Pacer International on Wednesday, Feb. 11, reported financial results for the annual and three-month period ended Dec. 26.
Revenues for the quarter decreased $36.5 million to $503.7 million compared to $540.2 million for the quarter ended Dec. 28, 2007. Income from operations, which includes an $87.9 million pretax noncash goodwill impairment charge related to the company’s logistics segment, was a loss of $75.0 million compared to an income of $35.2 million. Net income declined from $20.6 million to a net loss of $65.1 million, including the impact of the goodwill impairment charge ($73.3 million after tax). Net income, excluding the charge, decreased to $8.2 million from $20.6 million; similarly, adjusted income from operations declined $22.3 million to $12.9 million from $35.2 million.
Intermodal segment income from operations decreased $27.3 million on overall volume declines of 12.1 percent reflecting the U.S. and global economic downturn as well as the adverse developments relating to the automotive industry. Logistics segment income from operations decreased $87.9 million to a loss of $87.3 million compared to an income of $0.6 million. Income from operations for the logistics segment includes the $87.9 million goodwill impairment charge in 2008 and also was negatively impacted by the economic downturn.
“While our cash-based results for the fourth quarter were positive, Pacer’s market capitalization, like that of many companies, was impacted by the sustained decline in the equity markets and overall economy,” said Brian C. Kane, executive vice president and chief financial officer of the Concord, Calif.-based company. “Both of these items were contributing factors to the noncash impairment write-off of $87.9 million for our logistics segment. There was no impairment found in the intermodal segment. Our positive operating cash flow and low debt levels continue to provide Pacer with a sound financial foundation, a foundation that will help us weather the economic turbulence expected in 2009.”
For the year, revenues increased $118.3 million to $2,087.7 million compared to $1,969.4 million for the year ended Dec. 28, 2007. Income from operations declined $92.7 million to $1.8 million compared to $94.5 million. Net income decreased from $54.3 million to a loss of $16.6 million. Income from operations and net income include the noncash goodwill impairment charge. Net income also includes a tax benefit of $3.5 million for the resolution of open tax positions. Cash provided by operating activities was $59.6 million. The company repaid $20.2 million of debt during the year, paid $20.8 million in cash dividends and had capital expenditures of $24.8 million largely related to the SAP software project. Net income, adjusted to exclude the goodwill impairment charge, increased to $56.7 million from $54.3 million; similarly, adjusted income from operations declined $4.8 million to $89.7 million from $94.5 million.
“Though none of us can predict the future or control the economy, we do have control over our actions and our priorities as a company,” said Michael E. Uremovich, chairman and chief executive officer of Pacer. “We are taking immediate steps to put our costs in line with current business levels by implementing strict spending controls on all noncustomer-related activities, and we recently completed a work force reduction. While we understand there are challenging economic times ahead, we remain confident that our company will meet these challenges by remaining focused on our key initiatives.”
