Pacer International Reports Fourth Quarter 2009 Results

  Pacer International Reports Fourth Quarter 2009 Results

Business Wire

CONCORD, Calif. -- February 16, 2010

Pacer International, Inc. (Nasdaq: PACR), the asset-light North American
freight transportation and logistics services provider, today reported
financial results for the three- and twelve-month periods ended December 31,
2009.

FOURTH QUARTER RESULTS

  *Revenues decreased $90.1 million to $420.2 million compared to $510.3
    million for the quarter ended December 26, 2008.
  *Income from operations increased $91.6 million to an income of $18.3
    million compared to a loss of $73.3 million in the 2008 quarter (which
    included a pre-tax goodwill impairment charge of $87.9 million).
  *Net income increased from a loss of $64.0 million in the 2008 quarter
    (which includes the $73.3 million after-tax impact of the goodwill
    impairment charge) to a net income of $10.0 million in the 2009 quarter.
  *During the quarter the Company entered into new multi-year agreements with
    Union Pacific covering, among other things, domestic big box (48- and
    53-ft. container) shipments tendered by Pacer for transportation by Union
    Pacific and fleet sharing arrangements and the Company received a cash
    payment of $30 million from Union Pacific. A gain of $17.5 million was
    recorded in other income for the transaction. In addition, severance and
    lease termination costs of $3.0 million were charged to expense during the
    2009 quarter.

  *Intermodal segment income from operations increased $6.8 million from the
    2008 quarter to an income of $23.5 million compared to an operating income
    of $16.7 million in the 2008 quarter. The 2009 amount includes the $17.5
    million gain on the Union Pacific agreements and $2.0 million of severance
    and lease termination expense.
  *Logistics segment income from operations increased $87.3 million to a loss
    of $0.1 million compared to a loss of $87.4 million in the 2008 quarter.
    The 2008 amount includes the $87.9 million goodwill impairment charge, and
    the 2009 amount includes $0.2 million severance expense.

  *Corporate costs for the 2009 quarter were $2.5 million more than the 2008
    quarter principally due to additional professional service expenses and
    $0.8 million of severance expense in the 2009 quarter.

YEAR-TO-DATE RESULTS

  *Revenues for the year ended December 31, 2009 decreased $513.3 million to
    $1,574.2 million compared to $2,087.5 million for the year ended December
    26, 2008.
  *Income from operations in 2009, 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 $215.9 million compared to income of $2.0 million in 2008
    (which included an $87.9 million logistics segment goodwill impairment
    charge). Excluding the impairment charges in both years, income from
    operations was a loss of $15.5 million in 2009 compared to an income of
    $89.9 million in 2008. Included in income from operations in 2009 is the
    $17.5 million gain related to the Union Pacific agreements, a $1.4 million
    gain related to the sale of certain truck services assets and $7.2 million
    for severance and lease termination expense.
  *Net income declined from a loss of $16.4 million in 2008 to a loss of
    $174.1 million, or $5.01 per diluted share, in 2009. Net income in both
    years included the impact of the goodwill impairment charges ($161.0
    million after-tax, or $4.63 per share, in 2009 and $73.3 million
    after-tax, or $2.11 per share, in 2008). Excluding the impairment charges,
    net income was a loss of $13.1 million in 2009 compared to an income of
    $56.9 million in 2008.
  *Cash generated from operating activities was $12.5 million in 2009 and the
    outstanding debt and capital lease balance was $23.3 million at December
    31, 2009.
  *During the year, as previously reported, we:

      1.  Recorded a goodwill impairment charge of $200.4 million in
                 the first quarter,
            
                 Entered into an amendment to the software license agreement
            2.   with SAP America, Inc. and received $22.5 million in cash and
                 wrote-off $22.4 million of related property,
            
                 Sold certain assets of our truck services business to
            3.   Universal Truckload Services, Inc. and UTS Leasing, Inc. and
                 recorded a $1.4 million gain in other income,
            
                 Completed the amendment and restatement of our credit
            4.   agreement providing for an asset-backed revolving credit
                 facility with a maturity of April 5, 2012,
            
                 Entered into new multi-year agreements with Union Pacific
                 covering, among other things, domestic big box (48- and
                 53-ft. container) shipments tendered by Pacer for
            5.   transportation by Union Pacific and fleet sharing
                 arrangements and the Company received a cash payment of $30
                 million from Union Pacific. A gain of $17.5 million was
                 recorded in other income for the transaction,
            
                 Reduced employment by 559 people through the sale of certain
                 assets of the truck services unit, attrition and severance,
            6.   as well as closed two office locations. In addition, during
                 the second quarter of 2009, across the board temporary salary
                 reductions and discontinuation of the Company’s 401(k) plan
                 matching expenses were implemented.

