This Management's Discussion and Analysis ("MD&A") should be read in conjunction with the MD&A, including the discussion of our critical accounting policies, and the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 26, 2008 (the "2008 Annual Report") filed with the Securities and Exchange Commission on February 17, 2009.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, 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 to be obtained from our cost reduction initiatives. Forward-looking statements include all statements that are not historical facts and can be identified by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "plan," "may," "should," "will," "would," "project" and similar expressions. These forward-looking statements are based on information currently available to us and are subject to a number of risks, uncertainties and other factors that could cause our actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. Important factors that could cause our actual results to differ materially from the results referred to in the forward-looking statements we make in this quarterly report are discussed in Item 1A of the 2008 Annual Report and in this Quarterly Report on Form 10-Q and include:

• general economic and business conditions, including the length and severity of the current economic recession;

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

• our ability to comply with the financial ratios in our credit agreement during 2009, as currently in effect and as may be amended, and our ability to obtain such amendments from our banks;

• difficulties in maintaining or enhancing our information technology systems, including potential delays and cost overruns in the implementation of an enterprise suite of software applications that we purchased in the fourth quarter of 2007;

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

• the success of our cost reduction initiatives in improving our operating results and cash flows;

• the effect of the current economic recession and credit market disruption on our customers, including reduced transportation needs and an inability to pay us on time or at all;

• the impact of competitive pressures in the marketplace;

• the frequency and severity of accidents, particularly involving our trucking operations;

• the terms of new or replacement contracts with our major underlying rail carriers that are less favorable to us relative to our current contracts as these expire (including our contracts with Union Pacific, expiring in 2011, and CSX Intermodal, expiring in 2014);

• changes in, or the failure to comply with, government regulations;

• changes in our business strategy, development plans or cost savings plans;

• congestion, work stoppages, equipment and capacity shortages, weather related issues and service disruptions affecting our rail and motor transportation providers;

• the degree and timing of changes in fuel prices, including changes in the fuel costs and surcharges that we pay to our vendors and those that we are able to collect from our customers;

• changes in international and domestic shipping patterns;

• availability of qualified personnel;

• increases in our leverage;

• our ability to integrate acquired businesses; and

• terrorism and acts of war.

Our actual consolidated results of operations and the execution of our business strategy could differ materially from those expressed in, or implied by, the forward-looking statements we make. In addition, past financial or operating performance is not necessarily a reliable indicator of future performance and you should not use our historical performance to anticipate future results or future period trends. We can give no assurances that any of the events anticipated by the forward-looking statements we make will occur or, if any of them do, what impact they will have on our consolidated results of operations, financial condition and cash flows. In evaluating our forward-looking statements, you should specifically consider the risks and uncertainties discussed under "Item 1A. Risk Factors" in our 2008 Annual Report and in Part II
- "Item 1A. Risk Factors" of this Quarterly Report. Except as otherwise required by federal securities laws, we undertake no obligation to publicly revise our forward-looking statements to reflect events or circumstances that arise after the date of this Quarterly Report on Form 10-Q. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements included in this Quarterly Report on Form 10-Q and our other filings with the SEC.

Executive Summary

Pacer continues to be negatively impacted by the economic recession that began in 2008. Our intermodal traffic volumes were down 19.5% in the first quarter of 2009 compared to the 2008 period, creating excess capacity in the market resulting in aggressive price competition and reduced margins. Our overall revenues declined 28.7% in the 2009 period to $358.6 million from $502.8 million in the 2008 period. We recorded a $223.1 million operating loss for the 2009 period including an estimated non-cash pre-tax goodwill impairment charge (discussed below) related to both operating segments of $200.4 million compared to $23.1 million of operating income in the 2008 period. The analysis estimating the impairment charge will be finalized in the second quarter of 2009. We used $27.1 million of cash in operating activities in the 2009 period compared to providing $20.1 million of cash from operations in the 2008 period. Excluding the goodwill impairment charge, we recorded a $22.7 million operating loss for the 2009 period.

