PACR » Topics » Financial Statements

This excerpt taken from the PACR 8-K filed Nov 3, 2009.

Financial Statements

Historical Data

 

1. How much revenue is associated with the wholesale business that may transition away from Pacer?

For the first nine months of 2009, we recognized approximately $190 million in revenues from intermodal marketing company (“IMC”) customers in the wholesale east/west big-box business that may transition away from Pacer.

 

Exh. 99.3 – page 1


Projections

 

1. What is the future impact on revenue, income, gross margin, EBITDA and earnings per share (“EPS”) of Pacer’s new arrangements with UP?

We have not provided guidance this year, and consistent with current practice, we are not providing financial guidance on the impact of the new UP arrangements. These are a multi-faceted set of arrangements, where isolating and predicting the impact of the new terms is challenging. Furthermore, our future results depend in part on the decisions of third parties and other events beyond our control. It will also take time to transition some aspects of the arrangements so it is difficult to estimate the impact during the remainder of 2009 or early 2010. As indicated in our remarks, we will be filing pro forma financial statements within the next few days. You should review those documents when filed.

 

2. What is the revenue impact of the new arrangements - for the rest of the year and/or on an annualized basis?

We anticipate that the transition of the IMC east/west ramp-to-ramp big-box traffic away from Pacer will be reflected in our revenue results by the end of the first quarter of 2010. Until then, we are monitoring results and other components affecting those results - the economy, growth or declines in other areas of our business, etc. Revenues from IMC customers in our east/west ramp-to-ramp big-box business who may transition away from Pacer totaled approximately $190 million for the first nine months of 2009.

 

3. Will Pacer make full-year 2009 or 2010 revenue or EPS projections?

We have not provided guidance for 2009 and, as noted in our remarks, are not providing guidance concerning 2009 revenue or EPS at this time. Whether we provide any guidance for 2010 will be determined at a later time. This is a multi-faceted set of arrangements with UP, and predicting the impact of the new terms is challenging. Furthermore, our future results depend in part on the decisions of third parties and other events beyond our control. It will also take time to transition some aspects of the arrangements. So it would not be prudent for us to provide any guidance at this time.

 

4. What is the margin impact on the remaining business, and what does this mean for the business that is not transitioning as a result of the arrangements?

We are not providing guidance concerning the margin impact on our remaining business. This is a multi-faceted set of arrangements with UP, and it is difficult to predict the impact of the new terms, particularly in the current freight environment. Furthermore, our future results depend in part on the decisions of third parties and other events beyond our control. It will also take time to transition some aspects of the arrangements. So it would not be prudent for us to provide any guidance at this time.

 

5. How will the new arrangements affect selling, general and administrative (“SG&A”) and other costs?

As a result of the new arrangements, Pacer will be making additional cost reductions in areas impacted by the expected loss of revenue. Those costs cuts will come at the appropriate time as the business transitions away from Pacer, and as indicated in our remarks, we expect to be able to reduce our SG&A costs on an annualized basis by approximately an additional $12 million. In addition, Pacer continues to fulfill its strategic plan to right-size our organization and bring our SG&A costs in line with benchmark competition. We expect to have implemented our SG&A initiatives by mid-2010.

 

Exh. 99.3 – page 2


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