EXHIBIT 99.2
Transit Group, Inc.
Pro forma unaudited combined condensed balance sheet
As of June 30, 1999
Transit R&M MDR
Group, Inc. Enterprises Cartage Bestway Unaudited Unaudited
June 30, 1999 June 30, 1999 June 30, 1999 June 30, 1999 Pro forma Pro forma
As reported As reported As reported As reported Adjustments Combined
Current assets $ 51,128,000 $ 2,065,599 $ 4,255,697 $10,003,152 19,126 (a) $ 63,518,244
(819,588)(l)
(2,876,373)(m)
(257,369)(l)
Property, equipment and
capitalized leases 62,986,000 10,960,022 14,265,836 32,419,525 3,804,213 (b) 124,435,596
Goodwill 55,226,000 21,297,804 (c) 76,523,804
Other assets 206,000 38,333 244,333
------------ ----------- ----------- ----------- ---------- -------------
Total assets $169,546,000 $13,025,621 $18,521,533 $42,461,010 21,167,813 $ 264,721,977
============ =========== =========== =========== ========== =============
Current liabilities $ 37,725,000 $ 3,236,138 $ 7,147,267 $16,445,677 $ 64,554,082
------------ ----------- ----------- ----------- -------------
Deferred tax liability -
non-current 3,069,676 623,448 7,701,687 (a) 11,394,811
------------ ----------- ----------- ----------- ---------- -------------
Long term debt 44,382,000 4,872,929 3,916,003 20,716,613 10,300,000 (d) 80,491,584
------------ ----------- ----------- ----------- (819,588)(l) -------------
(2,876,373)(m)
Stockholders' equity
Redeemable common
stock 3,675,000 3,675,000
Redeemable preferred
stock 24,912,000 24,912,000
Preferred stock - -
Partnership interest 1,000 (1,000) -
Common stock 250,000 2,000 7,281 4,000 38,794 (e) 302,075
Note receivable
secured by stock (756,000) (756,000)
Treasury stock (274,323) 274,323 (e) -
Additional paid-in
capital 76,868,000 300,000 20,490,425 (e) 97,658,425
Accumulated (deficit)
earnings (17,510,000) 4,614,554 4,655,629 4,670,272 (13,940,455)(e) (17,510,000)
------------ ----------- ----------- ----------- ----------- -------------
Total shareholders'
equity 87,439,000 4,916,554 4,388,587 4,675,272 6,862,087 108,281,500
------------ ----------- ----------- ----------- ----------- -------------
Total liabilities
and stockholders'
equity $169,546,000 $13,025,621 $18,521,533 $42,461,010 21,167,813 $ 264,721,977
============ =========== =========== =========== ========== =============
Transit Group, Inc.
Pro forma unaudited combined statement of income
For the six months ended June 30, 1999
Transit R&M MDR
Group, Inc. Enterprises Cartage Bestway Unaudited Unaudited
June 30, 1999 June 30, 1999 June 30, 1999 June 30, 1999 Pro forma Pro forma
As reported As reported As reported As reported Adjustments Combined
Operating revenues $140,011,000 $10,647,805 $12,552,986 $21,592,355 $184,804,146
------------ ----------- ----------- ----------- ------------
Operating expenses
Purchased transportation 52,433,000 4,982,138 1,190,919 58,606,057
Salaries, wages and benefits 34,756,000 2,023,605 4,365,623 9,535,812 21,000 (k) 50,702,040
Fuel 11,194,000 1,011,378 1,765,844 3,087,186 17,058,408
Operating supplies and expenses 14,460,000 886,472 2,689,174 2,161,405 20,197,051
Lease expense - revenue equipment 1,785,000 1,054,091 2,839,091
Insurance 8,611,000 463,600 356,838 506,749 9,938,187
Depreciation and amortization
expense 5,145,000 696,593 2,121,183 3,046,106 329,232 (f) 11,592,041
253,927 (g)
General and administrative expense 3,968,000 222,822 68,702 246,133 4,505,657
------------ ----------- ----------- ----------- ------------
Total operating expenses 132,352,000 10,286,608 12,421,455 19,774,310 175,438,532
------------ ----------- ----------- ----------- ------------
