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 RETIREMENT SAVINGS 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 Retirement Savings Plan
June 29, 2009
/s/ Benedict J. Bowler
------------------------
Benedict J. Bowler
Chairman, Con-way Inc.
Administrative Committee
CON-WAY RETIREMENT SAVINGS PLAN
Financial Statements and Supplemental Schedule
December 31, 2008 and 2007
(With Report of Independent Registered Public Accounting Firm)
CON-WAY RETIREMENT SAVINGS PLAN
Table of Contents
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 14
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 Retirement Savings 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 RETIREMENT SAVINGS PLAN
Statements of Net Assets Available for Benefits
December 31, 2008 and 2007
2008 2007
------------------------------------------------ -----------------------------------------------
Invested Unallocated Total Invested Unallocated Total
-------------- -------------- -------------- -------------- -------------- --------------
Assets:
Investments, at fair value:
Shares in registered
investment companies $ 441,449,071 $ - $ 441,449,071 $ 626,715,929 $ - $ 626,715,929
Common trust funds 226,487,956 - 226,487,956 212,461,971 - 212,461,971
Con-way Common Stock 87,539,604 - 87,539,604 112,247,601 - 112,247,601
Con-way Preferred Stock 70,113,360 15,623,928 85,737,288 87,843,209 36,104,745 123,947,954
-------------- -------------- -------------- -------------- -------------- --------------
Total investments 825,589,991 15,623,928 841,213,919 1,039,268,710 36,104,745 1,075,373,455
-------------- -------------- -------------- -------------- -------------- --------------
Participant loans 45,476,106 - 45,476,106 50,353,892 - 50,353,892
-------------- -------------- -------------- -------------- -------------- --------------
Net assets held in 401(h)
account 34,524,892 - 34,524,892 33,782,942 - 33,782,942
-------------- -------------- -------------- -------------- -------------- --------------
Contributions receivable:
Participants 1,392,756 - 1,392,756 1,723,689 - 1,723,689
Con-way 20,514,081 - 20,514,081 21,721,137 - 21,721,137
-------------- -------------- -------------- -------------- -------------- --------------
Total contributions
receivable 21,906,837 - 21,906,837 23,444,826 - 23,444,826
-------------- -------------- -------------- -------------- -------------- --------------
Due from Con-way Preferred
Stock Fund - Unallocated 4,317,659 - 4,317,659 5,671,005 - 5,671,005
Dividend receivable - 3,507,007 3,507,007 - 3,747,495 3,747,495
Cash 91,306 - 91,306 82,776 - 82,776
-------------- -------------- -------------- -------------- -------------- --------------
Total assets 931,906,791 19,130,935 951,037,726 1,152,604,151 39,852,240 1,192,456,391
-------------- -------------- -------------- -------------- -------------- --------------
Liabilities:
Notes payable - (22,700,000) (22,700,000) - (43,400,000) (43,400,000)
Accrued interest payable - (969,565) (969,565) - (1,853,705) (1,853,705)
Due to Con-way - (2,537,442) (2,537,442) - (1,893,790) (1,893,790)
Due to Con-way Preferred Stock
Fund - Allocated - (4,317,659) (4,317,659) - (5,671,005) (5,671,005)
Amounts related to
obligation of 401(h)
account (34,524,892) - (34,524,892) (33,782,942) - (33,782,942)
-------------- -------------- -------------- -------------- -------------- --------------
Total liabilities (34,524,892) (30,524,666) (65,049,558) (33,782,942) (52,818,500) (86,601,442)
-------------- -------------- -------------- -------------- -------------- --------------
Net assets available for
benefits $ 897,381,899 $ (11,393,731) $ 885,988,168 $1,118,821,209 $ (12,966,260) $1,105,854,949
============== ============== ============== ============== ============== ==============
See accompanying notes to financial statements.
