SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of Earliest Event Reported): August 15, 1997
TRANSIT GROUP, INC.
(Exact name of Registrant as specified in its charter)
Florida 33-30123-A 59-2576629
(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification No.)
incorporation or
organization)
3350 Cumberland Circle, Suite 1900
Atlanta, Georgia 30339
(Address of principal executive offices, including zip code)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On August 15, 1997, Transit Group, Inc. ("Transit Group"),
formerly known as "General Parcel Service, Inc." consummated the
Acquisition of Carroll Fulmer Group, Inc., a Florida corporation
("Fulmer"). Pursuant to the Agreement and Plan of Reorganization
executed at closing, a wholly-owned Florida subsidiary of Transit
Group was merged with and into Fulmer in a reverse triangular
merger, with Fulmer remaining as the surviving corporation of
the merger. Upon consummation of the merger, all of the outstanding
common stock of Fulmer was converted into 4,166,667 shares of
Transit Group common stock.
Fulmer is a truckload carrier based in Groveland, Florida.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired
At the time Form 8-K was filed to report the acquisition of
Fulmer, it was impractical to provide the required financial
statements for Fulmer relative to its acquisition as required by
Article 11 of Regulation S-X and this Item 7 of Form 8-K. Transit
Group is filing such financial information under cover
of this Form 8-K/A as the following exhibits.
Exhibit 7.1 - Financial Statements for Fulmer
(b) Pro Forma Financial Statements
At the time Form 8-K was filed to report the acquisitions of
Fulmer, it was impractical to provide the pro forma financial
information relative to the Fulmer acquisitions as required by Article 11
of Regulation S-X and this Item 7 of Form 8-K. Transit Group is filing
such pro forma financial information under cover of this Form 8-K/A
as the following exhibit:
Exhibit 7.2 - Pro Forma Financial Information
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
TRANSIT GROUP, INC.
Date: November 5, 1997
By: Wayne N. Nellums
Vice President,
Chief Financial Officer and
Secretary
<PAGE>
Exhibit 7.1 - Financial Statements of Carroll Fulmer Group, Inc.
CARROLL FULMER GROUP, INC.
AND SUBSIDIARIES
GROVELAND, FLORIDA
INDEPENDENT AUDITORS' REPORT, AND
CONSOLIDATED AUDITED FINANCIAL STATEMENTS
YEARS ENDED MAY 31, 1997 AND 1996
TABLE OF CONTENTS
Page
Independent Auditors' Report 1
Consolidated Financial Statements:
Balance Sheets 2
Statements of Income and Retained
Earnings 3
Statements of Cash Flows 4-5
Notes to Financial Statements 6-12
August 15, 1997
Independent Auditors' Report
To The Board of Directors
Carroll Fulmer Group, Inc.
Groveland, Florida
We have audited the accompanying consolidated balance sheets
of Carroll Fulmer Group, Inc., a Florida corporation, and subsidiaries
as of May 31, 1997 and 1996, and the related consolidated statements of
income and retained earnings and cash flows for the years then ended.
These consolidated financial statements the are responsibility of the
Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the consolidated 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 consolidated financial statements referred
to in the first paragraph present fairly, in all material respects, the
financial position of Carroll Fulmer Group, Inc. and subsidiaries as of
May 31, 1997 and 1996, and the results of its operations and its cash
flows for the years then ended, in conformity with generally accepted
accounting principles.
/s/ BUNTING, TRIPP & INGLEY
Certified Public Accountants
<PAGE>
<TABLE>
<CAPTION>
CARROLL FULMER GROUP, INC. AND SUBSIDIATIES
CONSOLIDATED BALANCE SHEETS
MAY 31, 1997 AND 1996
1997 1996
ASSETS
<S> <C> <C>
Current Assets
Cash $ 627,035 $ 245,688
Accounts and notes receivable:
Trade - pledged (net of allowances
for doubtful accounts of $40,000) 7,797,501 7,682,454
Affiliated companies 241,710 224,563
Employees and others 71,011 156,426
Stockholders - 86,831
Prepaid expenses 404,115 380,776
Inventory - parts 142,189 109,102
Contracts receivable - current portion 749,641 5,243
------------- -------------
Total current assets 10,033,202 8,891,083
------------- -------------
Property and Equipment (At Cost)
Land and buildings 2,932,378 2,932,378
Semi-trailers and tractor trucks 1,805,096 3,663,542
Office and other equipment 1,804,173 1,810,640
------------- -------------
Total 6,541,647 8,406,560
Less: accumulated depreciation 2,699,603 3,735,014
------------- -------------
Property and equipment - net 3,842,044 4,671,546
------------- -------------
Other Assets
Contracts receivable - noncurrent
portion 592,198 1,133,526
Due from affiliated companies 482,069 179,050
Cash value of life insurance 373,871 248,964
Loan fees, net of amortization 74,274 82,707
Goodwill and noncompete agreement, net
of amortization 23,337 29,016
------------- -------------
Total other assets 1,545,749 1,673,263
------------- -------------
Total assets $ 15,420,995 $ 15,235,892
============= =============
</TABLE>
The accompanying notes to consolidated
financial statements should be read
in conjunction with this statement.
