UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES AND EXCHANGE ACT
- --- OF 1934
For the fiscal year ended December 31, 2006
OR
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
- --- 1934
For the transition period from N/A to N/A
COMMISSION FILE NUMBER 1-5046
CON-WAY 401(K) PLAN
Con-way Inc.
Incorporated in the State of Delaware
I.R.S. Employer Identification No. 94-1444798
2855 Campus Drive, Suite 300, San Mateo, California 94403
Telephone Number (650) 378-5200
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons administering the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
Con-way 401(k) Plan
June 27, 2007 /s/ Mark C. Thickpenny
----------------------------
Mark C. Thickpenny
Chairman, Con-way Inc.
Administrative Committee
CON-WAY 401(K) PLAN
(Formerly the Menlo Worldwide Forwarding, Inc. Savings Plan)
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
December 31, 2006 and 2005
(With Report of Independent Registered Public Accounting Firm)
CON-WAY 401(K) PLAN
December 31, 2006 and 2005
Index
Page
Report of Independent Registered Public Accounting Firm 1
Financial Statements:
Statements of Net Assets Available for Benefits - December 31,
2006 and 2005 2
Statement of Changes in Net Assets Available for Benefits -
Year Ended December 31, 2006 3
Notes to Financial Statements 4
Supplemental Schedule
Schedule H, Line 4i - Schedule of Assets (Held at End of Year) as
of December 31, 2006 10
Report of Independent Registered Public Accounting Firm
The Board of Directors
Con-way Inc.:
We have audited the accompanying statements of net assets available for
benefits of the Con-way 401(k) Plan (formerly the Menlo Worldwide Forwarding,
Inc. Savings Plan) as of December 31, 2006 and 2005, and the related statement
of changes in net assets available for benefits for the year ended
December 31, 2006. These financial statements are the responsibility
of the Plan's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as
of December 31, 2006 and 2005, and the changes in its net assets available
for benefits for the year ended December 31, 2006, in conformity with U.S.
generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets
(held at end of year) is presented for purposes of additional analysis and is
not a required part of the basic financial statements but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The supplemental schedule is the responsibility of the Plan's
management. The supplemental schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects, in relation to the basic
financial statements taken as a whole.
/s/ KPMG LLP
Portland, Oregon
June 27, 2007
CON-WAY 401(K) PLAN
Statements of Net Assets Available for Benefits
December 31
----------------------------
2006 2005
------------- -------------
Assets:
Investments, at fair value:
Shares in registered investment
companies $ 7,090,672 $ 7,960,308
Common trust funds 2,254,014 2,180,898
Con-way Common Stock 600,375 1,003,527
Con-way Preferred Stock 878,551 1,090,888
Investments, at cost:
Participant loans 51,247 86,049
------------- -------------
Total investments 10,874,859 12,321,670
------------- -------------
Net assets available for benefits $ 10,874,859 $ 12,321,670
============= =============
See accompanying notes to financial statements.
CON-WAY 401(K) PLAN
Statement of Changes in Net Assets Available for Benefits
Year Ended
December 31,
2006
-------------
Additions (deductions):
Allocation of preferred shares to
participants at fair value (note 1) $ 80,210
Dividend and interest income 55,998
Net appreciation in fair value of
investments (note 3) 782,359
Distributions to participants (2,365,378)
-------------
Total additions (deductions) (1,446,811)
-------------
Net assets available for benefits,
beginning of year $ 12,321,670
-------------
Net assets available for benefits,
end of year $ 10,874,859
=============
See accompanying notes to financial statements.
CON-WAY 401(K) PLAN
Notes to Financial Statements
December 31, 2006 and 2005
(1) Description of Plan
The following description of the Con-way 401(k) Plan (the Plan), formerly
the Menlo Worldwide Forwarding, Inc. Savings Plan, is provided for
general information purposes only. Participants should refer to the Con-
way Employee Benefits Handbook or the Plan document for more complete
information.
The term "Con-way" or "Company" refers to Con-way Inc., formerly CNF
Inc., and subsidiaries. In April 2006, shareholders approved management's
proposal to change the Company's name to Con-way Inc. from CNF Inc.
