Income Taxes

9 Months Ended

Sep. 30, 2011

Income Taxes [Abstract]

Income Taxes

9. Income Taxes

Con-way recognized a tax provision of $18.5 million in the third quarter of 2011 and $6.7 million in the same quarter of 2010. In the first nine months, Con-way recognized a tax provision of $48.9 million in 2011 and $14.3 million in 2010. The tax provision in 2011 included a $1.1 million second-quarter income-tax benefit associated with the reversal of a portion of Con-way's accrued liability for uncertain tax positions and a $5.9 million first-quarter charge due to the matter discussed below under "Uncertain Tax Positions." In 2010, the effective tax rate was affected by the non-deductible goodwill impairment charge in the third quarter of 2010. Excluding these items and other discrete adjustments, the third-quarter and year-to-date effective tax rates in 2011 were 37.4% and 37.5%, respectively, compared to 42.6% in both periods of 2010. The rates in 2011 declined from 2010 due primarily to a benefit associated with a fuel-related tax credit that was not in effect during 2010 until legislation was enacted in December 2010.

Other accounts receivable in the consolidated balance sheets include income tax receivables of $8.3 million and $41.2 million at September 30, 2011 and December 31, 2010, respectively.

Uncertain Tax Positions

Con-way is subject to examination for federal income taxes for 2005 to 2010. The Internal Revenue Service ("IRS") issued a Revenue Agent's Report for tax years 2005 through 2007 proposing certain adjustments, one of which related primarily to the treatment of certain payments to retirees and former employees of Menlo Worldwide Forwarding, Inc. and its subsidiaries and Menlo Worldwide Expedite!, Inc. (collectively "MWF") by Con-way after the sale of MWF to United Parcel Service, Inc. in 2004. Con-way contested this proposed adjustment through the IRS administrative appeals process. Con-way met with the IRS Appeals Division, and following negotiations, the IRS requested an offer from Con-way in July 2011 to settle. In July 2011, the IRS accepted Con-way's offer to settle at an amount approximating the liability recognized in the first quarter of 2011.

Due primarily to the matter discussed above, Con-way's estimated liability for unrecognized tax benefits increased to $18.7 million (including $6.9 million of accrued interest and penalties) at September 30, 2011 from $15.9 million (including $6.1 million of accrued interest and penalties) at December 31, 2010.