Operating income 7,659,000 361,197 131,531 1,818,045 9,365,614
Other (income) expense 128,697 (677,288)(l) (473,679)
74,912 (m)
Interest expense 2,519,000 115,701 291,079 1,321,481 412,000 (h) 4,459,495
(199,766)(m)
------------ ----------- ----------- ----------- ------------
Income before taxes 5,140,000 245,496 (159,548) 367,867 5,379,798
Income tax expense (benefit) 2,605,000 - (45,171) (16,823) 484,676 (i) 3,027,682
------------ ----------- ----------- ----------- ------------
Net income 2,535,000 245,496 (114,377) 384,690 2,352,116
Preferred stock dividends 296,000 296,000
------------ ----------- ----------- ----------- ------------
Income available to common
shareholders $ 2,239,000 $ 245,496 $ (114,377) $ 384,690 $ 2,056,116
============ =========== =========== =========== ============
Earnings per share - basic $ 0.09 $ 0.07
============ ============
Earnings per share - diluted $ 0.09 $ 0.07
============ ============
Weighted average shares
outstanding - basic 25,240,163 5,207,501 (j) 30,447,664
============ ============
Weighted average shares
outstanding - diluted 26,150,369 5,207,501 (j) 31,357,870
============ ============
Transit Group, Inc.
Pro forma unaudited combined statement of income
For the year ended December 31, 1998
Transit R&M MDR
Group, Inc. Enterprises Cartage Bestway
December 31, December 31, December 31, December 31, Unaudited Unaudited
1998 1998 1998 1998 Pro forma Pro forma
As reported As reported As reported As reported Adjustments Combined
Operating revenues $177,552,961 $19,385,368 $23,021,510 $40,943,157 $260,902,996
------------ ----------- ----------- ----------- ------------
Operating expenses
Purchased transportation 77,372,214 8,580,476 2,014,620 87,967,310
Salaries, wages and benefits 40,670,008 3,596,028 8,279,341 17,625,589 42,000 (k) 70,212,966
Fuel 12,931,732 1,753,569 3,490,558 5,984,624 24,160,483
Operating supplies and expenses 22,409,300 1,260,544 4,429,269 4,849,080 32,948,193
Lease expense revenue equipment 1,688,878 1,688,878
Insurance 2,844,739 803,679 522,926 962,441 5,133,785
Depreciation and amortization
expense 7,518,485 1,071,975 2,765,451 5,817,685 677,704 (f) 18,356,663
505,363 (g)
General and administrative expense 4,914,383 336,016 331,687 342,206 5,924,292
------------ ----------- ----------- ----------- ------------
Total operating expenses 168,660,861 17,402,287 21,508,110 37,596,245 246,392,570
------------ ----------- ----------- ----------- ------------
Operating income 8,892,100 1,983,081 1,513,400 3,346,912 14,510,426
Other (income) expense (336,685) 91,093 (m) (245,592)
Interest expense 4,310,359 377,267 572,613 2,515,342 824,000 (h) 8,356,667
(242,914)(m)
------------ ----------- ----------- ----------- ------------
Income before taxes 4,581,741 1,605,814 940,787 1,168,255 6,399,351
Income tax expense (benefit) (7,114,000) 338,303 (64,268) 1,250,657 (i) (5,589,308)
------------ ----------- ----------- ----------- ------------
Net income $ 11,695,741 $ 1,605,814 $ 602,484 $ 1,232,523 $ 11,988,659
============ =========== =========== =========== ============
Earnings per share -- basic $ 0.52 $ 0.42
============ ============
Earnings per share -- diluted $ 0.49 $ 0.41
============ ============
Weighted average shares
outstanding -- basic 22,391,142 5,207,501 (j) 27,598,643
============ ============
Weighted average shares
outstanding -- diluted 23,646,073 5,207,501 (j) 28,853,574
============ ============
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
1. ACQUISITIONS
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.
