<PAGE>
Exhibit 99.2
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Rail Van, Inc.
In our opinion, the accompanying consolidated balance sheet as of December
31, 1999 and the related consolidated statements of operations, of
shareholders' equity and of cash flows present fairly, in all material
respects, the consolidated financial position of Rail Van, Inc. (the Company)
as of December 31, 1999, and the consolidated results of its operations and
its consolidated cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
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 audit. We conducted our audit of these statements in accordance
with auditing standards generally accepted in the United States of America,
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 our opinion.
/s/ PricewaterhouseCoopers LLP
Columbus, Ohio
March 24, 2000
1
<PAGE>
RAIL VAN, INC.
CONSOLIDATED BALANCE SHEETS
As of December 31, 1999 and September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
December 31, September 30,
1999 2000
------------ -------------
(unaudited)
ASSETS (in millions)
<S> <C> <C>
Current assets
Cash and cash equivalents......................... $ .4 $ --
Accounts receivable
Trade--less allowance for doubtful accounts of
$1,000,000 and $2,962,000, respectively........ 83.2 79.2
Railroad incentives............................. 2.7 1.7
Shareholders and employees...................... .2 .1
Accounts receivable, Maersk, Inc. .............. -- 1.0
Affiliated entities............................. .1 .1
Other........................................... .4 .3
Investment in Maersk Rail Van..................... -- .6
Prepaid expenses and other current assets......... .3 .7
----- -----
Total current assets............................ 87.3 83.7
----- -----
Property and equipment, net....................... 4.3 5.6
Investment in Ratliff Logistics................... .2 .3
Other assets...................................... .3 .2
----- -----
Total assets........................................ $92.1 $89.8
===== =====
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable
Trade........................................... $57.7 $54.0
Bank overdrafts................................. 8.2 2.2
Customer incentives............................. 1.3 .5
Revolving line of credit.......................... 11.3 22.9
Shareholder distributions payable................. 1.2 .4
Current maturities of capital lease obligations... .2 .1
Minority interest--Maersk, Inc. .................. -- .6
Other accrued liabilities......................... 2.1 1.7
----- -----
Total current liabilities....................... 82.0 82.4
Capital lease obligations........................... .8 1.0
----- -----
Total liabilities................................... 82.8 83.4
----- -----
Shareholders' equity
Class A common stock, no par value; 60 shares
authorized, issued and outstanding............... -- --
Class B common stock, no par value; 7,140 shares
authorized, issued and outstanding............... -- --
Retained earnings................................. 9.3 6.4
----- -----
Total shareholders' equity...................... 9.3 6.4
----- -----
Total liabilities and shareholders' equity.......... $92.1 $89.8
===== =====
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE>
RAIL VAN, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1999 and the Nine Months Ended September 30,
2000 (Unaudited) and 1999 (Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
---------------------------
December 31, September 30, September 30,
1999 2000 1999
------------ ------------- -------------
(unaudited) (unaudited)
(in millions)
<S> <C> <C> <C>
Net revenues......................... $513.1 $364.4 $368.8
Line haulage expenses................ 474.5 332.5 341.4
------ ------ ------
Gross profit....................... 38.6 31.9 27.4
Selling, general and administrative
expenses............................ 33.9 31.6 23.9
------ ------ ------
Income from operations............. 4.7 .3 3.5
------ ------ ------
Other income (expense)
Interest expense................... (.8) (.9) (.6)
Equity income from Ratliff
Logistics......................... .1 -- .1
Other, net......................... -- .1 --
------ ------ ------
(.7) (.8) (.5)
------ ------ ------
Net income (loss).................... $ 4.0 $ (.5) $ 3.0