(a) General
The Plan is a defined contribution plan and is subject to the
provisions of the Employee Retirement Income Security Act of 1974, as
amended (ERISA). Overall responsibility for administering the Plan
rests with the Con-way Inc. Administrative Committee (the Committee),
which is appointed by the Chief Executive Officer of Con-way. Menlo
Worldwide Forwarding, Inc. was an indirect wholly owned subsidiary of
Con-way that was sold in December 2004, as discussed below. The
Plan's trustee, T. Rowe Price Trust Company (the Trustee), is
responsible for the management and control of the Plan's assets, which
are held in individual participant investment accounts (collectively
known as the Trust).
In December 2004, Con-way completed the sale of Menlo Worldwide
Forwarding, Inc. and its subsidiaries and Menlo Worldwide Expedite!,
Inc. (collectively referred to as MWF) to United Parcel Service, Inc.
(UPS). The active employees of MWF ceased participation in the Plan as
of the sale date and were permitted to transfer their Plan account
balances to a UPS-sponsored defined contribution plan.
In September 2000, the pilots of Emery Worldwide Airlines (EWA), a
wholly owned subsidiary of Con-way, ceased participation in the Con-
way Retirement Savings Plan (RSP), formerly the Con-way Thrift and
Stock Plan, and their elective deferrals began being contributed to
the Plan. The pilots' vested balances in the RSP were transferred to
the Plan in December 2000.
(b) Amendments
In November 2006, the Committee approved the proposal to change the
name of the plan from the Menlo Worldwide Forwarding, Inc. Savings
Plan to the Con-way 401(k) Plan.
For amendments effective January 1, 2007, see note 6, Subsequent
Event.
(c) Eligibility
Since the sale of MWF in December 2004, there have been no active
employees eligible for the Plan. Employees were eligible to
participate in the Plan if they were covered by a collective
bargaining unit that specifically provided for participation in the
Plan. Employees were eligible to participate in the Plan upon hire if
they were regular full-time employees. Supplemental or part-time
employees became eligible upon completion of one year of service
during which the employee worked 750 hours.
(d) Contributions
Prior to the sale of MWF in December 2004, participants could
contribute up to 50% of their compensation into the Plan, and could
direct contributions to any one or more of the investment funds
offered under the Plan. Con-way made no matching contributions for
participants of the Plan.
Participants who formerly participated in the RSP, as discussed under
"General" above, and participants who transferred from noncontractual
to contractual positions within Con-way, are awarded Con-way preferred
stock as a substitute for cash dividends used for debt service on RSP
debt. For 2006, these participants received Con-way preferred stock
with a fair value of $80,210, as shown on the Statement of
Changes in Net Assets Available for Benefits.
(e) Participant Accounts
A separate account is maintained for each participant of the Plan.
Allocations of net Plan earnings are based upon participant account
balances. The benefits to which participants are entitled are the
benefits that can be provided from participants' vested accounts.
(f) Vesting
Participants are fully vested at all times in all contributions made
to the Plan plus net earnings thereon.
(g) Participant Loans
The Plan had a loan provision allowing participants access to funds.
Each participant could borrow from a minimum of $1,000 up to a maximum
of $50,000 from the participant's fund account, reduced by the excess
of the participant's highest outstanding loan balance during the one-
year period on the day before the loan was made over the participant's
current outstanding loan balance on the date of the loan. Loans do not
exceed 50% of a participant's vested account balance (subject to
administrative adjustment to assure compliance with the 50% limit).
The loans are secured by the vested balance in the participant's
account. Loans outstanding at December 31, 2006 were related to
employees receiving long-term disability benefits and bear interest at
rates ranging from 8.75% to 10.00%.
In connection with the sale of MWF, as described above, a participant
with an outstanding loan balance could either transfer the balance to
a UPS-sponsored plan (if eligible for a UPS plan) or pay off the loan
balance. If the loan was not paid off within 75 days, the loan was
defaulted and offset against the participant's vested balance, in
accordance with plan rules.
(h) Distribution to Participants
Employees became eligible for distribution in connection with the sale
of MWF, as described above. Distributions are payable in the form of
lump-sum payments or in a series of substantially equal annual
installments.
(i) Plan Termination
Although it has not expressed any intent to do so, Con-way has the
right under the Plan to terminate the Plan subject to the provisions
of ERISA. In the event of Plan termination, Con-way shall direct the
Trustee with respect to the distribution of accounts to or for the
exclusive benefit of participants or their beneficiaries.
(2) Summary of Significant Accounting Policies
(a) Basis of Accounting
The accompanying financial statements have been prepared using the
accrual method of accounting.
