PACR Pacer International, Inc. (MM)

Pacer International, Inc. (Nasdaq:PACR), the non-asset based North American third-party logistics and freight transportation provider, today reported financial results for the three-months and fiscal year ended December 30, 2005. FOURTH QUARTER RESULTS For the quarter ended December 30, 2005, net income increased by $3.4 million, or 20.0 percent, to $20.4 million compared to $17.0 million in the same quarter of 2004, reflecting growth in both the wholesale and retail segments. Income from operations increased by $5.8 million, or 19.1 percent, to $36.1 million compared to $30.3 million in the same quarter of 2004. Diluted earnings per share for the quarter increased to $0.54 from $0.44 a year earlier, up 22.7 percent. The company had $25.2 million of cash flow from operations in the fourth quarter, an improvement of $17.7 million from the same period in 2004, and paid down $18.1 million of debt. In addition, the company's first dividend to shareholders of $5.6 million was paid during the fourth quarter of 2005. Also during the fourth quarter of 2005, the company declared a second dividend of $5.6 million to shareholders which was paid in January 2006. "We continue to see strong year-over-year financial results in our company," said Don Orris, chairman and chief executive officer. "Income from operations for our retail segment more than doubled for the fourth quarter of 2005 compared to the like quarter of 2004 and is up 63.8 percent for the year. For the year, our wholesale segment's revenues exceeded $1 billion and consolidated income from operations, excluding the previously announced $11.3 million software write-off, exceeded $100 million for the year. Our strong cash flow enabled us to repay $64 million of our debt and to pay our first dividend," added Orris. YEAR-TO-DATE RESULTS For the fiscal year ended December 30, 2005, on an as-reported basis, revenues increased to $1,860.1 million from $1,808.1 million in 2004. Net income increased to $50.9 million from $47.2 million last year. Diluted earnings per share increased to $1.34 from $1.24 a year earlier, and income from operations increased by $6.6 million, or 7.6 percent, compared to 2004. The 2005 results include the write-off of $11.3 million of software development costs and $3.3 million of pre-tax charges related to legal cases during the last half of 2005. Cash provided by operating activities exceeded $100 million and $64.1 million was paid on long-term debt bringing the debt balance to $90.0 million. Net income for 2005, adjusted to exclude the $11.3 million of pre-tax costs ($6.8 million after-tax) related to the software write-off, increased to $57.7 million from $47.2 million in 2004, a gain of 22.2 percent. Adjusted diluted earnings per share increased to $1.52 from $1.24 in 2004, up 22.6 percent. Adjusted income from operations for 2005 increased 20.7 percent to $104.4 million from $86.5 million a year earlier. Note: A tabular reconciliation of the differences between the adjusted financial results set forth above and 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. Eastern Time today (Wednesday, February 8). To participate, please call five minutes early by dialing (888) 428-4479 (in USA) and ask for "Pacer Fourth Quarter and Year 2005 Earnings Call." International callers can dial (612) 234-9960. Alternatively, an audio-only, simultaneous Web cast of the live conference call can be accessed through the Investor Relations link on the company's Web site at www.pacer-international.com. For persons unable to participate in either the conference call or the Web cast, a digitized replay will be available from February 8 at 10:15 p.m. Eastern Time to March 8 at 11:59 p.m. Eastern Time. For the replay, dial (800) 475-6701(USA) or (320) 365-3844 (international), using access code 814966. Alternatively, a replay can be accessed through the Investor Relations link on the company's Web site at www.pacer-international.com. ABOUT PACER INTERNATIONAL -- Pacer International, a leading non-asset based North American third-party logistics and freight transportation provider, offers a broad array of logistics and other services through its subsidiaries and divisions to facilitate the movement of freight from origin to destination. Its wholesale services include Stacktrain (cost-efficient, two-tiered rail transportation for containerized shipments) and cartage (local trucking) services, and its retail services include intermodal marketing, truck brokerage, truck services, warehousing and distribution, international freight forwarding, and supply-chain management services. Pacer International is headquartered in Concord, California. Its business units Pacer Stacktrain and Pacer Global Logistics are headquartered in Concord, California, and in Dublin, Ohio, respectively. Web sites: www.pacer-international.com, www.pacerstack.com, and www.pacerglobal.