S-1/A 1 ds1a.txt AMENDMENT NO. 4 TO FORM S-1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 11, 2002 REGISTRATION NO. 333-53700 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------- AMENDMENT NO. 4 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ----------------- PACER INTERNATIONAL, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER) TENNESSEE 4731 62-0935669 (STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER) 2300 CLAYTON ROAD, SUITE 1200 CONCORD, CALIFORNIA 94520 (877) 917-2237 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) ----------------- DONALD C. ORRIS CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER 5251 DTC PARKWAY, SUITE 1000 DENVER, COLORADO 80111 (303) 694-5730 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE OF PROCESS) ----------------- WITH COPIES TO: JAMES M. LURIE JOHN A. TRIPODORO O'SULLIVAN LLP CAHILL GORDON & REINDEL 30 ROCKEFELLER PLAZA 80 PINE STREET NEW YORK, NEW YORK 10112 NEW YORK, NEW YORK 10005 (212) 408-2400 (212) 701-3000 ----------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [_] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If delivery of the prospectus is expected to be made pursuant to Rule 434 under the Securities Act of 1933, please check the following box. [_] ----------------- CALCULATION OF REGISTRATION FEE ================================================================================

PROPOSED MAXIMUM TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER PROPOSED MAXIMUM AMOUNT OF SECURITIES TO BE REGISTERED REGISTERED UNIT AGGREGATE OFFERING PRICE REGISTRATION FEE -------------------------------------------------------------------------------------------------------- Common stock, $0.01 par value 16,100,000(1) $17.00 $273,700,000 $37,500.00(2)

================================================================================ (1)Includes 2,100,000 outstanding shares which the underwriters have an option to purchase to cover overallotments. (2)Previously paid. ----------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE TIME UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. ================================================================================ The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JUNE 11, 2002 14,000,000 SHARES [LOGO] PACER INTERNATIONAL, INC. COMMON STOCK ------------- We are selling 9,250,000 shares of common stock and the selling stockholders are selling 4,750,000 shares of common stock. Prior to this offering, there has been no public market for our common stock. The initial public offering price of the common stock is expected to be between $15.00 and $17.00 per share. Our common stock has been approved for listing on The Nasdaq Stock Market's National Market under the symbol "PACR" subject to official notice of issuance. The underwriters have an option to purchase a maximum of 2,100,000 additional shares from the selling stockholders to cover over-allotments of shares. INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" ON PAGE 7.

UNDERWRITING PROCEEDS TO PRICE TO DISCOUNTS AND PROCEEDS TO SELLING PUBLIC COMMISSIONS PACER STOCKHOLDERS -------- ------------- ----------- ------------ Per Share $ $ $ $ Total.... $ $ $ $

Delivery of the shares of common stock will be made on or about , 2002. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. CREDIT SUISSE FIRST BOSTON BEAR, STEARNS & CO. INC. ------------- DEUTSCHE BANK SECURITIES JPMORGAN UBS WARBURG BB&T CAPITAL MARKETS The date of this prospectus is , 2002. [INSIDE FRONT COVER OF PROSPECTUS] [GRAPHIC] Map of the United States, Mexico and southern Canada depicting the locations where we provide freight and logistics services and our wholesale rail network. In the lower left hand corner of the picture there is a legend listing the five retail freight and logistics services and the three aspects of the Wholesale Rail Network noted in the picture. The five Retail Freight and Logistics Services noted in the legend are Intermodal Marketing (noted by a red circle), Truck Brokerage and Services (noted by a green circle), International Freight Forwarding (noted by a white circle with a black outline), Freight Consolidation and Handling (noted by a yellow circle) and our Retail Corporate Headquarters, in Marysville, Ohio (noted by a red star). The Retail Freight and Logistics Services disseminated across the map in, among other places, Oakland, Concord and Los Angeles, California, Kansas City, Chicago, Illinois, Dallas, San Antonio and Houston, Texas, Memphis, Tennessee, Atlanta, Georgia, Jacksonville and Miami, Florida, Columbus, Ohio, Rutherford, New Jersey, New York, New York and Detroit, Michigan. The three aspects of the Wholesale Rail Network noted are Pacer's Network (noted by a purple line), Rail Terminals (noted by a purple circle) and our Wholesale Corporate Headquarters, in Concord, California (noted by a Purple Star). The Rail Network extends from, among other places, Seattle, Washington through San Francisco and Los Angeles, California to Mexico City; from San Francisco, California to Kansas City through Chicago, Illinois to Montreal Canada, Boston, Massachusetts, Portmouth, Virginia; from Mexico City to Chicago, Illinois and Nashville, Tennessee and from Nashville, Tennessee to Miami, Florida. ----------------- TABLE OF CONTENTS

PAGE ---- PROSPECTUS SUMMARY..................... 1 RISK FACTORS........................... 7 SPECIAL NOTE REGARDING FORWARD- LOOKING STATEMENTS................... 16 USE OF PROCEEDS........................ 17 DIVIDEND POLICY........................ 17 CAPITALIZATION......................... 18 DILUTION............................... 20 SELECTED FINANCIAL INFORMATION......... 21 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS........................... 24 BUSINESS............................... 44 MANAGEMENT............................. 61 PRINCIPAL AND SELLING STOCKHOLDERS..... 69

PAGE ---- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................... 72 DESCRIPTION OF CERTAIN INDEBTEDNESS 79 DESCRIPTION OF CAPITAL STOCK....... 83 SHARES ELIGIBLE FOR FUTURE SALE.... 90 MATERIAL FEDERAL INCOME TAX CONSEQUENCES TO NON-U.S. HOLDERS OF COMMON STOCK.................. 92 UNDERWRITING....................... 95 NOTICE TO CANADIAN RESIDENTS....... 98 LEGAL MATTERS...................... 99 EXPERTS............................ 99 ADDITIONAL INFORMATION............. 99 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS....................... F-1