On July 30, 1999 the Company completed the acquisitions of MDR Cartage, Inc
and BF Transportation, Inc.. (collectively "MDR"). MDR Cartage, Inc. is an
Arkansas corporation engaged in the short and long haul transportation
services business. BF Transportation, Inc. is an Arkansas corporation
engaged in the leasing of tractors to MDR Cartage, Inc. The MDR balances
reported in the pro forma financial statements include MDR Cartage, Inc. and
BF Transportation, Inc. The purchase agreement provided for an aggregate
cash consideration of $1.8 million and 2,450,000 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.
On July 30, 1999 the Company completed the acquisitions of Bestway Trucking,
Inc., Connection One Trucking LLC and DLS Leasing, Inc. (collectively
"Bestway"). Bestway Trucking, Inc. is an Indiana corporation engaged in dry
van transportation and logistics services. Connection One Trucking LLC, an
Indiana partnership, and DLS Leasing, Inc., an Indiana corporation, are both
primarily engaged in the leasing of tractors and trailers to Bestway
Trucking, Inc. The Bestway balances reported in the pro forma financial
statements include Bestway Trucking, Inc., Connection One Trucking LLC and
DLS Leasing, Inc. The purchase agreement provided for an aggregate cash
consideration of $6.8 million and 1,500,000 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 acquisitions
of R&M Enterprises, MDR and Bestway as if such events had occurred at the
beginning of the period. The pro forma unaudited combined balance at June
30, 1999 reflects the acquisitions of R&M Enterprises, MDR and Bestway as if
such events had occurred on that date. The pro forma combined financial
data, based on facts and circumstances existing on July 19, 1999 for R&M
Enterprises and July 30, 1999 for MDR and Bestway 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 reports on Form 8-K dated as of July 30, 1999
and Form 8-K/A dated as of October 4, 1999 related to the acquisition of R&M
Enterprises and the current report on Form 8-K dated as of August 9, 1999
related to the acquisitions of MDR and Bestway.
a. R&M Enterprises, BF Transportation and DLS Leasing were organized as S-
corporations and were exempt from federal and state taxation. Connection
One is a partnership and its income is taxed to its partners. All were
converted to C-corporations 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, BF Transportation, DLS Leasing and
Connection One as if they were C-corporations on June 30, 1999.
b. Amount represents the adjustment to fair market value of fixed assets
acquired from R&M Enterprises, MDR and Bestway.
c. Amount reflects the increase in goodwill related to the acquisition of R&M
Enterprises, MDR and Bestway 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, MDR and Bestway.
e. Amount represents the elimination of the historical pre-acquisition
stockholders' equity of R&M Enterprises, MDR and Bestway and the effect of
the stock consideration paid.
f. Amount represents the adjustments to depreciation expense for adoption of
the Company's depreciation policy related to property, equipment and
capitalized leases and the adjustment of fixed assets to fair value.
g. Amount represents additional goodwill amortization resulting from the
purchase of R&M Enterprises, MDR and Bestway by the Company.
h. Amount represents additional interest expense associated with the financing
of cash consideration paid to R&M Enterprises, MDR and Bestway
shareholders.
i. Amount reflects the estimated income tax effect of pro forma adjustments
and the conversion of R&M Enterprises, BF Transportation and DLS Leasing
from an S-corporation to a C-corporation and Connection One from a
partnership to a C-corporation.
j. Amount represents issuance of 5,207,501 shares of the Company's common
stock in conjunction with the purchase of R&M Enterprises, MDR and Bestway.
k. Amount represents changes in the former owners compensation as a result of
the sale of MDR and Bestway to the Company.
l. Amount represents the elimination of the unrealized loss on investments
held for trading. Additionally, an adjustment has been made to reflect the
sale of these investments and use of the proceeds to reduce acquisition
debt.
m. Amount represents the reduction of debt through the use of available cash
and cash equivalents. Furthermore, an adjustment was made to reduce the
associated interest income and interest expense.