Pacer International Reports Second Quarter 2009 Results

  Pacer International Reports Second Quarter 2009 Results

Business Wire

CONCORD, Calif. -- August 05, 2009

Pacer International, Inc. (Nasdaq: PACR), a leading North American freight
transportation and logistics services provider, today reported financial
results for the three- and six-month periods ended June 30, 2009.

SECOND QUARTER RESULTS

Revenues decreased $139.9 million to $376.7 million compared to $516.6 million
for the quarter ended June 27, 2008.

Income from operations declined $34.7 million to a loss of $11.8 million
compared to an income of $22.9 million in the 2008 quarter.

Net income declined from $13.4 million in the 2008 quarter to a net loss of
$7.3 million in the 2009 quarter.

During the quarter the company entered into an amendment to its credit
agreement which, among other things, waived compliance with the leverage ratio
covenant for the second quarter through August 31, 2009, and also received
$22.5 million from SAP America, Inc. as part of an amendment to the software
license agreement with SAP.

Intermodal segment income from operations decreased $37.3 million from the
2008 quarter to a loss of $5.7 million compared to an operating income of
$31.6 million in the 2008 quarter. Volumes showed improvement from the first
quarter of 2009, but are still below the 2008 quarter.

Logistics segment income from operations improved by $0.3 million to a loss of
$1.4 million compared to a loss of $1.7 million in the 2008 quarter. Increased
warehousing business and reduced truck services losses were the main
contributors.

Corporate costs for the 2009 quarter were $2.3 million less than the 2008
quarter principally due to the lack of a performance incentive accrual in the
2009 quarter.

Sale of Truck Services - On July 24, 2009, the company entered into an
agreement with Universal Truckload Services, Inc. and UTS Leasing, Inc. to
sell certain assets of its truck services business. The completion of the
transaction is subject to customary closing conditions and is expected to
occur in August 2009.

“While demand and economic conditions in general remained very difficult
leading to a second quarter loss, there were some positive signs that our
business levels were stabilizing and even improving in some key areas during
the quarter,” said Brian C. Kane, Chief Financial Officer of Pacer. “We
continue to take the steps necessary to reduce our costs to benchmark
competitive levels and provide the financial resources needed to position
Pacer for future growth. Operating cash flows were much improved for the
second quarter compared to the first quarter, and we anticipate returning to
positive cash flow and earnings during the second half of 2009.”

“Additional organizational simplification and workforce reduction initiatives
were implemented during the quarter moving Pacer significantly closer to the
organizational integration, process improvement, and cost reduction goals we
have established,” added Michael E. Uremovich, Chairman and CEO of Pacer. “We
are continuing to implement a number of key initiatives supporting these
goals, including actions that will further integrate our Cartage and
Intermodal Operations teams that will result in improved door-to-door service
delivery while reducing costs through increased density and improved driver
coordination.”

“Though these remain extremely challenging times, we are very encouraged with
the progress of our organizational improvement initiatives. Also encouraging
is the number of new customers and new business opportunities with existing
customers that we are winning, particularly in our retail intermodal services
area where both volume and market share improved year-over-year in the second
quarter.”

YEAR-TO-DATE RESULTS

Revenues for the six months ended June 30, 2009 decreased $284.1 million to
$735.3 million compared to $1,019.4 million for the six months ended June 27,
2008.

Income from operations, which includes a $200.4 million pre-tax, non-cash
goodwill impairment charge (of which $31.4 million related to our logistics
segment and $169.0 million related to our intermodal segment), was a loss of
$234.9 million compared to income of $46.0 million in the 2008 period.
Excluding the first quarter impairment charge, income from operations was a
loss of $34.5 million.

Net income declined from $26.8 million in the 2008 period to a net loss of
$184.7 million in the 2009 period. Net income includes the impact of the
goodwill impairment charge ($162.1 million after-tax, or $4.67 per share).
Excluding the impairment charge, net income was a loss of $22.6 million, or
$0.65 per diluted share.

Intermodal segment income from operations decreased $251.4 million from the
2008 period to a loss of $189.4 million (including a $169.0 million goodwill
impairment charge) compared to an operating income of $62.0 million in the
2008 period. Excluding the impairment charge, the intermodal segment recorded
a $20.4 million operating loss.

