EXHIBIT 99
NEWS RELEASE
Contacts:
Investor: Patrick Fossenier 1+650-378-5353
News Media: Gary Frantz 1+650-378-5335
CON-WAY INC. REPORTS SECOND-QUARTER 2007 RESULTS
SAN MATEO, Calif.-July 18, 2007 -- Con-way Inc. (NYSE:CNW) today reported net
income from continuing operations for the second quarter of 2007 of $47.7
million (after preferred stock dividends), or 99 cents per diluted share. The
results compared with second-quarter 2006 net income from continuing
operations (after preferred stock dividends) of $74.1 million, or $1.40 per
diluted share.
Earnings from continuing operations in the 2007 second quarter included a
charge of 10 cents per diluted share for costs from litigation of a vehicular
casualty claim. Results for both the 2007 and 2006 second quarters also
included the effect of discrete tax items, which reduced the tax provision by
$2.5 million, increasing earnings by 5 cents per diluted share in 2007; and
$6.9 million, adding 13 cents per diluted share to earnings in 2006. The 2006
second-quarter results for continuing operations also included $4.7 million
in earnings, or 8 cents per diluted share, from Vector SCM, LLC, the former
logistics joint venture with General Motors, which was sold at the end of
2006.
Operating income in the 2007 second quarter was $77.6 million, down 30.6
percent from $111.8 million earned in the second quarter a year ago. Revenue
was $1.07 billion, a decrease of 2.4 percent from last year's second-quarter
revenue of $1.10 billion.
Net income available to common shareholders in the 2007 second quarter was
$46.4 million, or 96 cents per diluted share. This compares to previous-year
second-quarter net income of $68.9 million, or $1.30 per diluted share. Both
the 2007 and 2006 second-quarter net income to common shareholders included
the results of discontinued operations. These operations had a net loss of 3
cents per diluted share in the 2007 second quarter, and a net loss of 10
cents per diluted share in the comparable period of 2006.
Commenting on the quarter, Con-way President and CEO Douglas W. Stotlar said,
"The soft market for less-than-truckload (LTL) freight remains highly
competitive and price-sensitive, which has put pressure on yields. Given the
market conditions we have been experiencing, we expect LTL freight demand to
remain restrained through the remainder of 2007 leading to moderate year-
over-year volume growth."
Stotlar noted that the company's recently announced agreement to acquire
Contract Freighters, Inc. (CFI), a respected, industry leading North America
truckload carrier with more than 3,000 employees, and a fleet of 2,600
tractors and 7,000 trailers, was being well received. "I have been very
encouraged with the positive feedback from the CFI team, as well as our
customers, employees and the financial markets," Stotlar said. "We're excited
about this acquisition and the strategic growth opportunities it presents.
We expect the transaction to close in the third quarter."
He added that the company's Menlo Logistics unit continues to perform well
and is on track to achieve low double-digit year-over-year growth in net
revenues and operating income. Menlo earlier announced an agreement to
acquire Cougar Holdings Pte. Ltd., a Singapore-based third-party logistics
provider with $22 million in annual revenues and operations throughout
Southeast Asia. The company expects the transaction to close during the third
quarter.
The effective tax rate for the 2007 second quarter was 34.2 percent compared
to 31.2 percent in the same period of 2006, with both periods affected by the
previously mentioned discrete tax items.
The company completed its stock repurchase program on June 29, as authorized
by Con-way's Board in April 2006. Under the program, the company acquired
7.3 million shares and utilized substantially all of the funding
authorization of $400 million.
CON-WAY FREIGHT AND TRANSPORTATION
For the second quarter of 2007, Con-way Freight, the company's regional less-
than-truckload operation, and Con-way Transportation, which consists of the
company's full-truckload and trailer manufacturing divisions, reported the
following results:
* Operating income of $70.3 million, a decrease of 31.2 percent from the
$102.3 million earned in the year-ago period. Results included an $8.0
million pre-tax charge for the previously mentioned litigation of a
vehicular casualty claim, which was partially mitigated by other self-
insurance-related activities.
