Exhibit 99.2
Reconciliation of financial information included in Form 8-K filed September 7,
2005 to audited financial statements included in Schedule 14A filed January 13,
2006
The following is a reconciliation of selected financial information of Lower
Lakes Towing Ltd. contained in Exhibit 99.1 to Rand Acquisition Corporation's
Form 8-K filed September 7, 2005 to the audited financial statements of Lower
Lakes for the years ended March 31, 2005, 2004 and 2003 included in the Schedule
14A filed by Rand Acquisition Corp. on January 13, 2006. All amounts are
presented in thousands of US dollars.
The selected financial information in Exhibit 99.1 to the Form 8-K was derived
from unaudited, combined, Lower Lakes' management-prepared, Canadian GAAP
financial statement of Lower Lakes and its subsidiary, Lower Lakes
Transportation Company, and equity investee, Grand River Navigation Company,
Inc. Rand's Schedule 14A contains US GAAP audited consolidated financial
statements of Lower Lakes. The differences between the two sets of financial
data are reconciled below. The reconciliation below reconciles the financial
information contained on Form 8-K to the GAAP equivalent in the audited
financial statements contained in Schedule 14A if a GAAP equivalent exists.
Income statement information adjustments
Year ended March 31,
Description 2005 2004 2003 Notes
- ----------------------------------------------------------------------------------------------------------------------
1 "Net Revenue" as presented in 8-K 44,872 35,383 27,100
1,057 714 127 (i)
6,258 2,384 - (ii)
(77) 69 - (iii)
---------------------------------------
"Revenue" as presented in the audited financial statements 52,110 38,550 27,227
=======================================
2 "Operating expenses" as presented in 8-K 31,533 26,667 19,099
1,057 714 127 (i)
(350) - - (iv)
(30) 97 - (iii)
---------------------------------------
"Vessel operating expenses" as presented in the audited
financial statements 32,210 27,478 19,226
=======================================
3 Outside vessel charter fees (not presented separately in 8-K but - - -
netted against outside vessel revenue in 8-K) 6,180 2,363 - (ii)
---------------------------------------
6,180 2,363 -
=======================================
Year ended March 31,
Description 2005 2004 2003 Notes
- ----------------------------------------------------------------------------------------------------------------------
4 "Operating Margin" as presented in 8-K (non-GAAP measure) 13,339 8,716 8,001
Total above adjustments (i) to (iv) 381 (7) -
---------------------------------------
Not shown in the audited financial statements (for
comparative purposes only) 13,720 8,709 8,001
=======================================
5 "Winter Work" as presented in 8-K 1,638 1,430 1,027
30 - - (iii)
---------------------------------------
"Repairs and maintenance" as presented in the audited
financial statements 1,668 1,430 1,027
=======================================
6 "Administration" as presented in 8-K 2,277 2,396 1,594
144 - - (iii)
---------------------------------------
"Administration" as presented in the audited financial
statements 2,421 2,396 1,594
=======================================
7 "EBITDA" as presented in 8-K (non-GAAP measure) 9,424 4,890 5,381
Total of adjustments (i) to (iv) 207 (7) -
---------------------------------------
Not shown in audited financial statements (for comparative
purposes only) 9,631 4,883 5,381
=======================================
8 "Adjusted EBITDA" as presented in 8-K (non-GAAP measure) 9,673 6,946 5,168
Total of adjustments (i) to (iv)
207 (7) -
---------------------------------------
Not shown in audited financial statements (for comparative
purposes only) 9,880 6,939 5,168
=======================================
9 "Depreciation and amortization" 4,816 4,390 3,074
150 50 - (iv)
(259) - -(viii)
47 67 60(iii)
---------------------------------------
Total of "depreciation" and "amortization" lines in the
audited financial statements 4,754 4,507 3,134
=======================================
10 "Capital Expenditures" 3,626 3,330 2,250
(739) (1,154) (x)
- - 520 (xi)
- 1,550 - (xii)
- 2,200 - (iv)
---------------------------------------
"Purchase of capital assets" presented in Statements of Cash
flows" in the audited financial statements 3,626 6,341 1,616
=======================================
Balance sheet adjustments - assets
Description March 31, 2005 Note
- --------------------------------------------------------------------------------------------------------------------
1 Cash (netted against long-term debt and not presented separately
in 8-K) -
644 (v)
----------------
"Cash" as presented in the audited financial statements 644
==============
2 Cash reserved for repairs and drydock (netted against bank indebtedness and
long-term debt and not presented separately in 8-K) -
2,191 (v)
--------------
"Cash reserved for repairs and drydock" as presented in the
audited financial statements 2,191
==============
3 "Accounts Receivable" as presented in 8-K 1,475
156(vi)
55(iii)
--------------
"Accounts receivable" as presented in the audited financial
statements 1,686
==============
4 "Prepaid Expenses & Other Current Assets" as presented in 8-K 1,863
(16) (iii)
--------------