----------------- YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY ONLY BE USED WHERE IT IS LEGAL TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY ONLY BE ACCURATE ON THE DATE OF THIS DOCUMENT. DEALER PROSPECTUS DELIVERY OBLIGATION UNTIL , 2002 (25 DAYS AFTER THE COMMENCEMENT OF THE OFFERING), ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE DEALER'S OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS AN UNDERWRITER AND WITH RESPECT TO UNSOLD ALLOTMENTS OR SUBSCRIPTIONS. i The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock. In this prospectus, "our company," "Pacer International," "we," "us" and "our" refer to Pacer International, Inc. and its consolidated subsidiaries, and "Pacer Logistics" refers to our subsidiary Pacer Logistics, Inc. References to our wholesale operations include our stacktrain operations and references to our retail operations include our intermodal marketing, truck brokerage and services, international freight forwarding, supply chain management services and freight consolidation and handling. This prospectus contains market data related to the transportation and logistics industries and their segments, including the third-party logistics market, and estimates regarding their size and growth. This market data has been included in reports published by organizations such as Standard & Poor's, Cass Information Systems, the American Trucking Association, the Association of American Railroads and Armstrong & Associates. Except as otherwise noted, statements as to our size and position relative to our competitors are based on revenues. ii PROSPECTUS SUMMARY THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS BUT MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. BEFORE INVESTING IN OUR COMMON STOCK, YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY, INCLUDING THE "RISK FACTORS" SECTION AND THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED ELSEWHERE IN THIS PROSPECTUS. OUR BUSINESS We are a leading North American non-asset based logistics provider. Within North America, we are one of the largest truck brokers, and we are one of the largest intermodal marketing companies, which facilitate the movement of freight by trailer or container using two or more modes of transportation. With one of the largest ground-based networks in North America, we were responsible for approximately 25% of all U.S. intermodal rail container shipments in 2001. According to Armstrong & Associates, total expenditures managed by third party logistics service providers in North America exceeded $60 billion in 2001 and grew at a compounded annual rate of approximately 15% between 1996 and 2001. We believe our size, geographic scope and comprehensive service offering provide us with distinct competitive advantages to capitalize on this growth trend. These advantages include: the ability to pass volume rate savings and economies of scale to our customers; a significant opportunity to cross-sell services to existing customers; the flexibility to tailor services to our customers' needs in rapidly changing freight markets; and the ability to provide more reliable and consistent services. Using our proprietary information systems, we provide logistics services to numerous Fortune 500 and multi-national companies, including Ford, General Electric, Heinz, Wal-Mart, ConAgra, Whirlpool, Union Pacific, Sony and CompUSA, which together represented 23% of our 2001 gross revenues, as well as numerous middle-market companies. We utilize a non-asset based strategy in which we seek to limit our investment in equipment and facilities and reduce working capital requirements through arrangements with transportation carriers and equipment providers. This strategy provides us with access to freight terminals and facilities and control over transportation-related equipment without owning assets. We provide our logistics services from two operating segments, our retail segment which provides services principally to end-user customers and our wholesale segment which provides services principally to transportation intermediaries and international shipping companies. We believe the unique combination of our wholesale and retail products and our ability to provide a comprehensive portfolio of services in rapidly changing freight markets provides us with competitive advantages by presenting significant opportunities for enhanced growth and operational synergies. For example, from 2000 to 2001, revenues generated by our wholesale segment which were originated by our retail segment increased from approximately $37 million to $91 million. RETAIL . INTERMODAL MARKETING--We arrange for and optimize the movement of our customers' freight in containers and trailers utilizing truck and rail transportation. These services are provided both internally through our wholesale service and our truck brokerage and services division, and externally through third-party rail and truck carriers. We provide customized tracking of shipments and analysis of charges, negotiate transportation rates, consolidate billing and handle claims for freight loss or damage on behalf of our customers. . TRUCK BROKERAGE AND SERVICES--We arrange the movement of freight in containers or trailers by truck using a nationwide network of over 5,000 independent trucking contractors. By utilizing our aggregate volumes to negotiate rates, we are able to provide high quality service at attractive prices. We also arrange for local trucking and flatbed and specialized heavy-haul trucking services on behalf of our customers. Our local trucking services are largely provided in and around major U.S. cities as an integral part of our wholesale, intermodal marketing and freight consolidation and handling product offerings. We provide these services through our independent agents and contractors who operate a fleet of over 1,400 trucks. 1 . INTERNATIONAL FREIGHT FORWARDING--We provide our customers with services necessary to move freight internationally. We purchase cargo space from ocean vessels and airlines on a wholesale basis for resale to our customers. We also track and trace shipments and provide customs brokerage services, including documentation preparation and calculation of duties and other charges for compliance with import and export regulations. . SUPPLY CHAIN MANAGEMENT--We provide customized logistics services throughout our customers' operations, from raw material delivery through distribution of finished goods. We arrange for infrastructure and equipment, integrated with our customers' existing systems, to handle distribution planning, just-in-time delivery and automated ordering. We also provide and manage warehouses, distribution centers and other facilities for select customers and consult on identifying and eliminating bottlenecks in our customers' supply chains by analyzing freight patterns and costs, optimizing facility locations, and developing internal policies and procedures. We leverage these capabilities to drive additional volume to our service offerings. . FREIGHT CONSOLIDATION AND HANDLING--We focus on providing customers with an integrated package of freight handling services that is customized to their specific shipping patterns and inventory needs. Some of the more common freight handling services we provide include the transfer of freight from international containers to rail-based or truck containers (transloading), repackaging merchandise from various shipments for distribution to multiple customer sites (consolidation/deconsolidation) and warehousing. We provide these services primarily on the West coast where the majority of U.S. container freight originates. WHOLESALE . INTERMODAL SERVICES --We provide our customers with single company control over a 50,000 mile rail network through long term operating agreements with major railroads, including Union Pacific, CSX, Canadian National Railroad, and the two largest railroads in Mexico. Using this network, we transport cargo containers stacked two high on specially designed railcars (stacktrain method) which provides economic advantages over traditional rail configurations. We provide our customers with rail capacity, equipment and shipment tracking on a nationwide basis and control one of the industry's largest fleets of stacktrain equipment, including railcars, containers and chassis (steel frames with rubber tires used to transport containers over the highway). We sell this service primarily to intermodal marketing companies, including our own intermodal marketing company, large automotive intermediaries and international shipping companies. For the three months ended April 5, 2002, we generated gross revenues of $382.4 million, net revenues of $83.2 million, EBITDA of $18.3 million and net income of $3.7 million. In 2001, we generated gross revenues of $1.7 billion, net revenues of $331.3 million, EBITDA of $69.3 million and net income of $7.0 million. A critical component of our business is our management team which has an average of 25 years of experience in the logistics industry. We believe their knowledge, relationships and experience provide us with a significant competitive advantage. BUSINESS STRATEGY We intend to increase our revenue and profitability by: . CAPITALIZING ON STRONG LOGISTICS INDUSTRY TRENDS AND FUNDAMENTALS . LEVERAGING OUR COMPREHENSIVE SERVICE PORTFOLIO ACROSS OUR EXISTING CUSTOMER BASE . CONTINUING TO DRIVE OPERATIONAL EFFICIENCIES . CONTINUING OUR NON-ASSET BASED LOGISTICS STRATEGY . PURSUING OPPORTUNITIES FOR ADDITIONAL GROWTH THROUGH EXPANSION OF OUR CUSTOMER BASE AND RANGE OF PRODUCTS 2 RISK FACTORS An investment in our common stock involves a high degree of risk. Potential investors should carefully consider the risk factors set forth under "Risk Factors" beginning on page 7 and the other information contained in this prospectus prior to making an investment decision regarding our common stock. In addition, reflecting principally the economic downturn in 2001, and particularly the cyclical slowdown in the automotive sector, increased expenses associated with our four 2000 acquisitions and the filling out of the infrastructure in our wholesale segment, our income from operations, net income and earnings per share decreased in 2001 as compared to 2000. Like our competitors in the industry, we have also experienced equipment shortages in the past, particularly during the peak shopping seasons in October and November. We have operated as an independent, stand-alone company only since our recapitalization on May 28, 1999. From 1984 until our recapitalization, we only provided wholesale intermodal services as a wholly-owned subsidiary of APL Limited. On the date of our recapitalization, we began providing retail and logistics services to customers through our acquisition of Pacer Logistics, at which Don Orris, our Chairman, President and Chief Executive Officer, and other members of our senior management team, were executive officers. As a result of the substantial change in our business resulting from the recapitalization and our acquisition of Pacer Logistics, our historical financial information prior to our recapitalization is not necessarily indicative of our results of operations, financial position and cash flows in the future or what our results of operations, financial position and cash flows would have been had we been a separate, independent entity providing wholesale transportation services during the periods presented. CORPORATE INFORMATION We were incorporated in Tennessee on November 4, 1974. Our principal executive offices are located at 2300 Clayton Road, Suite 1200, Concord, California 94520 and our telephone number is 877-917-2237. Our website is located at www.pacer-international.com. Information contained on our website does not constitute a part of this prospectus. 3 THE OFFERING Common stock offered............................. 9,250,000 shares by us 4,750,000 shares by the selling stockholders Total offering................................ 14,000,000 shares Common stock to be outstanding after the offering 36,811,848 shares Use of proceeds.................................. We expect to use the net proceeds from this offering to us for the repayment of debt and other general corporate purposes. See "Use of Proceeds." We will not receive any proceeds from the sale of our common stock by the selling stockholders. Nasdaq National Market symbol.................... PACR The number of shares of common stock to be outstanding after this offering is based on our shares of common stock outstanding as of April 5, 2002 after giving effect to the issuance of 4,469,688 shares of common stock upon the exchange of all outstanding shares of Pacer Logistics exchangeable preferred stock prior to the consummation of this offering, based on an exchange rate of 200 shares of common stock for each outstanding share of Pacer Logistics exchangeable preferred stock. The number of shares to be outstanding after the offering excludes: . 2,431,028 shares of common stock issuable upon the exercise of options outstanding as of April 5, 2002 under our stock option plans, at exercise prices ranging from $4.30 to $15.00 per share, with a weighted average exercise price of $9.29; and . 604,306 shares of common stock reserved for future grant under our stock option plans. All share and per share information in this prospectus gives effect to the amendment to our existing charter to increase the number of authorized shares of common stock to 150,000,000 shares and the declaration of a two for one stock split of the common stock which was effected on June 7, 2002. Except as otherwise indicated in this prospectus, we have presented the information in this prospectus on the assumption that the underwriters do not exercise their over-allotment option. 4 SUMMARY HISTORICAL FINANCIAL INFORMATION The following table presents our summary historical financial information. The summary historical data for the three years ended December 28, 2001 have been derived from, and should be read in conjunction with, our audited financial statements and related notes appearing elsewhere in this prospectus. The summary historical financial data as of April 5, 2002 and for the three months ended April 5, 2002 and April 6, 2001 have been derived from our unaudited financial statements included elsewhere in this prospectus. These unaudited financial statements include, in the opinion of our management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the data for such periods. The results of operations for the interim periods are not necessarily indicative of operating results for the full year. The following information should be read in conjunction with "Selected Financial Information" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus.

THREE MONTHS ENDED YEAR ENDED ------------------------ ------------------------------------- APRIL 5, APRIL 6, DECEMBER 28, DECEMBER 29, DECEMBER 31, 2002 2001 2001 2000(A) 1999(B) ----------- ----------- ------------ ------------ ------------ (IN MILLIONS, EXCEPT SHARE AND PER SHARE DATA) STATEMENT OF OPERATIONS DATA: Gross revenues................................. $ 382.4 $ 440.3 $ 1,670.9 $ 1,281.3 $ 927.7 Cost of purchased transportation and services.. 299.2 359.4 1,339.6 1,005.6 735.4 ----------- ----------- ----------- ----------- ----------- Net revenues................................... 83.2 80.9 331.3 275.7 192.3 Direct operating expenses...................... 27.8 25.0 101.7 90.4 76.8 Selling, general and administrative expenses... 37.1 39.9 155.9 102.6 58.9 Depreciation and amortization.................. 2.6 4.6 18.3 11.6 8.6 Merger and severance........................... -- -- 0.4 7.7 -- Other.......................................... -- -- 4.0 -- -- ----------- ----------- ----------- ----------- ----------- Income from operations......................... 15.7 11.4 51.0 63.4 48.0 Net income (loss).............................. $ 3.7 $ (0.4) $ 7.0 $ 14.8 $ 16.6 Earnings (loss) per share: Basic(c)...................................... $ 0.16 $ (0.02) $ 0.31 $ 0.68 $ 0.39(d) Diluted(c).................................... $ 0.13 $ (0.02) $ 0.27 $ 0.60 $ 0.34(d) Weighted average common shares outstanding: Basic......................................... 23,089,632 22,741,598 22,996,462 21,941,540 20,880,000 Diluted....................................... 28,374,252 22,741,598 28,287,952 27,586,726 27,039,870 CASH FLOW DATA: Cash provided by operating activities.......... $ 5.2 $ 9.6 $ 21.8 $ 1.2 $ 20.8 Cash (used in) investing activities............ (1.4) (1.2) (14.4) (130.7) (74.0) Cash provided by (used in) financing activities (3.8) (8.4) (7.4) 117.3 65.4 OTHER FINANCIAL DATA: EBITDA(e)...................................... $ 18.3 $ 16.0 $ 69.3 $ 75.0 $ 56.6 EBITDA margin(f)............................... 22.0% 19.8% 20.9% 27.2% 29.4% Capital expenditures(g)........................ $ 1.4 $ 1.3 $ 14.6 $ 5.5 $ 2.0

AS OF APRIL 5, 2002 ------------------------------ PRO PRO FORMA ACTUAL FORMA(H) AS ADJUSTED(I) ------ -------- -------------- BALANCE SHEET DATA: Working capital.............................................. $ 20.6 $ 20.6 $ 23.4 Total assets................................................. 614.2 614.2 612.8 Total debt including capital leases and current maturities... 393.4 393.4 258.8 Minority interest--exchangeable preferred stock of subsidiary 25.7 -- -- Total stockholders' equity................................... 7.1 32.8 167.0

5 -------- (a) Includes the results of Conex Global Logistics Services, Inc., GTS Transportation Services, Inc., RFI Group, Inc. and Rail Van, Inc. since their dates of acquisition on January 13, 2000, August 31, 2000, October 31, 2000 and December 22, 2000, respectively. (b) Includes the results of Pacer Logistics since acquisition on May 28, 1999. (c) For the year ended December 28, 2001, the pre-tax one-time charges of $6.9 million affected basic earnings per share by $0.21, and diluted earnings per share by $0.17. For the year ended December 29, 2000, the pre-tax merger and severance charge of $7.7 million affected basic earnings per share by $0.20, and diluted earnings per share by $0.15. For the year ended December 31, 1999, the pre-tax one-time bonus payment of $0.7 million affected basic earnings per share by $0.02, and diluted earnings per share by $0.02. (d) Net income of $8.5 million for the period from January 1, 1999 through May 28, 1999 has been excluded in calculating earnings per share as prior to our recapitalization and acquisition of Pacer Logistics on May 28, 1999, our wholesale operations were a division of APL Limited and did not have common stock. (e)EBITDA represents income before income taxes, interest expense, depreciation and amortization and minority interest (payment-in-kind dividends on Pacer Logistics' 7.5% exchangeable preferred stock). EBITDA is presented because it is commonly used by investors to analyze and compare operating performance and to determine a company's ability to service and/or incur debt. However, EBITDA should not be considered in isolation or as a substitute for net income, cash flows or other income or cash flow data prepared in accordance with generally accepted accounting principles or as a measure of a company's profitability or liquidity. EBITDA is calculated as follows:

THREE MONTHS ENDED YEAR ENDED ----------------- -------------------------------------- APRIL 5, APRIL 6, DECEMBER 28, DECEMBER 29, DECEMBER 31, 2002 2001 2001 2000 1999 -------- -------- ------------ ------------ ------------ (IN MILLIONS) Income before income taxes and minority interest............................. $ 5.9 $ 0.1 $11.4 $29.3 $29.4 Interest expense, net.................. 9.8 11.3 39.6 34.1 18.6 Depreciation and amortization.......... 2.6 4.6 18.3 11.6 8.6 ----- ----- ----- ----- ----- $18.3 $16.0 $69.3 $75.0 $56.6 ===== ===== ===== ===== =====

