10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2011

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to                     

Commission file number 000-49828

PACER INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Tennessee	62-0935669
(State or other jurisdiction of organization)	(I.R.S. employer identification no.)

6805 Perimeter Drive

Dublin, OH 43016

Telephone Number (614) 923-1400

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes  x    No  ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Small reporting company	¨

Indicate by checkmark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  ¨    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at November 2, 2011
Common stock, $0.01 par value per share	34,978,646 shares

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

FORM 10-Q

FISCAL QUARTER ENDED SEPTEMBER 30, 2011

TABLE OF CONTENTS

	Page
Part 1. Financial Information
Item 1. Condensed Consolidated Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets	3
Condensed Consolidated Statements of Operations	4
Condensed Consolidated Statements of Stockholders’ Equity	5
Condensed Consolidated Statements of Cash Flows	6
Notes to Condensed Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3. Quantitative and Qualitative Disclosures About Market Risk	28
Item 4. Controls and Procedures	28
Part 2. Other Information
Item 1. Legal Proceedings	29
Item 1A. Risk Factors	29
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3. Defaults Upon Senior Securities	29
Item 4. (Removed and Reserved)	29
Item 5. Other Information	29
Item 6. Exhibits	30
Signatures	31

2

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in millions, except share and per share data)	September 30, 2011			December 31, 2010
ASSETS
Current assets
Cash and cash equivalents	$	18.6		$	4.2
Accounts receivable, net of allowances of $1.7 million and $2.7 million, respectively		138.2			152.5
Prepaid expenses and other		14.7			15.4
Deferred income taxes		6.5			6.3
Total current assets		178.0			178.4
Property and equipment
Property and equipment, cost		98.0			97.4
Accumulated depreciation		(54.4	)		(53.7	)
Property and equipment, net		43.6			43.7
Other assets
Deferred income taxes		16.0			24.3
Other assets		12.8			15.5
Total other assets		28.8			39.8
Total assets	$	250.4		$	261.9
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Book overdraft	$	1.9		$	2.7
Accounts payable and other accrued liabilities		133.9			144.8
Total current liabilities		135.8			147.5
Long-term liabilities
Bank borrowings		—			13.4
Other		1.2			2.5
Total long-term liabilities		1.2			15.9
Total liabilities		137.0			163.4
Commitments and contingencies (Note 6)
Stockholders’ equity
Preferred stock, par value $0.01 per share; 50,000,000 shares authorized; none issued and outstanding		—			—
Common stock, par value $0.01 per share; 150,000,000 shares authorized;
34,978,646 and 34,911,674 issued and outstanding		0.4			0.4
Additional paid-in capital		304.1			302.5
Accumulated deficit		(191.3	)		(204.1	)
Accumulated other comprehensive income (loss)		0.2			(0.3	)
Total stockholders’ equity		113.4			98.5
Total liabilities and stockholders’ equity	$	250.4		$	261.9

The accompanying notes are an integral part of the condensed consolidated financial statements.

3

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30, 2011			September 30, 2010			September 30, 2011			September 30, 2010
(in millions, except share and per share data)
Revenues	$	375.8		$	364.8		$	1,120.5		$	1,129.5
Operating expenses:
Cost of purchased transportation and services		306.7			301.2			914.5			932.8
Direct operating expenses (excluding depreciation)		23.1			23.6			71.6			71.1
Selling, general and administrative expenses		37.5			37.0			111.0			116.2
Other income		(4.8	)		(2.2	)		(4.8	)		(2.4	)
Depreciation and amortization		1.9			1.9			5.4			4.7
Total operating expenses		364.4			361.5			1,097.7			1,122.4
Income from operations		11.4			3.3			22.8			7.1
Interest expense		(0.5	)		(1.2	)		(1.8	)		(3.7	)
Income before income taxes		10.9			2.1			21.0			3.4
Income tax expense		4.3			1.0			8.2			1.4
Net income	$	6.6		$	1.1		$	12.8		$	2.0
Earnings per share:
Basic:
Earnings per share	$	0.19		$	0.03		$	0.37		$	0.06
Weighted average shares outstanding		34,978,646			34,915,811			34,979,784			34,924,870
Diluted:
Earnings per share	$	0.19		$	0.03		$	0.37		$	0.06
Weighted average shares outstanding		35,019,152			34,928,329			35,010,005			34,931,080

The accompanying notes are an integral part of the condensed consolidated financial statements.

4

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Nine Months Ended September 30, 2011

(Unaudited)

	Common Shares			Common Stock and Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income/(Loss)			Total Stockholders’ Equity
(in millions, except share amounts)
Balance at December 31, 2010		34,911,674		$	302.9		$	(204.1	)	$	(0.3	)	$	98.5
Net income		—			—			12.8			—			12.8
Other comprehensive income		—			—			—			0.5			0.5
Total comprehensive income													$	13.3
Stock based compensation		—			1.8			—					$	1.8
Tax impact of vesting of restricted stock		—			(0.1	)		—					$	(0.1	)
Issuance of common stock for vesting of restricted stock units		19,193			—			—					$	—
Repurchase and retirement of Pacer common stock		(10,116	)		(0.1	)		—					$	(0.1	)
Issuance of restricted stock, net of forfeitures		57,895			—			—					$	—
Balance at September 30, 2011		34,978,646		$	304.5		$	(191.3	)	$	0.2		$	113.4

Total comprehensive income for the three months ended September 30, 2011 and September 30, 2010 was $7.0 million and $1.3 million, respectively. Total comprehensive income for the nine months ended September 30, 2010 was $2.0 million.

The accompanying notes are an integral part of the condensed consolidated financial statements.

5

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended
	September 30, 2011			September 30, 2010
(in millions)
Cash flows from operating activities
Net income	$	12.8		$	2.0
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		5.4			4.7
Gain on sale of property and equipment		—			(2.4	)
Gain on sale of railcar assets		(4.8	)		—
Gain on sale lease-back transactions		(0.5	)		(0.6	)
Deferred taxes		8.0			(1.7	)
Stock based compensation expense		1.8			1.0
Change in operating assets and liabilities:
Accounts receivable, net		14.3			(7.8	)
Prepaid expenses and other		0.7			16.9
Accounts payable and other accrued liabilities		(11.9	)		(3.9	)
Other long-term assets		0.8			(1.7	)
Other long-term liabilities		(0.3	)		(2.7	)
Net cash provided by operating activities		26.3			3.8
Cash flows from investing activities
Capital expenditures		(5.4	)		(6.7	)
Purchase of railcar assets		(22.1	)		—
Net proceeds from sale lease-back transaction		—			2.4
Net proceeds from sale of railcar assets		28.9			—
Proceeds from sales of property and equipment		0.2			2.6
Net cash provided by (used in) investing activities		1.6			(1.7	)
Cash flows from financing activities
Net borrowings (repayments) under revolving line of credit		(13.4	)		0.7
Repurchase and retirement of Pacer common stock		(0.1	)		(0.2	)
Capital lease obligation repayment		—			(0.2	)
Net cash provided by (used in) financing activities		(13.5	)		0.3
Net increase in cash and cash equivalents		14.4			2.4
Cash and cash equivalents at beginning of the period		4.2			2.8
Cash and cash equivalents at end of the period	$	18.6		$	5.2

The accompanying notes are an integral part of the condensed consolidated financial statements.

6

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. INTERIM FINANCIAL STATEMENTS

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements as of September 30, 2011 and December 31, 2010 and for the three and nine month periods ended September 30, 2011 and 2010 for Pacer International, Inc. and subsidiaries (referred to in these notes to the condensed consolidated financial statements as “Pacer”, “the Company”, “we”, “us”, or “our”) have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) and with the instructions to Form 10-Q and Article 10 of the Securities and Exchange Commission (“SEC”) Regulation S-X. Accordingly they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair statement of the financial condition and results of operations at the dates and for the interim periods presented, have been included. The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for any full fiscal year. These unaudited condensed consolidated financial statements and footnotes should be read in conjunction with the audited consolidated financial statements of the Company included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010 as filed with the SEC.

Use of Estimates

The preparation of the condensed consolidated financial statements requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include recognition of revenue, costs of purchased transportation and services, allowance for doubtful accounts, accounting for income taxes, valuation of deferred income taxes, the economic lives of our property and equipment and contingencies. Actual results could differ from those estimates.

Reclassification

Certain reclassifications have been made to the 2010 financial statements in order to conform to the 2011 presentation. These reclassifications have no effect on our results of operations, total assets or accumulated deficit as previously reported.

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive loss consists of foreign currency translation adjustments as follows (in millions):

	Foreign Currency Translation Adjustment
Balance at December 31, 2010	$	(0.3	)
Activity during 2011		0.5
Balance at September 30, 2011	$	0.2

NOTE 2. BANK BORROWINGS

Pursuant to Accounting Standards Codification (“ASC”) 470, borrowings under our revolving credit facility agreement entered into on December 30, 2010 (the “2010 Credit Agreement”) are classified as long-term debt. The previous credit facility had a lockbox arrangement in place at all times, which required our debt to be classified as current prior to December 30, 2010.

7

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Borrowings under the 2010 Credit Agreement bore a weighted average interest rate of 3.6% per annum as of and for the nine months ended September 30, 2011. Letter of credit fees are charged monthly at a rate equal to the applicable margin on Eurodollar rate loans.

As of September 30, 2011, $76.4 million was available under the 2010 Credit Agreement pursuant to the borrowing base formula set forth in the 2010 Credit Agreement, net of $15.6 million of outstanding letters of credit. There was no debt outstanding as of September 30, 2011.

NOTE 3. RAILCAR ASSET TRANSACTIONS

During 2011, the Company purchased 245 railcars pursuant to purchase options under various lease agreements. These leases were previously accounted for as operating leases. The railcar purchases were financed through borrowings under the 2010 Credit Agreement.

On July 22, 2011, we sold the railcar assets for net proceeds of $28.9 million. The Company recorded a gain as a result of the transaction net of related transaction costs and other carrying costs of approximately $4.8 million which is included in other income on the condensed consolidated statement of operations. Proceeds from the sale of the railcars were used to repay outstanding borrowings under the 2010 Credit Agreement.

NOTE 4. FACILITY CLOSINGS AND OTHER SEVERANCE COSTS

The Company implemented an organizational simplification and workforce reduction initiative in 2009 to move toward operations organized by function rather than by business unit and to consolidate operations. All remaining severance and lease termination costs associated with these activities will result in future cash expenditures.

The table below shows the activity for the organizational simplification and workforce reduction initiative as of and for the nine month period ended September 30, 2011 (in millions):

	Organizational and Workforce Reduction Program Activity
Accrual balance at 12/31/10	$	3.9
Additions		1.3
Payments		(3.5	)
Accrual balance at 9/30/11	$	1.7

All of these costs are included in selling, general and administrative expenses on the condensed consolidated statement of operations.

NOTE 5. LONG-TERM INCENTIVE PLANS

During the nine month period ended September 30, 2011, we granted time based restricted stock under the 2006 Long-Term Incentive Plan (the “2006 Plan”) to the non-management members of the Board of Directors. Restricted stock cannot be sold, transferred or disposed of during the restriction period. The holders of restricted stock generally have the same rights as a stockholder of the Company with respect to such shares, including the right to vote and receive dividends with respect to the shares. Restricted stock is valued at the date of grant, based on the closing market price of the Company’s common stock, and expensed using the straight-line method over the requisite service period. All of the restricted stock awards granted during the nine month period ended September 30, 2011 vest on March 5, 2012.

8

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

A summary of restricted stock activity for the nine month period ended September 30, 2011 is presented below:

	Shares			Weighted Average Grant-Date Fair Value
Nonvested at December 31, 2010		73,250		$	13.12
Granted		67,844		$	5.41
Vested		(33,299	)	$	14.66
Forfeited		(9,949	)	$	8.23
Nonvested at September 30, 2011		97,846		$	7.74

During the nine month period ended September 30, 2011, we granted equity incentive awards under the 2006 Plan to certain key employees and executive officers. These equity incentive awards are divided into two types: (1) restricted stock units, which vest in equal one-third increments on March 5, 2012, 2013 and 2014, subject to the grantee’s continued employment by the Company on such vesting dates, and (2) performance stock units, which vest based on (i) the Company’s achievement of operating income and operating margin targets established by the Compensation Committee of the Board of Directors for the performance periods ending December 31, 2011, 2012 and 2013 and (ii) the continued employment of the grantee through March 5, 2014. Upon vesting, the restricted stock units and performance stock units (the “Units”) result in the issuance of shares of Pacer common stock after required tax withholdings. The holders of the Units do not have the rights of a shareholder and do not have voting rights but are entitled to receive dividend equivalents payable in the form of additional shares upon vesting of the Units. The Units are valued at the date of grant, based on the closing market price of the Company’s common stock, and expensed using the straight-line method over the requisite service period. The actual number of performance stock units earned will be based on the Company’s performance for the periods ending December 31, 2011, 2012 and 2013. For purposes of the table below, performance stock units are assumed to vest based on targeted performance which may change based on actual performance.

A summary of restricted stock unit and performance unit award activity for the nine month period ended September 30, 2011 is presented below:

	Performance Stock Units			Restricted Stock Units			Total			Weighted Average Grant-Date Fair Value
Balance at December 31, 2010		185,657			92,830			278,487		$	6.97
Granted		383,411			127,804			511,215		$	5.46
Vested		—			(28,388	)		(28,388	)	$	6.97
Forfeited		(38,988	)		(15,554	)		(54,542	)	$	6.25
Balance at September 30, 2011		530,080			176,692			706,772		$	5.93

NOTE 6. COMMITMENTS AND CONTINGENCIES

a. Legal Contingencies

The Company is subject to routine litigation arising in the ordinary course of business, and, except as discussed below, none of which is expected to have a material adverse effect on the Company’s business, condensed consolidated results of operations, financial condition or cash flows. Most of the lawsuits to which the Company is a party are covered by insurance and are being defended in cooperation with insurance carriers.

9

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Union Pacific Railroad Company (“Union Pacific”) has asserted a claim against the Company for retroactive and prospective rate adjustments which is in the pre-trial stage of arbitration before a neutral third party arbitrator and relates to domestic shipments in 20-, 40- and 45 ft. international containers. The arbitration hearing has been postponed indefinitely. The information available to the Company does not indicate that it is probable that a liability had been incurred as of the period ended September 30, 2011, and the Company could not make an estimate of the amount, or range of amounts, of any liability that would be incurred if this claim were resolved against it. Accordingly, the Company has not accrued any liability for this claim in its financial statements at and for the period ended September 30, 2011. The Company disputes this claim in its entirety and believes that it has meritorious defenses to it and that Union Pacific is not entitled to the claimed rate adjustments. The Company intends to vigorously defend against this claim by Union Pacific and to pursue its other related rights and remedies.

b. Commitments

On June 30, 2011, the Company provided notice of exercise of its option to purchase 248 railcars subject to an operating lease for $26.6 million on January 15, 2012. We expect to finance the purchase through available cash and borrowings under the 2010 Credit Agreement.