CON-WAY RETIREMENT SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 2008
Invested Unallocated Total
-------------- -------------- --------------
Additions:
Participant contributions $ 92,870,371 $ - $ 92,870,371
Con-way contributions 82,456,972 15,505,268 97,962,240
Rollover contributions 2,248,114 - 2,248,114
Allocation of preferred shares
to RSP participants 13,620,695 - 13,620,695
Dividend and interest income 7,214,261 7,133,861 14,348,122
-------------- -------------- --------------
Total additions 198,410,413 22,639,129 221,049,542
-------------- -------------- --------------
Deductions:
Distributions to participants (80,824,474) - (80,824,474)
Transfer to Con-way 401(k) Plan (640) - (640)
Allocation of preferred shares
to RSP participants - (13,620,695) (13,620,695)
Allocation of preferred shares
to Con-way 401(k) Plan participants - (69,716) (69,716)
Interest expense - (1,939,129) (1,939,129)
Net depreciation in fair value of investments (339,024,609) (5,437,060) (344,461,669)
-------------- -------------- --------------
Total deductions (419,849,723) (21,066,600) (440,916,323)
-------------- -------------- --------------
Net change (221,439,310) 1,572,529 (219,866,781)
Net assets available for
benefits, December 31, 2007 1,118,821,209 (12,966,260) 1,105,854,949
-------------- -------------- --------------
Net assets available for
benefits, December 31, 2008 $ 897,381,899 $ (11,393,731) $ 885,988,168
============== ============== ==============
See accompanying notes to financial statements.
CON-WAY RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2008 and 2007
(1) Description of Plan
The following description of the Con-way Retirement Savings Plan
(the Plan or RSP) 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 also provides
medical benefits for retired participants, as described below.
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). The Plan also operates, in
relevant part, as a leveraged employee stock ownership plan (ESOP),
and is designed to comply with Section 4975(e)(7) of the Code. 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
(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).
Con-way has designated a portion of the ESOP feature of the Plan to be
a money purchase pension plan and added medical benefits for retired
participants, as described in note 3, Retiree Health Savings Account.
(b) Eligibility
An employee is 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.
(c) 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 first six percent of employees' eligible
compensation and makes additional discretionary contributions based on
years of service. Participants with at least six months of service
receive a company-paid Basic contribution of 3%, 4%, or 5% of eligible
compensation depending on years of service. In addition, qualifying
participants receive a company-paid Transition contribution of 1%, 2%,
or 3% of the participants' eligible compensation, depending on the
participants' combined age and years of service as of December 31,
2006.
Con-way Matching contributions are in the form of Con-way Preferred
Stock (Preferred Stock) and Con-way Common Stock (Common Stock). The
Basic and Transition contributions are calculated quarterly and are
invested in the same investment funds that participants have chosen
for their employee contributions.
Cash dividends on the Preferred Stock are used for debt service on the
notes payable, as more fully discussed in note 6, Notes Payable.
Participants are allocated additional Preferred Stock as a substitute
for the cash dividends used for debt service. For the year ended
December 31, 2008, annual interest requirements were less than annual
Preferred Stock cash dividends received by the Plan.
As reported in the statement of changes in net assets available for
benefits, Preferred Stock was allocated to RSP participants at a fair
value of $13,620,695. Participants of the Con-way 401(k) Plan who
formerly participated in the RSP were awarded Preferred Stock with a
fair value of $69,716, as shown on the statement of changes in net
assets available for benefits.
In 2008, the total allocation of Con-way Preferred Stock to the RSP
and Con-way 401(k) Plan participants consisted of the following:
Con-way match of Preferred Stock $ 6,771,952
Additional Preferred Stock allocated to
participants as a substitute for cash dividends
used for debt service 6,918,459
------------
Total allocations to participants $ 13,690,411
============
In addition, Con-way made contributions to the Plan for repayment of
the notes payable described in note 6, Notes Payable. In 2008,
principal payments consisted of the following:
Con-way cash contributions $ 15,505,268
Con-way Preferred Stock cash dividends in excess
of interest on the notes payable 5,194,732
------------
Total principal payments $ 20,700,000
============
At December 31, 2008 and 2007, the Preferred Stock dividend receivable
in excess of the interest payable on the RSP notes is reported in the
statements of net assets available for benefits as amounts Due to
Con-way of $2,537,442 and $1,893,790, respectively.
