EXHIBIT 99
NEWS RELEASE
Contacts:
Investor: Patrick Fossenier 1+ 650-378-5353
News Media: Gary Frantz 1+ 650-378-5335
CON-WAY INC. REPORTS THIRD-QUARTER 2008 RESULTS
SAN MATEO, Calif.-October 22, 2008-Con-way Inc. (NYSE:CNW) today reported net
income available to common shareholders for the third quarter of 2008 of
$38.8 million (after preferred stock dividends), or 81 cents per diluted
share. The results compare to third-quarter 2007 net income available to
common shareholders (after preferred stock dividends) of $37.3 million, or 78
cents per diluted share.
In the 2007 third quarter, earnings available to common shareholders included
an after-tax charge of 9 cents per diluted share for costs related to
business transformation initiatives and acquisitions.
Operating income in the 2008 third quarter was $78.9 million, an increase of
16.6 percent compared to $67.7 million earned in the third quarter a year
ago. Revenue in the 2008 third quarter was $1.37 billion, an increase of
23.3 percent from last year's third quarter revenue of $1.11 billion,
reflecting organic growth and the effect of acquisitions completed in 2007.
Commenting on the quarter, Con-way President and CEO Douglas W. Stotlar said,
"Our core operations turned in results that were consistent with our updated
earnings guidance, and as expected, were affected by weakening demand and a
difficult pricing environment," he noted. "Lower-than-anticipated employee-
related costs and a lower tax rate in the quarter led to results that were
somewhat better than earlier expectations."
Con-way Freight, the company's less-than-truckload and largest business unit,
recorded an increase in tonnage for the quarter but profit growth remained
constrained by weakening demand and pricing in a highly competitive business
climate. "Demand decelerated as the quarter proceeded, which created
additional pressure on pricing. Productivity measures remained strong as we
saw good operational execution. Our Freight team is doing an excellent job
delivering consistent, reliable service to customers in a very challenging
environment."
Menlo Worldwide Logistics achieved double-digit growth in net revenues but
saw income decline below last year's third quarter. Among the factors was an
operating loss in China as integration expense exceeded expectations.
"Additional costs for operational integration have extended the profit
horizon in China, but we are making progress and expect to turn the corner by
the end of the year," Stotlar said. He added that Menlo's results in the
quarter also were affected as customers experienced continuing pressures to
reduce supply chain costs in response to the economic downturn.
Con-way Truckload turned in a commendable performance in a weakening
environment for truckload freight, Stotlar noted. "We continued to realize
the benefits of synergy between Con-way Truckload, and our freight and
logistics units," he said. "The declining cost of fuel also aided Truckload's
earnings given the nature of their fuel cost recovery mechanisms."
The effective tax rate for the 2008 third quarter was 36.5 percent compared
to 37.1 percent in the same period of 2007. The 2008 tax rate was affected
by discrete tax adjustments which decreased the effective tax rate.
FREIGHT
For the 2008 third quarter, Con-way Freight, the company's regional less-
than-truckload operations, reported:
* Operating income of $61.1 million, an increase of 1.8 percent from the
$60.0 million earned in the year-ago period. The 2007 third quarter was
inclusive of $5.5 million in expense for Con-way's business
transformation initiative in the quarter, and $3.2 million of rebranding
expense.
* Revenues of $808.3 million, a 9.1 percent increase over last year's
third-quarter revenues of $740.8 million.
* Tonnage per day handled by Con-way Freight increased 2.3 percent over
the previous-year third quarter.
* Yield for Con-way Freight improved 7.0 percent from the previous-year
third quarter. Excluding the fuel surcharge, yield declined 1.0 percent.
* Con-way Freight recorded an operating ratio of 92.6 in the 2008 third
quarter compared to 92.0 in third-quarter 2007, which included the
earlier-mentioned business transformation expenses and rebranding costs.
LOGISTICS
For the third quarter of 2008, Menlo Worldwide Logistics, the company's
global logistics and supply chain management operations, reported:
* Operating income of $3.7 million, a 40.6 percent decrease from $6.2
million earned in the third quarter of 2007. Income was affected
primarily by the previously mentioned costs for operations integration
in China.
