e10vq

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTER ENDED JUNE 30, 2007


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM to

Commission file number:

VITRAN CORPORATION INC.


Ontario, Canada		(I.R.S. Employer
(State of incorporation)		Identification No.)

185 The West Mall, Suite 701, Toronto, Ontario, Canada, M9C 5L5
(Address of principal executive offices)(Zip Code)

416-596-7664
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Large accelerated filer o Accelerated filer þ Non-accelerated filer o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

The number of shares of common stock outstanding at July 18, 2007 was 13,466,359.

Part I. Financial Information

Item 1: Financial Statements

VITRAN CORPORATION INC.

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

(In thousands of United States dollars except for per share amounts)


	Three months			Three months			Six months			Six months
	Ended			Ended			Ended			Ended
	June 30, 2007			June 30, 2006			June 30, 2007			June 30, 2006

Revenue	$	170,144		$	123,641		$	324,280		$	238,768
Operating expenses		140,780			101,307			269,236			198,428
Selling, general and administrative expenses		15,283			11,737			30,382			22,480
Other income		(101	)		(40	)		(72	)		(156	)
Depreciation and amortization expense		5,109			2,509			10,054			4,916

Total operating expenses		161,071			115,513			309,600			225,668

Income from operations before undernoted		9,073			8,128			14,680			13,100
Interest expense, net		2,115			171			4,179			347

Income from operations before income taxes		6,958			7,957			10,501			12,753
Income taxes		1,425			2,181			1,581			3,354

Net income before cumulative effect of change in accounting principle		5,533			5,776			8,920			9,399

Cumulative effect of a change in accounting principle (note 8)		—			—			—			141

Net income	$	5,533		$	5,776		$	8,920		$	9,540

Earnings per share:
Basic - net income before cumulative effect of change in accounting principle	$	0.41		$	0.45		$	0.66		$	0.74
Basic - cumulative effect of change in accounting principle		—			—			—			0.01

Basic - net income	$	0.41		$	0.45		$	0.66		$	0.75

Diluted - net income before cumulative effect of change in accounting principle	$	0.41		$	0.45		$	0.65		$	0.73
Diluted - cumulative effect of change in accounting principle		—			—			—			0.01

Diluted - net income	$	0.41		$	0.45		$	0.65		$	0.74


Weighted average number of shares:
Basic		13,463,374			12,732,644			13,450,790			12,692,582
Diluted		13,661,467			12,964,761			13,656,765			12,950,673

See accompanying notes to consolidated financial statements

VITRAN CORPORATION INC.

CONSOLIDATED BALANCE SHEETS

(In thousands of United States dollars)


	Jun. 30, 2007		Dec. 31, 2006
	(Unaudited)		(Audited)

Assets
Current assets:
Cash and cash equivalents	$	1,047	$	1,454
Accounts receivable		79,415		66,051
Inventory, deposits and prepaid expenses		9,713		10,796
Income and other taxes receivable		4,347		—
Deferred income taxes		3,227		1,720

		97,749		80,021
Property and equipment		154,770		145,129
Intangible assets		14,766		15,888
Goodwill (note 5)		119,136		117,146
Other		125		150

	$	386,546	$	358,334

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities	$	72,584	$	67,916
Income and other taxes payable		—		1,275
Current portion of long-term debt		16,353		15,724

		88,937		84,915
Long-term debt		99,089		93,139
Other		2,089		—
Deferred income taxes		11,826		6,983

Shareholders’ equity:
Common shares, no par value, unlimited authorized, 13,466,359 and 13,419,859 issued and outstanding at March 31, 2007 and December 31, 2006, respectively		77,168		76,913
Additional paid-in capital		2,018		1,607
Retained earnings		99,853		90,933
Accumulated other comprehensive income		5,566		3,844

		184,605		173,297

	$	386,546	$	358,334

Contingent liabilities (note 10)

See accompanying notes to consolidated financial statements.

VITRAN CORPORATION INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited)


										Accumulated
					Additional					other		Total
	Common shares				Paid-in			Retained		comprehensive		Shareholders’
	Shares		Amount		Capital			Earnings		income		Equity


December 31, 2006		13,419,859	$	76,913	$	1,607		$	90,933	$	3,844	$	173,297
Shares issued upon exercise of employee stock options		46,500		255		(48	)						207
Net income									8,920				8,920
Other comprehensive income											1,722		1,722
Share based compensation						459							459

June 30, 2007		13,466,359	$	77,168	$	2,018		$	99,853	$	5,566	$	184,605


										Accumulated
					Additional					other		Total
	Common shares				Paid-in			Retained		comprehensive		Shareholders’
	Shares		Amount		Capital			Earnings		income		Equity


December 31, 2005		12,647,636	$	63,604	$	956		$	71,553	$	3,689	$	139,802
Shares issued upon exercise of employee stock options		97,300		526		(47	)						479
Net income									9,540				9,540
Other comprehensive income											1,418		1,418
Share based compensation						409							409
Cumulative effect of a change in accounting principle						(141	)						(141	)

June 30, 2006		12,744,936	$	64,130	$	1,177		$	81,093	$	5,107	$	151,507

VITRAN CORPORATION INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

(In thousands of United States dollars)


	Three months			Three months			Six months			Six months
	Ended			Ended			Ended			Ended
	June 30, 2007			June 30, 2006			June 30, 2007			June 30, 2006

Cash provided by (used in):

Net income	$	5,533		$	5,776		$	8,920		$	9,540
Items not involving cash from operations
Depreciation and amortization expense		5,109			2,509			10,054			4,916
Deferred income taxes		1,628			195			2,595			572
Share-based compensation expense		251			219			459			409
Gain on sale of property and equipment		(101	)		(40	)		(72	)		(156	)
Cumulative effect of change in accounting principle		—			—			—			(141	)
Change in non-cash working capital components		(2,066	)		(1,509	)		(5,763	)		446

		10,354			7,150			16,193			15,586
Investments:
Purchase of property and equipment		(6,870	)		(9,651	)		(11,420	)		(11,529	)
Proceeds on sale of property and equipment		167			1,384			238			1,554
Additional payments due to acquisition of subsidiary		(6,383	)		—			(6,921	)		—
Acquisition of business assets		—			—			—			(2,251	)

		(13,086	)		(8,267	)		(18,103	)		(12,226	)
Financing:
Change in revolving credit facility		6,838			—			10,122			(2,985	)
Repayment of long-term debt		(2,255	)		(631	)		(4,510	)		(1,952	)
Repayment of capital leases		(1,674	)		—			(3,314	)		—
Issue of common shares upon exercise of stock options		80			158			207			479

		2,989			(473	)		2,505			(4,458	)
Effect of translation adjustment on cash		(753	)		(63	)		(1,002	)		(177	)

Decrease in cash position		(496	)		(1,653	)		(407	)		(1,275	)
Cash position, beginning of period		1,543			14,970			1,454			14,592

