<PAGE>
================================================================================
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): October 15, 1999
(July 30, 1999)
TRANSIT GROUP, INC.
(Exact name of Registrant as specified in its charter)
Florida 000-18601 59-2576629
(State or other jurisdiction of (Commission File No.) (IRS Employer
incorporation or organization) Identification No.)
2859 Paces Ferry Road
Suite 1740
Atlanta, Georgia 30339
(Address of principal executive offices, including zip code)
(770) 444-0240
(Registrant's telephone number, including area code)
================================================================================
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired
-----------------------------------------
The MDR Cartage, Inc. and BF Transportation, Inc. combined financial
statements and Report of Independent Accountants for the year ended December 31,
1998 and the six months ended June 30, 1998 and 1999 (unaudited) are contained
in Exhibit 99.1 hereto.
(b) Pro Forma Financial Information
-------------------------------
Such required pro forma financial information is contained in Exhibit
99.2 hereto.
(c) Exhibits
--------
23.1 Consent of PricewaterhouseCoopers, LLP.
99.1 The MDR Cartage, Inc. and BF Transportation, Inc. combined
financial statements and Report of Independent Accountants for the year ended
December 31, 1998 and the six months ended June 30, 1998 and 1999 (unaudited).
99.2 Pro Forma financial statements for the year ended December 31,
1998 and the six months ended June 30, 1998 and 1999.
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: October 13, 1999 /s/ Phillip A. Belyew
-----------------------------------------
Philip A. Belyew
President and Chief Executive Officer
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
October 13, 1999
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (File Numbers 333-48939 and 333-6880) of Transit
Group, Inc. of our report dated September, 24, 1999 relating to the
combined financial statements of Bestway Trucking, Inc., Connection One
Trucking, LLP, and DLS Leasing, Inc., and our report dated October 12, 1999
relating to the combined financial statements of MDR Cartage, Inc. and BF
Transportation, Inc., which appear in the Current Reports on Form 8-K of
Transit Group, Inc. dated October 15, 1999.
PricewaterhouseCoopers LLP
Atlanta, Georgia
<PAGE>
EXHIBIT 99.1
MDR CARTAGE, INC. and
BF TRANSPORTATION, INC.
Combined Financial Statements
For the year ended December 31, 1998
and for the six months ended
June 30, 1998 and June 30, 1999
(unaudited)
<PAGE>
Report of Independent Accountants
October 12, 1999
To the Stockholders of MDR Cartage, Inc. and
BF Transportation, Inc.
In our opinion, the accompanying combined balance sheet and the related combined
statements of income, of changes in stockholders' equity, and of cash flows
present fairly, in all material respects, the combined financial position of MDR
Cartage, Inc. and BF Transportation, Inc. at December 31, 1998, and the combined
results of their operations and their cash flows for the year then ended in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Companies' 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
generally accepted auditing standards, 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 opinion provides a reasonable basis for the opinion
expressed above.
PricewaterhouseCoopers LLP
Atlanta, Georgia
<PAGE>
MDR CARTAGE, INC. and BF TRANSPORTATION, INC.
Combined Balance Sheets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, June 30,
1998 1999
(Unaudited)
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 966,485 $ 620,069
Accounts receivable net of allowance for
doubtful accounts $257,997 and $272,997 1,810,889 2,489,045
Other current assets 413,997 722,564
Deferred income taxes 404,186 424,019
----------- -----------
Total current assets 3,595,557 4,255,697
Noncurrent assets:
Property and equipment 15,270,023 14,265,836
Total noncurrent assets
----------- -----------
Total assets $18,865,580 $18,521,533
=========== ===========
LIABILITIES, AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 3,555,798 $ 3,359,594
Current maturities - notes payable - related parties 1,102,835 1,402,174
Line of Credit 17,364 700,000
Bank overdrafts 471,291 700,000
Accounts payable 106,701 317,384
Accrued expenses and other current liabilities 763,978 668,115
Federal and state income taxes 480,283 -0-
----------- -----------
Total current liabilities 6,498,250 7,147,267
----------- -----------
Noncurrent liabilities
Long-term debt 3,112,354 2,513,829
Notes payable - related parties 1,316,470 1,402,174
Deferred income taxes 2,995,097 3,069,676
----------- -----------
Total noncurrent liabilities 7,423,921 6,985,679
----------- -----------
Total liabilities 13,922,171 14,132,946
----------- -----------
Commitments and Contingencies
Stockholders' Equity:
Common Stock
MDR Cartage Inc., no par value, 2,000 shares
authorized, 200 shares issued and outstanding 6,281 6,281
BF Transportation, Inc., no par value, 2,000 shares
authorized, 100 shares issued and outstanding 1,000 1,000
Treasury stock (274,323) (274,323)
Returned Earnings 5,210,451 4,655,629
----------- -----------
Total stockholders' equity 4,943,409 4,388,587
----------- -----------
Total liabilities and stockholders' equity $18,865,580 $18,521,533
=========== ===========
</TABLE>
See accompanying notes to combined financial statements.