====== ====== ======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
RAIL VAN, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the Year Ended December 31, 1999 and the Nine Months Ended September 30,
2000 (Unaudited)
<TABLE>
<CAPTION>
Common Stock
-------------------------- Total
Number Number Retained Shareholders'
of Shares of Shares Amount Earnings Equity
--------- --------- ------ -------- -------------
Class A Class B (in millions)
<S> <C> <C> <C> <C> <C>
Balances, January 1, 1999.... 60 7,140 $ -- $ 7.7 $ 7.7
Net income................. -- -- -- 4.0 4.0
Distributions to
shareholders ($342.90 per
share).................... -- -- -- (2.4) (2.4)
--- ----- ----- ----- -----
Balances, December 31, 1999.. 60 7,140 -- 9.3 9.3
Unaudited:
Net loss................... -- -- -- (.5) (.5)
Distributions to
shareholders ($330.95 per
share).................... -- -- -- (2.4) (2.4)
--- ----- ----- ----- -----
Balances, September 30,
2000........................ 60 7,140 $ -- $ 6.4 $ 6.4
=== ===== ===== ===== =====
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
RAIL VAN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Year Ended December 31, 1999 and the Nine Months Ended September 30,
2000 (Unaudited) and 1999 (Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
---------------------------
December 31, September 30, September 30,
1999 2000 1999
------------ ------------- -------------
(unaudited) (unaudited)
(in millions)
<S> <C> <C> <C>
Cash flows from operating activities
Net income (loss)................... $ 4.0 $ (.5) $ 3.0
Adjustment to reconcile net income
(loss) to net cash provided by (used
in) operating activities:
Depreciation........................ .9 1.4 .7
Provision for doubtful accounts..... .6 2.0 .5
Income from investment in Ratliff
Logistics.......................... (.1) -- (.1)
Change in certain assets and
liabilities:
Accounts receivable............... (20.2) 2.2 5.8
Other assets...................... (.4) (.3) (.2)
Accounts payable--trade........... 9.2 (3.8) (3.7)
Customer incentives............... .4 (.8) .1
Accrued expenses.................. .8 (.4) 1.0
------ ----- -----
Net cash provided by (used in)
operating activities........... (4.8) (.2) 7.1
------ ----- -----
Cash flows from investing activities
Capital expenditures................ (1.8) (2.4) (1.3)
Investment in Maersk Rail Van....... -- (.6) --
Proceeds from disposal of assets.... .2 -- .2
------ ----- -----
Net cash used in investing
activities....................... (1.6) (3.0) (1.1)
------ ----- -----
Cash flows from financing activities
Net proceeds (payments) on revolving
line of credit..................... 3.4 11.7 (4.0)
Net bank overdraft increase
(decrease)......................... 5.2 (6.0) .7
Capital contribution from minority
interest........................... -- .6 --
Payment of capital lease
obligations........................ (.2) (.3) (.1)
Distributions to shareholders....... (2.4) (3.2) (2.4)
------ ----- -----
Net cash provided by (used in)
financing activities............. 6.0 2.8 (5.8)
------ ----- -----
Net increase (decrease) in cash and
cash equivalents..................... (.4) (.4) .2
Cash and cash equivalents, beginning
of period............................ .8 .4 .8
------ ----- -----
Cash and cash equivalents, end of
period............................... $ .4 $ -- $ 1.0
====== ===== =====
Supplemental Cash Flow Disclosures
Cash paid for interest.............. $ .8 $ 1.0 $ .6
====== ===== =====
Shareholder distributions payable... $ 1.2 $ .4 $ .1
====== ===== =====
Equipment acquired under capital
leases............................. $ 1.2 $ .4 $ .9
====== ===== =====
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
RAIL VAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999 and September 30, 2000 (unaudited) and 1999 (unaudited)
1. Description of Business
Rail Van, Inc. was organized in 1984. The Company's principal activity is
the conduct of operations as an intermodal marketing company specializing in
transportation and logistics management programs utilizing railroad and
trucking companies for national and international customers.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements include Rail Van, Inc.
and its 99.9% owned subsidiary, Transportes Rail Van, S. de R.L. de C.V.