Cash position, end of period	$	1,047		$	13,317		$	1,047		$	13,317


Change in non-cash working capital components:
Accounts receivable	$	(6,354	)	$	(4,083	)	$	(13,364	)	$	(6,429	)
Inventory, deposits and prepaid expenses		696			1,438			1,083			1,626
Income and other taxes receivable/payable		(1,462	)		510			(5,987	)		98
Accounts payable and accrued liabilities		4,893			626			10,416			5,151
Other liabilities		161			—			2,089			—

	$	(2,066	)	$	(1,509	)	$	(5,763	)	$	446


Supplemental cash flow information:
Capital lease additions	$	3,740			—		$	3,740			—

See accompanying notes to consolidated financial statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

(In thousands of United States dollars except for per share amounts)

1. Accounting Policies

The interim consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles with a reconciliation to Canadian generally accepted accounting principles in note 13. The Ontario Business Corporations Act (“OBCA”) regulations allow issuers that are required to file reports with the Securities and Exchange Commission in the United States to file financial statements under United States GAAP to meet their continuous disclosure obligations in Canada. Prior to 2006 Vitran Corporation Inc. (“Vitran” or “the Company”) prepared its consolidated financial statements in accordance with Canadian GAAP with a reconciliation to United States GAAP. The interim consolidated financial statements do not contain all the disclosures required by United States and Canadian generally accepted accounting principles. The interim consolidated financial statements have been prepared in accordance with instructions to Quarterly Report on Form 10-Q. The interim consolidated financial statements should be read in conjunction with the Company’s 2006 Annual Report and the 2006 Annual Report on Form 10-K with emphasis on Note 17 which describes the differences between United States and Canadian GAAP. The interim consolidated financial statements follow the same accounting principles and methods of application as the most recent annual consolidated financial statements as there are no material differences in the Company’s accounting policies between United States and Canadian GAAP at June 30, 2007 other than as denoted in note 13.

These unaudited consolidated interim financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair presentation of the results of the interim period presented. Operating results for the three and six month period ended June 30, 2007 are not necessarily indicative of the results of operations that may be expected for the year ended December 31, 2007.

All amounts in these consolidated interim financial statements are expressed in United States dollars, unless otherwise stated.

2. New Accounting Pronouncements

FSP FIN 48-1 “Definition of Settlement in FASB Interpretation No. 48” amends FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” to provide guidance on how an enterprise should determine where a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. The FSP is to be adopted upon initial adoption of FIN 48 with retroactive treatment if required. The Company adopted FIN 48 January 1, 2007 consistent with the provisions of the FSP.

SFAS Statement 159 “The Fair Value Option for Financial Assets and Financial Liabilities – Including an amendment of SFAS Statement 115” permits entities to choose to measure many financial instruments and certain warranty and insurance contracts at fair value on a contract-by-contract basis. SFAS Statement 159 will be adopted January 1, 2008 as required by the statement. The requirements of SFAS Statement 159 are not expected to have an effect on the Company’s consolidated financial statements.

3. Foreign Currency Translation

The United States dollar is the functional currency of the Company’s operations in the United States. The Canadian dollar is the functional currency of the Company’s Canadian operations. Each operation translates foreign currency denominated transactions into its functional currency using the rate of exchange in effect at the date of the transaction. Monetary assets and liabilities denominated in foreign currency are translated into the functional currency of the operation using the period-end rate of exchange giving rise to a gain or loss that is recognized in income during the current period.

For reporting purposes, the results of the Canadian operations are translated into United States dollars using the current rate method. Under this method, all assets and liabilities are translated at the period-end rate of exchange and all revenue and expense items are translated at the average rate of exchange for the period. The resulting translation adjustment is recorded as a separate component of shareholders’ equity. United States dollar debt of $77.9 million is designated as a hedge of the investment in the United States dollar functional operations, such that related transaction gains and losses are recorded in the separate component of shareholders’ equity.

4. Acquisition

On October 2, 2006, the Company acquired 100 percent of the outstanding shares of PJAX, Inc. and all the real estate held by Woodhurst Realty LLC and Northridge Enterprises LP, collectively known as PJAX Freight System (“PJAX”). During the 2006 fourth quarter, Vitran executed a joint election with the seller to structure the transaction as an asset sale for income tax purposes and at December 31, 2006 the Company had estimated an additional $5.5 million of cash would be payable in April 2007. Based on final calculations completed in the 2007 first quarter the additional amount of cash paid in April 2007 was $6.7 million. Therefore, aggregate purchase consideration was increased to $139.9 million. The additional $1.2 million was recorded as an adjustment to goodwill.

The following pro forma financial information reflects the results of operations of Vitran as if the acquisition of PJAX had taken place on January 1, 2005. The pro forma financial information is not necessarily indicative of the results as it would have been if the acquisition had been effected on the assumed date and is not necessarily indicative of future results:


	Three months		Six months
	Ended		Ended
	June 30, 2006		June 30, 2006


Pro forma revenue	$	169,315	$	326,107
Pro forma net income		6,839		10,867
Pro forma diluted earnings per share	$	0.50	$	0.80

5. Goodwill


	Goodwill


Balance at December 31, 2006	$	117,146
Foreign exchange on CDN$denominated goodwill		817
Adjustment to goodwill (note 4)		1,173

Balance at June 30, 2007	$	119,136

6. Income Taxes

The Company adopted the provisions of FASB interpretation No. 48, Accounting for Uncertainty in Income Taxes, on January 1, 2007. The implementation of Interpretation 48 did not result in a change in the estimated liability for unrecognized tax benefits at January 1, 2007. At June 30, 2007, the Company had unrecognized tax benefits of approximately $2.3 million, of which an estimated $1.9 million if recognized would have an impact on the effective tax rate.

The Company recognizes interest and penalties related to unrecognized tax benefits in the tax provision. For the three and six month periods ended June 30, 2007 and June 30, 2006, the Company did not recognize a material amount of interest and penalties. As at June 30, 2007, the Company had approximately $0.6 million accrued for interest and penalties.

The Company and its subsidiaries file income tax returns in U.S. and Canadian federal jurisdictions, and various states, provinces and foreign jurisdictions. The Internal Revenue Service (“IRS”) and Canada Revenue Agency (“CRA”) have in 2007 commenced examinations of the 2003, 2004 and 2005 income tax returns. The examinations, although in their earliest stages, are expected to be completed by 2008. These audits may impact the Company’s unrecognized tax benefits in the next 12 months; however, the estimated financial outcome is indeterminable at this time. Overall, the years 1999 to 2006 remain open to examination by tax authorities.

7. Stock Option Plan

Under the Company’s stock option plan, options to purchase Common Shares of the Company may be granted to key employees, officers and directors of the Company and its affiliates by the Board of Directors or by the Company’s Compensation Committee. There are 836,200 options outstanding under the plan. The term of each option is ten years and the vesting period is five years. The exercise price for options is the trading price of the Common Shares of the Company on the Toronto Stock Exchange on the day of the grant.

