<PAGE>

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-K


[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
                                  ACT OF 1934

                  For the fiscal year ended December 31, 1999

                                      OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                             EXCHANGE ACT OF 1934

For the transition period from ________________ to ________________

                       Commission file number  333-85041

                           PACER INTERNATIONAL, INC.
            (Exact name of registrant as specified in its charter)

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

                          1340 Treat Blvd., Suite 200
                            Walnut Creek, CA 94596
                        Telephone Number (800) 225-4222

       Securities registered pursuant to Section 12(b) of the Act: None

      Securities registered pursuant to Section 12(g) of the Act:  None.

Indicate by checkmark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                               Yes   X    No
                                   -----     -----

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. _____

As of March 15, 2000, none of the Registrant's Common Stock was held by non-
affiliates.

On March 15, 2000, the Registrant had 10,740,000 outstanding shares of Common
Stock, par value $.01 per share.
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                           Page
                                                                                   -------------------
<S>                                                                                  <C>
Part I.

  Items 1 and 2      Business and Properties....................................          3
                     General....................................................          3
                     Significant Customers .....................................          5
                     Ownership .................................................          6
                     Relationships with Railroads, Independent Contractors and
                     Local Trucking Companies ..................................          6
                     Facilities/Equipment ......................................          7
                     Employees .................................................          8
                     Government Regulation .....................................          8
                     Competition ...............................................          9
  Item 3.            Legal Proceedings..........................................         10
  Item 4.            Submission of Matters to a Vote of Security Holders........         10

Part II.

  Item 5.            Market For Registrant's Common Equity and Related
                     Shareholder Matters........................................         11
  Item 6.            Selected Financial Data....................................         11
  Item 7.            Management's Discussion and Analysis of Financial
                     Condition and Results of Operations .......................         12
  Item 7A.           Quantitative and Qualitative Disclosures About Market Risk.         21
  Item 8.            Financial Statements and Supplementary Data................         21
  Item 9.            Changes in and Disagreements with Accountants on
                     Accounting And Financial Disclosure .......................         21

Part III.

  Item 10.           Directors and Executive Officers of the Registrant.........         22
  Item 11.           Executive Compensation.....................................         24
  Item 12.           Security Ownership of Certain Beneficial Owners and
                     Management ................................................         28
  Item 13.           Certain Relationships and Related Transactions.............         29

Part IV.

  Item 14.           Exhibits, Financial Statement Schedules and Reports on
                     Form 8-K ..................................................         32
                     Index to Financial Statements and Financial Statement
                     Schedules .................................................        F-1
</TABLE>

                                       2
<PAGE>

                                    Part I


ITEMS 1. AND 2. BUSINESS AND PROPERTIES

General

     Pacer International, Inc. ("Pacer" or the "Company") is a leading freight
transportation and logistics provider and intermodal marketing company, offering
a broad array of services to facilitate the movement of freight from origin to
destination.  Intermodal transportation is the movement of freight via trailer
or container using two or more transportation modes. Intermodal transportation
usually includes a rail and truck segment. An intermodal marketing company
arranges intermodal transportation for global, national and regional retailers
and manufacturers.

     Prior to November 1998, APL Land Transport Services, Inc. ("APLLTS")
consisted of two operating divisions:  Stacktrain Services Division and the
Automotive Division. On November 20, 1998, APLLTS transferred all of its assets,
except those of the Stacktrain Services Division, to its parent, APL Limited.
As of May 28, 1999, APLLTS was recapitalized through (1) the purchase by a group
led by entities formed by affiliates of Apollo Management, L.P. of shares of
APLLTS's common stock from APL Limited and (2) the APLLTS's redemption of shares
of its common stock held by APL Limited. Immediately following the
recapitalization, APLLTS was renamed Pacer International, Inc. (the "Company").
Thereafter, the Company acquired Pacer Logistics, Inc. (f/k/a Pacer
International, Inc.) resulting in Pacer Logistics becoming a subsidiary of the
Company.

     Pacer Logistics, Inc. was formed on March 5, 1997 from its predecessor PMT
Holdings, Inc.  Since formation, Pacer Logistics, Inc. acquired the capital
stock and/or assets of the following companies:

 .    Pacific Motor Transport Company on March 31, 1997. Pacific Motor Transport
     Company is a provider of truckload services and intermodal marketing
     services.

 .    Interstate Consolidation, Inc., Interstate Consolidation Service, Inc. and
     its wholly owned subsidiary Intermodal Container Service, Inc. on December
     16, 1997. The Interstate companies are multipurpose providers of
     transportation services, including intermodal marketing, local trucking and
     freight consolidation and handling.

 .    Intraco, Inc. on April 3, 1998. Intraco is involved in the transportation
     of equipment primarily for railroads.

 .    Cross Con Transport, Inc. and its subsidiary Cross Con Terminals, Inc. on
     June 5, 1998. The Cross Con companies are multipurpose providers of
     transportation services, including intermodal marketing and local trucking.

 .    Professional Logistics Management Co., Inc. and 3PL Corporation on July 25,
     1998. Professional Logistics and 3PL are providers of logistics services.

 .    Manufacturers Consolidation Service, Inc. and its subsidiaries Levcon,
     Inc., MCS of Kansas, Inc. and Manufacturers Consolidation Service of Canada
     Inc. on December 9, 1998. The Manufacturers Consolidation Service companies
     are multipurpose providers of transportation services, including intermodal
     marketing and local trucking.

 .    Keystone Terminals, Inc. on April 20, 1999.  Keystone is a provider of
     transportation services.

 .    Conex Global Logistics, Inc., MSL Transportation, Inc. and Jupiter Freight,
     Inc. on January 13, 2000. The Conex companies are multipurpose providers of
     transportation services, including intermodal marketing, local trucking and
     freight consolidation and handling.

                                       3
<PAGE>

     The Company currently operates two business segments- the stacktrain
segment and the logistics segment.  Prior to the recapitalization, the Company
only operated in the stacktrain segment.

     Stacktrain Segment
     ------------------

     Our stacktrain operation (the movement of freight in containers stacked two
high on railcars) is the largest provider of intermodal rail service in North
America that is not affiliated with an individual railroad company. We offer
rail freight services by selling intermodal service to shippers while buying
space on intermodal rail trains. Through long-term contracts and other operating
arrangements with major rail carriers and using our large fleet of leased and
owned equipment, we have access to a 50,000 mile North American rail network
serving most major population and commercial centers in the United States,
Canada and Mexico. The long-term operating arrangements with the rail carriers
provide, among other things, for favorable rates, guaranteed minimum service
levels, priority handling and the utilization of certain terminal facilities.

     We directly market our stacktrain services to intermodal marketers which
serve customers in various industries, including the automotive industry and
shippers of refrigerated freight. We also directly serve customers in the ocean
carrier industry. We provide rail transportation services to over 5,000
beneficial cargo owners. In addition, we have historically provided, and will
continue to provide, stacktrain and equipment repositioning services for
companies and operations that are affiliated with APL Limited.

     The stacktrain business is seasonal and the segment's quarterly revenues
and profits historically have been marginally lower during the first and second
quarters of the year and higher during the third and fourth quarters due
primarily to the retail industry's shipping requirements.

     Logistics Segment
     -----------------

     Complementing our stacktrain segment, the logistics segment offers a broad
range of integrated transportation services, including intermodal marketing,
trucking and logistics services, to a broad range of shippers such as Sony, Ford
Motor Company and Wal-Mart Stores.

     A significant portion of our intermodal trucking, logistics and freight
handling services is provided through a network of agents and independent
contractors. These relationships allow us to control a large fleet of
specialized equipment and provide our customers with a broad range of integrated
transportation services without committing significant capital to the
acquisition and maintenance of an extensive asset base.

     Intermodal Marketing

     In our role as an intermodal marketing company, we coordinate for the
movement of freight in containers and trailers throughout North America for
global, national and regional manufacturers and retailers and provide customized
electronic tracking and analysis of charges. In addition, we negotiate rail,
truck and intermodal rates, determine the optimal route, electronically track
shipments in transit, consolidate billing, handle claims of freight loss or
damage on behalf of our customers and manage the handling, consolidation and
storage of freight throughout the process. We provide these services through a
network of agents and independent contractors. Our intermodal marketing
operations are based in Walnut Creek (California), Los Angeles, East Rutherford
(New Jersey), Memphis and Chicago and employ experienced transportation
personnel. This staff is responsible for operations, customer service,
marketing, management information systems and our relationships with the rail
carriers.

     Through our intermodal marketing operations we assist the railroads and our
stacktrain operation in balancing freight originating in or destined to its
service areas, resulting in improved asset utilization. In addition, we provide
value to our customers by passing on certain economies

                                       4
<PAGE>

of scale as a volume buyer from railroads, stacktrain operators, trucking
companies and other third party transportation providers, thereby providing
access to large equipment pools and streamlining the paperwork and logistics of
an intermodal move.

Trucking Services

     Our trucking services consist of truckload, less-than-truckload and local
cartage operations. Our truckload operations consist of flatbed and specialized
heavy-haul trucking services. Our less-than-truckload operation specializes in
long-haul transportation of a variety of freight through hubs operated by others
throughout the United States. Our less-than-truckload operations leverage the
mix of traffic we receive from customers by integrating shipments which have
common destinations in order to lower the linehaul, pick-up and delivery costs.
We maintain local cartage operations in Los Angeles, Oakland, Jacksonville,
Chicago, Memphis, Kansas City, Houston, Dallas and Baltimore. Our capital
investment in trucking services is limited. Pursuant to our truckload
operations, we control a specialized fleet of 480 flatbed vehicles which are
owned and operated by independent contractors and we own 63 specialized heavy-
haul trailers. We do not employ any drivers in our less-than-truckload
operations, but coordinate with regional transportation providers at
transportation hubs to provide local delivery and distribution services.
Pursuant to our cartage operations, we contract with independent contractors who
control more than 300 cartage trucks. We also maintain interchange agreements
with all of the major steamship lines, railroads and stacktrain operators. Our
network of independent contractors allows us to serve shippers, ocean carriers
and freight forwarders across the country to supply local transport
requirements.

     We provide truck brokerage services throughout North America through our
customer service centers in Los Angeles, Walnut Creek (California), Dallas,
Chicago, and East Rutherford (New Jersey). Truck brokerage involves the
arrangement by a broker of trucking services with a licensed independent carrier
on behalf of a shipper.

     Logistics

     We provide an array of logistics solutions which can be tailored to fit a
particular customer's needs. By optimizing the flow of goods through the supply
chain and across a variety of services, we can reduce our customers' freight
handling, delivery and inventory costs. We offer logistics services such as
local trucking, transportation purchasing and management, distribution planning
and other specialized services. We believe that demand for value-added logistics
services will continue to grow as companies downsize and outsource many of these
functions to third parties.

     As part of our logistics services, we offer a variety of freight handling
services, including consolidation/deconsolidation and warehousing. Our logistics
operation has prospered by focusing on providing customers with specially
designed transportation packages which fit the shipper's specific transportation
needs. Additionally, we have designed service packages intended to reduce the
shipper's handling requirements and improve inventory efficiency. These services
are primarily offered on the West Coast and we have recently established
additional regional freight handling facilities to meet the needs of our
customers.

Significant Customers

     For the year ended December 31, 1999, the Company had two significant
customers which contributed more than 10% of the Company's total gross revenues.
Hub Group generated $128.2 million in gross revenues for the stacktrain segment
and Union Pacific generated $100.8 million in gross revenues covering both
operating segments.

                                       5
<PAGE>

Ownership

     Apollo Management beneficially owns approximately 89.9% of our outstanding
common stock, APL Limited owns approximately 7.2% of our outstanding common
stock and certain affiliates of Deutsche Bank Securities Inc. and Credit Suisse
First Boston Corporation together beneficially own approximately 2.9% of our
outstanding common stock.

Relationships with Railroads, Independent Contractors and Local Trucking
Companies

 Railroads

     We have long-term contracts with certain of the railroads regarding
movement of our stacktrains. In addition, the railroad contracts generally
provide for access to terminals controlled by the railroads as well as support
services related to our stacktrain operations. Through these contracts, our
stacktrain business has established a North American transportation network.

     Through our stacktrain contracts with rail carriers, we have access to a
50,000 mile rail network throughout North America. Our rail contracts, which
generally provide that the rail carriers will perform linehaul and terminal
services for us, are typically long-term agreements, with major contracts
providing for a remaining term of 13 to 15 years. Pursuant to the service
provisions, the rail carriers provide transportation of our stacktrains across
their rail networks and terminal services related to loading and unloading of
containers, equipment movement and general administration. Our rail contracts
generally establish per container rates for stacktrain shipments made on rail
carriers' transportation networks and typically provide that we are obligated to
transport a certain percentage of our total stacktrain shipments with each of
the rail carriers. The terms of our rail contracts, including rates, are
generally subject to adjustment or renegotiation throughout the term of the
contract, based on factors such as the continuing fairness of the contract
terms, prevailing market conditions and changes in the rail carriers' costs to
provide rail service. Generally, we have the benefit of advantageous rate
provisions in our rail contracts. Based upon these provisions, and the volume of
freight which we ship with each of the rail carriers, we believe that we enjoy
favorable transportation rates for our stacktrain shipments.

     Pacer Logistics also maintains contracts with the railroads which govern
the transportation services and payment terms pursuant to which its intermodal
shipments are handled by the railroads. The Pacer Logistics contracts are
typically of short duration, usually twelve month terms, and subject to renewal
or extension. While there can be no assurance that Pacer Logistics' contracts
will be renewed, we have in the past successfully negotiated extensions of the
contracts with the railroads. We maintain close working relationships with all
of the major railroads in the United States and view each relationship as a
partnership. We will continue to focus our efforts on strengthening these
relationships.


 Independent Contractors

     We rely on the services of independent agents and contractors in certain of
our transportation services. Although we own a small number of tractors and
trailers, the majority of our truck equipment and drivers are provided by
independent contractors and agents. Our relationships with independent
contractors allow us to provide customers with a broad range of trucking
services without the need to commit capital to acquire and maintain an asset
base. Although our agreements with independent contractors are typically long-
term in practice, they are generally terminable by either party on short notice.

     Independent contractors and fleet owners are compensated on the basis of
mileage rates and a fixed percentage of the revenue generated from the shipments
they haul. Under the terms of our typical contracts, independent contractors
must pay all the expenses of operating their equipment, including driver wages
and benefits, fuel, physical damage insurance, maintenance and debt service.

                                       6
<PAGE>

 Local Trucking Companies

     We have established a good working relationship with a large network of
local truckers in many major urban centers throughout the United States. The
quality of these relationships helps ensure reliable pickups and deliveries,
which is a major differentiating factor among intermodal marketing companies.
Our strategy has been to concentrate business with a select group of local
truckers in a particular urban area, which increases our economic value with the
local truckers, and in turn raises the quality of service that we receive.


Facilities/Equipment

     Our stacktrain transportation network services a total of 67 locations
across North America. Our integrated rail network, combined with our equipment
fleet, enables us to provide our customers with single-company control over rail
transportation to locations throughout North America.

     Substantially all of our terminals are owned by rail or highway carriers
and are managed on our behalf. However, full-time personnel work on-site at
major locations to ensure close coordination of the services provided at the
facilities. In addition to these terminals, other locations throughout the
eastern United States serve as stand-alone container depots, where empty
containers can be picked up or dropped off, or supply points, where empty
containers can be picked up only. In connection with our trucking services,
agents provide marketing and sales, terminal facilities and driver recruiting,
while an operations center provides, among other services, insurance, claims
handling, safety compliance, credit, billing and collection and operating
advances and payments to drivers and agents.

     Our stacktrain equipment fleet consists of a large number of double stack
railcars, containers and chassis which are owned or subject to operating leases.
The majority of the leased equipment is leased on a day-to-day basis. As of
December 31, 1999 our stacktrain equipment fleet consisted of the following:

<TABLE>
<CAPTION>
                                                       Owned         Leased         Total
                                                  -------------------------------------------
<S>                                                 <C>           <C>           <C>
Containers
   48' Containers ..................                         706        14,483         15,189
   53' Containers ..................                          31         6,198          6,229
                                                  -------------------------------------------
      Total ........................                         737        20,681         21,418
                                                  ===========================================

Chassis
   48' Chassis .......................                     5,813         7,781         13,594
   53' Chassis .......................                        39         7,733          7,772
                                                  -------------------------------------------
      Subtotal........................                     5,852        15,514         21,366
   20', 40' and 45' (1) ............                           -         4,948          4,948
                                                  -------------------------------------------
      Total ............................                   5,852        20,462         26,314
                                                  ===========================================
Doublestack Railcars (2)........                             210           348            558
                                                  ===========================================
</TABLE>
---------
(1)  Represents the current allocation of chassis sublet to us pursuant to the
     terms of the Third Party International Chassis Sublet Agreement which was
     entered into between us and APL Limited.

(2)  On May 28, 1999 in connection with our recapitalization and the acquisition
     of Pacer Logistics, the Company completed a sale and leaseback transaction
     for 199 railcars.

                                       7
<PAGE>

     Supplementing the equipment listed above we have access to an extensive
inventory of 20-, 40- and 45-foot containers from APL Limited's international
network in addition to the empty containers which we reposition on behalf of APL
Limited.

     The Company plans on leasing an additional 3,125 containers and chassis
during 2000 at an estimated annual operating lease expense in 2000 of $1.7
million and approximately $3.8 million annually thereafter.

     The components of the Company's stacktrain equipment lease and rental
expense are shown below ($ in millions):

                            Equipment Lease Expense

<TABLE>
<CAPTION>
                                                               1999               1998               1997
                                                       --------------------------------------------------------
<S>                                                      <C>                <C>                <C>
Operating Lease Expense ..........................                  $51.3              $45.5              $38.8
Railcar Income ...................................                   (9.8)              (8.7)              (6.7)
                                                       --------------------------------------------------------
   Net Equipment Lease Expense....................                  $41.5              $36.8              $32.1
                                                       ========================================================
</TABLE>

   The following table shows the Company's expense for on-going maintenance and
repairs for containers, chassis and railcars ($ in millions):

                            Maintenance Expenditures

<TABLE>
<CAPTION>
                                                               1999              1998              1997
                                                       ------------------------------------------------------
<S>                                                      <C>               <C>               <C>
Containers ......................................                   $ 4.1             $ 4.1             $ 3.5
Chassis .........................................                    13.9              12.4               9.5
Doublestack Railcars ............................                     3.0               1.8               3.4
                                                       ------------------------------------------------------
    Total Expenditures ..........................                   $21.0             $18.3             $16.4
                                                       ======================================================
</TABLE>

     Pacer Logistics also owns a limited amount of equipment (63 specialized
heavy-haul trailers) to support our trucking operations. The majority of our
trucking operations are conducted through contracts with independent contractors
who own and operate their own equipment. Through Pacer Logistics, we lease two
warehouses in Kansas City and a facility in Los Angeles for dockspace,
warehousing and parking for tractors and trailers.


Employees

     As of December 31, 1999, the Company employed a total of 726 people.


Government Regulation

 Regulation of Our Trucking and Stacktrain Operations

     The transportation industry has been subject to legislative and regulatory
changes that have affected the economics of the industry by requiring changes in
operating practices or influencing the demand for, and cost of, providing
transportation services.

     We are subject to licensing and regulation as a transportation provider
pursuant to our trucking operations. We are licensed by the Department of
Transportation as a national freight broker in arranging for the transportation
of general commodities by motor vehicle and operate pursuant to a 48-state,
irregular route common and contract carrier authority. The Department of

                                       8
<PAGE>

Transportation prescribes qualifications for acting in our capacity as a
national freight broker, including certain surety bonding requirements. We
provide motor carrier transportation services that require registration with the
Department of Transportation and compliance with certain economic regulations
administered by the Department of Transportation, including a requirement to
maintain insurance coverage in minimum prescribed amounts. Other sourcing and
distribution activities may be subject to various federal and state food and
drug statutes and regulations. Although Congress enacted legislation in 1994
that substantially preempts the authority of states to exercise economic
regulation of motor carriers and brokers of freight, we and several of our
subsidiaries continue to be subject to a variety of vehicle registration and
licensing requirements. We and the carriers that we rely on in arranging
transportation services for our customers are also subject to a variety of
federal and state safety and environmental regulations.

     Intermodal operations, like ours, were exempted from virtually all active
regulatory supervision by the Interstate Commerce Commission, predecessor to the
regulatory responsibilities now held by the federal Surface Transportation
Board. Such exemption is revocable by the Surface Transportation Board, but the
standards for revocation of regulatory exemptions issued by the Interstate
Commerce Commission or Surface Transportation Board are high.


 Regulation of Our Suppliers and Customers

     We have a substantial number of customers who provide ocean carriage of
intermodal shipments. Ocean carriage is subject to regulation by the Federal
Maritime Commission and, to a lesser extent, by other agencies. The regulatory
regime applicable to ocean shipping was revised by the Ocean Shipping Reform Act
of 1998, which took effect May 1, 1999. As of December 31, 1999, there has been
no material effect to the competitiveness and/or efficiency of operations of our
various ocean carrier customers, however, there is no guarantee that this will
remain the case in the future.

     The Federal Maritime Commission is reported to be pursuing an investigation
at this time concerning alleged violations of statutory and regulatory
requirements by ocean carriers involved in the eastbound trans-Pacific trades
during the peak shipping season of 1998. The scope and focus of such
investigation and the remedies which may be imposed on our ocean carrier
suppliers and customers by the Federal Maritime Commission based on its findings
is presently unclear.


Competition

     Our stacktrain business competes primarily with over-the-road full
truckload carriers, conventional intermodal movement of trailers-on-flatcars,
and containerized intermodal rail services offered directly by railroads.
Competition between our stacktrain business and truckload carriers is
particularly intense for shipments of freight over shorter distances. This is
primarily attributable to the fact that the competitive advantage of intermodal
transportation's low variable labor and fuel requirements per ton/mile is
diminished for shorter distance shipments. The major competitors of our
stacktrain business include Burlington Northern Santa Fe, Union Pacific, CSX
Intermodal and J.B. Hunt Transport.