(b) Financial Instruments
The investments in the accompanying financial statements are stated at
quoted market prices, which approximate fair value as of December 31,
2006 and 2005, except for (1) participant loans outstanding that are
valued at cost, which approximates fair value and, (2) Con-way
preferred stock, which does not have a quoted market value, and is
stated at fair value as determined by an annual independent appraisal.
(c) Investments
The Plan offers various investments in securities that are generally
exposed to various risks, such as interest-rate, credit and overall
market-volatility risks. Due to the risk associated with certain
investment securities, it is reasonably possible that the value of
investment securities will change in the near term and that such
changes could materially affect amounts reported in the Statement of
Net Assets Available for Benefits.
(d) Income Recognition
The annual change in market value, including realized gains and
losses, is reported in net appreciation in fair value of investments
in the accompanying Statement of Changes in Net Assets Available for
Benefits.
Interest income is recorded on the accrual basis. Dividends are
recorded on the ex-dividend date. Purchases and sales of securities
are recorded on the trade-date basis.
(e) Operating Expenses
During 2006, all administrative expenses of the Plan were paid by Con-
way.
(f) Payment of Benefits
Benefits paid to participants are recorded upon distribution.
(g) Estimates
Con-way makes estimates and assumptions when preparing the financial
statements in conformity with U.S. generally accepted accounting
principles. These estimates and assumptions affect the amounts
reported in the accompanying financial statements and notes. Actual
results could differ from those estimates.
(3) Investments
The following investments represent 5% or more of the Plan's net assets.
December 31
--------------------------
2006 2005
------------ ------------
Shares in registered investment companies:
T. Rowe Price Growth Stock Fund, 76,057
and 94,627 shares, respectively $ 2,405,676 $ 2,687,396
T. Rowe Price Equity Income Fund, 43,285
and 56,791 shares, respectively 1,279,071 1,472,020
T. Rowe Price Science and Technology Fund,
68,250 and 97,343 shares respectively 1,430,524 1,905,003
T. Rowe Price International Stock Fund,
zero and 44,709 shares respectively -- 661,249
Dodge & Cox International Stock Fund,
16,303 and zero shares, respectively 711,795 --
Common trust funds:
T. Rowe Price U.S. Treasury Money Market Trust,
1,237,781 and 1,048,350 shares respectively 1,237,781 1,048,350
Con-way equity:
Con-way Common Stock, 13,632 and 17,955 shares,
respectively 600,375 1,003,527
Con-way Preferred Stock, 3,780 and 4,146 shares,
respectively 878,551 1,090,888
During 2006, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) appreciated
(depreciated) in value as follows:
Shares in registered investment companies $ 964,420
Common trust funds 122,375
Con-way Common Stock (182,028)
Con-way Preferred Stock (122,408)
-------------
$ 782,359
=============
(4) Income Tax Status
The Internal Revenue Service has determined and informed Con-way by a
letter dated October 3, 2001, that the Plan and related trust are
designed in accordance with applicable sections of the Internal Revenue
Code (the Code). The Plan has been amended since receiving the
determination letter. However, Con-way believes that the Plan is designed
and is currently being operated in compliance with the applicable
requirements of the Code. Therefore, Con-way believes that the Plan was
qualified and the related trust was tax exempt as of the financial
statement date.
(5) Related-Party Transactions
Certain Plan investments are shares in funds managed by T. Rowe Price
Trust Company, the Trustee as defined by the Plan. Therefore, these
investments and investment transactions qualify as party-in-interest.
(6) Subsequent Event
As of January 1, 2007, drivers of Con-way Truckload LLC ceased
participation in the RSP and became eligible to participate in the Plan.
In January 2007, approximately $1,200,000 of the drivers' account
balances were transferred from the RSP to the Plan. Certain provisions of
the Plan were amended to reflect the addition of active employees to the
Plan:
(a) Eligibility
Eligibility is restricted to employees of Con-way Truckload LLC (CTL)
who are classified as drivers. CTL drivers are eligible to
participate in the Plan if the employee is not covered by a collective
bargaining agreement, is not a leased employee or is not a nonresident
alien. There are no age or service requirements for eligibility
except that a supplemental employee must complete one year of service
during which the employee works 1,000 hours.
(b) Contributions
Participants may contribute up to 50% of their eligible compensation,
subject to certain limitations. Con-way makes matching contributions
equal to 50% of the participants' contributions, but not exceeding
2.0% of the participants' eligible compensation. Con-way matching
contributions are in the form of open-market purchases of Con-way
Common Stock from cash contributions by Con-way.
