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, 2008
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 29, 2009 /s/ Benedict J. Bowler
----------------------------
Benedict J. Bowler
Chairman, Con-way Inc.
Administrative Committee
CON-WAY 401(k) PLAN
Financial Statements and Supplemental Schedule
December 31, 2008 and 2007
(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,
2008 and 2007 2
Statement of Changes in Net Assets Available for Benefits - Year
ended December 31, 2008 3
Notes to Financial Statements 4
Supplemental Schedule:
Schedule H, Line 4i - Schedule of Assets (Held at End of Year) as
of December 31, 2008 11
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, 2008 and 2007, and the
related statement of changes in net assets available for benefits for the
year ended December 31, 2008. 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, 2008 and 2007, and the changes in its net assets available
for benefits for the year ended December 31, 2008, 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 - schedule H, line 4i - schedule of assets
(held at end of year) as of December 31, 2008 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 29, 2009
CON-WAY 401(K) PLAN
Statements of Net Assets Available for Benefits
December 31, 2008 and 2007
Assets 2008 2007
------------ ------------
Investments, at fair value:
Shares in registered investment companies $24,366,150 $ 7,496,307
Common trust funds 4,874,728 2,813,851
Con-way Common Stock 1,022,044 798,229
Con-way Preferred Stock 603,273 868,492
------------ ------------
Total investments 30,866,195 11,976,879
------------ ------------
Participant loans 1,413,797 102,371
------------ ------------
Contributions receivable:
Participants 38,030 12,502
Con-way 288,027 34,337
------------ ------------
Total contributions receivable 326,057 46,839
------------ ------------
Net assets available for benefits $32,606,049 $12,126,089
============ ============
See accompanying notes to financial statements.
CON-WAY 401(K) PLAN
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 2008
Contributions:
Participant contributions $ 3,385,704
Con-way contributions 949,636
Rollover contributions 7,417
------------
Total contributions 4,342,757
Transfers in from non-affiliated plan 33,916,324
Transfers in from Con-way Retirement Savings Plan 640
Allocation of preferred shares to participants at fair value 69,716
Investment income (loss):
Dividend and interest income 161,548
Net depreciation in fair value of investments (12,487,031)
------------
(12,325,483)
Distributions to participants (5,523,994)
------------
Net increase 20,479,960
Net assets available for benefits, beginning of year 12,126,089
------------
Net assets available for benefits, end of year $32,606,049
============
See accompanying notes to financial statements.
CON-WAY 401(K) PLAN
Notes to Financial Statements
December 31, 2008 and 2007
(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).
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. As a result, approximately
$34 million of assets were transferred to the Plan from CFI's 401(k)
plan. Certain provisions of the Plan were amended to reflect the
addition of employees to the Plan.
(b) 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.
(c) 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 participants have chosen for their own employee
contributions.
Participants who formerly participated in the Con-way Retirement
Savings Plan (RSP) are awarded Con-way Preferred Stock (Preferred
Stock) as a substitute for cash dividends used for debt service on the
RSP debt. For 2008, these participants received Preferred Stock with
a fair value of $69,716, 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.
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 as of December 31, 2007 vest as
follows:
Less than two years --%
Two years 20
Three years 40
Four years 60
Five years 80
Six or more years 100
Employees of Con-way's pre-acquisition truckload business with two or
more years of service as of December 31, 2007, vest in Matching
contributions as follows:
Less than two years --%
Two years 40
Three years 60
Four years 80
Five or more years 100
At December 31, 2008, forfeitures totaling $56,000 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, 2008 bear interest at rates ranging from
5.00% to 10.00% and are reported at amortized cost. Principal and
interest are paid ratably through payroll deductions.
(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 Con-way Common Stock (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) 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, including those backed by subprime mortgage
loans and other mortgage obligations. 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.
(c) 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.
(d) Operating Expenses
During 2008, 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.
(e) Payment of Benefits
Benefits paid to participants are recorded upon distribution.
(f) 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.
(g)Reclassifications
Certain reclassifications have been made to prior-year balances to
conform to the current-year presentation. These reclassifications
have no impact on the statement of changes in net assets available
for benefits.
(3) Fair-Value Measurements
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 Plan adopted SFAS 157 effective January 1,
2008.
SFAS 157 requires that assets and liabilities reported at fair value be
classified in one of the following three levels:
Level 1 - Quoted market prices in active markets for identical assets or
liabilities
Level 2 - Observable market-based inputs or unobservable inputs that are
corroborated by market data
Level 3 - Unobservable inputs that are not corroborated by market data
The following table summarizes the valuation of Plan assets by the SFAS
157 levels:
December 31, 2008
---------------------------------------------------
Level 1 Level 2 Level 3 Total
----------- ----------- ----------- -----------
Shares in registered
investment companies $24,366,150 $ -- $ -- $24,366,150
Common trust funds -- 4,874,728 -- 4,874,728
Con-way Common Stock 1,022,044 -- -- 1,022,044
Con-way Preferred Stock -- -- 603,273 603,273
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 per-unit values of the common and collective
trusts are derived from 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. Due to the lack of quoted market
prices, Con-way Preferred Stock was valued with an income approach that
utilized a discounted cash flow model. The assumptions used in preparing
the discounted cash flow model included estimates with respect to the
amount and timing of future dividend payments, the probability of
redemption and the rate of return required by investors.
The following table summarizes the changes in fair values of financial
instruments measured using Level 3 inputs:
Con-way
Preferred
Stock
------------
Balance at December 31, 2007 $ --
Transfer in - Adoption of SFAS 157 as of January 1, 2008 868,492
Unrealized losses relating to instruments still held
at the reporting date (215,131)
Purchases, sales, issuances and settlements, net (50,088)
------------
Balance at December 31, 2008 $ 603,273
============
(4) Investments
The following investments represent 5% or more of the Plan's net assets.