     The transportation services industry is highly competitive. Our intermodal
marketing, trucking and logistics business competes primarily against other
domestic non-asset-based transportation and logistics companies, asset-based
transportation and logistics companies, third-party freight brokers, private
shipping departments and freight forwarders. Competition is based primarily on
freight rates, quality of service (such as damage free shipments, on-time
delivery and consistent transit times), reliable pickup and delivery and scope
of operations. We also compete with transportation services companies for the
services of independent commission agents, and with trucklines for the services
of independent contractors and drivers. The major competitors of Pacer Logistics
include Hub Group, Mark VII, Alliance Shippers and C.H. Robinson.

                                       9
<PAGE>

ITEM 3.   LEGAL PROCEEDINGS

     Two subsidiaries of Pacer Logistics, Interstate Consolidation, Inc. and
Intermodal Container Service, Inc., are named defendants in a class action filed
in July 1997 in the State of California, Los Angeles Superior Court, Central
District, alleging, among other things, breach of fiduciary duty, unfair
business practices, conversion and money had and received in connection with
monies allegedly wrongfully deducted from truck drivers' earnings.  The
defendants have entered into a Judge Pro Tempore Submission Agreement dated as
of October 9, 1998, pursuant to which the plaintiffs and defendants have waived
their rights to a jury trial, stipulated to a certified class, and agreed to a
minimum judgement of $250,000 and a maximum judgement of $1.75 million. On
January 14, 2000, the Court issued its Statement of Decision, in which
Interstate Consolidation, Inc. and Intermodal Container Service, Inc. prevailed
on all issues except one.  The Court found that Interstate failed to issue
certificates of insurance to the owner-operators and therefore failed to
disclose that in 1998, the Company's retention on its liability policy was
$250,000.  The court has tentatively ordered that restitution be paid for this
omission, which in the worst case is well below the agreed upon high of $1.75
million.  An appeal to this decision is likely by the class. Based upon
information presently available and in light of legal and other defenses and
insurance coverage, management does not expect these legal proceedings, claims
and assessments, individually or in the aggregate, to have a material adverse
impact on the Company's consolidated financial position or results of
operations.  At December 31, 1999, the Company had $1.1 million accrued for this
case.

     In June 1995, APL Limited, the Company's former parent, sold the assets of
its trucking company, American President Trucking ("APT") to Burlington Motor
Carriers ("BMC").  The sale included the sublease of terminal real estate to BMC
and the sublease of tractor units to Stoops Freightliner, which in turn entered
into a use agreement with BMC.  BMC and the Company entered into a service
agreement whereby the Company guaranteed certain levels of traffic to BMC.
Under new ownership from a 1995 bankruptcy proceeding, BMC advised APL Limited
and the Company that it believed the Company breached the service agreement when
APL Limited sold its Distribution Services unit, and demanded $0.8 million in
compensation.  The Company disputed the claim.  BMC and Stoops Freightliner
filed subsequent complaints in BMC bankruptcy proceedings demanding unspecified
damages. APL Limited and the Company filed motions to dismiss both complaints.
On November 13, 1998, APL Limited and the Company's motions were granted; BMC
has filed an appeal; Stoops Freightliners has not. The Company does not believe
that the ultimate outcome, if unfavorable, will have a material adverse impact
on the financial position or results of operations of the Company, and has not
reserved for this contingency.

     We are currently not otherwise subject to any other pending or threatened
litigation other than routine litigation arising in the ordinary course of
business, none of which is expected to have a material adverse effect on our
business, financial condition or results of operations. Most of the lawsuits to
which we are a party are covered by insurance and are being defended by our
insurance carriers.


ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.

                                       10
<PAGE>

                                    Part II

ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
          MATTERS

     There is no established public trading market for the Company's outstanding
equity securities.

ITEM 6.   SELECTED FINANCIAL DATA

          The following table presents, as of the dates and for the periods
indicated, selected historical financial information for the Company.

          We have been unable to obtain selected historical financial
information for the fiscal years ended prior to December 27, 1996 and,
therefore, such financial information is not presented here.

<TABLE>
<CAPTION>
                                                  The Predecessor
                                     --------------------------------------
                                           For the
                                           Fiscal
                                            Year                 For the
                                            Ended                Period
                                     ----------------      ----------------
                                                                 Dec. 28
                                                                 1996 to
                                           Dec. 27               Nov. 12
                                           1996 1/               1997 1/
                                     ----------------      ----------------
<S>                                    <C>                   <C>
Statement of Operations
  Data:

Gross revenues .................             $  548.0              $  517.1
Cost of purchased
  transportation and services                   423.7                 407.5
Net revenues ...................                124.3                 109.6
Direct operating expenses.......                 33.3                  46.4
Selling, general and
  administrative expenses ......                 25.4                  21.4
Depreciation and
  Amortization .................                  4.1                   3.0
Income from operations .........                 61.5                  38.8
Net income .....................                 38.1                  22.9

Historical Balance Sheet
  Data (at period end):

Total assets....................             $   71.4              $      -
Total debt including capital
  leases .......................                    -                     -
Minority interest -
  exchangeable preferred
  stock.........................                    -                     -

Historical Cash Flow Data:

Cash provided by operating
  activities....................             $   17.4              $   18.2
Cash provided by (used in)
  investing activities..........                  0.9                   3.6
Cash provided by (used in)
  financing activities..........                (18.3)                (21.8)








                                                               The Company
                                     ------------------------------------------------------------
                                                                 For the               For the
                                                                 Fiscal                Fiscal
                                           For the                Year                  Year
                                           Period                 Ended                 Ended
                                     ----------------      ----------------      ----------------
                                           Nov. 13
                                           1997 to
                                           Dec. 26               Dec. 25               Dec. 31
                                           1997 1/               1998 1/               1999 2/
                                     ----------------      ----------------      ----------------
<S>                                    <C>                   <C>                   <C>
                                       (in millions)
Statement of Operations
  Data:

Gross revenues .................             $   60.0              $  590.8              $  917.4
Cost of purchased
  transportation and services                    47.4                 466.3                 735.4
Net revenues ...................                 12.6                 124.5                 182.0
Direct operating expenses.......                  6.7                  56.4                  66.5
Selling, general and
  administrative expenses ......                  3.2                  28.3                  58.9
Depreciation and
  Amortization .................                  0.7                   6.6                   8.6
Income from operations .........                  2.0                  33.2                  48.0
Net income .....................                  1.0                  20.6                  16.6

Historical Balance Sheet
  Data (at period end):

Total assets....................             $  111.9              $  156.1              $  455.0
Total debt including capital
  leases .......................                    -                     -                 284.4
Minority interest -
  exchangeable preferred
  stock.........................                    -                     -                  23.4

Historical Cash Flow Data:

Cash provided by operating
  activities....................             $   12.7              $   31.8              $   20.8
Cash provided by (used in)
  investing activities..........                    -                 (38.5)                (74.0)
Cash provided by (used in)
  financing activities..........                (12.7)                  6.7                  65.4
</TABLE>

                                       11
<PAGE>

__________

1/ The 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, Pacer International operated as the Stacktrain Services
division of APL Land Transport Services, Inc., a wholly-owned subsidiary of APL
Limited. In November 1998, APL Land Transport Services, Inc. transferred all of
its non-stacktrain assets to its parent, APL Limited.  In connection with our
recapitalization and acquisition of Pacer Logistics, Inc., APL Land Transport
Services, Inc. was renamed Pacer International (see Item 1).

2/ Includes the results of Pacer Logistics, Inc. since acquisition on May 28,
1999.


ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS  OF OPERATIONS

Certain Forward-Looking Statements

     This annual report on Form 10-K contains certain forward looking statements
(as such term is defined in the Private Securities Litigation Reform Act of
1995) that involve substantial risks and uncertainties relating to the Company
that are based on the beliefs of management. When used in this Form 10-K, the
words "anticipate", "believe", "estimate", "expect", "intend", and similar
expressions, as they relate to the Company or the Company's management, identify
forward-looking statements. Such statements reflect the current views of the
Company with respect to the risks and uncertainties regarding the operations and
the results of operations of the Company as well as its customers and suppliers,
including as a result of the availability of consumer credit, interest rates,
employment trends, changes in levels of consumer confidence, changes in consumer
preferences, pricing pressures, shifts in market demand, and general economic
conditions. In addition, the Company has acquired businesses in the past and may
consider acquiring businesses in the future that provide complementary services.
There can be no assurance that the businesses that we have acquired in the past
and may acquire in the future can be successfully integrated. Should one or more
of these risks or uncertainties materialize, or should underlying assumptions or
estimates prove incorrect, actual results may vary materially from those
described herein as anticipated, believed, estimated, expected or intended.


Overview

 Gross Revenues

     The stacktrain 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 lanes utilized and market conditions. Also included in gross
revenues are incentives paid by APL Limited for the repositioning of empty
containers with domestic westbound loads. Reposition incentives growth is driven
by the increase in APL Limited's shipping volumes from Asia to key population
centers in North America, as well as our ability to fill APL Limited's empty
containers with the westbound freight of other stacktrain customers. The
movement of APL Limited's international business between ports and inland points
is performed on a cost reimbursement basis.  Thus, no revenues or expenses are
recognized.  Reimbursements in 1999 amounted to $273.6 million.

     The logistics segment's gross revenues are generated through fees charged
for a broad portfolio of freight transportation services. The logistics
segment's gross revenues are generated from its intermodal marketing and flatbed
and specialized heavy-haul trucking services, augmented by local trucking,
freight consolidation and handling and logistics outsourcing. Overall gross
revenues for the logistics segment will be driven through its ability to market
its broad array

                                       12
<PAGE>

of transportation services to its existing customer base. Increases in gross
revenues from intermodal marketing are generated primarily from increased
volumes, as rates are dependent upon product mix and transportation lane, which
tend to remain relatively constant as customers' shipments tend to remain in
similar lanes. The gross revenues from the flatbed and specialized heavy-haul
segment are driven by the volume, length of haul and the rate per mile charged
to the customer, which are dependent upon product mix. Local trucking services
primarily support intermodal marketing and provide local transportation services
to customers through independent operators. Revenues are driven primarily
through increased volume. The logistics segment also provides a freight service
in which it consolidates customer freight at loading docks and provides
distribution services to specific customer locations throughout the United
States. In addition to transporting freight, the logistics segment provides
outsourcing services for customers' traffic departments.

 Cost of Purchased Transportation and Services/Net Revenues

     The stacktrain segment's net revenues are the gross revenues 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 logistics segment's net revenues consist of the gross revenues earned
from its third-party transportation services, net of the cost of purchased
transportation services. Net revenues are driven by the mix of business services
with net revenues as a percentage of gross revenues varying significantly based
on the mix of those services. Purchased transportation and services consists of
amounts paid to third parties to provide services, such as, railroads, sub-
contracted or in-house independent contractor truck drivers, freight terminal
operators and dock workers. Third-party rail costs are charged through a
contract maintained 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 basis or a fixed fee.

 Direct Operating Expenses

     Direct operating expenses are both fixed and variable expenses directly
relating to the stacktrain operations and consist of equipment lease and
depreciation expense, equipment maintenance and repair, fixed terminal and cargo
handling expenses and other direct variable expenses. Our fleet of leased
equipment is maintained through a variety of short- and long-term leases, many
of which can be terminated without penalty in an economic downturn. 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.
Other variable expenses primarily include income received from users of our
railcars in their operations, which has historically remained relatively
constant. Historically, also included in other variable expenses are service
credits from for-hire transportation providers, which effectively reduce our
transportation costs.

 Selling, General and Administrative Expenses

     The stacktrain segment's selling, general and administrative expenses prior
to the recapitalization consist of allocated APL Limited's 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 stacktrain segment. In addition, we are in

                                       13
<PAGE>

the process of negotiating a twenty-year agreement requiring APL Limited to
continue to provide information technology services.

     The logistics 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 logistics
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 logistics
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.

                                       14
<PAGE>

Results of Operations

     The following discussion and analysis of financial condition and results of
operations for the year ended December 31, 1999 includes the results of
operations after our recapitalization and the acquisition of Pacer Logistics,
both of which were completed on May 28, 1999. All prior years results discussed
represent the results of the former stacktrain business only. The results of
operations and financial condition for the periods subsequent to the
recapitalization and the acquisition of Pacer Logistics will not necessarily be
comparable to prior periods.

Fiscal Year Ended December 31, 1999 Compared to Fiscal Year Ended December 25,
1998

     The following table sets forth historical financial data for the Company
comparing data for the year ended December 31, 1999 and December 25, 1998.

                Financial Data Comparison by Reportable Segment
           Fiscal Year Ended December 31, 1999 and December 25, 1998
                                 (in millions)

<TABLE>
<CAPTION>
                                                        1999                1998               Change              % Change
                                                 ---------------      ---------------     --------------      ----------------

Gross revenues
<S>                                                <C>                  <C>                 <C>                 <C>
   Stacktrain................................             $702.9               $590.8             $112.1                  19.0%
   Logistics.................................              233.2                    -              233.2                   n/a
   Inter-segment elimination.................              (18.7)                   -              (18.7)                  n/a
                                                 ---------------      ---------------     --------------      ----------------
   Total.....................................              917.4                590.8              326.6                  55.3

Cost of purchased transportation and services
   Stacktrain................................              559.1                466.3               92.8                  19.9
   Logistics.................................              195.0                    -              195.0                   n/a
   Inter-segment elimination.................              (18.7)                   -              (18.7)                  n/a
                                                 ---------------      ---------------     --------------      ----------------
   Total.....................................              735.4                466.3              269.1                  57.7

Net revenues
   Stacktrain................................              143.8                124.5               19.3                  15.5
   Logistics.................................               38.2                    -               38.2                   n/a
                                                 ---------------      ---------------     --------------      ----------------
   Total.....................................              182.0                124.5               57.5                  46.2

Direct operating expenses
   Stacktrain................................               66.5                 56.4               10.1                  17.9
   Logistics.................................                  -                    -                  -                   n/a
                                                 ---------------      ---------------     --------------      ----------------
   Total.....................................               66.5                 56.4               10.1                  17.9

Selling, general & administrative expenses
   Stacktrain................................               32.4                 28.3                4.1                  14.5
   Logistics.................................               26.5                    -               26.5                   n/a
                                                 ---------------      ---------------     --------------      ----------------
   Total.....................................               58.9                 28.3               30.6                 108.1

Depreciation and amortization
   Stacktrain................................                6.7                  6.6                0.1                   1.5
   Logistics.................................                1.9                    -                1.9                   n/a
                                                 ---------------      ---------------     --------------      ----------------
   Total.....................................                8.6                  6.6                2.0                  30.3

Income from operations
   Stacktrain................................               38.2                 33.2                5.0                  15.1
   Logistics.................................                9.8                    -                9.8                   n/a
                                                 ---------------      ---------------     --------------      ----------------
   Total.....................................               48.0                 33.2               14.8                  44.6

Interest (income) expense, net...............               18.6                    -               18.6                   n/a
Income tax expense ..........................               11.7                 12.6               (0.9)                 (7.1)
Minority interest expense....................                1.1                    -                1.1                   n/a
Net income...................................               16.6                 20.6               (4.0)                (19.4)
</TABLE>

                                       15
<PAGE>

     Gross Revenues.  Gross revenues increased $326.6 million, or 55.3%, for the
year ended December 31, 1999 compared to the year ended December 25, 1998.  The
acquisition of the logistics segment accounted for $233.2 million, or 71.4%, of
the increase.  The stacktrain segment increase of $112.1 million was due
primarily to a $105.0 million, or 18.6%, increase in freight revenues driven by
an overall container volume increase of 109,304 containers or 20.9%.  This
increase was partially offset by a 1.9% reduction in the average revenue per
container resulting from mix changes. The increases were due, in part, to
correction of the rail service disruption problems experienced during 1998 and
to increased customer demand coupled with the addition of 2,000 53-foot
containers during the second half of 1998.  In addition, international business
increased due to both growth among existing customers as well as the addition of
a large new customer in the second quarter of 1999.  Reposition incentive
revenues increased $1.4 million in the 1999 period as a result of increased APL
Limited shipping volume.  Other stacktrain segment revenues increased $5.7
million due primarily to the management fees associated with the 1999 Stacktrain
Services Agreement with APL Limited.

     Net Revenues.  Net revenues increased $57.5 million, or 46.2%, for the 1999
period compared to the 1998 period.  The acquisition of the logistics segment
accounted for $38.2 million, or 66.4%, of the increase and the stacktrain
segment accounted for the remaining $19.3 million of the increase.  Stacktrain
cost of purchased transportation increased $92.8 million, or 19.9%, on container
volume increases of 20.9%. The stacktrain segment gross margin declined to 20.5%
in 1999 from 21.1% in 1998 due primarily to increased traffic in the lower rated
international business line.

     Direct Operating Expenses.  Direct operating expenses, which are only
incurred by the stacktrain segment, increased $10.1 million, or 17.9%, in 1999
compared to 1998. Expenses for 1998 were reduced by a $5.0 million credit from a
third-party transportation provider that was not received in 1999.  In addition,
equipment lease and maintenance expenses increased by $7.7 million as a result
of the expansion of the fleet of containers and chassis discussed in gross
revenues above coupled with the sale and leaseback of 199 railcars in the second
quarter of 1999.  Partially offsetting these expense increases was a $2.2
million increase in rail car rental income due to the increase in the railcar
fleet in mid-1998.

     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased $30.6 million, or 108.1%, in 1999 compared to
1998.  The acquisition of the logistics segment accounted for $26.5 million, or
86.6%, of the increase and the stacktrain segment accounted for $4.1 million, or
13.4%, of the increase.  The stacktrain increase was due primarily to an
increase of $1.2 million for information technology costs now under contract
with APL Limited and vacation accruals and other transition costs.  Stacktrain
segment costs decreased to 22.6% of net revenues in 1999 from 22.7% in 1998.

     Depreciation and amortization.  Depreciation and amortization expenses
increased $2.0 million, or 30.3%, for 1999 compared to 1998.  The acquisition of
the logistics segment accounted for $1.9 million of the increase while the
stacktrain segment accounted for only $0.1 million of the increase. Depreciation
expense was $6.2 million and $6.0 million and amortization expense was $2.4
million and $0.6 million for 1999 and 1998, respectively.  The increase in
amortization was due to the amortization of goodwill associated with the
acquisition of the logistics segment on May 28, 1999.

     Income From Operations. Income from operations increased $14.8
million, or 44.6%, from $33.2 million in 1998 to $48.0 million in 1999.  The
acquisition of the logistics segment accounted for $9.8 million, or 66.2%, of
the increase and the stacktrain segment accounted for $5.0 million, or 33.8%, of
the increase.  The stacktrain segment increase was due primarily to the 20.9%
container volume increase in 1999 partially offset by the $5.0 million credit to
direct operating expenses in 1998 discussed above.

     Interest Expense.  Interest expense increased by $18.6 million for 1999
compared to 1998 due to the issuance of $150 million of senior subordinated
notes and borrowing $135 million

                                       16
<PAGE>

under the term loan portion of the credit facility on May 28, 1999 to fund the
recapitalization of the Company and the acquisition of the logistics segment.

     Income Tax Expense.  Income tax expense decreased by $0.9 million from
$12.6 million in 1998 to $11.7 million in 1999. The effective tax rate for 1999
was 39.8% compared to 38.0% for 1998.

     Net Income.  Net income decreased $4.0 million, or 19.4%, from $20.6
million in 1998 to $16.6 million in 1999. The acquisition of the logistics
segment accounted for an increase of $4.4 million in net income offset by a $7.3
million decrease for the stacktrain segment and by minority interest costs
(accrued paid-in-kind dividends on the exchangeable preferred stock of the
logistics segment) of $1.1 million in 1999. The stacktrain segment decrease was
due primarily to increased interest expense on the financing for the
recapitalization and acquisition of the logistics segment (discussed above)
partially offset by improved operating income for 1999 as a result of increased
container volumes.

Fiscal Year Ended December 25, 1998 Compared to Fiscal Year Ended December 26,
1997

     The following table and discussion for the year ended December 26,
1997 has been presented for comparative purposes only and is the combination of
the predecessor to the Stacktrain Services division of APL Land Transport
Services, Inc. from December 28, 1996 through November 12, 1997 period and  the
Stacktrain Services division of APL Land Transport Services, Inc. from November
13, 1997 through December 26, 1997 period.  As a result of the change in
ownership, these numbers may not be indicative of what the full year 1997 was or
would have been if the ownership change had not occurred.  Further, there is
only one segment - the stacktrain segment for both periods presented.

                           Financial Data Comparison
              Year Ended December 25, 1998 and December 26, 1997
                                 (in millions)

<TABLE>
<CAPTION>
                                                           1998                1997               Change              % Change
                                                     ---------------     ---------------     --------------      ----------------

<S>                                                    <C>                 <C>                 <C>                 <C>
Gross revenues....................................            $590.8              $577.1              $13.7                   2.4%

Cost of purchased transportation and services.....             466.3               454.9               11.4                   2.5

Net revenues......................................             124.5               122.2                2.3                   1.9

Direct operating expenses.........................              56.4                53.1                3.3                   6.2

Selling, general & administrative expenses .......              28.3                24.6                3.7                  15.0

Depreciation and amortization ....................               6.6                 3.7                2.9                  78.4

Income from operations............................              33.2                40.8               (7.6)                (18.6)

Interest (income) expense, net....................                 -                 2.3               (2.3)               (100.0)

Income tax expense ...............................              12.6                14.6               (2.0)                (13.7)

Net income........................................            $ 20.6              $ 23.9              $(3.3)                (13.8)
</TABLE>

     Gross Revenues. Gross revenues for 1998 increased $13.7 million to $590.8
million, or 2.4%, from $577.1 million in 1997. Freight revenues increased $10.0
million, or 1.8%, due to an increase in container volume of 21,438, or 4.3%,
offset by a slight decrease per container in the average freight rate as a
result of product mix changes and the loss of certain premium business. The
third-party domestic and third-party international business contributed with
revenue increases of $17.0 million and $3.7 million, respectively, as a result
of increased container volumes of 7.9%

                                       17
<PAGE>

and 11.7%, respectively, partially attributable to the additional 2,000 53-foot
containers which were leased during 1998, and the strong import market
positively impacting the third-party international business. The automotive and
refrigerated container business revenues declined $10.6 million primarily as a
result of the rail service problems, as the refrigerated container business is
considered premium business and time sensitive. The type of automotive business
that declined was primarily the time sensitive "Just-In-Time" business, which
was lost to over-the-road truck transporters. Historically, our rates have been
impacted by the rail service disruptions as certain expedited business, for
which premium rates are charged, has been shifted by customers to more costly,
yet more reliable over-the-road carriers. Reposition incentive revenues
increased $2.3 million from 1997 to 1998 as a result of increased APL Limited
shipping volume.

