10-Q 1 d564379d10q.htm 10-Q 10-Q
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

 

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

For the quarterly period ended June 30, 2013

or

 

¨ 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: 001-32449

 

 

VITRAN CORPORATION INC.

(Exact name of registrant as specified in its charter)

 

 

 

Ontario, Canada   98-0358363

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

185 The West Mall, Suite 701,

Toronto, Ontario, Canada, M9C 5L5

(Address of principal executive offices and 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  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer   ¨    Accelerated filer   x
Non-accelerated filer   ¨  (Do not check if a smaller reporting company)    Smaller reporting company   ¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 16,432,241 common shares outstanding at July 30, 2013

 

 

 


Table of Contents

TABLE OF CONTENTS

 

Item        Page  

PART I

  Financial Information   

1.

  Financial Statements   
 

Unaudited Consolidated Statements of Income (Loss) for the three and six months ended June 30, 2013 and 2012

     3   
 

Unaudited Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2013 and 2012

     4   
 

Consolidated Balance Sheets as at June 30, 2013 (unaudited) and December 31, 2012

     5   
 

Unaudited Consolidated Statements of Changes in Shareholders’ Equity for the three and six months ended June 30, 2013 and 2012

     6   
 

Unaudited Consolidated Statements of Cash Flows for the three and six months ended June 30, 2013 and 2012

     7   
 

Notes to Unaudited Consolidated Financial Statements

     8   

2.

  Management’s Discussion and Analysis of Financial Condition and Results of Operations      11   

3.

  Quantitative and Qualitative Disclosures About Market Risk      18   

4.

  Controls and Procedures      18   

PART II

  Other Information   

1.

  Legal Proceedings      19   

1. A

  Risk Factors      19   

2.

  Unregistered Sales of Equity Securities and Use of Proceeds      19   

3.

  Defaults Upon Senior Securities      19   

4.

  Mine Safety Disclosures      19   

5.

  Other Information      19   

6.

  Exhibits      20   

 

2


Table of Contents

Part I. Financial Information

Item 1: Financial Statements

VITRAN CORPORATION INC.

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(Unaudited)

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

 

     Three months
Ended
June 30, 2013
    Three months
Ended
June 30, 2012
    Six months
Ended
June 30, 2013
    Six months
Ended
June 30, 2012
 

Revenue

   $ 165,443      $ 183,789      $ 326,552      $ 362,376   

Operating expenses:

        

Salaries, wages and other employee benefits

     75,628        78,054        148,750        154,425   

Purchased transportation

     25,968        26,176        50,944        51,947   

Depreciation and amortization

     3,696        3,766        7,597        7,525   

Maintenance

     8,710        9,148        16,189        17,731   

Rents and leases

     8,916        8,439        17,515        16,386   

Owner operators

     13,005        11,950        24,974        23,178   

Fuel and fuel-related expenses

     29,868        34,738        61,443        70,762   

Other operating expenses

     15,806        16,205        31,439        31,292   

Other income

     (673     (132     (963     (50
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

   $ 180,924      $ 188,344      $ 357,888      $ 373,196   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from continuing operations before the undernoted

     (15,481     (4,555     (31,336     (10,820

Interest expense, net

     1,358        1,325        3,278        2,635   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from continuing operations before income taxes

     (16,839     (5,880     (34,614     (13,455

Income tax expense (recovery)

     134        (157     (12     (545
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss from continuing operations

     (16,973     (5,723     (34,602     (12,910

Discontinued operations, net of income taxes (note 3)

     —          1,560        85,301        2,931   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ (16,973   $ (4,163   $ 50,699      $ (9,979
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) per share:

        

Basic and Diluted:

Loss from continuing operations

Discontinued operations income

Net income (loss)

   $

 

 

(1.03

—  

(1.03


  

  $

 

 

(0.35

0.10

(0.25


  

  $

 

 

(2.11

5.20

3.09


  

  

  $

 

 

(0.79

0.18

(0.61


  

Weighted average number of shares:

        

Basic

     16,432,241        16,399,241        16,417,108        16,383,175   

Diluted

     16,432,241        16,399,241        16,417,108        16,383,175   

See accompanying notes to consolidated financial statements

 

3


Table of Contents

VITRAN CORPORATION INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In thousands of United States dollars)

 

     Three months
Ended
June 30, 2013
    Three months
Ended
June 30, 2012
    Six months
Ended
June 30, 2013
    Six months
Ended
June 30, 2012
 

Net income (loss)

   $ (16,973   $ (4,163   $ 50,699      $ (9,979

Other comprehensive income (loss):

        

Change in foreign currency translation adjustment (net of income tax expense (recovery) of nil and $48 for the three and six months ended June 30, 2013; 2012—$1 and ($5))

     (1,114     (112     (1,937     (47

Foreign currency translation reclassified from accumulated other comprehensive income (note 3)

     —          —          1,865        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive loss

   $ (1,114   $ (112   $ (72   $ (47
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss)

   $ (18,087   $ (4,275   $ 50,627      $ (10,026
  

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying notes to consolidated financial statements

 

4


Table of Contents

VITRAN CORPORATION INC.