2
<PAGE>
MDR CARTAGE, INC. AND BF TRANSPORTATION, INC.
Combined Statements of Operations
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended (Unaudited)
December 31, Six Months Ended June 30,
------------ --------------------------
1998 1998 1999
<S> <C> <C> <C>
Operating revenues $23,021,510 $11,478,444 $12,552,986
----------- ----------- -----------
Operating expenses
Salaries, wages and benefits 8,279,341 4,263,462 4,365,623
Fuel 3,490,558 1,791,656 1,765,844
Operating supplies and expenses 4,429,269 2,219,343 2,689,174
Lease expense - revenue equipment 1,688,878 856,437 1,054,091
Insurance 522,926 308,547 356,838
Depreciation and amortization expense 2,765,451 1,412,300 2,121,183
General and administrative expense 331,687 168,444 68,702
----------- ----------- -----------
Total operating expenses 21,508,110 11,020,189 12,421,455
----------- ----------- -----------
Operating income 1,513,400 458,255 131,531
----------- ----------- -----------
Interest expense 572,613 274,163 291,079
----------- ----------- -----------
Income (loss) before income taxes 940,787 184,092 (159,548)
Provision (benefit) for income taxes 338,303 43,560 (45,171)
----------- ----------- -----------
Net Income (Loss) 602,484 140,532 (114,377)
=========== =========== ===========
</TABLE>
See accompanying notes to combined financial statements.
3
<PAGE>
MDR CARTAGE, INC. AND BF TRANSPORTATION, INC.
Combined Statements of Changes in Stockholders' Equity
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BF
Transportation,
MDR Inc. Total
Common Common Treasury Retained Stockholders'
Stock Stock Stock Earnings Equity
--------- --------------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1997 $ 6,281 $ 1,000 $(274,323) $5,463,069 $5,196,027
Distributions (855,102) (855,102)
Net Income 602,484 602,484
--------- --------- --------- ---------- ----------
Balance at December 31, 1998 6,281 1,000 (274,323) 5,210,451 4,943,409
Distributions (440,445) (440,445)
Net Loss (unaudited) (114,377) (114,377)
--------- --------- --------- ---------- ----------
Balance at June 30, 1999 $ 6,281 $ 1,000 $(274,323) $4,655,629 $4,388,587
(unaudited) ========= ========= ========= ========== ==========
</TABLE>
See accompanying notes to combined financial statements.
4
<PAGE>
MDR CARTAGE, INC. AND BF TRANSPORTATION, INC.
Combined Statements of Cash Flows
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended (Unaudited)
December 31, Six Months Ended June 30,
------------- --------------------------
1998 1998 1999
<S> <C> <C> <C>
Cash flows from operating activities
Income (loss) from operations $ 602,484 $ 140,532 $ (114,377)
----------- ----------- -----------
Adjustments to reconcile net income (loss)
to cash provided by operating activities
Depreciation and amortization 2,765,451 1,412,300 2,121,183
Changes in assets and liabilities
Increase (decrease) in accounts receivable 336,829 63,848 (678,156)
Increase (decrease) in other assets 347,959 (72,350) (308,567)
Increase (decrease) in accounts payable and accrued expenses 254,901 (50,931) (82,010)
----------- ----------- -----------
Total adjustments 3,705,140 1,352,867 1,052,450
----------- ----------- -----------
Net cash provided by operating activities 4,307,624 1,493,399 938,073
----------- ----------- -----------
Cash flows from financing activities
Net repayments on long-term debt (2,983,307) (1,143,636) (844,044)
Distributions to stockholders (855,107) (667,755) (440,445)
----------- ----------- -----------
Net cash used in financing activities (3,838,414) (1,811,391) (1,284,489)
----------- ----------- -----------
Increase (decrease) in cash 469,210 (317,992) (346,416)
Cash, beginning of period 497,275 497,275 966,485
----------- ----------- -----------
Cash, end of period $ 966,485 $ 179,283 $ 620,069
Supplemental cash flow data
Cash paid for interest $ 568,621 $ 272,381 $ 293,290
=========== =========== ===========
Cash paid for taxes $ 119,592 $ 119,592 $ 411,641
=========== =========== ===========
</TABLE>
Non-cash Investing and Financing Activities
The Company acquired property and equipment with a book value of $4,639,448,
$1,791,687 and $1,116,996 during the year ended December 31, 1998 and the six
months ended June 30, 1998 and June 30, 1999, respectively, by incurring
indebtedness.
