807 $1,084,457 $3,222,851 $3,041,617
Costs and Expenses
Operating expenses 848,024 871,019 2,561,516 2,436,055
Selling, general and
administrative expenses [a] 93,868 80,363 272,855 240,949
Depreciation 32,600 29,319 96,424 82,895
----------- ----------- ----------- -----------
974,492 980,701 2,930,795 2,759,899
----------- ----------- ----------- -----------
OPERATING INCOME 102,315 103,756 292,056 281,718
Other Expense, net 3,873 3,490 6,060 16,067
----------- ----------- ----------- -----------
Income Before Taxes 98,442 100,266 285,996 265,651
Income Tax Provision [b] 33,664 35,244 97,273 90,322
----------- ----------- ----------- -----------
Income from
Continuing Operations 64,778 65,022 188,723 175,329
----------- ----------- ----------- -----------
Discontinued Operations, net
of tax [d]
Loss from
Discontinued Operations -- (549) (1,929) (1,849)
Gain (Loss) from Disposal -- 3,335 (4,850) (3,490)
----------- ----------- ----------- -----------
-- 2,786 (6,779) (5,339)
Net Income 64,778 67,808 181,944 169,990
Preferred Stock Dividends 1,748 1,816 5,319 5,841
----------- ----------- ----------- -----------
NET INCOME AVAILABLE
TO COMMONSHAREHOLDERS $ 63,030 $ 65,992 $ 176,625 $ 164,149
=========== =========== =========== ===========
NET INCOME FROM
CONTINUING OPERATIONS
(after preferred dividends) $ 63,030 $ 63,206 $ 183,404 $ 169,488
=========== =========== =========== ===========
Weighted-Average Common
Shares Outstanding
Basic 47,601,175 52,081,891 49,717,418 52,198,251
Diluted 50,857,496 55,966,289 53,092,636 56,259,541
Earnings (Loss) Per
Common Share
Basic
Net income from
Continuing Operations $ 1.32 $ 1.21 $ 3.69 $ 3.25
Loss from
Discontinued Operations -- (0.01) (0.04) (0.04)
Gain(Loss)
from Disposal -- 0.07 (0.10) (0.07)
----------- ----------- ----------- -----------
$ 1.32 $ 1.27 $ 3.55 $ 3.14
=========== =========== =========== ===========
Diluted
Net income from
Continuing Operations $ 1.24 $ 1.13 $ 3.47 $ 3.03
Loss from
Discontinued Operations -- (0.01) (0.04) (0.04)
Gain (Loss)
from Disposal -- 0.06 (0.09) (0.06)
----------- ----------- ----------- -----------
$ 1.24 $ 1.18 $ 3.34 $ 2.93
=========== =========== =========== ===========
Operating Segments [c]
REVENUES
Con-way Freight and
Transportation $ 735,938 $ 729,660 $2,186,421 $2,067,835
Menlo Worldwide Logistics 340,869 354,797 1,036,430 973,782
----------- ----------- ----------- -----------
$1,076,807 $1,084,457 $3,222,851 $3,041,617
=========== =========== =========== ===========
OPERATING INCOME (LOSS)
Con-way Freight and
Transportation $ 95,524[e] $ 95,340 $264,603[e] $255,508
Menlo Worldwide
Logistics 5,462 7,889 17,740 18,553
Vector 1,019 4,220 13,068 13,196
----------- ----------- ----------- -----------
6,481 12,109 30,808 31,749
----------- ----------- ----------- -----------
Con-way Other (670) (2,852) (1,145) (3,176)
----------- ----------- ----------- -----------
101,335 104,597 294,266 284,081
----------- ----------- ----------- -----------
Reconciliation of segments
to consolidated amount:
Income tax related to
Vector, an
equity-method investment 980 (841) (2,210) (2,363)
----------- ----------- ----------- -----------
$102,315 $103,756 $292,056 $281,718
=========== =========== =========== ===========
[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 adjusted.
.
[b] Includes the effect of net tax credits that were primarily related to
the settlement with the IRS of previous tax filings. Excluding these
items, the effective tax rate in the third quarter and first nine months
of 2006 was 37.5% and 37.7%, respectively, and in 2005, was 35.8% and
37.0%, respectively.
[c] 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.
[d] Discontinued operations in the periods presented relate to the closure
of Con-way Forwarding in June 2006, the sale of MWF in 2004, and the
shut-down of EWA in 2001. The gain (loss) from disposal in 2006 primarily
reflects a $5.1 million second-quarter loss from the closure of Con-way
Forwarding while the prior year primarily reflects disposal-related gains
and losses related to MWF and EWA. The loss from discontinued operations in
all periods presented consists of the pre-closure operating results of
Con-way Forwarding.
[e] Includes a $6.2 million third-quarter gain ($0.08 per diluted share) from
the sale of assets related to Con-way Expedite.
Con-way Inc.
Condensed Balance Sheets
(Dollars in thousands)
September 30, December 31,
2006 2005
---------------- ----------------
ASSETS
Current assets $ 1,147,862 $ 1,423,047
Current assets of
discontinued operations 10,522 21,000
Property, plant and equipment, net 1,095,739 950,998
Other assets 80,294 85,527
---------------- ----------------
Total Assets $ 2,334,417 $ 2,480,572
================ ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 628,556 $ 590,941
Current liabilities of
discontinued operations 16,037 40,555
Long-term debt and guarantees 559,038 581,469
Other long-term liabilities and
deferred credits 342,003 356,689
Shareholders' equity 788,783 910,918
---------------- ----------------
Total Liabilities and
Shareholders' Equity $ 2,334,417 $ 2,480,572
================ ================