(d) Participant Accounts
The Plan allows participants to select any one or more of the
investment funds established under the Plan in which contributions can
be invested. Con-way's Matching contributions are deposited into the
Matching Con-way Preferred Stock Fund and the Con-way Common Stock
Fund. As with balances in other invested funds, participants may
transfer Con-way's Matching contributions to investments other than
Con-way equity. Basic and Transition contributions are invested in the
same investment funds that the participant has chosen for their own
employee contributions to the Plan.
Allocations of Con-way's Matching contributions are based upon a
percentage of participant contributions, as described above.
Allocations of net Plan earnings are based upon participant account
balances, as defined. Participants are only entitled to the vested
benefits.
(e) Vesting
Participants' contributions plus earnings thereon vest immediately.
Con-way's Matching contributions vest after two years of service with
Con-way. If the employee is terminated prior to two years of service,
the Matching contributions are forfeited. Forfeited shares of Common
and Preferred Stock are used to reduce future Con-way contributions.
At December 31, 2008 and 2007, forfeitures totaling $186,000 and
$200,000, respectively, were available to reduce future contributions.
The Basic and Transition contributions vest immediately.
(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 10.50% 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 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 depreciation 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) Retiree Health Savings Account
Effective January 1, 2002, the Plan was amended to include a medical
benefit that funds a portion of the postretirement obligation for
retirees and their beneficiaries in accordance with Section 401(h) of the
Code. A separate account has been established and maintained in the Plan
for the net assets related to the medical benefit (the 401(h) account).
In accordance with Code Section 401(h), the Plan's investments in the
401(h) account may not be used for, or diverted to, any other purpose
other than providing health benefits for retirees and their
beneficiaries. Plan participants do not contribute to the 401(h) account
and do not direct the investment choices. Employer contributions to the
401(h) account are determined annually at the discretion of Con-way and
are subject to certain limitations as defined by the Code.
Upon reaching age 45, completing five or more years of service and
completing 1,000 or more paid hours of service in the Plan year, each
noncontractual employee is eligible for a retiree medical allocation with
respect to that Plan year. Retiree medical allocations for each 401(h)
Plan participant are equal, except for allocations to participants
retiring in the current plan year, for whom the allocation will be a
pro-rata portion of the amount allocated to other participants based on
the number of quarters employed in the year of retirement. Benefits to
individual participants are limited to the total accumulated retiree
medical allocation, plus interest credited at an annual rate equal to the
five-year Treasury Constant Maturity rate as published by the Federal
Reserve Board. In order to access their benefit balance during
retirement, a participant must be at least age 55 with at least 10 years
of service at retirement, or be at least age 65 at retirement. Any
remaining unclaimed benefit will be forfeited to the Plan upon a
participant's death or termination of employment prior to retirement
eligibility.
(4) 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 $ 441,449,071 $ - $ - $ 441,449,071
Common trust funds - 226,487,956 - 226,487,956
Con-way Common Stock 87,539,604 - - 87,539,604
Con-way Preferred Stock - - 85,737,288 85,737,288
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 notes payable of $22,700,000 and $43,400,000 at December 31, 2008 and
2007, respectively, in the accompanying financial statements are stated
at their carrying value. The fair value of the notes payable as of
December 31, 2008 and 2007 was approximately $23,000,000 and $45,000,000,
respectively. Fair value was estimated based on the expected future
payments discounted at market rates.