CONSOLIDATED BALANCE SHEETS

(In thousands of United States dollars)

 

      June 30, 2013
(Unaudited)
    Dec 31, 2012
(Audited)
 

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 41,235      $ 233   

Accounts receivable

     73,343        65,291   

Inventory, deposits and prepaid expenses

     9,485        10,131   

Income taxes recoverable

     476        —     

Current assets of discontinued operations

     —          11,436   

Deferred income taxes

     87        92   
  

 

 

   

 

 

 

Total current assets

     124,626        87,183   

Property and equipment

     123,716        131,640   

Intangible assets

     1,841        2,707   

Goodwill

     5,278        5,579   

Long-term assets of discontinued operations

     —          11,388   
  

 

 

   

 

 

 

Total assets

   $ 255,461      $ 238,497   
  

 

 

   

 

 

 

Liabilities and Shareholders’ Equity

    

Current liabilities:

    

Accounts payable and accrued liabilities

   $ 70,840      $ 67,744   

Income taxes payable

     —          517   

Current liabilities of discontinued operations

     —          14,068   

Current portion of long-term debt

     3,828        3,339   
  

 

 

   

 

 

 

Total current liabilities

     74,668        85,668   

Long-term debt

     79,155        101,997   

Deferred income taxes

     997        1,175   

Shareholders’ equity:

    

Common shares, no par value, unlimited authorized, 16,432,241 and 16,399,241 issued and outstanding at June 30, 2013 and December 31, 2012, respectively

     100,204        99,954   

Additional paid-in capital

     5,815        5,708   

Accumulated deficit

     (10,190     (60,889

Accumulated other comprehensive income

     4,812        4,884   
  

 

 

   

 

 

 

Total shareholders’ equity

     100,641        49,657   

Contingent liabilities (note 6)

    
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 255,461      $ 238,497   
  

 

 

   

 

 

 

See accompanying notes to consolidated financial statements

 

5


Table of Contents

VITRAN CORPORATION INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

(In thousands of United States dollars, except share amounts)

 

    

 

Common Shares

     Additional
Paid-in
Capital
    Accumulated
Deficit
    Accumulated
Other
Comprehensive
Income
    Total
Shareholders’
Equity
 
      Shares      Amount           

December 31, 2012

     16,399,241       $ 99,954       $ 5,708      $ (60,889   $ 4,884      $ 49,657   

Shares issued upon exercise of employee stock options

     33,000         250         (80     —          —          170   

Net income

     —           —           —          50,699        —          50,699   

Other comprehensive loss

     —           —           —          —          (72     (72

Share-based compensation

     —           —           187        —          —          187   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

June 30, 2013

     16,432,241       $ 100,204       $ 5,815      $ (10,190   $ 4,812      $ 100,641   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
    

 

Common Shares

     Additional
Paid-in
Capital
    Accumulated
Deficit
    Accumulated
Other
Comprehensive
Income
    Total
Shareholders’
Equity
 
      Shares      Amount           

December 31, 2011

     16,331,241       $ 99,746       $ 5,334      $ (24,914   $ 4,807      $ 84,973   

Shares issued upon exercise of employee stock options

     68,000         208         (57     —          —          151   

Net loss

     —           —           —          (9,979     —          (9,979

Other comprehensive loss

     —           —           —          —          (47     (47

Share-based compensation

     —           —           227        —          —          227   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

June 30, 2012

     16,399,241       $ 99,954       $ 5,504      $ (34,893   $ 4,760      $ 75,325   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying notes to consolidated financial statements

 

6


Table of Contents

VITRAN CORPORATION INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands of United States dollars)

 

     Three months
Ended
June 30, 2013
    Three months
Ended
June 30, 2012
    Six months
Ended
June 30, 2013
    Six months
Ended
June 30, 2012
 

Cash provided by (used in):

        

Operations:

        

Net income (loss)

   $ (16,973   $ (4,163   $ 50,699      $ (9,979

Items not involving cash from operations:

        

Depreciation and amortization

     3,696        3,766        7,597        7,525   

Deferred income taxes

     44        (1     (178     (44

Gain on sale of property and equipment

     (673     (132     (963     (50

Share-based compensation expense

     92        100        187        227   

Income from discontinued operations (note 3)

     —          (1,560     (85,301     (2,931

Change in non-cash working capital components

     2,280        5,452        (4,739     (873
  

 

 

   

 

 

   

 

 

   

 

 

 

Continuing operations

     11,534        3,462        (32,698     (6,125

Discontinued operations

     —          237        475        3,616   
  

 

 

   

 

 

   

 

 

   

 

 

 
     11,534        3,699        (32,223     (2,509

Investments:

        

Proceeds from sale of business, net of cash divested

     363        —          94,102        —     

Purchases of property and equipment

     (1,695     (5,500     (2,486     (7,082

Proceeds on sale of property and equipment

     1,451        1,026        1,795        1,567   
  

 

 

   

 

 

   

 

 

   

 

 

 

Continuing operations

     119        (4,474     93,411        (5,515

Discontinued operations

     —          (261     22        (461
  

 

 

   

 

 

   

 

 

   

 

 

 
     119        (4,735     93,433        (5,976

Financing:

        

Change in revolving credit facility and bank overdraft

     —          1,440        (31,750     10,980   

Proceeds from long-term debt

     —          —          14,058        —     

Repayment of long-term debt

     (628     (489     (1,072     (733

Repayment of capital leases

     (409     (846     (811     (1,787

Financing costs

     —          —          (514     —     

Issue of common shares upon exercise of employee stock options

     —          —          170        151   
  

 

 

   

 

 

   

 

 

   

 

 

 
     (1,037     105        (19,919     8,611   

Effect of foreign exchange translation on cash

     (889     65        (289     (19
  

 