(collectively the Company). All significant intercompany transactions and
balances have been eliminated in consolidation. On December 22, 2000, the
Company was sold to Pacer International, Inc. The transaction was accounted
for as a purchase; accordingly, these financial statements are presented on a
historical basis and do not include any adjustments related to the acquisition
of the Company (see Note 11).
Interim Financial Information
The unaudited interim consolidated financial statements as of September 30,
2000 and for the nine-month periods ended September 30, 2000 and 1999 have
been prepared in accordance with accounting principles generally accepted in
the United States of America for interim financial information and with the
instructions to Form 10Q and Article 10 of Regulation SX. Accordingly, they
may not contain all information required by accounting principles generally
accepted in the United States of America to be included in a full set of
financial statements. In the opinion of management, all adjustments,
consisting of only normal recurring adjustments, that are necessary for fair
presentation have been included. The results of operations for any interim
period are not necessarily indicative of the results of operations to be
expected for any full fiscal year.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and short-term investments with
an original maturity date of three months or less. Cash is maintained
primarily in one bank.
Property and Equipment
Property and equipment are recorded at cost. Significant additions or
improvements extending asset lives are capitalized, while maintenance and
repair costs are expensed as incurred. The cost and accumulated depreciation
for assets sold, retired or otherwise disposed of are removed from the
accounts at the time of disposition, and the resulting gains or losses are
reflected in operations.
Capitalized Software Costs
The Company capitalizes the cost of developing computer software for
internal use. Such costs include all direct external consulting fees and
purchased software costs. Capitalized costs are amortized over four years
using the straight-line method. Software costs capitalized during the year
ended December 31, 1999 and the nine months ended September 30, 2000
(unaudited) amounted to $1.2 million and $2.2 million, respectively.
Amortization of software costs for the year ended December 31, 1999 and the
nine months ended September 30, 2000 (unaudited) and 1999 (unaudited) was $.4
million, $.7 million and $.3 million, respectively.
Income Taxes
The Company's shareholders have elected to be treated as an S corporation
for federal and state income tax purposes. Accordingly, the Company is not
required to pay federal and state income taxes, and the Company's
6
<PAGE>
RAIL VAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1999 and September 30, 2000 (unaudited) and 1999 (unaudited)
shareholders include their respective share of the Company's taxable income in
their individual income tax returns.
Revenue Recognition
The Company recognizes revenue when shipments are complete. Provisions for
discounts and rebates from vendors and to customers are recognized when
earned.
Fair Value of Financial Instruments
The carrying amounts of trade accounts receivable, other assets, accounts
payable and accrued expenses approximate fair value due to their short-term
maturities. The carrying value of the revolving line of credit approximates
fair value due to its variable interest rate.
Advertising
Advertising costs are expensed as incurred. Advertising costs for the year
ended December 31, 1999 and the nine months ended September 30, 2000
(unaudited) and 1999 (unaudited) were $.2 million, $.1 million and $.2
million, respectively.
Concentration of Credit Risk and Major Customers
The Company's largest customer (consisting of nine divisions) and second
largest customer (consisting of 13 divisions) accounted for approximately 40%
and 14%, respectively, of the Company's year ended December 31, 1999 net
revenues and approximately 39% and 9%, respectively, and 39% and 16%,
respectively, of the Company's nine months ended September 30, 2000
(unaudited) and 1999 (unaudited) net revenues. Likewise, the Company's largest
customer and second largest customer comprised approximately 38% and 5%,
respectively, of the total trade receivable balances at December 31, 1999 and
approximately 30% and 7%, respectively, of the total trade receivable balances
at September 30, 2000 (unaudited). Credit risk associated with the Company's
trade receivables is limited due to the wide geographic, industry and
divisional dispersion of the Company's customers.
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 it provides. 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.
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.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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
7
<PAGE>
RAIL VAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1999 and September 30, 2000 (unaudited) and 1999 (unaudited)
statements and the reported amounts of revenues and expenses during the
reporting period. Significant estimates include allowance for doubtful
accounts and line haulage costs. Actual results could differ from those
estimates.