<PAGE>
<TABLE>
<CAPTION>
CARROLL FULMER GROUP, INC. AND SUBSIDIATIES
CONSOLIDATED BALANCE SHEETS -CONTINUED
MAY 31, 1997 AND 1996
1997 1996
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities
Freight checks issued - not presented
for payment at balance sheet date $ 1,896,806 $ 1,779,307
Note payable - short-term 4,875,711 5,281,820
Current portion of long-term notes
payable 331,066 472,100
Accounts payable:
Freight charges (net of advances to
truckers) 1,360,547 1,340,854
Trade 676,634 344,017
Deposits payable - truckers 257,053 183,806
Accrued expenses and miscellaneous
payables 675,579 441,445
Income taxes payable 237,432 -
Deferred income taxes payable -
current portion 77,792 45,905
------------- -------------
Total current liabilities 10,388,620 9,889,254
Long-Term Liabilities
Notes payable - deferred portion 2,379,166 2,639,209
Deferred income taxes payable 312,342 567,229
------------- -------------
Total long-term liabilities 2,691,508 3,206,438
------------- -------------
Total liabilities 13,080,128 13,095,692
------------- -------------
Stockholders' Equity
Common stock - $1 par value - 200,000
shares authorized, 1,758 shares
issued and outstanding 1,758 1,758
Capital in excess of par value 127,261 127,261
Retained earnings 2,211,848 2,011,181
------------- -------------
Total stockholders' equity 2,340,867 2,140,200
------------- -------------
Total liabilities and stockholders'
equity $ 15,420,995 $ 15,235,892
============= =============
</TABLE>
The accompanying notes to consolidated
financial statements should be read
in conjunction with this statement.
<PAGE>
<TABLE>
<CAPTION>
CARROLL FULMER GROUP, INC. AND SUBSIDIATIES
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
YEARS ENDED MAY 31, 1997 AND 1996
1997 1996
<S> <C> <C>
Revenues
Freight and transportation income $ 66,435,346 $ 54,888,195
Leased employee services - related
parties 2,214,516 2,580,106
Rents, fees, and miscellaneous 639,754 434,172
------------- -------------
Total revenues 69,289,616 57,902,473
------------- -------------
Costs and Expenses
Freight and transportation costs 54,200,330 43,343,776
Compensation costs and commissions 9,307,585 8,392,972
Operating expenses 1,875,980 2,555,404
General and administrative 2,350,499 2,008,708
Interest 772,194 743,547
Depreciation and amortization 503,077 578,517
------------- -------------
Total costs and expenses 69,009,665 57,622,924
------------- -------------
Operating profit 279,951 279,549
Gain on sale of property and equipment 115,716 508,550
------------- -------------
Income before income taxes 395,667 788,099
------------- -------------
Income taxes:
Current provision 418,000 278,639
Deferred charge (benefit) (223,000) 99,361
------------- -------------
Total income taxes 195,000 378,000
------------- -------------
Net income 200,667 410,099
Retained earnings - beginning 2,011,181 1,601,082
------------- -------------
Retained earnings - ending $ 2,211,848 $ 2,011,181
============= =============
</TABLE>
The accompanying notes to consolidated
financial statements should be read
in conjunction with this statement.