The fair value of each stock option granted was estimated using the Black-Scholes fair value option-pricing model with the following assumptions:


	2007

Options granted		115,000
Risk-free interest rate		4.20	%
Dividend yield		—
Volatility factor of the future expected market price of the Company’s common shares		31.76	%
Expected life of the options	6 years

The weighted average estimated fair value at the date of grant for the options granted in 2007 was $7.12 per share.

8. Comprehensive income (loss)

The components of other comprehensive income (loss) such as changes in foreign currency adjustments are required to be added to the Company’s reported net income to arrive at comprehensive net income (loss). Other comprehensive income (loss) items have no impact on the reported net income as presented on the Consolidated Statements of Income.

The following are the components of other comprehensive income, net of income taxes for the three and six months ended June 30, 2007 and 2006:


	Three months		Three months		Six months			Six months
	Ended		Ended		Ended			Ended
	June 30, 2007		June 30, 2006		June 30, 2007			June 30, 2006

Net Income	$	5,533	$	5,776	$	8,920		$	9,540
Translation adjustment		1,652		1,779		1,747			1,418
Interest rate swap		1		—		(25	)		—

Other comprehensive income	$	1,653	$	1,779	$	1,722		$	1,418

Comprehensive net income	$	7,186	$	7,555	$	10,642		$	10,958

9. Computation of Earnings per Share


	Three months		Three months		Six months		Six months
	Ended		Ended		Ended		Ended
	June 30, 2007		June 30, 2006		June 30, 2007		June 30, 2006

Numerator:
Net Income	$	5,533	$	5,776	$	8,920	$	9,540

Denominator:
Basic weighted-average shares outstanding		13,463,374		12,732,644		13,450,790		12,692,582
Dilutive Stock options		198,093		232,117		205,975		258,091
Dilutive weighted-average shares outstanding		13,661,467		12,964,761		13,656,765		12,950,673

9. Computation of Earnings per Share (continued)


	Three months		Three months		Six months		Six months
	Ended		Ended		Ended		Ended
	June 30, 2007		June 30, 2006		June 30, 2007		June 30, 2006

Basic earnings per share before cumulative effect of change in accounting principle	$	0.41	$	0.45	$	0.66	$	0.74
Effect of a change in accounting principle		—		—		—		0.01
Basic earnings per share	$	0.41	$	0.45	$	0.66	$	0.75

Diluted earnings per share before cumulative effect of change in accounting principle	$	0.41	$	0.45	$	0.65	$	0.73
Effect of a change in accounting principle		—		—		—		0.01
Diluted earnings per share	$	0.41	$	0.45	$	0.65	$	0.74

Diluted earnings per share exclude the effect of 575,900 anti-dilutive options.

10. Contingent Liabilities

The Company is subject to legal proceedings that arise in the ordinary course of business. In the opinion of management, the aggregate liability, if any, with respect to these actions will not have a material adverse effect on the consolidated financial position, results of operations or cash flows. Legal costs are expensed as incurred.

11. Risk Management Activities

The Company is exposed to interest rate volatility with regard to existing variable rate debt. The Company assumed a variable-to-fixed rate interest rate swap on variable rate debt assumed as part of the PJAX acquisition. The swap is accounted for as a cash flow hedge. Effectiveness is assessed based on the hypothetical derivative method. Amounts deferred to Accumulated Other Comprehensive Income are reclassified into income over the life of the associated debt. At June 30, 2007, the notional amount of the swap was $3.4 million, with the average pay rate being 2.99% and the average receive rate being 5.3%. The swap matures September 2010.

12. Segmented Information


Three months ended	Less-than-								Corporate Office			Consolidated
June 30, 2007	truckload		Logistics		Truckload		Total		and Other			Totals


Revenue	$	150,615	$	11,225	$	8,304	$	170,144	$	—		$	170,144
Operating, selling, general and administrative expenses		137,022		10,348		7,643		155,013		1,050			156,063
Other income		101		—		—		101		—			101
Depreciation and amortization		4,692		142		256		5,090		19			5,109

Income (loss) from operations	$	9,002	$	735	$	405	$	10,142	$	(1,069	)		9,073
Interest expense, net													2,115
Income taxes													1,425

Net income												$	5,533


Three months ended	Less-than-									Corporate Office			Consolidated
June 30, 2006	truckload		Logistics		Truckload			Total		and Other			Totals


Revenue	$	105,213	$	10,251	$	8,177		$	123,641	$	—		$	123,641
Operating, selling, general and administrative expenses		95,023		9,509		7,446			111,978		1,066			113,044
Other income (loss)		43		—		(3	)		40		—			40
Depreciation and amortization		2,194		104		198			2,496		13			2,509

Income (loss) from operations	$	8,039	$	638	$	530		$	9,207	$	(1,079	)		8,128
Interest expense, net														171
Income taxes														2,181

Net income													$	5,776

12. Segmented Information (continued)


Six months ended	Less-than-										Corporate Office			Consolidated
June 30, 2007	truckload		Logistics		Truckload			Total			and Other			Totals


Revenue	$	286,772	$	20,888	$	16,620		$	324,280		$	—		$	324,280
Operating, selling, general and administrative expenses		262,348		19,452		15,419			297,219			2,399			299,618
Other income (loss)		77		—		(5	)		(72	)		—			(72	)
Depreciation and amortization		9,269		261		496			10,026			28			10,054

Income (loss) from operations	$	15,232	$	1,175	$	700		$	17,107		$	(2,427	)		14,680
Interest expense, net															4,179
Income taxes															1,581

Net income														$	8,920


Six months ended	Less-than-									Corporate Office			Consolidated
June 30, 2006	truckload		Logistics		Truckload			Total		and Other			Totals


Revenue	$	202,636	$	19,663	$	16,469		$	238,768	$	—		$	238,768
Operating, selling, general and administrative expenses		185,370		18,323		15,140			218,833		2,075			220,908
Other income (loss)		159		—		(3	)		156		—			156
Depreciation and amortization		4,318		188		386			4,892		24			4,916

Income (loss) from operations	$	13,107	$	1,152	$	940		$	15,199	$	(2,099	)		13,100
Interest expense, net														347
Income taxes														3,354

Net income before cumulative effect of change in accounting principle														9,399

Effect of change in accounting principle														141

Net income													$	9,540

13. United States and Canadian accounting policy differences

In accordance with the provisions of the OBCA, issuers that are required to file reports with the Securities and Exchange Commission in the United States are allowed to file financial statements under United States GAAP to meet their continuous disclosure obligations in Canada. Vitran has included a reconciliation highlighting the material differences between its consolidated financial statements prepared in accordance with United States GAAP compared to its consolidated financial statements prepared in accordance with Canadian GAAP below. This disclosure is required for a finite period of time under the Ontario Securities Commission regulations, subsequent to the adoption of United States GAAP. Prior to 2006 Vitran prepared its consolidated financial statements in accordance with Canadian GAAP with a reconciliation to United States GAAP.