     Net Revenues. Net revenues increased $2.3 million to $124.5 million in 1998
from $122.2 million in 1997, as a result of the increased revenues discussed
above. The net revenues as a percentage of gross revenues remained relatively
constant in 1998 at 21.1% compared to 21.2% in 1997.

     Direct Operating Expenses. Direct operating costs increased $3.3 million,
or 6.2%, to $56.4 million in 1998 from $53.1 million in 1997 due to increases in
equipment lease expense of $6.4 million and allocated maintenance and repair
charges of $1.9 million, offset by a credit from a third-party transportation
provider, to effectively reduce our third-party transportation costs, by an
amount of $5.0 million.

     The additional lease expense primarily relates to the 2,000 additional 53-
foot containers we leased in 1998 compared to 1997, which were delivered at
various times throughout the year, with all of them in operation by the end of
1998. The additional containers were leased to fulfill customer demand during
the period of rail service disruption. This increase in containers negatively
impacted operating results as a result of the increased trip days combined with
a decline in average revenue per container as previously discussed. In addition,
the Company purchased 200 railcars in the first quarter of 1998 for $39.7
million, increasing depreciation expense in 1998 as discussed below.
Historically, we were allocated maintenance and repair charges from APL Limited,
based on a formula using the number of days the equipment was in use. The
maintenance and repair charges increased in 1998 due to the increased volume of
shipments in 1998 and the increased number of containers, railcars and chassis
owned or leased by us compared to 1997.

     Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $3.7 million, or 15.0%, in 1998 to $28.3
million compared to $24.6 million in 1997 primarily as a result of the total
corporate expenses allocated to us from APL Limited increasing $1.0 million, and
the increase in various direct selling, general and administrative expenses. In
addition, other income decreased $1.9 million in 1998 primarily due to the
reduced gain on the sale of operating equipment compared to 1997.

     Depreciation and Amortization. Depreciation and amortization expenses
increased $2.9 million, or 78.4%, to $6.6 million in 1998 from $3.7 million in
1997 due primarily to the purchase of 200 railcars in the first quarter of 1998.
Depreciation expense was $6.0 million and $3.7 million and amortization expense
was $0.6 million and $0.0 million for 1998 and 1997, respectively.

     Income From Operations. Operating income decreased $7.6 million in 1998 to
$33.2 million or 26.7% of net revenues from $40.8 million or 33.4% in 1997 due
to the foregoing factors.

     Interest expense. Interest expense decreased $2.3 million to $0.0 in 1998
due to reduced intercompany borrowings from APL Limited in 1998.

     Income taxes. Income taxes decreased $2.0 million in 1998 to $12.6 million
compared to $14.6 million in 1997, as a result of the decrease in income before
income taxes from 1997 to 1998.

                                       18
<PAGE>

Liquidity and Capital Resources

     Cash generated by operating activities was $20.8 million, $31.8 million and
$30.9 million for the years ended December 31, 1999, December 25, 1998 and
December 26, 1997, respectively.  The decrease in cash provided by operating
activities from 1998 to 1999 was due to the increase in interest paid during
1999 combined with the change in receivables and payables associated primarily
with the 20.9% increase in stacktrain segment traffic volume. Cash generated
from operating activities in 1997 was due to a decrease in accounts receivable
in 1997 as a result of the sale of APL Limited's intermodal marketing operations
to a customer.  Cash generated from operating activities was used for working
capital purposes, to fund capital expenditures, for acquisitions and prior to
the recapitalization on May 28, 1999, to repay intercompany debt.  The Company
had a working capital deficit of $3.7 million at December 31, 1999 compared to a
deficit of $37.2 million at December 25, 1998.  This change was due primarily to
the elimination of the intercompany funding procedures between APL Limited and
APLLTS upon our recapitalization on May 28, 1999.

     Cash flows (used in) provided by investing activities were $(74.0) million,
$(38.5) million and $3.6 million for 1999, 1998 and 1997, respectively. The
increased use of cash in 1999 was due to the acquisition of the logistics
segment for $112.0 million partially offset by the net proceeds of $39.6 million
from the sale and leaseback of 199 railcars originally purchased in 1998 and by
the net proceeds of $0.4 million from the sale of logistics segment property.
Capital expenditures of $2.0 million in 1999 were primarily for computer
hardware and leasehold improvements to office space and warehouse facilities.
The use of cash in 1998 was primarily due to the purchase of 200 railcars for
$39.7 million.

     Cash flows (used in) provided by financing activities were $65.4 million,
$6.7 million and $(34.5) million for 1999, 1998 and 1997, respectively. Prior to
the Company's recapitalization on May 28, 1999, any excess cash generated from
or used for operating or investing activities was remitted to or received from
APL Limited, the former parent, through participation in the cash management
plan. During 1998, a net intercompany borrowing of $6.7 million from APL Limited
was necessary to fund the purchase of 200 railcars, 199 of which were
subsequently the subject of the sale and leaseback discussed above. During 1997,
a net intercompany remittance of $(34.5) million to APL Limited was generated by
operating activities. During 1999, in connection with the recapitalization of
the Company and acquisition of the logistics segment, proceeds of $104.4 million
were received from the issuance of the Company's common stock. The Company also
borrowed $135 million under a term loan facility (the "Term Loan"), issued
$150 million of senior subordinated notes, and borrowed $2 million under the
$100 million revolving credit facility (the "Revolving Credit Facility")
expiring in 2004. The Company paid $9.5 million of financing costs associated
with these borrowings which will be amortized over the life of the debt. The
$2 million borrowed under the Revolving Credit Facility was repaid in July
1999. These borrowings were partially offset by a distribution to APL Limited
of $300 million and to fees paid in connection with the recapitalization
of $11.7 million. In addition, $0.7 million of the Term Loan was repaid and $0.1
million was paid on capital lease obligations during 1999. In July 1999, the
Company also redeemed $2 million of the exchangeable preferred stock of its
subsidiary, Pacer Logistics, Inc.

     The $150 million of senior subordinated notes, due in 2007, bear interest
at 11.75% with interest due semi-annually at June 1 and December 1. The $135
million Term Loan, due in 2006 and the $100 million Revolving Credit Facility,
expiring in 2004 bear interest at variable rates subject to increases or
decreases based upon the achievement of financial ratios set forth in the
credit agreement. At December 31, 1999, the interest rate on the Revolving
Credit Facility was 9.00% and the interest rate on the term loan was 9.50%.
Voluntary prepayments and commitment reductions will generally be permitted
without premium or penalty, subject to certain conditions. The credit facilities
are generally guaranteed by all of the Company's existing and future direct and
indirect wholly-owned subsidiaries and are collateralized by liens on its
properties and assets. At December 31, 1999, the Company had $100 million
available under the Revolving Credit Facility. These credit agreements contain
certain restrictions and financial covenants such as an adjusted total leverage
ratio and a consolidated interest coverage ratio. At December 31, 1999, the
Company was in compliance with these covenants. On August 9, 1999,

                                       19
<PAGE>

the Company entered into a first amendment to the credit agreement to increase
the maximum swingline amount (the amount that can be drawn under the Revolving
Credit Facility on the day of notification of borrowing) to $10.0 million from
$2.5 million. On January 7, 2000, the Company entered into a second amendment
to the credit agreement to modify the definition of excess cash flow to allow
for the acquisition of Conex assets as described below.

     In connection with the Company's recapitalization, the Company recorded a
deferred tax asset related to future tax deductions for the net excess of the
tax basis of the assets and liabilities over the financial statement carrying
amounts with a corresponding credit to Stockholders' Equity. Realization of the
deferred tax asset is dependant upon the Company's ability to generate
sufficient future taxable income which management believes is more likely than
not based on historical operating results. Accordingly, no valuation allowance
has been recorded.

     The stacktrain segment took delivery in the fourth quarter of 1999 of 1,500
new 53-foot containers and chassis financed through an operating lease and has
on order 3,125 containers and chassis for delivery in 2000 to help meet current
and projected business growth.

     Based upon the current level of operations and anticipated growth in both
operating segments, management believes that operating cash flow and
availability under the Revolving Credit Facility will be adequate to meet the
Company's liquidity needs for the next five years, although no assurance can be
given in this regard.

     Effective January 13, 2000 pursuant to an asset purchase agreement, Conex
Acquisition Corporation, a subsidiary of the Company ("Acquisition
Corporation"), acquired substantially all of the assets and assumed certain
specified liabilities of Conex Global Logistics Services, Inc. ("Conex"), MSL
Transportation Group, Inc. ("MSL") and Jupiter Freight, Inc. ("Jupiter").
Conex, MSL and Jupiter employ approximately 200 persons and provide intermodal
freight transportation, cartage, transloading and warehousing services in the
following locations: Los Angeles, California; San Diego, California; Calexico,
California; Seattle, Washington; and Atlanta, Georgia.  The assets acquired will
be employed in substantially the same manner as used by Conex, MSL and Jupiter
in their respective businesses prior to the acquisition.  Certain top senior
executives at Conex have executed multi-year employment and/or consulting
agreements with Acquisition Corporation in order to assist in the assimilation
and management of the Conex, MSL and Jupiter assets into Pacer's logistics
segment.  The acquisition was financed by a $25.05 million cash payment ($15
million of which was borrowed from the Revolving Credit Facility), the issuance
of an 8.0% contingent note in the aggregate principal amount of $5 million and
the issuance of 300,000 shares of common stock of Pacer. On January 13, 2000,
Acquisition Corporation and the Company executed a supplement to the indenture
governing the Senior Subordinated Notes, resulting in Acquisition Corporation
becoming a guarantor of the Company's obligations thereunder.

     The Year 2000 ("Y2K") issue is the result of computerized systems using two
digits rather than four to identify an applicable year.  Date-sensitive systems
may recognize a date using "00" as the year 1900 rather than the year 2000.
This could result in a system failure or miscalculation causing disruptions of
business operations. In 1999, the Company's computer-based information systems
for the Stacktrain segment were reviewed and Y2K compliant upgrades were
implemented by APL Limited.  The Company completed a review of its Logistics
segment computer-based information systems and implemented Y2K compliant
upgrades.  To date, no significant Y2K problems have been encountered during
year 2000 and none are expected.  However, some factors could remain that might
cause Y2K related problems in the future.  We will again monitor critical
operations during the December 31, 2000 - January 1, 2001 rollover dates.  The
Company has spent approximately $2.2 million in internal and external consulting
fees for the remediation of the Y2K issue.

Recently Issued Accounting Pronouncements

     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 ("FAS 133"), "Accounting for Derivative
Instruments and Hedging Activities". FAS 133 establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts (collectively referred to as

                                       20
<PAGE>

derivatives), and for hedging activities, FAS 133 is effective for fiscal years
beginning after June 15, 2000, with earlier application encouraged. The Company
is evaluating the possible impact, if any, that FAS 133 may have on its
financial statements.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Our market risk is affected primarily by changes in interest rates. Under
our policies, we may use natural hedging techniques and derivative financial
instruments to reduce the impact of adverse changes in market prices, however,
we currently do not have any derivative financial instruments.

     We have market risk in interest rate exposure, primarily in the United
States.  We manage interest exposure through our mix of fixed and floating rate
debt.  Interest rate swaps may be used  to adjust interest rate exposure when
appropriate based on market conditions.  For qualifying hedges, the interest
differential of swaps is included in interest expense.  A 1% change in our
variable interest rates would affect our earnings by approximately $0.8 million.

     The Company contracts with railroads and independent truck operators for
our transportation requirements. These third parties are responsible for
providing their own diesel fuel. To the extent that increased fuel prices are
passed along to us, we have historically passed these increases along to our
customers. However, there is no guarantee that this will be possible in the
future.


ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The consolidated financial statements, including supplementary data and
accompanying reports of independent accountants are listed in the Index to
Consolidated Financial Statements and Consolidated Financial Statement Schedules
on page 37 filed as part of this annual report.


ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

     Pacer International, Inc., with the approval of its board of directors
on February 10, 1999, changed its independent accountants from Arthur Andersen
LLP to PricewaterhouseCoopers LLP. Arthur Andersen LLP's report on the financial
statements of Pacer International (formerly American President Lines Stacktrain
Services, a division of APL Land Transport Services, Inc.) as of December 25,
1998 and for the fiscal year ended December 25, 1998 and the period from
November 13, 1997 to December 26, 1997 and the financial statements of American
President Lines Stacktrain Services' predecessor for the period from December
28, 1996 through November 12, 1997 included in this Form 10-K was not qualified
or modified as to uncertainty, audit scope, or accounting principles. During
Arthur Andersen LLP's appointment as independent accountants, there were no
disagreements on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure which if not resolved to
Arthur Andersen LLP's satisfaction would have caused Arthur Andersen LLP to
make reference to the subject matter of the disagreement in connection with
Arthur Andersen LLP's reports on the financial statements of American President
Lines Stacktrain Services for the periods indicated above.

     There have been no disagreements with PricewaterhouseCoopers LLP.

                                       21
<PAGE>

                                   Part III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth information regarding the directors and executive
officers of our Company.

<TABLE>
<CAPTION>
Name                                Age       Position with Pacer International
<S>                                 <C>       <C>
Donald C. Orris                      58       Chairman, President and Chief Executive Officer
Gerry Angeli                         53       Executive Vice President
Robert L. Cross                      53       Executive Vice President
Richard P. Hyland                    45       Executive Vice President
Allen E. Steiner                     60       Executive Vice President
Lawrence C. Yarberry                 57       Executive Vice President, Chief Financial Officer and Treasurer
Joseph P. Atturio                    42       Vice President, Controller and Secretary
Joshua J. Harris                     35       Director
Thomas L. Finkbiner                  47       Director
Michael S. Gross                     38       Director
Bruce H. Spector                     57       Director
Marc E. Becker                       27       Director
Timothy J. Rhein                     58       Director
----------------------------
</TABLE>

     Donald C. Orris has served as Chairman, President and Chief Executive
Officer of our Company since May 1999. From Pacer Logistics' inception in March
1997 until May 1999, Mr. Orris served as Chairman, President and Chief Executive
Officer of Pacer Logistics. From March 1997 until May 1998, Mr. Orris served as
President and Chief Executive Officer of an affiliate of Pacer Logistics. He
also has served as Chairman of Pacer Logistics' other subsidiaries since their
formation or acquisition by Pacer Logistics. Mr. Orris has been the President of
Pacer International Consulting LLC (f/k/a Logistics International LLC), a wholly
owned subsidiary of Pacer Logistics, since September 1996. From January 1995 to
September 1996, Mr. Orris served as President and Chief Operating Officer, and
from 1990 until January 1995, he served as an Executive Vice President, of
Southern Pacific Transportation Company. Mr. Orris was the President and Chief
Operating Officer of American President Domestic Company and American President
Intermodal Company from 1982 until 1990.

     Gerry Angeli has served as an Executive Vice President of our Company since
May 1999. From Pacer Logistics' inception in March 1997 until May 1999, Mr.
Angeli served as an Executive Vice President and Assistant Secretary of Pacer
Logistics and as a Director of Pacer Logistics from April 1998 until May 1999.
He also served as a Director of each of Pacer Logistics' subsidiaries. Since May
1998, Mr. Angeli has served as President and Chief Executive Officer and Vice
President of certain Pacer Logistics subsidiaries. Mr. Angeli also served as a
Vice President and Assistant Secretary of Pacific Motor Transport Company
("PMTC") from March 1997 until May 1998. Since 1982, Mr. Angeli has served as
President and Chief Executive Officer of the Pacer division of PMTC and,
concurrent therewith, from 1987 until December 1993, Mr. Angeli served as
President and Chief Executive Officer of Southern Pacific Motor Trucking, a
wholly owned subsidiary of the Southern Pacific Railroad.

     Robert L. Cross has served as an Executive Vice President of our Company
since May 1999. Mr. Cross served as an Executive Vice President and Assistant
Secretary of Pacer Logistics and as an officer of certain Pacer Logistics
subsidiaries from Pacer Logistics' inception in March 1997 until May 1999. From
1991 until March 1997, Mr. Cross served as President of ABL-TRANS.

     Richard P. Hyland has served as an Executive Vice President of our Company
since May 1999. Mr. Hyland served as an Executive Vice President of Pacer
Logistics and as an officer of

                                       22
<PAGE>

certain Pacer Logistics subsidiaries from June 1998 until May 1999. Mr. Hyland
is the founder of Cross Con and has served as President of Cross Con since 1977.

     Allen E. Steiner has served as an Executive Vice President of our Company
since May 1999. Mr. Steiner served as an Executive Vice President of Pacer
Logistics from December 1997 until May 1999. Since May 1998, Mr. Steiner has
served as Executive Vice President of certain Pacer Logistics subsidiaries. Mr.
Steiner was a co-founder of ICI and ICSI in 1972. From 1972 until December 1997,
Mr. Steiner served as President and Treasurer of ICI and Vice President and
Secretary of ICSI and IMCS.

     Lawrence C. Yarberry has served as an Executive Vice President, Chief
Financial Officer and Treasurer of our Company since May 1999. Mr. Yarberry
served as an Executive Vice President, Chief Financial Officer and Treasurer of
Pacer Logistics from May 1998 until May 1999. Mr. Yarberry served as a
consultant to Pacer Logistics from February 1998 until April 1998. From April
1990 until December 1997, Mr. Yarberry served as a Vice President of Finance of
Southern Pacific Transportation Company and was Vice President of Finance and
Chief Financial Officer of Southern Pacific Rail Corporation.

     Joseph P. Atturio has served as a Vice President, Controller and Secretary
of our Company since May 1999. Mr. Atturio served as Vice President and
Secretary of Pacer Logistics since its inception in March 1997 until May 1999.
Prior to joining Pacer Logistics, Mr. Atturio served as Comptroller of SPMT from
August 1988 until December 1993 and as a Vice President of SPMT from July 1992
until December 1993. From January 1994 until March 1997, he served as Vice
President and Comptroller of PMTC and served as a Regional Director of PMT Auto
Transport, a division of PMTC, from January 1986 until 1988.

     Joshua J. Harris has served as a Director of our Company since May 1999.
Mr. Harris is a partner in Apollo Management and has served as an officer of
certain affiliates of Apollo Management since 1990. Prior to that time, Mr.
Harris was a member of the Mergers and Acquisitions Department of Drexel Burnham
Lambert Incorporated. Mr. Harris is also a director of Converse Inc., Florsheim
Group Inc., NRT, Incorporated, Clark Retail Enterprises, Inc., Breuners Home
Furnishings Corporation and Quality Distribution, Inc.

     Thomas L. Finkbiner was elected to serve as a Director of our Company
effective April 1, 2000.  Mr. Finkbiner is currently a Director and Chief
Executive Officer of Quality Distribution, Inc.  Prior to joining Quality
Distribution, Mr. Finkbiner served as Vice President of Intermodal for Norfolk
Southern Corporation since 1987.  From 1981 to 1987, he was Vice President of
Marketing & Administration for North American Van Lines.

     Michael S. Gross was elected to serve as a Director of our Company
effective April 1, 2000.  Mr. Gross is a founding partner of Apollo Management.
Prior to that time, Mr. Gross was a member of the Mergers and Acquisitions
Department of Drexel Burnham Lambert Incorporated.  Mr. Gross is also a Director
of Allied Waste Industries, Inc., Breuners Home Furnishings Corporation, Clark
Enterprises, Inc., Converse, Inc., Encompass Services Corporation, Florsheim
Group, Inc., Rare Medium, Inc., Saks, Inc. and United  Rentals.

     Bruce H. Spector has served as a Director of our Company since May 1999.
Mr. Spector has been a consultant to Apollo Advisors since 1992 and has been a
principal in Apollo Advisors since 1995. Prior to October 1992, Mr. Spector, a
reorganization attorney, was a member of the Los Angeles law firm of Stutman
Triester and Glatt. Mr. Spector is also a Director of Telemundo Group, Inc.,
United International Holdings, Inc., Nexthealth, Inc., Vail Resorts, Inc. and
Metropolis Realty Trust, Inc.

     Marc E. Becker has served as a Director of our Company since May 1999. Mr.
Becker has been associated with Apollo Management since 1996. Prior to that
time, Mr. Becker was employed by Smith Barney Inc. in the Financial
Entrepreneurs group within its Investment Banking division. Mr. Becker also
serves as a Director of National Financial Partners Corporation and Quality
Distribution, Inc.

                                       23
<PAGE>

     Timothy J. Rhein has served as a Director of our Company since May 1999.
Mr. Rhein has been President and Chief Executive Officer of APL Limited since
October 1995. Mr. Rhein served as APL Limited's President and Chief Operating
Officer from July 1995 to October 1995. Prior to that, Mr. Rhein served as
President and Chief Executive Officer of APL Land Transport Services, Inc. from
May 1990 to October 1995 and President and Chief Operating Officer of American
President Lines, Ltd. from January 1987 to May 1990. Mr. Rhein has served as a
Director of APL Limited since July 1990.


ITEM 11.  EXECUTIVE COMPENSATION

     The Summary Compensation Table for the five most highly paid executives of
the Company is set forth below.

