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, 2007
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, 2008 /s/ Mark C. Thickpenny
----------------------------
Mark C. Thickpenny
Chairman, Con-way Inc.
Administrative Committee
CON-WAY 401(K) PLAN
Financial Statements and Supplemental Schedule
December 31, 2007 and 2006
(With Report of Independent Registered Public Accounting Firm)
CON-WAY 401(K) PLAN
Index
Page
Report of Independent Registered Public Accounting Firm 1
Financial Statements:
Statements of Net Assets Available for Benefits - December 31,
2007 and 2006 2
Statement of Changes in Net Assets Available for Benefits - Year
ended December 31, 2007 3
Notes to Financial Statements 4
Supplemental Schedule
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
as of December 31, 2007 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 as of December 31, 2007 and 2006, and the
related statement of changes in net assets available for benefits for the
year ended December 31, 2007. 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, 2007 and 2006, and the changes in its net assets available
for benefits for the year ended December 31, 2007, 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 Schedule
H, Line 4i, schedule of assets (held at end of year) as of December 31, 2007
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, 2008
CON-WAY 401(K) PLAN
Statements of Net Assets Available for Benefits
December 31, 2007 and 2006
Assets 2007 2006
------------ ------------
Investments, at fair value:
Shares in registered investment companies $ 7,496,307 $ 7,090,672
Common trust funds 2,813,851 2,254,014
Con-way Common Stock 798,229 600,375
Con-way Preferred Stock 868,492 878,551
Investments, at cost:
Participant loans 102,371 51,247
------------ ------------
Total investments 12,079,250 10,874,859
------------ ------------
Contributions receivable:
Participants 12,502 --
Con-way 34,337 --
------------ ------------
Total contributions receivable 46,839 --
------------ ------------
Net assets available for benefits $12,126,089 $10,874,859
============ ============
See accompanying notes to financial statements.
CON-WAY 401(K) PLAN
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 2007
Contributions:
Participant contributions $ 913,299
Con-way contributions (note 1) 188,987
Rollover contributions 101,090
------------
1,203,376
Transfers in from Con-way Retirement Savings Plan 1,432,833
Allocation of preferred shares to participants at fair
value (note 1) 78,169
Investment income:
Dividend and interest income 81,896
Net appreciation in fair value of investments (note 3) 608,236
------------
690,132
Distributions to participants (2,153,280)
------------
Net increase 1,251,230
Net assets available for benefits, beginning of year 10,874,859
------------
Net assets available for benefits, end of year $12,126,089
============
See accompanying notes to financial statements.
CON-WAY 401(K) PLAN
Notes to Financial Statements
December 31, 2007 and 2006
(1) Description of Plan
The following description of the Con-way 401(k) Plan (the 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. and subsidiaries.
(a) General
The Con-way sponsored Plan provides eligible employees the opportunity
to save for their retirement through the Plan's profit-sharing,
salary-deferral and stock-ownership features. The Plan is intended to
qualify as a profit-sharing plan under Section 401(a) of the Internal
Revenue Code (the Code), with a salary-deferral feature qualified
under Section 401(k) of the Code 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. 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).
Between December 2004 and January 2007 there were no active employees
eligible for the Plan. However, the Plan's assets include account
balances of certain former employees of Con-way's discontinued
operations relating to (1) the sale of Menlo Worldwide Forwarding,
Inc. and its subsidiaries and Menlo Worldwide Expedite!, Inc. in 2004
and (2) the shut-down of Emery Worldwide Airlines, Inc. in 2001.
As of January 1, 2007, drivers of Con-way Truckload LLC (Truckload)
ceased participation in the Con-way Retirement Savings Plan (RSP) and
became eligible to participate in the Plan. As a result, $1,432,833
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.
(b) Eligibility
Beginning January 1, 2007, eligibility is restricted to employees of
Truckload who are classified as drivers. Truckload 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. During 2007, 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.
(c) Contributions
Beginning January 1, 2007, participants may contribute up to 50% of
their eligible compensation, subject to certain limitations. Con-way
makes matching contributions equal to 50% of the first four percent of
eligible compensation that participants contribute to the Plan.
During 2007, Con-way matching contributions are in the form of
open-market purchases of Con-way Common Stock from cash contributions
by Con-way.
Participants who formerly participated in the RSP are awarded Con-way
preferred stock as a substitute for cash dividends used for debt
service on RSP debt. For 2007, these participants received Con-way
preferred stock with a fair value of $78,169, as shown on the
Statement of Changes in Net Assets Available for Benefits.