Logistics segment income from operations decreased $33.6 million to a loss of
$36.1 million (including a $31.4 million goodwill impairment charge) compared
to a loss of $2.5 million in the 2008 period. Excluding the impairment charge,
the logistics segment recorded a $4.7 million operating loss.

Corporate costs for the 2009 period were $4.1 million less than the 2008
period principally due to the lack of a performance incentive accrual in the
2009 period.

Note: A tabular reconciliation detailing the adjustments made to arrive at the
adjusted financial results set forth above and elsewhere in this press release
from financial results determined in accordance with accounting principles
generally accepted in the United States of America (“GAAP”) is contained in
the financial summary statements attached to this press release.

CONFERENCE CALL TODAY

Pacer will hold a conference call for investors, analysts, business and trade
media, and other interested parties at 5:00 p.m. ET, today (Wednesday, August
5). To participate, please call five minutes early by dialing (800) 288-8968
(domestic) and ask for "Pacer International Second Quarter Earnings Call."
International callers can dial (612) 332-0107.

An audio-only, simultaneous Webcast of the live conference call can be
accessed through the Investors link on the company’s Web site at
www.pacer.com. For persons unable to participate in either the conference call
or the Webcast, a digitized replay will be available from August 5,at 7:30
p.m. ET to September 5,at 11:59 p.m. ET. For the replay, dial (800) 475-6701
(domestic) or (320) 365-3844 (international), using access code 109597. Or,
access the replay by selecting the Investors link on the company's Web site at
www.pacer.com.

ABOUT PACER INTERNATIONAL (www.pacer.com)

Pacer International is a leading asset-light North American freight
transportation and logistics provider, and through its intermodal and
logistics operating segments, offers a broad array of services to facilitate
the movement of freight from origin to destination. The intermodal segment
offers wholesale services provided by Pacer Stacktrain (cost-efficient,
two-tiered rail transportation for containerized shipments) and Pacer Cartage
(local trucking), as well as retail services through its Rail Brokerage unit
(intermodal marketing). The logistics segment provides retail truck brokerage,
trucking, warehousing and distribution, international freight forwarding, and
supply-chain management services. Pacer International is headquartered in
Concord, California. Its intermodal and logistics operating segments are
headquartered in Concord, California, and in Dublin, Ohio, respectively.

USE OF NON-GAAP FINANCIAL MEASURES:

This press release contains “non-GAAP financial measures” as defined by the
Securities and Exchange Commission, including adjusted diluted earnings per
share, adjusted net income and adjusted income from operations for the
logistic and intermodal segments and on a consolidated basis. These non-GAAP
measures which exclude the effect of the company’s goodwill impairment
write-off in the first quarter of 2009 are used by Management and the Board of
Directors in their analysis of the company's ongoing core operating
performance. Management believes that these non-GAAP financial measures
provide useful supplemental information that is essential to a proper
understanding of the operating results of the company's core businesses and
allows investors to more easily compare operating results from period to
period. A tabular reconciliation of the differences between the non-GAAP
financial information discussed in this release and the most directly
comparable financial information calculated and presented in accordance with
GAAP is contained in the financial summary statements attached to this press
release.