See accompanying notes to combined financial statements.
5
<PAGE>
MDR CARTAGE, INC. AND BF TRANSPORTATION, INC.
Notes to Combined Financial Statements
December 31, 1998, June 30, 1998, and June 30, 1999
- -----------------------------------------------------------------------------
1. Organization and Basis of Presentation
MDR Cartage, Inc. and BF Transportation, Inc. are nationwide bulk freight
trucking companies based in Jonesboro, Arkansas, engaged in the short and
long haul transportation services business. The Companies' primary areas of
operations are the Northeast, Eastern seaboard, and the Southern United
States.
2. Summary of Significant Accounting Policies
Interim Statements
The combined financial statements for the six months ended June 30, 1998 and
1999, contained in this report are unaudited but reflect all adjustments,
consisting of only normal recurring adjustments necessary for the fair
presentation of the results for the interim periods. The results of
operations for any interim period are not necessarily indicative of results
for the full year.
Principles of Combination
The combined financial statements include the accounts of MDR Cartage, Inc.
and BF Transportation, Inc. (collectively the "Company"). The Companies are
affiliated through common ownership. All material inter-company transactions
have been eliminated in combination.
Estimates
The process of preparing financial statements requires the use of estimates
and assumptions regarding certain types of assets, liabilities, revenues,
and expenses. Such estimates primarily relate to unsettled transactions and
events as of the date of the financial statements. Accordingly, upon
settlement, actual results may differ from estimated amounts.
Revenue recognition
Revenues and related expenses are recognized under a method which
approximates when freight is shipped. The Company believes that alternative
methods of revenue recognition would not result in a material difference in
the Company's results of operations or financial position.
Cash
The Company considers all highly liquid investments purchased with original
maturities of three months or less to be cash equivalents. The Company's
cash management programs utilize zero balance accounts. The Company
maintains its cash balances in financial institutions located in Jonesboro,
Arkansas. The balances are insured up to $100,000.
Concentrations of credit risk
Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist primarily of trade accounts
receivable. Three companies accounted for 42% of the Company's revenue for
the year ended December 31, 1998 and the six months ended June 30, 1998 and
1999. The Company reviews a customer's credit history before extending
credit and generally does not require collateral. The Company maintains an
allowance for doubtful accounts based upon factors surrounding the credit
risk of
6
<PAGE>
MDR CARTAGE, INC. AND BF TRANSPORTATION, INC.
Notes to Combined Financial Statements
December 31, 1998, June 30, 1998, and June 30, 1999
- -----------------------------------------------------------------------------
specific customers, historical trends, and other information. The Company's
historical experience in collection of accounts receivable falls within the
recorded allowances. Due to these factors, no additional credit risk beyond
amounts provided for collection losses are believed inherent in the
Company's trade accounts receivable.
Inventories
Inventories consist principally of repair parts and fuel and are stated at
the lower of cost or market on a first-in first-out (FIFO) basis.
Fair Values of Financial Instruments
Disclosure of fair value information about certain financial instruments,
whether or not recognized in the balance sheet for which it is practicable to
estimate that value, is required by SFAS No. 107, "Disclosure about Fair
Value of Financial Instruments."
The carrying amounts of financial instruments including cash and cash
equivalents, trade accounts receivable, trade accounts payable, and accrued
liabilities and expenses approximate fair value because of the relatively
short maturity of these investments. The carrying value of notes payable
approximate fair value as their interest rates approximate market rates.
Property and Equipment
Equipment is stated at historical cost. Except for life extending repair
costs (such as engine overhauls), all equipment maintenance and repair costs
are charged to operating expense as incurred. Depreciation is provided using
the straight-line method over the estimated useful life of the asset. Gain
or loss upon retirement or disposal of equipment is recorded as income or
expense. The ranges of depreciable lives used for financial reporting
purposes are:
<TABLE>
<CAPTION>
<S> <C>
Years
Revenue Equipment 6 to 10
Service and garage equipment 3 to 7
Office Furniture, Fixtures and Equipment 5 to 10
Buildings and Leasehold Improvements 7 to 40
</TABLE>
Income taxes
MDR Cartage, Inc. applies Statement of Financial Accounting Standards
("SFAS") No. 109, "Accounting for Income Taxes." Under SFAS 109, the deferred
tax liability or asset is determined based on the difference between the
financial statement and tax bases of assets and liabilities as measured by
the enacted tax rates which will be in effect when these differences reverse.