<PAGE>
<TABLE>
<CAPTION>
CARROLL FULMER GROUP, INC. AND SUBSIDIATIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MAY 31, 1997 AND 1996
1997 1996
<S> <C> <C>
Operating Activities
- --------------------
Freight, rental, and miscellaneous
revenue $ 69,174,569 $ 58,309,340
Freight and transportation costs (53,881,107) (43,500,207)
Compensation costs and commissions (8,997,853) (8,610,402)
Operating expenses (1,875,980) (2,555,404)
General and administrative expenses (2,412,158) (2,058,367)
Interest expense (774,545) (738,644)
Income taxes (133,815) (560,123)
-------------- -------------
Net cash provided by operating
activities 1,099,111 286,193
-------------- -------------
Investing Activities
- --------------------
Sale of equipment 398,703 359,171
Advances to affiliated companies (320,166) (312,414)
(Advances) collections on contracts
receivable (9,611) 36,231
Construction outlays and equipment
purchases (98,532) (141,946)
Repayments from stockholders,
employees, and others 172,246 71,833
Increase in cash value of life
insurance (124,907) (95,010)
-------------- -------------
Net cash provided (used) by
investing activities 17,733 (82,135)
-------------- -------------
Financing Activities
- --------------------
Payments on short-term debt (net) (406,109) (127,832)
Principal payments on long-term debt (446,887) (616,463)
-------------- -------------
Net cash used by financing activities (852,996) (744,295)
-------------- -------------
Net increase (decrease) in cash 263,848 (540,237)
Cash (deficit) - beginning of year (1,533,619) (993,382)
-------------- -------------
Cash (deficit) - end of year $ (1,269,771) $ (1,533,619)
============== =============
Cash (deficit) - end of year consisted
of the following:
Cash in banks $ 627,035 $ 245,688
Freight checks issued-not presented
for payment at balance sheet date (1,896,806) (1,779,307)
-------------- -------------
Totals $ (1,269,771) $ (1,533,619)
============== =============
</TABLE>
The accompanying notes to consolidated
financial statements should be read
in conjunction with this statement.
<PAGE>
<TABLE>
<CAPTION>
CARROLL FULMER GROUP, INC. AND SUBSIDIATIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
YEARS ENDED MAY 31, 1997 AND 1996
1997 1996
<S> <C> <C>
Significant Financial Activities Not
Requiring or Providing Cash
Land, buildings, and equipment financed
directly by bank loans $ 45,810 $ 503,218
============= =============
Contracts received from sale of
equipment and buildings $ 193,459 $ 1,175,000
============= =============
Reconciliation of Net Income to Net
Cash Provided by Operating Activities
Net income determined on the
accrual basis $ 200,667 $ 410,099
------------- -------------
Adjustments to reconcile net income
to net cash provided by operating
activities:
Noncash Items
Depreciation and amortization 503,077 578,517
Deferred income tax expense (benefit) (223,000) 99,361
Net gain on sales of property and
equipment (115,716) (508,550)
Bad debt provision - (30,000)
(Increase) Decrease in Applicable
Assets
Trade accounts receivable and
miscellaneous assets (115,047) 406,867
Prepaid loan costs 8,433 (82,707)
Parts inventory (33,087) (73,444)
Prepaid expenses (70,092) 63,046
Prepaid and refundable income taxes 46,753 (46,753)
Increase (Decrease) in Applicable
Liabilities
Trade accounts payable 352,310 (82,985)
Accrued liabilities 309,732 (217,430)
Interest payable (2,351) 4,903
Income tax payable 237,432 (234,731)
------------- -------------
Total adjustments 898,444 (123,906)
------------- -------------
Net cash provided by operating
activities $ 1,099,111 $ 286,193
============= =============
The accompanying notes to consolidated
financial statements should be read
in conjunction with this statement.
CARROLL FULMER GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MAY 31, 1997 AND 1996
General
The principal sources of revenue for the Company are from trans-
portation services as an Interstate Commerce Commission common carrier
and licensed broker and from the leasing of transportation equipment.
Approximately thirty-three percent of the Company's business in the
current year was with customers in the food industry.
Carroll Fulmer Group, Inc. was incorporated on July 10, 1989. The
following entities are wholly-owned subsidiaries in transactions
accounted for as poolings of interest:
Subsidiary Line of Business
---------- ----------------
Carroll Fulmer & Co., Inc. Transportation services
Carroll Fulmer Payroll, Inc. Employee leasing
Pact Management Corporation Truck and trailer leasing
Pact Leasing Corporation Truck and trailer leasing
Pact Trucking Corporation Transportation services
Carroll Fulmer Trucking Corporation Transportation services
Carroll Fulmer Enterprises, Inc. Transportation services
Mechanics Management Corporation Employee leasing
Carroll Fulmer Logistics, Inc. Transportation services
Note A - Summary of Significant Accounting Policies
Consolidation
The consolidated financial statements presented herein include the
accounts of the corporations listed above. All significant intercompany
balances and transactions have been eliminated.