  *Intermodal segment income from operations decreased $274.5 million from
    2008 to a loss of $161.0 million (including a $169.0 million goodwill
    impairment charge) compared to an operating income of $113.5 million in
    2008. Excluding the impairment charge in 2009, the intermodal segment
    recorded an $8.0 million operating income. The 2009 amount includes the
    $17.5 million gain on the Union Pacific agreements and $4.6 million of
    severance and lease termination expense.
  *Logistics segment income from operations increased $51.7 million to a loss
    of $36.4 million (including a $31.4 million goodwill impairment charge) in
    2009 compared to a loss of $88.1 million (including an $87.9 million
    goodwill impairment charge) in 2008. Excluding the impairment charges, the
    logistics segment recorded a $5.0 million operating loss in 2009 compared
    to a $0.2 million loss in 2008. The 2009 amount includes the $1.4 million
    gain on the sale of certain assets of our truck services business and $1.3
    million of severance expense.
  *Corporate costs for 2009 were $4.9 million less than 2008 principally due
    to a reduced performance incentive accrual in 2009.

“Though the economic environment in the fourth quarter continued to suppress
demand and pressure margins, we took additional substantial steps toward
sustained profitability while reducing debt by $31.5 million during the fourth
quarter. We returned to positive operating income and cash flow in the second
half of the year and we have significant availability under our amended credit
agreement,” said Brian C. Kane, chief financial officer of Pacer.

“Pacer made significant strides toward our goal of providing excellent
door-to-door intermodal service at competitive cost in the fourth quarter. We
transitioned to a new long-term arrangement with Union Pacific, and, on a
quarter-over-quarter basis, grew our direct to end-customer intermodal volume
by 10.7%, grew our automotive sector intermodal volume by 12.9%, while
reducing our on-going SG&A expenses by 16% compared to the 2008 fourth
quarter. We will build on this transformation momentum in 2010 as we execute
our strategic plan to provide integrated door-to-door control of all aspects
of our intermodal service delivery to end customers,” added Daniel W.
Avramovich, chairman and CEO of Pacer.

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 International will hold a conference call for
investors, analysts, business and trade media, and other interested parties at
5:00 p.m. ET, today (Tuesday, February 16). To participate, please call five
minutes early by dialing (800) 230-1766(in USA) and ask for "Pacer
International 4th 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 February 16 at 7:30
p.m. ET to March 16 at 11:59 p.m. ET. For the replay, dial (800) 475-6701(USA)
or (320) 365-3844 (international), using access code 144215. During such
period, the replay also can 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 third-party logistics provider, offers a broad array of
services to facilitate the movement of freight from origin to destination
through its intermodal and logistics operating segments. The intermodal
segment offers intermodal transportation through Pacer Stacktrain
(cost-efficient, two-tiered ramp to ramp rail transportation for containerized
shipments), Pacer Cartage (local trucking) and Pacer Transportation Solutions
(door-to-door service combining rail and truck transportation). The logistics
segment provides 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. For more information on Pacer International visit
www.pacer.com.

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 and
the fourth quarter of 2008 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; changes resulting from our new arrangements with
Union Pacific that will reduce revenues and may compress margins, result in
operational difficulties, and reduce our results of operations; changes in the
terms of new or replacement contracts with our underlying rail carriers that
are less favorable to us relative to our legacy contracts as these expire
(including our legacy contract with Union Pacific, expiring in 2011 which
continues to apply to our automotive and international lines of business, and
our legacy contract with CSX, expiring in 2014); 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 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, 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; the degree and timing of changes in fuel prices, including changes
in the fuel costs and surcharges that we pay to our vendors and those that we
are able to collect from our customers; 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 September 30, 2009 filed with the SEC on November 3, 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)
                                           
                                         December 31, 2009
                                           (Unaudited)
Assets
                                           
Current assets
Cash and cash equivalents                  $    2.8
Accounts receivable, net                        152.3
Prepaid expenses and other                      27.4
Deferred income taxes                          1.0      
Total current assets                            183.5
                                           
Property and equipment
Property, plant & equipment at cost             107.7
Accumulated depreciation                       (64.5    )
Property and equipment, net                     43.2
                                           
Other assets
Goodwill, net                                   -
Deferred income taxes                           34.9
Other assets                                   14.3     
Total other assets                             49.2     
                                           