(a) Consolidated reconciliation of net income and shareholders’ equity

Net Income and Shareholders’ equity reconciled to Canadian GAAP are as follows:


	Net income					Net Income						Shareholders’ equity
	Three months ended					Six months ended
	2007			2006		2007			2006			2007			2006

Balance as at June 30, based on United States GAAP	$	5,533		$	5,776	$	8,920		$	9,540		$	186,383		$	151,507
Effect of change in accounting principle (i)		—			—		—			(141	)		(141	)		(141	)
Foreign exchange adjustment (ii)		(631	)		—		(714	)		—			144			858
Unrealized foreign exchange loss on derivative instrument		—			—		—			—			(101	)		(101	)
Accumulated other comprehensive income adjustment (ii)		—			—		—			—			(43	)		(757	)

Balance as at June 30, based on Canadian GAAP	$	4,902		$	5,776	$	8,206		$	9,399		$	186,242		$	151,366

13. United States and Canadian accounting policy differences (continued)

	(i)		The adoption of SFAS 123(R) – Share-Based Payments only applies to United States GAAP. Therefore, the effect of a change in accounting principle does not impact Canadian GAAP net income or shareholders’ equity.

	(ii)		The Company had a foreign exchange loss of $0.6 million and $0.7 million for the three months and six months ended June 30, 2007, respectively, that did not represent a substantially complete liquidation of a foreign operation in the current period. In previous years, the Company had foreign exchange gains of $0.9 million that did not represent a substantially complete liquidation of a foreign operation. Under Canadian GAAP these gains and losses were recognized upon the transfer into income of the related cumulative translation adjustment. Under United States GAAP, there is no reduction of the cumulative translation adjustment account. Retained earnings under Canadian GAAP is increased $0.8 million with a corresponding decrease to the cumulative translation adjustment included in accumulated other comprehensive income.

Earnings per share


	Three months		Three months		Six months		Six months
	Ended		Ended		Ended		Ended
	June 30, 2007		June 30, 2006		June 30 2007		June 30, 2006

Earnings per share
Canadian GAAP
Basic	$	0.36	$	0.45	$	0.61	$	0.74
Diluted	$	0.36	$	0.45	$	0.60	$	0.73


	Three months		Three months		Six months		Six months
	Ended		Ended		Ended		Ended
	June 30, 2007		June 30, 2006		June 30 2007		June 30, 2006

Weighted average number of shares:
Basic		13,463,374		12,732,644		13,450,790		12,692,582
Potential exercise of stock options		198,093		232,117		205,975		258,091
Diluted		13,661,467		12,964,761		13,656,765		12,950,673

	(b)		Derivative accounting

			Previously under Canadian GAAP, gains and losses on derivatives that are designated as hedges and that manage the underlying risks of anticipated transactions are not recorded until the underlying hedged item is recorded in net income and hedge ineffectiveness is not recorded until settlement. On January 1, 2007 the Company adopted CICA 3865, Hedges, in accordance with the transitional provisions. Under the transitional provision any hedging relationships that existed and satisfy all the conditions of CICA 3865 are adjusted to the carrying amounts that would have resulted had CICA 3865 always been applied. Based on the transitional provision there is no longer a difference in accounting for derivatives for the Company between United States and Canadian GAAP.

			On January 1, 2007, the Company adopted CICA 3855, Financial Instruments – Recognition and Measurement. Management evaluated the effect of the standard on the consolidated financial statements and concluded that the Company does not have a difference between United States and Canadian GAAP upon adoption of the standard.

	(c)		Comprehensive income

			On January 1, 2007 the Company adopted CICA 1530, Comprehensive Income, in accordance with the appropriate provisions of the standard. The Company reports comprehensive income as part of its United States GAAP reporting, therefore, the adoption of this standard eliminates this presentation difference between United States and Canadian GAAP. However, there may be measurement differences between comprehensive income under United States and Canadian GAAP.

14. Comparative figures

Certain comparative figures have been reclassified to conform to the financial statement presentation adopted in the current year.

Item 2. Management’s Discussion and Analysis of Results of Operation

This MD&A and the documents incorporated by reference contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws concerning Vitran’s business, operations, and financial performance and condition.

Forward-looking statements may be generally identifiable by use of the words “believe”, “anticipate”, “intend”, “estimate”, “expect”, “project”, “may”, “plans”, “continue”, “will”, “focus”, “should”, “endeavor” or the negative of these words or other variation on these words or comparable terminology. These forward-looking statements are based on current expectations and are subject to uncertainty and changes in circumstances that may cause actual results to differ materially from those expressed or implied by such forward-looking statements.

The MD&A and the documents incorporated by reference herein contain forward-looking statements regarding, but not limited to, the following:

	•		the Company’s objective to expand or acquire a less-than-truckload operation, in a new regional market;

	•		the Company’s objective to achieve profitable revenue growth in the less-than-truckload segment;

	•		the Company’s objective to complete information technology initiatives;

	•		the Company’s intention to achieve above-average transborder and inter-regional growth rates;

	•		the Company’s intention to add clients in the second and third quarter that will improve revenue and income from operations within the Logistics segment;

	•		the Company’s intention to purchase a specified level of capital assets and to finance such acquisitions with cash flow from operations and, if necessary, from the Company’s unused credit facilities.

Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause Vitran’s actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Factors that may cause such differences include but are not limited to technological change, increase in fuel costs, regulatory change, changes in tax legislation, the general health of the economy, changes in labor relations, geographic expansion, capital requirements, availability of financing, claims and insurance costs, environmental hazards, availability of qualified drivers and competitive factors. More detailed information about these and other factors is included in the MD&A. Many of these factors are beyond the Company’s control; therefore, future events may vary substantially from what the Company currently foresees. You should not place undue reliance on such forward-looking statements. Vitran Corporation Inc. does not assume the obligation to revise or update these forward-looking statements after the date of this document or to revise them to reflect the occurrence of future unanticipated events, except as may be required under applicable securities laws.

Unless otherwise indicated all dollar references herein are in U.S. dollars. The Company’s Annual Report on Form 10-K, as well as all the Company’s other required filings, may be obtained from the Company at www.vitran.com or from www.sedar.com or from www.sec.gov/edgar.shtml. This MD&A and the documents incorporated by reference contain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws concerning Vitran’s business, operations, and financial performance and condition.