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 123,947,954
Unrealized losses relating to instruments still held
at the reporting date (30,673,428)
Purchases, sales, issuances and settlements, net (7,537,238)
Balance at December 31, 2008 ---------------
$ 85,737,288
===============
(5) 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, 4,026,179
and 4,009,074 shares, respectively $ 77,463,691 $ 134,945,423
T. Rowe Price Equity Income Fund, 3,909,040
and 3,804,709 shares, respectively 66,766,409 106,912,324
T. Rowe Price Science and Technology Fund,
3,239,409 and 3,227,755 shares,respectively 42,695,416 75,690,848
Allianz Global PIMCO Total Return Fund,
4,388,972 and 3,613,789 shares,respectively 44,504,176 38,631,408
Dodge & Cox International Stock Fund, 1,511,153
and 1,317,415 shares, respectively 33,094,255 60,627,420
Common trust funds:
T. Rowe Price U.S. Treasury Money Market Trust,
143,991,330 and 107,494,627 shares, respectively 143,991,330 107,494,627
Con-way equity:
Con-way Common Stock, 3,290,963 and 2,702,157
shares, respectively 87,539,604 112,247,601
Matching Con-way Preferred Stock, 425,445 and
394,818 shares, respectively 70,113,360 87,843,209
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 $ (241,324,832)
Common trust funds (25,916,070)
Con-way Common Stock (46,547,339)
Con-way Preferred Stock (30,673,428)
---------------
$ (344,461,669)
===============
In May 1989, the Plan purchased 986,259 shares of Preferred Stock for
$150,009,863 using proceeds from the debt described in note 6, Notes
Payable. The Preferred Stock can only be issued to and held by the Plan
Trustee. The shares are held by the Trustee and allocated to participant
accounts. Upon allocation, the shares are first used to pay the Preferred
Stock cash dividend on shares previously allocated to the participant
accounts with the remainder used to satisfy a portion of Con-way's
Matching contribution requirement. In connection with a participant's
account distribution, the Preferred Stock is converted into Common Stock
at a rate generally equal to that number of shares of Common Stock that
could be purchased for $152.10, but not less than the minimum conversion
rate of 4.708 shares of Common Stock for each share of Preferred Stock.
At December 31, 2008, outstanding Preferred Stock of 523,911 shares
consisted of 455,305 allocated shares and 68,606 unallocated shares.
Allocated shares at December 31, 2008 included 451,644 shares allocated
to RSP participant accounts and 3,661 shares allocated to Con-way 401(k)
Plan participant accounts. At December 31, 2007, outstanding Preferred
Stock of 560,998 shares consisted of 424,211 allocated shares and 136,787
unallocated shares. Allocated shares at December 31, 2007 included
420,307 shares allocated to RSP participant accounts and 3,904 shares
allocated to Con-way 401(k) Plan participant accounts. Unallocated shares
at December 31, 2008 and 2007 were pledged as collateral against the Plan
Notes, as described below. Preferred Stock of 26,199 and 25,489 shares
were allocated to participant accounts after December 31, 2008 and 2007,
respectively, but related to participant activity for the years ended
December 31, 2008 and 2007, respectively. Accordingly, the fair value of
this Preferred Stock is accrued as Due from (Due to) the Con-way
Preferred Stock Fund - Unallocated (Con-way Preferred Stock Fund -
Allocated) to reflect the accrued allocation between funds.
(6) Notes Payable
In July 1989, the Plan completed the sale of $150,000,000 in aggregate
principal amount of notes (the Plan Notes) to a group of institutional
investors. The proceeds from the sale of the Plan Notes were used to
repay a $150,000,000 bridge loan from Con-way to the Plan that had
financed the purchase of the Preferred Stock. Con-way guaranteed the
Plan Notes.
As of December 31, 2008, there was $22,700,000 aggregate principal amount
of Series B Plan Notes outstanding, bearing interest at an annual rate of
8.54% and payable semiannually on January 1 and July1. The Plan repaid
the remaining balance outstanding at maturity in January 2009.
(7) Income Tax Status
The Internal Revenue Service has determined and informed Con-way by a
letter dated August 20, 2003 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.
(8) 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.
(9) Reconciliation to Form 5500
The following is a reconciliation of net assets available for plan
benefits.
December 31
-----------------------------
2008 2007
-------------- --------------
Net assets available for benefits -
financial statements $ 885,988,168 $1,105,854,949
Net assets held in 401(h) account
included as assets in Form 5500:
Employer contribution receivable - 9,438,000
Shares in registered investment companies 34,524,892 24,344,942
-------------- --------------
Net assets available for benefits -
Form 5500 $ 920,513,060 $1,139,637,891
============== ==============
The assets in the 401(h) account included in Form 5500 are not available
to pay 401(k) benefits and can be used only to pay retiree health
benefits.