Total assets                               $    275.9    
                                           
Liabilities & Equity
                                           
Current liabilities
Current maturities of debt and
capital leases                             $    23.3
Book overdraft                                  4.5
Accounts payable and accrued liabilities       144.7    
Total current liabilities                       172.5
                                           
Long-term liabilities
Long-term debt and capital leases               -
Other                                          5.9      
Total long-term liabilities                     5.9
                                           
Stockholders' equity
Common stock                                    0.4
Paid In capital                                 301.5
Accumulated deficit                             (204.3   )
Accumulated other comprehensive loss           (0.1     )
Total stockholders' equity                     97.5     
                                           
Total liabilities and equity               $    275.9    

                                                                  
Pacer International, Inc.
                                                                    
Unaudited Consolidated Statement of Cash Flows
                                                                  
                                                                    
($ in millions)                                                     2009   
                                                                    
Cash Flows from Operating Activities
Net loss                                                            $ (174.1 )
Adjustments to net loss
                                                                    
Depreciation and amortization                                         6.8
Gain on sale of property, equipment and other assets                  (1.9   )
Deferred taxes                                                        (38.2  )
Goodwill impairment charge                                            200.4
Stock based compensation expense                                      2.1
Change in receivables                                                 31.2
Change in other current assets                                        (0.2   )
Change in current liabilities                                         (20.9  )
Other long-term assets                                                2.3
Other long-term liabilities                                         5.0    
                                                                    
                                                                    
Net cash provided by operating activities                           12.5   
                                                                    
Cash Flows from Investing Activities
Capital expenditures                                                  (9.2   )
Proceeds from software license amendment                              22.5
Proceeds from sales of property, equipment and other assets         2.4    
                                                                    
Net cash provided by investing activities                           15.7   
                                                                    
Cash Flows from Financing Activities
Net repayments under line of credit agreement, net of debt            (23.4  )
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                           (0.3   )
Dividends paid to shareholders                                      (5.2   )
                                                                    
Net cash used in financing activities                               (30.4  )
                                                                    
Effect of exchange rate changes on cash                             -      
                                                                    
Net change in cash and cash equivalents                               (2.2   )
                                                                    
Cash at beginning of period                                         5.0    
Cash at end of period                                              $ 2.8    

                                                                                                                                 
Pacer International, Inc.
                                                                                                                                           
Reconciliation of GAAP Financial Results to Adjusted Financial Results
For the Fiscal Years Ended December 31, 2009 and December 26, 2008
In millions, except share and per share amounts
                                                 
                                                                                                                              Adjusted
                Twelve Months 2009                                      Twelve Months 2008                                    Variance
                GAAP                                 Adjusted           GAAP                                 Adjusted         2009 vs
Item            Results          Adjustments         Results            Results 4/       Adjustments         Results           2008      %      
                                                                                                                                           
Income
(loss) from
operations      $ (161.0     )   $ 169.0        1/   $ 8.0              $ 113.5          $ -                 $ 113.5          $ (105.5 )   -93.0  %
-
intermodal
5/
Income
(loss) from       (36.4      )     31.4         2/     (5.0       )       (88.1      )     87.9         6/     (0.2       )     (4.8   )   2400.0 %
operations
- logistics
Income
(loss) from      (18.5      )    -                  (18.5      )      (23.4      )    -                  (23.4      )   4.9       -20.9  %
operations
- corporate
Income
(loss) from       (215.9     )     200.4               (15.5      )       2.0              87.9                89.9             (105.4 )   -117.2 %
operations
- total
Interest         4.5            -                  4.5              2.4            -                  2.4           2.1       87.5   %
expense
Income
(loss)
before            (220.4     )     200.4               (20.0      )       (0.4       )     87.9                87.5             (107.5 )   -122.9 %
income
taxes
Income tax       (46.3      )    39.4         3/    (6.9       )      16.0           14.6         7/    30.6          (37.5  )   -122.5 %
(benefit)
Net income      $ (174.1     )   $ 161.0             $ (13.1      )     $ (16.4      )   $ 73.3              $ 56.9         $ (70.0  )   -123.0 %
(loss)
                                                                                                                                           
Diluted
earnings        $ (5.01      )   $ 4.63              $ (0.38      )     $ (0.47      )   $ 2.11              $ 1.64         $ (2.02  )   -123.1 %
(loss) per
share
Weighted
average          34,767,275     34,767,275         34,767,275       34,616,598     34,739,597         34,739,597    27,678    0.1    %
shares
outstanding


1/Intermodal segment goodwill impairment charge.

2/Logistics segment goodwill impairment charge.