OVERVIEW

With the North American economy remaining sluggish, the second quarter of 2007 continued to be another difficult operating environment. Nonetheless the Company posted record second quarter revenue and income from operations. Revenue improved 37.6% to $170.1 million and income from operations improved 11.6% to $9.1 million compared to the 2006 second quarter primarily due to the October 2, 2006 acquisition of PJAX Freight System (“PJAX”). Hence Vitran’s LTL segment posted the most significant increases in revenue and income from operations of 43.2% and 12.0% respectively. For the 2007 six-month period revenue and income from operations exceeded the 2006 six-month period by 35.8% and 12.1% respectively.

As a result of an increased number of U.S. shareholders and the continued expansion within the United States, the Company, commencing the first quarter of 2006, elected U.S. GAAP as its primary reporting standard. Therefore a reconciliation from U.S. GAAP to Canadian GAAP has been provided in note 13 of the interim financial statements. This disclosure is required for a finite period of time after the change to US GAAP is made under the Ontario Securities Commission regulations.

CONSOLIDATED RESULTS

The following table summarizes the Consolidated Statements of Income for the periods ended June 30:


	For the three months ended June 30									For the six months ended June 30
(in thousands)	2007			2006			2007 vs 2006			2007			2006			2007 vs 2006


Revenue	$	170,144		$	123,641			37.6	%	$	324,280		$	238,768			35.8	%
Operating expenses		140,780			101,307			39.0	%		269,236			198,428			35.7	%
SG&A expenses		15,283			11,737			30.2	%		30,382			22,480			35.2	%
Other expenses (income)		(101	)		(40	)		152.5	%		(72	)		(156	)		(53.8	%)
Depreciation and amortization		5,109			2,509			103.6	%		10,054			4,916			104.5	%
Income from operations		9,073			8,128			11.6	%		14,680			13,100			12.1	%
Interest expense, net		2,115			171			1,136.8	%		4,179			347			1,104.3	%

Net income		5,533			5,776			(4.2	%)		8,920			9,540			(6.5	%)

Earnings per share:
Basic –net income	$	0.41		$	0.45					$	0.66		$	0.75
Diluted –net income	$	0.41		$	0.45					$	0.65		$	0.74

Operating Ratio⁽¹⁾		94.7	%		93.4	%					95.5	%		94.5	%

Revenue increased 37.6% to $170.1 million for the second quarter of 2007 compared to $123.6 million in the second quarter of 2006. Revenue in the LTL, Logistics and Truckload segments increased 43.2%, 9.5% and 1.6%, respectively. For the six months ended June 30, 2007 revenue increased 35.8% to $324.3 million compared to $238.8 million for the same period in 2006. The consolidated results were achieved by revenue increases in the LTL, Logistics and Truckload segments of 41.5%, 6.2% and 0.9% respectively. Revenue increases in the LTL segment for the quarter and six month period ended June 30, 2006 benefited from the acquisition of PJAX on October 2, 2006. Detailed explanations for the improvement in revenue are discussed below in the “Segmented Results”.

Income from operations for the 2007 second quarter improved 11.6% to $9.1 million compared to $8.1 million in the second quarter of 2006. The LTL and Logistics segments recorded quarter over prior-year quarter improvements in income from operations of 12.0% and 15.2% respectively offsetting the decline of 23.6% at the Truckload segment. As a result, the Company posted a consolidated operating ratio of 94.7% for the second quarter of 2007 compared to 93.4% for the second quarter of 2006. For the six months ended June 30, 3007 income from operations increased 12.1% to $14.7 million compared to $13.1 million for the same period in 2006, resulting in a consolidated operating ratio of 95.5% in 2007 compared to 94.5% in 2006. Detailed explanations for the fluctuation in income from operations are discussed below in “Segmented Results”.

Selling, general and administrative expenses (“SG&A”) increased 30.2% to $15.3 million in the second quarter compared to $11.7 million in the second quarter of 2006. For the six month period ended June 30, 2007 SG&A increased 35.2% to $30.4 million

compared to $22.5 for the same period a year ago. The increase for the both the quarter and six-month period can primarily be attributed to the additional SG&A expenses related to the acquisition of PJAX, not included in the 2006 comparative figures. The remainder of the increase can be attributed to increased share-based compensation expense and healthcare costs. Furthermore, with the addition of PJAX and the increase in on-going compensation-related expenses, SG&A should continue to be higher than the prior year periods.

The Company incurred interest expense of $2.1 million in the second quarter of 2007 compared to $0.2 million in the second quarter of 2006. Due to the October 2, 2006 acquisition of PJAX the Company’s total debt was $115.4 million at June 30, 2007 compared to the $9.6 million of debt at the end of the 2006 second quarter. Compared to December 31, 2006 total debt increased $6.5 million representing $7.8 million of principle payments and $13.9 million in new debt to finance additional payments related to the PJAX acquisition and capital asset purchases. Total debt at June 30, 2007 consisted of $17.9 million drawn on the Company’s $80.0 million revolving credit facilities, $77.4 million of term debt and $20.1 million of capital leases.

Income tax expense for the second quarter of 2007 was $1.4 million compared to $2.2 million for the same quarter a year ago. The effective tax rate was 20.5% for the second quarter of 2007 compared to 27.4% for the second quarter in 2006. For the six months ended June 30, 2006 the effective tax rate was 15.1% compared to 26.3% for the same period a year ago. The decline in the income tax expense is primarily due a decline in earnings before tax and a decline in the effective tax rate. The decline in the effective rate can be attributed to an increase in a higher proportion of income being earned in lower tax foreign jurisdictions. Should the Company’s earnings before income tax increase in subsequent quarters, the quarterly effective tax rate should also increase.

Net income before cumulative effect of change in accounting principle decreased by 4.2% to $5.5 million for the 2007 second quarter compared to $5.8 million for the same quarter in 2006. This resulted in basic and diluted earnings per share before cumulative effect of change in accounting principle of $0.41 for the second quarter of 2007 compared to basic and diluted earnings per share of $0.45 for the second quarter of 2006. The weighted average number of shares for the current quarter was 13.5 million basic and 13.7 million diluted compared to 12.7 million basic and 13.0 million diluted shares in the second quarter of 2006. For the six months ended June 30, 2007 net income before cumulative effect of a change in accounting principle decreased 5.1% to $8.9 million compared to $9.4 million in the same period a year ago. This resulted in basic and diluted earnings per share before change in cumulative effect of change in accounting principle of $0.66 and $0.65, respectively for the 2007 six-month period, compared to basic and diluted earnings per share of $0.74 and $0.73 in the same period in 2006. The weighted average number of shares for the six month period of 2007 was 13.5 million basic and 13.7 million diluted shares compared to 12.7 million basic and 13.0 million diluted shares in the six-month period of 2006.

On January 1, 2006, the Company adopted SFAS 123(R), “Share-Based Payment”, using the modified prospective transition method. In accordance with the standard the Company recognized $0.1 million of income as cumulative effect of change in accounting principle in the first quarter of 2006.

