Employee Benefit Plans

12 Months Ended

Dec. 31, 2013

Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]

Employee Benefit Plans

Employee Benefit Plans

In the periods presented, certain employees of Con-way and its subsidiaries in the U.S. were covered under several retirement benefit plans, including defined benefit pension plans, defined contribution retirement plans and a postretirement medical plan.

Defined Benefit Pension Plans

Con-way’s defined benefit pension plans include qualified plans that are eligible for certain beneficial treatment under the Internal Revenue Code (“IRC”), as well as non-qualified plans that do not meet IRC criteria. Con-way’s qualified defined benefit pension plans (collectively, the “Qualified Pension Plans”) consist mostly of a primary qualified defined benefit pension plan (the “Primary DB Plan”), which covers the non-contractual employees and former employees of Con-way’s continuing operations as well as former employees of its discontinued operations. Con-way’s other qualified defined benefit pension plans cover only the former employees of discontinued operations.

Con-way's non-qualified defined benefit pension plans (collectively, the “Non-Qualified Pension Plans”) consist mostly of a primary non-qualified supplemental defined benefit pension plan (the “Supplemental DB Plan”). The Supplemental DB Plan provides additional benefits for certain employees who are affected by IRC limitations on compensation eligible for benefits available under the qualified Primary DB Plan.

Some of Con-way's foreign subsidiaries sponsor defined benefit pension plans. These international defined benefit pension plans are excluded from the disclosures below due to their immateriality.

Benefits

As a result of plan amendments in previous years, no additional benefits accrue under these plans and already-accrued benefits will not be adjusted for future increases in compensation. In 2012, as a result of an actuarial equivalence review, Con-way amended its defined benefit pension plans, increasing the expected benefits to be paid.

Funded Status of Defined Benefit Pension Plans

The following table reports the changes in the projected benefit obligation, the fair value of plan assets and the determination of the amounts recognized in the consolidated balance sheets for Con-way’s defined benefit pension plans at December 31:

(Dollars in thousands)	Qualified Pension Plans						Non-Qualified Pension Plans
	2013			2012			2013			2012
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	1,680,603		$	1,526,136		$	78,218		$	76,229
Interest cost on projected benefit obligation	70,022			70,168			3,213			3,438
Plan amendments	—			44,961			—			109
Actuarial loss (gain)	(177,347		)	85,755			(5,508		)	3,574
Benefits paid	(49,747		)	(46,417		)	(5,109		)	(5,132		)
Projected and accumulated benefit obligation
at end of year	$	1,523,531		$	1,680,603		$	70,814		$	78,218
Change in plan assets:
Fair value of plan assets at beginning of year	$	1,281,261		$	1,105,370		$	—		$	—
Actual return on plan assets	152,014			170,886			—			—
Con-way contributions	55,337			51,422			5,109			5,132
Benefits paid	(49,747		)	(46,417		)	(5,109		)	(5,132		)
Fair value of plan assets at end of year	$	1,438,865		$	1,281,261		$	—		$	—
Funded status of the plans	$	(84,666	)	$	(399,342	)	$	(70,814	)	$	(78,218	)
Amounts recognized in the balance sheet consist of:
Long-term assets	$	15,018		$	10,951		$	—		$	—
Current liabilities	—			—			(5,145		)	(5,135		)
Long-term liabilities	(99,684		)	(410,293		)	(65,669		)	(73,083		)
Net amount recognized	$	(84,666	)	$	(399,342	)	$	(70,814	)	$	(78,218	)
Plans with a projected and accumulated benefit obligation
in excess of plan assets:
Projected and accumulated benefit obligation	$	1,502,541		$	1,657,701		$	70,814		$	78,218
Fair value of plan assets	1,402,857			1,247,409			—			—
Weighted-average assumptions as of December 31:
Discount rate	5.05		%	4.25		%	5.05		%	4.25		%

The amounts included in accumulated other comprehensive loss that have not yet been recognized in net periodic benefit expense, consist of the following:

(Dollars in thousands)	Qualified Pension Plans						Non-Qualified Pension Plans
	2013			2012			2013			2012
Actuarial loss	$	(413,879	)	$	(670,188	)	$	(27,367	)	$	(33,993	)
Prior-service cost	(42,428		)	(45,295		)	(104		)	(109		)
	$	(456,307	)	$	(715,483	)	$	(27,471	)	$	(34,102	)

The amounts in accumulated other comprehensive loss that are expected to be recognized as components of net periodic benefit cost in 2014 are as follows:

(Dollars in thousands)	Qualified Pension Plans		Non-Qualified Pension Plans
Reclassification of actuarial loss to net periodic benefit expense (income)	$	9,902	$	877
Reclassification of prior-service cost to net periodic benefit expense (income)	1,618		5