* Revenue of $419.9 million, up 34.3 percent from the previous-year third-
quarter revenue of $312.6 million. The increase reflects contributions
from acquisitions, as well as new transportation management revenues
from several new customer engagements and the Defense Transportation
Coordination Initiative.
* Net revenue of $127.9 million, an increase of 16.8 percent compared to
$109.6 million in the previous-year third quarter. The increase in net
revenue was primarily attributable to organic growth in revenue from
warehouse-management services and from the Asia acquisitions completed
last year.
TRUCKLOAD
Results for the Truckload segment reflect the operations of Con-way
Truckload. For the third quarter of 2008, the company's full-truckload
transportation operations reported:
* Operating income of $15.2 million, compared to $3.0 million in the
previous-year period, uring which Con-way completed its acquisition
of Contract Freighters, Inc. (CFI). This business unit was subsequently
renamed Con-way Truckload. Earnings for the 2007 third quarter had a
$4.7 million operating loss from Con-way's pre-acquisition truckload
business,
including $1.5 million for the closure of its former Memphis
headquarters. The 2007 quarterly period also benefited from earnings of
CFI from close of the acquisition on August 23, 2007 to the quarter's
end.
* Revenue of $140.9 million, after the elimination of $42.7 million in
inter-company revenues.
* Operating ratio before inter-company eliminations and exclusive of fuel
surcharges was 88.6.
CON-WAY OTHER
Con-way Other includes the company's Road Systems, Inc. trailer manufacturing
unit as well as other corporate activities. These activities produced a small
loss during both the 2008 and 2007 third quarters.
2008 OUTLOOK
Con-way is maintaining its outlook for 2008 full-year diluted earnings per
share from continuing operations at between $2.60 and $2.80 based on an
assumed number of diluted shares outstanding of 48.3 million.
Con-way's effective tax rate is expected to be 38.5 percent for the fourth
quarter and the year, including discrete tax items.
INVESTOR CONFERENCE CALL
Con-way will host a conference call for the investment community tomorrow,
Thursday, October 23 at 11:00 a.m., Eastern Daylight Time (8:00 a.m.
Pacific). On the call, management will review results of the quarter ending
on September 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 webcast
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 65546269. An Internet replay of the presentation will also be available
at the Con-way web site.
Con-way Inc. (NYSE:CNW) is a $4.7 billion freight transportation and
logistics services company headquartered in San Mateo, Calif. A diversified
transportation company, Con-way delivers industry-leading services through
three primary operating companies: Con-way Freight, Con-way Truckload and
Menlo Worldwide 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 acquisition of
Transportation Resources, Inc. and its subsidiaries, including Contract
Freighters, Inc. (collectively, "CFI"), and 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 and the effect of
ongoing litigation alleging that Con-way engaged in price fixing of fuel
surcharges in violation of Federal antitrust laws, 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 acquisition of CFI and related
financing (including 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 or
legislation which potentially could result in an adverse impact on the
company; environmental and tax matters, matters relating to the 1996 spin-off
of Consolidated Freightways Corporation ("CFC"), including, but not limited
to, the arbitration demand and federal lawsuit Con-way has filed against one
of CFC's multi-employer pension funds seeking a finding that Con-way is not
liable for any of CFC's unpaid withdrawal liabilities, the $662 million claim
asserted by that fund against Con-way and the possibility that other CFC
multi-employer pension funds may assert claims against Con-way in the future,
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 2007 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 Nine Months Ended