(c) Vesting
Amounts attributable to matching contributions made after December
31, 2006, and amounts transferred from the RSP that are attributable
to matching contributions under the RSP vest as follows:
Period of Service Percent Vested
----------------- --------------
Less than 2 years -0-
2 years 40%
3 years 60%
4 years 80%
5 or more years 100%
(d) Participant Loans
The Plan has a loan provision allowing participants access to funds.
Loans can be no less than $1,000 and cannot exceed the lesser of
$50,000 or 50% of a participant's vested account balance (subject to
administrative adjustment to assure compliance with the 50% limit).
Loans can be made for a term not to exceed 4-1/2 years. Principal and
interest are paid ratably through payroll deductions.
(e) Payments and Benefits
Participants can receive a total distribution from their accounts upon
death or termination of employment. Disabled participants can receive a
partial distribution of their accounts, excluding matching
contributions receive after January 1, 2002, provided they qualify for
benefits under Con-way's long-term disability coverage. Other types
of withdrawals are permitted by the Plan in limited situations.
Participants can elect to have their accounts distributed in a single
lump sum or in a series of substantially equal annual installments, as
defined by the Plan. Distributions will be made in cash except that
(1) participant accounts invested in Common Stock can, at the
direction of the participant, be paid in shares and (2) participant
allocations of Preferred Stock will be converted into shares of Common
Stock and can, at the direction of the participant, then be paid in
common shares or in cash.
Schedule I
CON-WAY 401(K) PLAN
EIN 94-1444798
Plan No. 112
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2006
Identity
of issue
borrower, Description of investment
lessor, including maturity date,
or similar rate of interest,collateral, Current
party par, or maturity value Cost value
- ---------- ----------------------------- -------------- --------------
Shares in registered
investment companies:
*T.Rowe Price Growth Stock Fund
(76,056.790 shares) $ 1,957,189 $ 2,405,676
*T.Rowe Price Equity Income Fund
(43,284.986 shares) 1,059,521 1,279,071
*T.Rowe Price Science and Technology
Fund (68,250.173 shares) 1,889,674 1,430,524
*T.Rowe Price Small-Cap Stock Fund
(11,437.177 shares) 324,655 391,495
*T.Rowe Price Retirement 2005 Fund
(11,684.775 shares) 125,823 135,660
*T.Rowe Price Retirement 2010 Fund
(394.282 shares) 5,824 6,257
*T.Rowe Price Retirement 2015 Fund
(1,146.869 shares) 13,264 14,187
*T.Rowe Price Retirement 2020 Fund
(131.301 shares) 1,930 2,278
*T.Rowe Price Retirement 2025 Fund
(17,561.343 shares) 179,188 225,839
*T.Rowe Price Retirement 2030 Fund
(1,594.101 shares) 25,999 29,634
*T.Rowe Price Retirement Income Fund
(4,469.253 shares) 54,419 58,681
Allianz Global
Investors PIMCO Total Return Fund
(37,177.359 shares) 395,531 385,901
J.P. Morgan
Investment
Management, Undiscovered Managers Small-Cap
Inc. Growth Fund (1,324.969 shares) 14,766 13,674
Dodge & Cox Dodge & Cox International Stock
(16,303.131 shares) 631,491 711,795
Common trust funds:
*T.Rowe Price Equity Index Trust
(11,550.473 shares) 375,252 478,190
*T.Rowe Price Bond Index Trust
(475.794 shares) 9,664 11,134
*T.Rowe Price U.S. Treasury Money Market
Trust (1,237,780.550 shares) 1,237,781 1,237,781
*T.Rowe Price Retirement Strategy Trust -
Balanced (18,125.528 shares) 393,496 526,909
Common stock:
*Con-way Inc. Con-way Common Stock
(13,632.482 shares) 407,721 600,375
Preferred stock:
*Con-way Inc. Con-way Preferred Stock
(3,780.179 shares) 574,846 878,551
Participant loans:
*Plan
participants Participant loans with interest
from 8.75% to 10.00% and maturity
dates from 2003 to 2004 -- 51,247
--------------
Total investments $ 10,874,859
==============
*Represents a party-in-interest transaction as of December 31, 2006.
Note: Cost is calculated using the historical rolling-average-cost method.
See accompanying report of independent registered
public accounting firm.