Net Periodic Benefit Expense (Income) for Defined Benefit Pension Plans

Net periodic benefit expense (income) and amounts recognized in other comprehensive income or loss for the years ended December 31 includes the following:

(Dollars in thousands)	Qualified Pension Plans									Non-Qualified Pension Plans
	2013			2012			2011			2013			2012			2011
Net periodic benefit expense (income):
Interest cost on benefit obligation	$	70,022		$	70,168		$	71,308		$	3,213		$	3,438		$	3,787
Expected return on plan assets	(91,324		)	(84,411		)	(85,935		)	—			—			—
Amortization of actuarial loss	18,272			19,432			10,532			1,118			958			678
Amortization of prior-service cost	1,670			14			14			5			—			—
Curtailment loss	1,197			—			—			—			44			—
Net periodic benefit expense
(income)	$	(163	)	$	5,203		$	(4,081	)	$	4,336		$	4,440		$	4,465
Amounts recognized in other
comprehensive income or loss:
Actuarial loss (gain)	$	(238,037	)	$	(720	)	$	256,571		$	(5,508	)	$	3,574		$	7,587
Prior-service cost	—			44,961			—			—			109			—
Reclassification of actuarial loss to net   periodic benefit expense (income)	(18,272		)	(19,432		)	(10,532		)	(1,118		)	(1,002		)	(678		)
Reclassification of prior-service cost to   net periodic benefit expense (income)	(2,867		)	(14		)	(14		)	(5		)	—			—
Loss (gain) recognized in other
comprehensive income or loss	$	(259,176	)	$	24,795		$	246,025		$	(6,631	)	$	2,681		$	6,909
Weighted-average assumptions used to
calculate net cost:
Discount rate	4.25		%	4.65		%	5.55		%	4.25		%	4.65		%	5.55		%
Expected long-term rate of return on
plan assets	7.10		%	7.65		%	8.00		%	—		%	—		%	—		%

Expected benefit payments for the defined benefit pension plans are summarized below. These estimates are based on assumptions about future events. Actual benefit payments may vary from these estimates.

(Dollars in thousands)	Qualified Pension Plans		Non-Qualified Pension Plans
Year ending December 31:
2014	$	57,616	$	5,144
2015	61,912		5,126
2016	66,313		5,165
2017	70,776		5,225
2018	75,826		5,209
2019-2023	450,408		25,664

Plan Assets

Investment Policies and Strategies

Assets of the Qualified Pension Plans are managed pursuant to a long-term allocation strategy that seeks to mitigate the Plans' funded status volatility by increasing the Plans' exposure to fixed-income investments over time. This strategy was developed by analyzing a variety of diversified asset-class combinations in conjunction with the projected liabilities of the Qualified Pension Plans. In 2013, the Plans lowered their percentage of investments in equity securities and increased their percentage of investments in fixed-income securities.

The Plans' current investment strategy is to achieve a mix of approximately 69% in fixed-income securities and 31% of investments in equity securities by the end of 2014. Investments in fixed-income securities consist primarily of high-quality U.S. corporate or government debt instruments in a variety of industries. The target allocations for equity securities include 16% in U.S. large companies, 3% in U.S. small companies, and 12% in international companies. Investments in equity securities are allocated between growth- and value-style investment strategies and are diversified across industries and investment managers. The Plans’ investments in fixed-income and equity securities consist of individual securities held in managed separate accounts as well as commingled investment funds.

The Plans' investment strategy does not include a meaningful long-term investment allocation to cash and cash equivalents; however, the Plan's cash allocation may rise periodically in response to timing considerations regarding contributions, investments, and the payment of benefits and eligible plan expenses. Additionally, the level of cash and cash equivalents may reflect the un-invested balance of each manager's allocated portfolio balance. This “un-invested cash” is typically held in a short-term fund that invests in money-market instruments, including commercial paper and other liquid short-term interest-bearing instruments.

The Plans' investment policy does not allow investment managers to use market-timing strategies or financial derivative instruments for speculative purposes. However, financial derivative instruments are used to manage risk and achieve stated investment objectives regarding duration, yield curve, credit and equity exposures. Generally, the investment managers are prohibited from short selling, trading on margin, and trading commodities, warrants or other options, except when acquired as a result of the purchase of another security, or in the case of options, when sold as part of a covered position. Con-way's investment policies also restrict the investment managers from accumulating concentrations by issuer, country or industry segment. The assumption of 6.53% for the overall expected long-term rate of return in 2014 was developed using asset allocation, return, risk (defined as standard deviation), and correlation expectations. The return expectations are created using long-term historical returns and current market expectations for inflation, interest rates and economic growth.