NOTE 7. SEGMENT INFORMATION

The following table presents reportable segment information for the three and nine month periods ended September 30, 2011 and 2010 (in millions):

10

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

	Intermodal			Logistics			Corp/Other			Consolidated
3 Months ended September 30, 2011:
Segment revenues	$	302.2		$	73.7		$	—		$	375.9
Inter-segment elimination		(0.1	)		—			—			(0.1	)
Revenues		302.1			73.7			—			375.8
Income from operations		17.2			(0.8	)		(5.0	)		11.4
Depreciation and amortization		1.2			0.5			0.2			1.9
Capital expenditures		1.2			0.7			0.1			2.0
3 Months ended September 30, 2010:
Segment revenues	$	255.7		$	109.4		$	—		$	365.1
Inter-segment elimination		(0.3	)		—			—			(0.3	)
Revenues		255.4			109.4			—			364.8
Income from operations		7.1			(0.2	)		(3.6	)		3.3
Depreciation and amortization		1.4			0.4			0.1			1.9
Capital expenditures		0.9			0.9			—			1.8
9 Months ended September 30, 2011:
Segment Revenues	$	885.6		$	235.2		$	—		$	1,120.8
Inter-segment elimination		(0.3	)		—			—			(0.3	)
Revenues		885.3			235.2			—			1,120.5
Income from operations		38.8			(1.2	)		(14.8	)		22.8
Depreciation and amortization		3.6			1.4			0.4			5.4
Capital expenditures		3.2			1.8			0.4			5.4
9 Months ended September 30, 2010:
Segment Revenues	$	800.3		$	330.0		$	—		$	1,130.3
Inter-segment elimination		(0.8	)		—			—			(0.8	)
Revenues		799.5			330.0			—			1,129.5
Income from operations		19.5			1.2			(13.6	)		7.1
Depreciation and amortization		3.6			0.9			0.2			4.7
Capital expenditures		3.8			2.9			—			6.7

The “Corp/Other” column includes corporate amounts (primarily compensation, tax and overhead costs unrelated to a specific segment). The Chief Operating Decision Maker does not review assets by segment for purposes of allocating resources and therefore assets by segment are not disclosed here.

11

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

The following table presents revenues from continuing operations generated by country or geographical area for the three and nine month periods ended September 30, 2011 and 2010 (in millions):

	Three Months Ended				Nine Months Ended
	September 30, 2011		September 30, 2010		September 30, 2011		September 30, 2010
United States	$	320.8	$	280.6	$	945.7	$	869.8
Asia		25.3		59.3		81.5		184.9
Europe		15.5		12.1		52.2		34.1
North America (excluding United States)		8.2		7.7		23.2		23.7
Australia		1.8		2.2		7.2		7.3
South America		2.5		1.9		6.5		6.4
Africa		1.7		1.0		4.2		3.3
Total	$	375.8	$	364.8	$	1,120.5	$	1,129.5

Substantially all of the foreign revenues are generated by the logistics segment. All material assets are located in the United States of America.

For the three month period ended September 30, 2011, the Company had two customers that contributed more than 10% of total consolidated revenues (one contributed 15.5%, and the other 10.3% of total revenues). For the three month period ended September 30, 2010, the Company had one customer that contributed more than 10% of total consolidated revenues (14.5%).

For the nine month period ended September 30, 2011, the Company had two customers that contributed more than 10% of total consolidated revenues (one contributed 15.0%, and the other 12.9% of total revenues). For the nine month period ended September 30, 2010, the Company had two customers that contributed more than 10% of total consolidated revenues (one contributed 15.0%, and the other 11.5% of total revenues).

12

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

NOTE 8. EARNINGS PER SHARE

The following table sets forth the computation of earnings per share-basic and diluted (in millions, except share and per share amounts):

	Three Months Ended				Nine Months Ended
	September 30, 2011		September 30, 2010		September 30, 2011		September 30, 2010
Numerator:
Net income (basic and diluted)	$	6.6	$	1.1	$	12.8	$	2.0
Denominator:
Denominator for earnings per share — basic:
Weighted average common shares outstanding		34,978,646		34,915,811		34,979,784		34,924,870
Effect of dilutive securities:
Stock options, restricted and performance stock units		40,506		12,518		30,221		6,210
Denominator for earnings per share—diluted		35,019,152		34,928,329		35,010,005		34,931,080
Earnings per share—basic	$	0.19	$	0.03	$	0.37	$	0.06
Earnings per share—diluted	$	0.19	$	0.03	$	0.37	$	0.06

Anti-dilutive shares attributable to outstanding stock options were excluded from the calculation of diluted net income per share. For the three month periods ended September 30, 2011 and 2010, 206,500 shares and 358,400 shares were anti-dilutive, respectively. For the nine month periods ended September 30, 2011 and 2010, 206,500 shares and 358,400 shares were anti-dilutive, respectively.

13

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis (“MD&A”) should be read in conjunction with the MD&A, including the discussion of our critical accounting policies, and the Condensed Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010 (the “2010 Annual Report”) filed with the Securities and Exchange Commission (“SEC”) on February 24, 2011.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that reflect our current estimates, expectations and projections about our future results, performance, prospects and opportunities. Forward-looking statements include, among other things, the information concerning our possible future consolidated results of operations, business and growth strategies, financing plans, our competitive position and the effects of competition, the projected growth of the industries in which we operate, and the benefits to be obtained from our cost reduction initiatives. Forward-looking statements include all statements that are not historical facts and can be identified by forward-looking words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “plan,” “may,” “should,” “will,” “would,” “project” and similar expressions. These forward-looking statements are based on information currently available to us and are subject to a number of risks, uncertainties and other factors that could cause our actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. Important factors that could cause our actual results to differ materially from the results referred to in the forward-looking statements we make in this Quarterly Report are discussed under “Item 1A. Risk Factors” of the 2010 Annual Report and include:

• general economic and business conditions, including the current U.S. and global economic environment and the timing and strength of economic recovery in the U.S. and internationally;

• industry trends, including changes in the costs of services from rail, ocean, motor and air transportation providers;

• changes resulting from our new arrangements with Union Pacific that have reduced or may in the future reduce revenues and compress margins;

• the terms of contracts with our major underlying rail carriers;

• our reliance on Union Pacific to provide us with, and to service and maintain, a substantial portion of the chassis and containers used in our business;

• the loss of one or more of our major customers;

• the effect of uncertainty surrounding the current economic environment on the transportation needs of our customers;

• 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 regulations;

• 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, ocean 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;

• changes in international and domestic shipping patterns;

• availability of qualified personnel;

• selecting, developing and implementing applications and solutions to update or replace our diverse legacy systems;

• increases in our leverage;

• terrorism and acts of war;

• our ability to borrow amounts under our credit agreement due to borrowing base limitations and/or to comply with the covenants in our credit agreement;

• increases in interest rates; and

• our ability to successfully protect our data against cyber attacks.

14

Our actual consolidated results of operations and the execution of our business strategy could differ materially from those expressed in, or implied by, the forward-looking statements contained in this Quarterly Report on Form 10-Q or in other forward-looking statements made by us. In addition, past financial or operating performance is not necessarily a reliable indicator of future performance and you should not use our historical performance to anticipate future results or future period trends. We can give no assurances that any of the events anticipated or implied by the forward-looking statements we make will occur or, if any of them do occur, what impact they will have on our consolidated results of operations, financial condition or cash flows. In evaluating our forward-looking statements, you should specifically consider the risks and uncertainties discussed under “Item 1A. Risk Factors” in the 2010 Annual Report. Except as otherwise required by federal securities laws, we undertake no obligation to publicly revise our forward-looking statements to reflect events or circumstances that arise after the date of this Quarterly Report on Form 10-Q. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements included in this Quarterly Report on Form 10-Q and our other filings with the SEC.

Executive Summary

For the first nine months of 2011, Pacer has continued to make progress in achieving its strategic objectives and improving its financial performance. We significantly improved our income from operations and working capital position in the 2011 period as compared to the 2010 period and believe we are well positioned to continue to execute on our business plan. We are focused on enhancing our capabilities, while reducing our cost structure in both our intermodal and logistics segments, and continuing to provide our customers with the service quality and on-time performance they expect.

Our intermodal segment recorded income from operations of $17.2 million in the third quarter of 2011 compared to $7.1 million in the third quarter of 2010. We have continued to expand our customer base and replace revenues from the transitioned wholesale domestic east-west big box business in our intermodal segment. The significant improvement in income from operations is a reflection of the improvements we have made in shedding unprofitable business during the customer contract renegotiation season in the first half of 2011, improving capacity allocation decisions and controlling costs. We also benefited in the third quarter from a $4.8 million gain we recorded on the sale of railcar assets which were purchased during the second and third quarter of 2011. The 2010 period included a $2.2 million gain recorded on the sale of container and chassis equipment. The 2010 period was also impacted by Hurricane Alex which disrupted rail service in the third quarter of that year. We have estimated the Hurricane Alex impact reduced intermodal operating income by $3.5 million to $4.0 million in the 2010 period. Beginning in the fourth quarter of 2011, we anticipate a reduction in revenue of $50 million to $75 million annually from one of our large ocean carrier customers. We expect revenue growth in 2012 despite this customer reduction. We are positioned to continue to benefit from favorable trends in the intermodal market.

Our logistics segment recorded a loss from operations of $0.8 million for the third quarter of 2011 compared to an operating loss of $0.2 million in the third quarter of 2010. The operating loss is primarily due to the loss of a customer in our warehousing and distribution business, $0.4 million of severance costs as we continue to consolidate and simplify our operations, and the continued expansion costs associated with our international business. We believe the expansion of our international operations will allow us to capture more freight at origin points in order to take full advantage of our ability to provide integrated global door-to-door transportation and logistics solutions for our customers.

We were debt free and our cash balance has increased to $18.6 million at September 30, 2011. The credit facility we entered into in December 2010 has lowered our interest rates and increased our flexibility by eliminating capital expenditure limitations and easing other restrictions. Interest expense incurred during the third quarter of 2011 decreased over 58% in comparison to the third quarter of 2010.

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Use of Non-GAAP Financial Measures

From time to time in press releases regarding quarterly earnings, presentations and other communications, we may provide financial information determined by methods other than in accordance with GAAP. The non-GAAP measures include adjusted revenues, which exclude the impact of the transition during 2010 of the east-west big box business from intermodal marketing companies (“IMCs”). Management uses the non-GAAP measures in its analysis of the Company’s performance and regularly reports such information to our Board of Directors. Management believes that presentations of financial performance excluding the impact of these revenues provides useful supplemental information that is essential to a proper understanding of the operating results of our core businesses as we continue to transform the Company’s operations, focus on network flows and allow investors, management and our Board to more easily compare operating results from period to period. However, the use of any such non-GAAP financial information should not be considered in isolation or as a substitute for revenues, net income or loss, operating income or loss, cash flows from operations or other income or cash flow data prepared in accordance with GAAP or as a measure of our profitability or liquidity. These non-GAAP measures may not be comparable to those used by other companies.

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Results of Operations

Three months ended September 30, 2011 compared to three months ended September 30, 2010

The following table sets forth our historical financial data by reportable segment for the three months ended September 30, 2011 and 2010 (in millions):

	2011			2010			Change			% Change
Revenues
Intermodal	$	302.2		$	255.7		$	46.5			18.2	%
Logistics		73.7			109.4			(35.7	)		(32.6	)
Inter-segment elimination		(0.1	)		(0.3	)		0.2			N/M
Total		375.8			364.8			11.0			3.0
Cost of purchased transportation and services and direct operating expenses
Intermodal		269.0			229.8			39.2			17.1
Logistics		60.9			95.3			(34.4	)		(36.1	)
Inter-segment elimination		(0.1	)		(0.3	)		0.2			N/M
Total		329.8			324.8			5.0			1.5
Gross margin
Intermodal		33.2			25.9			7.3			28.2
Logistics		12.8			14.1			(1.3	)		(9.2	)
Total	$	46.0		$	40.0		$	6.0			15.0
Gross margin percentage
Intermodal		11.0	%		10.1	%		0.9	%
Logistics		17.4			12.9			4.5
Total		12.2	%		11.0	%		1.2	%
Selling, general and administrative expenses
Intermodal	$	19.6		$	19.6		$	—			—
Logistics		13.1			13.9			(0.8	)		(5.8	)
Corporate		4.8			3.5			1.3			37.1
Total		37.5			37.0			0.5			1.4
Other income
Intermodal		(4.8	)		(2.2	)		(2.6	)		118.2
Logistics		—			—			—			—
Corporate		—			—			—			—
Total		(4.8	)		(2.2	)		(2.6	)		118.2
Depreciation and amortization
Intermodal		1.2			1.4			(0.2	)		(14.3	)
Logistics		0.5			0.4			0.1			25.0
Corporate		0.2			0.1			0.1			100.0
Total		1.9			1.9			—			—
Income (loss) from operations
Intermodal		17.2			7.1			10.1			142.3
Logistics		(0.8	)		(0.2	)		(0.6	)		300.0
Corporate		(5.0	)		(3.6	)		(1.4	)		38.9
Total		11.4			3.3			8.1			245.5
Interest expense		(0.5	)		(1.2	)		0.7			(58.3	)
Income tax expense		4.3			1.0			3.3			330.0
Net income	$	6.6		$	1.1		$	5.5			500.0	%

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Revenues. Revenues increased $11.0 million, or 3.0%, for the three months ended September 30, 2011 compared to the three months ended September 30, 2010. Excluding 2010 revenues from the transitioned east-west big box IMC business, revenues increased $12.4 million or 3.4%.

The following table sets forth the change in revenue by reportable segment and the change in intermodal volumes during the 2011 period compared to the 2010 period (in millions):

							Adjusted 1/
	Change			% Change			Change			% Change
Revenues:
Intermodal	$	46.5			18.2	%	$	47.9			18.8	%
Logistics	$	(35.7	)		(32.6	)%	$	(35.7	)		(32.6	)%
Intermodal Volume					(0.6	)%					(0.4	)%

1/ Results excluding 2010 revenues from the transitioned east-west big box IMC business on the intermodal segment. See reconciliation below.