CERTAIN FORWARD-LOOKING STATEMENTS

This press release contains or may contain forward-looking statements (as such
term is defined in the Private Securities Litigation Reform Act of 1995),
including the belief that the Company will return to positive cash flow and
earnings during the second half of 2009. These forward-looking statements are
based on the company's current expectations and beliefs and are subject to a
number of risks, uncertainties and assumptions. Among the important factors
that could cause actual results to differ materially from those expressed or
implied in the forward-looking statements are: general economic and business
conditions including the length and severity of the current economic
recession; industry trends, including changes in the costs of services from
rail and motor transportation providers; our ability to comply with the
financial ratios in our credit agreement as amended during the remainder of
2009, and thereafter our ability to obtain a long-term waiver or replacement
credit facility; our inability as of September 1, 2009 to borrow under our
credit agreement upon expiration of the waiver period (August 31, 2009)
granted by our syndicate of banks with respect to the leverage covenant ratio;
increases in interest rates, including those that may result if we are
required to seek amendments to our credit agreement to comply with financial
covenants; the loss of one or more of our major customers; the success of our
cost reduction initiatives in improving our operating results and cash flows;
the effect of the current economic recession on our customers including
reduced transportation needs and an inability to pay us on time or at all; the
impact of competitive pressures in the marketplace; the frequency and severity
of accidents, particularly involving our trucking operations; changes in the
terms of contracts with our underlying rail carriers that are less favorable
to us relative to our current contracts as these expire; changes in, or the
failure to comply with, government regulation; changes in our business
strategy, development plans or cost savings plans; congestion, work stoppages,
equipment and capacity shortages, weather related issues and service
disruptions affecting our rail and motor transportation providers; changes in
fuel prices; our ability to successfully defend or resolve customer and vendor
rate and volume adjustment claims against us; changes in international and
domestic shipping patterns; availability of qualified personnel; difficulties
in maintaining or enhancing our information technology systems including
selecting, developing and implementing applications and solutions to update
our diverse legacy systems; increases in our leverage; our ability to
integrate acquired businesses; and terrorism and acts of war. Additional
information about these and other factors that could affect the company's
business is set forth in the company's various filings with the Securities and
Exchange Commission, including those set forth in the company's annual report
on Form 10-K for the year ended December 26, 2008 filed with the SEC on
February 17, 2009 and the Form 10-Q for the quarter ended March 31, 2009 filed
with the SEC on May 8, 2009. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions or estimates prove
incorrect, actual results may vary materially from those described herein as
anticipated, believed, expected or intended. Except as otherwise required by
federal securities laws, the company does not undertake any obligation to
update such forward-looking statements whether as a result of new information,
future events or otherwise.

Pacer International, Inc.

Consolidated Balance Sheet

($ millions)
                                        
                                        June 30, 2009
                                           (Unaudited)
        Assets
                                           
Current assets
Cash and cash equivalents                  $ 21.6
Accounts receivable, net                   161.5
Prepaid expenses and other                 45.1
Deferred income taxes                      3.7
        Total current assets               231.9
                                           
Property and equipment
Property, plant & equipment at cost        106.4
Accumulated depreciation                   (63.9)
        Property and equipment, net        42.5
                                           
Other assets
Goodwill, net                              -
Deferred income taxes                      28.0
Other assets                               14.0
        Total other assets                 42.0
                                           
Total assets                               $ 316.4
                                           
        Liabilities & Equity
                                           
Current liabilities
Current maturities of long-term debt and
capital leases                             $ 78.8
Book overdraft                             -
Accounts payable and accrued liabilities   150.1
        Total current liabilities          228.9
                                           
Long-term liabilities
Long-term debt and capital leases          0.1
Other                                      1.2
        Total long-term liabilities        1.3
                                           
Stockholders' equity
Common stock                               0.4
Paid In capital                            300.8
Accumulated deficit                        (214.9)
Accumulated other comprehensive loss       (0.1)
        Total stockholders' equity         86.2
                                           
Total liabilities and equity               $ 316.4
                                           
                                           

Pacer International, Inc.



Unaudited Consolidated Statement of Cash Flows
                                                                 
                                                                    Six Months
($ in millions)                                                    2009
                                                                    
Cash Flows from Operating Activities
Net loss                                                            $ (184.7 )
Adjustments to net loss
                                                                    
              Depreciation and amortization                         3.5
              Gain on sale of property and equipment                (0.7     )
              Deferred taxes                                        (34.0    )
              Goodwill impairment charge                            200.4
              Stock based compensation expense                      1.4
              Change in receivables                                 22.1
              Change in other current assets                        (17.8    )
              Change in current liabilities                         (19.3    )
             Other                                               0.4      
                                                                    
                                                                    
Net cash used for operating activities                             (28.7    )
                                                                    
Cash Flows from Investing Activities
Capital expenditures                                                (5.5     )
Proceeds from software license amendment                            22.5
Proceeds from sales of property and equipment                      0.7      
                                                                    
