16 February 2010

Net losses of US$16.4mn in 2008 grew to US$174.1mn in 2009

Pacer International, Inc. has reported financial results for the three- and twelve-month periods ended December 31, 2009. For Q4 2009, revenues decreased US$90.1 million, to US$420.2 million compared to US$510.3 million for the quarter ended December 26, 2008. Income from operations increased US$91.6 million to an income of US$18.3 million compared to a loss of US$73.3 million in the 2008 quarter (which included a pre-tax goodwill impairment charge of US$87.9 million). Net income increased from a loss of US$64.0 million in the 2008 quarter (which includes the US$73.3 million after-tax impact of the goodwill impairment charge) to a net income of US$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 US$30.0 million from Union Pacific. A gain of US$17.5 million was recorded in other income for the transaction. In addition, severance and lease termination costs of US$3.0 million were charged to expense during the 2009 quarter.

Income from operations at the Intermodal segment increased US$6.8 million from the 2008 quarter to an income of US$23.5 million, compared to an operating income of US$16.7 million in the 2008 quarter. The 2009 amount includes the US$17.5 million gain on the Union Pacific agreements and US$2.0 million of severance and lease termination expense.

Logistics segment income from operations increased US$87.3 million to a loss of US$0.1 million compared to a loss of US$87.4 million in the 2008 quarter. The 2008 amount includes the US$87.9 million goodwill impairment charge, and the 2009 amount includes US$0.2 million severance expense.

Revenues for the year ended December 31, 2009 decreased US$513.3 million, to US$1,574.2 million compared to US$2,087.5 million for the year ended December 26, 2008. Income from operations in 2009, which includes a US$200.4 million pre-tax, non-cash goodwill impairment charge (of which US$31.4 million is related to logistics segment and US$169.0 million is related to the intermodal segment), was a loss of US$215.9 million compared to income of US$2.0 million in 2008 (which included an US$87.9 million logistics segment goodwill impairment charge). Excluding the impairment charges in both years, income from operations was a loss of US$15.5 million in 2009 compared to an income of US$89.9 million in 2008. Included in income from operations in 2009 is the US$17.5 million gain related to the Union Pacific agreements, a US$1.4 million gain related to the sale of certain truck services assets and US$7.2 million for severance and lease termination expense.

Net income declined from a loss of US$16.4 million in 2008, to a loss of US$174.1 million in 2009. Net income in both years included the impact of the goodwill impairment charges (US$161.0 million after-tax in 2009 and US$73.3 million after-tax in 2008). Excluding the impairment charges, net income was a loss of US$13.1 million in 2009 compared to an income of US$56.9 million in 2008.

During the year, the Company reduced employment by 559 people through the sale of certain assets of the truck services unit, attrition and severance, as well as the closing of two office locations.

Intermodal segment income from operations decreased US$274.5 million from 2008 to a loss of US$161.0 million (including a US$169.0 million goodwill impairment charge) compared to an operating income of US$113.5 million in 2008. Excluding the impairment charge in 2009, the intermodal segment recorded an US$8.0 million operating income. The 2009 amount includes the US$17.5 million gain on the Union Pacific agreements and US$4.6 million of severance and lease termination expense.

Logistics segment income from operations increased US$51.7 million to a loss of US$36.4 million (including a US$31.4 million goodwill impairment charge) in 2009 compared to a loss of US$88.1 million (including an US$87.9 million goodwill impairment charge) in 2008. Excluding the impairment charges, the logistics segment recorded a US$5.0 million operating loss in 2009 compared to a US$0.2 million loss in 2008. The 2009 amount includes the US$1.4 million gain on the sale of certain assets of the truck services business and US$1.3 million of severance expense.

Pacer made significant strides toward its goal of providing excellent door-to-door intermodal service at competitive cost in the fourth quarter. On a quarter-over-quarter basis, the Company grew its direct to end-customer intermodal volume by 10.7%, and grew automotive sector intermodal volume by 12.9%, while reducing on-going SG&A expenses by 16.0% compared to the 2008 fourth quarter.