Total intermodal revenue increased $46.5 million, or 18.2%, from the 2010 period to $302.2 million. Excluding 2010 revenues from the transitioned east-west IMC business, our intermodal revenues increased $47.9 million or 18.8%. This 18.8% period-over-period change in revenue is comprised of price increases of 6.8%, higher fuel surcharges of 11.0% and a change in the mix within our network which increased revenues by 1.4%, offset by a reduced volume impact of 0.4%. Our big box equipment turns increased from 1.6x in the 2010 period to 1.7x in the 2011 period. Equipment turns in the 2010 period were negatively impacted by Hurricane Alex which disrupted our network equipment flows.

Revenues in our logistics segment decreased $35.7 million, or 32.6%, in the 2011 period compared to the 2010 period. The decline is primarily due to the absence of the military freight forwarding business in Asia, a decrease in revenues in our warehousing and distribution business due to the loss of a customer and less trans-pacific trade during the 2011 period.

Cost of Purchased Transportation and Services and Direct Operating Expenses. Cost of purchased transportation and services and direct operating expenses increased $5.0 million, or 1.5%, in the 2011 period compared to the 2010 period. Direct operating costs are only incurred in our intermodal segment.

The intermodal segment’s cost of purchased transportation and services and direct operating expense increased $39.2 million, or 17.1%, in the 2011 period compared to the 2010 period. The increase is primarily driven by customer mix changes and higher fuel costs, partially offset by efforts in the 2010 period to reduce equipment that was underutilized or obsolete. In connection with this equipment right sizing, we recognized $0.4 million of lease termination costs on certain containers and chassis in the 2010 period while no lease termination costs were incurred in the 2011 period.

Cost of purchased transportation and services in our logistics segment decreased $34.4 million, or 36.1%, in the 2011 period compared to the 2010 period. The decrease was due primarily to the absence of military shipments in the 2011 period, a decrease in costs in our warehousing and distribution business due to the loss of a customer and less trans-pacific trade during the 2011 period.

Gross Margin. Overall gross margin increased $6.0 million, or 15.0%, and our gross margin percentage (revenues less the cost of purchased transportation and services and direct operating expense divided by revenues) increased from 11.0% in the 2010 period to 12.2% in the 2011 period. The gross margin for our intermodal segment increased by $7.3 million or 28.2%. The gross margin percentage for our intermodal segment increased to 11.0% during the 2011 period compared to 10.1% in the 2010 period. The increase in the intermodal segment gross margin

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and gross margin percentage primarily reflected the results of our strategic growth plan to shed unprofitable business. The increases also resulted from improved network balance reflecting better economic conditions in the 2011 period as compared to the corresponding 2010 period. A portion of the increases can also be attributable to the disruption of rail service in the 2010 period caused by Hurricane Alex which was estimated to have reduced intermodal gross margin by $3.5 million to $4.0 million in the 2010 period. Logistics segment gross margin decreased $1.3 million, or 9.2%, and the gross margin percentage for our logistics segment increased from 12.9% in the 2010 period to 17.4% in the 2011 period. The decrease in the gross margin was due to a decrease in our warehousing and distribution business as a result of the loss of a customer and less trans-pacific trade during the 2011 period. The gross margin percentage increase was due primarily to the absence of the low-margin military shipments in our international operations in the 2011 period.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased $0.5 million, or 1.4%, in the 2011 period compared to the 2010 period. A total of $0.4 million in severance costs were incurred during the 2011 period in the logistics segment. A total of $0.1 million of severance costs were incurred during the 2010 period, all in corporate. Our average employment level declined by 29 people, or 2.8%, in the 2011 period compared to the 2010 period due to severance activities and attrition. We estimate that the reduced employment level reduced expenses by approximately $0.6 million in the 2011 period compared to the 2010 period. These aforementioned decreases are offset by increased incentive compensation and bonus costs due to the improved operating results in the 2011 period.

Other Income. Other income resulted from a gain on the sale of railcar assets in the 2011 period of $4.8 million compared to a gain on the sale of container and chassis equipment of $2.2 million in the 2010 period.

Depreciation and Amortization. Depreciation and amortization expenses were $1.9 million for both the 2011 and 2010 periods.

Income From Operations. Income from operations increased $8.1 million from $3.3 million in the 2010 period to $11.4 million in the 2011 period.

Intermodal segment income from operations increased $10.1 million to $17.2 million in the 2011 period compared to income from operations of $7.1 million in the 2010 period. The primary drivers of the improvement were the increased revenues and gross margin as well as the $4.8 million gain on the sale of railcar assets. A portion of the increase is attributable to the disruption of rail service caused by Hurricane Alex which was estimated to have reduced intermodal operating income by $3.5 million to $4.0 million in the 2010 period. In addition, the 2010 period benefited from a $2.2 million gain on the sale of container and chassis equipment.

The logistics segment incurred a loss from operations of $0.8 million in the 2011 period compared to loss from operations of $0.2 million in the 2010 period. The current period loss was primarily attributable to decreased revenues in our warehousing and distribution business due to the loss of a customer, less trans-pacific trade during the 2011 period, and severance expense incurred during the 2011 period.

Corporate expenses increased $1.4 million from $3.6 million in the 2010 period compared to $5.0 million in the 2011 period. The increase is primarily due to higher bonus and incentive compensation partially offset by $0.1 million less severance expense than in the 2010 period.

Interest Expense. Interest expense decreased $0.7 million in the 2011 period compared to the 2010 period. Interest expense is composed of interest paid on our debt and the amortization of deferred financing costs. The decrease reflects lower deferred financing cost amortization of $0.3 million, coupled with reduced borrowings and lower interest rates in the 2011 period under the 2010 Credit Agreement as compared to our prior facility. The weighted average interest rate during the 2011 period was approximately 4.1% compared to 5.6% in the 2010 period. The average outstanding debt balance decreased from $33.1 million for the three month period ended September 30, 2010 to $8.6 million for the three month period ended September 30, 2011.

Income Tax Expense. We recorded income tax expense of $4.3 million in the 2011 period compared to $1.0 million in the 2010 period. The effective tax rate was 39.4% in the 2011 period and 44.6% in the 2010 period. The change in the effective tax rate was primarily driven by the impact of a discrete tax settlement in the 2010 period coupled with lower pre-tax income in the 2010 period.

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Net Income. As a result of the foregoing, net income increased by $5.5 million from $1.1 million in the 2010 period to $6.6 million in the 2011 period.

20

Reconciliation of GAAP Revenues to Adjusted Revenues

For the three months ended September 30, 2011 and September 30, 2010

(in millions)

	Three Months Ended Septemer 30, 2011								Three Months Ended Septemer 30, 2010									Adjusted			% Adjusted
	GAAP Results			Adjustments		Adjusted Results			GAAP Results			Adjustments			Adjusted Results			Variance 2011 vs 2010			Variance 2011 vs 2010
Revenues:
Intermodal	$	302.2		$	—	$	302.2		$	255.7		$	(1.4	)1/	$	254.3		$	47.9			18.8	%
Logistics		73.7			—		73.7			109.4			—			109.4			(35.7	)		(32.6	)
Inter-segment elimination		(0.1	)		—		(0.1	)		(0.3	)		—			(0.3	)		0.2			N/M
	$	375.8		$	—	$	375.8		$	364.8		$	(1.4	)	$	363.4		$	12.4			3.4	%

1/ Transitioned east-west big box revenues from intermodal marketing companies.

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Results of Operations

Nine months ended September 30, 2011 compared to nine months ended September 30, 2010

The following table sets forth our historical financial data by reportable segment for the nine months ended September 30, 2011 and 2010 (in millions):

	2011			2010			Change			% Change
Revenues
Intermodal	$	885.6		$	800.3		$	85.3			10.7	%
Logistics		235.2			330.0			(94.8	)		(28.7	)
Inter-segment elimination		(0.3	)		(0.8	)		0.5			N/M
Total		1,120.5			1,129.5			(9.0	)		(0.8	)
Cost of purchased transportation and services and direct operating expenses
Intermodal		790.4			715.6			74.8			10.5
Logistics		196.0			289.1			(93.1	)		(32.2	)
Inter-segment elimination		(0.3	)		(0.8	)		0.5			N/M
Total		986.1			1,003.9			(17.8	)		(1.8	)
Gross margin
Intermodal		95.2			84.7			10.5			12.4
Logistics		39.2			40.9			(1.7	)		(4.2	)
Total	$	134.4		$	125.6		$	8.8			7.0
Gross margin percentage
Intermodal		10.7	%		10.6	%		0.1	%
Logistics		16.7			12.4			4.3
Total		12.0	%		11.1	%		0.9	%
Selling, general and administrative expenses
Intermodal	$	57.6		$	64.0		$	(6.4	)		(10.0	)
Logistics		39.0			38.8			0.2			0.5
Corporate		14.4			13.4			1.0			7.5
Total		111.0			116.2			(5.2	)		(4.5	)
Other income
Intermodal		(4.8	)		(2.4	)		(2.4	)		100.0
Logistics		—			—			—			—
Corporate		—			—			—			—
Total		(4.8	)		(2.4	)		(2.4	)		100.0
Depreciation and amortization
Intermodal		3.6			3.6			—			—
Logistics		1.4			0.9			0.5			55.6
Corporate		0.4			0.2			0.2			100.0
Total		5.4			4.7			0.7			14.9
Income (loss) from operations
Intermodal		38.8			19.5			19.3			99.0
Logistics		(1.2	)		1.2			(2.4	)		(200.0	)
Corporate		(14.8	)		(13.6	)		(1.2	)		8.8
Total		22.8			7.1			15.7			221.1
Interest expense		(1.8	)		(3.7	)		1.9			(51.4	)
Income tax expense		8.2			1.4			6.8			485.7
Net income	$	12.8		$	2.0		$	10.8			540.0	%

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Revenues. Revenues decreased $9.0 million, or 0.8%, for the nine month period ended September 30, 2011 compared to the nine month period ended September 30, 2010. Excluding 2010 revenues from the transitioned east-west big box IMC business, revenues increased $6.3 million or 0.6%.

The following table sets forth the change in revenue by reportable segment and the change in intermodal volumes during the 2011 period compared to the 2010 period (in millions):

							Adjusted 1/
				%						%
	Change			Change			Change			Change
Revenues:
Intermodal	$	85.3			10.7	%	$	100.6			12.8	%
Logistics	$	(94.8	)		(28.7	)%	$	(94.8	)		(28.7	)%
Intermodal Volume					(1.7	)%					0.1	%

1/ Results excluding 2010 revenues from the transitioned east-west big box IMC business on the intermodal segment. See reconciliation below.

Total intermodal revenue increased $85.3 million, or 10.7%, from the 2010 period to $885.6 million. Excluding 2010 revenues from the transitioned east-west IMC business, our intermodal revenues increased $100.6 million or 12.8%. This 12.8% period-over-period change in revenue is comprised of 0.1% volume growth, 9.4% of higher fuel surcharges and 3.4% of price increases, offset by a change in the mix within our network which reduced revenues by 0.1%. Our big box equipment turns decreased from 1.8x in the 2010 period to 1.7x in the 2011 period as we increased our equipment fleet capacity to support future volume growth.

Revenues in our logistics segment decreased $94.8 million, or 28.7%, in the 2011 period compared to the 2010 period. The decline is primarily due to the absence of the military freight forwarding business in Asia and a decrease in revenues in our warehousing and distribution business due to the loss of a customer.

Cost of Purchased Transportation and Services and Direct Operating Expenses. Cost of purchased transportation and services and direct operating expenses decreased $17.8 million, or 1.8%, in the 2011 period compared to the 2010 period. Direct operating costs are only incurred in our intermodal segment.

The intermodal segment’s cost of purchased transportation and services and direct operating expense increased $74.8 million, or 10.5%, in the 2011 period compared to the 2010 period. The increase is primarily driven by changes in the customer mix and fuel costs as well as costs incurred to terminate leases on equipment that was underutilized or obsolete. In connection with this equipment right sizing, we recognized $2.8 million of lease termination costs on certain containers and chassis in the 2011 period versus $1.7 million of lease termination costs incurred in the 2010 period.

Cost of purchased transportation and services in our logistics segment decreased $93.1 million, or 32.2%, in the 2011 period compared to the 2010 period. The decrease was due primarily to the absence of military shipments in the 2011 period as well as a decrease in costs in our warehousing and distribution business due to the loss of a customer. The decrease was partially offset by the increase in international shipping volumes.

Gross Margin. Overall gross margin increased $8.8 million, or 7.0%, and our gross margin percentage (revenues less the cost of purchased transportation and services and direct operating expense divided by revenues) increased from 11.1% to 12.0%. The gross margin for our intermodal segment increased by $10.5 million. The gross margin percentage for our intermodal segment increased to 10.7% during the 2011 period compared to 10.6% in the 2010 period. The increase in the intermodal segment gross margin percentage is primarily driven by changes in the customer mix and fuel costs and was partially offset by $1.1 million of additional lease termination costs incurred in the 2011 period to terminate leases on certain containers and chassis as described above. Logistics segment gross margin decreased $1.7 million, or 4.2%, and the gross margin percentage for our logistics segment increased from

23

12.4% in the 2010 period to 16.7% in the 2011 period. The decrease in the gross margin was due to a decrease in revenues in our warehousing and distribution business due to the loss of a customer, partially offset by increased ocean and air shipments. The gross margin percentage increase was due primarily to the absence of the low-margin military shipments in our international operations in the 2011 period.

Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased $5.2 million, or 4.5%, in the 2011 period compared to the 2010 period. The decrease was due primarily to the impact of cost reduction efforts undertaken in prior periods and continuing in 2011. A total of $1.2 million in severance costs were incurred during the 2011 period, $0.7 million in the intermodal segment, $0.4 million in the logistics segment and $0.1 million in corporate. A total of $2.9 million of severance costs were incurred during the 2010 period, $1.2 million in the intermodal segment, and $1.7 million in corporate. Use of the internally-developed transportation information system implemented in July 2010 resulted in a reduction in costs for the 2011 period of approximately $4.8 million. Partially offsetting these decreases was an increase in salaries, incentive compensation and benefits costs due to increased operating income in the 2011 period compared to the 2010 period. There was no change in our average employment level for both periods.

Other income. Other income resulted from a gain on the sale of railcar assets in the 2011 period of $4.8 million compared to a gain on the sale of container and chassis equipment of $2.4 million in the 2010 period.

Depreciation and Amortization. Depreciation and amortization expenses increased $0.7 million, or 14.9%, in the 2011 period compared to the 2010 period due primarily to increased depreciation expense as a result of the transportation management and operations solution system implemented in 2010.

Income From Operations. Income from operations increased $15.7 million from $7.1 million in the 2010 period to $22.8 million in the 2011 period.

