Pacer International Announces New Arrangements with Union

  Pacer International Announces New Arrangements with Union Pacific and
  Reports Third-Quarter 2009 Results

Business Wire

CONCORD, Calif. -- November 03, 2009

Pacer International, Inc. (Nasdaq: PACR), the asset-light North American
freight transportation and logistics services provider, today announced that
it has entered into new arrangements with Union Pacific Railroad (UP) that
will further accelerate Pacer’s transformation into a fully-integrated,
door-to-door intermodal service provider. In addition, Pacer reported today
its financial results for the three- and nine-month periods ending September
30, 2009.

               NEW ARRANGEMENTS BETWEEN PACER AND UNION PACIFIC

  *Multi-year arrangements provide continued access to the entire UP
    intermodal rail network and establishes a new rate structure.
  *Pacer increases focus on door-to-door integrated intermodal services with
    seamless coordination and control of equipment, technology, and service
    delivery.
  *Pacer’s full portfolio of intermodal, trucking, and logistics services is
    positioned to meet shipper requirements.

“We are delighted to announce that Pacer and UP have entered into new
multi-year arrangements that provide Pacer with continued access to the entire
UP network,” said Michael E. Uremovich, chairman and CEO of Pacer. “This is a
significant positive development for Pacer and our customers. The direct
beneficiaries of the arrangements are companies seeking door-to-door
intermodal services who demand a higher degree of service delivery integration
and greater efficiency.”

The new arrangements provide Pacer with continued access to the entire UP
intermodal network, featuring a multi-year line-haul services extension that
replaces the parties’ current terms for domestic big-box shipments that were
to expire in 2011. In addition, it resolves outstanding claims between Pacer
and UP relating to domestic container transportation; facilitates a more
efficient equipment model through a fleet-sharing arrangement that provides
customers access to equipment of both companies; and allows Pacer to
strategically focus on its direct-to-customer intermodal service offering. The
multi-faceted arrangements form a firm foundation for intermodal service
growth by both organizations.

Pacer will utilize the $30 million cash payment received in connection with
the new arrangements to reduce outstanding debt under its revolving credit
facility, a reduction of nearly 50 percent, providing the Company with
additional availability under the facility.

The increased focus on high-value, door-to-door service is expected to result
in long-term benefits for Pacer, though a substantial reduction in revenues
from third-party, ramp-to-ramp services is anticipated due to the new
arrangements’ terms and conditions.

“Pacer’s strategy recognizes that shippers favor direct control over each
element of the transportation process. This is an exciting and dynamic time
because intermodal has emerged as a key growth sector in the transportation
industry. We are positioned for growth as one of the largest intermodal
services providers with the most diverse container fleet in North America and
focused on what the customer demands—seamless coordination and control of
equipment, technology, and service delivery,” said Uremovich.

“We continue to offer our premier array of transportation and logistics
services, through our cartage, highway, warehousing, and ocean carrier and
freight forwarding businesses; and we continue to dedicate ourselves to
delivering the very highest service with confidence every day,” said
Uremovich.

Pacer will discuss its new arrangements during its earnings call that is
scheduled for Wednesday, November 4^th at 8 a.m. ET. Details for analysts who
would like to participate in the call are below.

                       THIRD-QUARTER FINANCIAL RESULTS

  *Revenues decreased $139.1 million to $418.7 million compared to $557.8
    million for the quarter ended September 19, 2008.
  *Income from operations declined $28.6 million to an income of $0.7 million
    compared to an income of $29.3 million in the 2008 quarter.
  *Net income declined from $20.8 million in the 2008 quarter to a net income
    of $0.6 million in the 2009 quarter.
  *During the quarter the Company completed an amendment to its credit
    agreement, closed the sale of certain assets of its truck services unit
    and recorded a gain of $1.4 million on the transaction in Selling, General
    and Administrative Expenses. In addition, it continued its cost cutting
    efforts during the quarter with a reduction of 253 people and recorded
    $2.0 million in severance expense.

********

  *Intermodal segment income from operations decreased $30.0 million from the
    2008 quarter to an income of $4.9 million compared to an income of $34.9
    million in the 2008 quarter. Volumes showed improvement from the second
    quarter of 2009, especially automotive volumes, but are still below the
    2008 quarter. Results include $1.0 million for severance expense.
  *Logistics segment income from operations declined $1.9 million to a loss
    of $0.2 million compared to an income of $1.7 million in the 2008 quarter.
    Losses at the truck services unit were the primary cause of the decrease.