On January 1, 2007, the Company adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes.” The adoption of this standard requires management to make estimates and assumptions that effect reported amounts of tax related assets and liabilities that will impact the effective tax rate of the Company. In addition the effective tax rate in all periods is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. The income tax expense differs from the tax computed at the federal statutory income tax rate due primarily to state and provincial income taxes and earnings in foreign jurisdictions. Future effective tax rates could be adversely affected if earnings are lower than anticipated in jurisdictions with lower statutory rates, unfavourable changes in tax laws and regulations, or by adverse tax rulings.

SEGMENTED RESULTS

Less-Than-Truckload (LTL)

The table below provides summary information for the LTL segment for the periods ended June 30:


	For the three months ended June 30									For the six months ended June 30
(in thousands)	2007			2006			2007 vs 2006			2007			2006			2007 vs 2006


Revenue	$	150,615		$	105,213			43.2	%	$	286,772		$	202,636			41.5	%
Income from operations		9,002			8,039			12.0	%		15,232			13,107			16.2	%
Operating ratio		94.0	%		92.4	%					94.7	%		93.5	%


	For the three months ended June 30							For the six months ended June 30
(in thousands)	2007		2006		2007 vs 2006			2007		2006		2007 vs 2006

Number of shipments ⁽²⁾		1,085,565		687,120		58.0	%		2,079,241		1,351,650		53.8	%
Weight (000s of lbs) ⁽³⁾		1,555,693		1,100,523		41.4	%		3,023,539		2,144,103		41.0	%
Revenue per shipment ⁽⁴⁾	$	138.71	$	153.12		(9.4	%)	$	137.92	$	149.92		(8.0	%)
Revenue per hundredweight ⁽⁵⁾	$	9.68	$	9.56		1.3	%	$	9.48	$	9.45		0.3	%

Revenue in the LTL segment increased significantly, 43.2 % to $150.6 million, in the second quarter of 2007 compared to $105.2 million in the same period a year ago. The results of the LTL segment were positively impacted by the acquistion of PJAX on October 2, 2006 and the launch of the new inter-regional service between the Central States and the West Coast which represented 2.2% of the LTL segment’s 2007 second quarter revenue. In addition, revenue growth in the cross border service offering improved 28.5% for the 2007 second quarter compared to the same period a year ago. However, these improvements were mitigated by the continued sluggishness of the North American economy. The LTL segment’s shipments, tonnage and revenue per hundredweight increased 58.0%, 41.4% and 1.3%, respectively in the 2007 second quarter compared to the 2006 second quarter. Excluding PJAX, revenue per hundredweight increased 6.1% in the second quarter of 2007 compared to the same period a year ago. Therefore the operating ratio for the 2007 second quarter was 94.0% compared to 92.4% in 2006 second quarter.

The results for the 2007 six-month period ended June 30, 3007 were predominantly impacted by the addition of PJAX, which was not included in the 2006 six-month comparative figures. Cross border revenue increase 18.3% for the 2007 six-month period compared to the same period a year ago. Consequently revenue and income from operations increased 41.5% and 16.2% respectively for the six-month period ended June 30, 2007 compared to the same period a year ago. For the 2007 six-month period ended June 30, 2007 the operating ratio was 94.7% compared to 93.5% for the 2006 six-month period.

Logistics

The table below provides summary information for the Logistics segment for the periods ended June 30:


	For the three months ended June 30												For the six months ended June 30
(in thousands)	2007			2006			2007 vs 2006					2007			2006		2007 vs 2006


Revenue	$	11,225		$	10,251			9.5	%	$	20,888			$	19,663			6.2	%
Income from operations		735			638			15.2	%		1,175				1,152			2.0	%
Operating Ratio		93.4	%		93.8	%					94.4	%			94.1	%

Revenue for the Logistics segment improved 9.5% and income from operations increased 15.2% for the second quarter of 2007 compared to the same period in 2006. The increase in income from operations was primarily attributable to The Supply Chain Unit completing the facility preparation it started in the first quarter for two new clients that commenced this quarter. The Supply Chain Unit is currently operating near 100% capacity within its 576,000 square feet under management. The Brokerage Unit was impacted by the continued slowdown in the economy but revenue and income from operations were only slightly down from the prior year second quarter. For the six-month period of 2007, revenue and income from operations increased 6.2% and 2.0% compared to the same period a year ago. Revenue and income from operations should increase as additional clients are scheduled to commence in the third quarter of 2007 within the Supply Chain Unit.

Truckload

The table below provides summary information for the TL segment for the periods ended June 30:


	For the three months ended June 30									For the six months ended June 30
(in thousands)	2007			2006			2007 vs 2006			2007			2006			2007 vs 2006


Revenue	$	8,304		$	8,177			1.6	%	$	16,620		$	16,469			0.9	%
Income from operations		405			530			(23.6	%)		700			940			(25.5	%)
Operating Ratio		95.1	%		93.5	%					95.8	%		94.3	%

Revenue in the Truckload segment improved 1.6% to $8.3 million for the second quarter of 2007 compared to $8.2 million in the second quarter of 2006. Revenue per mile⁽⁶⁾was flat but was offset by the 4.1% increase in shipments compared to the 2006 second quarter. Income from operations declined $0.1 million as a result of a 14.0% increase in empty miles and an increase in insurance-related expenses. Consequently the Truckload segment posted an operating ratio of 95.1% in the second quarter of 2007 compared to 93.5% for the second quarter of 2006. Revenue for the six-month period of 2007 was up 0.9% compared to the same period of 2006, while income from operations declined 25.5% due to 10.5% increase in empty miles for the six month period.

LIQUIDITY AND CAPITAL RESOURCES

Cash flow from operations before working capital changes for the six-month period increased to $22.0 million compared to $15.1 million in the 2006 six-month period. The growth is attributable to increases in deferred tax expense and depreciation and amortization expense. Non-cash working capital changes consumed $5.8 million in the first six months of 2007 compared to contributing $0.4 million for the same period a year ago. Accounts receivable increased at June 30, 2007 compared to December 31, 2006 due to higher revenue. Average days sales outstanding was 38.1 days compared to 37.7 days for the Company compared to December 31, 2006. Accounts payable and accrued liabilities increased compared to December 31, 2006 due to the timing of payments.

Interest-bearing debt was $115.4 million at June 30, 2007 consisting of $77.4 million of term debt, capital leases of $20.1 million and $17.9 million drawn under the revolving credit facility. At the end of 2006 interest-bearing debt was $108.9 million consisting of $81.9 million of term debt, capital leases of $19.7 million and $7.2 million drawn under the revolving credit facility. For the six months ended June 30, 2007 quarter the Company repaid $4.5 million of term debt and $3.3 million of capital leases and borrowed $10.1 million on the revolving credit facility as well as $3.7 million of new capital leases. At June 30, 2007 the Company had $43.7 million of unused credit facilities, net of outstanding letters of credit.