Intermodal segment income from operations increased $19.3 million to $38.8 million in the 2011 period compared to income from operations of $19.5 in the 2010 period. The primary drivers of the improvement were the increased revenues and gross margin, our cost reduction activities taken in 2010 and continuing into 2011 as well as the $4.8 million gain on the sale of railcar assets. A portion of the increase can also be attributable to the disruption of rail service caused by Hurricane Alex which was estimated to have reduced intermodal operating income by $3.5 million to $4.0 million in the 2010 period. In addition, the 2010 period benefited from a $2.4 million gain on the sale of container and chassis equipment.

The logistics segment incurred a loss from operations of $1.2 million in the 2011 period compared to income from operations of $1.2 million in the 2010 period. The current period loss was primarily due to decreased revenues in our warehousing and distribution business due to the loss of a customer and severance costs within the logistics segment in the 2011 period.

Corporate expenses increased $1.2 million from $13.6 million in the 2010 period compared to $14.8 million in the 2011 period. The increase is primarily due to higher bonus and incentive compensation costs in the 2011 period, partially offset by $1.6 million less severance cost in the 2011 period.

Interest Expense. Interest expense decreased $1.9 million in the 2011 period compared to the 2010 period. Interest expense is composed of interest paid on our debt and the amortization of deferred financing costs. The decrease reflects lower deferred financing cost amortization of $1.0 million, coupled with reduced borrowings and lower interest rates in the 2011 period under the 2010 Credit Agreement. The weighted average interest rate during the 2011 period was approximately 3.6% compared to 5.7% in the 2010 period. In addition, the average outstanding debt balance decreased from $31.3 million for the nine month period ended September 30, 2010 to $24.1 million for the nine month period ended September 30, 2011.

Income Tax Expense. We recorded income tax expense of $8.2 million in the 2011 period compared to $1.4 million in the 2010 period. The effective tax rate was 39.0% in the 2011 period and 39.7% in the 2010 period. The change in the estimated annual effective tax rate was primarily due to the change in the mix of income among the jurisdictions in which we do business.

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Net income. As a result of the foregoing, net income increased by $10.8 million from $2.0 million in the 2010 period to net income of $12.8 million in the 2011 period.

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Reconciliation of GAAP Revenues to Adjusted Revenues

For the nine months ended September 30, 2011 and September 30, 2010

(in millions)

	Nine Months Ended September 30, 2011								Nine Months Ended September 30, 2010										Adjusted			% Adjusted
	GAAP					Adjusted			GAAP							Adjusted			Variance			Variance
	Results			Adjustments		Results			Results			Adjustments				Results			2011 vs 2010			2011 vs 2010
Revenues:
Intermodal	$	885.6		$	—	$	885.6		$	800.3		$	(15.3	)	1/	$	785.0		$	100.6			12.8	%
Logistics		235.2			—		235.2			330.0			—				330.0			(94.8	)		(28.7	)
Inter-segment elimination		(0.3	)		—		(0.3	)		(0.8	)		—				(0.8	)		0.5			N/M
	$	1,120.5		$	—	$	1,120.5		$	1,129.5		$	(15.3	)		$	1,114.2		$	6.3			0.6	%

1/ Transitioned east-west big box revenues from intermodal marketing companies.

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Liquidity and Capital Resources

Cash provided by operating activities was $26.3 million and $3.8 million for the nine month periods ended September 30, 2011 and September 30, 2010, respectively. The increase in cash provided by operating activities in the 2011 period was due primarily to increased cash provided by changes in working capital and increased net income in the 2011 period. Included in cash flow from operating activities is a net tax refund of $4.7 million in the 2011 period compared to a refund of $7.8 million in the 2010 period.

We had working capital of $42.2 million and $9.2 million at September 30, 2011 and 2010, respectively. The increase in 2011 is due primarily to 2010 working capital including short-term debt of $23.8 million and the increase in our cash flow from operations from September 30, 2010 to September 30, 2011.

Cash flows provided by (used in) investing activities were $1.6 million and ($1.7) million for the nine month periods ended September 30, 2011 and September 30, 2010, respectively.

During the 2011 period, we purchased $22.1 million of railcar assets and sold them for net proceeds of $28.9 million. Proceeds from the sale of the railcars were used to repay outstanding borrowings under the 2010 Credit Agreement. The Company also provided notice of exercise of its option to purchase 248 railcars subject to an operating lease for $26.6 million on January 15, 2012. The foregoing transactions will reduce future operating lease obligations by approximately $1.0 million for the remainder of 2011, $7.2 million in 2012, $7.5 million in 2013, $7.5 million in 2014, $7.5 million in 2015, and $5.0 million thereafter for a total of $35.7 million.

The 2011 period cash capital expenditures included $4.4 million for enhancements to our internally developed transportation management and operations solutions systems, $0.6 million for normal computer hardware replacement items and $0.4 million of leasehold improvements and other assets. During the 2011 period, we retired and sold various sizes of chassis and containers in our intermodal segment for proceeds of $0.2 million.

The 2010 cash capital expenditures included $4.0 million for the internally developed transportation management and operations solutions to replace the systems previously provided through an agreement with APL and $2.7 million for other capital expenditures. Also during the 2010 period, we received proceeds of $2.4 million from a sale leaseback arrangement for 4,000 53-ft containers and recorded, as a reduction of lease expense, a gain of $0.6 million and deferred an additional gain of $1.8 million which is being amortized over the remaining lease term. During the 2010 period, we retired and sold primarily 48-ft. chassis in our Stacktrain unit for proceeds of $2.6 million.

Cash flows provided by (used in) financing activities were ($13.5) million and $0.3 million for the nine month periods ended September 30, 2011 and September 30, 2010, respectively.

During the 2011 period, the Company repaid a net $13.4 million under our 2010 Credit Agreement. In addition, 10,116 shares of our common stock were surrendered for payment of employee taxes due upon the June 1, 2011 vesting of restricted stock. These shares were retired, thereby reducing stockholders’ equity by $0.1 million.

During the 2010 period, we borrowed a net $0.7 million under our former credit facility and repaid $0.2 million of capital lease obligations related to the SAP software project. The net book value of equipment under capital lease was $0.1 million at September 30, 2010. In addition, 26,251 shares of our common stock were surrendered for payment of employee taxes due upon the June 1, 2010 vesting of restricted stock. These shares were retired, thereby reducing stockholders’ equity by $0.2 million.

As of September 30, 2011, $76.4 million was available under the 2010 Credit Agreement pursuant to the borrowing base formula set forth in the 2010 Credit Agreement, net of $15.6 million of outstanding letters of credit. There was no debt outstanding at September 30, 2011.

We believe that our cash, cash flow from operations and borrowings available under the 2010 Credit Agreement will be sufficient to meet our cash needs for at least the next twelve months.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our market risk is affected primarily by changes in interest rates. Under our policies, we may use hedging techniques and derivative financial instruments to reduce the impact of adverse changes in interest rates.

We have market risk in interest rate exposure, primarily in the United States. We manage interest exposure through our floating rate debt. Interest rate swaps may be used from time to time to adjust interest rate exposure when appropriate based on market conditions. There were no swaps outstanding as of September 30, 2011.

Based upon the average variable interest rate debt outstanding during the nine months ended September 30, 2011, a 100 basis point change in our variable interest rates would affect our pre-tax earnings by approximately $0.2 million on an annual basis.

As our foreign business expands, we will be subjected to greater foreign currency risk.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. We evaluated the effectiveness of the design and operation of our “disclosure controls and procedures” as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this report. This evaluation (the “disclosure controls evaluation”) was done under the supervision and with the participation of management, including our chief executive officer (“CEO”) and chief financial officer (“CFO”). Rules adopted by the SEC require that in this section of our Quarterly Report on Form 10-Q we present the conclusions of the CEO and the CFO about the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report based on the disclosure controls evaluation.

Objective of Controls. Our disclosure controls and procedures are designed so that information required to be disclosed in our reports filed or submitted under the Exchange Act, such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Our disclosure controls and procedures are also intended to ensure that such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives, and management necessarily is required to use its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.

Conclusion. Based upon the disclosure controls evaluation, our CEO and CFO have concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective to provide reasonable assurance that the foregoing objectives are achieved.

Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting during the quarter ended September 30, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

Information on legal proceedings is set forth in Note 6 to the Notes to Condensed Consolidated Financial Statements included in Part I of this report, which information is incorporated by reference herein.

ITEM 1A. RISK FACTORS.

Information on risk factors is set forth in “Managements’ Discussion and Analysis of Financial Condition and Results of Operations – Forward Looking Statements” in Part I-Item 2 of this Quarterly Report on Form 10-Q and in Part I – “Item 1A. Risk Factors” to the Company’s 2010 Annual Report. There have been no material changes from the risk factors previously described in Pacer’s 2010 Annual Report on Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. (Removed and Reserved).

ITEM 5. OTHER INFORMATION.

On October 31, 2011, the Compensation Committee of our Board of Directors approved the 2012 Bonus Plan, which is substantially consistent with the 2011 bonus plan. The 2012 Bonus Plan provides for payment of cash bonuses subject to achievement of specified financial objectives. The executive officers named in our 2011 proxy statement, other than Ms. Bailey and Mr. Kane who are no longer employees of the Company, are eligible to participate in the 2012 Bonus Plan. Bonuses payable to the named executive officers participating in the 2012 Bonus Plan are contingent on the Company’s actual fiscal year 2012 consolidated operating income or gross margin for certain lines of business (as such financial measures may be adjusted by the Committee in its discretion for certain items as described in the 2012 Bonus Plan) falling within specified minimum and maximum targets established by the Committee. Bonuses are capped at 150% of a participant’s bonus opportunity (stated as a percentage of base salary) as established by the Committee. For our Chief Executive Officer, the target bonus opportunity is set at 100% of annual base salary. For Messrs. Hafferty, Burns and Killea, the target bonus opportunity is set at 50% of annual base salary. For Mr. Sutherland, the target bonus opportunity is 40% of annual base salary. We will provide additional information regarding the compensation of our executive officers in our proxy statement for the 2012 annual meeting of shareholders.

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ITEM 6. EXHIBITS.

Exhibit No.	Description
10.1	Employment Agreement dated as of May 16, 2011 between Pacer International, Inc. and Florian Kete.*
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1	Certification of Chief Executive Officer and Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
101.INS	XBRL Instance Document**
101.SCH	XBRL Taxonomy Extension Schema Document**
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document**
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document**
101.LAB	XBRL Taxonomy Extension Label Linkbase Document**
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document**

* filed herewith

** furnished herewith, but not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that we explicitly incorporate it by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	PACER INTERNATIONAL, INC.
Date: November 2, 2011	By:	/s/    Daniel W. Avramovich
		Chairman and Chief Executive Officer
		(Principal Executive Officer)
Date: November 2, 2011	By:	/s/    John J. Hafferty
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

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PACER INTERNATIONAL, INC. AND SUBSIDIARIES

EXHIBIT INDEX

Exhibit No.	Description
10.1	Employment Agreement dated as of May 16, 2011 between Pacer International, Inc. and Florian Kete
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer and Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

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EX-10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT dated as of May 16, 2011, between Pacer International, Inc., a Tennessee corporation (the “Company”), and Florian Kete (the “Executive”).

The Company and the Executive are entering into this Agreement to set forth the terms of the Executive’s employment with the Company. Accordingly, in consideration of the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the Company and the Executive, the Company and the Executive hereby agree as follows:

Section 1. Duties. On the terms and subject to the conditions contained in this Agreement, the Executive will initially be employed by the Company as Vice President, Human Resources. The Executive shall perform such duties and services on behalf of the Company and its Affiliates (as defined in Section 24(b) below) consistent with such title and position as may reasonably be assigned to the Executive from time to time by the Company’s Board of Directors (the “Board”) or the Chief Executive Officer or other more senior officers of the Company. The Executive’s title and position and related duties and services may be changed during the course of Executive’s employment by the Board or the Chairman of the Board or other more senior officers of the Company.

Section 2. Term. The Executive’s employment hereunder shall be for the period (the “Employment Period”) commencing on the first date that the Executive begins employment with the Company (the “Commencement Date”) and ending on the effective date of the termination of such employment pursuant to and in accordance with the applicable provisions of this Agreement. Upon such termination of the Executive’s employment hereunder, the Executive (or, if applicable, the Executive’s beneficiaries or estate) shall be entitled only to those rights and benefits provided in Section 8(a) or Section 8(b), as applicable to such termination, subject to compliance with those continuing covenants and agreements set forth herein.

Section 3. Time to be Devoted to Employment. During the Employment Period, the Executive will devote substantially all of the Executive’s working energies, efforts, interest, abilities and time exclusively to the business and affairs of the Company and its Affiliates. The Executive will not engage in any other business or activity that, in the reasonable judgment of the Board, cause a conflict of interest, affect job performance or otherwise would conflict or interfere in any material respect with the Executive’s performance of his duties as set forth herein, whether or not such activity is pursued for gain, profit or other pecuniary advantage.

Section 4. Base Salary; Bonus; Benefits.

(a) During the Employment Period, the Company (or any of its Affiliates) shall pay the Executive a minimum annual base salary (the “Base Salary”) of $225,000, payable in such installments (but not less often than monthly) as is generally the policy of the Company with respect to the payment of regular compensation to its executive officers. The Base Salary may be increased from time to time in the sole discretion of the Board. The Executive will also be entitled to three weeks vacation (pro-rated in 2011) under and subject to the Company’s policy. Such vacation shall accrue and may be taken in accordance with the Company’s policy in effect from

time to time with respect to its executive officers generally, subject to the Company’s right at any time and from time to time to amend, modify, change or terminate such vacation policy in any respect. The Executive will also be entitled to such other benefits as may be made available to other executive officers of the Company generally, including participation in such health, life and disability insurance programs and retirement or savings plans, if any, as the Company may from time to time maintain in effect, in all cases subject to the Company’s right at any time and from time to time to amend, modify, change or terminate in any respect any of its employee and other benefit plans, policies, or programs; provided however, that during the period from the Commencement Date until December 31, 2011, the Executive has requested, and the Company has agreed, that the Executive and his family will not participate in the Company’s’ health insurance plan but instead the Executive and his family shall continue coverage under the Executive’s former employer’s health insurance program and the Company shall reimburse the Executive for his COBRA premiums in a monthly amount of $1,167.18. The Company will reimburse the Executive for the reasonable costs incurred by the Executive for temporary housing in the vicinity of Dublin, OH, until the first to occur of (i) the Executive’s relocation to the Dublin, OH, vicinity and (ii) November 30, 2011. The Company will also reimburse the Executive for the reasonable costs and expenses incurred by the Executive (grossed up to cover any net income tax obligation incurred by the Executive with respect to such reimbursement) to relocate to the Dublin, OH, vicinity subject to and in accordance with the Company’s relocation policy.