  *SG&A expenses declined by $8.9 million due in part to the Company’s
    continued cost reduction programs.
  *Sale of Truck Services–On August 17, 2009, the Company sold certain assets
    of its truck services business to Universal Truckload Services, Inc. and
    UTS Leasing, Inc.

“We are very pleased with our progress and return to profitability in the
third-quarter given that the transportation markets and overall economic
conditions remained extremely challenging,” said Brian C. Kane, chief
financial officer of Pacer. “We successfully amended and extended our credit
facility and closed the sale of certain assets of Pacer Transport, our flatbed
and heavy haul truck services company, during the quarter. We also implemented
a number of additional organizational initiatives that we believe will further
improve our operational execution and the focus on our door-to-door integrated
intermodal product while reducing our costs. Though we remain in challenging
economic times, we are very encouraged by our financial and organizational
progress during the third-quarter, and by our new arrangements with UP which
will allow us to continue to deliver unparalleled value to our customers.”

                        YEAR-TO-DATE FINANCIAL RESULTS

  *Revenues for the nine months ended September 30, 2009 decreased $423.2
    million to $1,154.0 million compared to $1,577.2 million for the nine
    months ended September 19, 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 $234.2 million compared to income of $75.3 million in the
    2008 period. Excluding the first quarter impairment charge, income from
    operations was a loss of $33.8 million. Included in income from operations
    in the 2009 period is $4.3 million for severance expense.
  *Net income declined from $47.6 million in the 2008 period to a net loss of
    $184.1 million, or $5.30 per diluted share, in the 2009 period. Net income
    includes the impact of the goodwill impairment charge ($161.2 million
    after-tax, or $4.64 per share). Excluding the impairment charge, net
    income was a loss of $22.9 million, or $0.66 per diluted share.

********

  *Intermodal segment income from operations decreased $281.3 million from
    the 2008 period to a loss of $184.5 million (including a $169.0 million
    goodwill impairment charge) compared to an operating income of $96.8
    million in the 2008 period. Excluding the impairment charge, the
    intermodal segment recorded a $15.5 million operating loss.
  *Logistics segment income from operations decreased $35.6 million to a loss
    of $36.3 million (including a $31.4 million goodwill impairment charge)
    compared to a loss of $0.7 million in the 2008 period. Excluding the
    impairment charge, the logistics segment recorded a $4.9 million operating
    loss due primarily to our truck services unit.
  *SG&A expenses declined by $13.3 million due in part to the Company’s
    continued cost reduction programs.

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.

Pacer International will hold a conference call for investors, analysts,
business and trade media, and other interested parties at 8:00 a.m. ET,
tomorrow (Wednesday, November 4). Pacer will discuss both its third-quarter
financial results and its new arrangements with UP. Details for parties who
would like to participate in the call are below.

CONFERENCE CALL INFORMATION—NOVEMBER 4, 2009, 8:00 a.m. ET

Conference call participation
Please call five minutes early
(800) 553-0326 (domestic) and  (612) 332-0819 (international)
Ask for "Pacer International Third-Quarter Earnings Call"

Webcast access
Simultaneous audio-only of the live conference call
Select 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 November 4at 10:30 a.m. ET
to December 4at 11:59 p.m. ET. For the replay, dial (800) 475-6701(domestic)
or (320) 365-3844 (international), using access code 120963. During such
period, the replay can also be accessed through the Investors link on the
Company’s Web site at www.pacer.com.

ABOUT PACER INTERNATIONAL (www.pacer.com)

Pacer International, a leading asset-light North American freight
transportation and logistics provider, 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 intermodal services to transportation intermediaries, and retail
intermodal services directly to beneficial cargo owners. The logistics segment
provides other logistics services to beneficial cargo owners through its truck
brokerage, warehousing and distribution, international freight forwarding and
supply-chain management services units. 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 logistics 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). 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 borrow amounts under our credit
agreement due to borrowing base limitations and/or to comply with the
financial ratio and other covenants in our credit agreement; increases in
interest rates; the loss of one or more of our major customers; the success of
our operational consolidation and other cost reduction initiatives in
improving our operating results and cash flows without affecting customer
service levels; 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;
revenue losses and cost impacts associated with the new UP arrangements; 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; 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 (the “SEC”), 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 June 30, 2009 filed with the SEC on August 6, 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)