 

   

 

 

   

 

 

   

 

 

 

Increase (decrease) in cash and cash equivalents

     (13,341     (866     41,002        107   

Cash and cash equivalents, beginning of period

     54,576        2,177        233        1,204   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 41,235      $ 1,311      $ 41,235      $ 1,311   
  

 

 

   

 

 

   

 

 

   

 

 

 

Change in non-cash working capital components:

        

Accounts receivable

   $ 2,508      $ 368      $ (8,002   $ (8,137

Inventory, deposits and prepaid expenses

     992        1,724        1,160        454   

Income taxes recoverable/payable

     4        1,659        (993     570   

Accounts payable and accrued liabilities

     (1,224     1,701        3,096        6,240   
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 2,280      $ 5,452      $ (4,739   $ (873
  

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental disclosure of non-cash transactions:

        

Capital lease additions

     —          4,099        —          5,745   

See accompanying notes to consolidated financial statements

 

7


Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

1. Accounting Policies

The accompanying interim consolidated financial statements include the accounts of Vitran Corporation Inc. and its wholly-owned subsidiaries (together, the Company). All material intercompany transactions and balances have been eliminated on consolidation.

The interim consolidated financial statements have been prepared in accordance with the rules prescribed for filing interim financial statements and accordingly, do not contain all the disclosures that may be necessary for complete financial statements prepared in accordance with United States generally accepted accounting principles (“GAAP”). 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 2012 Annual Report on Form 10-K. The interim consolidated financial statements follow the same accounting principles and methods of application as the most recent annual consolidated financial statements, except as noted in Note 2.

These interim consolidated financial statements reflect all adjustments which are, in the opinion of Management, necessary for a fair presentation of the results of the interim period presented. Operating results for the three and six months ended June 30, 2013 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2013.

2. New Accounting Pronouncements

Financial Accounting Standards Board (“FASB”) Accounting Standard Update (“ASU”) No. 2013-02 “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income” requires expanded disclosures for amounts reclassified out of accumulated other comprehensive income by component. The guidance requires the presentation of amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under GAAP to be reclassified in their entirety to net income, a cross-reference to other disclosures that provide additional detail about those amounts is required. The guidance is to be applied prospectively for reporting periods beginning after December 15, 2012. ASU No. 2013-02 was adopted by the Company on January 1, 2013. The new guidance affects disclosures only and did not have an impact on the Company’s results of operations or financial position.

3. Discontinued Operations

On March 4, 2013, the Company completed the sale of its Supply Chain Operation business unit (“SCO”), which was previously a reportable segment. The proceeds from the transaction were $97.0 million, plus an adjustment of $1.8 million on account of working capital. As of June 30, 2013, the Company has received net cash proceeds of $94.1 million, net of cash divested of $0.4 million, direct selling costs of $2.9 million and income taxes of $1.4 million. The Company used the proceeds to reduce its outstanding debt under its revolving credit facility. The operating results and gain on sale of SCO have been recorded as a discontinued operation.

 

8


Table of Contents

The following table summarizes the operations for all periods presented to classify SCO operations as discontinued operations for the three and six months ended June 30, 2013 and 2012:

 

     Three months
Ended
June 30, 2013
     Three months
Ended
June 30, 2012
    Six months
Ended
June 30, 2013
    Six months
Ended
June 30, 2012
 

Revenue

   $ —         $ 29,308      $ 18,689      $ 58,469   

Income from discontinued operations

     —           2,366        1,082        4,462   

Income tax expense

     —           (806     (402     (1,531
  

 

 

    

 

 

   

 

 

   

 

 

 

Income from discontinued operations, net of income tax

     —           1,560        680        2,931   

Gain on sale

     —           —          87,892        —     

Income tax expense

     —           —          (19,019     —     

Utilization of net operating loss carry-forwards

     —           —          17,613        —     
  

 

 

    

 

 

   

 

 

   

 

 

 
     —           —          86,486        —     

Reclassification of foreign currency translation from accumulated other comprehensive income

     —           —          (1,865     —     
  

 

 

    

 

 

   

 

 

   

 

 

 

Net gain on sale of discontinued operations

     —           —          84,621        —     
  

 

 

    

 

 

   

 

 

   

 

 

 

Net income from discontinued operations

   $ —         $ 1,560      $ 85,301      $ 2,931   
  

 

 

    

 

 

   

 

 

   

 

 

 

The following table summarizes the assets and liabilities from discontinued operations:

 

      June 30, 2013      Dec 31, 2012  

Accounts receivable

   $ —         $ 10,284   

Income taxes recoverable

     —           120   

Deposits and prepaid expenses

     —           1,032   

Property and equipment

     —           1,635   

Intangible assets

     —           750   

Goodwill

     —           8,872   

Deferred income taxes

     —           159   

Deferred income taxes valuation allowance

     —           (28
  

 

 

    

 

 

 

Total assets from discontinued operations

   $ —         $ 22,824   
  

 

 

    

 

 

 

Accounts payable and accrued liabilities

   $ —         $ 14,068   
  

 

 

    

 

 

 

Total liabilities from discontinued operations

   $ —         $ 14,068   
  

 

 

    

 

 

 

4. Computation of Income (Loss) per Share

 

     Three months
Ended
June 30, 2013
    Three months
Ended
June 30, 2012
    Six months
Ended
June 30, 2013
    Six months
Ended
June 30, 2012
 

Numerator:

        