(b) During the Employment Period, the Executive shall be entitled to participate in the Company’s performance bonus plan or program as adopted by the Board and in effect from time to time with respect to similarly situated executives of the Company and its Affiliates (the “Bonus Plan”), and to receive such performance bonus thereunder (if any) with respect to each fiscal year of the Company occurring during the Employment Period, subject in all cases to the terms and conditions of this Agreement and such Bonus Plan. The amount of such performance bonus, if any, that may be awarded and payable to the Executive hereunder with respect to any such fiscal year shall range up to thirty percent (30%) of the Base Salary in effect for such fiscal year as determined by the Board (or committee thereof) in its sole discretion based on and to the extent of the achievement or satisfaction of such targets, goals and conditions as may be provided in such Bonus Plan for such fiscal year, and as the Board (or committee thereof) may otherwise determine. Such targets, goals and conditions may include business, financial, operating and/or other performance measures applicable to (A) the Company and its Affiliates taken as a whole and (B) those business segment(s) or divisions(s) of the Company and its Affiliates for and with respect to which the Executive is responsible or has authority (e.g., the human resources function) and (ii) such personal and individual performance criteria as may be determined by the Board (or committee thereof) taking into account the Executive’s duties and responsibilities to the Company and its Affiliates for the period in question. The performance bonus awarded and payable to the Executive under such Bonus Plan with respect to any such fiscal year (including any pro rated amount payable pursuant to the following provisions of this Section 4(b)) shall be paid at such time or times and in such manner as performance bonuses are paid to the other executive officers of the Company generally. If the Executive’s employment with the Company is terminated by the Company without “cause” pursuant to Section 7(b) below or by the Executive with Good Reason (as defined below) within eighteen (18) months after a Change in Control (as defined below) pursuant to Section 7(d) below, the Executive will be entitled to receive that portion of the bonus payable for the fiscal year of the Company during which such termination occurs pro rated through the date of such termination based on the number of days elapsed through the termination

2

date over 365 days. If the Executive’s employment with the Company is terminated for any reason other than without “cause” pursuant to Section 7(b) below or by the Executive with Good Reason within eighteen (18) months after a Change in Control pursuant to Section 7(d) below, neither the Company nor any of its Affiliates will be obligated to pay the Executive any bonus with respect to the fiscal year of the Company in which such termination occurred or thereafter. The Executive’s rights to participate in, and to receive a performance bonus under, the Company’s Bonus Plan in effect for any given fiscal year shall be subject to the Company’s right at any time and from time to time to amend, modify, change or terminate such Bonus Plan in any respect. In the event of a conflict between this Agreement and such Bonus Plan, this Agreement shall control.

(c) During the Employment Period, the Executive shall be entitled to participate in the Company’s long-term equity incentive plan as adopted by the Board (or a committee thereof) and in effect from time to time with respect to similarly situated executives of the Company and its Affiliates (the “LTI Plan”), and to receive such awards thereunder (if any), subject in all cases to the terms and conditions of this Agreement, the LTI Plan and the applicable award agreement issued thereunder. The number of shares or awards and applicable terms and conditions of such awards, if any, that may be granted to the Executive hereunder shall be determined by the Board (or committee thereof) in its sole discretion and shall be vested and earned based on and to the extent of the achievement or satisfaction of such targets, goals and conditions as may be provided in such LTI Plan or the applicable award agreement, and as the Board (or committee thereof) may determine. Such targets, goals and conditions may include any performance measures permitted under the LTI Plan as determined by the Board (or a committee thereof) and may relate to business, financial, operating and/or other measures applicable to (A) the Company and its Affiliates taken as a whole, (B) those business segment(s) or divisions(s) of the Company and its Affiliates for and with respect to which the Executive is responsible or has authority (e.g., the human resources function) and (C) such personal and individual performance criteria as may be determined by the Board (or committee thereof) taking into account the Executive’s duties and responsibilities to the Company and its Affiliates for the period in question. The effect of termination of employment or other circumstances shall be as stated in the LTI Plan or the applicable award agreement. The Executive’s rights to participate in, and to receive awards under, the Company’s LTI Plan shall be subject to the Company’s right at any time and from time to time to amend, modify, change or terminate such LTI Plan or any award program thereunder in any respect. In the event of a conflict between this Agreement and such LTI Plan or the applicable award agreement, the LTI Plan and the applicable award agreement shall control.

Section 5. Reimbursement of Expenses. During the Employment Period, the Company shall reimburse the Executive in accordance with Company policy for all reasonable and necessary traveling expenses and other disbursements incurred by the Executive for or on behalf of the Company in connection with the performance of the Executive’s duties hereunder upon presentation of appropriate receipts or other documentation therefor, in accordance with all applicable policies of the Company.

Section 6. Disability or Death. If, during the Employment Period, the Executive is incapacitated or disabled by accident, sickness or otherwise (a “Disability”) so as to render the Executive mentally or physically incapable of performing the services required to be performed by the Executive under this Agreement for any period of 90 consecutive days or for an aggregate of 180 days in any period of 360 consecutive days, the Company may, at any time thereafter, at its

3

option, terminate the Executive’s employment under this Agreement immediately upon giving the Executive written notice to that effect. In the event of the Executive’s death, the Executive’s employment will be deemed terminated as of the date of death.

Section 7. Termination.

(a) The Company may terminate the Executive’s employment hereunder at any time for “cause” by giving the Executive written notice of such termination, containing reasonable specificity of the grounds therefor. For purposes of this Agreement, “cause” shall mean (i) willful misconduct with respect to the business and affairs of the Company or any of its Affiliates, (ii) willful neglect of the Executive’s duties or the failure to follow the lawful directions of the Board or more senior officers of the Company to whom the Executive reports, including the violation of any material policy of the Company or of any of its Affiliates that is applicable to the Executive, (iii) the material breach of any provision of this Agreement or any other written agreement between the Executive and the Company or any of its Affiliates and, if such breach is capable of being cured, the Executive’s failure to cure such breach within 30 days of receipt of written notice thereof from the Company, (iv) the Executive’s commission of a felony, (v) the Executive’s commission of an act of fraud or financial dishonesty with respect to the Company or any of its Affiliates, or (vi) any conviction of the Executive for a crime involving moral turpitude or fraud. A termination pursuant to this Section 7(a) shall take effect immediately upon the giving of the notice contemplated hereby.

(b) The Company may terminate the Executive’s employment hereunder at any time without “cause” by giving the Executive written notice of such termination, which termination shall be effective as of the date set forth in such notice, provided that such date shall not be earlier than the day on which such notice is delivered to Executive (determined pursuant to Section 16(b) below).

(c) The Executive may terminate his employment hereunder at any time for any or no reason by giving the Company written notice of such termination, which termination shall be effective as of the date set forth in such notice, provided that such date shall not be earlier than the day on which such notice is delivered to the Company (determined pursuant to Section 16(b) below).

(d) The Executive may terminate his employment hereunder within eighteen (18) months after a Change in Control (defined below) with Good Reason (defined below). A “Change in Control” means the occurrence or existence of any of the following events or circumstances:

(i) any Person or any “group” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), but excluding the Company, any Subsidiary of the Company and any employee benefit plan of the Company or any of its Subsidiaries, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended), directly or indirectly, of securities representing 50% or more of the total combined voting power of the Company’s then outstanding securities eligible to vote for the election of directors (the “Company Voting Securities”);

4

(ii) the consummation of a merger, consolidation, share exchange or similar form of corporate reorganization of the Company, or any such type of transaction involving the Company or any of its Subsidiaries that requires the approval of the Company’s shareholders (whether for such transaction or the issuance of securities in the transaction or otherwise), or the sale or other disposition in one transaction or a series of transactions of all or substantially all of the assets of the Company (any of the foregoing events being referred to herein as a “Business Combination”), unless such Business Combination also constitutes a Non-Control Transaction (as defined below);

(iii) individuals constituting the Board as of February 5, 2008 (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board (or the board of directors or similar governing body of the surviving entity or its ultimate parent company in the case of a merger, consolidation or reorganization of the Company whose principal purpose is to change the Company’s state of incorporation, form a holding company or effect a similar reorganization as to form); provided, however, that any individual whose election to the Board, or whose nomination for election to the Board by the Company’s shareholders, was approved or recommended by at least two-thirds (2/3) of the directors then comprising the Incumbent Board shall be deemed to be a member of the Incumbent Board unless such individual’s initial assumption of office occurs as a result of either an actual or threatened proxy contest relating to the election of directors (including by way of consent solicitation); or

(iv) the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company.

The foregoing notwithstanding, the occurrence or existence of any of the foregoing events or circumstance shall be a Change in Control hereunder only if it is also a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company as described in Section 409A(a)(2)(A)(v) of the Internal Revenue Code, as amended.

“Non-Control Transaction” means any Business Combination immediately following which both of the following conditions are satisfied:

(i) more than 50% of the total combined voting power of the voting securities of the corporation or other entity resulting from such Business Combination (including a corporation or other entity that acquires all or substantially all of the assets of the Company or that beneficially owns, directly or indirectly, 100% of the Company Voting Securities) or the ultimate parent company thereof is represented by shares that comprised the Company Voting Securities immediately prior to such Business Combination (either by remaining outstanding or by being converted), and such voting power is in substantially the same proportion as the voting power of the Company Voting Securities immediately prior to such Business Combination; and

(ii) at least a majority of the members of the board of directors or equivalent governing body of the corporation or other entity resulting from such Business Combination or the ultimate parent company thereof were members of the Incumbent

5

Board at the time of the Board’s approval of the initial agreement providing for such Business Combination.

“Good Reason” means the occurrence or existence of any of the following events or circumstances within eighteen (18) months after a Change in Control:

(i) any reduction in the annual base salary, the bonus percentage established under Section 4(b) (i.e., 30%), employee benefits or fringe benefits required to be provided to the Executive under this Agreement, provided that the Executive notifies the Company, in writing, of such reduction and, if such reduction is capable of being cured, the Company’s failure to cure the same within 30 days after the Company’s receipt of such written notice;

(ii) any material reduction in the Executive’s position, title, duties, reporting responsibilities or authorities from that in effect immediately prior to the Change in Control; provided that the Executive notifies the Company, in writing, of such material reduction and, if such material reduction is capable of being cured, the Company’s failure to cure the same within 30 days after the Company’s receipt of such written notice;

(iii) any material breach by the Company of its obligations to the Executive under this Agreement or other written agreement between the Company and the Executive and, if such breach is capable of being cured, the Company’s failure to cure the same within 30 days after the Company’s receipt of written notice of such breach from the Executive; or

(iv) the Company’s requirement that the Executive relocate the Executive’s principal office or place of employment with the Company or its Subsidiary to a location that is more than fifty (50) miles from the present location of the Executive’s principal office.

Section 8. Effect of Termination.

(a) Upon the effective date of a termination of the Executive’s employment under this Agreement for any reason other than a termination by the Company without cause pursuant to Section 7(b) or by the Executive with Good Reason within eighteen (18) months after a Change in Control pursuant to Section 7(d), neither the Executive nor the Executive’s beneficiaries or estate shall have any further rights under this Agreement or any claims against the Company or any of its Affiliates arising out of this Agreement, except the right to receive, within 30 days after the effective date of such termination (or such earlier period as may be required by applicable law):

(i) the unpaid portion of the Base Salary provided for in Section 4, computed on a pro rata basis to the effective date of such termination;

(ii) reimbursement for any expenses incurred by the Executive up to the effective date of such termination of employment and with respect to which the Executive shall not have theretofore been reimbursed, as provided in Section 5; and

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(iii) the unpaid portion of any amounts earned by the Executive prior to the effective date of such termination pursuant to any employee benefit plan or program in which the Executive participated during the Employment Period (including any accrued and unused or unpaid vacation benefits that may be earned by or due to the Executive as of the effectiveness of such termination in accordance with the Company’s policy in effect at the effective time of such termination); provided, however, that the Executive shall not be entitled to receive any benefits under any such employee benefit plan or program that have accrued during any period if the terms of such plan or program require that the beneficiary be employed by the Company as of the end of any period ending on or after the effective date of such termination.

(b) Upon termination of the Executive’s employment under this Agreement by the Company without cause pursuant to Section 7(b) or by the Executive with Good Reason within eighteen (18) months after a Change in Control pursuant to Section 7(d), neither the Executive nor the Executive’s beneficiaries or estate shall have any further rights under this Agreement or any claims against the Company or any of its Affiliates arising out of this Agreement, except the right to receive the following amounts and benefits within 30 days after the effective date of such termination, in the case of amounts due pursuant to clause (i) below, and at such other times as provided in clauses (ii) and (iii) below in the case of amounts due thereunder (or in each case such earlier period as may be required by applicable law); provided, however, that in the case of clauses (ii) and (iii) below, the Executive is not in breach of any provision of this Agreement surviving such termination and does not engage in any activity or conduct proscribed by Section 9 or Section 10 (regardless of the extent to which such Section may be enforced under applicable law):

(i) the payments, if any, referred to in Section 8(a) above;

(ii) continued payment of an annual amount equal to the Base Salary as in effect immediately prior to the effective date of such termination for six (6) months following the effective date of such termination (the “Severance Period”), payable during the Severance Period in such manner as the Base Salary would have been payable pursuant to Section 4(a) but for such termination; and

(iii) the payment of any pro rata bonus (or portion thereof), if any, awarded and payable to the Executive pursuant to and in accordance with Section 4(b) with respect to the fiscal year in which such termination occurs, to be paid when and as provided in such Section 4(b).

Notwithstanding the provisions of this Section 8(b), if on the date of Executive’s termination, Executive is a “specified employee” as defined in Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), and an exception from Section 409A’s requirements is not available as to any one or more payments or installments, Executive shall not receive a distribution of such payment or installment under this Agreement until six months after the date of termination. If Executive is subject to the restriction described in the previous sentence, Executive will be paid on the first day of the seventh month after termination an amount equal to the benefit that Executive would have been paid during such six-month period absent such restriction. In furtherance of the application of all possible exceptions to requirements of Section 409A, each

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payment or installment shall be treated as a separate payment in order to maximize the application of payments during the “short term deferral period” under Section 409A.

(c) Without limiting any other provision of this Agreement, if the Executive dies on or after the effective date of the termination of the Executive’s employment hereunder, the Executive’s heirs, beneficiaries or estate, as their respective interests may appear (but without duplication), shall be entitled to receive or continue to receive those benefits that would otherwise have been due and payable to the Executive pursuant to Section 8(a) above or Section 8(b) above, as applicable.