In view of our recent operating performance and the significant effect that the current economic recession has had on the transportation needs of customers and on our industry in general, we have recently taken further steps to reduce costs and conserve cash. Since the end of 2008 and through the first quarter of 2009, we have reduced employment through attrition or severance by 72 people, reduced wage levels for the remaining personnel by up to 10% and discontinued the 401(k) company matching contributions, effective in April 2009. Additional employment reductions have occurred in the second quarter of 2009, and we have begun consolidating some of our decentralized accounting functions with the implementation of the SAP finance and accounting modules. In addition, we had previously discontinued our $0.15 per share quarterly cash dividend in order to conserve cash. We are currently reviewing other internal processes and procedures to identify and implement additional cost saving opportunities. These and other measures will remain in effect until our financial performance improves. As previously announced in our press release of May 5, 2009, we have also implemented a restructuring initiative designed to simplify and streamline our organization in order to further reduce our cost structure without sacrificing the quality of service delivery.

Based on a combination of factors, including the continued, sustained decline in our stock price and market capitalization during the first quarter of 2009, the operating results of our intermodal and logistics reporting units during the first quarter of 2009, and the effect the current economic recession is expected to have on the operating results for both business segments until at least the end of 2009, we determined that a goodwill impairment triggering event had occurred for purposes of SFAS 142, and,

accordingly, performed a testing of the carrying values of goodwill for both the intermodal and logistics reporting units as of March 31, 2009. After this testing, we concluded that the carrying value of our intermodal and logistics reporting units (including goodwill) exceeded the fair value of each respective reporting unit. As a result, we recorded an estimated total non-cash impairment charge of $200.4 million, $163.7 million net of tax, or $4.71 per share, during the first quarter of 2009. We recorded $169.0 million of the pre-tax charge in the intermodal reporting unit and $31.4 million in the logistics reporting unit. See below for further discussion.

Our intermodal segment recorded a $183.6 million operating loss for the quarter including the goodwill impairment charge compared to operating income of $30.4 million for the first quarter of 2008. Operating loss for the intermodal segment for the 2009 period, excluding the impairment charge, was $14.6 million. The primary drivers of the decrease were excess capacity, declining prices and traffic volumes.

Our logistics segment recorded a $34.7 million operating loss for the quarter including the goodwill impairment charge compared to an operating loss of $0.8 million during the first quarter of 2008. Operating loss for the logistics segment for the 2009 period, excluding the impairment charge, was $3.3 million. The primary drivers of the decrease were excess capacity, declining prices and traffic volumes.

Please see the table on page 30 reconciling the GAAP financial results to the adjusted financial results excluding the goodwill impairment charge.

Beginning in the first quarter of 2009, the Company's Stacktrain business unit changed its revenue recognition method to a completed service basis from the percent of completed service basis used in prior periods. All other business units already apply the completed service revenue and cost recognition method. All prior period amounts have been adjusted for this change in the Stacktrain revenue and cost recognition method. In addition, before 2009 the Company's fiscal year was the 52- or 53-week annual accounting period ending on the last Friday in December. Following the implementation of the SAP America, Inc. ("SAP") finance and accounting modules during the 2009 quarter at our Stacktrain business unit, the Company's fiscal year was changed to December 31 of each year. Amounts for the transition period between December 27, 2008 and December 31, 2008 are included in the 2009 quarter. For further information regarding the status of the SAP software project, see "Liquidity and Capital Resources" below.

We believe that the current U.S. and global recession will continue well into 2009 and possibly beyond, impacting our business and financial results. Overall volumes continue to be depressed in 2009, especially with further cutbacks in the majority of the industries that we serve. For example, the number and length of automotive plant shutdowns is increasing in 2009.

We are subject to two financial covenants under our credit agreement that are based on operating results and the amount of our debt obligations, an interest coverage ratio and a leverage ratio. As of March 31, 2009, we were in compliance with these financial covenants. Based upon current revenue and expense projections and given the uncertainty of the depth and duration of the current economic recession, we may not be able to comply with the existing quarterly leverage ratio covenant in the second quarter of 2009. Therefore, we will enter into discussions with the agent bank and the bank group for an amendment to our credit agreement that would result in our compliance with these covenants, as amended. While we anticipate that we will reach an acceptable resolution with our syndicate of banks, there can be no assurance that an amendment (or waiver of the covenants) will be obtained or, if obtained, that they will not be on terms that are detrimental to the Company. For further information see "Liquidity and Capital Resources" and "Item 1A. Risk Factors."

Critical Accounting Policies

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be predicted with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements. Management believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial

statements. For additional information regarding each of these critical accounting policies, including the potential effect of specified deviations from certain management estimates, see "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies" in our 2008 Annual Report.