Net cash used for investing activities                             17.7     
                                                                    
Cash Flows from Financing Activities
Net borrowings under line of credit agreement, net of debt          33.1
issuance costs
Repurchase and retirement of common stock                           (0.1     )
Debt and capital lease obligation repayment                         (0.2     )
Dividends paid to shareholders                                     (5.2     )
                                                                    
Net cash provided by financing activities                          27.6     
                                                                    
Effect of exchange rate changes on cash                            -        
                                                                    
Net change in cash and cash equivalents                             16.6
                                                                    
Cash at beginning of period                                        5.0      
Cash at end of period                                              $ 21.6   
                                                                             
                                                                             

Pacer International, Inc.
                                                                                 
Reconciliation of GAAP Financial Results to Adjusted Financial Results
For the Six Months Ended June 30, 2009 and June 27, 2008
In millions, except share and per share amounts
                           
                                                                            Adjusted
              Six Months 2009                                Six Months     Variance
              GAAP                            Adjusted       2008           2009 vs
Item          Results        Adjustments      Results        Results 4/     2008       %
                                                                                       
Income
(loss) from
operations    $ (189.4   )   $ 169.0       1/ $ (20.4    )   $ 62.0         $      )   -132.9 %
-                                                                           (82.4
intermodal
5/
Income
(loss) from   (36.1      )   31.4          2/ (4.7       )   (2.5       )   (2.2   )   88.0   %
operations
- logistics
Income
(loss) from   (9.4       )   -                (9.4       )   (13.5      )   4.1       -30.4  %
operations
- corporate
Income
(loss) from   (234.9     )   200.4            (34.5      )   46.0           (80.5  )   -175.0 %
operations
- total
Interest      1.2           -                1.2           1.9           (0.7   )   -36.8  %
expense
Income
(loss)
before        (236.1     )   200.4            (35.7      )   44.1           (79.8  )   -181.0 %
income
taxes
Income tax    (51.4      )   38.3          3/ (13.1      )   17.3          (30.4  )   -175.7 %
(benefit)
Net income    $ (184.7   )   $ 162.1          $ (22.6    )   $ 26.8        $      )   -184.3 %
(loss)                                                                      (49.4
                                                                                       
Diluted
earnings      $ (5.32    )   $ 4.67           $ (0.65    )   $ 0.77        $      )   -185.1 %
(loss) per                                                                  (1.42
share
Weighted
average       34,747,513    34,747,513       34,747,513    34,674,351    73,162    0.2    %
shares
outstanding

                                                                                       
1/ Intermodal segment goodwill impairment charge.
2/ Logistics segment goodwill impairment charge.
3/ Income tax effect of the write-off at the effective tax rate excluding the permanent
difference of the goodwill impairment charge.
4/ 2008 amounts have been adjusted for the change in revenue recognition policy for the
Stacktrain business unit to conform to the 2009 presentation.
                                                                                       
5/ Beginning in the first quarter of 2009, the company’s Stacktrain business unit changed its
revenue recognition method to a completed service basis from the percent of completed service
basis used in prior periods. This change has been retrospectively applied to all prior period
amounts. In addition, prior to 2009, the company’s fiscal year was the 52- or 53-week annual
accounting period ending on the last Friday in December. Following the implementation of the
SAP accounting modules during the 2009 first quarter, the company’s fiscal year was changed to
end on December 31 of each year. Amounts for the transition period between December 27, 2008
and December 31, 2008 are included in the 2009 first quarter.



Pacer International, Inc.

Unaudited Consolidated Statements of Operations

($ millions)
                                                                                                     
                 2nd Quarter 2009                                      Year-to-Date
               Intermodal  Logistics  Corp./Elim.  Consolidated   Intermodal Logistics  Corp./Elim.  Consolidated
                 1/                                                    1/
                 ($ in millions)                                       ($ in millions)
                            
Revenues         $ 278.6      $ 98.7      $ (0.6)       $ 376.7        $ 549.9    $ 186.3     $ (0.9)       $ 735.3
                                                                                                            
Cost of
purchased        226.4        84.2        (0.6)         310.0          450.9      157.4       (0.9)         607.4
transportation
Direct
operating        30.1         -                         30.1           63.0       -           -             63.0
expenses
Selling,
general &        26.5         15.5        4.6           46.6           53.7       32.9        9.3           95.9
admin.
expenses
Goodwill
impairment       -            -           -             -              169.0      31.4        -             200.4
charge
Depreciation    1.3         0.4        0.1          1.8            2.7       0.7        0.1          3.5
expense
                                                                                                            
