Notes to Financial Statements
December 31, 2013
and
2012
1. Description of Plan
The following description of the Con-way Personal Savings Plan (the "Plan") is provided for general information purposes only. Participants should refer to the Con-way Employee Benefits Plan Description or the Plan document for more complete information. The term “Con-way” or “Company” refers to Con-way Inc. and subsidiaries.
General
The Con-way sponsored Plan is a defined contribution plan with profit-sharing, salary deferral and employee stock ownership plan features and is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended. The Plan is intended to qualify under Section 401(a) of the Internal Revenue Code (the "Code"). A portion of the Plan also includes provisions for supplemental medical benefits, which are intended to comply with Section 401(h) of the Code. The Section 401(h) feature of the Plan has not been implemented. The Plan was adopted effective January 1, 2010.
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 control of the Plan’s assets, which are held in individual participant investment accounts (collectively known as the "Trust").
Eligibility
An employee is eligible to participate in the Plan if the employee first became a qualified employee on or after January 1, 2010, is not covered by a collective bargaining agreement, is not a leased employee, is not a nonresident alien or is not a resident of Puerto Rico. 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.
Prior to January 1, 2012, employees of the Con-way Truckload, a subsidiary of the Company, who were not sales managers, directors, vice presidents or president were not eligible to participate in the Plan. Effective January 1, 2012, Con-way Truckload was eliminated as a participating employer of the Con-way Personal Savings Plan.
Contributions
Participants
may contribute up to 50% of their eligible compensation subject to certain limitations. Con-way, at its discretion, makes Matching Contributions equal to 50% of the first six percent of eligible compensation that participants contribute to the Plan. There were no Matching Contributions made to the Plan for the year ended
December 31, 2013
.
Effective January 1, 2013, the Plan was amended to provide a Basic Contribution by the Company equal to 2% of eligible compensation. Participants are eligible to receive Basic Contributions on the first day of the calendar quarter in which the employee completed six-months of service. For the 2013 Plan year, the Basic Contributions were made to eligible participants.
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.
A separate account is maintained for each participant of the Plan. Allocations of Con-way’s contributions are based upon a percentage of participant contributions or compensation, as described above. Allocations of net Plan earnings are based upon participant account balances, as defined. Participants are only entitled to the vested benefits.
Vesting
Participants are fully vested at all times in the portion of their accounts attributable to their elective deferrals, rollover contributions and Basic Contributions. 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 and are used to reduce future Con-way contributions. As there were no Matching Contributions made during the years ended
December 31, 2013
and
2012
, there were no forfeitures available to reduce future contributions during these periods.
Notes Receivable from Participants
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, 2013
bear interest at rates of 4.25%. Principal and interest are paid ratably through payroll deductions.
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, 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 participant accounts invested in Con-way common stock which can, at the direction of the participant, be paid in shares.
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, all balances will become 100% vested and the net assets of the Plan shall be distributed to participants in the amount credited to their accounts.
2. Summary of Significant Accounting Policies
Basis of Accounting
The accompanying financial statements have been prepared using the accrual method of accounting.
Risks and Uncertainties
The Plan offers various investments that are generally exposed to various risks, such as interest-rate, credit and overall market-volatility risks. Investments are reported at fair value. 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.
Investment Valuation and Income Recognition
Investments are reported at fair value, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. See Note 3, "Fair-Value Measurements," for a discussion of fair value measurements.
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.
Administrative Expenses
During
2013
, administrative expenses of the Plan were paid by Con-way and by Plan participants. Participant payments of administrative expenses were collected in administrative fees through a reduction in certain funds’ net asset value and paid directly to the Trustee. Certain funds also charge investment management fees in accordance with each fund’s prospectus, through a reduction in the funds’ net asset value.
Payment of Benefits
Benefits paid to participants are recorded upon distribution.
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.
Notes Receivable from Participants
Notes receivable from participants are carried at amortized cost plus accrued interest.