The following are reconciliations of certain changes in net assets
available for plan benefits:
Retiree
health
savings
account
Financial (401(h) Form
statements account) 5500
-------------- ------------- --------------
Year ended December 31, 2008:
Net appreciation (depreciation)
in fair value of investments $(344,461,669) $ 1,309,143 $(343,152,526)
Distributions to participants (80,824,474) (567,193) (81,391,667)
(10) Subsequent Events
(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 contribution),
the Transition contribution was suspended and the Basic contribution
was limited to no more than 3% of an employees' eligible compensation.
Future Basic contributions will be made with repurchased Con-way
Common Stock, rather than with cash. Effective for payroll periods
after April 25, 2009, 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 RETIREMENT SAVINGS PLAN
EIN 94-1444798
Plan No. 003
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2008
Identity
of issuer
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
(4,026,179.353 shares) $110,046,759 $ 77,463,691
*T. Rowe Price Equity Income Fund
(3,909,040.353 shares) 97,014,644 66,766,409
*T. Rowe Price Science and Technology Fund
(3,239,409.387 shares) 75,185,156 42,695,416
Dodge & Cox Dodge & Cox International Stock
Fund (1,511,153.217 shares) 57,823,007 33,094,255
*T. Rowe Price Small-Cap Stock Fund
(962,257.761 shares) 28,056,056 18,783,271
Allianz Global PIMCO Total Return Fund
Investors (4,388,971.945 shares) 46,489,295 44,504,176
J.P. Morgan Undiscovered Managers
Investment Small Cap Growth Fund
Management, Inc (780,394.197 shares) 6,123,957 3,371,303
*T. Rowe Price Retirement Income Fund
(280,746.436 shares) 3,499,186 2,897,303
*T. Rowe Price Retirement 2005 Fund
(222,899.969 shares) 2,438,499 1,925,856
*T. Rowe Price Retirement 2010 Fund
(1,417,251.035 shares) 21,177,833 15,887,384
*T. Rowe Price Retirement 2015 Fund
(2,920,142.580 shares) 33,727,118 24,237,183
*T. Rowe Price Retirement 2020 Fund
(3,159,680.338 shares) 50,437,280 35,104,049
*T. Rowe Price Retirement 2025 Fund
(2,964,795.560 shares) 35,077,836 23,540,477
*T. Rowe Price Retirement 2030 Fund
(2,076,767.413 shares) 35,366,004 23,176,724
*T. Rowe Price Retirement 2035 Fund
(1,342,859.062 shares) 15,821,177 10,460,872
*T. Rowe Price Retirement 2040 Fund
(846,902.542 shares) 14,087,966 9,383,680
*T. Rowe Price Retirement 2045 Fund
(825,564.703 shares) 9,087,705 6,092,668
*T. Rowe Price Retirement 2050 Fund
(242,704.804 shares) 2,074,826 1,504,770
*T. Rowe Price Retirement 2055 Fund
(91,286.204 shares) 791,258 559,584
Common trust funds:
*T. Rowe Price Equity Index Trust
(858,474.525 shares) 29,189,377 23,573,710
*T. Rowe Price Bond Index Trust
(686,834.390 shares) 15,494,959 17,905,773
*T. Rowe Price U.S. Treasury Money
Market Trust
(143,991,329.531 shares) 143,991,330 143,991,330
*T. Rowe Price Retirement Strategy
Trust-Balanced
(1,724,858.820 shares) 41,142,881 41,017,143
Common stock:
*Con-way Inc. Con-way Common Stock
(3,290,962.545 shares) 127,623,420 87,539,604
Preferred stock:
*Con-way Inc. Matching Con-way Preferred
Stock(425,445.142 shares) 64,710,206 70,113,360
*Con-way Inc. Con-way Preferred
Stock - Unallocated
(94,805.389 shares) 14,419,900 15,623,928
Participant loans:
*Plan
Participants Participant loans with interest
from 5.00% to 10.50% and
maturity dates through 2013 - 45,476,106
--------------
886,690,025
Investments held in 401(h) account:
Allianz Global PIMCO Total Return Fund
Investors (3,404,821.701 shares) 36,147,404 34,524,892
--------------
$ 921,214,917
==============
*Represents a party-in-interest as of December 31, 2008.
Note: Cost is calculated using the moving-average method.
See accompanying report of independent registered public accounting firm.