                           Summary Compensation Table

<TABLE>
<CAPTION>
                               Annual Compensation                                       Long-Term Compensation
--------------------------------------------------------------------   -----------------------------------------------------
                                                                                            Awards       Payout
                                                                                       -------------------------
 (a)                   (b)        (c)          (d)            (e)             (f)             (g)          (h)         (i)
                                                                                          Securities
Name and                                                    Other         Restricted      Underlying                  All
Principal                                                   Annual           Stock          Options       LTIP       Other
Position               Year      Salary       Bonus       Compensation     Award(s) 1/       SARs        Payout     Comp. 2/
----------------------------------------------------------------------------------------------------------------------------
<S>                    <C>        <C>          <C>            <C>             <C>             <C>          <C>         <C>
Donald C. Orris       1999     $300,000     $161,880                -               -        100,000                  $5,688
   (CEO)              1998     $250,000     $ 90,000                -               -              -          -       $6,250

Gerry Angeli          1999     $270,000     $121,410                -               -        100,000                  $3,025
                      1998     $250,000     $ 90,000                -               -              -          -       $7,500

Gary I. Golfein       1999     $255,000     $121,410                -               -        100,000                  $3,975
      3/              1998     $235,000     $ 90,000                -               -              -          -       $1,600

Robert L. Cross       1999     $235,000     $121,410                -               -        100,000                  $5,604
                      1998     $220,000     $ 90,000                -               -              -          -       $6,558

Alan E. Steiner       1999     $235,000     $121,410                -               -        100,000                  $3,975
                      1998     $220,000     $ 90,000                -               -              -          -       $1,600
</TABLE>
_________

(1)  Messrs. Orris,  Angeli, Goldfein, Cross and Steiner hold 2,329, 2,264,
     4,963, 2,264 and 4,963 shares of Pacer Logistics 7.5% Exchangeable
     Preferred Stock, respectively, with a fiscal year end 1999 fair market
     value of $17.5 million (based on a fiscal year end 1999 fair market value
     of $1,000 per share of such preferred stock, plus accrued dividends).
(2)  Consists of company matching contributions to 401(k) plan.
(3)  Mr. Goldfein resigned effective January 1, 2000 and forfeited 90,000
     options to purchase Pacer International common stock.

                                       24
<PAGE>

                     Option/SAR Grants in Last Fiscal Year

  The following table lists the stock options granted to the named executive
officers during the fiscal year 1999.

<TABLE>
<CAPTION>

                          Individual Grants
--------------------------------------------------------------------
  (a)              (b)             (c)          (d)            (e)               (f)                 (g)
                 Number of          % of                                      Potential Realizable Value at
Name and        Securities       Options     Exercise                         Assumed Annual Rates of Stock
Principal       Underlying       Granted       Price       Expiration       Price Appreciation for Option Term
                                                                       ----------------------------------------
Position      Options Granted     In Year      ($/Sh)          Date                5% ($)             10% ($)
---------------------------------------------------------------------------------------------------------------
<S>            <C>                 <C>         <C>          <C>              <C>                 <C>

Donald C. Orris    100,000         9.4%      $10.00     May 28, 2009            $628,895          $1,593,742
(CEO)

Gerry Angeli       100,000         9.4%      $10.00     May 28, 2009            $628,895          $1,593,742

Gary I. Goldfein   100,000         9.4%      $10.00     May 28, 2009            $628,895          $1,593,742

Robert L. Cross    100,000         9.4%      $10.00     May 28, 2009            $628,895          $1,593,742

Alan E. Steiner    100,000         9.4%      $10.00     May 28, 2009            $628,895          $1,593,742
</TABLE>


     Aggregate Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
                               Option/SAR Values

<TABLE>
<CAPTION>
      (a)               (b)       (c)                 (d)(1)                               (e)
                                            Number of Securities Underlying   Value of Unexercised In-the-
                      Shares                   Unexercised Options/SARs at         Money Options/SARs at
                      Acquired                        Fiscal year end               Fiscal year end (2)
                        On        Value      -----------------------------   --------------------------------
     Name            Exercise    Realized    Exercisable    Unexercisable      Exercisable     Unexercisable
---------------    -----------  ----------  -------------  ----------------  ---------------  ----------------
<S>                 <C>          <C>         <C>             <C>               <C>              <C>
Donald C. Orris
    Common              -           -          34,833         221,916             $593,554        $3,411,498
    Preferred           -           -           3,333          11,666             $      0        $        0

Gerry Angeli
    Common              -           -          34,833         221,916             $593,554        $3,411,498
    Preferred           -           -           3,333          11,666             $      0        $        0

Gary I.
 Goldfein
    Common (3)          -           -             -           100,000             $      0        $1,000,000

Robert L. Cross
    Common              -           -          34,833         221,916             $593,554        $3,411,498
    Preferred           -           -           3,333          11,666             $      0        $        0

Alan E. Steiner
    Common              -           -             -            100,000            $      0        $1,000,000
---------------
</TABLE>
(1)  In connection with the acquisition of Pacer Logistics, certain of the
     options relating to Pacer Logistics preferred stock converted to
     options to purchase Pacer International Series A preferred stock.
(2)  Based upon end of year fair market value of $20 per share of Pacer
     International common stock and $9 per share of Pacer International
     preferred stock.
(3)  Mr. Goldfein resigned effective January 1, 2000 and forfeited 90,000
     options to purchase Pacer International common stock.

                                       25
<PAGE>

Stock Option Plan

     Our Board of Directors adopted the Pacer International, Inc. 1999 Stock
Option Plan in May 1999. The purpose of this plan is to further our growth and
success by permitting our employees, as well as employees of Pacer Logistics, to
acquire shares of our common stock and the preferred stock of Pacer Logistics,
in the case of employees of Pacer Logistics, thereby increasing their personal
interest in our growth and success and to provide a means of rewarding
outstanding contribution by these employees. With the exception of the 562,861
incentive stock options which were rolled into this plan from the PMT Holdings,
Inc. 1997 Stock Option Plan and the Pacer International, Inc. 1998 Stock Option
Plan, options subject to this plan do not qualify as incentive stock options
under the provisions of section 422 of the Internal Revenue Code.

     No more than 1,793,747 shares have been authorized to be issued pursuant to
all option grants under this plan. A total of 1,604,361 common stock options
have been granted at or above fair market value at the date of grant.  Of the
options granted, 470,247 and 92,614 were part of the 1997 and 1998 Pacer
Logistics, Inc. Stock Option Plan, respectively, that were rolled over as part
of the acquisition of Pacer Logistics.  In addition, under the 1999 Stock Option
Plan, options to purchase 44,997 shares of preferred stock were granted which
were rolled over from the 1997 Pacer Logistics Stock Option Plan.  In the event
of certain corporate reorganizations, recapitalizations, or other specified
corporate transactions affecting our stock, this plan permits proportionate
adjustments to the number and kinds of shares subject to options and/or the
exercise price of those shares. There are no cash-out provisions for the
Company's common or preferred stock in the event of exercise since the Company's
stock is not public.

     All of the Company's employees, as well as the employees of any of the
Company's subsidiaries, as well as non-employee directors are eligible for
option grants under this plan. This plan is administered by a committee of our
Board of Directors and, except with respect to initial grants described below,
such committee has the power and authority to approve the persons to whom
options are granted, the time or times at which options are granted, the number
of shares subject to each option, the exercise price of each option and the
vesting and exercisability provisions of each option and has all powers with
respect to the administration and interpretation of this plan.

     This plan provides for initial grants to specified employees. The aggregate
number of shares subject to these initial grants is 832,000 and their exercise
price is $10.00 per share. These initial grants are divided into three tranches,
Tranche A, Tranche B and Tranche C. Tranche A options vest in five equal
installments on the date of the grant's first five anniversary dates, provided
the employee is employed by the Company on each anniversary date. Tranche B
options generally vest on the date of grant's seventh anniversary date if the
employee is employed by the Company on that date. However, if on any of the
grant's first five anniversary dates certain per share target values are
attained and the employee is employed by the Company on that date, then 20% of
the Tranche B options will vest. Accelerated vesting of the Tranche B options is
possible if a sale of the company occurs prior to the date of grant's fifth
anniversary and the fair market value of the per share consideration to be
received by the shareholder equals or exceeds an amount calculated in accordance
with this plan. Tranche C options vest in substantially the same manner as
Tranche B options, including acceleration upon a sale of the Company, except
that the per share target values as of a given anniversary date are increased.
Options granted to non-employee directors vest in four equal installments on the
date of grant's first four anniversary dates.

     A vested option that has not yet been exercised will automatically
terminate on the first to occur of the grant's tenth anniversary, ninety days
following the employee's termination of employment for any reason other than
death or disability, twelve months following the employee's termination of
employment due to death or disability, or as otherwise determined by the
committee.

     Each option that is vested as of the date of the sale of our company
remains exercisable until the sale's closing, after which time such option is
unenforceable. Non-vested Tranche A,

                                       26
<PAGE>

Tranche B and Tranche C options will vest in accordance with the vesting
schedules described above, however, an option that vests after our company is
sold will remain exercisable for 10 days before such portion of the option
terminates and is of no further force or effect. All options granted under this
plan are nontransferable except upon death, by such employee's will or the laws
of descent and distribution, or transfers to family members of the employee that
are approved by the committee.

     This plan has a term of ten years, subject to earlier termination by our
Board of Directors, who may modify or amend this plan in any respect, provided
that no amendment or modification affects an option already granted without the
consent of the option holder.

Employment and Related Agreements

     We have entered into employment agreements dated as of March 31, 1997, and
amended as of April 7, 1999, with each of Donald C. Orris, Gerry Angeli and
Robert L. Cross and employment agreements dated as of December 16, 1997, and
amended as of April 7, 1999, with each of Gary I. Goldfein and Allen E. Steiner.
Each of these employment agreements, as amended, has a term of two years
commencing upon the closing of the Pacer Logistics transactions, with automatic
one year renewals on each anniversary of their commencement date. The minimum
base salary under these employment agreements is $225,000, $225,000, $200,000,
$235,000, and $220,000 per year for Messrs. Orris, Angeli, Cross, Goldfein, and
Steiner, respectively, subject to increase by our board of directors, except in
the case of Mr. Orris, in which case the base salary is subject to increase as
agreed to by Mr. Orris and our Board of Directors.

     Under the employment agreement of Mr. Orris, our Board of Directors may
award an annual bonus to him in an amount up to $120,000 and under the
employment agreements of Messrs. Angeli, Cross, Goldfein and Steiner such bonus
may be in an amount up to $90,000. In each case, such bonus is based on the
attainment of certain operating income targets.  Further, an additional bonus of
up to 50% of the annual bonus may be awarded to each of Messrs. Orris, Angeli,
Cross, Goldfein and Steiner, based upon acquisitions made during the year. The
bonus amounts may be changed from time to time by the Board of Directors.

     All of the employment agreements provide that if the employment of these
employees is terminated for any reason, they would be entitled to receive any
unpaid portion of their base salary, reimbursement for any expenses incurred
prior to the date of termination and any unpaid amounts earned prior to the
effective date of termination pursuant to the terms of any bonus or benefit
program in which they participated at the time of termination. In addition, the
employment agreements provide that if the employment of these employees is
terminated without "cause", as defined in the employment agreements, they would
be entitled to receive 100% of their base salary for a period of between twelve
and twenty-four months, with such amount to be reduced by 50% of any salary
earned during this severance period from other sources.

     All of the employment agreements include certain restrictive covenants for
our benefit relating to the non-disclosure by these employees of our
confidential business information and trade secrets, the disclosure grant and
assignment of inventions and non-competition with regards to any business in
competition with us.

                                       27
<PAGE>

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
          AND MANAGEMENT

     The following table sets forth information regarding the beneficial
ownership of shares of the common stock by each person to be the owner of 5% or
more of the common stock, by each person who is a director or executive officer
of our company and by all directors and executive officers of our company as a
group. The following table does not include the ownership by certain directors
and executives of the Pacer Logistics 7.5% Exchangeable Preferred Stock.

<TABLE>
<CAPTION>
                                                                                 Common Stock (1)
                                                                     --------------------------------------
                                                                           Number of          Percentage
                                                                             Shares            Of Class
                                                                       ------------------  -----------------

<S>                                                                    <C>                 <C>
Apollo Management IV, L.P. (2)......................................            9,390,000              89.9%
 C/o Apollo Management, L.P.
 1301 Avenue of the Americas
 New York, NY 10019
APL Limited.........................................................              750,000               7.2%
 1111 Broadway
 Oakland, CA 94607
Donald C. Orris (3)(13).............................................               34,833               0.3%
Gerry Angeli (4)(13)................................................               34,833               0.3%
Gary I. Goldfein (5)(13)............................................                    -                 -
Robert L. Cross (6)(13).............................................               34,833               0.3%
Richard P. Hyland (7)(13)...........................................                    -                 -
Allen E. Steiner (8)(13)............................................                    -                 -
Lawrence C. Yarberry (9)(13)........................................               11,000               0.1%
Joseph P. Atturio (10)(13)..........................................               19,582               0.2%
Joshua J. Harris (11)(14)...........................................                    -                 -
Bruce M. Spector (11)(15)...........................................                    -                 -
Marc E. Becker (11)(14).............................................                    -                 -
Timothy J. Rhein (12)(16)...........................................                    -                 -
All directors and executive officers as a group (12 persons) .......              135,081               1.3%
</TABLE>

________

(1) The amounts and percentage of common stock beneficially owned are reported
on the basis of regulations of the SEC governing the determination of beneficial
ownership of securities. Under the rules of the SEC, a person is deemed to be a
"beneficial owner" of a security if that person has or shares "voting power,"
which includes the power to vote or to direct the voting of such security, or
"investment power," which includes the power to dispose of or to direct the
disposition of such security. A person is also deemed to be a beneficial owner
of any securities of which that person has a right to acquire beneficial
ownership within 60 days. Under these rules, more than one person may be deemed
a beneficial owner of the same securities and a person may be deemed a
beneficial owner of securities as to which he has no economic interest.

(2) Through its interest in Coyote Acquisition LLC and Coyote Acquisition II
LLC, Apollo Management IV, L.P. is deemed to beneficially own all of the shares
of common stock owned by Coyote Acquisition LLC and Coyote Acquisition II LLC.
Coyote Acquisition LLC owns 8,912,000 shares, or 85.3%, of our outstanding
common stock. Coyote Acquisition II LLC owns 478,000 shares, or 4.6%, of our
outstanding common stock.

(3) Includes 34,833 shares of common stock issuable upon the exercise of
presently exercisable options held by the stockholder. Does not include an
additional 100,000 options and an additional 121,916 options which vest in the
future or 2,329.25 shares of the Pacer Logistics 7.5% Exchangeable Preferred
Stock held by the stockholder.

                                       28
<PAGE>

(4) Includes 34,833 shares of common stock issuable upon the exercise of
presently exercisable options held by the stockholder. Does not include an
additional 100,000 options and an additional 121,916 options which vest in the
future or 2,264.16 shares of the Pacer Logistics 7.5% Exchangeable Preferred
Stock held by the stockholder.

(5) Does not include 100,000 options which vest in the future or 4,963.75 shares
of the Pacer Logistics 7.5% Exchangeable Preferred Stock held by the
stockholder.

(6) Includes 34,833 shares of common stock issuable upon the exercise of
presently exercisable options held by the stockholder. Does not include an
additional 100,000 options and an additional 121,916 options which vest in the
future or 2,264.16 shares of the Pacer Logistics 7.5% Exchangeable Preferred
Stock held by the stockholder.

(7) Does not include 100,000 options which vest in the future or 3,971.0 shares
of the Pacer Logistics 7.5% Exchangeable Preferred Stock held by the
stockholder.

(8) Does not include 100,000 options which vest in the future or 4,963.75 shares
of the Pacer Logistics 7.5% Exchangeable Preferred Stock held by the
stockholder.

(9) Includes 11,000 shares of common stock issuable upon the exercise of
presently exercisable options held by the stockholder. Does not include an
additional 22,000 options which vest in the future.

(10) Includes 19,582 shares of common stock issuable upon the exercise of
presently exercisable options held by the stockholder. Does not include an
additional 9,781 options which vest in the future.

(11) Messrs. Harris, Spector and Becker are each principals and/or employees of
certain affiliates of Apollo Management IV, L.P. Accordingly, each such person
may be deemed to beneficially own shares of common stock held by Apollo
Management IV, L.P. Each such person disclaims beneficial ownership of any such
shares in which he does not have a pecuniary interest.

(12) Mr. Rhein is President, Chief Executive Officer and a director of APL
Limited. Accordingly, he may be deemed to beneficially own shares of common
stock held by APL Limited. Mr. Rhein disclaims beneficial ownership of any such
shares in which he does not have a pecuniary interest.

(13) The business address for Messrs. Orris, Angeli, Goldfein, Cross, Hyland,
Steiner, Yarberry and Atturio is Pacer International, Inc., 1340 Treat
Boulevard, Suite 200, Walnut Creek, CA 94596.

(14) The business address for Messrs. Harris and Becker is Apollo Management
L.P., 1301 Avenue of the Americas, New York, NY 10019.

(15) The business address for Mr. Spector is Apollo Management L.P., 1999 Avenue
of the Stars, Suite 1900, Los Angeles, CA 90067.

(16) The business address for Mr. Rhein is APL Limited, 1111 Broadway, Oakland,
CA 94607.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

          Prior to the recapitalization, the Company provided intermodal
services to APL Limited. These services include moving containers from ports to
inland points, moving containers from inland points to ports, and repositioning
empty containers. These transactions are performed on a cost reimbursement
basis. Thus, no revenues or expenses are recognized for financial reporting

                                       29
<PAGE>

purposes. Reimbursements amounted to $273.6 million, $276.7 million, $22.3
million and $154.1 million, for the fiscal years ended December 31, 1999,
December 25, 1998, and the periods ended December 26, 1997 and November 12,
1997, respectively. At December 31, 1999 the Company had a receivable from APL
Limited for these transactions of $31.3 million.  Pursuant to the
recapitalization, the Company has signed long-term agreements with APL Limited
for the domestic transportation on the stacktrain network of APL Limited's
international freight for an annual management fee of $6.6 million.  For the
seven months since the recapitalization, the Company has recognized $3.9 million
in revenues for this fee.

     Prior to the recapitalization, APL Land Transport Services Inc. shared in
certain expenses of the former parent for services including systems support,
office space and other corporate services.  These expenses were $5.6 million,
$14.4 million, $1.6 million and $12.0 million for the period ended May 28, 1999,
the fiscal year ended December 25, 1998, the periods ended December 26, 1997 and
November 12, 1997, respectively. Pursuant to the recapitalization, the Company
has signed long-term agreements with APL Limited  for administrative services
such as billing and accounts receivable and payable processing on a per
transaction basis.  For the seven months ended December 31, 1999, $1.1 million
has been accrued and was payable at December 31, 1999 for these services.  In
addition, the information technology services of APL Limited are currently being
provided to the Company according to a term sheet upon which negotiations for a
long-term agreement are based.  For the seven months ended December 31, 1999,
$5.8 million has been paid for these services.  The annual fee for these
services is $10 million.

     In addition, the Company receives a credit from APL Limited for the
repositioning expense that APL Limited has avoided due to the Company using APL
Limited's containers in surplus locations. The total amount of revenue
recognized for these services was $21.0 million, $20.0 million, $1.9 million and
$15.8 million for the fiscal years ended December 31, 1999 and December 25,
1998, the periods ended December 26, 1997 and November 12, 1997, respectively.
At December 31, 1999, $3.7 million was receivable from APL Limited.

     The Company also provides services to the Automotive Division of APL
Limited. These services include moving containers primarily in the U.S.--Mexico
trade. Total amount of revenue recognized for these services was $49.1 million,
$38.7 million, $5.0 million and $38.4 million for the fiscal years ended
December 31, 1999 and December 25, 1998, the periods ended December 26, 1997
and November 12, 1997,  respectively. At December 31, 1999, $4.6 million was
receivable from APL Limited.

     Prior to the recapitalization, the Company received an allocation for lease
and maintenance and repair expenses from APL Limited. These expenses were $7.0
million, $19.5 million, $1.9 million and $14.1 million for the period ended May
28, 1999, the fiscal year ended December 25, 1998, the periods ended December
26, 1997 and November 12, 1997,  respectively.

     In 1997, in connection with the acquisition of APL Limited by Neptune
Orient Lines, Limited, APL Limited incurred certain merger related costs
totaling approximately $61 million. These non-operating costs do not relate to
the ongoing operations of the Company and have not been allocated to the
Company's results of operations.

     APL de Mexico, S.A. de C.V. ("APL Mexico"), a wholly owned Mexican
subsidiary APL Limited, provides various agency services to the Company with
respect to its bills of lading in Mexico. Expenses recorded by the Company from
APL Mexico were $1.8 million, $0.5 million, $0.1 million and $0.3 million for
the fiscal years ended December 31, 1999 and December 25, 1998, the periods
ended December 26, 1997 and November 12, 1997, respectively.  At December 31,
1999, $1.2 million was payable to APL Mexico.

     The Company has entered into a management agreement with Apollo Management
for financial and strategic services as the board of directors may reasonable
request.  The annual fee for these services is $0.5 million.  At December 31,
1999, $0.3 million was payable to Apollo Management.

                                       30
<PAGE>

     The Company leases a facility consisting of office, warehousing and
trucking space from A&G Investments, a California general partnership of which
Messrs. Goldfein and Steiner are the only partners.  Mr. Goldfein is a
stockholder and a Director and Executive Vice President of the Company.  Mr.
Steiner is a stockholder and an Executive Vice President of the Company.  Lease
payments were $0.3 million for the seven month period ended December 31, 1999.

     The Company leases a facility consisting of office space from Richard P.
Hyland, a stockholder and an Executive Vice President of the Company.  Such
lease is pursuant to an oral agreement and is on a month-to-month basis.  The
lease was terminated December 31, 1999.

                                       31
<PAGE>

                                    Part IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

A.  Documents filed as part of this report.

    1.  The financial statements, financial statement schedules and accompanying
        reports of independent accountants are listed in the Index to Financial
        Statements and Financial Statement Schedules filed as part of this
        Annual Report.

