EXHIBIT 99.2
Transit Group, Inc.
Pro forma unaudited combined condensed balance sheet
As of June 30, 1999
Transit R&M
Group, Inc. Enterprises Unaudited Unaudited
June 30, 1999 June 30, 1999 Pro forma Pro forma
As reported As reported Adjustments Combined
Current assets $ 51,128,000 $ 2,065,599 19,126 (a) $ 53,212,725
Property, equipment and capitalized leases 62,986,000 10,960,022 (780,449)(b) 73,165,573
Goodwill 55,226,000 - 3,400,137 (c) 58,626,137
Other assets 206,000 - 206,000
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Total assets $169,546,000 $ 13,025,621 2,638,814 $185,210,435
============ ============ ============
Current liabilities $ 37,725,000 $ 3,236,138 $ 40,961,138
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Deferred tax liability - non-current 1,777,868 (a) 1,777,868
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Long term debt 44,382,000 4,872,929 1,525,000 (d) 50,779,929
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Shareholders' equity
Redeemable common stock 3,675,000 - 3,675,000
Redeemable preferred stock 24,912,000 - 24,912,000
Preferred stock - - -
Common stock 250,000 2,000 10,150 (e) 262,150
Note receivable secured by stock (756,000) - (756,000)
Additional paid-in capital 76,868,000 300,000 3,940,350 (e) 81,108,350
Accumulated (deficit) earnings (17,510,000) 4,614,554 (4,614,554)(e) (17,510,000)
------------ ------------ ------------
Total shareholders' equity 87,439,000 4,916,554 91,691,500
------------ ------------ ------------
Total liabilities and shareholders' equity $169,546,000 $ 13,025,621 2,638,814 $185,210,435
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Transit Group, Inc.
Pro forma unaudited combined statement of income
For the six months ended June 30, 1999
Transit R&M
Group, Inc. Enterprises Unaudited Unaudited
June 30, 1999 June 30, 1999 Pro forma Pro forma
As reported As reported Adjustments Combined
Operating revenues $ 140,011,000 $ 10,647,805 $ 150,658,805
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Operating expenses
Purchased transportation 52,433,000 4,982,138 57,415,138
Salaries, wages and benefits 34,756,000 2,023,605 36,779,605
Fuel 11,194,000 1,011,378 12,205,378
Operating supplies and expenses 14,460,000 886,472 15,346,472
Lease expense - revenue equipment 1,785,000 - 1,785,000
Insurance 8,611,000 463,600 9,074,600
Depreciation and amortization expense 5,145,000 696,593 (50,404) (f) 5,834,935
43,746 (g)
General and administrative expense 3,968,000 222,822 4,190,822
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Total operating expenses 132,352,000 10,286,608 142,631,950
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Operating income 7,659,000 361,197 8,026,855
Interest expense 2,519,000 115,701 61,000 (h) 2,695,701
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Income before taxes 5,140,000 245,496 5,331,154
Income tax expense 2,605,000 - 99,035 (i) 2,704,035
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Net income 2,535,000 245,496 2,627,119
Preferred stock dividends 296,000 - 296,000
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Income available to common shareholders $ 2,239,000 $ 245,496 $ 2,331,119
=============== ============== ==============
Earnings per share - basic $ 0.09 $ 0.09
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Earnings per share - diluted $ 0.09 $ 0.09
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Weighted average shares outstanding - basic 25,240,163 1,215,000 (j) 26,455,163
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Weighted average shares outstanding - diluted 26,150,369 1,215,000 (j) 27,365,369
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Transit Group, Inc.