(d) 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.
(e) Vesting
Participants are fully vested at all times in all employee
contributions made to the Plan plus net earnings thereon.
For Truckload employees who participated in the plan during 2007,
including amounts transferred from the RSP that are attributable to
matching contributions under the RSP, the vesting schedule for Con-way
matching contributions is as follows:
Less than two years 0%
Two years 40
Three years 60
Four years 80
Five or more years 100
At December 31, 2007, forfeitures totaling $44,901 were available to
reduce future contributions.
(f) 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. Loans
outstanding at December 31, 2007 bear interest at rates ranging from
8.75% to 10.00%. Principal and interest are paid ratably through
payroll deductions. Starting July 1, 2007, participants may have a
maximum of one loan outstanding at a time.
(g) 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 received 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.
(h) Plan Termination
Although Con-way has no current intention to terminate the Plan, it
may do so at any time by resolution of the Board of Directors. In the
event that the Plan is terminated, the net assets of the Plan shall be
distributed to participants in the amount credited to their accounts.
(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
Investments in shares of registered investment companies are stated at
fair value, based on the net asset value of the underlying investments
and are valued daily. Investments in common and collective trusts are
stated at fair value based on the value of the underlying investments
and are expressed in units. The Plan's investments in common and
collective trusts are valued using the audited financial statements of
the collective trusts at year end. The Con-way Common Stock is stated
at fair value based on the quoted market price. The Con-way Preferred
Stock is stated at fair value determined by an annual independent
appraisal. Participant loans are recorded at cost, which approximates
fair value.
(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 and that such changes could
materially affect amounts reported in the Statements of Net Assets
Available for Benefits.
The Plan invests in securities with contractual cash flows, such as
asset backed securities, collateralized mortgage obligations and
commercial mortgage backed securities, including securities backed by
subprime mortgage loans. The value, liquidity and related income of
these securities are sensitive to changes in economic conditions,
including real estate value, delinquencies or defaults, or both, and
may be adversely affected by shifts in the market's perception of the
issuers and changes in interest rates.
(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 2007, all administrative expenses of the Plan were paid by
Con-way. The funds charge investment management fees in accordance
with each fund's prospectus, through a reduction in each fund's Net
Asset Value.
(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.
(h) New Accounting Standards
In September 2006, the FASB issued SFAS No. 157, "Fair Value
Measurements," which defines fair value, establishes a framework for
measuring fair value, and expands disclosures about fair-value
measurements. SFAS 157 applies to other accounting pronouncements
that require or permit fair-value measurements and does not require
any new fair-value measurements. The effective date of SFAS 157 is
the first fiscal year beginning after November 15, 2007. In November
2007, the FASB proposed a one-year deferral of SFAS 157's fair-value
measurement requirement for nonfinancial assets and liabilities,
except for items that are recognized or disclosed at fair value on a
recurring basis. Con-way does not expect the adoption of SFAS 157 to
have a material effect on the Plan's financial statements.
(3) Investments
The following investments represent 5% or more of the Plan's net assets.
December 31
-------------------------
2007 2006
------------ ------------
Shares in registered investment companies:
T. Rowe Price Growth Stock Fund, 63,435 and
76,057 shares, respectively $ 2,135,213 $ 2,405,676
T. Rowe Price Equity Income Fund, 38,356 and
43,285 shares, respectively 1,077,813 1,279,071
T. Rowe Price Science and Technology Fund,
59,838 and 68,250 shares, respectively 1,403,213 1,430,524
Dodge & Cox International Stock Fund, 15,523
and 16,303 shares, respectively 714,383 711,795
Common trust funds:
T. Rowe Price U.S. Treasury Money Market Trust,
1,683,440 and 1,237,781 shares, respectively 1,683,440 1,237,781
Con-way equity:
Con-way Common Stock, 19,216 and
13,632 shares, respectively 798,229 600,375
Con-way Preferred Stock, 3,904 and
3,780 shares, respectively 868,492 878,551
During 2007, 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 $ 652,809
Common trust funds 64,837
Con-way Common Stock (73,022)
Con-way Preferred Stock (36,388)
-----------
$ 608,236
===========
(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 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 registered investment companies
and common trust funds managed by T. Rowe Price, the Plan trustee, as
defined. Therefore, these investments and investment transactions qualify
as party-in-interest transactions.