Cash and Equivalents
For purposes of the statement of cash flows, the Company considers
all highly liquid debt instruments purchased with a maturity of three
months or less to be cash equivalents. There were no cash equivalents
at the balance sheet dates.
Use of Estimates
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.
Accounts Receivable
Accounts are reviewed periodically. An allowance for doubtful
accounts is provided for those accounts deemed to be unlikely of
collection.
The trade accounts receivable are collateral on a credit line payable
to AmSouth Bank.
The Company is the owner of two insurance policies with one carrier
covering the collection and credit risk associated with domestic and
foreign transportation accounts receivable. The limit of the policy
covering domestic accounts is $5,000,000 with an annual deductible
provision of $35,000. A limit of $175,000 applies to foreign accounts
with a deductible provision of $5,000 annually.
Depreciation
Depreciation of equipment and buildings is provided over the esti-
mated useful lives of the respective assets on the straight line method.
Accelerated methods and shorter lives are used for tax purposes.
Certain equipment is collateral on various notes payable by the
Company and related parties. Land and buildings are collateral on sev-
eral mortgages payable.
Inventory
Inventory is comprised of parts and supplies for repairs and is
stated at the lower of actual cost or market value.
Amortization of Goodwill
Goodwill resulting from the purchase of several brokerage firms is
being amortized over ten to twenty-five years on a straight line basis.
Reclassification of Financial Statement Presentation
Certain reclassifications have been made to the 1996 financial state-
ments to conform with the 1997 financial statement presentation. Such
reclassifications had no effect on net income as previously reported.
Note B - Contracts Receivable
During the prior year, the Company entered into two lease/sale option
contracts for its former office building and property in Orlando,
Florida. During the current year, legal fees for retitling the property
were added to the balances of each contract. One contract has an
outstanding balance of $620,391. The other contract has an outstanding
balance of $556,165.
These transactions have been recorded as sales with gains for book
purposes of $395,900. Should these lease/sale option contracts not be
completed, a loss would necessarily be recorded. Management has received
no indications that the terms of the contracts will not be met. The
Company retains title to these properties until certain conditions are
satisfied.
The Company has also sold various equipment under contract. The
balances due on these contracts amounted to $165,282 at May 31, 1997.
Note C - Short-Term Debt
As of May 31, 1997, the Company was indebted to a financial insti-
tution on a credit line note. The outstanding balance amounted to
$4,875,711 with an interest rate of prime plus a percentage negotiable
yearly with the lender. Collateral for the note consists of pledged
accounts receivable and a guarantee of officers. Advances on the credit
line are limited to 85% of pledged accounts receivable or $9,000,000,
whichever is less.
Note D - Long-Term Debt
The Company was also indebted on several long-term obligations total-
ing $2,710,232 and $3,111,309 at May 31, 1997 and 1996, respectively.
This debt for 1997 is summarized as follows:
Interest
Payees Collateral Rate Balances
------ ---------- ----------- -----------
Financial Semi-trailers, tractors,
institutions and vehicles 7% to 9.9% $ 66,373
Financial Land and building -
institutions Charleston 7.8% 186,741
Financial Land and building -
institutions Groveland 8% to 10% 1,936,417
Lake County None None 59,705
Individuals Land and building 10% to 12% 209,985
Financial
institutions Office equipment 6% to 11% 251,011
----------
Total $2,710,232
==========
Payments of principal due in each of the next five fiscal years and
thereafter are:
1998 $ 331,066
1999 451,857
2000 149,481
2001 76,598
2002 63,820
Thereafter 1,637,410
----------
Total $2,710,232
==========
Note E - Leasing Arrangements
As of May 31, 1997, the Company was obligated under several leases
for equipment, mostly with related parties. These leases are noncancel-
lable operating leases with remaining terms ranging from one to five
years with no option for renewal or purchase.