3/ Actual tax impact 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.

6/Logistics segment goodwill impairment charge.

7/ Actual tax impact of the goodwill impairment charge.

                                                                                                       
Pacer International, Inc.

Unaudited Consolidated Statements of Operations

($ millions)
                                                                                                                 
                 4th Quarter 2009                                        Year-to-Date
               Intermodal  Logistics  Corp./Elim.  Consolidated     Intermodal   Logistics  Corp./Elim.  Consolidated
                 1/                                                      1/
                 ($ in millions)                                         ($ in millions)
                                                                                                                 
Revenues         $  325.9     $  94.9     $  (0.6  )    $  420.2         $ 1,190.7     $ 385.6     $  (2.1   )   $  1,574.2
                                                                                                                 
Cost of
purchased           261.6        81.0        (0.6  )       342.0           964.9         328.5        (2.1   )      1,291.3
transportation
Direct
operating           30.4         -                         30.4            124.5         -            -             124.5
expenses
Selling,
general &           26.6         13.7        5.1           45.4            105.5         62.2         18.3          186.0
admin.
expenses
Goodwill
impairment          -            -           -             -               169.0         31.4         -             200.4
charge
Other income        (17.5 )      -           -             (17.5  )        (17.5   )     (1.4  )      -             (18.9   )
Depreciation      1.3       0.3      -          1.6           5.3        1.3       0.2        6.8     
expense
                                                                                                                 
Income (loss)
from                23.5         (0.1 )      (5.1  )       18.3            (161.0  )     (36.4 )      (18.5  )      (215.9  )
operations
                                                                                                                 
Interest                                           1.6                                              4.5     
expense/income
                                                                                                                 
Income (loss)
before income                                              16.7                                                     (220.4  )
taxes
                                                                                                                 
Income tax                                         6.7                                              (46.3   )
(benefit)
                                                                                                                 
Net income                                       $  10.0                                           $  (174.1  )
(loss)
Diluted
Earnings                                                $  0.29                                                  $  (5.01   )
(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)
                                                                                                         
               4th Quarter                                      Year-to-Date
             2009     2008    Variance   %             2009       2008 1/    Variance     %
                             1/
                                                                            
Segments
                                                                                                         
Revenues
Intermodal     $ 325.9     $ 397.4     $ (71.5 )   -18.0  %     $ 1,190.7     $ 1,633.2     $ (442.5 )   -27.1    %
Logistics        94.9        113.2       (18.3 )   -16.2  %       385.6         455.9         (70.3  )   -15.4    %
Cons.         (0.6  )   (0.3  )   (0.3  )  100.0  %      (2.1    )   (1.6    )   (0.5   )  31.3     %
Entries
Total          $ 420.2     $ 510.3     $ (90.1 )   -17.7  %     $ 1,574.2     $ 2,087.5     $ (513.3 )   -24.6    %
                                                                                                         
Income
(loss)
from
Operations
2/
Intermodal     $ 23.5      $ 16.7      $ 6.8       40.7   %     $ (161.0  )   $ 113.5       $ (274.5 )   -241.9   %
Logistics        (0.1  )     (87.4 )     87.3      n.m.           (36.4   )     (88.1   )     51.7       -58.7    %
Corporate     (5.1  )   (2.6  )   (2.5  )  96.2   %      (18.5   )   (23.4   )   4.9      -20.9    %
Total          $ 18.3      $ (73.3 )   $ 91.6      -125.0 %     $ (215.9  )   $ 2.0         $ (217.9 )   -10895.0 %
                                                                                                         
Net Income     $ 10.0      $ (64.0 )   $ 74.0      -115.6 %     $ (174.1  )   $ (16.4   )   $ (157.7 )   961.6    %
(Loss) 2/
Diluted
Earnings       $ 0.29      $ (1.83 )   $ 2.12      -115.8 %     $ (5.01   )   $ (0.47   )   $ (4.54  )   966.0    %
(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/ 2009 year-to-date 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, $161.0 million net of tax, or $4.63
per diluted share. 2008 fourth quarter and year-to-date Logistics segment
amounts include $87.9 million goodwill impairment charge, $73.3 million net of
tax, or $2.11 per diluted share.

Contact:

INVESTORS:
Pacer International, Inc.
Joseph B. Doherty, 925-887-1582
EVP, Treasurer & Investor Relations
joe.doherty@pacer.com
or
MEDIA:
Princeton Partners
Erin Bijas, 609-452-8500 x118
Senior Account Manager, Public Relations
732-895-0792 (mobile)
ebijas@princetonpartners.com
 
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