                                                        September 30, 2009
                                                         (Unaudited)
Assets
                                                          
Current assets
Cash and cash equivalents                                 $    3.2
Accounts receivable, net                                       169.0
Prepaid expenses and other                                     27.9
Deferred income taxes                                         18.4      
Total current assets                                           218.5
                                                          
Property and equipment
Property, plant & equipment at cost                            106.0
Accumulated depreciation                                      (63.8     )
Property and equipment, net                                    42.2
                                                          
Other assets
Goodwill, net                                                  -
Deferred income taxes                                          26.8
Other assets                                                  17.1      
Total other assets                                            43.9      
                                                          
Total assets                                              $    304.6     
                                                          
Liabilities & Equity
                                                          
Current liabilities
Current maturities of long-term debt and capital leases   $    0.3
Book overdraft                                                 6.1
Accounts payable and accrued liabilities                      155.2     
Total current liabilities                                      161.6
                                                          
Long-term liabilities
Long-term debt and capital leases                              54.5
Other                                                         1.3       
Total long-term liabilities                                    55.8
                                                          
Stockholders' equity
Common stock                                                   0.4
Paid In capital                                                301.3
Accumulated deficit                                            (214.3    )
Accumulated other comprehensive loss                          (0.2      )
Total stockholders' equity                                    87.2      
                                                          
Total liabilities and equity                              $    304.6     
                                                                         

Pacer International, Inc.

Unaudited Consolidated Statement of Cash Flows

                                                                  Nine Months
($ in millions)                                                   2009
                                                                             
Cash Flows from Operating Activities
Net loss                                                           $  (184.1 )
Adjustments to net loss
                                                                             
Depreciation and amortization                                         5.2
Gain on sale of property, equipment and other assets                  (2.2   )
Deferred taxes                                                        (47.5  )
Goodwill impairment charge                                            200.4
Stock based compensation expense                                      1.9
Change in receivables                                                 14.5
Change in other current assets                                        (0.7   )
Change in current liabilities                                         (8.2   )
Other                                                               (0.1   )
                                                                             
                                                                             
Net cash used for operating activities                              (20.8  )
                                                                             
Cash Flows from Investing Activities
Capital expenditures                                                  (7.2   )
Proceeds from software license amendment                              22.5
Proceeds from sales of property, equipment and other assets         2.6    
                                                                             
Net cash provided by investing activities                           17.9   
                                                                             
Cash Flows from Financing Activities
Net borrowings under line of credit agreement, net of debt            8.0
issuance costs paid to lenders
Debt issuance costs paid to other third parties                       (1.4   )
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                           1.1    
                                                                             
Effect of exchange rate changes on cash                             -      
                                                                             
Net change in cash and cash equivalents                               (1.8   )
                                                                             
Cash at beginning of period                                         5.0    
Cash at end of period                                             $  3.2    
                                                                             

Pacer International, Inc.

Reconciliation of GAAP Financial Results to Adjusted Financial Results
For the Nine Months Ended September 30, 2009 and September 19, 2008
In millions, except share and per share amounts

                                                                               Adjusted     
              Nine Months 2009                                      Nine Months      Variance
              GAAP                                 Adjusted         2008             2009 vs
Item          Results          Adjustments        Results          Results 4/       2008           %      
                                                                                                    
Income
(loss) from
operations    $ (184.5     )   $ 169.0        1/   $ (15.5      )   $ 96.8           $ (112.3   )   -116.0 %
-
intermodal
5/
Income
(loss) from     (36.3      )     31.4         2/     (4.9       )     (0.7       )     (4.2     )   600.0  %
operations
- logistics
Income
(loss) from    (13.4      )    -                  (13.4      )    (20.8      )    7.4         -35.6  %
operations
- corporate
Income
(loss) from     (234.2     )     200.4               (33.8      )     75.3             (109.1   )   -144.9 %
operations
- total
Interest       2.9            -                  2.9            2.0            0.9         45.0   %
expense
Income
(loss)
before          (237.1     )     200.4               (36.7      )     73.3             (110.0   )   -150.1 %
income
taxes
Income tax     (53.0      )    39.2         3/    (13.8      )    25.7           (39.5    )   -153.7 %
(benefit)
Net income    $ (184.1     )   $ 161.2             $ (22.9      )   $ 47.6          $ (70.5    )   -148.1 %
(loss)
                                                                                                    