Net loss from continuing operations

   $ (16,973   $ (5,723   $ (34,602   $ (12,910

Net income from discontinued operations

     —          1,560        85,301        2,931   

Net income (loss)

     (16,973     (4,163     50,699        (9,979
  

 

 

   

 

 

   

 

 

   

 

 

 

Denominator:

        

Basic weighted-average shares outstanding

     16,432,241        16,399,241        16,417,108        16,383,175   

Dilutive weighted-average shares outstanding

     16,432,241        16,399,241        16,417,108        16,383,175   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted loss per share from continuing operations

   $ (1.03   $ (0.35   $ (2.11   $ (0.79

Basic and diluted income per share from discontinued operations

     —          0.10        5.20        0.18   

Basic and diluted income (loss) per share

     (1.03     (0.25     3.09        (0.61

 

9


Table of Contents

5. Assets Held for Sale

The Company has certain assets that are classified as assets held for sale. These assets are carried on the balance sheet at the lower of the carrying amount or estimated fair value, less cost to sell. Once an asset is classified held for sale, there is no further depreciation taken on the asset. At June 30, 2013, the net book value of assets held for sale was approximately $1.4 million (December 31, 2012—$2.1 million). This amount is included in property and equipment on the balance sheet.

6. 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 Company’s consolidated financial position, results of operations or cash flows. Legal costs are expensed as incurred.

7. Long-Term Debt

During the six months ended June 30, 2013, the Company entered into additional 15 year real estate term credit facilities with a real estate mortgage lender for $14.1 million. The real estate term credit facilities are secured by 10 transportation facilities throughout the United States. The real estate term agreements bear interest at 4.625% to 4.875% with an interest rate adjustment period of every three to five years.

On March 4, 2013, in conjunction with the sale of SCO, the Company amended its asset based revolving credit facility. The amended credit facility provides up to $50.0 million, compared to $85.0 million previously. The amended credit facility matures on November 30, 2014, which may be accelerated to May 31, 2014 if certain financial conditions are not met. The Company may access the revolving credit facility for letters of credit, however such access is subject to certain financial measures and the Company must initially use cash-on-hand to fund operations to be able to draw on additional funds. As a result of the amendment, the Company wrote off $0.4 million of previously capitalized financing fees. This non-cash expense was recorded in interest expense on the consolidated statements of income (loss).

8. Income Taxes

The Company established a valuation allowance for all U.S. deferred tax assets as required by FASB Accounting Standards Codification (“ASC”) 740-10. During the six months ended June 30, 2013, the Company incurred additional losses increasing the valuation allowance and utilized its net operating loss carry-forwards to offset tax on the gain on the sale of SCO resulting in a net decrease in the valuation allowance of $11.3 million (2012—increase of $4.0 million) to $52.6 million.

9. Fair Value Measurements

The fair values of cash and cash equivalents, accounts receivable and accounts payable and accrued liabilities approximate their carrying values because of the short-term nature of these financial instruments. The fair value of the Company’s long-term debt, determined based on the future cash flows associated with each debt instrument discounted using an estimate of the Company’s current borrowing rate for similar debt instruments of comparable maturity, is approximately equal to their carrying value at June 30, 2013 and December 31, 2012.

FASB ASC 820-10-05 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The fair value of the Company’s cash and cash equivalents and long-term debt are classified as Level 1 and Level 2 measurements, respectively. The fair values of accounts receivable and accounts payable and accrued liabilities are classified as Level 2 measurements.

 

10


Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion is intended to help the reader understand the results of operations and financial condition of our Company. It is provided as a supplement to, and should be read in conjunction with, our unaudited consolidated interim financial statements for the three and six months ended June 30, 2013 and the notes thereto as included in Item 1 of this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K for the year ended December 31, 2012.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, 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.

This Quarterly Report on Form 10-Q contains forward-looking statements regarding, but not limited to, the following:

 

   

the Company’s expectation that efficiencies, increase in activity levels and optimization of technology within the U.S. Less-Than-Truckload (“LTL”) business unit will reduce salaries, wages and employee benefits expense as a percentage of revenue;

   

the Company’s expectation that revenue per hundredweight will increase in upcoming quarters as the freight mix and internal leadership in the pricing department impacts the LTL business;

   

the Company’s expectation that operating initiatives implemented will continue to improve productivity and service levels within the U.S. LTL business unit;

   

the Company’s expectation that operational improvements within the U.S. LTL business unit will have a positive impact on future financial results;

   

the Company’s expectation that activity levels will improve;

   

the Company’s ability to maintain days sales outstanding (“DSO”) below 40 days;

   

the Company’s intention to purchase a specified level of property and equipment and to finance such acquisitions with cash flow from operations, capital and operating leases and, if necessary, from the Company’s cash;

   

the Company’s ability to generate future operating cash flows from profitability and managing working capital;

   

the Company’s operational plan will improve service and efficiencies in the U.S. LTL business unit; and

   

the Company’s ability to benefit from an improvement in the economic and pricing environment.

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, foreign currency fluctuations, claims and insurance costs, environmental hazards, availability of qualified drivers and competitive factors. More detailed information about these and other factors is included in Item 1A – Risk Factors in the Company’s 2012 Annual Report on Form 10-K. 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.