(d) In addition to, and not by way of limitation of, any other provision of this Agreement, upon the effective date of the termination of the Executive’s employment hereunder, the Executive shall surrender and deliver to the Company (i) all computers, cell phones, office equipment, credit cards, charge cards and other tangible property of or belonging to or issued in the name of the Company or any of its Affiliates, (ii) all membership cards for memberships maintained by or in the name of the Company or any of its Affiliates, (iii) all passwords, access codes, documents, records, and files (including all copies thereof, regardless of the form or media in which the same exist or are stored) in the Executive’s possession and belonging or relating to the Company or any of its Affiliates (except that the Executive may retain one copy thereof for personal archive purposes, subject to the other terms and conditions of this Agreement, including Section 9), and (iv) any and all other personal property in the Executive’s possession belonging to the Company or any of its Affiliates.

Section 9. Disclosure of Information.

(a) From and after the date hereof, the Executive shall not at any time disclose, divulge, furnish or make accessible to any Person any Confidential Information (as hereinafter defined) heretofore acquired or acquired during the Employment Period for any reason or purpose whatsoever (provided that nothing contained herein shall be deemed to prohibit or restrict the Executive’s right or ability to disclose, divulge, furnish or make accessible any Confidential Information (i) to any officer, director, employee, Affiliate or representative of the Company, or (ii) to any other Person as required in connection with the performance of the Executive’s duties under and in compliance with this Agreement, or as required by law or judicial process), nor shall the Executive make use of any Confidential Information for the Executive’s own purposes or benefit or for the purposes or benefit of any other Person except the Company and its Affiliates. The covenant contained in this Section 9 shall survive the termination or expiration of the Employment Period and any termination of this Agreement.

(b) For purposes of this Agreement, the term “Confidential Information” means (i) the Intellectual Property Rights (as hereinafter defined) of the Company and its Affiliates and (ii) all other information of a proprietary or confidential nature relating to the Company or any Affiliate thereof, or the business or assets of the Company or any such Affiliate, including: books and records; agent and independent contractor lists and related information; customer lists and related information; vendor lists and related information; supplier lists and related information; employee and personnel lists, policies and related information; contract terms and conditions (including those with customers, suppliers, vendors, independent contractors and agents, and present and former employees); terms and conditions of permits, orders, judgments and decrees;

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wholesale, retail and distribution channels; pricing information, cost information, and pricing and cost structures and strategies; marketing, product development and business development plans and strategies; management reports; financial statements, reports, schedules and other information; accounting policies, practices and related information; business plans, strategic plans and initiatives, forecasts, budgets and projections; and shareholder, board of directors and committee meeting minutes and related information; provided, however, that Confidential Information shall not include (A) information that is generally available to the public on the date hereof, or which becomes generally available to the public after the date hereof without action by the Executive in breach or violation of this Agreement, or (B) information that the Executive receives from a third party who does not have any obligation to the Company or any of its Affiliates to keep such information confidential and which the Executive does not know (or reasonably could not have known) is confidential to the Company or any of its Affiliates.

(c) As used herein, the term “Intellectual Property Rights” means all industrial and intellectual property rights, including the following (whether patentable or not): patents, patent applications, and patent rights; trademarks, trademark applications, trade names; service marks and service mark applications; trade dress, logos and designs, and the goodwill associated with the foregoing; copyrights and copyright applications; certificates of public convenience and necessity, franchises and licenses; trade secrets, know-how, proprietary processes and formulae, inventions, improvements, devices and discoveries; development tools; marketing materials; instructions; Confidential Information; and all documentation and media constituting, describing or relating to the foregoing, including manuals, memoranda and records.

Section 10. Noncompetition Covenant.

(a) The Executive acknowledges and agrees that he will receive significant and substantial benefits from his employment with the Company under this Agreement, including the remuneration, compensation and other consideration inuring to his benefit hereunder, as well as introductions to, personal experience with, training in and knowledge of the Company and its Affiliates, the industries in which they engage, and third parties with whom they conduct business. Accordingly, in consideration of the foregoing, and to induce the Company to employ and continue to employ the Executive hereunder and provide such benefits to the Executive (in each case subject to the terms and conditions of this Agreement and the applicable employment policies of the Company and its Affiliates), the Executive agrees that he will not during the period beginning on the Commencement Date and ending six (6) months after the effective date of the termination of the Executive’s employment with the Company and its Affiliates (the “Non-Competition Period”) for any reason:

(i) in any city or county in any state or province of the United States, Canada or Mexico where the Company or any of its Affiliates conducts business during the Non-Competition Period, directly or indirectly engage or participate in any Competing Business (as defined in Section 10(b) below) (whether as an officer, director, employee, partner, consultant, holder of an equity or debt investment, lender or in any other manner, or capacity, including by the rendering of services or advice to any person), or lend his name (or any part or variant thereof) to, any Competing Business;

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(ii) deal, directly or indirectly, with any customers, vendors, agents or contractors doing business with the Company or any of its Affiliates, or with any officer, director, employee of the Company or any of its Affiliates, in each case in any manner that is or could reasonably be expected to be competitive with the Company or any of its Affiliates;

(iii) take any action to solicit, encourage or induce any customer, vendor, agent or contractor doing business with the Company or any of its Affiliates, or any officer, director, employee or agent of the Company or any of its Affiliates:

(A) to terminate or alter in any manner adverse to the Company and its Affiliates his or its business, commercial, employment, agency or other relationship with the Company or such Affiliate (including any action to do business or attempt to do business with, or to hire, retain, engage or employ or attempt to hire, retain, engage or employ, any customer, vendor, agent or contractor, or any officer, director or employee, of the Company or any of its Affiliates);

(B) to become a customer, vendor, agent or contractor, or an officer, director or employee, of the Executive, the Executive’s Affiliates or any other Person; or

(C) to engage in any Competing Business; or

(iv) engage in or participate in, directly or indirectly, any business conducted under any name that shall be the same as or similar to the name of the Company or any of its Affiliates or any trade name used by any of them.

Ownership by the Executive for investment purposes only of less than 2% of the outstanding shares of capital stock or class of debt securities of any Person with one or more classes of its capital stock listed on a national securities exchange or actively traded in the over-the-counter market shall not constitute a breach of the foregoing covenant. The covenant contained in this Section 10 shall survive the termination or expiration of the Employment Period and any termination of this Agreement.

(b) As used herein, the term “Competing Business” means any transportation or other business that the Company or any of its Affiliates has engaged in at any time during the Employment Period in any city or county in any country, state or province of the United States, Canada or Mexico, including any such business directly or indirectly engaged in providing any of the following:

(i) intermodal marketing or rail or intermodal brokerage services (whether in connection with domestic or international shipments or customers), car fleet management services, and railcar brokerage and management services;

(ii) highway brokerage services, including full trailer load, less than trailer load, trailer fleet management and depot operations services;

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(iii) international freight transportation services, including ocean forwarding, custom house brokerage, ocean carrier services (including NVOCC operations), import/export air forwarding services, and special project services;

(iv) dry van trucking services, port and rail depot cartage services (whether in connection with domestic or international shipments or customers), and local and regional trucking services (including full truckload and less-than-truckload motor carrier services);

(v) freight consolidation and handling services, including third party warehouse, cross dock, consolidation, deconsolidation and distribution services;

(vi) comprehensive transportation management programs and services to third party customers, including supply chain and traffic management services, carrier rate and contract management services, logistics optimization planning, and vendor bid optimization; and

(vii) intermodal rail equipment (including double-stack rail car, container and chassis) supply and management services, including doublestack transportation services.

Section 11. Inventions Assignment. During the Employment Period, the Executive shall promptly disclose, grant and assign to the Company for its and its Affiliates’ sole use and benefit any and all inventions, improvements, technical information and suggestions reasonably relating to the business of the Company and its Affiliates (collectively, the “Inventions”) that the Executive may develop or acquire during the Employment Period (whether or not during usual working hours), together with all patent applications, letters patent, copyrights and reissues thereof that may at any time be granted for or with respect to the Inventions. In connection with the previous sentence, the Executive shall, at the expense of the Company, including a reasonable payment based on the Executive’s last per diem earnings with the Company for the time involved if (a) the Executive is not then in the Company’s employ, or (b) if the Executive is not then receiving severance payments pursuant to Section 8(b) above, or (c) if the Executive has not otherwise received one or more severance payments with respect to such period (whether on a lump sum, pre-paid, or accelerated basis or otherwise), (i) promptly execute and deliver such applications, assignments, descriptions and other instruments as may be necessary or proper in the opinion of the Company to vest title to the Inventions and any patent applications, patents, copyrights, reissues or other proprietary rights related thereto in the Company and to enable it to obtain and maintain the entire right and title thereto throughout the world, and (ii) render such reasonable assistance to the Company as may be required in the prosecution of applications for said patents, copyrights, reissues or other proprietary rights, in the prosecution or defense of interferences or infringements that may be declared involving any said applications, patents, copyrights or other proprietary rights and in any litigation in which the Company may be involved relating to the Inventions. The covenant contained in this Section 11 shall survive the termination or expiration of the Employment Period and any termination of this Agreement.

Section 12. Assistance in Litigation. At the request and expense of the Company (including a reasonable payment, based on the Executive’s last per diem earnings, for the time involved if (a) the Executive is not then in the Company’s employ, or (b) if the Executive is not then receiving severance payments from the Company pursuant to Section 8(b)(ii), or (c) if the

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Executive has not otherwise received one or more severance payments from the Company with respect to such period (whether on a lump sum, pre-paid or accelerated basis or otherwise)) and upon reasonable notice, the Executive shall, at all times during and after the Employment Period, furnish such information and assistance to each of the Company and its Affiliates as the Company may reasonably require in connection with any issue, claim or litigation in which the Company or any of its Affiliates may be involved. If such a request for assistance occurs after the expiration of the Employment Period, then the Executive will only be required to render such assistance to the Company and its Affiliates to the extent that the Executive can do so without materially adversely affecting the Executive’s other business obligations. The covenant contained in this Section 12 shall survive the termination or expiration of the Employment Period and any termination of this Agreement.

Section 13. Expenses; Taxes. Each party hereto shall bear his or its own expenses incurred in connection with this Agreement (including legal, accounting and any other third party fees, costs and expenses and all federal, state, local and other taxes and related charges incurred by such party). All references herein to remuneration, compensation and other consideration payable by the Company or any of its Affiliates hereunder to or for the benefit of the Executive or his heirs, representatives, or estate are to the gross amounts thereof before reductions, set-off, or deduction for taxes and other charges referred to below, and all such remuneration, compensation and other consideration shall be paid net of and after reduction, set-off and deduction for any and all applicable withholding, F.I.C.A., employment and other similar federal, state and local taxes and contributions required by law to be withheld by the Company or any such Affiliate.

Section 14. Representation. The Executive hereby represents and warrants to the Company that (a) the execution, delivery and performance of this Agreement by the Executive do not breach, violate or cause a default under any agreement, contract or instrument to which the Executive is a party or any judgment, order or decree to which the Executive is subject, and (b) the Executive is not a party to or bound by any employment agreement, consulting agreement, noncompetition agreement, confidentiality agreement or similar agreement with any other Person.

Section 15. Entire Agreement; Amendment and Waiver. This Agreement contains the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes any and all prior and contemporaneous agreements and understandings between the Executive and the Company or any predecessor of the Company, or any of their respective Affiliates, with respect to the subject matter hereof. Other than this Agreement and any applicable award agreement under the LTI Plan, there are no other agreements or understandings continuing in effect relating to the subject matter hereof. No waiver, amendment or modification of any provision of this Agreement shall be effective unless in writing and signed by each party hereto. No waiver by any party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights or remedies arising by virtue of any such prior or subsequent occurrence.

Section 16. Notices.

(a) All notices or other communications pursuant to or contemplated by this Agreement shall be in writing and shall be deemed to be sufficient if delivered personally, sent by

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facsimile transmission, sent by nationally-recognized, overnight courier or mailed by registered or certified mail (return receipt requested), postage prepaid, to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):

(i) if to the Company, to it:

Pacer International, Inc.

6805 Perimeter Drive

Dublin, Ohio 43016

Attention: Chief Executive Officer

Telephone No.: (614) 923-1400

Facsimile No.: (614) 717-4165

with copy to:

Pacer International, Inc.

11231 Phillips Industrial Drive, Building 1, Suite 200

Jacksonville, Florida 32256

Attention: General Counsel

Telephone No.: (904) 251-2075

Facsimile No.: (614) 717-4131

(ii) if to the Executive, to him at his last known address contained in the records of the Company.

(b) All such notices and other communications shall be deemed to have been given and received (i) in the case of personal delivery, on the date of such delivery, (ii) in the case of delivery by facsimile, on the date of such delivery (if sent on a business day where sent, or if sent on other than a business day where sent, on the next business day where sent after the date sent), (iii) in the case of delivery by nationally-recognized, overnight courier, on the next business day where sent following dispatch, and (iv) in the case of mailing, on the third business day where sent next following such mailing. In this Agreement, the term “business day” means, as to any location, any day that is not a Saturday, a Sunday or a day on which banking institutions in such location are authorized or required to be closed.

Section 17. Severability. It is the desire and intent of the parties that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any provision of this Agreement is determined to be partially or wholly invalid, illegal or unenforceable in any jurisdiction, then such provision shall, as to such jurisdiction, be modified or restricted to the extent necessary to make such provision valid, binding and enforceable, or if such provision cannot be so modified or restricted, then such provision shall, as to such jurisdiction, be deemed to be excised from this Agreement; provided, however, that the legality, binding effect and enforceability of the remaining provisions of this Agreement, to the extent the economic benefits conferred upon the parties by virtue of this Agreement remain substantially unimpaired, shall not be affected or impaired in any manner, and any such invalidity, illegality or unenforceability with

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respect to such provision in such jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

Section 18. Remedies. The Executive acknowledges and agrees that the provisions of this Agreement (including Section 9, Section 10, Section 11, and Section 12) are of a special and unique nature, the loss of which cannot be adequately compensated for in damages by an action at law, and that the breach or threatened breach of any provision of this Agreement (including Section 9, Section 10, Section 11, and Section 12) would cause the Company irreparable harm. The Executive further acknowledges and agrees that in the event of a breach or threatened breach of any of the covenants contained in this Agreement (including Section 9, Section 10, Section 11, and Section 12), the Company shall be entitled to immediate relief enjoining the same in any court or before any judicial body having jurisdiction over such a claim. All rights and remedies provided for in this Agreement are cumulative, are in addition to any other rights and remedies provided for by law, and may, to the extent permitted by law, be exercised concurrently or separately. The exercise of any one right or remedy shall not be deemed to be an election of such right or remedy or to preclude the exercise or pursuit of any other right or remedy.