EBITDA includes merger, severance and other one-time charges of $6.9 million for the year ended December 28, 2001, merger and severance charges of $7.7 million for the year ended December 29, 2000, and one-time bonus payments of $0.7 million related to the acquisition of Pacer Logistics for the year ended December 31, 1999. (f)EBITDA margins are calculated as a percentage of net revenues. (g)Capital expenditures for the year ended December 28, 2001 included $7.2 million for the conversion from APL Limited's computer systems to a stand-alone system for the wholesale segment, $3.5 million for the expansion of the Rail Van, Inc. computer systems and $1.1 million for new offices associated with our warehousing facilities. Capital expenditures for the year ended December 29, 2000 included $2.3 million for leasehold improvements. Excluding these amounts, capital expenditures would have been $2.8 million and $3.2 million for the years ended December 28, 2001 and December 29, 2000, respectively. Capital expenditures for the three months ended April 5, 2002 included $0.7 million for the conversion from APL Limited's computer systems to a stand-alone system for the wholesale segment, $0.3 million for the expansion of Rail Van, Inc. computer systems and $0.4 million for leasehold improvements and other computer related expenditures. Capital expenditures for the three months ended April 6, 2001 included $0.6 million for the expansion of the Rail Van computer systems and $0.7 million for leasehold improvement and other computer related expenditures. (h)To give pro forma effect to the exchange of all of Pacer Logistics' exchangeable preferred stock for shares of our common stock prior to the consummation of this offering. (i)As adjusted for this offering, the repayment of borrowings under our credit facility with the net proceeds from this offering and the exchange of all Pacer Logistics' exchangeable preferred stock for shares of our common stock prior to consummation of this offering. 6 RISK FACTORS AN INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. BEFORE MAKING AN INVESTMENT DECISION, YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW, WHICH WE BELIEVE ARE THE MATERIAL RISKS FACING US. OUR BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS COULD BE MATERIALLY ADVERSELY AFFECTED BY ANY OF THESE RISKS. THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE DUE TO ANY OF THESE RISKS, AND, THEREFORE, YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT. RISK FACTORS RELATING TO THE COMMON STOCK AND THE OFFERING WE HAVE A SINGLE STOCKHOLDER WHO CAN SUBSTANTIALLY INFLUENCE THE OUTCOME OF ALL MATTERS VOTED UPON BY OUR STOCKHOLDERS AND PREVENT ACTIONS WHICH A STOCKHOLDER MAY OTHERWISE VIEW FAVORABLY. Upon consummation of this offering, Apollo Management, L.P. will beneficially own approximately 38.5% of our outstanding common stock (33.0% if the underwriters' overallotment option is exercised in full). As a result, Apollo Management will be able to substantially influence all matters requiring stockholder approval, including the election of directors, the approval of significant corporate transactions, such as acquisitions, the ability to block an unsolicited tender offer and any other matter requiring a supermajority vote of stockholders. This concentration of ownership could delay, defer or prevent a change in control of our company or impede a merger, consolidation, takeover or other business combination which you, as a stockholder, may otherwise view favorably. BECAUSE WE HAVE VARIOUS MECHANISMS IN PLACE TO DISCOURAGE TAKEOVER ATTEMPTS, A CHANGE IN CONTROL OF OUR COMPANY THAT YOU AS A STOCKHOLDER MAY CONSIDER FAVORABLE COULD BE PREVENTED. Provisions of our restated charter and amended bylaws may discourage, delay or prevent a change in control of our company that a stockholder may consider favorable. These provisions could also discourage proxy contests and make it more difficult for you and other shareholders to elect directors and take other corporate actions. These provisions include: . authorizing the issuance of "blank check" preferred stock that could be issued by our board of directors to increase the number of outstanding shares in order to thwart a takeover attempt; . a classified board of directors with staggered, three-year terms, which may lengthen the time required to gain control of the board of directors; . prohibiting cumulative voting in the election of directors, which would otherwise allow less than a majority of stockholders to elect director candidates; . requiring super-majority voting to effect particular amendments to our restated charter and amended bylaws; . limitations on who may call special meetings of stockholders; . requiring all stockholder actions to be taken at a meeting of the stockholders unless the stockholders unanimously agree to take action by written consent in lieu of a meeting; . establishing advance notice requirements for nominations of candidates for election to the board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings; and . prohibiting business combinations with interested stockholders unless particular conditions are met. As a result, these provisions could limit the price that investors are willing to pay in the future for shares of our common stock. In addition, the Tennessee Greenmail Act and Control Share Acquisition Act may discourage, delay or prevent a change in control of our company. 7 THERE HAS NOT BEEN A PRIOR PUBLIC MARKET FOR OUR COMMON STOCK AND WE CANNOT ASSURE YOU THAT AN ACTIVE PUBLIC MARKET WILL DEVELOP. Our common stock is a new issue of securities for which there is currently no trading market. Although we expect our common stock to be quoted on The Nasdaq Stock Market's National Market, an active trading market for our common stock may not develop or be sustained following this offering. Moreover, even if an active market does develop, stockholders may not be able to resell their shares at prices equal to or greater than the initial public offering price. FUTURE SALES OF OUR COMMON STOCK IN THE PUBLIC MARKET MAY DEPRESS OUR STOCK PRICE. The market price of our common stock could decline as a result of sales by our existing stockholders of a large number of shares of our common stock in the market after this offering or the perception that such sales may occur. These sales might also make it more difficult for us to sell additional equity securities at a time and price that we deem appropriate. There will be approximately 36,811,848 shares of common stock outstanding immediately after this offering. All of the shares sold in this offering will be freely tradable without restriction or further registration under the Securities Act of 1933, as amended, except for shares purchased by our "affiliates" as defined in Rule 144 under the Securities Act. The remaining 22,811,848 shares will be "restricted securities" as defined in Rule 144. Subject to the 180-day lock-up agreement with the underwriters, these restricted securities may be sold in the future without registration under the Securities Act to the extent permitted under Rule 144 under the Securities Act. Commencing 180 days after the date of this prospectus, approximately 17,276,996 outstanding shares of these restricted securities will be eligible for sale under Rule 144 subject to applicable holding period, volume limitations, manner of sale and notice requirements set forth in applicable SEC rules and 923,584 shares of the restricted securities will be saleable without regard to these restrictions under Rule 144(k). In addition, commencing 180 days after the date of this prospectus, stockholders holding approximately 22,806,015 outstanding shares of these restricted securities will have registration rights which could allow those holders to sell their shares freely through a registration statement filed under the Securities Act. After this offering, we will have 3,035,334 shares of common stock reserved for issuance under our stock option plans, of which options to purchase 2,431,028 shares were outstanding as of April 5, 2002. Promptly following this offering, we intend to file a registration statement on Form S-8 to register these shares which, upon effectiveness, will permit substantial additional sales of shares of our common stock as these shares are issued. YOU WILL SUFFER AN IMMEDIATE AND SUBSTANTIAL DILUTION IN THE NET TANGIBLE BOOK VALUE OF THE COMMON STOCK YOU PURCHASE. Prior investors have paid substantially less per share than the price in this offering. The initial public offering price is expected to be substantially higher than the net tangible book value per share of the outstanding common stock immediately after this offering. Accordingly, based on an assumed initial public offering price of $16.00 per share (the midpoint of the range set forth on the cover of this prospectus), purchasers of common stock in this offering will experience immediate and substantial dilution of approximately $19.07 per share in net tangible book value of the common stock. In addition, there were 2,431,028 outstanding stock options at April 5, 2002. If all of these options were exercised on the date of the closing of this offering, investors purchasing shares in this offering would suffer total dilution of $18.30 per share. RISKS RELATED TO OUR BUSINESS WE ARE DEPENDENT UPON THIRD PARTIES FOR EQUIPMENT AND SERVICES ESSENTIAL TO OPERATE OUR BUSINESS AND IF WE FAIL TO SECURE SUFFICIENT EQUIPMENT OR SERVICES, WE COULD LOSE CUSTOMERS AND REVENUES. We are dependent upon transportation equipment such as chassis and containers and rail, truck and ocean services provided by independent third parties. We, along with competitors in our industry, have experienced equipment shortages in the past, particularly during the peak shipping season in October and November. If we 8 cannot secure sufficient transportation equipment or transportation services from these third parties to meet our customers' needs, customers may seek to have their transportation and logistics needs met by other third parties on a temporary or permanent basis, and as a result, our business, results of operations and financial position could be materially adversely affected. IF WE HAVE DIFFICULTY ATTRACTING AND RETAINING AGENTS AND INDEPENDENT CONTRACTORS, OUR RESULTS OF OPERATIONS COULD BE ADVERSELY AFFECTED. We rely extensively on the services of agents and independent trucking contractors to provide our trucking services. We rely on a fleet of vehicles which are owned and operated by independent trucking contractors and on agents representing groups of trucking contractors to transport customers' goods by truck and have over 5,000 approved agents and independent contractors in our truck brokerage network. Although we believe our relationships with our agents and independent trucking contractors are good we may not be able to maintain our relationships with them. Contracts with agents and independent trucking contractors are, in most cases, terminable upon short notice by either party. If an agent terminates its relationship with us, some customers and independent trucking contractors with whom such agent has a direct relationship may also terminate their relationship with us. We may have trouble replacing our agents and independent trucking contractors with equally qualified persons. We compete with transportation service companies for the services of independent commission agents and with trucking companies for the services of independent trucking contractors and drivers. The pool of agents, contractors and drivers from which we draw is limited, and therefore competition from other transportation service companies and trucking companies has the effect of increasing the price we must pay to obtain their services. The industry is currently experiencing a shortage of independent trucking contractors resulting in increased compensation expenses to us and our competitors who also rely on them. In addition, because independent trucking contractors are not employees, they may not be as loyal to our company, requiring us to pay more to retain their services. If we are unable to attract or retain agents and independent contractors or had to increase the amount paid for their services, our results of operations could be adversely affected and we could experience difficulty increasing our business volume. IF WE MAKE FUTURE ACQUISITIONS, THEY MAY BE FINANCED IN A WAY THAT DILUTES YOUR INVESTMENT IN US, REDUCES OUR REPORTED EARNINGS OR IMPOSES ADDITIONAL RESTRICTIONS ON OUR BUSINESS. As we did in the acquisitions of Conex and Rail Van in 2000, if we make future acquisitions, we may issue shares of capital stock that dilute other stockholders, incur debt, assume significant liabilities or create additional expenses related to intangible assets, any of which might reduce our reported earnings or reduce earnings per share and cause our stock price to decline. In addition, any financing that we might need for future acquisitions may be available to us only on terms that restrict our business. COMPETITION IN OUR INDUSTRY MAY CAUSE DOWNWARD PRESSURE ON FREIGHT RATES WHICH COULD ADVERSELY AFFECT OUR BUSINESS. The transportation services industry is highly competitive. Our retail businesses compete primarily against other domestic non-asset based transportation and logistics companies, asset-based transportation and logistics companies, third-party freight brokers, shipping departments of our customers and other freight forwarders. Our wholesale business competes primarily with over-the-road full truckload carriers, conventional intermodal movement of trailers on flat cars, and containerized intermodal rail services offered directly by railroads. Some of our competitors have substantially greater financial, marketing and other resources than we do, which may allow them to better withstand an economic downturn, reduce their prices more easily than us or expand or enhance the marketing of their products. There are a number of large companies competing in one or more segments of the industry, although the number of companies with a global network that offer a full complement of logistics services is more limited. Depending on the location of the customer and the scope of services requested, we must compete against both the niche players and larger entities. In addition, customers are increasingly turning to competitive bidding situations involving bids from a number of competitors, including 9 competitors that are larger than us. We also face competition from Internet-based freight exchanges which attempt to provide an online marketplace for buying and selling supply chain services. Historically, competition has created downward pressure on freight rates. In particular, we have experienced downward pressure in the pricing of our wholesale and retail services, which has reduced our revenues and operating results. Continuation of this rate pressure may materially adversely affect our net revenues and income from operations. In particular, continued pricing pressure in our wholesale segment, particularly from our railroad competitors in the intermodal business, could adversely affect the yields of our intermodal product. A DECREASE IN INTERMODAL VOLUME SHIPMENTS WOULD ADVERSELY AFFECT OUR REVENUES AND OPERATING RESULTS. A decrease in intermodal transportation services resulting from general economic conditions or other factors such as work stoppages or price competition from other modes of transportation service would have an adverse effect on our revenues and operating results. The economic downturn that began in the fourth quarter of 2000 resulted in a significant decrease during that quarter and the four quarters of 2001 in aggregate domestic intermodal car volumes based on data compiled by the Association of American Railroads. This downturn adversely affected our 2001 operating results. While aggregate domestic intermodal carload volumes in the first quarter of 2002 were marginally below the corresponding 2001 quarterly amount, any further significant deterioration in aggregate intermodal volumes would have an adverse effect on our future operating results. OUR CUSTOMERS WHO ARE ALSO COMPETITORS COULD TRANSFER THEIR BUSINESS TO NON-COMPETITORS WHICH WOULD DECREASE OUR PROFITABILITY. As a result of our company operating in two distinct but related intermodal segments, we buy and sell transportation services from and to many companies with which we compete. For example, Hub Group, GST Corp and Alliance Shippers, three of the 10 largest customers of our wholesale operations, who accounted for 21% of the 2001 revenues of our wholesale operations, are also competitors of our retail operations. It is possible that these customers could transfer their business away from us to other companies with which they do not compete. The loss of one or more of these customers could have a material adverse effect on the profitability of our wholesale operations. In addition, rather than outsourcing their transportation logistics requirements to us, some of our customers could decide to provide these services internally which could further adversely affect our business volumes and revenues. OUR REVENUES COULD BE REDUCED BY THE LOSS OF MAJOR CUSTOMERS. We have derived, and believe we will continue to derive, a significant portion of our revenues from our largest customers. In 2001, Union Pacific Railroad Company and Ford Motor accounted for approximately 8% and 6%, respectively, of our gross revenues and our 10 largest customers accounted for approximately 40% of our gross revenues. The loss of one or more of our major customers could have a material adverse effect on our revenues, business and prospects. WORK STOPPAGES AT SEA PORTS COULD ADVERSELY AFFECT OUR OPERATING RESULTS. A significant portion of the freight moved by us for our customers originates at ports on the West coast. Freight arriving at West coast ports must be offloaded from ships by longshoremen, none of whom are our employees. The longshoremen labor contracts expire on June 30, 2002. Any work stoppage or slowdown by the longshoremen at these West coast ports could adversely affect our operating income and cash flows in both our wholesale and retail segments. SERVICE INSTABILITY IN THE RAILROAD INDUSTRY COULD INCREASE COSTS AND DECREASE DEMAND FOR OUR INTERMODAL SERVICES. We depend on the major railroads in the United States for substantially all of the intermodal transportation services we provide. In many markets, rail service is limited to a few railroads or even a single railroad. Any reduction in service by the railroads with whom we have relationships is likely to increase the cost of the 10 rail-based services we provide and reduce the reliability, timeliness and overall attractiveness of our rail-based services. For example, from 1997 to 1999, service disruptions related to consolidation and restructuring in the railroad industry interrupted intermodal service throughout the United States. Service problems arising from prior mergers in the railroad industry appear to be largely resolved. However, consolidation and restructuring may continue to occur in the railroad industry and it is possible that future service disruptions could result, which would decrease the efficiency of our wholesale business. Although we were not substantially adversely affected by past service disruptions, we could be substantially affected by service disruptions in the future. In addition, because the railroads' workforce is generally subject to collective bargaining agreements, our business could be adversely affected by labor disputes between the railroads and their union employees. Our business could also be adversely affected by a work stoppage at one or more railroads or by adverse weather conditions that hinder the railroads' ability to provide transportation services. Such an adverse effect could be material if the work stoppage or adverse weather conditions have a material effect on major railroad interchange facilities or areas through which significant amounts of our rail shipments pass, such as the Los Angeles and Chicago gateways. In addition, the railroads are relatively free to adjust shipping rates up or down as market conditions permit. Although the application of rate increases to our wholesale business is limited by our long-term contracts with the railroads, such increases could result in higher costs to our customers and decreased demand for our services. AS WE EXPAND OUR SERVICES INTERNATIONALLY, WE MAY BECOME SUBJECT TO INTERNATIONAL ECONOMIC AND POLITICAL RISKS. An increasing portion of our business is providing services between continents, particularly between North America and Asia. International revenues accounted for 10% of our gross revenues in 2001, up from 6% in 2000. Doing business outside the United States subjects us to various risks, including changing economic and political conditions, major work stoppages, exchange controls, currency fluctuations, armed conflicts and unexpected changes in United States and foreign laws relating to tariffs, trade restrictions, transportation regulations, foreign investments and taxation. Significant expansion in foreign countries will expose us to increased risk of loss from foreign currency fluctuations and exchange controls as well as longer accounts receivable payment cycles. We have no control over most of these risks and may be unable to anticipate changes in international economic and political conditions and, therefore, unable to alter our business practices in time to avoid the adverse effect of any of these changes. WE HAVE AN EXTENSIVE RELATIONSHIP WITH OUR FORMER PARENT, APL LIMITED, AND WE DEPEND ON APL LIMITED FOR ESSENTIAL SERVICES. OUR BUSINESS AND RESULTS OF OPERATIONS COULD BE ADVERSELY AFFECTED IF APL LIMITED FAILED OR REFUSED TO PROVIDE SUCH SERVICES OR TERMINATED THE RELATIONSHIP. Pursuant to long-term contracts, APL Limited, the former owner of our wholesale business and one of our current stockholders, supplies us with chassis from its equipment fleet which we manage for the transport of international freight on behalf of other international shippers. In addition, we transport APL Limited's international cargo on our stacktrain network to locations in the United States using the chassis and equipment supplied by APL Limited. The additional wholesale volume attributable to the transport of APL Limited's international cargo contributes to our ability to obtain favorable provisions in our rail contracts, although we do not profit from APL Limited's cargo revenue as we provide these services at cost. APL Limited pays us a fee for repositioning its empty containers within North America so that the containers can be reused in trans-Pacific shipping operations. In addition, APL Limited is currently providing us with computers, software and other information technology necessary for the operation of our wholesale business. We are in the process of replacing the technology provided by APL Limited with information technology systems currently available in the marketplace. We anticipate this to be completed by the end of 2003. If any of our contracts with APL Limited were terminated or if APL Limited were unwilling or unable to fulfill its obligations to us under the terms of these contracts, our business, results of operations and financial position could be materially adversely affected. IF WE FAIL TO DEVELOP, INTEGRATE, UPGRADE OR REPLACE OUR INFORMATION TECHNOLOGY SYSTEMS, WE MAY LOSE ORDERS AND CUSTOMERS OR INCUR COSTS BEYOND OUR EXPECTATIONS. Increasingly, we compete for customers based upon the flexibility and sophistication of our technologies supporting our services. The failure of the hardware or software that supports our information technology systems, the loss of data contained in the systems, or the inability to access or interact with our website, could 11 significantly disrupt our operations, prevent customers from making orders, or cause us to lose orders or customers. If our information technology systems are unable to handle additional volume for our operations as our business and scope of services grow, our service levels, operating efficiency and future freight volumes will decline. In addition, we expect customers to continue to demand more sophisticated, fully integrated information systems from their supply chain management service providers. If we fail to hire qualified personnel to implement and maintain our information technology systems or if we fail to upgrade or replace our information technology systems to handle increased volumes, meet the demands of our customers and protect against disruptions of our operations, we may lose orders and customers which could seriously harm our business. We are in the process of replacing the technology provided by APL Limited for our wholesale operations with information technology systems currently available in the marketplace from unrelated third parties which are being enhanced through joint development efforts with the third party provider so that the new system will be specifically designed to meet our requirements. We will have a perpetual exclusive global license with respect to the design enhancements. We anticipate this project to be completed by the end of 2003. If we experience delays or problems in integrating the new technology and/or training our employees to use the new system, our wholesale operations could be adversely affected or the cost of the project could exceed our expectations. IF WE LOSE KEY PERSONNEL AND QUALIFIED TECHNICAL STAFF, OUR ABILITY TO MANAGE THE DAY-TO-DAY ASPECTS OF OUR BUSINESS WILL BE WEAKENED. We believe that the attraction and retention of qualified personnel is critical to our success. If we lose key personnel or are unable to recruit qualified personnel, our ability to manage the day-to-day aspects of our business will be weakened. Our operations and prospects depend in large part on the performance of our senior management team. The loss of the services of one or more members of our senior management team, particularly Donald C. Orris, our chairman, president and chief executive officer, could have a material adverse effect on our business, financial condition and results of operation. You should be aware that we face significant competition in the attraction and retention of personnel who possess the skill sets that we seek. Because our senior management team, particularly Mr. Orris, has unique experience with our company and within the transportation industry, it would be difficult to replace them without adversely affecting our business operations. In addition to their unique experience, our management team has fostered key relationships with our suppliers. Such relationships are especially important in a non-asset based company such as ours. Loss of these relationships could have a material adverse effect on our profitability. IF WE FAIL TO COMPLY WITH OR LOSE ANY REQUIRED LICENSES, GOVERNMENTAL REGULATORS COULD ASSESS PENALTIES AGAINST US OR ISSUE A CEASE AND DESIST ORDER AGAINST OUR OPERATIONS WHICH ARE NOT IN COMPLIANCE. We are licensed by the Department of Transportation as a broker in arranging for the transportation of general commodities by motor vehicle. The Department of Transportation has established requirements for acting in this capacity, including insurance and surety bond requirements. In addition, we are licensed as an ocean transportation intermediary by the U.S. Federal Maritime Commission. The Federal Maritime Commission regulates ocean freight forwarders and non-vessel operating common carriers like us that contract for space with the actual vessel operators and sell that space to commercial shippers and other non-vessel operating common carriers for freight originating and/or terminating in the United States. Non-vessel operating common carriers must publish and maintain tariffs for the movement of specified commodities into and out of the United States. The Federal Maritime Commission may enforce these regulations by instituting proceedings seeking the assessment of penalties for violations of these regulations. For ocean shipments not originating or terminating in the United States, the applicable regulations and licensing requirements typically are less stringent than in the United States. We are also licensed, regulated and subject to periodic audit as a customs broker by the Customs Service of the Department of Treasury in each United States custom district in which we do business. In other jurisdictions in which we perform customs brokerage services, we are licensed, where necessary, by the appropriate governmental authority. Our failure to comply with the laws and regulations of any of these governmental regulators, and any resultant suspension or loss of our licenses, could result in penalties or a cease and desist order against any operations that are not in compliance. Such an occurrence would have an adverse effect on our results of operations, financial condition and liquidity. 12 WE, OUR SUPPLIERS AND OUR CUSTOMERS ARE SUBJECT TO CHANGES IN GOVERNMENT REGULATION WHICH COULD RESULT IN ADDITIONAL COSTS AND THEREBY AFFECT OUR RESULTS OF OPERATIONS. The transportation industry is subject to legislative or regulatory changes that can affect its economics. Although we operate in the intermodal segment of the transportation industry, which has been essentially deregulated, changes in the levels of regulatory activity in the intermodal segment could potentially affect us and our suppliers and customers. Future laws and regulations may be more stringent and require changes in operating practices, influence the demand for transportation services or require the outlay of significant additional costs. Additional expenditures incurred by us, or by our suppliers, who would pass those costs onto us through higher prices, would adversely affect our results of operation. In addition, we have a substantial number of wholesale customers who provide ocean carriage of intermodal shipments. The regulatory regime applicable to ocean shipping was revised by the Ocean Shipping Reform Act of 1998, which took effect on May 1, 1999. Although the implementation of the Ocean Shipping Reform Act has not to date had any material impact on the competitiveness and/or efficiency of operations of our various ocean carrier customers, we cannot assure you that it will not adversely impact these customers in the future which could adversely affect our business. OUR OPERATING RESULTS ARE SUBJECT TO CYCLICAL FLUCTUATIONS AND OUR QUARTERLY REVENUES MAY ALSO FLUCTUATE, POTENTIALLY AFFECTING OUR STOCK PRICE. Historically, sectors of the transportation industry have been cyclical as a result of economic recession, customers' business cycles, increases in prices charged by third-party carriers, interest rate fluctuations and other economic factors over which we have no control. Increased operating expenses incurred by third-party carriers can be expected to result in higher costs to us, and our net revenues and income from operations could be materially adversely affected if we were unable to pass through to our customers the full amount of increased transportation costs. We have a large number of customers in the automotive and consumer goods industries. If these customers experience cyclical movements in their business activity, due to an economic downturn, work stoppages or other factors over which we have no control, the volume of freight shipped by those customers may decrease and our operating results could be adversely affected. Any unexpected reduction in revenues for a particular quarter could cause our quarterly operating results to be below the expectations of public market analysts or stockholders. In this event, the trading price of our common stock may fall significantly. IF THE MARKETS IN WHICH WE OPERATE DO NOT GROW, OUR BUSINESS COULD BE ADVERSELY AFFECTED. This prospectus contains market data related to the transportation and logistics industries and their segments, including the third-party logistics market, and estimates regarding their size and historical growth. This market data has been included in reports published by organizations such as Standard & Poor's, Cass Information Systems, Armstrong & Associates, the Association of American Railroads, and the American Trucking Association. These industry publications generally indicate that they have derived this data from sources believed to be reasonable, but do not guarantee the accuracy or completeness of the data. While we believe these industry publications to be reliable, we have not independently verified this data or any of the assumptions on which the estimates are based. The failure of these markets to continue to grow may have a material adverse effect on our business and the market price of our common stock. OUR DEBT LEVELS MAY LIMIT OUR FLEXIBILITY IN OBTAINING ADDITIONAL FINANCING AND IN PURSUING OTHER BUSINESS OPPORTUNITIES. As of April 5, 2002 after giving effect to this offering and the exchange of all outstanding shares of Pacer Logistics exchangeable preferred stock for our common stock, our long-term debt would have been approximately $258.8 million, while our total capitalization would have been $425.8 million. We also have the ability to incur new debt, subject to limitations under our credit agreement and the indenture governing our senior subordinated notes. Our level of indebtedness could have important consequences to us, including the following: . Our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may be impaired or such financing may not be available on favorable terms; 13 . We will need a substantial portion of our cash flow to pay the principal and interest on our indebtedness, including indebtedness that we may incur in the future; . Payments on our indebtedness will reduce the funds that would otherwise be available for our operations and future business opportunities; . A substantial decrease in our net operating cash flows could make it difficult for us to meet our debt service requirements and force us to modify our operations; . We may be more highly leveraged than our competitors, which may place us at a competitive disadvantage; . Our debt level may make us more vulnerable than our competitors to a downturn in our business or the economy generally; . Our debt level reduces our flexibility in responding to changing business and economic conditions; . Some of our debt has a variable rate of interest, which increases our vulnerability to interest rate fluctuations; and . There would be a material adverse effect on our business and financial condition if we are unable to obtain additional financing, as needed. WE MAY NOT HAVE SUFFICIENT CASH TO SERVICE OUR INDEBTEDNESS. Our ability to service our indebtedness will depend upon, among other things: . Our future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, some of which are beyond our control; and . The future availability of borrowings under our credit agreement or any successor facility, the availability of which may depend on, among other things, our complying with certain covenants. If our operating results and borrowings under our credit agreement are not sufficient to service our current or future indebtedness, we will be forced to take actions such as reducing or delaying acquisitions, investments, strategic alliances and/or capital expenditures, selling assets, restructuring or refinancing our indebtedness, or seeking additional equity capital or bankruptcy protection. There is no assurance that we can effect any of these remedies on satisfactory terms, or at all. OUR DEBT AGREEMENTS CONTAIN OPERATING AND FINANCIAL RESTRICTIONS WHICH MAY RESTRICT OUR BUSINESS AND FINANCING ACTIVITIES. The operating and financial restrictions and covenants in our credit agreement, the indenture governing our senior subordinated notes and any future financing agreements may adversely affect our ability to finance future operations or capital needs or to engage in other business activities. In addition, our debt agreements restrict our ability to: . declare dividends, redeem or repurchase capital stock; . prepay, redeem or purchase debt; . incur liens and engage in sale and leaseback transactions; . make loans and investments; . incur additional indebtedness; . amend or otherwise change debt and other material agreements; . make capital expenditures; . engage in mergers, acquisitions and asset sales; . enter into transactions with affiliates; and . change our primary business. Our credit agreement also requires us to satisfy interest coverage and leverage ratios. 14 A breach of any of the restrictions, covenants, ratios or tests in our debt agreements could result in defaults under these agreements. A significant portion of our indebtedness then may become immediately due and payable. We might not have, or be able to obtain, sufficient funds to make these accelerated payments. In addition, our obligations under our credit agreement are secured by substantially all of our assets. A DETERMINATION BY REGULATORS THAT OUR INDEPENDENT CONTRACTORS ARE EMPLOYEES COULD EXPOSE US TO VARIOUS LIABILITIES AND ADDITIONAL COSTS. From time to time, tax and other regulatory authorities have sought to assert that independent contractors in the trucking industry are employees, rather than independent contractors. There can be no assurance that these authorities will not successfully assert this position, or that these interpretations and tax laws that consider these persons independent contractors will not change. If our independent contractors are determined to be our employees, that determination could materially increase our exposure under a variety of federal and state tax, worker's compensation, unemployment benefits, labor, employment and tort laws, as well as our potential liability for employee benefits. Our business model relies on the fact that our independent contractors are not deemed to be our employees, and exposure to any of the above increased costs would impair our competitiveness in the industry. IF WE ARE UNABLE TO IDENTIFY, MAKE AND SUCCESSFULLY INTEGRATE ACQUISITIONS, OUR PROFITABILITY COULD BE ADVERSELY AFFECTED. Identifying, acquiring and integrating businesses requires substantial management, financial and other resources and may pose risks with respect to customer service and market share. Further, acquisitions involve a number of special risks, some or all of which could have a material adverse effect on our business, financial condition and results of operation. These risks include: . unforeseen operating difficulties and expenditures; . difficulties in assimilation of acquired personnel, operations and technologies; . the need to manage a significantly larger and more geographically dispersed business; . amortization of goodwill and other intangible assets; . diversion of management's attention from ongoing development of our business or other business concerns; . potential loss of customers; . failure to retain key personnel of the acquired businesses; and . the use of substantial amounts of our available cash. We have acquired a number of businesses in the past and may consider acquiring businesses in the future that provide complementary services to those we currently provide or expand our geographic presence. There can be no assurance that the businesses that we have acquired in the past or any businesses that we may acquire in the future can be successfully integrated. In addition, we cannot assure you that we will be able to identify suitable acquisition candidates or be able to acquire them on reasonable terms or at all. While we believe that we have sufficient financial and management resources and experience to successfully conduct our acquisition activities and integrate the acquired businesses into our operations, there can be no assurance in this regard or that we will not experience difficulties with customers, personnel or others. Our acquisition activities involve more difficult integration issues than those of many other companies because the value of the companies we acquire comes mostly from their business relationships, rather than their assets. The integration of business relationships poses more of a risk than the integration of tangible assets because relationships may suddenly weaken or terminate. Further, logistics businesses we have acquired and may acquire in the future compete with many customers of our wholesale operations and these customers may shift their business elsewhere if they believe our retail operations receive favorable treatment from our wholesale operations. In addition, although we believe that our acquisitions will enhance our competitive position, business and financial prospects, there can be no assurances that such benefits will be realized or that any combination will be successful. 15 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This prospectus includes forward-looking statements 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 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 and synergies to be obtained from our completed and any future acquisitions. 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" and similar expressions. These forward-looking statements are based on all information currently available to us and 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 prospectus include: . general economic and business conditions; . industry trends; . increases in our leverage; . changes in our business strategy, development plans or cost savings plans; . our ability to integrate acquired businesses; . the loss of one or more of our major customers; . competition; . availability of qualified personnel; . changes in, or the failure to comply with, government regulations; and . the other factors discussed under "Risk Factors." You should not place undue reliance on any forward-looking statements. Except as otherwise required by federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason after the date of this prospectus. 16 USE OF PROCEEDS Our net proceeds from this offering are estimated to be approximately $135.6 million, assuming an initial public offering price of $16.00 per share, the midpoint of the range on the cover of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated expenses of the offering. We intend to use the net proceeds to us from this offering to repay indebtedness outstanding under our credit agreement plus accrued interest as follows: . $39.5 million will be used to repay the outstanding principal amount of the $40 million term loan described below, . $28.0 million will be used to repay a portion of the $135 million term loan described below, and . $67.1 million will be used to repay outstanding borrowings under the revolving credit facility. At April 5, 2002, outstanding borrowings under our credit agreement totaled approximately $238.1 million, consisting of: . $170.9 million of term loans which represents the outstanding portions of the $135 million term loan incurred in May 1999 to finance a portion of our recapitalization and acquisition of Pacer Logistics and the $40 million term loan incurred in December 2000 to finance a portion of our acquisition of Rail Van. These term loans currently bear interest at the rate of 4.9% per annum and mature on May 28, 2006. . $67.2 million of borrowings under the revolving credit facility incurred to finance our acquisitions of Conex, GTS, RFI and Rail Van in January, August, October and December 2000, respectively. Borrowings under the revolving credit facility currently bear interest at the rate of 4.4% per annum and mature on May 28, 2004. The reduction in indebtedness under our revolving credit facility as a result of the application of a portion of the net proceeds of this offering as described above will enhance our ability to make acquisitions and investments to expand our current product offerings and acquisitions of or investments in, companies, products, technologies and processes. We currently have no commitments or agreements with respect to any future acquisitions or investments. However, we evaluate acquisition opportunities on an on-going basis. We will not receive any proceeds for the sale of our common stock by the selling stockholders, including if the underwriters exercise the over-allotment option. In the aggregate, the selling stockholders and their affiliates will receive approximately $109.1 million of the net proceeds of this offering ($140.3 million if the underwriters over-alottment option is exercised in full), including $70.7 million of net proceeds received by them from the sale of their common stock in this offering ($101.9 million if the underwriters over-alottment option is exercised in full), assuming an initial public offering price of $16.00 per share, the midpoint of the range on the cover of this prospectus, and after deducting estimated underwriting discounts and commissions, and approximately $38.4 million representing their pro rata portion of the repayments under our credit facility. DIVIDEND POLICY We have not paid any dividends on our common stock and do not intend to pay any dividends on our common stock in the foreseeable future. We currently intend to retain our future earnings, if any, to repay debt or to finance the further expansion and continued growth of our business. In addition, our ability to pay cash dividends is currently restricted under the terms of our credit agreement and the indenture governing our senior subordinated notes. Future dividends, if any, will be determined by our board of directors. 17 CAPITALIZATION The following table sets forth our capitalization as of April 5, 2002: . on an actual basis (except for share information which has been adjusted for the proposed stock split); . on a pro forma basis to reflect the exchange of all outstanding shares of Pacer Logistics exchangeable preferred stock for 4,469,688 shares of our common stock; and . on a pro forma as adjusted basis to reflect the sale by us of 9,250,000 shares of our common stock in this offering at an assumed initial offering price of $16.00 per share, the midpoint of the range on the cover of this prospectus, after deducting estimated underwriting discounts and commissions and estimated expenses of the offering payable by us not previously expensed in our financial statements, and the application of the proceeds therefrom. You should read this table in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this prospectus.