 

11


Table of Contents

CONSOLIDATED RESULTS

The following table summarizes the Consolidated Statements of Income (Loss) for the three and six months ended June 30:

 

     For the three months ended June 30,     For the six months ended June 30,  

(in thousands)

   2013     2012     2013 vs 2012     2013     2012     2013 vs 2012  

Revenue

   $ 165,443      $ 183,789        (10.0%   $ 326,552      $ 362,376        (9.9%

Salaries, wages and other employee benefits

     75,628        78,054        (3.1%     148,750        154,425        (3.7%

Purchased transportation

     25,968        26,176        (0.8%     50,944        51,947        (1.9%

Depreciation and amortization

     3,696        3,766        (1.9%     7,597        7,525        1.0%   

Maintenance

     8,710        9,148        (4.8%     16,189        17,731        (8.7%

Rents and leases

     8,916        8,439        5.7%        17,515        16,386        6.9%   

Owner operators

     13,005        11,950        8.8%        24,974        23,178        7.7%   

Fuel and fuel-related expenses

     29,868        34,738        (14.0%     61,443        70,762        (13.2%

Other operating expenses

     15,806        16,205        (2.5%     31,439        31,292        0.5%   

Other income

     (673     (132     409.8%        (963     (50     1,826.0%   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     180,924        188,344        (3.9%     357,888        373,196        (4.1%
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss from continuing operations

     (15,481     (4,555     239.9%        (31,336     (10,820     189.6%   

Interest expense, net

     1,358        1,325        2.5%        3,278        2,635        24.4%   

Income tax expense (recovery)

     134        (157     (185.4%     (12     (545     (97.8%
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss from continuing operations

     (16,973     (5,723     196.6%        (34,602     (12,910     168.0%   

Discontinued operations, net of income taxes

     —          1,560        (100.0%     85,301        2,931        2,810.3%   

Net income (loss)

   $ (16,973   $ (4,163     307.7%      $ 50,699      $ (9,979     (608.1%
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) per share:

            

Basic and diluted – continuing operations

   $ (1.03   $ (0.35     $ (2.11   $ (0.79  

Basic and diluted – net income (loss)

   $ (1.03   $ (0.25     $ 3.09      $ (0.61  

Operating Ratio (1)

     109.4%        102.5%          109.6%        103.0%     

Financial Overview

Revenue decreased 10.0% to $165.4 million for the second quarter of 2013 compared to $183.8 million in the second quarter of 2012. Revenue was impacted by the decrease in shipment and tonnage of 11.2% and 11.8%, respectively, compared to the second quarter of 2012. For the six months ended June 30, 2013, revenue decreased 9.9% to $326.6 million compared to $362.4 million for the six-month period ended June 30, 2012. Detailed explanations are discussed below in “Operations Overview”.

Salaries, wages and other employee benefits decreased 3.1% and 3.7% for the second quarter of 2013 and six-months ended June 30, 2013, respectively, compared to the same periods a year ago. This is due to the reduction in activity levels compared to the same periods in 2012. As density improves in future quarters, the Company should realize increased productivity and labor efficiencies and although salaries, wages and other employee benefits expenses should outpace the prior year expenses, as management improves efficiencies within the U.S. LTL business unit, such costs are expected to decline on a percentage of revenue basis. In the second quarter of 2013, the Company recorded $1.8 million in severance to the previous President and Chief Executive Officer of Vitran, which is included in salaries, wages and other employee benefits.

Purchased transportation decreased 0.8% for the three-month period ended June 30, 2013 compared to the same period in 2012. For the six-month period ended June 30, 2013, purchased transportation decreased 1.9% compared to the same six-month period a year-ago. This is attributable to the U.S. LTL business unit continuing to optimize the use of purchased transportation within the line haul structure and reduced shipment volume in 2013 compared to 2012.

 

12


Table of Contents

Depreciation and amortization expense decreased 1.9% for the second quarter of 2013 compared to the same period in 2012, and is primarily attributable to the sale of rolling stock and reduced capital expenditures compared to the second quarter of 2012. Depreciation and amortization expense increased 1.0% for the six-month period ended June 30, 2013 compared to the same period in 2012, and is attributable to the purchase of rolling stock and buildings in the second half of 2012.

Maintenance expense decreased 4.8% and 8.7% for the three-month and six-month periods ended June 30, 2013 compared to the same periods in 2012, respectively. As a percentage of revenue, maintenance expense was consistent for the six-month period ended June 30, 2013 compared to six-month period ended June 30, 2012.

Rents and leases expense increased 5.7% and 6.9% for the three-month and six-month periods ended June 30, 2013 compared to the same periods in 2012. The increase is attributable to the 200 new tractors received by the U.S LTL business unit in 2012 and approximately 950 new trailers received in 2012, a majority of which were acquired by the U.S. LTL business unit.

Owner operator expense increased in the second quarter of 2013 and six-month period ended June 30, 2013 compared to the same periods in 2012. This is attributable to increased activity levels in the Canadian LTL business unit in 2013 compared to 2012.

Fuel and fuel-related expenses decreased 14.0% for the three month period ended June 30, 2013 and decreased 13.2% for the six-month period ended June 30, 2013, compared to the same periods a year ago. Fuel consumption in 2013 decreased as shipments declined 12.1% during the six-month period ended June 30, 2013 compared to the same six months in 2012.

On February 12, 2013, Vitran signed an agreement to sell its Supply Chain Operation (“SCO”) services business to Legacy SCO Inc. (“Legacy”), an affiliate of Legacy Supply Chain, for $97.0 million in cash, subject to working capital adjustments. On March 4, 2013, the Company completed the sale of SCO for $97.0 million in cash, and a portion of the proceeds was used to fully reduce Vitran’s debt under its revolving credit facility. The Company received an additional $1.8 million in proceeds in the second quarter of 2013 upon final determination of the aforementioned working capital adjustments. The Company recorded a gain of $85.3 million on the sale of its SCO business. The operating results and divestiture of the SCO segment have been recorded as a discontinued operation.