December 31
-------------------------
2008 2007
------------ ------------
Shares in registered investment companies:
T. Rowe Price Growth Stock Fund, 74,962 and
63,435 shares,respectively $ 1,442,267 $ 2,135,213
T. Rowe Price Equity Income Fund, 45,204 and
38,356 shares, respectively 772,079 1,077,813
T. Rowe Price Science and Technology Fund,
64,468 and 59,838 shares,respectively 849,684 1,403,213
T. Rowe Price Retirement 2010 Fund, 228,194
and 5,611 shares, respectively 2,558,058 90,962
T. Rowe Price Retirement 2015 Fund, 493,149
and 12,529 shares, respectively 4,093,141 158,490
T. Rowe Price Retirement 2020 Fund, 360,795
and 11,344 shares, respectively 4,008,436 201,251
T. Rowe Price Retirement 2025 Fund, 314,812
and 34,239 shares, respectively 2,499,610 451,265
T. Rowe Price Retirement 2030 Fund, 199,096
and 9,569 shares, respectively 2,221,907 182,291
Dodge & Cox International Stock Fund, 38,722
and 15,523 shares, respectively 848,019 714,383
Common trust funds:
T. Rowe Price U.S. Treasury Money Market Trust,
3,763,621 and 1,683,440 shares, respectively 3,763,621 1,683,440
Con-way equity:
Con-way Common Stock, 38,423 and 19,216
shares, respectively 1,022,044 798,229
Con-way Preferred Stock, 3,661 and 3,904
shares, respectively 603,273 868,492
During 2008, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) depreciated
in value as follows:
Shares in registered investment companies $ (11,349,610)
Common trust funds (334,482)
Con-way Common Stock (587,808)
Con-way Preferred Stock (215,131)
--------------
$ (12,487,031)
==============
(5) 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.
(6) 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.
(7) Subsequent Event
(a) Contributions
In March 2009, the Con-way Board of Directors announced that certain
of its employer contributions would be suspended or limited.
Effective April 1, 2009 (for the second quarter 2009 contributions
and beyond), the Matching contribution was suspended.
(b) Redemption of Con-way Preferred Stock
On May 22, 2009, Con-way exercised its right to redeem all shares of
its Preferred Stock that are outstanding on June 30, 2009, and to pay
the redemption price solely in shares of repurchased Con-way Common
Stock. Upon redemption on June 30, 2009, each share of Preferred
Stock will be exchanged for the number of shares of Common Stock that
could be purchased for $158.565 (an amount equal to the $152.10
redemption value plus $6.465, the amount of the accrued dividend).
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, 2008
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
(74,961.899 shares) $ 2,069,973 $ 1,442,267
*T.Rowe Price Equity Income Fund
(45,203.693 shares) 1,134,011 772,079
*T.Rowe Price Science and Technology
Fund (64,467.653 shares) 1,636,086 849,684
*T.Rowe Price Small-Cap Stock Fund
(12,232.820 shares) 343,253 238,785
*T.Rowe Price Retirement 2005 Fund
(128,966.639 shares) 1,444,432 1,114,272
*T.Rowe Price Retirement 2010 Fund
(228,194.274 shares) 3,497,775 2,558,058
*T.Rowe Price Retirement 2015 Fund
(493,149.489 shares) 5,837,719 4,093,141
*T.Rowe Price Retirement 2020 Fund
(360,795.273 shares) 5,928,334 4,008,436
*T.Rowe Price Retirement 2025 Fund
(314,812.349 shares) 3,785,976 2,499,610
*T.Rowe Price Retirement 2030 Fund
(199,095.606 shares) 3,413,859 2,221,907
*T.Rowe Price Retirement 2035 Fund
(114,639.937 shares) 1,396,974 893,045
*T.Rowe Price Retirement 2040 Fund
(76,299.870 shares) 1,327,008 845,403
*T.Rowe Price Retirement 2045 Fund
(22,596.116 shares) 255,901 166,759
*T.Rowe Price Retirement 2050 Fund
(4,236.878 shares) 37,798 26,269
*T.Rowe Price Retirement 2055 Fund
(2,582.528 shares) 21,388 15,831
*T.Rowe Price Retirement Income Fund
(26,653.917 shares) 340,274 275,068
Allianz Global
Investors PIMCO Total Return Institutional
Fund (146,446.420 shares) 1,544,840 1,484,967
J.P. Morgan
Investment
Management, Undiscovered Managers Small-Cap
Inc. Growth Fund (2,905.128 shares) 21,677 12,550
Dodge & Cox Dodge & Cox International Stock
Fund (38,722.345 shares) 1,510,984 848,019
Common trust funds:
*T.Rowe Price Equity Index Trust
(16,254.201 shares) 568,699 446,340
*T.Rowe Price Bond Index Trust
(14,235.761 shares) 353,612 371,126
*T.Rowe Price U.S. Treasury Money Market
Trust (3,763,621.470 shares) 3,763,621 3,763,621
*T.Rowe Price Retirement Strategy Trust -
Balanced (12,348.248 shares) 281,862 293,641
Common stock:
*Con-way Inc. Con-way Common Stock
(38,422.719 shares) 1,543,849 1,022,044
Preferred stock:
*Con-way Inc. Con-way Preferred Stock
(3,660.639 shares) 556,681 603,273
Participant loans:
*Plan
participants Participant loans with interest
from 5.00% to 10.00% and maturity
dates through 2013 -- 1,413,797
------------
Total investments $32,279,992
============
* Represents a party-in-interest transaction as of December 31, 2008
Note: Cost is calculated using the historical rolling-average-cost method.
See accompanying report of independent registered public accounting firm.