Recognition of Revenue. We recognize revenue when all of the following conditions are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is determinable and collectability is reasonably assured. We maintain signed contracts with many of our customers and have bills of lading specifying shipment details including the rates charged for our services. In 2009, our Stacktrain business unit changed its method of revenue and cost recognition. Prior to 2009, the Stacktrain business unit recognized revenue for loads that are in transit at the end of an accounting period on a percentage-of-completion basis. Beginning in 2009, the Stacktrain business unit recognizes revenue and costs using the completed service method. The completed service method was retrospectively applied to all prior periods. See Notes 1 and 2 to the notes to our condensed consolidated financial statements for further details. Our intermodal segment and our logistics segment recognize revenue after services have been completed.

Recognition of Cost of Purchased Transportation and Services. Both our intermodal and logistics 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.

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 could be required. Historically, our actual losses have been within the estimated allowances. However, unexpected or significant future changes could result in a material impact to future results of operations.

Goodwill. We adopted Financial Accounting Standards Board Statement of Financial Accounting Standard No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142") on December 29, 2001 (the first day of our fiscal 2002). Based on a combination of factors, including the continued, sustained decline in our stock price and market capitalization during the first quarter of 2009, the operating results of our intermodal and logistics reporting units during that quarter, and the effect that the current economic recession is expected to have on the operating results of both business segments until at least the end of 2009, we concluded that a goodwill impairment triggering event had occurred in the 2009 period for purposes of SFAS 142, and, accordingly, performed a testing of the carrying values of goodwill for both the intermodal and logistics reporting units as of March 31, 2009. After this testing, we concluded that the carrying value of our intermodal and logistics reporting units (including goodwill) exceeded the fair value of each respective reporting unit. Accordingly, we undertook the second step of the goodwill impairment analysis and determined that the implied fair value of each reporting unit's goodwill was $0 using the methodology required by SFAS 157. As a result, we recorded an estimated non-cash goodwill impairment charge of $200.4 million, $163.7 million net of tax, or $4.71 per share, in the 2009 first quarter ($169.0 million of the pre-tax charge was recorded in the intermodal reporting unit and $31.4 million in the logistics reporting unit). After the charge, there was no remaining goodwill assigned to either the intermodal or logistics reporting units.

Goodwill and other intangible assets are subject to periodic testing, at least annually, 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 impairment where step one is to compare the fair value of the reporting unit with the unit's carrying amount, including goodwill. If this test indicates that the fair value is less than the carrying value, 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 determine the fair value of each reporting unit based upon the average value determined using an income approach based on the present value of estimated future cash flows, and a market approach based on market price data of stocks of corporations engaged in

similar businesses. 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 and charged to operations. We base our fair value estimates on projected financial information which we believe to be reasonable. However, actual future results may differ from those projections, and those differences may be material.

The valuation methodology used to estimate the fair value of our total company and reporting units requires inputs and assumptions that reflect current market conditions as well as management judgment. For purposes of establishing inputs for the fair value calculations described above related to goodwill impairment testing, we made the following assumptions. We assumed that the current economic recession would continue throughout 2009, followed by a slow recovery period beginning in 2010. We applied transportation margin assumptions reflecting our current estimates. We used our current estimate of operations for the forecast period and applied a 13.0% discount rate to the forecast. We applied a 5.0% growth factor to our intermodal reporting unit and a 2.5% growth factor to our logistics reporting unit to calculate the terminal value of our reporting units under the income approach. The 13.0% discount rate was the weighted average cost of capital using comparable publicly traded companies. The sum of the fair values of our reporting units was reconciled to our current market capitalization which declined further during the 2009 period as compared to our market capitalization at the end of the 2008 fiscal year, plus an estimated control premium. Our fair value estimates based on these assumptions were used to prepare projected financial information which we believe to be reasonable. However, actual future results may differ from those projections, and those differences may be material.

Use of Non-GAAP Financial Measures

From time to time in press releases regarding quarterly earnings, presentations and other communications, we may provide financial information determined by methods other than in accordance with GAAP. Recent non-GAAP financial measures have presented financial information excluding our non-cash goodwill impairment write-off in the first quarter of 2009. Management uses this non-GAAP measure in its analysis of the company's performance and regularly reports such information to our Board of Directors. Management believes that presentations of financial measures excluding the impact of these non-cash charges provides useful supplemental information that is essential to a proper understanding of the operating results of our core businesses and allows investors, management and our Board to more easily compare operating results from period to period. However, the use of any such non-GAAP financial information should not be considered in isolation or as a substitute for net income or loss, operating income or loss, cash flows from operations or other income or cash flow data prepared in accordance with GAAP or as a measure of our profitability or liquidity. These measures may not be comparable to other companies.