BF Transportation, Inc. is organized as an S-Corporation and is therefore
exempt from federal and Arkansas state income tax. Taxable income of the
Company is allocated to its shareholders for inclusion in the determination
of their individual taxable income. Accordingly, federal and state income
taxes are not provided.
Comprehensive income
In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 130, "Reporting Comprehensive Income." SFAS 130 establishes standards
for reporting and display of comprehensive income and its components in a
full set of general-purpose financial statements. The provisions of SFAS 130
were adopted during the current period.
7
<PAGE>
MDR CARTAGE, INC. AND BF TRANSPORTATION, INC.
Notes to Combined Financial Statements
December 31, 1998, June 30, 1998, and June 30, 1999
- -------------------------------------------------------------------------------
The Company has no items of other comprehensive income at December 31, 1998
and June 30, 1999.
Business segments
Segments are determined by the "management approach" as described in SFAS
No. 131, "Disclosures about Segments of an Enterprise and Related
Information," which the Company adopted in the current period. Management
views the Company as operating in a single segment.
Earnings per share (EPS)
Given the historical organization and capital structure of the Company,
earnings per share information is not considered meaningful or relevant and
has not been presented in the accompanying combined financial statements or
notes thereto.
3. Other Current Assets
Other current assets consist of the following:
<TABLE>
<CAPTION>
June 30,
December 31, 1999
1998 (Unaudited)
------------ -----------
<S> <C> <C>
Refundable income taxes $ - $220,067
Inventories 211,090 221,793
Deposits 86,560 86,560
Prepaid licenses and insurance 116,347 194,144
-------- --------
$413,997 $722,564
======== ========
</TABLE>
4. Income Taxes
The provision (benefit) for income taxes consists of the following:
<TABLE>
<CAPTION>
6 months 6 months
ended ended
Year Ended June 30, June 30,
December 31, 1998 1999
1998 (Unaudited) (Unaudited)
-------------- ----------- -----------
<S> <C> <C> <C>
Current
-------
Federal $ 387,283 $ 92,456 $ (86,994)
State 93,000 17,357 (16,332)
--------- -------- ---------
480,283 109,813 (103,326)
Deferred (141,980) (66,253) 58,155
--------- -------- ---------
$ 338,303 $ 43,560 $ (45,171)
========= ======== =========
</TABLE>
8
<PAGE>
MDR CARTAGE, INC. AND BF TRANSPORTATION, INC.
Notes to Combined Financial Statements
December 31, 1998, June 30, 1998, and June 30, 1999
- -----------------------------------------------------------------------------
The components of the net deferred tax liability are as follows:
<TABLE>
<CAPTION>
Year ended June 30,
December 31, 1999
1998 (Unaudited)
----------- -------------
<S> <C> <C>
Depreciation $3,288,260 $3,237,685
Estimated expenses deductible in
future tax periods (697,349) (592,028)
---------- ----------
Net deferred income tax liability $2,590,911 $2,645,657
========== ==========
</TABLE>
The difference between the provision for income taxes attributable to
continuing operations and the amounts that would be expected using the
Federal statutory income tax rate of 34% is explained below:
<TABLE>
<CAPTION>
6 months 6 months
ended ended
Year Ended June 30, June 30,
December 31, 1998 1999
1998 (Unaudited) (Unaudited)
------------ ----------- -----------
<S> <C> <C> <C>
Tax at federal statutory rate $ 319,868 $ 62,591 $(54,246)
Income not subject to taxation
at Corporate level (232,409) (118,032) (84,597)
Nondeductible expenses 191,543 95,772 98,386
State taxes, net 59,301 3,229 (4,714)
--------- --------- --------
Net provision benefit for income tax $ 338,303 $ 43,560 $(45,171)
========= ========= ========
</TABLE>
9
<PAGE>
MDR CARTAGE, INC. AND BF TRANSPORTATION, INC.
Notes to Combined Financial Statements
December 31, 1998, June 30, 1998, and June 30, 1999
- -----------------------------------------------------------------------------
5. Property and Equipment
<TABLE>
<CAPTION>
December 31, June 30,
1998 1999
(unaudited)
------------ -----------
<S> <C> <C>
Property and Equipment consists of
the following:
Revenue Equipment $22,082,314 $21,314,886
Service and Garage Equipment 810,713 616,530
Office Furniture, Fixtures, and
Equipment 370,701 370,701
Buildings and Leasehold Improvements 972,787 972,787
Land 305,322 305,322
----------- -----------
24,541,837 23,580,226
Less: Accumulated depreciation
and amortization (9,271,814) (9,314,390)
----------- -----------
$15,270,023 $14,265,836
=========== ===========
</TABLE>
10
<PAGE>
MDR CARTAGE, INC. AND BF TRANSPORTATION, INC.