Recently Issued Accounting Pronouncements (unaudited)
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 (SFAS 133), Accounting for Derivative
Instruments and Hedging Activities. SFAS 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. SFAS 133 is effective for fiscal
years beginning after June 15, 2000, with earlier application encouraged. In
June 2000, the Financial Accounting Standards Board released Statement of
Financial Accounting Standards (SFAS) No. 138, Accounting for Certain
Derivative Instruments and Certain Hedging Activities--on Amendment to FASB
Statement No. 133, which modifies certain provisions and definitions in
accounting principles used in accounting for derivative instruments and
hedging activities. The Company is evaluating the possible effect, if any, of
SFAS No. 133 and has not yet determined the impact of this pronouncement, as
amended by SFAS No. 138.
In December 1999, the Securities and Exchange Commission (SEC) staff issued
Staff Accounting Bulletin No. 101 (SAB 101), Revenue Recognition in Financial
Statements, as amended by Staff Accounting Bulletins No. 101A and 101B. These
bulletins summarize certain of the staff's views about applying accounting
principles generally accepted in the United States of America to revenue
recognition in financial statements. The Company will be required to follow
the guidance in SAB 101 no later than its fourth quarter of 2000, with
restatement of earlier quarters in 2001 required, if necessary. The SEC has
recently issued further guidance with respect to adoption of specific issues
addressed by SAB 101. The Company is currently assessing the impact, if any,
SAB 101 may have on its consolidated financial position or results of
operations.
3. Property and Equipment
Property and equipment and estimated useful lives consist of the following:
<TABLE>
<CAPTION>
December 31, September 30, Useful
1999 2000 Life
------------ ------------- -------
(unaudited)
(in millions)
<S> <C> <C> <C> <C>
Data processing equipment and
software........................... $ 4.0 $ 6.2 3 Years
Data processing equipment and
software under capital lease....... 1.2 1.6 4 Years
Furniture and other equipment....... 1.0 1.2 7 Years
----- -----
Property and equipment............ 6.3 9.0
Less accumulated depreciation..... (2.0) (3.4)
----- -----
Property and equipment, net..... $ 4.3 $ 5.6
===== =====
</TABLE>
4. Debt
At December 31, 1999, the Company had a $15.0 million revolving line of
credit agreement with a bank. Interest at December 31, 1999 was payable using
LIBOR rate plus 100 basis points (6.82% at December 31, 1999 and 7.62% at
September 30, 2000 (unaudited)) for amounts borrowed up to $5.0 million, and
amounts borrowed in excess of $5,000,000 are payable at the bank's prime rate
less 25 basis points (8.25% at December 31, 1999 and 9.25% at September 30,
2000 (unaudited)). Available amounts under the line of credit at December 31,
1999 amounted to approximately $3.7 million. The line of credit is
collateralized by substantially all assets of the Company and contains various
restrictive covenants including maintaining minimum amounts of tangible net
worth.
September 30, 2000 (unaudited):
In May 2000, the Company renegotiated and increased its revolving line of
credit to $19.0 million expiring on May 31, 2001. The new agreement has
substantially the same terms as the previous agreement. Based on a
8
<PAGE>
RAIL VAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1999 and September 30, 2000 (unaudited) and 1999 (unaudited)
verbal agreement, the bank allowed the Company to exceed the maximum
borrowings allowed under the line of credit for a short period of time as of
September 30, 2000. The Company reduced the amount outstanding to
approximately $12.6 million as of October 3, 2000. As of September 30, 2000,
the Company was not in compliance with certain of the restrictive covenants
contained in the revolving line-of-credit agreement; however, coincident with
the sale of the Company to Pacer International, Inc. (see Note 11), all
amounts outstanding under this agreement were paid and the agreement was
terminated.
5. Employee Benefit Plans
The Company provides retirement, long-term disability and health benefits
to substantially all employees principally through a defined contribution plan
and a group contract. Contributions are made at the discretion of the Board of
Directors, and the Company reserves the right to amend or terminate the plans
at any time. The plans cover substantially all employees who have met age
and/or service requirements.