September 30, September 30,
--------------------- ----------------------
2008 2007 2008 2007
-------- -------- --------- ---------
(c)
REVENUES
Freight $ 808,326 740,769 2,375,654 2,165,381
Logistics (a) 419,896 312,572 1,138,494 956,962
Truckload (b) 140,932 51,991 394,264 54,228
Other 1,015 5,961 3,023 10,630
---------- -------- ---------- ---------
$1,370,169 1,111,293 3,911,435 3,187,201
__________ ________ __________ _________
OPERATING INCOME (LOSS)
Freight $ 61,107 60,029(d) 174,559 179,859(d)
Logistics 3,678 6,188 14,895 19,659
Truckload (b) 15,195 2,975 37,907 6
Vector - - - (2,699)
Other (1,063) (1,510) 424 (2,402)
--------- -------- ---------- ---------
78,917 67,682 227,785 194,423
Other Expense, net 15,169 5,756 43,247 11,585
--------- -------- ---------- ---------
Income before
Income Tax Provision 63,748 61,926 184,538 182,838
Income Tax Provision 23,264 22,961 71,136 67,787
--------- -------- ---------- ---------
Income from
Continuing Operations 40,484 38,965 113,402 115,051
--------- -------- ---------- ---------
Discontinued Operations, net of tax
Gain from Disposal - - 1,609 1,609
--------- -------- ---------- ---------
- - 1,609 1,609
Net Income 40,484 38,965 115,011 116,660
Preferred Stock Dividends 1,655 1,693 5,028 5,172
--------- -------- ---------- ---------
NET INCOME AVAILABLE TO
COMMON SHAREHOLDERS $ 38,829 37,272 109,983 111,488
__________ ________ __________ _________
NET INCOME FROM CONTINUING
OPERATIONS AVAILABLE
TO COMMON SHAREHOLDERS $ 38,829 37,272 108,374 111,879
__________ ________ __________ _________
Weighted-Average Common Shares Outstanding
Basic 45,499,208 44,976,482 45,367,459 45,414,155
Diluted 48,336,200 48,007,691 48,256,429 48,492,037
Earnings (Loss) Per Common Share
Basic
Net Income from
Continuing Operations $ 0.85 $ 0.83 $ 2.39 $ 2.42
Gain from Disposal - - 0.03 0.03
--------- -------- ---------- --------
$ 0.85 $ 0.83 $ 2.42 $ 2.45
__________ ________ __________ ________
Diluted
Net Income from
Continuing Operations $ 0.81 $ 0.78 $ 2.26 $ 2.28
Gain (Loss)
from Disposal - - 0.04 0.04
--------- -------- ---------- --------
$ 0.81 $ 0.78 $ 2.30 $ 2.32
__________ ________ __________ ________
****************************************************
(a) Menlo Logistics' net revenues
Revenues $ 419,896 312,572 1,138,494 956,962
Purchased
Transportation (291,964) (203,015) (757,923) (637,371)
---------- -------- ---------- ---------
Net revenue $ 127,932 109,557 380,571 319,591
__________ ________ __________ _________
(b) Effective August 23, 2007, Con-way acquired Contract Freighters, Inc.
and affiliated companies (collectively, "CFI"). Under purchase-
method accounting, CFI's operating results are included in Con-way's
statements of operating results only for periods subsequent to the
acquisition. In 2007, includes a $1.5 million third-quarter loss
($0.02 per diluted share) for the closure of Con-way Truckload's
former headquarters.
(c) During the fourth quarter of 2007, Con-way identified adjustments
related to the first quarter of 2007. Con-way has determined that
those adjustments were not material to either the first or fourth
quarter. However, for a more accurate presentation, Con-way
elected to revise the first quarter of 2007 by decreasing net income
from continuing operations. For the periods presented, the
adjustments decreased 2007 year-to-date net income from continuing
operations by $4.1 million ($0.09 diluted share).
(d) Includes a $5.5 million third-quarter loss ($0.07 per diluted share)
related to the business-transformation at initiative at Con-way
Freight.
Con-way Inc.
Condensed Balance Sheets
(Dollars in thousands)
ASSETS September 30, 2008 December 31, 2007
Current assets $ 1,003,443 $ 847,106
Property, plant
and equipment, net 1,487,812 1,458,788
Other assets 753,707 703,414
------------- ----------------
Total Assets $ 3,244,962 $ 3,009,308
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 722,687 $ 673,120
Long-term debt
and guarantees 928,777 955,722
Other long-term
liabilities and
deferred credits 564,622 471,370
Shareholders'
equity 1,028,876 909,096
------------- ----------------
Total Liabilities and
Shareholders' Equity $ 3,244,962 $ 3,009,308