    2.  Exhibits


<TABLE>
<CAPTION>
   Exhibit
   Number           Exhibit Description
-------------     ------------------------------------------------------------

<S>                 <C>
     3.1            Amended and Restated Charter of Pacer International, Inc.
                    (Incorporated by reference to Exhibit 3.1 to the Company's
                    Registration Statement on Form S-4 filed with the Securities
                    and Exchange Commission (the "Commission") on November 5,
                    1999.

     3.2            Amended and Restated Bylaws of Pacer International, Inc.
                    (Incorporated by reference to Exhibit 3.2 to the Company's
                    Registration Statement on Form S-4 dated November 5, 1999).

     4.1            Indenture, dated as of May 28, 1999, among Pacer
                    International, Inc. the Guarantors and Wilmington Trust
                    Company, as Trustee (including form of 11 3/4% Senior
                    Subordinated Notes due 2007) (Incorporated by reference to
                    Exhibit No. 4.2 to the Company's Registration Statement on
                    Form S-4 dated August 12, 1999).

     4.2            Form of 11 3/4% Senior Subordinated Notes due 2007 (filed as
                    part of Exhibit 4.1). (Incorporated by reference to Exhibit
                    4.3 to the Company's Registration Statement on Form S-4
                    dated August 12, 1999).

     4.3            Shareholders' Agreement, dated as of May 28, 1999, among APL
                    Limited, Pacer International, Inc., Coyote Acquisition LLC
                    and Coyote Acquisition II LLC. (Incorporated by reference to
                    Exhibit No. 4.12 to the Company's Registration Statement on
                    Form S-4 dated August 12, 1999).

     4.4            Shareholders' Agreement, dated as of May 28, 1999, by and
                    among Pacer International, Inc., Coyote Acquisition LLC and
                    Coyote Acquisition II LLC and The Management Stockholders.
                    (Incorporated by reference to Exhibit No. 4.13 to the
                    Company's Registration Statement on Form S-4 dated August
                    12, 1999).

     4.5            Shareholders' Agreement, dated as of May 28, 1999, by and
                    among Pacer International, Inc., Coyote Acquisition LLC and
                    Coyote Acquisition II LLC, BT Capital Investors, L.P. and
                    Pacer International Equity Investors, LLC. (Incorporated by
                    reference to Exhibit No. 4.14 to the Company's Registration
                    Statement on Form S-4 dated August 12, 1999).

     4.6            Registration Rights Agreement, dated as of May 28, 1999,
                    between Pacer International, Inc. and the Purchasers named
                    therein. (Incorporated by Reference to Exhibit No. 4.18 to
                    the Company's Registration Statement on Form S-4 dated
                    August 12, 1999).

    10.1            Employment Agreement for Donald C. Orris. (Incorporated by
                    reference to Exhibit No. 10.1 to the Company's Registration
                    Statement on Form S-4 dated November 5, 1999).
</TABLE>

                                       32
<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number              Exhibit Description
-------------     -----------------------------------------------------------------------------------------
<C>               <S>
    10.2            Employment Agreement for Gerry Angeli. (Incorporated by reference to
                    Exhibit No. 10.2 to the Company's Registration Statement on Form S-4 dated
                    November 5, 1999).

    10.3            Employment Agreement for Gary I. Goldfein. (Incorporated by reference to
                    Exhibit No. 10.3 to the Company's Registration Statement on Form S-4 dated
                    November 5, 1999).

    10.4            Employment Agreement for Robert L. Cross. (Incorporated by reference to
                    Exhibit No. 10.4 to the Company's Registration Statement on Form S-4 dated
                    November 5, 1999).

    10.5            Employment Agreement for Allen E. Steiner. (Incorporated by reference to
                    Exhibit No. 10.5 to the Company's Registration Statement on Form S-4 dated
                    November 5, 1999).

    10.6            Credit Agreement, dated as of May 28, 1999, among Pacer International, Inc.,
                    the lenders party thereto from time to time, Morgan Stanley Senior Funding,
                    Inc., as Syndication Agent, Credit Suisse First Boston Corporation, as
                    Documentation Agent and Bankers Trust Company, as Administrative Agent.
                    (Incorporated by reference to Exhibit No. 4.1 to the Company's Registration
                    Statement on Form S-4 dated August 12, 1999).

    10.7            Stock Purchase Agreement, dated as of March 15, 1999, between APL Limited
                    And Coyote Acquisition LLC. (Incorporated by reference to Exhibit No. 4.4 to
                    the Registration Statement on Form S-4 dated August 12, 1999).

    10.8            Non-Competition Agreement, dated as of May 28, 1999, among Neptune
                    Orient Lines Limited, APL Limited, Pacer International, Inc. and Coyote
                    Acquisition LLC. (Incorporated by reference to Exhibit No. 4.5 to the
                    Registration Statement on Form S-4 dated August 12, 1999).

    10.9            Administrative Services Agreement, dated as of May 28, 1999, between APL
                    Limited and Pacer International, Inc. (Incorporated by reference to Exhibit No.
                    4.6 to the Registration Statement on Form S-4 dated August 12, 1999).

    10.10           IT Supplemental Agreement, dated as of May 11, 1999, between APL Limited,
                    APL Land Transport Services, Inc. and Coyote Acquisition LLC. (Incorporated
                    By reference to Exhibit 10.10 to the Registration Statement on Form S-4 dated
                    November 5, 1999).

    10.11           Stacktrain Services Agreement, dated as of May 28, 1999, among American
                    President Lines, Ltd., APL Co. Pte. Ltd., APL Limited and Pacer International,
                    Inc. (Incorporated by reference to Exhibit No. 4.8 to the Registration
                    Statement on Form S-4 dated August 12, 1999).

    10.12           TPI Chassis Sublet Agreement, dated as of May 28, 1999, among American
                    President Lines, Ltd., APL Co. Pte. Ltd., APL Limited and Pacer International.
                    Inc. (Incorporated by reference to Exhibit No.4.9 to the Registration Statement
                    on Form S-4 dated August 12, 1999).

    10.13           Equipment Supply Agreement, dated as of May 28, 1999, among American
                    President Lines, Ltd., APL Co. Pte. Ltd., APL Limited and Pacer International,
                    Inc. (Incorporated by reference to Exhibit No.4.10 to the Registration Statement
                    on Form S-4 dated August 12, 1999).
</TABLE>

                                       33
<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number              Exhibit Description
-------------     -----------------------------------------------------------------------------------------
<C>               <S>
    10.14           Primary Obligation and Guaranty Agreement, dated as of March 15, 1999, by
                    Neptune Orient Lines Limited in favor of Coyote Acquisition LLC and APL
                    Land Transport Services, Inc. (Incorporated by reference to Exhibit No. 4.11
                    to the Registration Statement on Form S-4 dated August 12, 1999).

    10.15           Management Agreement, dated as of May 28, 1999, between Apollo
                    Management IV, L.P. and Pacer International, Inc. (Incorporated by reference
                    to Exhibit No. 4.15 to the Registration Statement on Form S-4 dated August
                    12, 1999).

    10.16           Tax Sharing Agreement, dated as of May 28, 1999, by and among Coyote
                    Acquisition LLC, Pacer International, Inc. and Pacer Logistics, Inc.
                    (Incorporated by reference to Exhibit No. 4.16 to the Registration Statement
                    on Form S-4 dated August 12, 1999).

    10.17           Purchase Agreement, dated as of May 24, 1999, among Pacer International,
                    Inc., the Guarantors and the Placement Agents named therein.  (Incorporated
                    by reference to Exhibit No. 4.17 to the Registration Statement on Form S-4
                    dated August 12, 1999).

    10.18           Form of Joinder Agreement, dated as of May 24, 1999, between Coyote
                    Acquisition LLC and the Placement Agents named therein (Incorporated by
                    reference to Exhibit No. 4.19 to the Registration Statement on Form S-4 dated
                    August 12, 1999).

    10.19           Intermodal Transportation Agreement No. 1111, dated as of May 4, 1999
                    Between CSX Intermodal, Inc., APL Land Transport Services, Inc., APL
                    Limited and APL Co. Pte. Ltd. (Incorporated by reference to Exhibit No. 10.19
                    to the Registration Statement on Form S-4 dated November 5, 1999).

    10.20           Domestic Incentive Agreement, dated as of May 4, 1999, between CSX
                    Intermodal, Inc. and Pacer International, Inc. (Incorporated by reference to
                    Exhibit No. 10.20 to the Registration Statement on Form S-4 dated November
                    5, 1999).

    10.21           Rail Transportation Agreement, dated as of October 11, 1996, between
                    Union Pacific Railroad Company, APL Land Transport Services, Inc.,
                    American President Lines, Ltd., and APL Co. Pte. Ltd. (Incorporated by
                    reference to Exhibit No. 10.21 to the Registration Statement on Form S-4
                    dated November 5, 1999).

    10.22           Asset Purchase Agreement dated December 31, 1999, among Conex
                    Acquisition Corporation, Conex Global Logistics Services, Inc., MSL
                    Tranportation Group, Inc., Jupiter Freight, Inc. The Michael W. Keller
                    Living Trust, The Uchida Family Trust, Michael Keller and Shigehiro Uchida
                    (Incorporated by reference to Exhibit No. 2.1 to the Current Report on Form
                    8-K dated January 13, 2000).

    10.23           Employment Agreement dated January 13, 2000, between Conex Acquisition
                    Corporation and Michael Keller.

    10.24           Employment Agreement dated January 13, 2000, between Conex Acquisition
                    Corporation and Shigehiro Uchida.
</TABLE>

                                       34
<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number              Exhibit Description
-------------     -----------------------------------------------------------------------------------------
<C>               <S>

    10.25           First Supplemental Indenture dated as of January 13, 2000, among Pacer
                    International, Inc., Conex Acquisition Corporation and Wilmington Trust
                    Company.

    10.26           First Amendment dated August 9, 1999, among Pacer International, Inc., the
                    lending institutions party to the Pacer International, Inc. Credit Agreement
                    dated May 28, 1999, Credit Suisse First Boston, Morgan Stanley Senior
                    Funding, Inc., and Bankers Trust Company.

    10.27           Second Amendment dated January 7, 2000, among Pacer International, Inc.,
                    the Lending institutions party to the Pacer International, Inc. Credit Agreement
                    dated May 28, 1999, Credit Suisse First Boston, Morgan Stanley Senior
                    Funding, Inc., and Bankers Trust Company.

    16.1            Letter re:  change in certifying accountant (incorporated by reference to Exhibit
                    No. 16.1 to the Registration Statement on Form S-4 dated November 5, 1999).

    27.1            Financial Data Schedule.
</TABLE>


B.  Reports on Form 8-K

    The Company did not file any reports on Form 8-K during the three months
    ended December 31, 1999.

C.  Other Exhibits

    No exhibits in addition to those previously filed or listed in Item 14(a)(2)
    are filed herein.

D.  Other Financial Statement Schedules

    Schedule II - Valuation and Qualifying Accounts - filed herein.

                                       35
<PAGE>

                                   SIGNATURE
                                   ---------

  Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                           PACER INTERNATIONAL, INC.


Date: February  24,  2000                     By: /s/ Joseph P. Atturio
      -------------------                         ---------------------
                                                    Joseph P. Atturio
                                       Vice President, Controller and Secretary
                                             (Principal Accounting Officer)

  Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.


Date: February 24, 2000                By:  /s/ Donald C. Orris
      -----------------                     -------------------
                                              Donald C. Orris
                                   Chairman, Chief Executive Officer and
                                                  Director
                                        (Principal Executive Officer)

Date: February 24, 2000                By:  /s/ Lawrence C. Yarberry
      -----------------                     ------------------------
                                              Lawrence C. Yarberry
                                        Executive Vice President, Chief
                                        Financial Officer and Treasurer
                                         (Principal Financial Officer)

Date: February 24, 2000                By:  /s/ Joshua J. Harris
      -----------------                     --------------------
                                              Joshua J. Harris
                                                  Director

Date: February 24, 2000                By:  /s/ Bruce H. Spector
      -----------------                     --------------------
                                              Bruce H. Spector
                                                  Director

Date: February 24, 2000                By:  /s/ Marc E. Becker
      -----------------                     ------------------
                                              Marc E. Becker
                                                 Director

Date: February 24, 2000                By:  /s/ Timothy J. Rhein
      -----------------                     --------------------
                                              Timothy J. Rhein
                                                 Director

                                       36
<PAGE>

               PACER INTERNATIONAL INC. AND SUBSIDIARY COMPANIES

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                       AND FINANCIAL STATEMENT SCHEDULES



<TABLE>
<CAPTION>
                                                                                                    Page
                                                                                              --------------
<S>                                                                                             <C>

Report of Independent Accountants (PricewaterhouseCoopers LLP) ...............................      F-2
Report of Independent Public Accountants (Arthur Andersen LLP) ...............................      F-3

Consolidated Balance Sheet of Pacer International, Inc. as of December 31, 1999 and
   American President Lines Stacktrain Services - a division of APL Land Transport
   Services, Inc. - Statement of Assets, Liabilities and Divisional Control Account as
   of December 25, 1998 (currently known as Pacer International, Inc.) .......................      F-4

Consolidated Statement of Operations of Pacer International, Inc. for the fiscal year
   ended December 31, 1999 and American President Lines Stacktrain Services - a
   division of APL Land Transport Services, Inc. - Statements of Operations for the fiscal
   year ended December 25, 1998, the period November 13, 1997 through December
   26, 1997 and the period December 28, 1996 through November 12, 1997 ......................       F-5

Consolidated Statement of Stockholders' Equity of Pacer International, Inc. for the
   fiscal year ended December 31, 1999 and American President Lines Stacktrain
   Services - a division of APL Land Transport Services, Inc. - Statements of Divisional
   Control Account for the fiscal year ended December 25, 1998, the period November
   13, 1997 through December 26, 1997 and the period December 28, 1996 through
   November 12, 1997..........................................................................      F-6

Consolidated Statement of Cash Flows of Pacer International, Inc. for the fiscal year
   ended December 31, 1999 and American President Lines Stacktrain Services - a
   division of APL Land Transport Services, Inc. - Statements of Cash Flows for the
   fiscal year ended December 25, 1998, the period November 13, 1997 through
   December 26, 1997 and the period December 28, 1996 through November 12, 1997...............      F-7

Notes to Consolidated Financial
 Statements...................................................................................      F-8

Schedule II - Valuation and Qualifying Accounts................................................     F-27
</TABLE>

  All other schedules are omitted because they are not applicable or because the
required information is shown in the financial statements or the notes thereto.
Columns omitted from schedules filed have been omitted because the information
is not applicable.



                                      F-1
<PAGE>

                       Report of Independent Accountants

   To the Board of Directors and Shareholders of Pacer International, Inc.:


   In our opinion, the consolidated financial statements listed in the index on
   page F-1 present fairly, in all material respects, the financial position of
   Pacer International, Inc. and its subsidiaries at December 31, 1999, and the
   results of their operations and their cash flows for the year then ended, in
   conformity with accounting principles generally accepted in the United
   States.  In addition, in our opinion, the financial statement schedule for
   the year ended December 31, 1999 listed in the index referred to above
   present fairly, in all material respects, the information set forth therein
   when read in conjunction with the related consolidated financial statements.
   These financial statements and financial statement schedule are the
   responsibility of the Company's management; our responsibility is to
   express an opinion on these financial statements and financial statement
   schedule based on our audit.  We conducted our audit of these statements in
   accordance with auditing standards generally accepted in the United States,
   which require that we plan and perform the audit to obtain reasonable
   assurance about whether the financial statements are free of material
   misstatement.  An audit includes examining, on a test basis, evidence
   supporting the amounts and disclosures in the financial statements,
   assessing the accounting principles used and significant estimates made by
   management, and evaluating the overall financial statement presentation.  We
   believe that our audit provides a reasonable basis for the opinion expressed
   above.



   PricewaterhouseCoopers LLP
   San Francisco, California
   March 14, 2000



                                      F-2
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To APL Land Transport Services, Inc., a wholly-owned subsidiary of APL Limited:

We have audited the accompanying statements of assets, liabilities and
divisional control account of American President Lines Stacktrain Services (a
division of APL Land Transport Services, Inc., a Tennessee corporation and a
wholly-owned subsidiary of APL Limited) as of December 25, 1998 and the related
statements of operations, divisional control account and cash flows for the
fiscal year ended December 25, 1998 and the period from November 13, 1997
through December 26, 1997.  We have also audited the accompanying statements of
operations, divisional control account and cash flows of the Predecessor
(identified in Note 1) for the period from December 28, 1996 through November
12, 1997. These financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States.  Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.  We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of American President Lines
Stacktrain Services as of December 25, 1998 and the results of its operations
and cash flows for the fiscal year ended December 25, 1998 and the period from
November 13, 1997 through December 26, 1997, and the results of the
Predecessor's operations and cash flows for the period from December 28, 1996
through November 12, 1997, in conformity with accounting principles generally
accepted in the United States.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The schedules listed in the index of financial
statements are presented for purposes of complying with the Securities and
Exchange Commission's rules and are not part of the basic financial statements.
These schedules have been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, fairly state in
all material respects the financial data required to be set forth herein in
relation to the basic financial statements taken as a whole.

                                           ARTHUR ANDERSEN LLP

Memphis, Tennessee,
January 29, 1999.



                                      F-3
<PAGE>

                   PACER INTERNATIONAL, INC. AND SUBSIDIARIES
               CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1999
                                      AND
                 AMERICAN PRESIDENT LINES STACKTRAIN SERVICES,
                a division of APL Land Transport Services, Inc.
     STATEMENT OF ASSETS, LIABILITIES AND DIVISIONAL CONTROL ACCOUNT AS OF
                               DECEMBER 25, 1998
                                  (SEE NOTE 1)

<TABLE>
<CAPTION>
                                                                          December 31,  1999         December 25, 1998
                                                                        ---------------------       ----------------------
                                                                                           (In millions)
                                 ASSETS
<S>                                                                       <C>                                      <C>
Current assets
  Cash and cash equivalents...........................................              $  12.2                       $     -
  Accounts receivable, net of allowances of $3.0 million and $0.7
          million, respectively ......................................                114.7                          43.9
  Accounts receivable from APL........................................                 39.6                             -
  Intercompany trade receivables......................................                    -                           3.4
  prepaid expenses and other..........................................                  2.9                           0.1
  Deferred income taxes...............................................                  4.4                             -
                                                                        ---------------------       ----------------------
    Total current assets..............................................                173.8                          47.4
                                                                        ---------------------       ----------------------

Property and equipment
  Property and equipment at cost......................................                 61.8                          95.4
  Accumulated depreciation............................................                (11.4)                         (6.6)
                                                                        ---------------------       ----------------------
    Property and equipment, net.......................................                 50.4                          88.8
                                                                        ---------------------       ----------------------

Other assets
  Goodwill, net......................................................                 143.1                          19.2
  Deferred income taxes..............................................                  75.7                             -
  Other assets.......................................................                  12.0                           0.7
                                                                        ---------------------       ----------------------
    Total other assets                                                                230.8                          19.9
                                                                        ---------------------       ----------------------

Total assets........................................................                $ 455.0                        $156.1
                                                                        =====================       ======================

              LIABILITIES AND STOCKHOLDERS' EQUITY
                 OR DIVISIONAL CONTROL ACCOUNT
Current liabilities
  Current maturities of long-term debt and capital leases ............              $   1.5                        $    -
  Accounts payable and accrued liabilities............................                176.0                           84.6
                                                                        ---------------------       ----------------------
    Total current liabilities........................................                 177.5                           84.6
                                                                        ---------------------       ----------------------

Long-term liabilities
  Deferred income taxes.............................................                      -                           15.4
  Long-term debt and capital leases.................................                  282.9                              -
  Other.............................................................                    2.9                            0.5
                                                                        ---------------------       ----------------------
    Total long-term liabilities.....................................                  285.8                           15.9
                                                                        ---------------------       ----------------------
Total liabilities...................................................                  463.3                          100.5
                                                                        ---------------------       ----------------------

Minority interest - exchangeable preferred stock ...................                   23.4                              -
                                                                        ---------------------       ----------------------
Commitments and contingencies (Note 7)
Stockholders' equity  or divisional control account
  Divisional control account........................................                      -                           55.6
  Preferred stock at December 31, 1999:  $0.01 par value,
      1,000,000 shares authorized, none outstanding ................                      -                              -
  Common stock at December 31, 1999:  $0.01 par value,
      20,000,000 shares authorized, 10,440,000 issued and
      outstanding...................................................                    0.1                              -
  Additional paid in capital........................................                  104.3                              -
  Retained earnings (accumulated deficit)...........................                 (136.1)                             -
                                                                        ---------------------       ----------------------
    Total stockholders' equity (deficit) or divisional control
      account.......................................................                  (31.7)                          55.6
                                                                        ---------------------       ----------------------
Total liabilities and equity or divisional control account .........                $ 455.0                         $156.1
                                                                        =====================       ======================
</TABLE>

   The accompanying notes are an integral part of the consolidated financial
                                  statements.
                                      F-4
<PAGE>

                   PACER INTERNATIONAL, INC. AND SUBSIDIARIES
         CONSOLIDATED STATEMENT OF OPERATIONS FOR THE FISCAL YEAR ENDED
                               DECEMBER 31, 1999
                                      AND
                 AMERICAN PRESIDENT LINES STACKTRAIN SERVICES,
                a division of APL Land Transport Services, Inc.
      STATEMENTS OF OPERATIONS FOR THE FISCAL YEAR ENDED DECEMBER 25, 1998
           AND THE PERIOD NOVEMBER 13, 1997 THROUGH DECEMBER 26, 1997
                AND DECEMBER 28, 1996 THROUGH NOVEMBER 12, 1997
                                  (SEE NOTE 1)

<TABLE>
<CAPTION>

                                                                            The Company
                                           ---------------------------------------------------------------------------
                                                  Fiscal Year                 Fiscal Year             Nov. 13, 1997
                                                     Ended                       Ended                   through
                                                 Dec. 31, 1999               Dec. 25, 1998            Dec. 26, 1997
                                           ------------------------    -----------------------    --------------------
<S>                                          <C>                         <C>                        <C>
                                                                                        (In millions)