APRIL 5, 2002 --------------------------- PRO FORMA AS ACTUAL PRO FORMA ADJUSTED ------- --------- --------- (IN MILLIONS) Current maturities of long-term debt and capital leases.................... $ 2.0 $ 2.0 $ 0.2 ------- -------- ------- Long-term debt: Capital leases............................................................ $ 0.1 $ 0.1 $ 0.1 Senior credit facilities(1) Revolving credit facility............................................... 67.2 67.2 0.1 Term loans.............................................................. 169.1 169.1 103.4 Senior subordinated notes(1).............................................. 150.0 150.0 150.0 Subordinated note(2)...................................................... 5.0 5.0 5.0 ------- -------- ------- Total long-term debt................................................ 391.4 391.4 258.6 ------- -------- ------- Minority interest-exchangeable preferred stock of subsidiary.............. 25.7 -- -- Stockholders' equity: Preferred stock: $0.01 par value; 1,000,000 shares authorized actual and pro forma, 50,000,000 pro forma as adjusted; none issued and outstanding -- -- -- Common stock: $0.01 par value; 150,000,000 shares authorized; 23,092,160 shares issued and outstanding actual, 27,561,848 shares pro forma, 36,811,848 shares pro forma as adjusted................................. 0.2 0.3 0.4 Additional paid-in capital................................................ 118.5 144.1 279.6 Unearned compensation..................................................... (0.3) (0.3) (0.3) Accumulated deficit....................................................... (110.6) (110.6) (112.0)(3) Other accumulated comprehensive income (loss)............................. (0.7) (0.7) (0.7) ------- -------- ------- Total stockholders' equity................................................ 7.1 32.8 167.0 ------- -------- ------- Total capitalization...................................................... $ 426.2 $ 426.2 $ 425.8 ======= ======== =======