Section 19. Benefits of Agreement; Assignment. The terms and provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns, representatives, heirs and estates, as applicable. This Agreement shall not be assignable by the Executive without the prior written consent of the Company (acting with approval its Board of Directors). Except as expressly provided in this Agreement, this Agreement shall not confer any rights or remedies upon any Person other than the parties hereto and their respective successors, permitted assigns, representatives, heirs and estates, as applicable.

Section 20. Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF OHIO, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF OHIO, OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF OHIO TO BE APPLIED.

Section 21. Jury Trial Waiver. THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT OR ANY DOCUMENTS RELATED TO THE SUBJECT MATTER HEREOF. EXECUTIVE UNDERSTANDS THAT THE WAIVER OF THE RIGHT TO A TRIAL BY JURY IS AN IMPORTANT RIGHT WHICH THE EXECUTIVE HEREBY FOREGOES.

Section 22. Jurisdiction and Venue; Service of Process.

(a) The parties hereto agree that all disputes among them arising out of, connected with, related to, or incidental to the relationship established between them in connection with this Agreement shall be resolved exclusively by state or federal courts located in Franklin County, Ohio and any appellate court from any thereof, or by an arbitrator located in Franklin County, Ohio in such cases where both parties hereto have expressly agreed to binding arbitration.

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(b) Each of the parties hereto hereby irrevocably and unconditionally submits, for himself or itself and his or its property, to the exclusive jurisdiction of any Ohio state court or federal court of the United States of America sitting in Franklin County, Ohio, and any appellate court from any thereof, in any suit, action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereunder or thereunder or for recognition or enforcement of any judgment relating thereto, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such suit, action or proceeding may be heard and determined in any such Ohio state court or, to the extent permitted by law, in any such federal court. Each of the parties hereto agrees that a final judgment in any such suit, action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

(c) Each of the parties hereto hereby irrevocably and unconditionally waives, to the fullest extent he or it may legally and effectively do so, any objection that he or it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereunder or thereunder in any Ohio state or federal court of the United States of America sitting in Franklin County, Ohio. Each of the parties hereto hereby irrevocably waives, to the fullest extent he or it may legally and effectively do so, the defense of an inconvenient forum to the maintenance of such suit, action or proceeding in any such court.

(d) Each of the parties hereto hereby agrees that the mailing by certified or registered mail, return receipt requested, of any process required by any such court shall constitute valid and lawful service of process against them, without the necessity for service by any other means provided by law.

Section 23. Independence of Covenants and Representations and Warranties. All covenants hereunder shall be given independent effect so that if a certain action or condition constitutes a default under a certain covenant, the fact that such action or condition is permitted by another covenant shall not affect the occurrence of such default, unless expressly permitted under an exception to such initial covenant. In addition, all representations and warranties hereunder shall be given independent effect so that if a particular representation or warranty proves to be incorrect or is breached, the fact that another representation or warranty concerning the same or similar subject matter is correct or is not breached shall not affect the incorrectness of or a breach of a representation and warranty hereunder.

Section 24. Interpretation and Construction; Defined Terms.

(a) The term “Agreement” means this Employment Agreement and any and all schedules, annexes and exhibits that may be attached hereto, as the same may from time to time be amended, modified, supplemented or restated in accordance with the terms hereof. The use in this Agreement of the word “including” means “including, without limitation.” The words “herein,” “hereof,” “hereunder,” “hereby,” “hereto,” “hereinafter,” and other words of similar import refer to this Agreement as a whole, and not to any particular article, section, subsection, paragraph, subparagraph or clause contained in, or any schedule, annex or exhibit that may be attached to, this Agreement. All references to articles, sections, subsections, paragraphs, subparagraphs, clauses, schedules, annexes and exhibits mean such provisions of this Agreement and the

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schedules, annexes and exhibits that may be attached to this Agreement, except where otherwise stated. The title of and the article, section, paragraph, schedule, annex and exhibit headings in this Agreement are for convenience of reference only and shall not govern or affect the interpretation of any of the terms or provisions of this Agreement. The use herein of the masculine, feminine or neuter forms also shall denote the other forms, as in each case the context may require. Where specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates. The language used in this Agreement has been chosen by the parties to express their mutual intent, and no rule of strict construction shall be applied against any party. Accounting terms used but not otherwise defined herein shall have the meanings given to them under GAAP. Unless otherwise provided herein, the measure of one month or year for purposes of this Agreement shall be that date of the following month or year corresponding to the starting date, except that, if no corresponding date exists, the measure shall be the next day of the following month or year (e.g., one month following February 8 is March 8, and one month following March 31 is May 1).

(b) The term “Affiliate” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with such Person, where “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

(c) The term “Person” shall be construed as broadly as possible and shall include an individual or natural person, a partnership (including a limited liability partnership), a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, a business, and any other entity, including a governmental entity such as a domestic or foreign government or political subdivision thereof, whether on a federal, state, provincial or local level and whether legislative, executive, judicial in nature, including any agency, authority, board, bureau, commission, court, department or other instrumentality thereof.

(d) The term “Subsidiary” of the Company means any entity, domestic or foreign, of which not less than 50% of the outstanding shares or other equity interests normally entitled to vote for the election of directors or equivalent governing body are owned or controlled, directly or indirectly, by the Company, whether or not such entity now exists or is hereafter organized or acquired.

Section 25. Counterparts and Facsimile Execution. This Agreement may be executed in two or more counterparts, and each such counterpart shall be an original instrument, but all such counterparts taken together shall be considered one and the same agreement, effective when one or more counterparts have been signed by each party and delivered to the other parties, it being understood that all parties need not sign the same counterpart. Any signed counterpart delivered by facsimile shall be deemed for all purposes to constitute such party’s good and valid execution and delivery of this Agreement.

Section 26. Further Assurances. The Executive hereby agrees, in consideration of the Company’s covenants and agreements set forth herein, that contemporaneous with the Executive’s (or his heirs’, beneficiaries’ or estate’s in the event of his death) acceptance of amounts payable

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under Section 8, Executive shall for himself, his heirs, beneficiaries, estate, successors and assigns, enter into such other documents, agreements and instruments reasonably requested by the Company, including a separate settlement agreement prepared by the Company with those provisions deemed appropriate by the Company, including a release of the Company and its Affiliates from, and a waiver of, all claims (including those related to alleged wrongful discharge or alleged employment discrimination under any federal, state or local statute or regulation) and confirmation of the confidentiality, non-competition and other covenants of this Agreement that survive termination of employment. The Executive hereby agrees that the Executive shall forfeit all rights to payments and benefits hereunder unless any Company property is returned pursuant to Section 8(d) and all documents, agreements and instruments specified in the previous sentence are signed, delivered and not revoked within sixty (60) days following the date of Executive’s separation from service within the meaning of Section 409A. If such property is so returned and such documents, agreements, and instruments are so signed, delivered and not revoked, then such payments or benefits shall be made or commence upon the sixtieth (60^th) day following the Executive’s separation from service. The first such cash payment shall include payment of all amounts that otherwise would have been due prior thereto under the terms of this Agreement had such payments commenced immediately upon the Executive’s separation from service, and any payments made thereafter shall continue as provided herein.

Section 27. Section 409A. The provisions of this Agreement are intended and shall be interpreted and administered so as to not result in the imposition of additional tax or interest under Section 409A where applicable. Without limiting the foregoing, this Agreement shall not be amended in a manner so as to result in the imposition of such tax or interest, any reference to “termination of employment” or similar term shall mean an event that constitutes a “separation from service” within the meaning of Section 409A, and any reimbursement of expenses shall occur no later than the end of the calendar year following the calendar year in which is the expense is incurred (or such earlier date as applies under the Company’s business expense reimbursement policy).

[Remainder of page intentionally left blank.]

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IN WITNESS WHEREOF, the parties have executed and delivered this Employment Agreement effective as of the date first written above.

THE COMPANY:
PACER INTERNATIONAL, INC.
By:	/s/    Daniel W. Avramovich
Name: Title:	Daniel W. Avramovich Chief Executive Officer

THE EXECUTIVE:

/s/    Florian Kete

Florian Kete

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer Pursuant to

Rules 13a-14(a) and 15d-14(a) under the Securities

Exchange Act of 1934, as amended

I, Daniel W. Avramovich, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Pacer International, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonable likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 2, 2011

/s/ Daniel W. Avramovich

Daniel W. Avramovich

Chairman, and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer Pursuant to

Rules 13a-14(a) and 15d-14(a) under the Securities

Exchange Act of 1934, as amended

I, John J. Hafferty, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Pacer International, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonable likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 2, 2011

/s/ John J. Hafferty

John J. Hafferty

Executive Vice President, and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Pacer International, Inc. (the “Company”), on Form 10-Q for the fiscal quarter ended September 30, 2011, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Daniel W. Avramovich, Chief Executive Officer of the Company and John J. Hafferty, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Daniel W. Avramovich

Daniel W. Avramovich

Chief Executive Officer

November 2, 2011

/s/ John J. Hafferty

John J. Hafferty

Chief Financial Officer

November 2, 2011

A signed original of this written statement required by Section 906 has been provided to Pacer International, Inc. and will be retained by Pacer International, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Millions, except Share data	Sep. 30, 2011	Dec. 31, 2010
Condensed Consolidated Balance Sheets
Accounts receivable, allowances	$ 1.7	$ 2.7
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	50,000,000	50,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	34,978,646	34,911,674
Common stock, shares outstanding	34,978,646	34,911,674

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Condensed Consolidated Statements Of Operations (USD $) In Millions, except Share data	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Condensed Consolidated Statements Of Operations
Revenues	$ 375.8	$ 364.8	$ 1,120.5	$ 1,129.5
Operating expenses:
Cost of purchased transportation and services	306.7	301.2	914.5	932.8
Direct operating expenses (excluding depreciation)	23.1	23.6	71.6	71.1
Selling, general and administrative expenses	37.5	37.0	111.0	116.2
Other income	(4.8)	(2.2)	(4.8)	(2.4)
Depreciation and amortization	1.9	1.9	5.4	4.7
Total operating expenses	364.4	361.5	1,097.7	1,122.4
Income from operations	11.4	3.3	22.8	7.1
Interest expense	(0.5)	(1.2)	(1.8)	(3.7)
Income before income taxes	10.9	2.1	21.0	3.4
Income tax expense	4.3	1.0	8.2	1.4
Net income	$ 6.6	$ 1.1	$ 12.8	$ 2.0
Earnings per share:
Earnings per share	$ 0.19	$ 0.03	$ 0.37	$ 0.06
Weighted average shares outstanding	34,978,646	34,915,811	34,979,784	34,924,870
Diluted:
Earnings per share	$ 0.19	$ 0.03	$ 0.37	$ 0.06
Weighted average shares outstanding	35,019,152	34,928,329	35,010,005	34,931,080

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Document And Entity Information	9 Months Ended
	Sep. 30, 2011	Nov. 02, 2011
Document And Entity Information
Entity Registrant Name	PACER INTERNATIONAL INC
Entity Central Index Key	0001091735
Document Type	10-Q
Document Period End Date	Sep. 30, 2011
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		34,978,646
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2011

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Long-Term Incentive Plans

9 Months Ended

Sep. 30, 2011

Long-Term Incentive Plans

Long-Term Incentive Plans

NOTE 5. LONG-TERM INCENTIVE PLANS

During the nine month period ended September 30, 2011, we granted time based restricted stock under the 2006 Long-Term Incentive Plan (the "2006 Plan") to the non-management members of the Board of Directors. Restricted stock cannot be sold, transferred or disposed of during the restriction period. The holders of restricted stock generally have the same rights as a stockholder of the Company with respect to such shares, including the right to vote and receive dividends with respect to the shares. Restricted stock is valued at the date of grant, based on the closing market price of the Company's common stock, and expensed using the straight-line method over the requisite service period. All of the restricted stock awards granted during the nine month period ended September 30, 2011 vest on March 5, 2012.

A summary of restricted stock activity for the nine month period ended September 30, 2011 is presented below:

	Shares			Weighted Average Grant-Date Fair Value
Nonvested at December 31, 2010		73,250		$	13.12
Granted		67,844		$	5.41
Vested		(33,299	)	$	14.66
Forfeited		(9,949	)	$	8.23
Nonvested at September 30, 2011		97,846		$	7.74

During the nine month period ended September 30, 2011, we granted equity incentive awards under the 2006 Plan to certain key employees and executive officers. These equity incentive awards are divided into two types: (1) restricted stock units, which vest in equal one-third increments on March 5, 2012, 2013 and 2014, subject to the grantee's continued employment by the Company on such vesting dates, and (2) performance stock units, which vest based on (i) the Company's achievement of operating income and operating margin targets established by the Compensation Committee of the Board of Directors for the performance periods ending December 31, 2011, 2012 and 2013 and (ii) the continued employment of the grantee through March 5, 2014. Upon vesting, the restricted stock units and performance stock units (the "Units") result in the issuance of shares of Pacer common stock after required tax withholdings. The holders of the Units do not have the rights of a shareholder and do not have voting rights but are entitled to receive dividend equivalents payable in the form of additional shares upon vesting of the Units. The Units are valued at the date of grant, based on the closing market price of the Company's common stock, and expensed using the straight-line method over the requisite service period. The actual number of performance stock units earned will be based on the Company's performance for the periods ending December 31, 2011, 2012 and 2013. For purposes of the table below, performance stock units are assumed to vest based on targeted performance which may change based on actual performance.

A summary of restricted stock unit and performance unit award activity for the nine month period ended September 30, 2011 is presented below:

	Performance Stock Units			Restricted Stock Units			Total			Weighted Average Grant-Date Fair Value
Balance at December 31, 2010		185,657			92,830			278,487		$	6.97
Granted		383,411			127,804			511,215		$	5.46
Vested		—			(28,388	)		(28,388	)	$	6.97
Forfeited		(38,988	)		(15,554	)		(54,542	)	$	6.25
Balance at September 30, 2011		530,080			176,692			706,772		$	5.93

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Interim Financial Statements

9 Months Ended

Sep. 30, 2011

Interim Financial Statements

Interim Financial Statements

NOTE 1. INTERIM FINANCIAL STATEMENTS

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements as of September 30, 2011 and December 31, 2010 and for the three and nine month periods ended September 30, 2011 and 2010 for Pacer International, Inc. and subsidiaries (referred to in these notes to the condensed consolidated financial statements as "Pacer", "the Company", "we", "us", or "our") have been prepared in accordance with United States generally accepted accounting principles ("GAAP") and with the instructions to Form 10-Q and Article 10 of the Securities and Exchange Commission ("SEC") Regulation S-X. Accordingly they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair statement of the financial condition and results of operations at the dates and for the interim periods presented, have been included. The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for any full fiscal year. These unaudited condensed consolidated financial statements and footnotes should be read in conjunction with the audited consolidated financial statements of the Company included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010 as filed with the SEC.