Gross revenues............................                   $917.4                     $590.8                   $60.0
Cost of purchased transportation and
  services.................................                   735.4                      466.3                    47.4
                                           ------------------------    -----------------------    --------------------
    Net revenues ..........................                   182.0                      124.5                    12.6
                                           ------------------------    -----------------------    --------------------

Operating expenses:
  Direct operating expenses................                    66.5                       56.4                     6.7
  Selling, general and
   administrative expenses ................                    58.9                       28.3                     3.2

  Depreciation and amortization............                     8.6                        6.6                     0.7
                                           ------------------------    -----------------------    --------------------
    Total operating expenses ..............                   134.0                       91.3                    10.6
                                           ------------------------    -----------------------    --------------------

Income from operations.....................                    48.0                       33.2                     2.0
                                           ------------------------    -----------------------    --------------------

Interest expense (income), net.............                    18.6                          -                     0.3
                                           ------------------------    -----------------------    --------------------

Income before income taxes and minority
  interest..................................                   29.4                       33.2                     1.7
                                           ------------------------    -----------------------    --------------------

Income taxes or charge in lieu of income
  taxes.....................................                   11.7                       12.6                     0.7
                                           ------------------------    -----------------------    --------------------
Minority interest...........................                    1.1                          -                       -
                                           ------------------------    -----------------------    --------------------

Net income.................................                  $ 16.6                     $ 20.6                   $ 1.0
                                           ========================    =======================    ====================
</TABLE>
























<TABLE>
<CAPTION>

                                                     The
                                                 Predecessor
                                            ----------------------
                                                Dec. 28, 1996
                                                   through
                                                 Nov. 12, 1997
                                           ----------------------
<S>                                          <C>
                                                 (In millions)

Gross revenues............................                  $517.1
Cost of purchased transportation and
  services.................................                  407.5
                                            ----------------------
    Net revenues ..........................                  109.6
                                            ----------------------

Operating expenses:
  Direct operating expenses................                   46.4
  Selling, general and administrative
    expenses...............................                   21.4
  Depreciation and amortization............                    3.0
                                            ----------------------
    Total operating expenses ..............                   70.8
                                            ----------------------

Income from operations.....................                   38.8
                                           -----------------------

Interest expense (income), net.............                    2.0
                                           -----------------------

Income before income taxes and minority
  interest..................................                   36.8
                                            -----------------------

Income taxes or charge in lieu of income
  taxes.....................................                   13.9
                                            -----------------------
Minority interest...........................                      -
                                           ------------------------

Net income.................................                  $ 22.9
                                           ========================
</TABLE>



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



                                      F-5
<PAGE>

                   PACER INTERNATIONAL, INC. AND SUBSIDIARIES
     CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY AS OF DECEMBER 31, 1999
                                      AND
                 AMERICAN PRESIDENT LINES STACKTRAIN SERVICES,
                a division of APL Land Transport Services, Inc.
                 STATEMENTS OF DIVISIONAL CONTROL ACCOUNT AS OF
           DECEMBER 25, 1998, DECEMBER 26, 1997 AND NOVEMBER 12, 1997
                                  (SEE NOTE 1)


<TABLE>
<CAPTION>
                                                                  Retained
                                Common Stock      Additional      Earnings       Divisional          Total
                          --------------------
                              No. of               Paid-in      (Accumulated       Control       Stockholders'
                              Shares    Amount     Capital        Deficit)         Account      Equity(Deficit)
                          ------------------------------------------------------------------------------------
<S>                           <C>       <C>       <C>           <C>              <C>            <C>
                                                               (In millions)
Balance December 27,
1996....................          -    $     -   $         -   $           -         $ (0.1)           $  (0.1)
Net Income..............                                                               22.9               22.9
Intercompany Funding....                                                               18.4               18.4
                          ------------------------------------------------------------------------------------

Balance November 12, 1997          -         -             -               -           41.2               41.2
Net Income..............                                                                1.0                1.0
Intercompany Funding....                                                              (12.6)             (12.6)
                          ------------------------------------------------------------------------------------

Balance December 26,
1997.....................          -         -             -               -           29.6               29.6
Net Income...............                                                              20.6               20.6
Intercompany Funding.....                                                               5.4                5.4
                          ------------------------------------------------------------------------------------

Balance December 25,
1998.....................          -         -             -               -           55.6               55.6
Distribution to
Shareholders ............                                             (300.0)             -             (300.0)
Effects of
Recapitalization.........                                              147.3          (55.6)              91.7
Issuance of Common
Stock....................       10.4       0.1         104.3               -              -              104.4
Net Income...............                                               16.6              -               16.6
                          ------------------------------------------------------------------------------------
Balance December 31,
1999 .....................      10.4      $0.1        $104.3         $(136.1)        $    -            $ (31.7)
                          ====================================================================================
</TABLE>


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



                                      F-6
<PAGE>

                   PACER INTERNATIONAL, INC. AND SUBSIDIARIES
         CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE FISCAL YEAR ENDED
                             DECEMBER 31, 1999 AND
                 AMERICAN PRESIDENT LINES STACKTRAIN SERVICES,
                a division of APL Land Transport Services, Inc.
      STATEMENTS OF CASH FLOWS FOR THE FISCAL YEAR ENDED DECEMBER 25, 1998
         AND THE PERIOD NOVEMBER 13, 1997 THROUGH DECEMBER 26, 1997 AND
                DECEMBER 28, 1996 THROUGH NOVEMBER 12, 1997 AND
                                  (SEE NOTE 1)
<TABLE>
<CAPTION>
                                                                                                                The
                                                                        The Company                         Predecessor
                                                   ---------------------------------------------------------------------
                                                      Fiscal Year       Fiscal Year      Nov. 13, 1997     Dec. 28, 1996
                                                         Ended             Ended            through           through
                                                     Dec. 31, 1999     Dec. 25, 1998     Dec. 26, 1997     Nov. 12, 1997
                                                   ---------------------------------------------------------------------
<S>                                                  <C>               <C>               <C>               <C>
                                                                                (In millions)
Cash Flows from Operating Activities
Net Income........................................         $  16.6            $ 20.6            $  1.0            $ 22.9
Adjustments to Reconcile Net Income to
  Net Cash Provided By Operating Activities:
    Depreciation and Amortization.................             8.6               6.6               0.7               3.0
    Gain on Sale of Property and Equipment........               -              (0.4)                -              (2.6)
    Deferred Taxes................................             4.6               1.0               1.7              (3.4)
    Change in Current Assets and Liabilities:
      Trade and Other Receivables ................           (10.8)            (10.5)              5.5               0.7
      Receivable from APL ........................           (39.6)                -                 -                 -
      Intercompany Trade Receivables .............               -              (1.0)              0.3              (0.3)
      Prepaid Expenses and Other Current
        Assets....................................               -              (0.1)              4.3              (3.8)
      Accounts Payable and Accrued
        Liabilities...............................            39.4              16.2              (2.4)              2.1
      Other.......................................             2.0              (0.6)              1.6              (0.4)
                                                   ---------------------------------------------------------------------

        Net Cash Provided By Operating
          Activities ..............................           20.8              31.8              12.7              18.2
                                                   ---------------------------------------------------------------------

Cash Flows from Investing Activities
Purchase of Business, Net of Cash Acquired .......          (112.0)                -                 -                 -
Capital Expenditures..............................            (2.0)            (39.7)                -                 -
Proceeds from Sales of Property and
    Equipment.....................................            40.0               1.2                 -               3.6
                                                   ---------------------------------------------------------------------

        Net Cash Provided By  (Used in)
          Investing Activities ....................          (74.0)            (38.5)                -               3.6
                                                   ---------------------------------------------------------------------

Cash Flows from Financing Activities
Proceeds of Long-Term Debt, Net of Costs..........           277.5                 -                 -                 -
Proceeds from Issuance of Common Stock ...........           104.4                 -                 -                 -
Distribution to APL and Recap Costs ..............          (311.7)                -                 -                 -
Redemption of Preferred Stock of
  Subsidiary......................................            (2.0)                -                 -                 -
Intercompany Funding, Net.........................               -               6.7             (12.7)            (21.8)
Debt, Revolving Credit Facility and Capital Lease
  Obligation Repayment............................            (2.8)                -                 -                 -
                                                   ---------------------------------------------------------------------

        Net Cash Provided By  (Used in)
          Financing Activities ....................           65.4               6.7             (12.7)            (21.8)
                                                   ---------------------------------------------------------------------

Net Increase in Cash and Cash
  Equivalents......................................           12.2                 -                 -                 -
                                                   ---------------------------------------------------------------------

Cash and Cash Equivalents at Beginning of
  Year/Period......................................              -                 -                 -                 -
                                                   ---------------------------------------------------------------------

Cash and Cash Equivalents at End of Year/Period ...        $  12.2     $           -     $           -     $           -
                                                   =====================================================================
</TABLE>
   The accompanying notes are an integral part of the consolidated financial
                                  statements.

                                      F-7
<PAGE>

                   PACER INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.  BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

       Pacer International, Inc. and its subsidiaries are a freight
transportation and logistics provider operating with two complementary business
segments, the stacktrain segment and the logistics segment. The Company was
recently recapitalized and acquired the logistics segment as discussed below.

       Prior to November 1998 APL Land Transport Services, Inc. consisted of two
operating divisions:  Stacktrain Services Division and the Automotive Division.
On November 20, 1998, APL Land Transport Services, Inc. transferred all of its
assets, except those of the Stacktrain Services Division, to its parent, APL
Limited.  As of May 28, 1999 APL Land Transport Services, Inc. was renamed
Pacer International, Inc. ("the Company") and was recapitalized through (1) the
purchase by a group led by entities formed by affiliates of Apollo Management,
L.P of shares of the Company's common stock from APL Limited and (2) the
Company's redemption of shares of its common stock held by APL Limited.  As part
of the recapitalization, the assets and liabilities of the Company remained at
their historical basis for financial reporting purposes; for income tax
purposes, the transaction has been treated as a taxable transaction such that
the consolidated financial statements reflect a "step-up" in tax basis resulting
in the establishment of a deferred tax asset.  See Note 4.  Immediately
following its recapitalization, the Company acquired Pacer Logistics, Inc,
resulting in Pacer Logistics becoming a subsidiary of the Company.  The
acquisition of Pacer Logistics was accounted for using the purchase method of
accounting.  See Note 2.

          On November 12, 1997 APL Limited was acquired by Neptune U.S.A., Inc.,
a Delaware corporation and an indirect, wholly-owned subsidiary of Neptune
Orient Lines Limited, a Singapore corporation.  In the acquisition, Neptune
U.S.A., Inc. merged with and into APL Limited.  The surviving company, APL
Limited, was a subsidiary of Neptune Orient Lines Limited.  The transaction was
accounted for by APL Limited using the purchase method of accounting.  The
purchase price exceeded the fair market value of the underlying net assets
acquired by approximately $165 million which was allocated to goodwill and other
intangible assets and is being amortized on a straight-line basis over various
periods, none in excess of 40 years.  APL Limited pushed down the fair value
adjustments arising in the purchase to its subsidiaries, including the American
President Lines Stacktrain Services division of APL Land Transport Services,
Inc.

Basis of Presentation

       The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period.  Actual results could differ from those estimates.  Prior to
May 28, 1999, APL Land Transport Services, Inc. was a wholly-owned subsidiary of
APL Limited (as discussed above) and was allocated certain expenses.  These
expenses include systems support, office space, salaries, and other corporate
services which were either allocated or charged on a cost reimbursement basis.
Management believes that these allocations were reasonable.  Subsequent to May
28, 1999, the corporate administrative services previously provided by APL
Limited are incurred directly by the stacktrain segment.

Principles of Consolidation

       The consolidated financial statements as of and for the year ended
December 31, 1999 include the accounts of the Company and all entities in which
the Company has more than a 50% equity ownership including its subsidiary, Pacer
Logistics, Inc., acquired May 28, 1999.  All significant intercompany
transactions and balances have been eliminated in consolidation.
                                      F-8
<PAGE>

                   PACER INTERNATIONAL, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

      The financial statements subsequent to November 12, 1997 include the
accounts of the Company and include the "push down" effect of the purchase price
allocation.  Prior to November 13, 1997, the financial statements include the
accounts of the Stacktrain Services division (the "Predecessor") of APL Land
Transport Services, Inc.

Industry Segments

      The Company operates in two reportable industry segments, providing
intermodal rail  services (the "Stacktrain" segment) and providing logistic
services (the "Logistics" segment) in North America.  The Stacktrain segment's
fiscal year ends on the last Friday in December and the Logistics segment's
calendar year ends on the last day in December.


Goodwill

      Goodwill represents the excess of cost over the estimated fair value of
the net tangible and intangible assets acquired and is being amortized over 40
years on a straight-line basis.  The Company evaluates the carrying value of
goodwill and recoverability should events or circumstances occur that bring into
question the realizable value or impairment of goodwill.  The Company's
principal considerations in determining impairment include the strategic benefit
to the Company of the business related to the goodwill as measured by
undiscounted current and expected future operating income levels of the business
and expected undiscounted future cash flows.  When goodwill is determined to not
be recoverable, an impairment is recognized as a charge to operations to the
extent the carrying value of related assets (including goodwill) exceeds the sum
of the undiscounted cash flows from those related assets.  Amortization expense
was $2.4 million and $0.6 million for 1999 and 1998, respectively; and
accumulated amortization was $2.8 million and $0.6 million for 1999 and 1998,
respectively.

Deferred Financing Costs

      The deferred financing costs included in other assets relate to the
cost incurred in the placement of the Company's debt and are being amortized
using the effective interest method over the terms of the related debt which
range from 5 to 7 years.

Cash and Cash Equivalents

      Cash and cash equivalents include highly liquid investments with an
original maturity of three months or less.

Revenue Recognition

      The Company's Stacktrain segment recognizes revenue and rail linehaul
expenses on a percentage-of-completion basis and remaining expenses as incurred.
The Logistics segment recognizes revenue and related expenses when shipments are
complete.

Property and Equipment

      Property and equipment are recorded at cost.  For assets financed
under capital leases, the present value of the future minimum lease payments is
recorded at the date of acquisition as property and equipment, with a
corresponding amount recorded as a capital lease obligation.  Depreciation and
amortization are provided on a straight-line basis over the estimated useful
lives of the assets as follows:
                                      F-9
<PAGE>

                   PACER INTERNATIONAL, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

<TABLE>
<CAPTION>
                  Classification                        Estimated Useful Life
---------------------------------------------------  ---------------------------
<S>                                                  <C>

Rail Cars..........................................           28 Years
Containers and Chassis.............................            5 Years
Leasehold Improvements ............................         Term of Lease
Other..............................................         3 to 7 Years
</TABLE>

          When assets are sold, the applicable costs and accumulated
depreciation are removed from the accounts, and any gain or loss is included in
income. Expenditures for maintenance and repairs are expensed as incurred.

Concentration of Credit Risk

          Financial instruments that potentially subject the Company to
concentrations of credit risk consist primarily of trade accounts receivable.
The Company sells primarily on net 30-day terms, performs credit evaluation
procedures on its customers and generally does not require collateral on its
accounts receivable.  The Company maintains an allowance for potential credit
losses. The Company has two customers accounting for 10% or more of revenues.
Hub Group generated $128.2 million of revenues in the stacktrain segment in 1999
and Union Pacific generated $100.8 million of revenues in both reporting
segments in 1999.  The receivables from these customers were $15.1 million and
$12.6 million at December 31, 1999 and December 25, 1998, respectively.  In
addition, the Company had a receivable from APL Limited at December 31, 1999 of
$39.6 million primarily for the movement of APL Limited's international
business.

Financial Instruments

          The carrying amounts for cash, accounts receivables and accounts
payable approximate fair value due to the short-term nature of these
instruments.  Other fair value disclosures are in the respective notes.

Reclassification

          Certain reclassifications have been made to the 1998 and 1997 balances
to conform to the 1999 presentation.  These reclassifications had no effect on
the Company's financial position or net income.

Reliance on Independent Contractors

          The Company relies upon the services of independent contractors for
underlying transportation services for their customers.  Contracts with
independent contractors are, in most cases, terminable upon short notice by
either party.  Although the Company believes its relationships with independent
contractors are good, there can be no assurance that the Company will continue
to be successful in retaining and recruiting independent contractors or that
independent contractors who terminate their contracts can be replaced by equally
qualified persons.

Dependence on Railroads and Equipment and Service Availability

          The Company is dependent upon the major railroads in the United States
for substantially all of the intermodal services provided by the Company.  In
many markets rail services are limited to a few railroads or even a single
railroad.  Consequently, a reduction in or elimination of rail service to a
particular market is likely to adversely affect the Company's ability to provide
intermodal transportation services to some of the Company's customers.
Furthermore, significant rate increases, work stoppage or adverse weather
conditions can impact the railroads and therefore the Company's ability to
provide cost-effective services to its customers.
                                      F-10
<PAGE>

                   PACER INTERNATIONAL, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

          In addition, the Company is dependent in part on the availability of
rail, truck and ocean services provided by independent third parties. If the
Company were unable to secure sufficient equipment or other transportation
services to meet its customers' needs, its results of operations could be
materially adversely affected on a temporary or permanent basis.

Concentration of Business on Intermodal Marketing

          Significant portions of the Company's revenues are derived from
intermodal marketing.  As a result, a decrease in demand for intermodal
transportation services relative to other transportation services could have a
material adverse affect on the Company's results of operations.

Other Comprehensive Income

          In June, 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 130 ("FAS 130")
"Reporting Comprehensive Income."  FAS 130 requires companies to classify items
of comprehensive income by their nature in the financial statements and display
the accumulated balance of comprehensive income separately from retained
earnings and additional paid-in-capital in the equity section of the balance
sheet.  To date, the Company has not had any transactions that are required to
be reported as other comprehensive income.

Recently Issued Accounting Pronouncements

          In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133 ("FAS 133"), "Accounting for
Derivative Instruments and Hedging Activities".  FAS 133 establishes accounting
and reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts (collectively referred to as
derivatives), and for hedging activities, FAS 133 is effective for fiscal years
beginning after June 15, 2000, with earlier application encouraged.  The Company
is evaluating the possible impact, if any, that FAS 133 may have on its
financial statements.

NOTE 2.  THE RECAPITALIZATION AND PURCHASE TRANSACTIONS

          The recapitalization of the Company and acquisition of Pacer
Logistics, financed primarily with the issuance of $150.0 million in senior
subordinated notes, $135.0 million in term loans, $133.0 million in issued,
rolled or exchanged equity and $39.6 million in net proceeds from the sale and
leaseback of 199 railcars purchased in 1998, resulted in affiliates of Apollo
Management, LP holding 89.9%, APL Limited holding 7.2% and affiliates of
Deutsche Bank Securities, Inc. and Credit Suisse First Boston holding 2.9% of
the Company's outstanding common stock as of May 28, 1999.

          As discussed in Note 1, on May 28, 1999, the Company acquired the
common stock of Pacer Logistics, Inc. (formerly known as Pacer International,
Inc.), a privately-held third party logistics provider pursuant to a stock
purchase agreement (the "Purchase Agreement"), dated as of March 15, 1999
between APL Limited (the Company's former parent) and Coyote Acquisition LLC (a
transitory subsidiary which was merged with and into Pacer Logistics, Inc. after
the acquisition).

     The Company paid approximately $137.5 million for the acquisition of Pacer
Logistics, Inc., which included acquisition fees of $2.9 million and assumed
indebtedness of $62.6 million.  The Company financed the acquisition with a
portion of the proceeds raised in the note offering and with funds under the
Credit Facility as discussed in Note 3.  The acquisition of Pacer Logistics has
been accounted for as a purchase in accordance with Accounting Principles Board
Opinion No. 16, "Business Combinations".  The aggregate purchase price has been
allocated to the underlying assets and liabilities based upon preliminary
estimates of fair values at the date of
                                      F-11
<PAGE>

                   PACER INTERNATIONAL, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

acquisition, which may be updated based on final appraisals, with the remainder
allocated to goodwill to be amortized over 40 years. The Company determined a
40-year amortization period was appropriate after considering that there are no
legal, regulatory or contractual provisions associated with the logistics
segment that may limit the useful life of the goodwill, the service provided by
the logistics segment is not subject to obsolescence, the Company is not aware
of any expected actions of competitors and others that may restrict the
logistics segment's ability to successfully compete in the industry and the
predecessor company of the logistics segment has successfully operated since
1928. Though the fair value estimates are preliminary, management does not
believe there will be a material change to goodwill when these estimates are
finalized. The results of operations for the acquired business are included in
the Company's consolidated financial statements beginning May 28, 1999. The
purchase price allocation, preliminary in nature and subject to change, is as
follows (in millions):

<TABLE>
<S>                                                                             <C>
Accounts receivable, net .....................................................       $ 45.9
Prepaid expenses and other current assets ....................................          6.3
Property and equipment, net ..................................................          4.4
Other non-current assets .....................................................          1.7
Goodwill .....................................................................        123.1
Current liabilities ..........................................................        (43.2)
Long-term liabilities ........................................................         (0.7)
                                                                              -------------
         Total purchase price ...............................................        $137.5
                                                                              =============
</TABLE>

          Pro forma results of operations, giving effect to the Company's
recapitalization and acquisition of Pacer Logistics, including acquisitions made
by Pacer Logistics, at the beginning of each period presented is as follows (in
millions):

<TABLE>
<CAPTION>
                                                                 Year Ended                      Year Ended
                                                              December 31, 1999              December 25, 1998
                                                        --------------------------      -------------------------
                                                                 (Unaudited)                    (Unaudited)
<S>                                                       <C>                             <C>
Gross revenues ...............................                            $1,068.9                         $981.6
Income before extraordinary items ............                            $   17.4                         $ 13.3
Net income .....................................                          $   17.4                         $ 13.0
</TABLE>


NOTE 3.  LONG-TERM DEBT AND CAPITAL LEASES

    Long-term debt and capital leases are summarized as follows (in millions):

<TABLE>
<CAPTION>
                                                                   December 31,              December 25,
                                                                       1999                      1998
                                                              --------------------     ----------------------
<S>                                                             <C>                      <C>
Senior subordinated notes (11.75%; due June 1, 2007)..........              $150.0       $                  -
Term loan ( 9.5%; due May 28, 2006) ..........................               134.3                          -
Revolving credit facility (  9.00%; due May 28, 2004) ........                   -                          -
Capital lease obligations (Note 11)...........................                 0.1                          -
                                                              --------------------     ----------------------
    Total.....................................................              $284.4       $                  -
Less current portion..........................................                 1.5                          -
    Total long-term ..........................................              $282.9       $                  -
                                                              ====================     ======================
</TABLE>

    In conjunction with the transactions described above, the Company issued
$150 million aggregate principal amount of 11.75% senior subordinated notes due
June 1, 2007 under the indenture dated as of May 28, 1999.  Interest on the
notes is payable semi-annually in cash on each June 1 and December 1, commencing
on December 1, 1999.  The Company may redeem the notes, in whole at any time or
in part from time to time on and after June 1, 2003, upon not
                                      F-12
<PAGE>

                   PACER INTERNATIONAL, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

less than 30 nor more than 60 days' notice, at the following redemption prices:
2003 -105.875%; 2004 -102.938%; 2005 and thereafter -100.00%.  The indenture
provides that upon the occurrence of a change of control, each holder of notes
will have the right to require that the Company purchase all or a portion of
such holder's notes at a purchase price equal to 101.0% of the principal amount
thereof plus accrued interest to the date of purchase.