The Company incurred interest expense of $1.4 million in the second quarter of 2013 compared to interest expense of $1.3 million for the same quarter a year ago. The Company’s total balance sheet debt net of cash at June 30, 2013 is $41.7 million.

In accordance with Financial Accounting Standard Board (“FASB”) Accounting Standard Codification (“ASC”) 740-10, the Company had recorded a valuation allowance for all U.S. deferred tax assets. The sale of SCO resulted in a taxable gain in the United States, which the Company was able to offset with the utilization of its available net operating loss carry forwards from previous years. The Company recorded a consolidated tax recovery of $0.1 million for the first six months of 2013 compared to a consolidated tax recovery of $0.5 million for the first six months of 2012.

Net loss from continuing operations for the 2013 second quarter was $17.0 million compared to a net loss of $5.7 million for the same quarter in 2012. This resulted in a basic and diluted loss per share from continuing operations of $1.03 for the second quarter of 2013 compared to a basic and diluted loss per share from continuing operations of $0.35 for the second quarter of 2012. The weighted average number of shares for the current quarter was 16.4 million basic and diluted shares, consistent with the basic and diluted shares in the second quarter of 2012. For the six months ended June 30, 2013, the Company posted a net loss from continuing operations of $34.6 million compared to a net loss of $12.9 million in the same six-month period a year ago. This resulted in a loss per share from continuing operations of $2.11 compared to a net loss of $0.79 per share for the 2012 six-month period. The weighted average number of shares for the six-month period of 2013 was 16.4 million basic and diluted shares, consistent with the basic and diluted shares in the six-month period of 2012. Income from discontinued operations, including the gain from the sale of the SCO segment, was $85.3 million for the six months ended June 30, 2013 compared to $2.9 million in the six-month period of 2012. As a result, the Company posted net income of $50.7 million or $3.09 basic and diluted income per share compared to a net loss of $10.0 million or $0.61 basic and diluted loss per share in the comparable six-month period of 2012.

 

13


Table of Contents

Operations Overview

 

      For the three months ended June 30,     For the six months ended June 30,  

(in thousands)

   2013      2012      2013 vs 2012     2013      2012      2013 vs 2012  

Number of shipments (2)

     1,025,690         1,155,476         (11.2 %)      2,005,593         2,281,627         (12.1 %) 

Weight (000s of lbs) (3)

     1,505,259         1,707,367         (11.8 %)      2,942,072         3,360,058         (12.4 %) 

Revenue per shipment (4)

   $ 161.30       $ 159.06         1.4   $ 162.82       $ 158.82         2.5

Revenue per hundredweight (5)

   $ 10.99       $ 10.76         2.1   $ 11.10       $ 10.78         3.0

Shipments and tonnage decreased 11.2% and 11.8%, respectively, compared to the second quarter of 2012. The decrease in shipments year-over-year is attributable to the U.S. LTL business unit; while shipments per day in the U.S. LTL business unit were flat compared to the first quarter of 2013. As announced in June 2013, effective August 2013 the U.S. LTL business unit entered into an interline relationship to serve the west coast of the United States. This will result in the reduction of seven terminals and allow the U.S. LTL business unit to focus on its core geographic footprint. As a result of this strategic decision, shipments declined approximately 300 shipments per day in the month of June related to the West region.

In the U.S. LTL business unit, average length of haul remained flat and revenue per hundredweight increased 4.0% for the second quarter of 2013 compared to the same quarter in 2012. Management expects revenue per hundredweight to increase in upcoming quarters as the Company promotes its improved on-time service to existing and new customers.

During the second quarter of 2013, the U.S. LTL business unit continued to focus on maintaining and improving customer service levels, realize efficiencies in the operations, technology development for the sales group and beginning the implementation of its on dock hand-held technology. The management team’s focus is to drive density and revenue into the U.S. LTL infrastructure through volume and pricing growth.

The Canadian LTL business unit posted a solid 2013 second quarter benefiting from an increase in activity year-over-year.

Lastly, management believes that additional density gains, continued momentum in the North American pricing environment, combined with a continued focus on operational and customer service improvements, the LTL operation should be well positioned to improve income from operations over the long term.

Other

Mr. Rick Gaetz resigned as President and Chief Executive Officer of Vitran effective April 4, 2013 and the Company recorded severance expense of $1.8 million. Mr. William Deluce was appointed Interim President and Chief Executive Officer effective the same day to replace Mr. Gaetz.

The Board of Directors continues its evaluation of Vitran’s business and is reviewing all appropriate strategic options for the Company with a focus on enhancing shareholder value.

LIQUIDITY AND CAPITAL RESOURCES

Cash flow from continuing operations for the second quarter of 2013 consumed $11.5 million compared to generating $3.5 million in the 2012 second quarter. The Company generated a higher net loss from operations in the second quarter of 2013 and had a deterioration in non-cash working capital. Days sales outstanding (“DSO”) in the second quarter of 2013 were 39.7 days compared to DSO of 39.0 days for the second quarter of 2012.

The Company’s future operating cash flows are largely dependent upon the Company’s profitability and its ability to manage its working capital requirements, primarily accounts receivable, accounts payable, and wage and benefit accruals.