* Revenues of $749.8 million, slightly below last year's second-quarter
revenues of $754.4 million.
* Tonnage per day handled by Con-way Freight increased 4.4 percent over
the previous-year second quarter.
* Yield for Con-way Freight declined 3.5 percent from the previous-year
second quarter, and was down 3.4 percent excluding the fuel surcharge.
* Con-way Freight achieved an operating ratio of 90.5 in the 2007 second
quarter compared to 86.7 in second-quarter 2006. The operating ratio was
affected by higher employee-related costs for increased driver
recruitment and training, the previously-mentioned vehicular casualty
claim, and rebranding expense.
MENLO LOGISTICS
For the second quarter of 2007, Menlo Logistics reported:
* Operating income of $6.9 million, a 13.8 percent increase from $6.1
million in the second quarter of 2006, which does not include Vector's
earnings of $4.7 million. At the end of 2006, Menlo sold its membership
interest in Vector to General Motors.
* Revenue of $323.9 million, down 6.3 percent from the previous-year
second-quarter revenue of $345.7 million.
* Net revenue of $105.9 million, a 9.7 percent increase compared to $96.6
million in the previous-year second quarter.
2007 OUTLOOK
The company expects full-year 2007 earnings from continuing operations to be
between $3.25 and $3.45 per diluted share, based on an expected average
number of diluted shares outstanding of 48.4 million for the year. Con-way's
effective tax rate is expected to be approximately 38 percent for the
remainder of the year. Current 2007 guidance does not reflect the
acquisition of North America truckload carrier Contract Freighters, Inc.
which was announced earlier this week. Following the close of the
transaction, which is expected by the end of the third quarter, Con-way will
update its full-year 2007 earnings guidance as appropriate to reflect the
inclusion of CFI's financial results.
INVESTOR CONFERENCE CALL
Con-way will hold a conference call for the investment community to discuss
its second-quarter financial results tomorrow, Thursday, July 19, 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, in the Investor Relations section. Related financial
and operating statistics to be discussed on the conference call will also
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 4371197. The replay will also be available at the same web-casting site
providing access to the live call.
About Con-way Inc.
Con-way Inc. (NYSE:CNW) is a $4.2 billion freight transportation and
logistics services company headquartered in San Mateo, Calif. Named FORTUNE
magazine's "Most Admired Company" in transportation and logistics for 2007,
Con-way delivers industry-leading services through three primary operating
companies: Con-way Freight, Con-way Truckload Services and Menlo Logistics.
These operating units provide high-performance, day-definite less-than-
truckload and full truckload and intermodal freight transportation, as well
as logistics, warehousing and supply chain management services, and trailer
manufacturing. Con-way Inc. and its subsidiaries operate from more than 500
locations across North America and in 20 countries. For more information
about Con-way, visit us on the Web 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, any statements regarding the proposed acquisition of CFI
and proposed related financing, 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 proposed acquisition of CFI and proposed related financing
(including without limitation the possibility that such acquisition may not
be consummated due to failure of regulatory approval or other closing
conditions to be satisfied, risks relating to the financing, integration
risks and risks that acquisition synergies are not realized), the possibility
of defaults under Con-way's $400 million credit agreement and other debt
instruments (including without limitation 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 2006 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 OPERATING RESULTS