          The notes are fully and unconditionally guaranteed, on a senior
subordinated basis, jointly and severally, by each of the Company's
subsidiaries.  The indenture contains covenants limiting the Company's ability
to incur additional indebtedness, and restricts the Company's ability to pay
dividends or make certain other restricted payments, consummate certain asset
sales, or otherwise dispose of all or substantially all of the assets of the
Company and its subsidiaries.

          The Company also entered into a credit agreement that provides for a
seven-year $135 million term loan (the "Term Loan") which was used to finance
the recapitalization and certain indebtedness of the Company and a five-year
$100 million revolving credit facility (the "Revolving Credit Facility"). The
interest rate for the Term Loan is the lesser of 2% in excess of the prime
lending rate as determined by the administrative agent, 2.5% in excess of the
federal funds rate, or 3% in excess of the Eurodollar rate subject to increases
and decreases based upon achievement of certain financial ratios. The Term Loan
requires minimum scheduled repayments of $1.35 million annually between the year
2000 and 2005. The interest rate for the Revolving Credit Facility is the lesser
of 1.5% in excess of the prime lending rate as determined by the administrative
agent, 1.5% in excess of the federal funds rate or 2.5% in excess of the
Eurodollar rate subject to increases and decreases based upon achievement of
certain financial ratios. At December 31, 1999, the interest rate on the Term
Loan and the Revolving Credit Facility was 9.50% and 9.00%, respectively. The
rates for the Term Loan and Revolving Credit Facility are reset on a monthly
basis.

          The Company must pay a commitment fee equal to 0.5% per annum on the
unused portion of the Revolving Credit Facility, subject to decreases based on
the achievement of certain financial ratios and subject to increases based on
the amount of unused commitments.  In addition, the credit agreement contains
customary covenants, the most restrictive of which limits the Company's ability
to declare dividends, prepay debt, make investments, incur additional
indebtedness, make capital expenditures, engage in mergers, acquisitions and
asset sales, and issue redeemable common stock and preferred stock, subject to
certain exceptions.  The Company is also required to comply with specified
financial covenants including a consolidated interest coverage ratio and an
adjusted total leverage ratio.  At December 31, 1999, the Company was in
compliance with these covenants.  At December 31, 1999, the Company had $100
million available under the Revolving Credit Facility. On August 9, 1999, the
Company entered into a first amendment to the credit agreement to increase the
maximum swingline amount (the amount that can be drawn under the Revolving
Credit Facility on the day of notification of borrowing) to $10.0 million from
$2.5 million.  On January 7, 2000, the Company entered into a second amendment
to the credit agreement to modify the definition of excess cash flow to allow
for the acquisition of Conex assets. On January 13, 2000, in connection with
the acquisition of Conex (see Note 15), the Company borrowed $15 million from
the Revolving Credit Facility.

          The loans and letters of credit under the credit agreement are
guaranteed by all of the existing and future direct and indirect wholly-owned
subsidiaries. The Company's obligations and the obligations of such subsidiaries
are collateralized by a first priority perfected lien on substantially all of
the Company's properties and assets and all of the properties and assets of such
subsidiaries, whether such properties and assets are now owned or subsequently
acquired, subject to exceptions.

          Contractual maturities of long-term debt (including capital lease
obligations) during each of the five years subsequent to 1999 and thereafter are
as follows (in millions):


                                      F-13
<PAGE>

                   PACER INTERNATIONAL, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


<TABLE>
<S>                                                                      <C>
2000 .......................................................                   $  1.5
2001 .......................................................                      1.4
2002 .......................................................                      1.4
2003 .......................................................                      1.4
2004 .......................................................                      1.4
Thereafter ................................................                     277.3
                                                                       --------------
    Total ....................................................                 $284.4
                                                                       ==============
</TABLE>

          Management estimates the Company's debt at December 31, 1999
approximates fair value based on interest rates for similar issues and
financings.

          At December 31, 1999, the Company was a party to an interest rate swap
agreement for which it pays a fixed rate on an aggregate notional amount of $2.7
million which is used to hedge its variable interest rate exposure on certain
debt and is accounted for as an adjustment of interest expense over the life of
the debt. The Company receives a variable rate of interest on the swap of 5.5%
at December 31, 1999 and pays a fixed rate based on LIBOR, which was 5.9% at
December 31, 1999. During 1999, an insignificant amount was charged to interest
expense for the swap. The swap terminated on January 10, 2000.

NOTE 4.   INCOME TAXES

          The Company is required to file separate U.S. corporate income tax
returns, independent of Pacer Logistics, Inc. and its subsidiaries.  The Company
and its subsidiary, Pacer Logistics, Inc., would be eligible to elect and file
U.S. consolidated corporation income tax returns if the Company owns at least
80% of the total voting power and total value of the stock of Pacer Logistics,
Inc.  Income taxes are recognized utilizing the asset and liability method,
under which deferred income taxes are recognized for the consequences of
temporary differences by applying currently enacted statutory rates to
differences in the financial statement carrying amounts and the tax basis of
existing assets and liabilities.

          For federal and state income tax purposes, the recapitalization of the
Company was a taxable business combination and a qualified stock purchase. The
buyer and seller jointly agreed to treat the transaction as an asset acquisition
in accordance with Section 338 (h)(10) of the Internal Revenue Code and such
election has been made. An allocation of the purchase price to the tax basis of
assets and liabilities based on their respective fair value at May 28, 1999 has
not been finalized for income tax purposes.

          In connection with the recapitalization, the Company recorded a
deferred tax asset of approximately $81.2 million at May 28, 1999 related to
future tax deductions for the net excess of the tax basis of the assets and
liabilities over the financial statement carrying amounts with a corresponding
credit to Stockholders' Equity. Realization of the deferred tax asset is
dependent upon the Company's ability to generate sufficient future taxable
income which management believes is more likely than not based on historical
operating results. Accordingly, no valuation allowance has been recorded.

For periods prior to May 28, 1999, the Company's operating results were included
in the consolidated income tax returns of APL Limited.  A charge in lieu of
income taxes was recorded using the separate return method, as if the Company
were a separate taxpayer.


                                       F-14
<PAGE>
                    PACER INTERNATIONAL, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

          The reconciliation of the net effective income tax rate to the U.S.
federal statutory income tax rate is as follows:

<TABLE>
<CAPTION>
                                                                       The Company
                                     -------------------------------------------------------------------------------
                                           Fiscal Year                 Fiscal Year                 Nov. 13, 1997
                                              Ended                       Ended                       through
                                          Dec. 31, 1999               Dec. 25, 1998                Dec. 26, 1997
                                     ---------------------       --------------------       ------------------------
<S>                                    <C>                         <C>                        <C>
U.S. Federal Statutory Rate .........                 35.0%                      35.0%                          35.0%
Increases (Decreases) in Rate
Resulting From:
  State Tax, Net of Federal Benefit.                   3.8%                       2.2%                           2.7%
  Permanent Book/Tax Differences
      and Other......................                  1.0%                       0.8%                           2.0%
                                     ---------------------       --------------------       ------------------------
Net Effective Tax Rate..............                  39.8%                      38.0%                          39.7%
                                     =====================       ====================       ========================
</TABLE>

<TABLE>
<CAPTION>
                                         The Predecessor
                                      ---------------------
                                          Dec. 28, 1996
                                             through
                                          Nov. 12, 1997
                                     ---------------------
<S>                                    <C>
U.S. Federal Statutory Rate .........                 35.0%
Increases (Decreases) in Rate
Resulting From:
  State Tax, Net of Federal Benefit.                   2.7%
  Permanent Book/Tax Differences
      and Other......................                  0.2%
                                     ---------------------
Net Effective Tax Rate..............                  37.9%
                                     =====================
</TABLE>




























     The provision for income taxes from continuing operations is as follows (in
millions):

<TABLE>
<CAPTION>
                                                                        The Company
                                     ------------------------------------------------------------------------------
                                           Fiscal Year               Fiscal Year                 Nov. 13, 1997
                                              Ended                     Ended                       through
                                          Dec. 31, 1999             Dec. 25, 1998                Dec. 26, 1997
                                     ---------------------      --------------------      -------------------------
<S>                                    <C>                        <C>                       <C>
Current:
   Federal........................                   $ 6.3                     $10.6                          $(1.1)
   State..........................                     0.9                       1.0                           (0.1)
   Foreign........................                                                                              0.2
                                     ---------------------      --------------------      -------------------------
     Total Current ...............                     7.2                      11.6                           (1.0)

Deferred:
   Federal.........................                    3.7                       1.0                            1.6
   State...........................                    0.8                         -                            0.1
                                     ---------------------      --------------------      -------------------------
     Total Deferred ...............                    4.5                       1.0                            1.7
                                     ---------------------      --------------------      -------------------------
Total Provision....................                  $11.7                     $12.6                         $  0.7
                                     =====================      ====================      =========================
</TABLE>

<TABLE>
<CAPTION>
                                          The Predecessor
                                      -----------------------
                                           Dec. 28, 1996
                                             through
                                          Nov. 12, 1997
                                      ---------------------
<S>                                    <C>
Current:
   Federal........................                  $15.9
   State..........................                    1.2
   Foreign........................                    0.2
                                     ---------------------
     Total Current ...............                   17.3

Deferred:
   Federal.........................                   (3.2)
   State...........................                   (0.2)
                                     ---------------------
     Total Deferred ...............                   (3.4)
                                     ---------------------
 Total Provision....................                 $13.9
                                     =====================
</TABLE>

     The following table shows the tax effects of the Company's and
Predecessor's cumulative temporary differences included in the Consolidated
Balance Sheet at December 31, 1999 and in the Statement of Assets, Liabilities,
and Divisional Control Account at December 25, 1998 (in millions):

<TABLE>
<CAPTION>
                                                                    December 31,              December 25,
                                                                        1999                      1998
                                                              ---------------------      --------------------
<S>                                                             <C>                        <C>
Property and Equipment.......................................                 $(0.7)                   $(17.1)
Allowance for Doubtful Accounts .............................                   1.2                       0.7
Accrued Liabilities..........................................                   3.5                       0.4
Tax Basis in Excess of Book - Stacktrain.....................                  81.2                         -
Other........................................................                  (5.1)                      0.6
                                                              ---------------------      --------------------
     Total Net Deferred Tax Asset ...........................                 $80.1                    $(15.4)
                                                              =====================      ====================
</TABLE>

                                      F-15
<PAGE>

                   PACER INTERNATIONAL, INC. AND SUBSIDIARIES
      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

NOTE 5.   PENSION PLANS AND STOCK OPTION PLANS

          Effective May 28, 1999, the Company's employees were eligible for the
Pacer Logistics, Inc. 401(k) plan and no longer participate in the former
parent's pension, postretirement benefits and profit-sharing plans.  Under the
Pacer Logistics, Inc. 401(k) plan, the Company matches 50% of the first 6% of
base salary contributed by the employee.  Matching contributions by the Company
to the plan in 1999 were $0.5 million.  In prior periods, contributions by the
former parent to the prior profit-sharing plan were $3.5 million, $0.4 million
and $2.7 million for the year ended December 25, 1998, and the periods ended
December 26, 1997 and November 12, 1997, respectively.

          The former parent maintained defined benefit pension plans for certain
domestic shoreside employees, healthcare benefit plans for retired employees
and profit-sharing plans for non-union employees.  The costs and benefits of
these plans were allocated by the former parent to the Company and were included
in general and administrative expenses.

          On May 28, 1999, the Board of Directors authorized the creation of the
Pacer International, Inc. 1999 Stock Option Plan under which 1,793,747 options
for the Company's common stock were authorized, of which 1,604,361 options have
been granted and outstanding at or above fair market value at the date of grant.
Of the options granted, 470,247 and 92,614 were part of the 1997 and 1998 Pacer
Logistics, Inc. Stock Option Plan, respectively, that were rolled over as part
of the acquisition of Pacer Logistics.  In addition, under the 1999 Stock Option
Plan, options to purchase 44,997 shares of preferred stock were granted which
were rolled over from the 1997 Pacer Logistics Stock Option Plan. There are no
cash-out provisions for the Company's common or preferred stock in the event of
exercise since the Company's stock is not public.

          The 1999 plan provides for initial grants to specified employees. The
aggregate number of shares subject to these initial grants is 832,000 and their
exercise price is $10.00 per share. These initial grants are divided into three
tranches, Tranche A, Tranche B and Tranche C. Tranche A options vest in five
equal installments on the date of the grant's first five anniversary dates,
provided the employee is employed by the Company on each anniversary date.
Tranche B options generally vest on the date of grant's seventh anniversary date
if the employee is employed by the Company on that date. However, if on any of
the grant's first five anniversary dates certain per share target values are
attained and the employee is employed by the Company on that date, then 20% of
the Tranche B options will vest. Accelerated vesting of the Tranche B options is
possible if a sale of the Company occurs prior to the date of grant's fifth
anniversary and the fair market value of the per share consideration to be
received by the shareholder equals or exceeds an amount calculated in accordance
with this plan. Tranche C options vest in substantially the same manner as
Tranche B options, including acceleration upon a sale of the Company, except
that the per share target values as of a given anniversary date are increased.
Options granted to non-employee directors vest in four equal installments on the
date of grant's first four anniversary dates.

          A vested option that has not yet been exercised will automatically
terminate on the first to occur of the grant's tenth anniversary, ninety days
following the employee's termination of employment for any reason other than
death or disability, twelve months following the employee's termination of
employment due to death or disability, or as otherwise determined by the
committee.

          Each option that is vested as of the date of the sale of the Company
remains exercisable until the sale's closing, after which time such option is
unenforceable. Non-vested Tranche A, Tranche B and Tranche C options will vest
in accordance with the vesting schedules described above, however, an option
that vests after the Company is sold will remain exercisable for 10
                                      F-16
<PAGE>

                   PACER INTERNATIONAL, INC. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

days before such portion of the option terminates and is of no further force or
effect. All options granted under this plan are nontransferable except upon
death, by such employee's will or the laws of descent and distribution, or
transfers to family members of the employee that are approved by the committee.

     This plan has a term of ten years, subject to earlier termination by the
Board of Directors, who may modify or amend this plan in any respect, provided
that no amendment or modification affects an option already granted without the
consent of the option holder.

     The following table summarizes the transactions of the Pacer International,
Inc. 1999 Stock Option Plan adopted May 28, 1999 as of December 31, 1999.

<TABLE>
<CAPTION>
                                                                               December 31, 1999
                                                               -----------------------------------------------
                                                                     Common Stock            Preferred Stock
                                                               ---------------------     ---------------------
<S>                                                              <C>                       <C>

Outstanding options, beginning of period .................                        -                         -

Options rolled over from prior plan at
    May 28, 1999 .........................................                   562,861                    44,997
Granted...................................................                 1,065,500                         -
Canceled or expired ......................................                   (24,000)                        -
Exchanged ................................................                         -                         -
Exercised.................................................                         -                         -
                                                               ---------------------     ---------------------
Outstanding options, end of year..........................                 1,604,361                    44,997
                                                               =====================     =====================

Weighted average exercise price of options
    exercised.............................................       None exercised            None exercised
Weighted average exercise price of options
    granted...............................................                $    10.75       None granted
Weighted average exercise price, end of year..............                $     7.79                   $  9.00
Options exercisable, end of year .........................                   143,158                     9,999
Options available for future grant ...................                       189,386                         -
</TABLE>



























The following table summarizes information about stock options outstanding at
December 31, 1999:

<TABLE>
<CAPTION>
                                                   Options Outstanding
                          --------------------------------------------------------------------
                                                          Weighted                Weighted
                                                           Average                 Average
  Range of Exercise               Number                  Remaining               Exercise
       Prices                  Outstanding              Life (Months)               Price
---------------------     --------------------     --------------------      -----------------

    Common Stock
---------------------
<S>                         <C>                      <C>                       <C>
     $     0.22                        365,748                       87                 $ 0.22
     $     2.96                        104,499                       39                 $ 2.96
     $     8.61                         29,364                      109                 $ 8.61
     $    10.00                      1,024,750                      113                 $10.00
     $    20.00                         80,000                      117                 $20.00
                          --------------------

        Total                        1,604,361

   Preferred Stock
---------------------
      $    9.00                         44,997                       39                 $ 9.00
</TABLE>

<TABLE>
<CAPTION>
              Options Exercisable
    -----------------------------------------
                            Weighted
                            Average
      Number                Exercise
   Exercisable               Price
---------------------     --------------------
<S>                         <C>
              -                  $ 0.22
        104,499                  $ 2.96
         19,576                  $ 8.61
         19,083                  $10.00
              -                  $20.00
  -----------------

 Total  143,158

   Preferred Stock
---------------------
      9,999                  $ 9.00
</TABLE>

                                      F-17
<PAGE>

                   PACER INTERNATIONAL, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

          In 1995, the FASB issued FASB Statement No. 123 ("FAS 123")
"Accounting for Stock-Based Compensation" which, if fully adopted by the
Company, would change the methods the Company applies in recognizing the cost of
the stock based plans. Adoption of the cost recognition provisions of FAS 123 is
optional and the Company has decided not to elect the provisions of FAS 123.
However, pro forma disclosures as if the Company adopted the cost recognition
provisions of FAS 123 are required by FAS 123. Had the compensation cost for the
Company's stock-based compensation plan been determined consistent with FAS 123,
the Company's net income for 1999 would not have been significantly different.

          The fair value of each stock option granted is estimated on the date
of grant using the minimum value method of option pricing with the following
weighted-average assumptions for grants: dividend yield of 0.0%, risk-free
interest rate of 6.5% and expected life of 7 years (in determining the "minimum
value", FAS 123 does not require the volatility of the Company's common stock
underlying the options to be calculated or considered because the Company is not
publicly traded).


NOTE 6.   RELATED PARTY TRANSACTIONS

          Prior to the recapitalization, the Company provided intermodal
services to APL Limited. These services include moving containers from ports to
inland points, moving containers from inland points to ports, and repositioning
empty containers. These transactions are performed on a cost reimbursement
basis. Thus, no revenues or expenses are recognized for financial reporting
purposes. Reimbursements amounted to $273.6 million, $276.7 million, $22.3
million and $154.1 million, for the fiscal years ended December 31, 1999,
December 25, 1998, and the periods ended December 26, 1997 and November 12,
1997, respectively. At December 31, 1999 the Company had a receivable from APL
Limited for these transactions of $31.3 million.  Pursuant to the
recapitalization, the Company has signed long-term agreements with APL Limited
for the domestic transportation on the stacktrain network of APL Limited's
international freight for an annual management fee of $6.6 million.  For the
seven months since the recapitalization, the Company recognized $3.9 million in
revenues for this fee.

     Prior to the recapitalization, APL Land Transport Services Inc. shared in
certain expenses of the former parent for services including systems support,
office space and other corporate services.  These expenses were $5.6 million,
$14.4 million, $1.6 million and $12.0 million for the period ended May 28, 1999,
the fiscal year ended December 25, 1998, and the periods ended December 26, 1997
and November 12, 1997, respectively. Pursuant to the recapitalization, the
Company has signed long-term agreements with APL Limited  for administrative
services such as billing and accounts receivable and payable processing on a per
transaction basis. For the seven months ended December 31, 1999, $1.1 million
has been accrued and was payable at December 31, 1999 for these services. In
addition, the information technology services of APL Limited are currently being
provided to the Company according to a term sheet upon which negotiations for a
long-term agreement are based. For the seven months ended December 31, 1999,
$5.8 million has been paid for these services. The annual fee for these services
is $10 million.

     In addition, the Company receives a credit from APL Limited for the
repositioning expense that APL Limited has avoided due to the Company using APL
Limited's containers in surplus locations. The total amount of revenue
recognized for these services was $21.0 million, $20.0 million, $1.9 million and
$15.8 million for the fiscal years ended December 31, 1999 and December 25,
1998, the periods ended December 26, 1997 and November 12, 1997, respectively.
At December 31, 1999, $3.7 million was receivable from APL Limited.



                                      F-18
<PAGE>

                   PACER INTERNATIONAL, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

     The Company also provides services to the Automotive Division of APL
Limited. These services include moving containers primarily in the U.S.--Mexico
trade. Total amount of revenue recognized for these services was $49.1 million,
$38.7 million, $5.0 million and $38.4 million for the fiscal years ended
December 31, 1999 and December 25, 1998, the periods ended December 26, 1997 and
November 12, 1997,  respectively. At December 31, 1999, $4.6 million was
receivable from APL Limited.