 

14


Table of Contents

On March 4, 2013, the Company completed the sale of its SCO business to Legacy for $97.0 million in cash. The Company used a portion of the proceeds to fully reduce its outstanding debt under its senior revolving credit facility. During the second quarter the Company received additional proceeds of $1.8 million upon final determination of the working capital adjustment and paid income taxes of $1.4 million related to the sale.

In the fourth quarter of 2012, Vitran received a commitment for up to a $33.0 million U.S. real estate term facility secured by specific real estate in the United States subject to customary due diligence including environmental assessments. In the fourth quarter of 2012, Vitran entered into the first 15-year U.S. real estate term facility for $16.8 million, secured by 18 U.S transportation facilities. In the first quarter of 2013, Vitran entered into additional U.S. real estate term facilities under the aforementioned commitment for total proceeds of $14.1 million, secured by an additional 10 U.S. transportation facilities. The additional U.S. real estate term facilities have a 15-year term, at an average fixed interest rate of 4.875% adjusted every three to five years and a 15-year amortization period. At June 30, 2013, the Company had $30.3 million outstanding under its U.S. real estate term facilities.

As at June 30, 2013, interest-bearing debt was $83.0 million consisting of $77.6 million of real estate term debt and $5.4 million of capital leases. There were no amounts outstanding under the Company’s senior revolving credit facility at June 30, 2013, except for outstanding letters of credit (“LOC”). At December 31, 2012, interest-bearing debt was $105.3 million consisting of $31.7 million drawn under the syndicated asset based revolving credit facility, $67.3 million of real estate term debt and $6.3 million of capital leases.

The Company may access the revolving credit facility for additional letters of credit, however, must achieve a required level of financial performance to be able to draw additional funds on the revolving credit facility and must initially use its cash on-hand to fund operations.

For the six months ended June 30, 2013, the Company repaid $1.1 million of real estate term debt, $0.8 million of capital leases and $31.8 million of its revolving credit facilities. At June 30, 2013, the Company had $41.2 million of available cash on its balance sheet. The Company was in compliance with all terms under its credit agreements at June 30, 2013.

The Company generated $1.8 million in proceeds on the divestiture of a facility in Kansas City, KS and surplus equipment in the first six months of 2013. Capital expenditures amounted to $2.5 million for the first six months of 2013 and were funded from cash on hand.

The table below sets forth the Company’s capital expenditures for the three and six months ended June 30:

 

      For the three months
ended June 30,
     For the six months
ended June 30,
 

(in thousands of dollars)

   2013      2012      2013      2012  

Real estate and buildings

   $ 342       $ 3,675       $ 419       $ 4,355   

Tractors

     —           4,326         —           4,461   

Trailing fleet

     676         —           683         1,906   

Information technology

     296         534         494         646   

Leasehold improvements

     163         54         330         151   

Other equipment

     218         1,010         560         1,308   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 1,695       $ 9,599       $ 2,486       $ 12,827   
  

 

 

    

 

 

    

 

 

    

 

 

 

Management estimates that cash capital expenditures for the remainder of 2013 will be between $4.0 million and $8.0 million. The Company may enter into operating leases to fund the acquisition of specific equipment should the business levels exceed the current equipment capacity of the Company. The Company expects to finance its capital requirements with cash on-hand and operating leases.

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.

 

15


Table of Contents

The following table summarizes our significant contractual obligations and commercial commitments as of June 30, 2013:

 

(in thousands of dollars)           Payments due by period  

Contractual Obligations

   Total      2013      2014 & 2015      2016 & 2017      Thereafter  

Real estate term facilities

   $ 77,563       $ 1,276       $ 5,429       $ 5,964       $ 64,894   

Capital lease obligations

     5,420         645         2,494         1,934         347   

Estimated interest payments (1)

     24,206         1,983         7,417         6,580         8,226   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Sub-total

     107,189         3,904         15,340         14,478         73,467   

Off-balance sheet commitments

              

Operating leases

     76,175         12,990         41,266         16,552         5,367   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Contractual Obligations

   $ 183,364       $ 16,894       $ 56,606       $ 31,030       $ 78,834   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) The Company has estimated its interest obligation on its fixed rate obligations. For fixed rate debt, the fixed interest rate was used to determine the interest obligation.

In addition to the above-noted contractual obligations, as at June 30, 2013, the Company utilized the revolving credit facility for standby letters of credit of $25.2 million. The letters of credit are used as collateral for self-insured retention of insurance claims. Export Development Canada (“EDC”), a Crown corporation wholly-owned by the government of Canada, provides guarantees to the Company’s syndicated lenders of up to $12.2 million on letters of credit. In so doing, the Company’s definition of available debt in the associated revolving credit agreement excludes LOC’s guaranteed by the EDC.

A significant decrease in demand for our services could limit the Company’s ability to generate cash flow and affect its profitability. The Company’s asset-based revolving credit agreement is subject to financial maintenance tests that require the Company to achieve stated levels of financial performance, which, if not achieved, could cause an acceleration of the credit agreement’s maturity date. The Company must also achieve stated levels of financial performance to be able to draw on the revolving credit facility beyond only for letters of credit. The Company may fail to achieve the required level of financial performance within the required timeline. Assuming no significant decline in business levels or financial performance, management expects that existing working capital, together with available cash, will be sufficient to fund operating and capital requirements as well as service the contractual obligations.