Results of Operations

Three Months Ended March 31, 2009 Compared to Three Months Ended April 4, 2008

The following table sets forth our historical financial data by reportable
segment for the three months ended March 31, 2009 and April 4, 2008 (in
millions).



                                                  2009            2008            Change      % Change
                                                              (as adjusted)
Revenues
Intermodal                                      $  271.3     $         400.0     $ (128.7 )      (32.2 )%
Logistics                                           87.6               103.0        (15.4 )      (14.9 )
Inter-segment elimination                           (0.3 )              (0.2 )       (0.1 )       50.0

Total                                              358.6               502.8       (144.2 )      (28.7 )
Cost of purchased transportation and services
Intermodal                                         224.5               305.8        (81.3 )      (26.6 )
Logistics                                           73.2                88.8        (15.6 )      (17.6 )
Inter-segment elimination                           (0.3 )              (0.2 )       (0.1 )       50.0

Total                                              297.4               394.4        (97.0 )      (24.6 )
Direct operating expenses
Intermodal                                          32.9                34.1         (1.2 )       (3.5 )
Logistics                                             -                   -            -            -

Total                                               32.9                34.1         (1.2 )       (3.5 )
Selling, general & administrative expenses
Intermodal                                          27.2                28.4         (1.2 )       (4.2 )
Logistics                                           17.4                14.8          2.6         17.6
Corporate                                            4.7                 6.5         (1.8 )      (27.7 )

Total                                               49.3                49.7         (0.4 )       (0.8 )
Goodwill impairment write-off
Intermodal                                         169.0                  -         169.0         n.m.
Logistics                                           31.4                  -          31.4         n.m.
Corporate                                             -                   -            -          n.m.

Total                                              200.4                  -         200.4         n.m.
Depreciation and amortization
Intermodal                                           1.3                 1.3           -            -
Logistics                                            0.3                 0.2          0.1         50.0
Corporate                                            0.1                  -           0.1         n.m.

Total                                                1.7                 1.5          0.2         13.3
Income (loss) from operations
Intermodal                                        (183.6 )              30.4       (214.0 )     (703.9 )
Logistics                                          (34.7 )              (0.8 )      (33.9 )    4,237.5
Corporate                                           (4.8 )              (6.5 )        1.7        (26.2 )

Total                                             (223.1 )              23.1       (246.2 )   (1,065.8 )
Interest (expense)/income                           (0.3 )              (1.1 )        0.8        (72.7 )
Income tax (benefit)                               (46.0 )               8.6        (54.6 )     (634.9 )
Net income (loss)                               $ (177.4 )   $          13.4     $ (190.8 )   (1,423.9 )%

Revenues. Revenues decreased $144.2 million, or 28.7%, for the three months ended March 31, 2009 compared to the three months ended April 4, 2008. Intermodal segment revenues decreased $128.7 million, reflecting decreases in both intermodal segment wholesale and retail products.

In previous reports, our Management's Discussion and Analysis ("MD&A") provided intermodal segment revenue information on a business unit basis for our Stacktrain, cartage and rail brokerage operations. Consistent with the manner in which we are managing and marketing our intermodal segment services and our efforts to further integrate and streamline our intermodal operations, we have revised our presentation of intermodal segment revenues into two products based on the channel of distribution: wholesale (intermodal transportation services sold to international shipping companies and transportation intermediaries other than our rail brokerage operation and performed by our Stacktrain and cartage units) and retail (intermodal transportation services sold primarily to beneficial cargo owners by our retail brokerage unit which arranges the transportation to be performed by a combination of our Stacktrain and cartage operations as well as by third party transportation providers). Accordingly, the wholesale product includes all revenues recognized by our cartage and Stacktrain operations on shipments tendered by transportation intermediaries other than our rail brokerage operation, and the retail product represents all revenues recognized by our rail brokerage unit for transportation services arranged by the unit, whether through Stacktrain, cartage and other transportation providers. Management believes that the revised presentation more accurately reflects the manner in which we are managing the products within our intermodal segment.

Revenues for our wholesale intermodal product of $193.0 million for the 2009 period declined 33.7% compared to the 2008 period, on overall volume declines of 31.1%. Domestic volume declined 22.1%, auto volumes declined 40.2% and . . .