Future minimum lease payments under these leases are as follows:
Year Ending Minimum
May 31, Payments
----------- --------
1998 $111,817
1999 71,602
2000 49,052
2001 45,709
2002 27,633
--------
Total $305,813
========
Note F - Income Taxes
Currently Payable
Carroll Fulmer Group, Inc. files a consolidated tax return with its
ten wholly-owned subsidiaries. The current provision for income taxes
represents the amount which management has determined to be applicable
for the year ended May 31, 1997
Note F - Income Taxes - Continued
Deferred
As disclosed in Note A, the Company uses different methods of
depreciation for financial and income tax reporting on its equipment and
buildings. As disclosed in Note B, the Company entered into two lease/
sale option contracts for its former office building and property in
Orlando, Florida. The gains on these sales were recognized in full in
the prior year for book purposes and will be recognized over the life of
the contracts for tax purposes. The effect of these differences is the
basis for computing deferred tax liability.
The components of the deferred tax liability reported on the balance
sheets as of May 31, 1997 and 1996, were as follows:
1997 1996
---------- ----------
Cumulative temporary differences between
depreciation taken for financial state-
ment purposes versus tax purposes $ 791,784 $1,210,219
Cumulative temporary differences between
recognition of gains on lease/sale option
contracts for financial and tax purposes 402,197 416,305
Cumulative temporary difference between
recognition of reserve accruals for
financial statement and tax purposes (160,000) -
---------- ----------
Net cumulative temporary differences $1,033,981 $1,626,524
========== ==========
Net deferred tax liabilities associated
with these differences based on enacted
tax rates for Federal and State purposes
(of which $77,792 and $45,905 are current,
respectively) $390,132 $613,134
======== ========
The components of the deferred tax (benefit) charge reported on the
statements of income and retained earnings are as follows:
1997 1996
--------- -------
Tax charge (benefit from turnaround)
of temporary differences on
depreciation and gain recognition $(163,000) $99,361
Tax benefit related to deferred
recognition of reserve accruals (60,000) -
--------- -------
$(223,000) $99,361
========= =======
Note G - Retirement Plan
On September 13, 1985, the Company adopted a profit sharing plan
covering substantially all employees. Contributions to the plan are
determined by management. The contribution provided for the prior year
amounted to $25,000. A contribution of $100,000 was accrued for the
current year. The plan may be terminated at the discretion of
management.
Note H - Disclosures About the Fair Value of Financial Instruments
The Company estimates that the fair value of financial instruments
(cash, receivables, accounts payable, and long-term debt) at May 31,
1997, does not differ materially from their aggregate carrying values
reflected in the accompanying balance sheet.
Note I - Contingencies and Commitments
The Company has been named as a defendant in certain lawsuits arising
in the ordinary course of business. While the outcome of these lawsuits
cannot be predicted with certainty, management does not expect these
matters to have a material adverse effect on the financial position and
results of operations of the Company.
The Company is a guarantor on a financing arrangement to a related
party. The balance of this loan amounted to $333,038 at May 31, 1997
and $561,258 at May 31, 1996.
Note J - Significant Customers
Although the Company has no significant economic dependency on any
customer, revenues from two customers in unrelated industries totaled
approximately $6,000,000, which was slightly less than 9% of the
Company's total revenues in 1997.
Note K - Related Party Transactions
Several subsidiaries of the Company are engaged to a significant
degree in employee leasing activities with nonconsolidated related
parties.
The Company received $2,214,515 in revenues from leasing employees to
nonconsolidated related parties during the current year and $2,580,106
in the prior year.
The Company also leases tractors, trailers, and other miscellaneous
assets from these same nonconsolidated related parties under operating
leases. The total lease payments amounted to approximately $7,098,000
for the current year and $7,823,000 for the prior year. The lease rates
are comparable to those paid to nonrelated parties.
Note K - Related Party Transactions - Continued
As of May 31, 1997, the Company owed other nonconsolidated corpora-
tions $16,845. These same corporations owed the Company $179,050 at
May 31, 1996. Building rent paid to these corporations during the year
ended May 31, 1997, amounted to approximately $250,000. The Company
also paid other related parties $49,000 during the year for building
rent.
Note L - Uninsured Cash Balances
The Company maintains its cash in bank deposit accounts which, at
times, may exceed federally insured limits. The Company has not
experienced any losses in such accounts and believes it is not exposed
to any significant credit risk on its cash balances.
Note M - Subsequent Event
On August 15, 1997, the Corporation and its stockholders signed an
agreement and plan of reorganization to merge Carroll Fulmer Group, Inc.
with a wholly-owned subsidiary of Transit Group, Inc. ("Newco") with
"Newco" to be the surviving corporation. The effective date of the
merger is to be August 31, 1997.