(6) Subsequent Event
In August 2007, Con-way acquired the outstanding common shares of
Transportation Resources, Inc. ("TRI"). TRI is the holding company for
Contract Freighters, Inc. and other affiliated companies (collectively,
"CFI"). Con-way in September 2007 integrated the Con-way Truckload
business unit with the CFI business unit and in January 2008 changed the
name of the CFI business unit to Con-way Truckload. Effective January 1,
2008, certain employees of the acquired truckload business became
eligible for the Plan. On January 7, 2008, approximately $32 million of
assets were transferred to the Plan from CFI's 401(k) plan. Effective
January 1, 2008, certain provisions of the Plan were amended to reflect
the addition of employees to the Plan:
(a) Eligibility
Eligibility is restricted to employees of Con-way Truckload who are
not sales managers, directors, or vice presidents. Employees are
eligible to participate in the Plan if they are not covered by a
collective bargaining agreement, are not a leased employee or are not
a nonresident alien. There are no age requirements for eligibility.
One year of service is required for participation, and prior service
with CFI (or with a Con-way company) is used for this purpose. A
supplemental employee must complete one year of service during which
the employee works 1,000 hours.
(b) Contributions
Con-way makes matching contributions equal to 50% of the first seven
percent of eligible compensation that participants contribute to the
Plan. Con-way matching contributions will be invested in the same
fund(s) that the participant has chosen for their own employee
contributions.
(c) Vesting
Matching contributions for employees of the acquired truckload
business and employees of Con-way's pre-acquisition truckload business
with less than two years of service will vest as follows:
Less than two years 0%
Two years 20
Three years 40
Four years 60
Five years 80
Six or more years 100
The Plan's prior vesting schedule applies to employees of Con-way's
pre-acquisition truckload business with two or more years of service
as of December 31, 2007.
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, 2007
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
(63,434.733 shares) $ 1,662,629 $ 2,135,213
*T.Rowe Price Equity Income Fund
(38,356.347 shares) 962,232 1,077,813
*T.Rowe Price Science and Technology
Fund (59,838.499 shares) 1,643,946 1,403,213
*T.Rowe Price Small-Cap Stock Fund
(8,361.035 shares) 243,718 254,092
*T.Rowe Price Retirement 2005 Fund
(14,430.107 shares) 159,337 170,131
*T.Rowe Price Retirement 2010 Fund
(5,611.494 shares) 91,572 90,962
*T.Rowe Price Retirement 2015 Fund
(12,528.834 shares) 160,062 158,490
*T.Rowe Price Retirement 2020 Fund
(11,344.485 shares) 202,636 201,251
*T.Rowe Price Retirement 2025 Fund
(34,238.628 shares) 403,917 451,265
*T.Rowe Price Retirement 2030 Fund
(9,569.092 shares) 179,422 182,291
*T.Rowe Price Retirement 2035 Fund
(4,977.344 shares) 67,964 67,244
*T.Rowe Price Retirement 2040 Fund
(4,077.648 shares) 77,312 76,947
*T.Rowe Price Retirement 2045 Fund
(681.498 shares) 8,681 8,675
*T.Rowe Price Retirement Income Fund
(6,837.277 shares) 85,858 90,936
Allianz Global
Investors PIMCO Total Return Fund
(38,573.519 shares) 409,321 412,351
J.P. Morgan
Investment
Management, Undiscovered Managers Small-Cap
Inc. Growth Fund (117.311 shares) 1,097 1,050
Dodge & Cox Dodge & Cox International Stock
Fund (15,523.311 shares) 630,646 714,383
Common trust funds:
*T.Rowe Price Equity Index Trust
(12,681.334 shares) 426,704 553,540
*T.Rowe Price Bond Index Trust
(6,740.137 shares) 164,446 168,841
*T.Rowe Price U.S. Treasury Money Market
Trust (1,683,440.260 shares) 1,683,440 1,683,440
*T.Rowe Price Retirement Strategy Trust -
Balanced (13,158.014 shares) 286,995 408,030
Common stock:
*Con-way Inc. Con-way Common Stock
(19,215.917 shares) 732,365 798,229
Preferred stock:
*Con-way Inc. Con-way Preferred Stock
(3,903.509 shares) 593,610 868,492
Participant loans:
*Plan
participants Participant loans with interest
from 8.75% to 10.00% and maturity
dates from 2003 to 2011 -- 102,371
------------
Total investments $12,079,250
============
* Represents a party-in-interest transaction as of December 31, 2007.
Note: Cost is calculated using the historical rolling-average-cost method.
See report of independent registered public accounting firm.