Loss from        (5.7)        (1.4)       (4.7)         (11.8)         (189.4)    (36.1)      (9.4)         (234.9)
operations
                                                                                                            
Interest                                         0.9                                           1.2
expense/income
                                                                                                            
Loss before                                             (12.7)                                              (236.1)
income taxes
                                                                                                            
Income tax                                       (5.4)                                         (51.4)
benefit
                                                                                                            
Net loss                                         $ (7.3)                                       $ (184.7)
Diluted Loss                                            $ (0.21)                                            $ (5.32)
Per Share
                                                                                                            
1/ Beginning in the first quarter of 2009, the company’s Stacktrain business unit changed its revenue recognition method
to a completed service basis from the percent of completed service basis used in prior periods. This change has been
retrospectively applied to all prior period amounts. In addition, prior to 2009, the company’s fiscal year was the 52-
or 53-week annual accounting period ending on the last Friday in December. Following the implementation of the SAP
accounting modules during the 2009 first quarter, the company’s fiscal year was changed to end on December 31 of each
year. Amounts for the transition period between December 27, 2008 and December 31, 2008 are included in the 2009 first
quarter.



Pacer International, Inc.

Unaudited Consolidated Statements of Operations

($ millions, except per share amounts)
                                                                                  
             2nd Quarter                               Year-to-Date
           2009     2008 1/  Variance  %          2009      2008 1/     Variance   %
                                                               
Segments
                                                                                         
Revenues
Intermodal   $         $         $      )   -31.0  %   $          $ 803.9     $      )   -31.6  %
             278.6     403.9     (125.3                549.9                  (254.0
Logistics    98.7      112.9     (14.2  )   -12.6  %   186.3      215.9       (29.6  )   -13.7  %
Cons.       (0.6  )  (0.2  )  (0.4   )  200.0  %   (0.9   )  (0.4    )  (0.5   )  125.0  %
Entries
Total        $         $         $      )   -27.1  %   $          $           $      )   -27.9  %
             376.7     516.6     (139.9                735.3      1,019.4     (284.1
                                                                                         
Income
(loss)
from
Operations
2/
Intermodal   $     )   $         $      )   -118.0 %   $      )   $ 62.0      $      )   -405.5 %
             (5.7      31.6      (37.3                 (189.4                 (251.4
Logistics    (1.4  )   (1.7  )   0.3        -17.6  %   (36.1  )   (2.5    )   (33.6  )   1344.0 %
Corporate   (4.7  )  (7.0  )  2.3      -32.9  %   (9.4   )  (13.5   )  4.1      -30.4  %
Total        $     )   $         $      )   -151.5 %   $      )   $ 46.0      $      )   -610.7 %
             (11.8     22.9      (34.7                 (234.9                 (280.9
                                                                                         
Net Income   $     )   $         $      )   -154.5 %   $      )   $ 26.8      $      )   -789.2 %
(Loss) 2/    (7.3      13.4      (20.7                 (184.7                 (211.5
Diluted
Earnings     $     )   $         $      )   -153.8 %   $      )   $ 0.77      $      )   -790.9 %
(Loss) per   (0.21     0.39      (0.60                 (5.32                  (6.09
Share 2/
                                                                                         
1/ 2008 amounts have been adjusted for the change in revenue recognition policy for the
Stacktrain business unit to conform with the 2009 presentation.
                                                                                         
2/ Six month 2009 amounts include an intermodal segment goodwill impairment charge of $169.0
million
and a logistics segment goodwill impairment charge of $31.4 million, a total of $200.4 million,
$162.1 million net of tax, or $4.67 per diluted share.

Contact:

INVESTOR CONTACT:
Joseph B. Doherty
EVP, Investor Relations and Treasurer
Pacer International
(925) 887-1582
joe.doherty@pacer.com
or
MEDIA CONTACT:
Bill Fahrenwald
James Street Associates
(708) 371-0110 X 1#
bfahrenwald@jamesstreetassoc.com
 
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