(Dollars in thousands except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
2007 2006 2007 2006
----------- ----------- ----------- -----------
REVENUES
Freight and Transportation $749,808 $754,353 $1,431,518 $1,450,483
Menlo Logistics [a] 323,909 345,699 644,390 695,561
----------- ----------- ----------- -----------
1,073,717 1,100,052 2,075,908 2,146,044
=========== =========== =========== ===========
OPERATING INCOME (LOSS)
Freight and Transportation 70,328 102,276 124,203 169,079
Menlo Logistics 6,935 6,093 13,471 12,278
Vector 0 4,665 (2,699) 8,859
Con-way Other 358 (1,201) (1,681) (475)
----------- ----------- ----------- -----------
77,621 111,833 133,294 189,741
----------- ----------- ----------- -----------
Other Expense, Net 2,501 1,463 5,829 2,187
----------- ----------- ----------- -----------
Income Before Taxes 75,120 110,370 127,465 187,554
Income Tax Provision 25,670 34,418 47,296 63,609
----------- ----------- ----------- -----------
Income from Continuing
Operations 49,450 75,952 80,169 123,945
----------- ----------- ----------- -----------
Discontinued Operations,
net of tax
Loss from Discontinued
Operations - (1,176) - (1,929)
Gain (Loss) from
Disposal (1,310) (4,044) 1,609 (4,850)
----------- ----------- ----------- -----------
(1,310) (5,220) 1,609 (6,779)
Net Income 48,140 70,732 81,778 117,166
Preferred Stock Dividends 1,765 1,808 3,479 3,571
----------- ----------- ----------- -----------
NET INCOME AVAILABLE
TO COMMON SHAREHOLDERS $46,375 $68,924 $78,299 $113,595
=========== =========== =========== ===========
NET INCOME FROM CONTINUING
OPERATIONS AVAILABLE TO
COMMON SHAREHOLDERS $47,685 $74,144 $76,690 $120,374
=========== =========== =========== ===========
Weighted-Average Common
Shares Outstanding
Basic 45,286,315 49,676,912 45,636,617 50,793,078
Diluted 48,415,928 53,104,005 48,757,823 54,228,769
Earnings (Loss) Per Common Share
Basic
Net Income from
Continuing Operations $1.05 $1.49 $1.68 $2.37
Loss from Discontinued
Operations - (0.02) - (0.04)
Gain (Loss) from Disposal (0.03) (0.08) 0.04 (0.09)
----------- ----------- ----------- -----------
$1.02 $1.39 $1.72 $2.24
=========== =========== =========== ===========
Diluted
Net Income from
Continuing Operations $0.99 $1.40 $1.58 $2.23
Loss from Discontinued
Operations - (0.02) - (0.04)
Gain (Loss) from Disposal (0.03) (0.08) 0.04 (0.09)
----------- ----------- ----------- -----------
$0.96 $1.30 $1.62 $2.10
=========== =========== =========== ===========
$105,911 $96,574 $210,034 $190,971
=========== =========== =========== ===========
[a] Menlo Logistics net revenue (revenue less purchased transportation of
$217,998 and $249,125 for the three months ended June 30, 2007 and 2006,
respectively; $434,356 and $504,590 for the six months ended June 30, 2007
and 2006, respectively.)
Con-Way Inc.
CONDENSED BALANCE SHEETS
(Dollars in thousands)
June 30, December 31,
2007 2006
------------ ------------
ASSETS
Current assets $1,137,428 $1,090,484
Property, plant and equipment, net 1,093,809 1,117,975
Other assets 83,050 93,430
------------ ------------
Total Assets $2,314,287 $2,301,889
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $635,767 $559,802
Long-term debt and guarantees 532,357 557,723
Other long-term liabilities and deferred
credits 399,452 443,585
Shareholders' equity [a] 746,711 740,779
------------ ------------
Total Liabilities
and Shareholders' Equity $2,314,287 $2,301,889
============ ============
[a] Effective January 1, 2007, Con-way adopted the measurement-date provisions
ofSFAS 158, Employers Accounting for Defined Benefit Pension Plans -an
amendment of SFAS 87, 88, 106 and 123R. In connection with the revision
of its measurement date to December 31 from November 30, Con-way recorded
a $13.0 million net increase to shareholders equity, consisting of a
$15.6 million reduction in the accumulated other comprehensive loss and a
$2.6 million decrease to beginning retained earnings.