Use of Estimates

The preparation of the condensed consolidated financial statements requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include recognition of revenue, costs of purchased transportation and services, allowance for doubtful accounts, accounting for income taxes, valuation of deferred income taxes, the economic lives of our property and equipment and contingencies. Actual results could differ from those estimates.

Reclassification

Certain reclassifications have been made to the 2010 financial statements in order to conform to the 2011 presentation. These reclassifications have no effect on our results of operations, total assets or accumulated deficit as previously reported.

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive loss consists of foreign currency translation adjustments as follows (in millions):

	Foreign Currency Translation Adjustment
Balance at December 31, 2010	$	(0.3	)
Activity during 2011		0.5
Balance at September 30, 2011	$	0.2

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Segment Information

9 Months Ended

Sep. 30, 2011

Segment Information

Segment Information

NOTE 7. SEGMENT INFORMATION

The following table presents reportable segment information for the three and nine month periods ended September 30, 2011 and 2010 (in millions):

	Intermodal			Logistics			Corp/Other			Consolidated
3 Months ended September 30, 2011:
Segment revenues	$	302.2		$	73.7		$	—		$	375.9
Inter-segment elimination		(0.1	)		—			—			(0.1	)
Revenues		302.1			73.7			—			375.8
Income from operations		17.2			(0.8	)		(5.0	)		11.4
Depreciation and amortization		1.2			0.5			0.2			1.9
Capital expenditures		1.2			0.7			0.1			2.0
3 Months ended September 30, 2010:
Segment revenues	$	255.7		$	109.4		$	—		$	365.1
Inter-segment elimination		(0.3	)		—			—			(0.3	)
Revenues		255.4			109.4			—			364.8
Income from operations		7.1			(0.2	)		(3.6	)		3.3
Depreciation and amortization		1.4			0.4			0.1			1.9
Capital expenditures		0.9			0.9			—			1.8
9 Months ended September 30, 2011:
Segment Revenues	$	885.6		$	235.2		$	—		$	1,120.8
Inter-segment elimination		(0.3	)		—			—			(0.3	)
Revenues		885.3			235.2			—			1,120.5
Income from operations		38.8			(1.2	)		(14.8	)		22.8
Depreciation and amortization		3.6			1.4			0.4			5.4
Capital expenditures		3.2			1.8			0.4			5.4
9 Months ended September 30, 2010:
Segment Revenues	$	800.3		$	330.0		$	—		$	1,130.3
Inter-segment elimination		(0.8	)		—			—			(0.8	)
Revenues		799.5			330.0			—			1,129.5
Income from operations		19.5			1.2			(13.6	)		7.1
Depreciation and amortization		3.6			0.9			0.2			4.7
Capital expenditures		3.8			2.9			—			6.7

The "Corp/Other" column includes corporate amounts (primarily compensation, tax and overhead costs unrelated to a specific segment). The Chief Operating Decision Maker does not review assets by segment for purposes of allocating resources and therefore assets by segment are not disclosed here.

The following table presents revenues from continuing operations generated by country or geographical area for the three and nine month periods ended September 30, 2011 and 2010 (in millions):

	Three Months Ended				Nine Months Ended
	September 30, 2011		September 30, 2010		September 30, 2011		September 30, 2010
United States	$	320.8	$	280.6	$	945.7	$	869.8
Asia		25.3		59.3		81.5		184.9
Europe		15.5		12.1		52.2		34.1
North America (excluding United States)		8.2		7.7		23.2		23.7
Australia		1.8		2.2		7.2		7.3
South America		2.5		1.9		6.5		6.4
Africa		1.7		1.0		4.2		3.3
Total	$	375.8	$	364.8	$	1,120.5	$	1,129.5

Substantially all of the foreign revenues are generated by the logistics segment. All material assets are located in the United States of America.

For the three month period ended September 30, 2011, the Company had two customers that contributed more than 10% of total consolidated revenues (one contributed 15.5%, and the other 10.3% of total revenues). For the three month period ended September 30, 2010, the Company had one customer that contributed more than 10% of total consolidated revenues (14.5%).

For the nine month period ended September 30, 2011, the Company had two customers that contributed more than 10% of total consolidated revenues (one contributed 15.0%, and the other 12.9% of total revenues). For the nine month period ended September 30, 2010, the Company had two customers that contributed more than 10% of total consolidated revenues (one contributed 15.0%, and the other 11.5% of total revenues).

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Earnings Per Share

9 Months Ended

Sep. 30, 2011

Earnings Per Share

Earnings Per Share

NOTE 8. EARNINGS PER SHARE

The following table sets forth the computation of earnings per share-basic and diluted (in millions, except share and per share amounts):

	Three Months Ended				Nine Months Ended
	September 30, 2011		September 30, 2010		September 30, 2011		September 30, 2010
Numerator:
Net income (basic and diluted)	$	6.6	$	1.1	$	12.8	$	2.0
Denominator:
Denominator for earnings per share — basic:
Weighted average common shares outstanding		34,978,646		34,915,811		34,979,784		34,924,870
Effect of dilutive securities:
Stock options, restricted and performance stock units		40,506		12,518		30,221		6,210
Denominator for earnings per share—diluted		35,019,152		34,928,329		35,010,005		34,931,080
Earnings per share—basic	$	0.19	$	0.03	$	0.37	$	0.06
Earnings per share—diluted	$	0.19	$	0.03	$	0.37	$	0.06

Anti-dilutive shares attributable to outstanding stock options were excluded from the calculation of diluted net income per share. For the three month periods ended September 30, 2011 and 2010, 206,500 shares and 358,400 shares were anti-dilutive, respectively. For the nine month periods ended September 30, 2011 and 2010, 206,500 shares and 358,400 shares were anti-dilutive, respectively.

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Commitments And Contingencies

9 Months Ended

Sep. 30, 2011

Commitments And Contingencies

Commitments And Contingencies

NOTE 6. COMMITMENTS AND CONTINGENCIES

a. Legal Contingencies

The Company is subject to routine litigation arising in the ordinary course of business, and, except as discussed below, none of which is expected to have a material adverse effect on the Company's business, condensed consolidated results of operations, financial condition or cash flows. Most of the lawsuits to which the Company is a party are covered by insurance and are being defended in cooperation with insurance carriers.

Union Pacific Railroad Company ("Union Pacific") has asserted a claim against the Company for retroactive and prospective rate adjustments which is in the pre-trial stage of arbitration before a neutral third party arbitrator and relates to domestic shipments in 20-, 40- and 45 ft. international containers. The arbitration hearing has been postponed indefinitely. The information available to the Company does not indicate that it is probable that a liability had been incurred as of the period ended September 30, 2011, and the Company could not make an estimate of the amount, or range of amounts, of any liability that would be incurred if this claim were resolved against it. Accordingly, the Company has not accrued any liability for this claim in its financial statements at and for the period ended September 30, 2011. The Company disputes this claim in its entirety and believes that it has meritorious defenses to it and that Union Pacific is not entitled to the claimed rate adjustments. The Company intends to vigorously defend against this claim by Union Pacific and to pursue its other related rights and remedies.

b. Commitments

On June 30, 2011, the Company provided notice of exercise of its option to purchase 248 railcars subject to an operating lease for $26.6 million on January 15, 2012. We expect to finance the purchase through available cash and borrowings under the 2010 Credit Agreement.

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Condensed Consolidated Statements Of Stockholders' Equity (Parenthetical) (USD $) In Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Condensed Consolidated Statements Of Stockholders' Equity
Total comprehensive income	$ 7.0	$ 1.3	$ 13.3	$ 2.0

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Bank Borrowings

9 Months Ended

Sep. 30, 2011

Bank Borrowings

Bank Borrowings

NOTE 2. BANK BORROWINGS

Pursuant to Accounting Standards Codification ("ASC") 470, borrowings under our revolving credit facility agreement entered into on December 30, 2010 (the "2010 Credit Agreement") are classified as long-term debt. The previous credit facility had a lockbox arrangement in place at all times, which required our debt to be classified as current prior to December 30, 2010.

Borrowings under the 2010 Credit Agreement bore a weighted average interest rate of 3.6% per annum as of and for the nine months ended September 30, 2011. Letter of credit fees are charged monthly at a rate equal to the applicable margin on Eurodollar rate loans.

As of September 30, 2011, $76.4 million was available under the 2010 Credit Agreement pursuant to the borrowing base formula set forth in the 2010 Credit Agreement, net of $15.6 million of outstanding letters of credit. There was no debt outstanding as of September 30, 2011.

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Railcar Asset Transactions

9 Months Ended

Sep. 30, 2011

Railcar Asset Transactions

Railcar Asset Transactions

NOTE 3. RAILCAR ASSET TRANSACTIONS

During 2011, the Company purchased 245 railcars pursuant to purchase options under various lease agreements. These leases were previously accounted for as operating leases. The railcar purchases were financed through borrowings under the 2010 Credit Agreement.

On July 22, 2011, we sold the railcar assets for net proceeds of $28.9 million. The Company recorded a gain as a result of the transaction net of related transaction costs and other carrying costs of approximately $4.8 million which is included in other income on the condensed consolidated statement of operations. Proceeds from the sale of the railcars were used to repay outstanding borrowings under the 2010 Credit Agreement.

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Facility Closings And Other Severance Costs

9 Months Ended

Sep. 30, 2011

Facility Closings And Other Severance Costs

Facility Closings And Other Severance Costs

NOTE 4. FACILITY CLOSINGS AND OTHER SEVERANCE COSTS

The Company implemented an organizational simplification and workforce reduction initiative in 2009 to move toward operations organized by function rather than by business unit and to consolidate operations. All remaining severance and lease termination costs associated with these activities will result in future cash expenditures.

The table below shows the activity for the organizational simplification and workforce reduction initiative as of and for the nine month period ended September 30, 2011 (in millions):

	Organizational and Workforce Reduction Program Activity
Accrual balance at 12/31/10	$	3.9
Additions		1.3
Payments		(3.5	)
Accrual balance at 9/30/11	$	1.7

All of these costs are included in selling, general and administrative expenses on the condensed consolidated statement of operations.

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Condensed Consolidated Statements Of Stockholders' Equity (USD $) In Millions, except Share data	Common Shares [Member]	Common Stock And Paid-In Capital [Member] USD ($)	Accumulated Deficit [Member] USD ($)	Accumulated Other Comprehensive Income/(Loss) [Member] USD ($)	Total USD ($)
Balance, value at Dec. 31, 2010		$ 302.9	$ (204.1)	$ (0.3)	$ 98.5
Balance, shares at Dec. 31, 2010	34,911,674
Net income			12.8		12.8
Other comprehensive income				0.5	0.5
Total comprehensive income					13.3
Stock based compensation		1.8			1.8
Tax impact of vesting of restricted stock		(0.1)			(0.1)
Issuance of common stock for vesting of restricted stock units, shares	19,193
Issuance of common stock for vesting of restricted stock units, value
Repurchase and retirement of Pacer common stock, shares	(10,116)
Repurchase and retirement of Pacer common stock, value		(0.1)			(0.1)
Issuance of restricted stock, net of forfeitures, shares	57,895
Issuance of restricted stock, net of forfeitures, value
Balance, value at Sep. 30, 2011		$ 304.5	$ (191.3)	$ 0.2	$ 113.4
Balance, shares at Sep. 30, 2011	34,978,646

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Condensed Consolidated Statements Of Cash Flows (USD $) In Millions	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010
Cash flows from operating activities
Net income	$ 12.8	$ 2.0
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	5.4	4.7
Gain on sale of property and equipment		(2.4)
Gain on sale of railcar assets	(4.8)
Gain on sale lease-back transactions	(0.5)	(0.6)
Deferred taxes	8.0	(1.7)
Stock based compensation expense	1.8	1.0
Change in operating assets and liabilities:
Accounts receivable, net	14.3	(7.8)
Prepaid expenses and other	0.7	16.9
Accounts payable and other accrued liabilities	(11.9)	(3.9)
Other long-term assets	0.8	(1.7)
Other long-term liabilities	(0.3)	(2.7)
Net cash provided by operating activities	26.3	3.8
Cash flows from investing activities
Capital expenditures	(5.4)	(6.7)
Purchase of railcar assets	(22.1)
Net proceeds from sale lease-back transaction		2.4
Net proceeds from sale of railcar assets	28.9
Proceeds from sales of property and equipment	0.2	2.6
Net cash provided by (used in) investing activities	1.6	(1.7)
Cash flows from financing activities
Net borrowings (repayments) under revolving line of credit	(13.4)	0.7
Repurchase and retirement of Pacer common stock	(0.1)	(0.2)
Capital lease obligation repayment		(0.2)
Net cash provided by (used in) financing activities	(13.5)	0.3
Net increase in cash and cash equivalents	14.4	2.4
Cash and cash equivalents at beginning of the period	4.2	2.8
Cash and cash equivalents at end of the period	$ 18.6	$ 5.2

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Condensed Consolidated Balance Sheets (USD $) In Millions	Sep. 30, 2011	Dec. 31, 2010
ASSETS
Cash and cash equivalents	$ 18.6	$ 4.2
Accounts receivable, net of allowances of $1.7 million and $2.7 million, respectively	138.2	152.5
Prepaid expenses and other	14.7	15.4
Deferred income taxes	6.5	6.3
Total current assets	178.0	178.4
Property and equipment
Property and equipment, cost	98.0	97.4
Accumulated depreciation	(54.4)	(53.7)
Property and equipment, net	43.6	43.7
Other assets
Deferred income taxes	16.0	24.3
Other assets	12.8	15.5
Total other assets	28.8	39.8
Total assets	250.4	261.9
LIABILITIES AND STOCKHOLDERS' EQUITY
Book overdraft	1.9	2.7
Accounts payable and other accrued liabilities	133.9	144.8
Total current liabilities	135.8	147.5
Long-term liabilities
Bank borrowings		13.4
Other	1.2	2.5
Total long-term liabilities	1.2	15.9
Total liabilities	137.0	163.4
Commitments and contingencies (Note 6)
Stockholders' equity
Preferred stock, par value $0.01 per share; 50,000,000 shares authorized; none issued and outstanding
Common stock, par value $0.01 per share; 150,000,000 shares authorized; 34,978,646 and 34,911,674 issued and outstanding	0.4	0.4
Additional paid-in capital	304.1	302.5
Accumulated deficit	(191.3)	(204.1)
Accumulated other comprehensive income (loss)	0.2	(0.3)
Total stockholders'equity	113.4	98.5
Total liabilities and stockholders' equity	$ 250.4	$ 261.9