</TABLE>
<PAGE>
Exhibit 7.2 - Pro forma Financial Information
<TABLE>
<CAPTION>
(in thousands, except shares)
Unaudited Unaudited
Transit Carolina Service Capitol Carroll Pro Forma Pro Forma
Group, Inc. Pacific Express Warehouse Fulmer Adjustments Combined
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Current assets $ 284 $ 973 $ 792 $ 1,668 $ 10,033 $ 13,750
Property and equipment 4 1,787 1,243 12,896 3,842 $ 6,460 (b) 26,232
Goodwill 23 33,725 (c) 33,748
Other noncurrent assets 6,764 - - 68 1,523 8,355
----------- -------- -------- --------- -------- ----------- ---------
Total assets $ 7,052 $ 2,760 $ 2,035 $ 14,632 $ 15,421 $ 40,185 $ 82,085
=========== ======== ======== ========= ======== =========== =========
Current debt $ - $ 711 $ 516 $ 3,734 $ 5,207 $ 2,759 (b) $ 12,927
Other current liabilities 12,887 407 152 1,900 5,182 20,528
Long-term debt - 1,441 417 7,549 2,691 9,264 (b) 21,890
528 (b)
----------- -------- -------- --------- -------- ----------- ---------
Total liabilities 12,887 2,559 1,085 13,183 13,080 12,551 55,345
----------- -------- -------- --------- -------- ----------- ---------
Stockholders' equity
(deficit) (5,835) 201 950 1,449 2,341 44,436 (c) 26,740
----------- -------- -------- --------- -------- ----------- ---------
Total liabilities &
stockholders equity $ 7,052 $ 2,760 $ 2,035 $ 14,632 $ 15,421 $ 27,634 $ 82,085
=========== ======== ======== ========= ======== =========== =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
For the six months ended June 30, 1997
-------------------------------------------------------------------------------------
(in thousands, except shares)
Unaudited Unaudited
Transit Carolina Service Capitol Carroll Pro Forma Pro Forma
Group, Inc. Pacific Express Warehouse Fulmer Adjustments Combined
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $ - $ 4,722 $ 2,288 $ 9,628 $ 34,645 $ 1,500 (b) $ 52,783
----------- -------- -------- --------- -------- ----------- ---------
Expenses
Salaries and wages expense - 1,780 674 2,667 4,654 (250) (d) 11,451
1,926 (b)
Operating expense - 2,298 429 4,992 28,038 (1,281) (b) 34,476
Depreciation and amortization - 255 266 1,256 251 353 (e) 3,283
836 (c)
General and administration 66 (b)
expense 268 43 148 32 1,175 (108) 1,558
Interest expense - 68 45 517 386 388 (f) 1,404
Other expense - 518 596 (244) (58) (500) 312
Total expenses 268 4,962 2,158 9,220 34,446 1,156 52,210
----------- -------- -------- --------- -------- ----------- ---------
Operating income (loss) (268) (240) 130 408 199 344 573
Provision for income taxes - 45 (62) (190) (97) 299 (5)
----------- -------- -------- --------- -------- ----------- ---------
Income (loss) before
discontinued operations (268) (195) 68 218 102 643 568
Discontinued operations (13,570) - - - - - (13,570)
----------- -------- -------- --------- -------- ----------- ---------
Net income (loss) $ (13,838) $ (195) $ 68 $ 218 $ 102 $ 643 $ (13,002)
=========== ======== ======== ========= ======== =========== =========
Loss per common share:
Continuing operations $ (0.13) $ 0.01
Discontinued operations (2.77) (0.95)
----------- ---------
Total $ (2.90) $ (0.94)
=========== =========
Weighted average number
of shares 4,909,528 14,186,037
=========== ==========
</TABLE>
>PAGE>
<TABLE>
<CAPTION>
For the twelve months ended December 31, 1996
--------------------------------------------------------------------------------------
(in thousands, except shares)
Unaudited Unaudited
Transit Carolina Service Capitol Carroll Pro Forma Pro Forma
Group, Inc. Pacific Express Warehouse Fulmer Adjustments Combined
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $ 23,404 $ 11,691 $ 4,428 $ 16,920 $ 69,290 $ 3,000 (b) $ 105,329
$ (23,404) (g)
Expenses
Salaries and wages expense 13,377 4,528 1,263 4,661 9,308 (1,016) (d) 22,676
3,932 (b)
(13,377) (g)
Operating expense 7,126 5,533 1,875 8,705 56,076 4,713 (b) 69,624
(14,404) (g)
Depreciation and amortization 1,857 957 620 2,512 503 711 (e) 6,559
1,124 (c)
132 (b)
General and administration (1,857) (g)
expense 5,335 37 711 443 2,351 (4,585) (g) 4,292
Interest expense 717 226 114 1,068 772 280 (f) 2,460
(717) (g)