3. Fair-Value Measurements
Assets and liabilities reported at fair value are classified in one of the following three levels in the fair-value hierarchy:
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 within the fair-value hierarchy:
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December 31, 2013
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Level 1
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Level 2
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Level 3
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Total
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Mutual funds:
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Targeted retirement date
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$
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47,429,607
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$
|
—
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|
$
|
—
|
|
|
$
|
47,429,607
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U.S. large company growth
|
1,778,628
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|
—
|
|
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—
|
|
|
1,778,628
|
|
U.S. small company growth
|
1,038,155
|
|
|
—
|
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—
|
|
|
1,038,155
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International equity
|
638,427
|
|
|
—
|
|
|
—
|
|
|
638,427
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Fixed income
|
626,081
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—
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—
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|
626,081
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U.S. large company value
|
605,110
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—
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—
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605,110
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Total mutual funds
|
52,116,008
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—
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—
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52,116,008
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Common trust funds:
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U.S. equity index
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—
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550,026
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—
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550,026
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Money market
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—
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490,976
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—
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|
490,976
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Fixed income
|
—
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|
149,672
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—
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|
149,672
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Balanced
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—
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|
87,984
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—
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|
87,984
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Total common trust funds
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—
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1,278,658
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—
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1,278,658
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Con-way common stock
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554,147
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—
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—
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554,147
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Total assets at fair value
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$
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52,670,155
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$
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1,278,658
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$
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—
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$
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53,948,813
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December 31, 2012
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Level 1
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Level 2
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Level 3
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Total
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Mutual funds:
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Targeted retirement date
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$
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24,012,304
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$
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—
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$
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—
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$
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24,012,304
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U.S. large company growth
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805,246
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—
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—
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805,246
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U.S. small company growth
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378,270
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—
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—
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378,270
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International equity
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269,854
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—
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—
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269,854
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Fixed income
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396,411
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—
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—
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396,411
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U.S. large company value
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301,821
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—
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—
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301,821
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Total mutual funds
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26,163,906
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—
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—
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26,163,906
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Common trust funds:
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U.S. equity index
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—
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257,665
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—
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257,665
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Money market
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—
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498,169
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—
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498,169
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Fixed income
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—
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124,864
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—
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124,864
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Balanced
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—
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28,782
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—
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28,782
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Total common trust funds
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—
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909,480
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—
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909,480
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Con-way common stock
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426,503
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—
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—
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426,503
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Total assets at fair value
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$
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26,590,409
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$
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909,480
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$
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—
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$
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27,499,889
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Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at
December 31, 2013
and
2012
.
Mutual funds and Con-way common stock
- valued at the daily closing price reported on the active market on which the individual securities are traded.
Common trust funds
- valued at the fair value of the underlying investments determined by and reported at the net asset value ("NAV") of units held by the Plan at year end. The common trust funds are considered Level 2 investments as the underlying securities are publicly traded.
The following table provides information regarding redemption of investments where the NAV has been used as a practical expedient to measure fair value at December 31:
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Fair Value
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Redemption Frequency
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Redemption Notice Period
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2013
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2012
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Common trust funds
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$
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1,278,658
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$
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909,480
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Daily
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1 - 2 days
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The common trust funds include investments that are operated by a trust company that manages a pooled group of trust accounts. Common trust funds combine the assets of various institutional investors to create a larger, well-diversified portfolio. Each investor owns a participating interest that is calculated in units and represents a portion of the holdings of the fund.
The investments in common trust funds can generally be redeemed without restriction; however, in certain cases, redemption or purchase may be limited to prevent excess and/or short-term trading. There are no unfunded commitments related to the common trust funds.
4. Investments
The following investments represent 5% or more of the Plan’s net assets:
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December 31,
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2013
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2012
|
Mutual funds:
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T. Rowe Price Retirement 2030 Fund, 343,218 and 228,334 shares, respectively
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$
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7,756,732
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$
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4,320,083
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T. Rowe Price Retirement 2035 Fund, 456,748 and 279,267 shares, respectively
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7,435,859
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3,736,590
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T. Rowe Price Retirement 2040 Fund, 287,400 and 179,912 shares, respectively
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6,728,029
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3,434,520
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T. Rowe Price Retirement 2050 Fund, 456,212 and 272,917 shares, respectively
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5,958,130
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2,909,295
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T. Rowe Price Retirement 2045 Fund, 379,598 and 224,305 shares, respectively
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5,925,526
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2,850,918
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T. Rowe Price Retirement 2025 Fund, 377,730 and 230,257 shares, respectively
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5,809,491
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3,020,969
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T. Rowe Price Retirement 2020 Fund, 166,226 and 98,154 shares, respectively
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3,389,356
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1,754,996
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T. Rowe Price Retirement 2055 Fund, 251,719 and 129,825 shares, respectively *
|
3,254,721
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1,368,356
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* Investment does not represent 5% or more of the Plan's net assets for 2012.
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During
2013
, the Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value as follows:
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Mutual funds
|
$
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7,146,030
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Common trust funds
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118,911
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Con-way common stock
|
211,523
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$
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7,476,464
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5. Income Tax Status
In 2010, the Plan applied for a determination letter in accordance with Internal Revenue Service ("IRS") requirements to ensure the Plan and related trust are designed in accordance with applicable sections of the Code. The IRS has acknowledged receipt of the Plan’s application. Con-way and its outside legal counsel are currently working to provide additional information requested by the IRS with respect to the Plan's application. 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 mutual funds 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. The Plan offers Con-way common stock as an investment option for participants. Con-way Inc. is the Plan sponsor as defined by the Plan, and, therefore, these transactions qualify as party-in-interest transactions.