Categories and Fair-Value Measurements of Plan Assets

The following table summarizes the fair value of Con-way’s pension plan assets within the fair-value hierarchy:

(Dollars in thousands)	December 31, 2013
	Total		Level 1		Level 2		Level 3
Cash and cash equivalents
Short-term investment fund [a]	$	65,100	$	—	$	65,100	$	—
Equity
U.S. large companies
S&P 500 futures [b]	3,482		3,482		—		—
Growth [c]	99,050		99,050		—		—
Value [c]	101,154		101,154		—		—
U.S. small companies
Value [c]	57,403		57,403		—		—
International
Growth [c]	91,058		91,058		—		—
Value fund [a]	94,927		—		94,927		—
Fixed-income securities
U.S. long-term debt instruments [d]	832,915		91,824		741,091		—
Real estate
Private fund [e]	40,412		—		—		40,412
Hedge fund
Multi-Strategy [f]	53,364		—		—		53,364
Total	$	1,438,865	$	443,971	$	901,118	$	93,776

(Dollars in thousands)	December 31, 2012
	Total		Level 1		Level 2		Level 3
Cash and cash equivalents
Short-term investment fund [a]	$	33,569	$	—	$	33,569	$	—
Equity
U.S. large companies
S&P 500 index fund [a]	105,523		—		105,523		—
Growth [c]	96,409		96,409		—		—
Value [c]	146,501		146,501		—		—
U.S. small companies
Growth [c]	41,720		41,720		—		—
Value [c]	58,126		58,126		—		—
International
Growth [c]	84,673		84,673		—		—
Value fund [a]	92,724		—		92,724		—
Fixed-income securities
U.S. long-term debt instruments [d]	511,990		68,340		443,650		—
Real estate
Private fund [e]	36,911		—		—		36,911
Real estate investment trust index fund [a]	22,966		—		22,966		—
Hedge Fund							—
Multi-Strategy [f]	50,149		—		—		50,149
Total	$	1,281,261	$	495,769	$	698,432	$	87,060

[a] These funds are not publicly traded and do not have readily determinable fair values. Accordingly, they are valued at their net asset value per share. The underlying investments in the funds consist primarily of publicly traded securities with quoted market prices.

[b] Gains from S&P 500 futures held in a separately managed account.

[c] Publicly traded equity securities are valued at their closing market prices.

[d] U.S. government securities are valued at their quoted market price, while corporate-debt instruments are generally valued using observable bid-ask spreads or broker-provided pricing.

[e] The fair value of the private real estate fund is based on the fair values of the underlying assets, which consist of commercial and residential properties valued using periodic appraisals. The fund maintains a redemption plan whereby redemption requests must be received in writing 45 days prior to the end of the quarter. If the fund is unable to satisfy all redemption requests, partial redemptions may be made on a prorated basis.

[f] The fair value of the hedge fund is based on the fair value of the underlying assets, which consists of individual equities, convertible securities, futures, forward contracts, currency forwards, swaps, high-yield debt portfolios, options, other derivative instruments, and cash which are all valued monthly.

The following table summarizes the change in fair value for Level 3 pension assets:

(Dollars in thousands)	Private real estate fund		Hedge fund		Total
Balance at December 31, 2011	$	34,520	$	—	$	34,520
Purchases	—		50,000		50,000
Actual return on plan assets:
Relating to assets still held at the reporting date	2,391		149		2,540
Balance at December 31, 2012	$	36,911	$	50,149	$	87,060
Actual return on plan assets:
Relating to assets still held at the reporting date	3,501		3,215		6,716
Balance at December 31, 2013	$	40,412	$	53,364	$	93,776

Funding

Con-way's funding practice is to evaluate its tax and cash position, as well as the Qualified Pension Plans' funded status, in determining its planned contributions. Con-way estimates that it will contribute $59 million to its Qualified Pension Plans in 2014; however, this could change based on variations in interest rates, asset returns, Pension Protection Act requirements and other factors.

Defined Contribution Retirement Plans

Con-way’s cost for defined contribution retirement plans was $55.3 million in 2013, $50.8 million in 2012, and $38.4 million in 2011. In the fourth quarter of 2011, Con-way reinstated certain contributions to its defined contribution retirement plans to their prior levels that had previously been suspended in the second quarter of 2009 as part of a cost-savings initiative. In the first quarter of 2013, additional contributions were implemented for employees hired on or after January 1, 2010. In the periods presented, Con-way’s contributions included cash and Con-way common stock. From January 2009 through June 2011, the common stock contributions were made with repurchased common stock (also referred to as treasury stock). In 2011, Con-way used 461,151 shares of treasury stock to fund $17.3 million in contributions.