The defined contribution plan is The Rail Van, Inc. Retirement Savings Plan
Trust (the Plan). At December 31, 1999 and at September 30, 2000 (unaudited),
the long-term disability income plan and the health benefits plan were under a
group contract with Unum.
The Plan is organized to provide a salary deferral under Section 401(k) of
the Internal Revenue Code. Under the Plan, eligible employees may defer up to
ten percent of their salary until retirement by making periodic contributions
to the nontaxable trust. The Company matches eligible employee contributions
at a rate of $.25 for each $1 of employee contributions. The Company's
contributions to the Plan totaled $.1 million, $.1 million and $.1 million for
the year ended December 31, 1999 and the nine months ended September 30, 2000
(unaudited) and 1999 (unaudited), respectively.
6. Leases and Related-Party Transactions
The Company has various noncancelable operating leases for office space,
equipment and automobiles.
During the year ended December 31, 1999 and for the nine months ended
September 30, 2000 (unaudited), the Company entered into several capital lease
obligations for office and data processing equipment and related software. The
cost of assets under capital leases was $1.2 million and $1.6 million and the
accumulated amortization was $.2 million and $.3 million at December 31, 1999
and September 30, 2000 (unaudited), respectively. Future minimum annual lease
payments for all leases and the present value of the net minimum lease
payments for capital leases are as follows as of December 31, 1999:
<TABLE>
<CAPTION>
Capital Operating
For the Year Ending December 31: Leases Leases
-------------------------------- ------- ---------
(in millions)
<S> <C> <C>
2000....................................................... $ .4 $1.0
2001....................................................... .4 .9
2002....................................................... .3 .7
2003....................................................... -- --
---- ----
Total minimum lease payments............................. 1.1 $2.6
====
Less amount representing interest........................ .1
----
Present value of net minimum lease payments................ 1.0
Less current maturities.................................. .2
----
Long-term obligation under capital leases.................. $ .8
====
</TABLE>
9
<PAGE>
RAIL VAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1999 and September 30, 2000 (unaudited) and 1999 (unaudited)
Rental expense for the year ended December 31, 1999 and the nine months
ended September 30, 2000 (unaudited) and 1999 (unaudited) was $2.5 million,
$1.9 million and $2.0 million, respectively.
The Company rents an aircraft from an affiliated corporation. Three of the
Company's shareholders are the principal shareholders of the affiliated
corporation. For the year ended December 31, 1999 and the nine months ended
September 30, 2000 (unaudited) and 1999 (unaudited), total rent expense for
use of the airplane was $1.0 million, $1.0 million and $.7 million,
respectively.
The Company had advances of $.1 million and $0 at December 31, 1999 and
September 30, 2000 (unaudited), respectively, to an affiliated corporation to
pay for general operating expenses for the aircraft. The Company received
payment of the advances from the affiliated corporation in 2000. In addition,
the Company had receivables from shareholders of $.2 million and $.1 million
at December 31, 1999 and September 30, 2000 (unaudited), respectively.
In April 2000, the Company entered into a 15-year building lease agreement
with an entity that is 50% owned by substantially all shareholders of the
Company. The lease will commence upon completion of building construction
which is estimated to be in March 2001. Annual rental commitments under this
lease range from $1.3 million to $1.7 million during the initial lease term.
The Company had advances of $0 and $.1 million at December 31, 1999 and
September 30, 2000 (unaudited), respectively, to an affiliated entity to pay
for various expenses for the new building.
7. Equity Investment
In August 1998, the Company acquired a 40% interest in Ratliff Logistics,
LLC (Ratliff), a joint venture with Ratliff Trucking Corporation, Inc., a
Michigan-based motor carrier, for $.1 million. The investment is accounted for
using the equity method.