Notes to Combined Financial Statements
December 31, 1998, June 30, 1998, and June 30, 1999
- -----------------------------------------------------------------------------
6. Long-Term Debt
<TABLE>
<CAPTION>
June 30,
December 31, 1999
1998 (Unaudited)
------------ -----------
<S> <C> <C>
Notes payable to commercial lenders,
secured primarily by revenue equipment;
interest rates from 5.69% to 9.5%; payable
in monthly installments through 2004 $ 6,668,152 $5,955,597
Notes payable to related parties, unsecured;
interest at 8%; $919,500 due July 30, 1999,
remainder payable in monthly installments
through 2002 2,419,305 2,722,174
----------- ----------
$ 9,087,457 $8,677,771
Less current portion (4,658,633) (4,761,768)
----------- ----------
$ 4,428,824 $3,916,003
=========== ==========
</TABLE>
Long-term debt matures as follows:
<TABLE>
<CAPTION>
December 31,
Year Ended 1998
---------- -------------
<S> <C>
1999 $4,658,633
2000 2,448,045
2001 1,039,355
2002 654,886
2003 232,061
Thereafter 54,477
----------
Total long-term debt 9,087,457
==========
</TABLE>
7. Line of Credit Facility
MDR Cartage, Inc. has a line of credit facility which provides for borrowings
up to $700,000 with interest accruing at 9%. The line was secured by accounts
receivable and real estate. The initial term of the line of credit facility
matured on July 16, 1999, and was renewed for an additional term of one year.
11
<PAGE>
MDR CARTAGE, INC. AND BF TRANSPORTATION, INC.
Notes to Combined Financial Statements
December 31, 1998, June 30, 1998, and June 30, 1999
- -----------------------------------------------------------------------------
8. Operating Leases
MDR leases equipment from independent lessors and an employee on a regular
basis. All of the leases are operating leases, and no leases have terms
extending beyond 12 months from December 31, 1998. The terms of the lease
with an employee is, in the opinion of the Company, no less favorable to the
Company than would be obtained from unrelated third parties.
9. Retirement Plan
In 1997, MDR Cartage, Inc. adopted a 401(k) Retirement Plan covering
substantially all employees with at least 12 months of service. The plan
provides for MDR Cartage, Inc. matching contributions of up to 6% of wages.
The expenses associated with this plan reflected in the combined statements
of income for the year ended December 31, 1998, and for the six months ended
June 30, 1998 and June 30, 1999, were $36,848, $25,104, and $18,000,
respectively.
10. Contingencies
The Company is a party to various legal actions, which are ordinary, and
incidental to its business. While the outcomes of legal actions cannot be
predicted with certainty, the Company believes the outcome of any of these
proceedings, or all of them combined, will not have a material adverse
effect on its combined financial position or results of operations.
12
<PAGE>
MDR CARTAGE, INC. AND BF TRANSPORTATION, INC.
Notes to Combined Financial Statements
December 31, 1998, June 30, 1998, and June 30, 1999
- -----------------------------------------------------------------------------
11. Subsequent Events
On June 30, 1999, the Company was purchased by Transit Group, Inc. for
2,450,000 shares of Transit Group, Inc. common stock and $1,800,000 of cash.
As a result of the purchase, BF Transportation, Inc. was converted to a
C-corporation and recorded a noncurrent deferred tax liability of
approximately $135,000.
13
<PAGE>
EXHIBIT 99.2
Transit Group, Inc.
Pro forma unaudited combined condensed balance sheet
As of June 30, 1999
<TABLE>
<CAPTION>
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
<S> <C> <C> <C> <C> <C> <C>
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
============ =========== =========== =========== ========== =============
</TABLE>
<PAGE>
Transit Group, Inc.
Pro forma unaudited combined statement of income
For the six months ended June 30, 1999
<TABLE>
<CAPTION>
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
<S> <C> <C> <C> <C> <C> <C>
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
============ ============
</TABLE>
<PAGE>
Transit Group, Inc.
Pro forma unaudited combined statement of income
For the year ended December 31, 1998
<TABLE>
<CAPTION>
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
<S> <C> <C> <C> <C> <C> <C>
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
============ ============
</TABLE>
<PAGE>
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
<PAGE>
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.