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. These non-GAAP measures which exclude the effect of the company's write-off of computer software in the second quarter of 2005, 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 by excluding the impact of the non-cash write-off 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; congestion, work stoppages, capacity shortages or weather related issues and service disruptions affecting our rail and motor transportation providers; industry trends, including changes in the costs of services from rail and motor transportation providers; changes in our business strategy, development plans or cost savings plans; the loss of one or more of our major customers; competition; availability of qualified personnel; the frequency or severity of accidents, particularly involving our trucking operations; our ability to integrate acquired businesses; changes in, or the failure to comply with, government regulations; changes in interest rates; difficulties in maintaining or enhancing our information technology systems; terrorism and acts of war; and increases in our leverage. 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 31, 2004 filed with the SEC on March 14, 2005. 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. Note to editors: Issued by Steve Potash and Company, tel. 510/865-0800, or steve@potashco.com -0- *T Pacer International, Inc. Consolidated Balance Sheet ($ millions) December 30, 2005 --------------------------------------------------------------------- (Unaudited) Assets Current assets Cash and cash equivalents $ 9.1 Accounts receivable,net 219.3 Prepaid expenses and other 10.8 Deferred income taxes 4.0 ------------------ Total current assets 243.2 Property and equipment Property, plant & equipment at cost 94.8 Accumulated depreciation (58.7) ------------------ Property and equipment, net 36.1 Other assets Intangible assets, net 288.3 Deferred income taxes 9.1 Other assets 13.5 ------------------ Total other assets 310.9 ------------------ Total assets $ 590.2 ================== Liabilities & Equity Current liabilities Current maturities of long-term debt and capital leases $ - Book overdraft - Accounts payable and accrued liabilities 188.2 ------------------ Total current liabilities 188.2 Long-term liabilities Long-term debt and capital leases 90.0 Other 5.3 ------------------ Total long-term liabilities 95.3 Stockholders' equity Common stock 0.4 Paid In capital 277.8 Retained earnings 28.7 Accumulated other comprehensive loss (0.2) ------------------ Total stockholders' equity 306.7 ------------------ Total liabilities and equity $ 590.2 ================== Pacer International, Inc. Unaudited Consolidated Statement of Cash Flows ---------------------------------------------------------------------- ($ in millions) 2005 ---------------------------------------------------------------------- Cash Flows from Operating Activities Net income $ 50.9 Adjustments to net income Depreciation and amortization 6.9 Deferred income taxes 2.5 Loss on write-off of computer software 11.3 Change in receivables 12.8 Change in other current assets (0.6) Change in current liabilities 16.5 Other 0.6 ---------------------------------------------------------------------- Net cash provided by operating activities 100.9 ---------------------------------------------------------------------- Cash Flows from Investing Activities Capital expenditures (5.3) Proceeds from sales of property and equipment 0.3 ---------------------------------------------------------------------- Net cash used for investing activities (5.0) ---------------------------------------------------------------------- Cash Flows from Financing Activities Book overdraft (18.6) Proceeds from issuance of common stock 1.8 Dividends paid to shareholders (5.6) Debt, revolver, net and capital lease payments (64.1) ---------------------------------------------------------------------- Net cash used for financing activities (86.5) ---------------------------------------------------------------------- Effect of exchange rate changes on cash (0.3) ---------------------------------------------------------------------- Net change in cash and cash equivalents 9.1 Cash at beginning of period - ---------------------------------------------------------------------- Cash at end of period $ 9.1 ====================================================================== Pacer International, Inc. Reconciliation of As Reported Financial Results to As Adjusted Financial Results For the Year Ended December 30, 2005 and December 31, 2004 In millions, except share