Postretirement Medical Plan

Con-way sponsors a postretirement medical plan that provides health benefits to certain non-contractual employees at least 55 years of age with at least 10 years of service (the “Postretirement Plan”). The Postretirement Plan does not provide employer-subsidized retiree medical benefits for employees hired on or after January 1, 1993.

On October 31, 2013, Con-way amended the Postretirement Plan to provide a set benefit to certain retirees, at least 65 years of age, effective in 2014. Accordingly, a remeasurement was performed, reducing the projected benefit obligation by $28.3 million with an offsetting prior-service credit of $19.2 million and an actuarial gain of $9.1 million recognized in other comprehensive income (loss).

Funded Status of Postretirement Medical Plan

The following sets forth the changes in the benefit obligation and the determination of the amounts recognized in the consolidated balance sheets for the Postretirement Plan at December 31:

(Dollars in thousands)	2013			2012
Change in benefit obligation:
Projected benefit obligation at beginning of year	$	102,291		$	98,417
Service cost – benefits earned during the year	1,459			1,679
Interest cost on projected benefit obligation	3,434			4,318
Plan amendments	(19,243		)	—
Actuarial loss (gain)	(21,143		)	1,979
Participant contributions	2,009			3,265
Benefits paid	(6,890		)	(7,367		)
Projected and accumulated benefit obligation at end of year	$	61,917		$	102,291
Funded status of the plan	$	(61,917	)	$	(102,291	)
Amounts recognized in the balance sheet consist of :
Current liabilities	$	(4,462	)	$	(6,588	)
Long-term liabilities	(57,455		)	(95,703		)
Net amount recognized	$	(61,917	)	$	(102,291	)
Discount rate assumption as of December 31	4.50		%	3.60		%

The amounts included in accumulated other comprehensive loss that have not yet been recognized in net periodic benefit expense consist of the following:

(Dollars in thousands)	2013		2012
Actuarial gain (loss)	$	19,537	$	(1,605	)
Prior-service credit	19,366		1,580
	$	38,903	$	(25	)

The amounts in accumulated other comprehensive loss that are expected to be recognized as components of net periodic benefit cost are as follows:

(Dollars in thousands)	2014
Reclassification of prior-service credits to net periodic benefit expense	2,863
Reclassification of actuarial gain to net periodic benefit expense	2,626

Net Periodic Benefit Expense for Postretirement Medical Plan

Net periodic benefit expense and amounts recognized in other comprehensive income or loss for the years ended December 31 includes the following:

(Dollars in thousands)	2013			2012			2011
Net periodic benefit expense (income):
Service cost - benefits earned during the year	$	1,459		$	1,679		$	1,441
Interest cost on benefit obligation	3,434			4,318			4,492
Amortization of actuarial gain	(1		)	—			—
Amortization of prior-service credit	(1,457		)	(1,206		)	(1,212		)
Net periodic benefit expense	$	3,435		$	4,791		$	4,721
Amounts recognized in other comprehensive income or loss:
Actuarial loss (gain)	$	(21,143	)	$	1,979		$	3,493
Prior-service cost	(19,243		)	—			—
Reclassification of actuarial gain to net periodic benefit expense	1			—			—
Reclassification of prior-service credit to net periodic benefit expense	1,457			1,206			1,212
Loss (gain) recognized in other comprehensive income or loss	$	(38,928	)	$	3,185		$	4,705
Discount rate assumption used to calculate interest cost through October 31	3.60		%	4.30		%	5.00		%
Discount rate assumption used to calculate interest cost from November 1 through December 31	4.25		%	4.30		%	5.00		%

Expected benefit payments, which reflect expected future service, as appropriate, are summarized below. These estimates are based on assumptions about future events. Actual benefit payments may vary from these estimates.

(Dollars in thousands)	Benefit  Payments
Year ending December 31:
2014	$	4,462
2015	4,457
2016	4,815
2017	5,045
2018	5,267
2019-2023	26,488

The assumed health-care cost trend rates used to determine the benefit obligation are as follows:

	2013
Health-care cost trend rate assumed for next year	7.20	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)	4.50	%
Year that the rate reaches the ultimate trend rate	2027

Assumed health-care cost trends affect the amounts recognized for Con-way’s postretirement benefits. The sensitivity to changes in assumed health-care cost trends are as follows:

(Dollars in thousands)	2013
One-percentage-point increase in trend rate:
Increase in total service cost and interest cost components	$	137
Increase in accumulated postretirement benefit obligation	483
One-percentage-point decrease in trend rate:
Decrease in total service cost and interest cost components	$	(123	)
Decrease in accumulated postretirement benefit obligation	(436		)