Capital expenditures amounted to $10.6 million for the second quarter of 2007 and were funded out of operating cash flows, the revolving credit facilities and new capital leases. The majority of capital expenditures were for rolling stock and the construction of the new LTL service centre in Toronto, Ontario. Tractor and trailer additions for the six months were primarily for replacement purposes. The table below sets forth the Company’s capital expenditures for the three and six month periods ended June 30, 2007.


	For the three months ended June 30				For the six months ended June 30
(in thousands, unaudited)	2007		2006		2007		2006

Real Estate and buildings	$	2,429	$	6,746	$	5,675	$	6,757
Tractors		5,343		548		5,343		832
Trailing fleet		1,717		1,629		2,686		2,447
Information technology		403		171		572		530
Leasehold improvements		14		37		32		56
Other equipment		704		520		852		907

Total	$	10,610	$	9,651	$	15,160	$	11,529

Management estimates that cash capital expenditures, excluding real estate additions for the remainder of 2007 will be between $7.0 million and $14.0 million the majority of which will be for tractors and trailing fleet. Real estate additions, the majority of which will be for the construction of the new Toronto service centre, will be approximately $8.0 million. The Company also anticipates entering into operating leases to fund the acquisition of equipment with a capital cost of between $1.5 million and $4.0 million. The Company expects to finance its capital requirements with cash flow from operations, and if required, its $43.7 million of unused credit facilities.

The Company has contractual obligations that include long-term debt consisting of term debt facilities, revolving credit facilities, capital leases for operating equipment and off-balance sheet operating leases primarily consisting of tractor, trailing fleet and real estate leases. Operating leases form an integral part of the Company’s financial structure and operating methodology as they provide an alternative cost effective and flexible form of financing.

The following table summarizes our significant contractual obligations and commercial commitments as of June 30, 2007:


(in thousands of dollars)			Payments due by period
Contractual Obligations	Total		2007		2008 & 2009		2010 & 2011		Thereafter


Long-term debt (LIBOR 4.74% to 7.20%)	$	77,420	$	4,510	$	72,106	$	804	$	Nil
Revolving credit facilities		17,879		Nil		17,879		Nil		Nil
Capital lease obligations		20,143		3,709		10,730		4,530		1,174
Amount due to vendors of acquisitions		1,980		1,980		Nil		Nil		Nil

Sub-total		117,422		10,199		100,715		5,334		1,174
Operating leases		32,973		7,802		16,316		6,650		2,205

Total Contractual Obligations	$	150,395	$	18,001	$	117,031	$	11,984	$	3,379

In addition to the above-noted contractual obligations, the Company, as at June 30, 2007, utilized the revolving credit facilities for standby letters of credit of $18.4 million. The letters of credit are used as collateral for self-insured retention of insurance claims.

A significant decrease in demand for the Company’s services could limit the Company’s ability to generate cash flow and affect its profitability. The Company’s credit agreement contains certain financial maintenance tests that require the Company to achieve stated levels of financial performance, which, if not achieved, could cause an acceleration of the payment schedules. Management does not anticipate a significant decline in business levels or financial performance and expects that existing working capital, together with available revolving facilities, will be sufficient to fund operating and capital requirements in 2007 as well as service the contractual obligations.

OUTLOOK

The second quarter of 2007 proved to be another challenging quarter as the continued sluggishness of the general economy impacted the operating results of all segments. The LTL segment expanded its revenue and income from operations with the addition of PJAX on October 2, 2006. PJAX continued to operate at expected levels and contributed to the second quarter growth.

For the remainder of 2007, LTL marketing initiatives will concentrate on expanding regional, inter-regional and transborder service offerings. The U.S. LTL business unit will focus on IT systems integration that will augment the inter-regional marketing initiative. Upon completion of the IT system integration, operating management will focus on terminal level redundancy, linehual optimization and dock efficiencies. The Canadian LTL business unit will complete the construction of its new Toronto service centre in the second half of 2007 and then focus on service centre efficiencies. The Logistics segment will continue to make progress developing new accounts that will expand revenue and income from operations.

Lastly the Company remains committed to its objective to expand or acquire into new regional markets to complete its LTL footprint in North America.

See “Forward-Looking Statements” for a more complete discussion of potential risks and uncertainties that could materially affect the Company’s future performance.

QUARTERLY RESULTS


U.S. GAAP
(thousands of dollars	2007		2007		2006		2006		2006		2006		2005		2005
except per share amounts)	Q2		Q1		Q4		Q3		Q2		Q1		Q4		Q3

Revenue	$	170,144	$	154,136	$	153,779	$	121,512	$	123,641	$	115,127	$	112,975	$	116,226
Income from operations		9,073		5,607		8,143		6,797		8,128		4,972		6,937		7,647
Net Income		5,533		3,387		4,974		4,885		5,776		3,764		5,012		5,376
Earnings per share:
Basic	$	0.41	$	0.25	$	0.37	$	0.38	$	0.45	$	0.30	$	0.40	$	0.43
Diluted		0.41		0.25		0.37		0.38		0.45		0.29		0.39		0.42
Weighted average number of shares:
Basic		13,463,374		13,438,065		13,413,153		12,744,936		12,732,644		12,652,075		12,618,416		12,584,358
Diluted		13,661,467		13,651,872		13,624,031		12,966,835		12,964,761		12,934,751		12,930,661		12,921,695


Canadian GAAP ⁽⁷⁾
(thousands of dollars	2007		2007		2006		2006		2006		2006		2005		2005
except per share amounts)	Q2		Q1		Q4		Q3		Q2		Q1		Q4		Q3

Revenue	$	170,144	$	154,136	$	153,779	$	121,512	$	123,641	$	115,127	$	112,975	$	116,226
Income from operations		8,442		5,524		8,143		6,797		8,128		4,972		6,937		7,647
Net Income		4,902		3,304		4,974		4,885		5,776		3,623		5,012		5,376
Earnings per share:
Basic	$	0.36	$	0.25	$	0.37	$	0.38	$	0.45	$	0.29	$	0.40	$	0.43
Diluted		0.36		0.24		0.37		0.38		0.45		0.28		0.39		0.42
Weighted average number of shares:
Basic		13,463,374		13,438,065		13,413,153		12,744,936		12,732,644		12,652,075		12,618,416		12,584,358
Diluted		13,661,467		13,651,872		13,624,031		12,966,835		12,964,761		12,934,751		12,930,661		12,921,695

Definitions of non-GAAP measures:

(1)

Operating ratio (“OR”) is a non-GAAP financial measure which does not have any standardized meaning prescribed by GAAP. OR is the sum of operating expenses, selling, general and administrative expenses, other expenses (income), and depreciation and amortization expense, divided by revenue. OR allows management to measure the Company and its various segments’ operating efficiency. OR is a widely recognized measure in the transportation industry which provides a comparable benchmark for evaluating the Company’s performance compared to its competitors. Investors should also note that the Company’s presentation of OR may not be comparable to similarly titled measures by other companies. OR is calculated as follows:


	Three months ended June 30,						Six months ended June 30,
(in thousands)	2007			2006			2007			2006


Operating expenses	$	140,780		$	101,307		$	269,236		$	198,428
Selling, general and administrative expenses		15,283			11,737			30,382			22,480
Other expenses (income)		(101	)		(40	)		(72	)		(156	)
Depreciation and amortization expense		5,109			2,509			10,054			4,916

	$	161,071		$	115,513		$	309,600		$	225,668
Revenue	$	170,144		$	123,641		$	324,280		$	238,768

Operating ratio (“OR”)		94.7	%		93.4	%		95.5	%		94.5	%

(2)		A shipment is a single movement of goods from a point of origin to its final destination as described on a bill of lading document.