Diluted
earnings      $ (5.30      )   $ 4.64              $ (0.66      )   $ 1.36          $ (2.02    )   -148.7 %
(loss) per
share
Weighted
average        34,760,659     34,760,659         34,760,659     34,917,677     (157,018 )   -0.4   %
shares
outstanding

                                                                                                           

1/ Intermodal segment goodwill impairment charge.
2/ Logistics segment goodwill impairment charge.
3/ Actual tax impact of the goodwill impairment charge excluding the permanent
difference.

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)

                3rd Quarter 2009                                     Year-to-Date
               Intermodal  Logistics  Corp./Elim.  Consolidated   Intermodal  Logistics  Corp./Elim.  Consolidated
                 1/                                                    1/
                            ($ in millions)                                    ($ in millions)         
                                                                                             
Revenues         $   314.9    $ 104.4     $  (0.6  )    $  418.7       $ 864.8      $ 290.7     $  (1.5   )   $  1,154.0
                                                                                                              
Cost of
purchased            252.4      90.1         (0.6  )       341.9         703.3        247.5        (1.5   )      949.3
transportation
Direct
operating            31.1       -                          31.1          94.1         -            -             94.1
expenses
Selling,
general &            25.2       14.2         3.9           43.3          78.9         47.1         13.2          139.2
admin.
expenses
Goodwill
impairment           -          -            -             -             169.0        31.4         -             200.4
charge
Depreciation       1.3      0.3       0.1        1.7         4.0       1.0       0.2        5.2     
expense
                                                                                                              
Loss from            4.9        (0.2  )      (4.0  )       0.7           (184.5 )     (36.3 )      (13.4  )      (234.2  )
operations
                                                                                                              
Interest                                           1.7                                           2.9     
expense/income
                                                                                                              
Loss before                                                (1.0   )                                              (237.1  )
income taxes
                                                                                                              
Income tax                                         (1.6   )                                       (53.0   )
benefit
                                                                                                              
Net income                                       $  0.6                                         $  (184.1  )
(loss)
Diluted
Earnings                                                $  0.02                                               $  (5.30   )
(Loss) 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)

            3rd Quarter                                    Year-to-Date
           2009       2008 1/    Variance    %          2009         2008 1/      Variance    %
                                                                      
Segments
                                                                                                      
Revenues
Intermodal   $ 314.9     $ 431.9     $ (117.0 )   -27.1  %   $ 864.8       $ 1,235.8     $ (371.0 )   -30.0  %
Logistics      104.4       126.7       (22.3  )   -17.6  %     290.7         342.7         (52.0  )   -15.2  %
Cons.        (0.6  )   (0.8  )   0.2      -25.0  %    (1.5    )   (1.3    )   (0.2   )  15.4   %
Entries
Total        $ 418.7     $ 557.8     $ (139.1 )   -24.9  %   $ 1,154.0     $ 1,577.2     $ (423.2 )   -26.8  %
                                                                                                      
Income
(loss)
from
Operations
2/
Intermodal   $ 4.9       $ 34.9      $ (30.0  )   -86.0  %   $ (184.5  )   $ 96.8        $ (281.3 )   -290.6 %
Logistics      (0.2  )     1.7         (1.9   )   -111.8 %     (36.3   )     (0.7    )     (35.6  )   5085.7 %
Corporate    (4.0  )   (7.3  )   3.3      -45.2  %    (13.4   )   (20.8   )   7.4      -35.6  %
Total        $ 0.7       $ 29.3      $ (28.6  )   -97.6  %   $ (234.2  )   $ 75.3        $ (309.5 )   -411.0 %
                                                                                                      
Net Income   $ 0.6       $ 20.8      $ (20.2  )   -97.1  %   $ (184.1  )   $ 47.6        $ (231.7 )   -486.8 %
(Loss) 2/
Diluted
Earnings     $ 0.02      $ 0.59      $ (0.57  )   -96.6  %   $ (5.30   )   $ 1.36        $ (6.66  )   -489.7 %
(Loss) per
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/ Nine 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, $161.2 million net of tax, or $4.64
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
 
Press spacebar to pause and continue. Press esc to stop.