-------- (1) For a description of the senior credit facilities and the senior subordinated notes, see "Description of Certain Indebtedness." (2) Conex Global Logistics Services, Inc., one of our subsidiaries, issued an 8.0% Non-Negotiable Subordinated Note Due 2003 in the aggregate principal amount of $5.0 million to the former shareholders of Conex in connection with our acquisition of Conex in 2000. (3) Reflects the write-off of deferred loan costs in connection with repayment of indebtedness under our credit agreement. The write-off will be recognized in the quarter in which the offering is consummated and the indebtedness is repaid. 18 The foregoing table excludes: . 2,431,028 shares of common stock issuable upon the exercise of options outstanding as of April 5, 2002, at exercise prices ranging from $4.30 to $15.00 per share, with a weighted average exercise price of $9.29; and . 604,306 shares of common stock reserved for future grant under our stock option plans. 19 DILUTION Our net tangible book value as of April 5, 2002, after giving effect to the proposed stock split and the exchange of all outstanding shares of Pacer Logistics exchangeable preferred stock for 4,469,688 shares of our common stock, was $(248.7) million, or $(9.02) per share of common stock. We have calculated this amount by: . subtracting our total liabilities from our total tangible assets; and . then dividing the difference by the adjusted number of shares of common stock outstanding. If we give effect to our sale of 9,250,000 shares of common stock in this offering at an assumed initial public offering price of $16.00 per share, the midpoint of the range on the cover of this prospectus, after deducting the estimated underwriting discounts and commissions and the estimated offering expenses payable by us not previously expensed in our financial statements, our adjusted net tangible book value as of April 5, 2002 would have been $(113.1) million, or $(3.07) per share. This amount represents an immediate dilution of $19.07 per share to new investors. The following table illustrates this per share dilution: Assumed initial public offering price per share................................ $16.00 Net tangible book value per share as of April 5, 2002....................... $(9.02) Increase in net tangible book value per share attributable to new investors. 5.95 ------ Net tangible book value per share after this offering.......................... (3.07) ------ Dilution per share to new investors............................................ $19.07 ====== The following table summarizes on the basis described above, as of April 5, 2002, the difference between the number of shares of common stock purchased from us, the total consideration paid to us, and the average price per share paid by existing stockholders and by new investors, at an assumed initial public offering price of $16.00 per share, the midpoint of the range on the cover of this prospectus, before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us:

SHARES PURCHASED TOTAL CONSIDERATION AVERAGE -------------------- ------------------- PRICE NUMBER PERCENT AMOUNT PERCENT PER SHARE ---------- ------- ------------ ------- --------- Existing stockholders 27,561,848(2) 74.9% $144,064,882 49.3% $ 5.23 New investors(1)..... 9,250,000 25.1 148,000,000 50.7 $16.00 ---------- ----- ------------ ----- Total............. 36,811,848 100.0% $292,064,882 100.0% ========== ===== ============ =====

-------- (1) Excludes 4,750,000 shares of our common stock to be sold by the selling stockholders to the new investors in the offering for which we will not receive any net proceeds. (2) Includes 4,469,688 shares of common stock to be issued upon exchange of the Pacer Logistics exchangeable preferred stock prior to the effective date of the registration statement of which this prospectus is a part. The tables above assume no exercise of stock options outstanding on April 5, 2002. As of April 5, 2002, there were options outstanding to purchase 2,431,028 shares of common stock, at a weighted average exercise price of $9.29 per share. To the extent any of these options are exercised, there will be further dilution to new investors. If all of these outstanding options had been exercised as of April 5, 2002, net tangible book value per share after this offering would have been $(2.30) and total dilution per share to new investors would have been $18.30. 20 SELECTED FINANCIAL INFORMATION The following table presents, as of the dates and for the periods indicated, selected historical financial information for us and our predecessor as discussed below. The selected historical information at December 28, 2001 and December 29, 2000 and for the fiscal years ended December 28, 2001, December 29, 2000 and December 31, 1999 have been derived from, and should be read in conjunction with, our audited financial statements and related notes appearing elsewhere in this prospectus. The selected historical information at December 31, 1999, December 25, 1998 and December 26, 1997 and for the year ended December 25, 1998 and the periods from November 13, 1997 through December 26, 1997 and December 28, 1996 through November 12, 1997 have been derived from our, or our predecessor's, audited financial statements which are not included in this prospectus. The selected historical financial information as of April 5, 2002 and for the three months ended April 5, 2002 and April 6, 2001 have been derived from our unaudited financial statements included elsewhere in this prospectus. These unaudited financial statements include, in the opinion of our management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the data for such periods. The results of operations for the interim periods are not necessarily indicative of operating results for the full year. Prior to our May 1999 recapitalization, our name was APL Land Transport Services, Inc., ("APLLTS") and we were a wholly-owned subsidiary of APL Limited. See note 1 to our audited financial statements included in this prospectus. Our historical financial statements subsequent to November 13, 1997 include the push down effect of the purchase price allocation resulting from the purchase of APL Limited by Neptune Orient Lines Limited. The results of operations of the predecessor period are not comparable to the successor period as a result of the acquisition of APL Limited by Neptune Orient Lines Limited. Prior to November 1998, APLLTS was comprised of three operating divisions. In November, 1998, APLLTS transferred all of its non-stacktrain divisions to its parent, APL Limited. Accordingly, at the time of our May 1999 recapitalization, we only provided wholesale stacktrain services, but with our acquisition of Pacer Logistics, we began providing retail and logistics services to customers. The financial information for the year ended December 31, 1999 includes the results of operations of our wholesale stacktrain operations for the full year plus the results of Pacer Logistics since May 28, 1999, the date of acquisition. In connection with our recapitalization and acquisition of Pacer Logistics, we were renamed Pacer International and we ceased to be a subsidiary of APL Limited. The following table should also be read in conjunction with our audited financial statements and the related notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus. 21