(3)		Weight represents the total pounds shipped.

(4)		Revenue per shipment represents revenue divided by the number of shipments.

(5)		Revenue per hundredweight is the price obtained for transporting 100 pounds of LTL freight from point to point, calculated by dividing the revenue for an LTL shipment by the hundredweight (weight in pounds divided by 100) for a shipment.

(6)		Revenue per total mile represents revenue divided by the total miles driven.

(7)		Please see Note 13 to the Interim Consolidated Financial Statements for differences between United States and Canadian GAAP.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to the impact of interest rate changes. The Company’s exposure to changes in interest rates is limited to borrowings under the term bank facilities and revolving credit facilities that have variable interest rates tied to the LIBOR rate. As a majority of the Company’s debt is tied to variable interest rates, the Company estimates that the fair value of the long-term debt approximates the carrying value.


(in thousands of dollars)				Payments due by period
Long-term debt	Total			2007			2008 & 2009			2010 & 2011			Thereafter
Variable Rate
Term bank facility	$	74,000		$	4,000		$	70,000		$	Nil		$	Nil
Average interest rate (LIBOR)		7.23	%		7.20	%		7.20	%

Revolving bank facility		9,600			Nil			9,600			Nil			Nil
Average interest rate (LIBOR)		7.20	%					7.20	%					Nil
Revolving bank facility		8,279			Nil			8,279			Nil			Nil
Average interest rate (CDN BA)		6.40	%					6.40	%

Fixed Rate
Term bank facility		3,420			510			2,106			804			Nil
Average interest rate		4.74	%		4.74	%		4.74	%		4.74	%
Capital lease obligations		20,143			3,709			10,730			4,530			1,174
Average interest rate		6.05	%		6.05	%		6.05	%		6.05	%		6.05	%


Total	$	115,442		$	8,219		$	100,715		$	5,334		$	1,174

The Company uses a variable-to-fixed interest rate swap on a $3.4 million term facility outstanding at June 30, 2007. The pay rate on the swap is 2.99% and the average receive rate is the one-month LIBOR rate which is currently 5.30%.

The Company is exposed to foreign currency risk as fluctuations in the United States dollar against the Canadian dollar can impact the financial results of the Company. The Company’s Canadian operations realize foreign currency exchange gains and losses on the United States dollar denominated revenue generated against Canadian dollar denominated expenses. Furthermore, the Company reports its results in United States dollars thereby exposing the results of the Company’s Canadian operations to foreign currency fluctuations. In addition, the Company’s United States dollar debt of $77.9 million is designated as a hedge of the investment in the United States’ self-sustaining foreign operations.

Item 4. Controls and Procedures

a)		As of July 18, 2007, the Chief Executive Officer and the Chief Financial Officer evaluated the effectiveness of the Company’s disclosure controls and procedures in accordance with Rule 13a-15 under the Exchange Act for the quarter ended June 30, 2007. Based on their evaluation, the Company’s Chief Executive Officer and the Chief Financial Officer concluded that Vitran’s disclosure controls and procedures enable Vitran to record, process, summarize and report in a timely manner the information that we are required to disclose in our Exchange Act reports.

b)		There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II. Other Information

Item 1. Legal Proceedings

The Company is subject to various legal proceedings and claims that have arisen in the ordinary course of its business that have not been fully adjudicated. Many of these are covered in whole or in part by insurance. The management of Vitran does not believe that these actions, when finally concluded and determined, will have a significant adverse effect upon Vitran’s financial condition, results of operations or cash flows.

Item 1A. Risk Factors

See Part 1A of the Company’s 2006 Annual Report on Form 10-K.

Item 2. Changes in Securities and Use of Proceeds

On February 13, 2007 Vitran commenced a normal course issuer bid to repurchase up to 670,993 Common Shares by way of open market purchases through the facilities of the Toronto Stock Exchange. The normal course issuer bid expires on February 12, 2008. All shares repurchased are cancelled. The following table summarizes the purchases in the second quarter of 2007:


							Maximum number
					Total number of		of Common Shares
	Number of		Average price paid		Common Shares as		that may yet be
	Common Shares		per Common Share		part of a publicly		purchased under the
Period	purchased		(CAD)		announced plan		plan

Apr. 01 to Apr. 30, 2007		—		—		—		670,993
May 1 to May 31, 2007		—		—		—		670,993
June 1 to June 30, 2007		—		—		—		670,993

Total		—		—		—

Item 3. Defaults Upon Senior Securities — None

Item 4. Submission of Matters to a Vote of Security Holders — None

Item 5. Other Information — None

Item 6. Exhibits and Reports on Form 8-K

Exhibits


Exhibit
Number		Description of Exhibit

31		Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated July 18, 2007.

32		Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated July 18, 2007.


		VITRAN CORPORATION INC.

		/s/ SEAN P. WASHCHUK

		Sean P. Washchuk
Date: July 18, 2007		Vice President of Finance and
		Chief Financial Officer
		(Principle Financial Officer)

		/s/ FAYAZ D. SULEMAN

		Fayaz D. Suleman
Date: July 18, 2007		Corporate Controller
		(Principle Accounting Officer)


		/s/ RICHARD E. GAETZ

		Richard E. Gaetz
		President and
		Chief Executive Officer


		/s/ SEAN P. WASHCHUK

		Sean P. Washchuk
		Vice President, Finance and
		Chief Financial Officer


Date: July 18, 2007	By:	/s/ RICHARD E. GAETZ

		Richard E. Gaetz
		President and
		Chief Executive Officer

	By:	/s/ SEAN P. WASHCHUK

		Sean P. Washchuk
		Vice President Finance and
		Chief Financial Officer


Item		Page
PART I	Financial Information

1.	Financial Statements		3

2.	Management’s Discussion and Analysis		13

3.	Quantitative and Qualitative Disclosures About Market Risk		20

4.	Controls and Procedures		20

PART II	Other Information

1.	Legal Proceedings		21

2.	Changes in Securities and Use of Proceeds		21

3.	Defaults Upon Senior Securities		21

4.	Submission of Matters to a Vote of Security Holders		21

5.	Other Information		21

6.	Exhibits and Reports on Form 8-K		21