Other expense 141 375 (33) (487) (116) (141) (g) (261)
----------- -------- -------- --------- -------- ----------- ---------
Total expenses 28,553 11,656 4,550 16,902 68,894 (25,205) 105,350
----------- -------- -------- --------- -------- ----------- ---------
Operating income (loss) (5,149) 35 (122) 18 396 4,801 (21)
Provision for income taxes - (103) 19 (15) (195) 294 (h) -
----------- -------- -------- --------- -------- ----------- ---------
Net income (loss) $ (5,149) $ (68) $ (103) $ 3 $ 201 $ 5,095 $ (21)
=========== ======== ======== ========= ======== =========== =========
Loss per common share $ (1.48) $ (0.04)
=========== =========
Weighted average number
of shares 3,758,671 11,202,180
=========== ==========
</TABLE>
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS:
(a) On August 29, 1997, Transit Group, Inc. (the "Company")
completed the acquisition of Carroll Fulmer Group, Inc.
("Fulmer"). Previously, on July 11, 1997, the Company completed
the acquisition of Carolina Pacific Distributors, Inc.
("Carolina"); and, on August 15, 1997, the company completed the
acquisitions of Capital Warehouse, Inc. ("Capital") and Service
Express, Inc. ("Service"). Pursuant to the Stock Purchase
Agreements executed at the closings (the "Agreements"), the
Company purchased all the outstanding capital stock of Fulmer, Capital,
Service and Carolina. The total purchase price of the four companies
approximates $35.5 million consisting of $3.7 million in cash, the
issuance of 4,166,667 shares of common stock of the Company and $1.9
million of debt to the shareholders of Fulmer, and the issuance of
641,283 shares of common stock of the Company to the shareholder of
Capital and 903,226 shares of Company stock to the shareholder of
Service and the issuance of 1,733,000 shares of common stock of the
Company to the shareholders of Carolina, and the assumption of
approximately $0.6 million of debt. The Company's and Service's
financial statements are prepared on a calendar year-end basis while
Fulmer used a fiscal year ended May 31, 1997 and Capital used a fiscal
year ended February 29, 1997 and Carolina used a fiscal year ended
September 30, 1996. Accordingly, the accompanying unaudited pro forma
combined financial statements combine the December 31, 1996 and
June 30, 1997 financial statements of the Company and Service, and
the May 31, 1997 and August 31, 1997 financial statements of Fulmer,
and the February 29, 1997 and August 31, 1997 financial statements
of Capital, and the September 30, 1996 and June 30, 1997 financial
statements of Carolina, respectively. Such financial information is
intended to reflect the combined financial position and results of
operations as of each of the periods presented and is not necessarily
indicative of future combined financial position or results of operations.
(b) To reflect the purchase by the Company of certain additional
productive assets from an affiliate of Carolina and the assumption
of related borrowings, and the capital lease by the Company of additional
productive assets from affiliates of Fulmer.
(c) To reflect the APB 16 purchase accounting adjustments including
the financing of $3.5 million in cash paid at closing, the issuance of
7,444,176 shares at fair market value of the Company's common stock
to the shareholders of Fulmer, Capital, Service and Carolina, notes payable
of $2.5 million, and expenses associated with the acquisitions. In
connection with the acquisitions, goodwill of approximately $33.7 million
was recorded. Such goodwill will be amortized over a 30-year period.
(d) To reflect certain adjustments to salaries and employee
benefits expense resulting from the acquisition of Carolina.
(e) To eliminate the depreciation expense associated with certain
assets not acquired in the purchases of Carolina.
(f) To reflect interest expense associated with new borrowings
acquired in connection with the acquisition at an average annual
interest rate of 8%.
(g) To eliminate the discontinued parcel delivery and courier
operations at Transit Group, Inc.
(h) To reflect the utilization of the Company's net operating
loss carryforwards to offset Fulmer, Capital, Service and Carolina
taxable income.