THE COMPANY ------------------------------------------------------------------------------------------- THREE MONTHS FOR THE ENDED YEAR ENDED PERIOD ------------------------ ---------------------------------------------------- ------------ NOVEMBER 13, 1997 THROUGH APRIL 5, APRIL 6, DECEMBER 28, DECEMBER 29, DECEMBER 31, DECEMBER 25, DECEMBER 26, 2002 2001 2001 2000(A) 1999(B) 1998 1997(C) ----------- ----------- ------------ ------------ ------------ ------------ ------------ (IN MILLIONS, EXCEPT SHARE AND PER SHARE DATA) STATEMENT OF OPERATIONS DATA: Gross revenues............... $ 382.4 $ 440.3 $ 1,670.9 $ 1,281.3 $ 927.7 $598.9 $ 60.7 Cost of purchased transportation and services. 299.2 359.4 1,339.6 1,005.6 735.4 466.3 47.4 ----------- ----------- ----------- ----------- ----------- ------ ------ Net revenues................. 83.2 80.9 331.3 275.7 192.3 132.6 13.3 Direct operating expenses.... 27.8 25.0 101.7 90.4 76.8 64.5 7.4 Selling, general and administrative expenses..... 37.1 39.9 155.9 102.6 58.9 28.3 3.2 Depreciation and amortization 2.6 4.6 18.3 11.6 8.6 6.6 0.7 Merger and severance......... -- -- 0.4 7.7 -- -- -- Other........................ -- -- 4.0 -- -- -- -- ----------- ----------- ----------- ----------- ----------- ------ ------ Income from operations....... 15.7 11.4 51.0 63.4 48.0 33.2 2.0 ----------- ----------- ----------- ----------- ----------- ------ ------ Net income (loss)............ 3.7 $ (0.4) $ 7.0 $ 14.8 $ 16.6 $ 20.6 $ 1.0 Net income (loss) per share: Basic...................... $ 0.16 $ (0.02) $ 0.31 $ 0.68 $ 0.39(e) (d) (d) Diluted.................... 0.13 (0.02) 0.27 0.60 0.34(e) (d) (d) Weighted average common shares outstanding: Basic...................... 23,089,632 22,741,598 22,996,462 21,941,540 20,880,000 (d) (d) Diluted.................... 28,374,252 22,741,598 28,287,952 27,586,726 27,039,870 (d) (d) BALANCE SHEET DATA (AT END OF PERIOD): Working capital.............. $ 20.6 $ 13.1 $ 20.1 $ 12.6 $ (3.7) $(37.2) $(32.5) Total assets................. 614.2 647.0 632.9 658.4 455.0 156.1 111.9 Total debt including capital leases and current maturities.................. 393.4 401.1 397.9 405.4 284.4 -- -- Minority interest-- exchangeable preferred stock of subsidiary......... 25.7 25.5 25.7 25.0 23.4 -- -- Total stockholders' equity (deficit)................... 7.1 (3.2) 3.0 (2.9) (31.7) 55.6 29.6 CASH FLOW DATA: Cash provided by operating activities.................. $ 5.2 $ 9.6 $ 21.8 $ 1.2 $ 20.8 $ 31.8 $ 12.7 Cash provided by (used in) investing activities........ (1.4) (1.2) (14.4) (130.7) (74.0) (38.5) -- Cash provided by (used in) financing activities........ (3.8) (8.4) (7.4) 117.3 65.4 6.7 (12.7) OTHER FINANCIAL DATA: EBITDA(f).................... $ 18.3 $ 16.0 $ 69.3 $ 75.0 $ 56.6 $ 39.8 $ 2.7 EBITDA Margin(g)............. 22.0% 19.8% 20.9% 27.2% 29.4% 30.0% 20.3% Capital expenditures......... $ 1.4 $ 1.3 $ 14.6 $ 5.5 $ 2.0 $ 39.7 $ --

THE PREDECESSOR ------------- FOR THE PERIOD ------------- DECEMBER 28, 1996 THROUGH NOVEMBER 12, 1997(C) ------------- (IN MILLIONS, EXCEPT PER SHARE DATA) STATEMENT OF OPERATIONS DATA: Gross revenues............... $523.8 Cost of purchased transportation and services. 407.5 ------ Net revenues................. 116.3 Direct operating expenses.... 53.1 Selling, general and administrative expenses..... 21.4 Depreciation and amortization 3.0 Merger and severance......... -- Other........................ -- ------ Income from operations....... 38.8 ------ Net income (loss)............ $ 22.9 Net income (loss) per share: Basic...................... (d) Diluted.................... (d) Weighted average common shares outstanding: Basic...................... (d) Diluted.................... (d) BALANCE SHEET DATA (AT END OF PERIOD): Working capital.............. $ -- Total assets................. -- Total debt including capital leases and current maturities.................. -- Minority interest-- exchangeable preferred stock of subsidiary......... -- Total stockholders' equity (deficit)................... -- CASH FLOW DATA: Cash provided by operating activities.................. $ 18.2 Cash provided by (used in) investing activities........ 3.6 Cash provided by (used in) financing activities........ (21.8) OTHER FINANCIAL DATA: EBITDA(f).................... $ 41.8 EBITDA Margin(g)............. 35.9% Capital expenditures......... $ --

22 -------- (a) Includes the results of Conex Global Logistics Services, Inc., GTS Transportation Services Inc. RFI Group, Inc. and Rail Van, Inc. since their dates of acquisition on January 13, 2000, August 31, 2000, October 31, 2000 and December 22, 2000, respectively. (b) Includes the results of Pacer Logistics, since acquisition on May 28, 1999. (c) The following information for the year ended December 26, 1997 has been presented for comparative purposes only and is the combination of the December 28, 1996 to November 12, 1997 period, set forth above as the Predecessor, and the November 13, 1997 to December 26, 1997 period, set forth above as the Company. As a result of the change in ownership, these numbers are not indicative of what the full year 1997 was or would have been if the change in ownership had not occurred.

1997 ------ Gross revenues............................... $584.5 Cost of purchased transportation and services 454.9 Net revenues................................. 129.6 Income from operations....................... 40.8 Net income................................... 23.9 EBITDA(f).................................... 44.5 EBITDA margin(g)............................. 34.3%

(d) Not applicable as prior to our recapitalization we were a division of APL Limited and did not have common stock. (e) Net income of $8.5 million for the period January 1, 1999 through May 28, 1999 has been excluded in calculating earnings per share as prior to the recapitalization and acquisition of Pacer Logistics on May 28, 1999 our wholesale operations were a division of APL Limited and did not have common stock. (f) EBITDA represents income before income taxes, interest expense, depreciation and amortization and minority interest (payment-in-kind dividends on Pacer Logistics' 7.5% exchangeable preferred stock). EBITDA is presented because it is commonly used by investors to analyze and compare operating performance and to determine a company's ability to service and/or incur debt. However, EBITDA should not be considered in isolation or as a substitute for net income, cash flows or other income or cash flow data prepared in accordance with generally accepted accounting principles or as a measure of a company's profitability or liquidity. EBITDA is calculated as follows (in millions):

THREE MONTHS ENDED YEAR ENDED PERIOD FROM ----------------- --------------------------------------------------- ------------------------- NOVEMBER 13, DECEMBER 28, 1997 THROUGH 1996 THROUGH APRIL 5, APRIL 6, DECEMBER 28, DECEMBER 29, DECEMBER 31, DECEMBER 25, DECEMBER 26, NOVEMBER 12, 2002 2001 2001 2000 1999 1998 1997 1997 -------- -------- ------------ ------------ ------------ ------------ ------------ ------------ Income before income taxes and minority interest........... $5.9 $0.1 $11.4 $29.3 $29.4 $33.2 $1.7 $36.8 Interest expense, net 9.8 11.3 39.6 34.1 18.6 - 0.3 2.0 Depreciation and amortization....... 2.6 4.6 18.3 11.6 8.6 6.6 0.7 3.0 ----- ----- ----- ----- ----- ----- ---- ----- $18.3 $16.0 $69.3 $75.0 $56.6 $39.8 $2.7 $41.8 ===== ===== ===== ===== ===== ===== ==== =====