Condensed financial information of Ratliff as of and for the year ended
December 31, 1999 and as of and for the nine months ended September 30, 2000
(unaudited) and 1999 (unaudited) is summarized as follows:
<TABLE>
<CAPTION>
December 31, September 30, September 30,
1999 2000 1999
------------ ------------- -------------
(unaudited) (unaudited)
(in millions)
<S> <C> <C> <C>
Current assets...................... $ 5.2 $ 3.8 $ 6.4
Noncurrent assets................... .8 .7 .8
Total liabilities................... 5.4 3.8 6.8
Members' equity..................... .5 .7 .5
Total revenues...................... 36.1 25.8 28.1
Net income.......................... .4 .1 .3
</TABLE>
8. Shareholders' Equity
The Company's common stock consists of Class A and Class B common stock.
Holders of Class A common stock are entitled to one vote per share; holders of
Class B common stock have no voting rights except as required by law. The
Company has a close corporation agreement among its shareholders. The
agreement provides for restrictions on stock transfers, sale and redemption of
common stock and provisions in the event of the death, disability or
retirement of a shareholder. The agreement was terminated upon the sale of the
Company (see Note 11).
10
<PAGE>
RAIL VAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1999 and September 30, 2000 and 1999 (unaudited)
9. Contingencies
The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's financial position or results of operations.
10. Agreements on Formation of Intermodal Joint Venture
On July 1, 1999, the Company and Maersk, Inc. (Maersk) entered into an
agreement to form Rail Van LLC and Maersk Rail Van LCC and the shareholders of
the Company entered into the Rail Van Buy Sell Shareholder Agreement
(Agreement). Pursuant to these agreements, on January 1, 2000, the Company
contributed its operating assets and liabilities to Rail Van LLC in exchange
for 99% of the member interests in Rail Van LLC, and Maersk contributed cash
of $.6 million in exchange for the remaining 1% member interest in Rail Van
LLC. In addition, on January 1, 2000, Maersk contributed certain of its
business services to Maersk Rail Van LLC in exchange for 99% of the member
interests in Maersk Rail Van LLC, and Rail Van LLC contributed cash of
$.6 million in exchange for the remaining 1% member interest in Maersk Rail
Van LLC. Pursuant to the Agreement, Maersk received the right to acquire all
of the outstanding shares of the Company at a price determined by a formula
set forth in the Agreement. This right may be exercised on the last day of
each quarter beginning September 30, 1999 through July 1, 2002 (see Note 11).
11. Subsequent Events (Unaudited)
Agreements on Formation of Intermodal Joint Venture
Effective November 10, 2000, the Company and Maersk entered into a mutual
redemption agreement to sever the relationships, rights and obligations
created by the Agreement. Pursuant to the mutual redemption agreement, Maersk
Rail Van LLC will pay Rail Van LLC $.6 million to redeem its 1% member
interest in Maersk Rail Van LLC. In addition, Rail Van LLC will pay Maersk $.6
million to redeem its 1% member interest in Rail Van LLC.
Sale of the Company to Pacer International, Inc. and Assignment of Transportes
Rail Van S. de R.L. de C.V.
On December 22, 2000, the Company's shareholders sold all of the common
stock of the Company to Pacer International, Inc. (Pacer). In connection
therewith, and immediately prior to the stock sale, the Company sold its
99.97% interest in Transportes Rail Van, S. de R.L. de C.V. (Transportes) to
an entity owned by substantially all selling shareholders of the Company.
Transportes was organized to provide certain services to Rail Van, Inc.
customers in Mexico. It is intended that these services will be provided by a
different entity organized by Pacer subsequent to its acquisition of the
Company. Operating revenues of Transportes for the year ended December 31,
1999 and the nine-month periods ended September 30, 2000 (unaudited) and 1999
(unaudited) were $63.0 million, $69.8 million and $59.6 million, respectively.
Coincident with the acquisition of the Company, all debt outstanding under the
Company's bank line of credit was refinanced by Pacer and the bank agreement
was terminated. Further, the shareholder agreement referred to in Note 8 was
terminated.
11