and per share amounts Unaudited 2005 ---------------------------------------- As Reported As Adjusted Item Results Adjustments Results ---------------------------- ------------ ------------- ------------ Income from operations $ 93.1 $ 11.3 1/ $ 104.4 Interest expense 8.2 - 8.2 ------------ ------------ ------------ Income before income taxes 84.9 11.3 96.2 Income taxes 34.0 4.5 2/ 38.5 ------------ ------------ ------------ Net income $ 50.9 $ 6.8 $ 57.7 ============ ============ ============ Diluted earnings per share $ 1.34 $ 0.18 $ 1.52 ============ ============ ============ Weighted average shares outstanding 38,042,454 38,042,454 38,042,454 ============ ============ ============ As 2004 Adjusted ----------- Variance As Reported 2005 vs Item Results 2004 % ---------------------------------------- ------------ -------- ------ Income from operations $ 86.5 $ 17.9 20.7% Interest expense 9.6 (1.4) -14.6% ------------ --------- ------ Income before income taxes 76.9 19.3 25.1% Income taxes 29.7 8.8 29.6% ------------ --------- ------ Net income $ 47.2 $ 10.5 22.2% ============ ========= ====== Diluted earnings per share $ 1.24 $ 0.28 22.6% ============ ========= ====== Weighted average shares outstanding 38,140,409 (97,955) -0.3% ============ ========= ====== ---------------------------------------- 1/ Write-off of costs related to the development of Stacktrain computer software. 2/ Income tax effect of the write-off at the effective rate. Pacer International, Inc. Unaudited Consolidated Statements of Operations ($ millions) 4th Quarter 2005 ---------------------------------------------- Wholesale Retail Corp./Elim. Consolidated ---------------------------------------------------------------------- GAAP Revenues $ 330.1 $ 218.3 $ (44.6) $ 503.8 Cost of purchased transportation 236.7 187.7 (44.6) 379.8 Direct operating expenses 31.0 - 31.0 Selling, general & admin. expenses 19.9 27.7 7.6 55.2 Write-off of computer software - - - - Depreciation expense 0.8 0.9 - 1.7 ---------------------------------------------------------------------- Income from operations 41.7 2.0 (7.6) 36.1 Interest expense 1.9 ---------------------------------------------------------------------- Income before income taxes 34.2 Income tax 13.8 ---------------------------------------------------------------------- Net income $ 20.4 ====================================================================== Diluted Earnings Per Share $ 0.54 Year ----------------------------------------------- Wholesale Retail Corp./Elim. Consolidated ---------------------------------------------------------------------- GAAP Revenues $ 1,124.2 $ 901.6 $ (165.7) $ 1,860.1 Cost of purchased transportation 816.1 778.2 (165.7) 1,428.6 Direct operating expenses 115.4 - - 115.4 Selling, general & admin. expenses 72.6 110.5 21.7 204.8 Write-off of computer software 11.3 - - 11.3 Depreciation expense 3.4 3.4 0.1 6.9 ---------------------------------------------------------------------- Income from operations 105.4 9.5 (21.8) 93.1 Interest expense 8.2 ---------------------------------------------------------------------- Income before income taxes 84.9 Income tax 34.0 ---------------------------------------------------------------------- Net income $ 50.9 ====================================================================== Diluted Earnings Per Share $ 1.34 Pacer International, Inc. Unaudited Consolidated Statements of Operations ($ millions, except per share amounts) 4th Quarter -------------------------------------- 2005 2004 Variance % ---------------------------- ----------- --------- --------- ------ GAAP Segments Revenues Wholesale 330.1 303.4 26.7 8.8% Retail 218.3 261.0 (42.7) -16.4% Cons. Entries (44.6) (33.6) (11.0) 32.7% ---------------------------- ----------- --------- --------- ------ Total 503.8 530.8 (27.0) -5.1% Income from Operations Wholesale 41.7 37.3 4.4 11.8% Retail 2.0 0.6 1.4 233.3% Corporate (7.6) (7.6) - 0.0% ---------------------------- ----------- --------- --------- ------ Total 36.1 30.3 5.8 19.1% Net Income 20.4 17.0 3.4 20.0% Diluted Earnings per Share $ 0.54 $ 0.44 $ 0.10 22.7% Year ----------------------------------------- 2005 2004 Variance % --------------------------- ----------- -------- --------- ------ GAAP Segments Revenues Wholesale 1,124.2 999.2 125.0 12.5% Retail 901.6 930.4 (28.8) -3.1% Cons. Entries (165.7) (121.5) (44.2) 36.4% --------------------------- ----------- -------- --------- ------ Total 1,860.1 1,808.1 52.0 2.9% Income from Operations Wholesale 105.4 99.1 6.3 6.4% Retail 9.5 5.8 3.7 63.8% Corporate (21.8) (18.4) (3.4) -18.5% --------------------------- ----------- -------- --------- ------ Total 93.1 86.5 6.6 7.6% Net Income 50.9 47.2 3.7 7.8% Diluted Earnings per Share $ 1.34 $ 1.24 $ 0.10 8.1% *T