EBITDA includes merger, severance and other one-time charges of $6.9 million for the year ended December 28, 2001, merger and severance charges of $7.7 million for the year ended December 29, 2000, one-time bonus payments of $0.7 million related to the acquisition of Pacer Logistics for the year ended December 31, 1999, and non-recurring costs of $2.1 million for the year ended December 25, 1998. (g) EBITDA margins are calculated as a percentage of net revenues. 23 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS YOU SHOULD READ THE FOLLOWING DISCUSSION AND ANALYSIS TOGETHER WITH OUR FINANCIAL STATEMENTS, INCLUDING THE NOTES AND THE OTHER FINANCIAL INFORMATION APPEARING IN THE BACK OF THIS PROSPECTUS. DUE TO OUR LIMITED OPERATING HISTORY, ACQUISITIONS AND RAPID GROWTH, PERIOD-TO-PERIOD COMPARISONS OF FINANCIAL DATA ARE NOT NECESSARILY INDICATIVE, AND YOU SHOULD NOT RELY UPON THEM AS AN INDICATOR OF OUR FUTURE PERFORMANCE. THE FOLLOWING DISCUSSION INCLUDES FORWARD-LOOKING STATEMENTS. FOR A DISCUSSION OF IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER FROM RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS, SEE "SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS." OVERVIEW We are a leading non-asset based North American third-party logistics provider offering a broad array of services to facilitate the movement of freight from origin to destination. We operate in two segments, the wholesale segment and the retail segment (see note 10 to the consolidated financial statements for segment information). The wholesale segment provides intermodal rail service in North America by selling intermodal service to shippers pursuant to agreements with railroads. The retail segment provides truck brokerage and services, intermodal marketing, freight consolidation and handling, international freight forwarding and supply chain management services. OPERATING HISTORY We have operated as an independent, stand-alone company only since our recapitalization in May 1999. From 1984 until our recapitalization, our wholesale business was conducted by various entities owned directly or indirectly by APL Limited. While owned by APL Limited, our wholesale business used some of the financial and administrative resources and infrastructure of APL Limited in such areas as treasury, legal, information systems and benefits administration. Since our recapitalization, we have provided the infrastructure, resources and services necessary to operate our wholesale business independently, although we still utilize computers, software and other information technology which APL Limited provides to us under an agreement with a remaining term of 17 years that is terminable by us upon 120 days' notice and by APL Limited if we fail to make required payments or are acquired by a competitor of APL Limited. We are in the process of replacing the technology provided by APL Limited with information technology systems currently available in the marketplace from unrelated third parties. This project is anticipated to be complete by year-end 2003. In addition, our historical financial information prior to our recapitalization may not necessarily reflect the results of operations, financial condition and cash flows in the future or what our results of operations, financial condition and cash flows would have been had we been a separate, independent entity during the periods presented. GROSS REVENUES The wholesale segment's gross revenues are generated through fees charged to customers for the transportation of freight. The growth of these revenues is primarily driven by increases in volume of freight shipped, as overall rates have historically remained relatively constant. The average rate is impacted by product mix, rail routes utilized, fuel surcharge and market conditions. Also included in gross revenues are railcar rental income, container per diem and incentives paid by APL Limited and others for the repositioning of empty containers with domestic westbound loads. Gross revenues are reported net of volume rebates provided to customers. The retail segment's gross revenues are generated through fees charged for a broad portfolio of freight transportation services, including truck brokerage and services, intermodal marketing, freight consolidation and handling, international freight forwarding and supply chain management services. Overall gross revenues for the retail segment are driven by expanding our service offering and marketing our broad array of transportation 24 services to our existing customer base and to new customers. Trucking services include truck brokerage, flatbed and specialized heavy-haul operations, and local trucking services. Gross revenues from truck brokerage are driven primarily through increased volume and outsourcing by companies of their transportation and logistics needs. Gross revenues from other trucking services, which primarily support intermodal marketing and provide specialized and local transportation services to customers through independent operators, are driven primarily by increased volume as well as length of haul and the rate per mile charged to the customer. Intermodal marketing involves arranging the movement of freight in containers and trailers utilizing truck and rail transportation. Increases in gross revenues from intermodal marketing are generated primarily from increased volumes, as rates are dependent upon product mix and route, which tend to remain relatively constant as customers' shipments tend to remain in similar routes. Gross revenues for freight consolidation and handling, which includes the handling, consolidation/deconsolidation and storage of freight on behalf of the shipper, are driven by increased outsourcing and import volumes and by shipping lines on the West coast who are increasingly using third-party containers, rather than their own, to move freight inland. Through our supply chain management services, we manage all aspects of the supply chain from inbound sourcing and delivery logistics through outbound shipment, handling, consolidation, deconsolidation, distribution, and just-in-time delivery of end products to our customers' customers. Revenues for supply chain management services are recognized on a net basis and are driven by increased outsourcing. We also provide international freight forwarding services, which involves arranging transportation and other services necessary to move our customers' freight to and from a foreign country. Gross revenues for international freight forwarding are driven by the globalization of trade. We have a large number of customers in the automotive and consumer goods industries. If these customers experience cyclical movements in their business activity, due to an economic downturn, work stoppages or other factors over which we have no control, the volume of freight shipped by these customers may decrease thereby reducing our revenues. As more fully discussed below, the cyclical slowdown in the automotive industry during 2001 and the first quarter of 2002 adversely affected our operating results. COST OF PURCHASED TRANSPORTATION AND SERVICES/NET REVENUES The wholesale segment's net revenues are the gross revenues earned from transportation rates charged to customers less the costs of purchased transportation and services. The cost of purchased transportation and services consists primarily of the amounts charged by railroads and local trucking companies. In addition, terminal and cargo handling services represent the variable expenses directly associated with handling freight at a terminal location. The cost of these services is variable in nature and is based on the volume of freight shipped. The retail segment's net revenues consist of the gross revenues earned from its third-party transportation services, less the cost of purchased transportation and services. Net revenues are driven by the mix of services provided with net revenues as a percentage of gross revenues varying significantly based on this mix. Purchased transportation and services consists of amounts paid to third parties to provide services, such as railroads, independent contractor truck drivers, freight terminal operators and dock workers. Third-party rail costs are charged through contracts with the railroads and are dependent upon product mix and traffic lanes. Sub-contracted or independent operators are paid on a percentage of revenues, mileage or a fixed fee. DIRECT OPERATING EXPENSES Direct operating expenses are both fixed and variable expenses directly relating to the wholesale operations and consist of equipment lease expense, equipment maintenance and repair, fixed terminal and cargo handling expenses and other direct variable expenses. Our fleet of leased equipment is financed through a variety of short- and long-term leases. Increases to our equipment fleet will primarily be through additional leases as the growth of our business dictates. Equipment maintenance and repair consist of the costs related to the upkeep of the equipment fleet, which can be considered semi-variable in nature, as a certain amount relates to the annual preventative maintenance costs in addition to amounts driven by fleet usage. Fixed terminal and cargo handling costs primarily relate to the fixed rent and storage expense charged to us by terminal operators and is expected to remain relatively fixed. 25 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES The wholesale segment's selling, general and administrative expenses prior to our 1999 recapitalization consisted of allocated APL Limited corporate and information technology expenses and direct administrative expenses, which primarily include payroll and fringe benefits and other overhead expenses. After May 28, 1999, the corporate administrative services previously provided by APL Limited are incurred directly by the wholesale segment. The retail segment's selling, general and administrative expenses relate to the costs of customer acquisition, billing, customer service and salaries and related expenses of marketing, as well as the executive and administrative staff's compensation, office expenses and professional fees. The retail segment anticipates that it will incur increased overall selling related costs as it grows its operations, but that such costs will remain relatively consistent as a percentage of net revenues. The costs related to the retail segment's corporate functions, such as administration, finance, legal, human resources and facilities will likely increase as the business grows, but will likely decrease as a percentage of net revenues as the business grows. CRITICAL ACCOUNTING POLICIES Management believes the following critical accounting policies, among others, affect its more significant judgements and estimates used in the preparation of its consolidated financial statements. . RECOGNITION OF REVENUE Our wholesale segment recognizes revenue for loads that are in transit at the end of an accounting period on a percentage of completion basis. Revenue is recorded for the portion of the transit that has been completed because reasonably dependable estimates of the transit status of loads is available in our computer systems. In addition, our wholesale segment offers volume discounts based on annual volume thresholds. We estimate our customer's annual shipments throughout the year and record a reduction to revenue accordingly. Should our customer's annual volume vary significantly from our estimates, a revision to revenue for volume discounts would be required. Our retail segment recognizes revenue after services have been completed. . RECOGNITION OF COST OF PURCHASED TRANSPORTATION AND SERVICES Both our wholesale and retail segments estimate the cost of purchased transportation and services and accrue an amount on a load by load basis in a manner that is consistent with revenue recognition. Historically, upon completion of the payment cycle (receipt and payment of transportation bills), the actual aggregate transportation costs have been less than the accrual and therefore we have established an allowance to reduce the payable amounts. Should actual payments differ from our estimate, revisions to the cost of purchased transportation and services would be required. In addition, our retail segment earns discounts to the cost of purchased transportation and services that are primarily based on annual volume of loads transported over major railroads. We estimate our annual volume throughout the year and record a reduction to cost of purchased transportation accordingly. Should our annual volume vary significantly from our estimates, a revision to the cost of purchased transportation would be required. . ALLOWANCE FOR DOUBTFUL ACCOUNTS We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. Estimates are used in determining this allowance based on our historical collection experience, current trends, credit policy and a percentage of our accounts receivable by aging category. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. 26 . DEFERRED TAX ASSETS At April 5, 2002, we have recorded net deferred tax assets of $60.7 million and have not recorded a valuation reserve as we believe that future earnings will more likely than not be sufficient to fully utilize the assets. The minimum amount of future taxable income required to realize this asset is $148.1 million. Should we not be able to generate this future income, we would be required to record valuation allowances against the deferred tax assets resulting in additional income tax expense in our Statement of Operations. . GOODWILL At April 5, 2002, we had recorded $281.5 million of net goodwill. We adopted the Financial Accounting Standards Board Statement of Financial Accounting Standard No. 142 ("SFAS 142"), "Goodwill and Other Intangible Assets" effective December 29, 2001 and ceased to amortize goodwill on that date. Goodwill and other intangible assets will be subject to periodic tests for impairment and recognition of impairment losses in the future could be required based on the methodology for measuring impairments described below. SFAS 142 requires a two-step method for determining goodwill impairments where step one is to compare the fair value of the reporting unit with the unit's carrying amount, including goodwill. If this test suggests that it is impaired, then step two is required to compare the implied fair value of the reporting unit's goodwill with the carrying amount of the reporting unit's goodwill. We have elected to determine the fair value of the reporting unit using a market valuation method based on our public peers. If the carrying amount of the reporting unit's goodwill is greater than the implied fair value of its goodwill, an impairment loss must be recognized for the excess. Also under SFAS 142, a one-step method is used to determine the impairment for indefinite-lived intangible assets where the fair value of the intangible asset is compared with its carrying amount. We have completed the initial step of the goodwill impairment test and have determined that we will not be required to take an initial goodwill impairment charge as a result of adopting SFAS 142. Future evaluations of goodwill, which are to be completed at least annually, may however, require an impairment charge. 27 RESULTS OF OPERATIONS THREE MONTHS ENDED APRIL 5, 2002 COMPARED TO THREE MONTHS ENDED APRIL 6, 2001 The following table sets forth our historical financial data for the three months ended April 5, 2002 and April 6, 2001. FINANCIAL DATA COMPARISON BY REPORTABLE SEGMENT THREE MONTHS ENDED APRIL 5, 2002 AND APRIL 6, 2001 (IN MILLIONS)

2002 2001 CHANGE % CHANGE ------ ------ ------ -------- Gross revenues Wholesale................................. $204.7 $205.6 $ (0.9) (0.4)% Retail.................................... 204.9 254.2 (49.3) (19.4) Inter-segment elimination................. (27.2) (19.5) (7.7) 39.5 ------ ------ ------ ------ Total................................. 382.4 440.3 (57.9) (13.2) Cost of purchased transportation and services Wholesale................................. 152.0 161.1 (9.1) (5.6) Retail.................................... 174.4 217.8 (43.4) (19.9) Inter-segment elimination................. (27.2) (19.5) (7.7) 39.5 ------ ------ ------ ------ Total................................. 299.2 359.4 (60.2) (16.8) Net revenues Wholesale................................. 52.7 44.5 8.2 18.4 Retail.................................... 30.5 36.4 (5.9) (16.2) ------ ------ ------ ------ Total................................. 83.2 80.9 2.3 2.8 Direct operating expenses Wholesale................................. 27.8 25.0 2.8 11.2 Retail.................................... -- -- -- -- ------ ------ ------ ------ Total................................. 27.8 25.0 2.8 11.2 Selling, general & administrative expenses Wholesale................................. 12.2 11.1 1.1 9.9 Retail.................................... 24.9 28.8 (3.9) (13.5) ------ ------ ------ ------ Total................................. 37.1 39.9 (2.8) (7.0) Depreciation and amortization Wholesale................................. 1.3 1.5 (0.2) (13.3) Retail.................................... 1.3 3.1 (1.8) (58.1) ------ ------ ------ ------ Total................................. 2.6 4.6 (2.0) (43.5) Income from operations Wholesale................................. 11.4 6.9 4.5 65.2 Retail.................................... 4.3 4.5 (0.2) (4.4) ------ ------ ------ ------ Total................................. 15.7 11.4 4.3 37.7 Interest expense, net........................ 9.8 11.3 (1.5) (13.3) Income tax expense........................... 2.2 -- 2.2 -- Minority interest............................ -- 0.5 (0.5) (100.0) ------ ------ ------ ------ Net income (loss)............................ $ 3.7 $ (0.4) $ 4.1 -- ====== ====== ====== ======

OVERVIEW. Our results for the first quarter of 2002 were negatively impacted by issues from 2001 including the general economic downturn, and particularly a cyclical slowdown in the automotive sector. As a result, our truck brokerage, freight handling and international freight forwarding operations experienced reduced 28 shipments from major retailers and other customers including Kraft, Ford, Bridgestone and the United States Department of Agriculture ("USDA"). Our wholesale operatio