"Prepaid expenses and other current assets" as presented in the
audited financial statements 1,847
==============
5 Current deferred income taxes (not presented separately in 8-K) -
69(vii)
--------------
"Deferred income taxes" (current) as presented in the audited
financial statements 69
==============
6 "Total Current Assets" as presented in 8-K 3,338
Total of adjustments in balance sheet items 1 to 5 3,099
--------------
Total of current assets as presented in the audited financial
statements 6,437
==============
7 Capital Assets as presented in 8-K 34,177
2,000(iv)
--------------
"Capital Assets" as presented in the audited financial statements 36,177
==============
8 "Deferred Charges" as presented in 8-K 5,768
(438)(viii)
--------------
"Deferred drydock and financing costs" as presented in the
audited financial statements 5,330
==============
9 "Deferred Income Taxes and Other Assets" as presented in 8-K 3,524
2,160(vii)
--------------
"Deferred Income Taxes" (long-term) as presented in the
audited financial statements 5,684
==============
10 "Total Assets" as presented in 8-K 46,807
Total of adjustments to balance sheet items 1 to 9 6,821
--------------
Total assets as presented in the audited financial statements 53,628
==============
Balance sheet adjustments - liabilities and shareholders' deficiency
Description March 31, 2005 Notes
- ---------------------------------------------------------------------------------------------------------------------
11 Bank indebtedness (included with long-term debt in 8-K and not
presented separately) -
512 (v)
--------------
"Bank indebtedness" as presented in the audited financial
statements 512
==============
12 "Accounts Payable & Accrued Liabilities" as presented in 8-K 6,213
156 (vi)
25 (iii)
--------------
Total of "Accounts payable" and "Accrued liabilities" lines as
presented in the audited financial statements 6,394
==============
13 Deferred income taxes (current - not presented separately in 8-K) -
475 (vii)
--------------
"Deferred income taxes" (current) as presented in the audited
financial statements 475
==============
14 "Current Portion of Long-Term Debt" as presented in 8-K 2,035
350 (iv)
--------------
Total of "Current portion of long-term debt" and "Current portion
of long-term obligations - vessel lease" lines as presented in
the audited financial statements 2,385
==============
15 "Long-Term Debt, Net of Cash" as presented in 8-K 36,976
2,325 (v)
1,786 (iv)
--------------
Total of "Long-term debt - Senior" and "Long-term debt -
subordinated" lines as presented in the audited financial
statements 41,087
==============
16 "Deferred Income Taxes" (long-term) as presented in 8-K 988
2,347 (vii)
--------------
"Deferred income taxes" as presented in the audited financial
statements 3,335
==============
17 Convertible notes (classified with equity in 8-K) -
9,670 (ix)
--------------
"Convertible notes" (classified as a liability in the audited
financial statements) 9,670
==============
18 "Total Liabilities" as presented in 8-K 37,964
Total of adjustments to balance sheet items 15 to 17 16,128
--------------
Total liabilities as presented in the audited financial statements
54,092
==============
19 "Shareholders' Equity" as presented in 8-K 595
(9,670) (ix)
(438) (viii)
(593) (vii)
(124) (iii)
--------------
Total Shareholder's deficiency presented in the audited financial
statements (10,230)
==============
Description of reconciling adjustments
(i) Fuel surcharges are included in the gross revenue line item in the
audited financial statements. Form 8-K did not include all fuel
surcharges in revenue, but rather presented the surcharge revenue as a
reduction in fuel expenses.
(ii) Outside voyage charter revenue and expenses were shown on a net revenue
basis in the Form 8-K. The expense associated with the chartering of
other fleet's vessels is shown as a separate line item in operating
expenses for the US GAAP audited financial statements.
(iii) Immaterial consolidation, presentation, reclassifications and final
adjustments to present US GAAP consolidated financial statements.
(iv) Reclassification of the Manistee lease from an operating to a capital
lease for US GAAP reporting. Depreciation expenses for capital lease
classification not previously recorded were $150,000 and $50,000 in 2005
and 2004 respectively. Lease payments for the Manistee commenced in the
first quarter of 2005. The Form 8-K included $350,000 in operating lease
payments that have been reversed as a result of the reclassification to a
capital lease.
(v) Reclassification of cash and bank indebtedness netted with long-term debt
in the Form 8-K.
(vi) Reclassification of a Canadian Goods and Service Tax rebate to accounts
receivable.
(vii) Reclassification of deferred income taxes and final tax adjustments for
2005.
(viii) Write-down of deferred financing costs on debt extinguishments and
resulting effect on amortization expense associated with deferred
financing costs.
(ix) To classify convertible notes previously included in equity in Form 8-K
to liabilities for conformity with US GAAP.
(x) Drydocking expenditures reclassified to the operating section of the cash
flow statement
(xi) Reclassify asset held for disposal
(xii) Asset addition for the Michipicoten vessel that was excluded from the
calculation presented on Form 8-K.