Pro forma unaudited combined statement of income
For the year ended December 31, 1998
Transit R&M
Group, Inc. Enterprises Unaudited Unaudited
December 31, 1998 December 31, 1998 Pro forma Pro forma
As reported As reported Adjustments Combined
Operating revenues $ 177,552,961 $ 19,385,368 $ 196,938,329
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Operating expenses
Purchased transportation 77,372,214 8,580,476 85,952,690
Salaries, wages and benefits 40,670,008 3,596,028 44,266,036
Fuel 12,931,732 1,753,569 14,685,301
Operating supplies and expenses 22,409,300 1,260,544 23,669,844
Insurance 2,844,739 803,679 3,648,418
Depreciation and amortization expense 7,518,485 1,071,975 (81,317) (f) 8,594,146
85,003 (g)
General and administrative expense 4,914,383 336,016 5,250,399
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Total operating expenses 168,660,861 17,402,287 186,066,834
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Operating income 8,892,100 1,983,081 10,871,495
Interest expense 4,310,359 377,267 122,000 (h) 4,809,626
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Income before taxes 4,581,741 1,605,814 6,061,869
Income tax expense (benefit) (7,114,000) - 624,606 (i) (6,489,394)
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Net income $ 11,695,741 $ 1,605,814 $ 12,551,263
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Earnings per share - basic $ 0.52 $ 0.50
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Earnings per share - diluted $ 0.49 $ 0.47
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Weighted average shares outstanding - basic 22,391,142 1,215,000 (j) 23,606,142
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Weighted average shares outstanding - diluted 23,646,073 1,215,000 (j) 24,861,073
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NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
1. ACQUISITION OF R&M ENTERPRISES
On July 19, 1999 Transit Group, Inc. (the "Company") completed the
acquisition of R&M Enterprises, Inc. and Williams Truck Brokers, Inc.
(collectively "R&M Enterprises"). R&M Enterprises, Inc. is a Nebraska
corporation engaged in the short and long haul transportation services
business. Williams Truck Brokers, Inc. is a Nebraska corporation whose
business consists of arranging the shipment of goods for a variety of
shippers utilizing unrelated transportation companies. The R&M Enterprises
balances reported in the pro forma financial statements include R&M
Enterprises, Inc. and Williams Truck Brokers, Inc. The purchase agreement
provided for an aggregate cash consideration of $1.4 million and 1,215,000
shares of the Company's restricted common stock. The purchase price has
been preliminarily allocated to the assets and liabilities acquired based
on their estimated fair value. The excess of purchase price over the
estimated fair value of the net assets acquired will be recorded as
goodwill and amortized over a 40-year period.
2. EXPLANATIONS OF PRO FORMA FINANCIAL STATEMENTS AND RELATED ADJUSTMENTS
The pro forma combined statement of operations for the year ended December
31,1998 and six months ended June 30, 1999 gives effect to the acquisition
of R&M Enterprises as if such event had occurred at the beginning of the
period. The pro forma unaudited combined balance at June 30, 1999 reflects
the acquisition of R&M Enterprises as if such event had occurred on that
date. The pro forma combined financial data, based on facts and
circumstances existing on July 19, 1999 may not be indicative of the
results that actually would have occurred if the transactions and
adjustments described in the following notes had occurred on the dates
assumed and does not project the Company's financial position or results of
operations at any future date. The pro forma combined financial data should
be read in conjunction with the reports of independent accountants, the
Company's current report on Form 10-K and Form 10-Q dated March 31, 1999
and August 16, 1999, respectively, related to the Company's consolidated
financial statements for the year ended December 31, 1998 and six months
ended June 30, 1999, and the Company's current report on Form 8-K dated as
of July 30, 1999 related to the acquisition of R&M Enterprises.
a. R&M Enterprises was organized as an S-corporation and was exempt from
federal and state taxation. It was converted to a C-corporation upon
acquisition by the Company. The pro forma adjustments reflect the
deferred taxes arising from differences between the book and tax bases
of R&M Enterprises as if it was a C-corporation on June 30, 1999.
b. Amount represents the adjustment to fair market value of fixed assets
acquired from R&M Enterprises.
c. Amount reflects the increase in goodwill related to the acquisition of
R&M Enterprises, to be amortized over 40 years.
d. Amount represents the additional debt associated with cash
consideration paid plus professional fees associated with the
acquisition of R&M Enterprises.
e. Amount represents the elimination of the historical pre-acquisition
stockholders' equity of R&M Enterprises and the effect of the stock
consideration paid for R&M Enterprises.
f. Amount represents the adjustment to depreciation expense for adoption
of the Company's depreciation policy related to property, equipment
and capitalized leases.
g. Amount represents additional goodwill amortization resulting from the
purchase of R&M Enterprises by the Company.
h. Amount represents additional interest expense associated with the
financing of cash consideration paid to R&M Enterprises shareholders.
i. Amount reflects the estimated income tax effect of pro forma
adjustments and the conversion of R&M Enterprises from an
S-corporation to a C-corporation.
j. Amount represents issuance of 1,215,000 shares of the Company's common
stock in conjunction with purchase of R&M Enterprises.