     Prior to the recapitalization, the Company received an allocation for lease
and maintenance and repair expenses from APL Limited. These expenses were $7.0
million, $19.5 million, $1.9 million and $14.1 million for the period ended May
28, 1999, the fiscal year ended December 25, 1998, the periods ended December
26, 1997 and November 12, 1997,  respectively.

     In 1997, in connection with Neptune Orient Line ("NOL") acquisition of
APL Limited, NOL incurred certain merger related costs totaling approximately
$61 million. These non-operating costs do not relate to the ongoing operations
of the Company and have not been allocated to the Company's results of
operations.

     APL de Mexico, S.A. de C.V. (APL Mexico), a wholly owned Mexican subsidiary
of the APL Limited, provides various agency services to the Company with respect
to its bills of lading in Mexico. Expenses recorded by the Company from APL
Mexico were $1.8 million, $0.5 million, $0.1 million and $0.3 million for the
fiscal years ended December 31, 1999 and December 25, 1998, the periods ended
December 26, 1997 and November 12, 1997, respectively.  At December 31, 1999,
$1.2 million was payable to APL Mexico.

     The Company has entered into a management agreement with Apollo Management
("Apollo") for financial and strategic services as the Board of Directors may
reasonably request.  The annual fee for these services is $0.5 million.  At
December 31, 1999,  $0.3 million  was payable to Apollo.

     The Company leases a facility consisting of office, warehousing and
trucking space from A&G Investments, a California general partnership of which
Messrs. Goldfein and Steiner are the only partners.  Mr. Goldfein is a
stockholder and a Director and Executive Vice President of the Company.  Mr.
Steiner is a stockholder and an Executive Vice President of the Company.  Lease
payments were $0.3 million for the seven month period ended December 31, 1999.

     The Company leases a facility consisting of office space from Richard P.
Hyland, a stockholder and an Executive Vice President of the Company.  Such
lease is pursuant to an oral agreement and is on a month-to-month basis.  The
lease terminated on December 31, 1999.

NOTE 7.  COMMITMENTS AND CONTINGENCIES

     The Company is party to various legal proceedings, claims and assessments
arising in the normal course of its business activities.

     In June 1995, APL Limited, the Company's former parent, sold the assets of
its trucking company, American President Trucking ("APT") to Burlington Motor
Carriers ("BMC").  The sale included the sublease of terminal real estate to BMC
and the sublease of tractor units to Stoops Freightliner, which in turn entered
into a use agreement with BMC.  BMC and the Company entered into a service
agreement whereby the Company guaranteed certain levels of traffic to BMC.
Under new ownership from a 1995 bankruptcy proceeding, BMC advised APL Limited
and the Company that it believed the Company breached the service agreement when
APL Limited sold its Distribution Services unit, and demanded $0.8 million in
compensation.  The Company disputed the claim.  BMC and Stoops Freightliner
filed subsequent complaints in BMC bankruptcy
                                      F-19
<PAGE>

                   PACER INTERNATIONAL, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

proceedings demanding unspecified damages.  APL Limited and the Company filed
motions to dismiss both complaints.  On November 13, 1998, APL Limited and the
Company's motions were granted; BMC has filed an appeal; Stoops Freightliners
has not.  The Company does not believe that the ultimate outcome, if
unfavorable, will have a material adverse impact on the financial position or
results of operations of the Company, and has not reserved for this contingency.

     Two subsidiaries of Pacer Logistics, Interstate Consolidation, Inc. and
Intermodal Container Service, Inc., are named defendants in a class action filed
in July 1997 in the State of California, Los Angeles Superior Court, Central
District, alleging, among other things, breach of fiduciary duty, unfair
business practices, conversion and money had and received in connection with
monies allegedly wrongfully deducted from truck drivers' earnings.  The
defendants have entered into a Judge Pro Tempore Submission Agreement dated as
of October 9, 1998, pursuant to which the plaintiffs and defendants have waived
their rights to a jury trial, stipulated to a certified class, and agreed to a
minimum judgement of $250,000 and a maximum judgement of $1.75 million. On
January 14, 2000, the Court issued its Statement of Decision, in which
Interstate Consolidation, Inc. and Intermodal Container Service, Inc. prevailed
on all issues except one.  The Court found that Interstate failed to issue
certificates of insurance to the owner-operators and therefore failed to
disclose that in 1998, the Company's retention on its liability policy was
$250,000.  The court has tentatively ordered that restitution be paid for this
omission, which in the worst case is well below the agreed upon high of $1.75
million.  An appeal to this decision is likely by the class. Based upon
information presently available and in light of legal and other defenses and
insurance coverage, management does not expect these legal proceedings, claims
and assessments, individually or in the aggregate, to have a material adverse
impact on the Company's consolidated financial position or results of
operations.  At December 31, 1999, the Company had $1.1 million accrued for this
case.

   In May 1996, APL Limited sold a portion of its third operating division
("Distribution Services") to a third party purchaser.  In connection with this
sale, the Company and the purchaser entered into a 10-year agreement to provide
stacktrain services to the purchaser.

NOTE 8.  SEGMENT INFORMATION

     The Company has adopted SFAS No. 131, "Disclosures About Segments of
an Enterprise and Related Information", which changes the way the Company
reports information about its reportable operating segments.

     With the acquisition of Pacer Logistics on May 28, 1999, the Company
has two reportable segments, the stacktrain segment and the logistics segment,
which have separate management teams and offer different but related products
and services.  The stacktrain segment provides intermodal rail service in North
America by selling intermodal service to shippers while buying space on
intermodal rail trains.  The large majority of business is conducted
domestically, with minor services in Mexico and Canada.  Customers include
intermodal marketers who serve customers in various industries as well as the
ocean carrier industry.  The logistics segment supports the stacktrain segment
by offering marketing, freight handling, truck and local pickup and delivery
services.  Prior to May 28, 1999, the Company had only one reportable segment,
the stacktrain segment.

The following table presents reportable segment information for the fiscal years
ended December 31, 1999 and December 25, 1998 and the periods ended December 26,
1997 and November 12, 1997 (in millions).



                                      F-20
<PAGE>

                   PACER INTERNATIONAL, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


<TABLE>
<CAPTION>
                                               Stacktrain              Logistics                 Other               Consolidated
                                           -----------------     -------------------     -------------------      -----------------

<S>                                          <C>                   <C>                     <C>                      <C>
Fiscal year ended December 31, 1999
      Gross revenues ......................           $702.9                  $233.2                  $(18.7)             $917.4
      Net revenues.........................            143.8                    38.2                                       182.0
      Income from operations ..............             38.2                     9.8                                        48.0
      Interest expense, net ...............             16.4                     2.2                                        18.6
      Tax expense..........................              8.5                     3.2                                        11.7
      Net income...........................             13.3                     4.4                    (1.1)               16.6
      Depreciation and amortization .......              6.7                     1.9                                         8.6
      Capital expenditures ................              0.1                     1.9                                         2.0
      Total assets.........................            391.7                   139.9                   (76.6)              455.0

Fiscal year ended December 25, 1998
      Gross revenues ......................           $590.8                  $    -                  $    -              $590.8
      Net revenues.........................            124.5                       -                       -               124.5
      Income from operations ..............             33.2                       -                       -                33.2
      Interest expense, net ...............                -                       -                       -                   -
      Tax expense..........................             12.6                       -                       -                12.6
      Net income...........................             20.6                       -                       -                20.6
      Depreciation and amortization .......              6.6                       -                       -                 6.6
      Capital expenditures ................             39.7                       -                       -                39.7
      Total assets.........................            156.1                       -                       -               156.1
</TABLE>

<TABLE>
<CAPTION>
Period ended December 26, 1997
<S>                                         <C>                     <C>                     <C>                     <C>
      Gross revenues .....................             $ 60.0                 $     -                 $     -             $ 60.0
      Net revenues........................               12.6                       -                       -               12.6
      Income from operations..............                2.0                       -                       -                2.0
      Interest expense, net...............                0.3                       -                       -                0.3
      Tax expense.........................                0.7                       -                       -                0.7
      Net income..........................                1.0                       -                       -                1.0
      Depreciation and amortization ......                0.7                       -                       -                0.7
      Capital expenditures ...............                  -                       -                       -                  -
      Total assets........................              111.9                       -                       -              111.9

Period ended November 12, 1997
      Gross revenues .....................             $517.1                  $    -                 $     -             $517.1
      Net revenues........................              109.6                       -                       -              109.6
      Income from operations .............               38.8                       -                       -               38.8
      Interest expense, net...............                2.0                       -                       -                2.0
      Tax expense.........................               13.9                       -                       -               13.9
      Net income..........................               22.9                       -                       -               22.9
      Depreciation and amortization ......                3.0                       -                       -                3.0
      Capital expenditures ...............                  -                       -                       -                  -
      Total assets........................                n/a                       -                       -                n/a
</TABLE>

Data in the "Other" column includes elimination of intercompany balances and
subsidiary investment.  All intersegment services are provided and purchased at
quoted market rates.

     For the year ended December 31, 1999, the Company had two customers,
respectively which contributed more than 10% of the Company's total gross
revenues.  Total gross revenues of $128.2 million were generated by the
stacktrain segment from Hub Group and total gross revenues of $100.8 million
were generated from Union Pacific (generated by both reporting segments).


                                      F-21
<PAGE>

                   PACER INTERNATIONAL, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

NOTE 9.  PROPERTY AND EQUIPMENT

     Property and equipment consist of the following at December 31, 1999 and
December 25, 1998, ($ in millions):

<TABLE>
<CAPTION>
                                                                1999                1998
                                                          --------------      --------------

<S>                                                         <C>                 <C>
Rail Cars ................................................        $ 26.9               $66.5
Containers and Chassis ...................................          27.6                27.6
Leasehold improvements and
   Other .................................................           7.3                 1.3
                                                          --------------      --------------
                  Total ..................................          61.8                95.4
                                                          --------------      --------------
Less: Accumulated Depreciation ...........................         (11.4)               (6.6)
                                                          --------------      --------------
   Property and Equipment, net ...........................        $ 50.4               $88.8
                                                          ==============      ==============
</TABLE>

     Depreciation and amortization of property and equipment was $6.2
million, $6.0 million, $0.7 million and $3.0 million for the years ended
December 31, 1999, December 25, 1998 and the periods ended December 26, 1997 and
November 12, 1997, respectively.  Trailers under capital lease are included
above with a cost of $0.3 million and accumulated depreciation of $0.1 million.

     As part of the recapitalization of the Company and acquisition of
Pacer Logistics, the Company received $39.6 million in net proceeds from the
sale and leaseback of 199 railcars originally purchased in 1998.  A deferred
gain of $1.6 million was recorded upon sale and is being amortized over the 13
year life of the lease.  An additional $0.4 million was received from sales of
other property in 1999.


NOTE 10.  ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

     Accounts payable and accrued liabilities at December 31, 1999 and December
25, 1998 were as follows (in millions):

<TABLE>
<CAPTION>
                                                                      1999                1998
                                                                ---------------     ---------------

<S>                                                               <C>                 <C>
Accounts Payable ...............................................         $ 49.2               $14.2
Accrued Rail Liability .........................................           71.8                49.8
Accrued Volume Rebates Payable .................................           10.1                 7.2
Accrued Equipment Maintenance and Lease ........................            8.1                 3.0
Accrued Interest Payable .......................................            2.7                   -
Other Accrued Liabilities ......................................           34.1                 9.8
Unearned Revenue ...............................................              -                 0.6
                                                                ---------------    ----------------
   Total Accounts Payable and Accrued Liabilities ..............         $176.0               $84.6
                                                                ===============     ===============
</TABLE>

NOTE 11.  LEASES

     The Company leases certain doublestack railcars, containers, chassis,
data processing equipment and other property.  Future minimum lease payments
under noncancelable leases at December 31, 1999 for the five years subsequent to
1999 and thereafter are summarized as follows (in millions)

                                      F-22
<PAGE>

                  PACER INTERNATIONAL, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


<TABLE>
<CAPTION>
                                                           Capital            Operating
                                                           Leases              Leases
                                                      ---------------     ---------------

<S>                                                     <C>                 <C>
2000..................................................           $0.1              $ 36.8
2001..................................................              -                32.2
2002..................................................              -                25.0
2003..................................................              -                22.1
2004..................................................              -                17.6
Thereafter............................................              -                87.6
                                                      ---------------     ---------------
  Total Minimum Payments .............................           $0.1              $221.3
                                                                          ===============

Less amount representing interest (at an
 effective rate of 10.4%).............................              -
                                                      ---------------
Present value of minimum lease payments ..............           $0.1
                                                      ===============
</TABLE>

     Rental expense was $50.4 million, $49.7 million, $5.5 million and
$37.1 million for the fiscal years ended December 31, 1999 and December 25,
1998, the periods ended December 26, 1997 and November 12, 1997, respectively.
The net book value of property under capital lease at December 31, 1999 was
approximately $0.2 million.

     On May 28, 1999 the Company received, as part of the Company's
recapitalization and acquisition of Pacer Logistics, $39.6 million in net
proceeds from the sale and leaseback (operating) of 199 railcars originally
purchased in 1998.

     The Company took delivery of 1,500 new 53-foot containers and chassis in
the fourth quarter of 1999 financed through an operating lease.

     The Company receives income from others for the use of its doublestack
railcars.  These income amounts are included as an offset to direct operating
expenses which are presented on a net basis.  Rental income was $9.8 million,
$8.1 million, $0.7 million and $6.7 million for the fiscal years ended December
31, 1999 and December 25, 1998, the periods ended December 26, 1997 and November
12, 1997,respectively.


NOTE 12. SUPPLEMENTAL CASH FLOW INFORMATION

     Supplemental cash flow information is as follows ($ in millions):

<TABLE>
<CAPTION>
                                                                                                                     The
                                                       The Company                                               Predecessor
                        -----------------------------------------------------------------------------      ----------------------
                             Fiscal Year               Fiscal Year                Nov. 13, 1997                Dec. 28, 1996
                                Ended                     Ended                      through                      through
                            Dec. 31, 1999             Dec. 25, 1998               Dec. 26, 1997                Nov. 12, 1997
                        ---------------------      --------------------      ------------------------      ----------------------
<S>                                    <C>                        <C>                       <C>                           <C>

Cash Payments:
     Interest..........             $15.4                      $  -                          $0.3                       $ 2.0
     Income Taxes......             $ 2.5                      $3.4                          $0.6                       $12.2
</TABLE>

                                      F-23
<PAGE>

                   PACER INTERNATIONAL, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

NOTE 13.  MINORITY INTEREST

     Pursuant to the Company's recapitalization and acquisition of Pacer
Logistics, 24,300 of Pacer Logistics' one million authorized shares of preferred
stock were issued to certain management shareholders of Pacer Logistics as 7.5%
exchangeable preferred stock on May 28, 1999. The remainder have been reserved
for issuance by Pacer Logistics as payment-in-kind dividends. The preferred
shares are convertible into shares of Pacer International common stock. In July
1999, the Company redeemed 1,986 shares for $2.0 million. At December 31, 1999,
dividends of $1.1 million were accrued and unpaid and recorded as minority
interest deductions from net income.

     Liquidation Preference

     The exchangeable preferred stock has a liquidation preference of $1,000 per
share, plus accrued and unpaid dividends thereon. In addition, holders of the
preferred stock are entitled to an amount per share equal to 5% of the total
assets available for distribution to equity holders divided by the number of
shares of preferred stock outstanding.

     Dividends

     Dividends payable per share of the exchangeable preferred stock are equal
to the greater of:

    (1)  7.5% of the $1,000 liquidation preference per share payable annually in
         arrears in additional shares of the exchangeable preferred stock or
    (2)  an amount equal to 10% of the aggregate of certain dividends paid on
         the Pacer Logistics common stock divided by the number of outstanding
         shares of Pacer Logistics preferred stock, payable annually in arrears
         in cash.

     Voluntary Exchange

     At any time at least 15 months after, but before 24 months following the
closing of the Company's recapitalization, each holder of the exchangeable
preferred stock has the right to exchange its shares into shares of Pacer
International common stock.  As a condition to the exchange of such preferred
stock, each holder will be required to become a party to the shareholders'
agreement and will be bound by all of the terms and conditions of the
shareholders' agreement as though such persons were original parties thereto.
Upon joining in the shareholders' agreement, such persons will have the same
rights and responsibilities as those of APL Limited, as set forth in the
shareholders' agreement.

     Purchase Right

     At any time at least 15 months after the closing of the Company's
recapitalization, the exchangeable preferred stock may be purchased by Pacer
International for newly issued shares of preferred stock of Pacer International
or cash.  The credit agreement and the indenture governing the notes restricts
the Company from purchasing the exchangeable preferred stock for cash for the
initial 15 month time period.  The Pacer International preferred stock has a
7.5% dividend, payable in shares of such preferred stock and is mandatorily
redeemable by Pacer International on the tenth anniversary of issue.



                                      F-24
<PAGE>

                   PACER INTERNATIONAL, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

     Change of Control

     Upon a change of control, each holder of exchangeable preferred stock shall
have the right to exchange the shares of exchangeable preferred stock held by
such holder for Pacer International common stock at the ratio set forth in the
certificate of designation multiplied by the following applicable premium which
shall be allocated pro rata on a monthly basis:

               Prior to the End of Year 1..................115.00%
               End of Year 1...............................106.75%
               End of Year 2...............................100.00%

     Voting Provisions

     Except as required by law and except for matters which affect the rights
and preferences of the exchangeable preferred stock, the exchangeable preferred
stock is not entitled to vote on any matter submitted to a vote of the
stockholders of Pacer Logistics.

     If (1) the voluntary exchange of 7.5% exchangeable preferred stock by the
holders thereof for Pacer International common stock or (2) the purchase of such
preferred stock by Pacer International as contemplated above does not occur, The
CEO and other members of the senior management team will remain holders of the
7.5% exchangeable preferred stock.


NOTE 14. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

     The following table sets forth selected quarterly financial data for each
of the quarters in 1999 and 1998 (in millions):

<TABLE>
<CAPTION>
                                                                                 Quarters
                                              ----------------------------------------------------------------------------
                                                   First             Second (a)            Third (a)           Fourth (a)
                                              -------------     -----------------      --------------      ---------------

Fiscal year ended December 31, 1999

<S>                                             <C>               <C>                    <C>                 <C>
Revenues......................................       $163.5                $195.1              $258.3               $300.5
Net revenues..................................         33.7                  38.3                50.8                 59.2
Income from operations........................          7.5                  11.4                15.0                 14.1
Net income....................................          4.7                   5.4                 4.1                  2.4

Fiscal year ended December 25, 1998

Revenues......................................       $150.2                $135.2              $130.8               $174.6
Net revenues..................................         30.6                  26.6                28.6                 38.7
Income from operations........................          5.5                   3.0                10.9                 13.8
Net income....................................          3.5                   1.5                 7.1                  8.5
</TABLE>
_______

(a)  1999 amounts include the acquisition of Pacer Logistics, Inc. on May 28,
     1999 (see Note 2).





                                      F-25
<PAGE>

                   PACER INTERNATIONAL, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

NOTE 15.  ACQUISITION OF CONEX

     Pursuant to the terms of an Asset Purchase Agreement dated as of December
31, 1999, as amended (the "Purchase Agreement"), among Conex Acquisition
Corporation, a Delaware corporation ("Acquisition Corp."), Conex Global
Logistics Services, Inc., a California corporation ("Conex"), MSL Transportation
Group, Inc., a California corporation ("MSL"), Jupiter Freight, Inc.,a
California corporation ("Jupiter"), and certain other persons, Acquisition Corp.
acquired substantially all of the assets, and assumed certain specified
liabilities, of Conex, MSL and Jupiter for approximately $25,050,000 in cash,
issued Conex shareholders an 8.0% contingent note in the aggregate principal
amount of $5,000,000 and issued Conex shareholders 300,000 shares of common
stock of Pacer International, Inc.  Acquisition Corp. is a wholly-owned
subsidiary of Pacer International, Inc., a Tennessee corporation ("Pacer"). The
transaction closed on January 13, 2000.  On January 13, 2000, Acquisition
Corporation and the Company executed a supplement to the Indenture, resulting in
Acquisition Corporation becoming a guarantor of the Company's obligations,
thereunder.






                                      F-26
<PAGE>

                                  Schedule II

Pacer International, Inc. (Formerly known as American President Lines Stacktrain
                                   Services)

                       Valuation and Qualifying Accounts

   For the fiscal years ended December 31, 1999 and December 25, 1998 and the
             period November 13, 1997 through December 26, 1997 and
                  December 28, 1996 through November 12, 1997
                                 (in millions)


<TABLE>
<CAPTION>
           Column A                 Column B        Column C              Column D                  Column E
-------------------------------------------------------------------------------------------------------------
                                  Balances at      Additions                                      Balances at
                                   Beginning       (Charged)/                                        End of
                                   of Fiscal      Credited to                                        Fiscal
         Description                 Period          Income       Deductions (1)     Other           Period
-------------------------------------------------------------------------------------------------------------
<S>                               <C>             <C>             <C>               <C>      <C>  <C>

December 31, 1999
-----------------
   Allowance for doubtful
      accounts...................       $(0.7)          $(0.8)             $0.4      $(1.9)  (2)        $(3.0)

December 25, 1998
-----------------
   Allowance for doubtful
      accounts...................       $(0.9)          $   -              $  -      $ 0.2   (3)        $(0.7)

December 26, 1997
-----------------
   Allowance for doubtful
      accounts...................       $(0.8)          $(0.1)             $  -      $   -              $(0.9)

November 12, 1997
-----------------
   Allowance for doubtful
      accounts....................      $(0.7)          $(0.3)             $0.2     $    -              $(0.8)
</TABLE>
---------

(1.)  Represents write-off of amounts.
(2.)  Represents the historical allowance recorded on Pacer Logistics books at
      the date of acquisition.
(3.)  Represents a reduction of the allowance based on historical analysis.





                                      F-27