OUTLOOK

Management believes the most significant opportunity remains in the U.S. LTL business unit and management’s continued focus is to improve the contribution to operating results of this business unit. The management team continues to focus on implementing additional projects and initiatives to improve service, productivity and efficiency of the operation. Successfully executing on these plans will allow management to expand revenue through increased pricing and density.

Should the U.S. LTL business unit successfully execute its operational plan, activity levels and pricing initiatives should improve, positioning the Company to improve operating results in future periods.

 

16


Table of Contents

QUARTERLY RESULTS (unaudited)

 

(thousands of dollars

except per share amounts)

   2013
Q2
    2013
Q1
    2012
Q4
    2012
Q3
    2012
Q2
    2012
Q1
    2011
Q4
    2011
Q3
 

Revenue

   $ 165,443      $ 161,109      $ 164,329      $ 176,209      $ 183,789      $ 178,587      $ 172,484      $ 176,407   

Loss from continuing operations

     (16,973     (17,629     (17,956     (11,760     (5,723     (7,187     (9,966     (5,328

Net income (loss)

     (16,973     67,672        (15,896     (10,100     (4,163     (5,816     (8,072     (3,420

Loss from continuing operations per share:

                

Basic

   $ (1.03   $ (1.07   $ (1.09   $ (0.72   $ (0.35   $ (0.44   $ (0.61   $ (0.33

Diluted

     (1.03     (1.07     (1.09     (0.72     (0.35     (0.44     (0.61     (0.33

Weighted average number of shares:

                

Basic

     16,432,241        16,401,808        16,399,241        16,399,241        16,399,241        16,367,109        16,331,241        16,330,171   

Diluted

     16,432,241        16,401,808        16,399,241        16,399,241        16,399,241        16,367,109        16,331,241        16,330,171   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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 total operating expenses, divided by revenue. OR allows management to measure the Company’s 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, 2013
     Three months
Ended
June 30, 2012
     Six months
Ended
June 30, 2013
     Six months
Ended
June 30, 2012
 

Total operating expenses

   $ 180,924       $ 188,344       $ 357,888       $ 373,196   

Revenue

     165,443         183,789         326,552         362,376   
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating ratio (“OR”)

     109.4%         102.5%         109.6%         103.0%   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(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.

 

17


Table of Contents

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. We estimate that the fair value of our long-term debt approximates its carrying value.

 

(in thousands of dollars)         Payments due by period  

Long-Term Debt

  Total     2013     2014 & 2015     2016 & 2017     Thereafter  

Fixed Rate

         

Real Estate term facilities

  $ 77,563      $ 1,276      $ 5,429      $ 5,964      $ 64,894   

Interest Rate

    4.30%-4.88%        4.30%-4.88%        4.30%-4.88%        4.30%-4.88%        4.30%-4.88%   

Capital lease obligations

    5,420        645        2,494        1,934        347   

Average interest rate

    6.15%        6.15%        6.15%        6.15%        6.15%   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 82,983      $ 1,921      $ 7,923      $ 7,898      $ 65,241   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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.

Item 4. Controls and Procedures

Disclosure controls and procedures, as such term is defined in Rule 13a-15(e) of the Exchange Act, are controls and other procedures that are designed to ensure that information required to be disclosed by our Company is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our Company’s management, including our Interim Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), as appropriate to allow timely decisions regarding required disclosure. Our CEO and CFO are responsible for establishing and maintaining disclosure controls and procedures for our Company.

As of the end of the period covered by this Quarterly Report on Form 10-Q, the Company carried out an evaluation, under the supervision and with the participation of Company management, including our CEO and CFO, of the effectiveness of the design, implementation and operation of its disclosure controls and procedures. Based on this evaluation, the Company’s CEO and CFO have concluded that the Company’s disclosure controls and procedures are effective as of June 30, 2013.

There have been no significant changes in our internal control over financial reporting, which we define in accordance with Exchange Act Rule 13a-15(f) to include our control environment, control procedures, and accounting systems, or any other factors that could materially affect or are reasonably likely to materially affect our internal control over financial reporting during the second quarter of 2013.

 

18


Table of Contents

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 2012 Annual Report on Form 10-K. There have been no material changes from the risk factors previously disclosed therein.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

We have not purchased any of our shares of common stock during the period covered by this quarterly report on Form 10-Q.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

 

19


Table of Contents

Item 6. Exhibits

 

Exhibit

Number

  

Description of Exhibit

31.1    Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated August 6, 2013 (1)
31.2    Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated August 6, 2013 (1)
32.1    Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated August 6, 2013 (2)
101.INS    XBRL Instance Document(1)
101.SCH    XBRL Taxonomy Extension Schema (1)
101.CAL    XBRL Taxonomy Extension Calculation Linkbase (1)
101.DEF    XBRL Taxonomy Extension Definition Linkbase (1)
101.LAB    XBRL Taxonomy Extension Label Linkbase (1)
101.PRE    XBRL Taxonomy Extension Presentation Linkbase (1)

Notes:

 

(1) Filed as an exhibit to this Quarterly Report on Form 10-Q.
(2) Furnished as an exhibit to the Quarterly Report on Form 10-Q.

 

20


Table of Contents

SIGNATURES

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 thereunto duly authorized.

 

      VITRAN CORPORATION INC.
      /s/ FAYAZ D. SULEMAN
     

 

      Fayaz D. Suleman

Date: August 6, 2013

      Vice President of Finance and
      Chief Financial Officer
      (Principal Financial Officer)