##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 20-F

(Mark One)
[ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF
THE SECURITIES EXCHANGE ACT OF 1934
OR
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2002


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

VITRAN CORPORATION INC.

(Exact name of Registrant as specified in its charter)


ONTARIO, CANADA

(Jurisdiction of incorporation or organization)


185 The West Mall, Suite 701, Toronto, Ontario, Canada M9C 5L5

(Address of principal executive offices)


Securities registered or to be registered pursuant to Section 12(b) of the Act.

|              |  |                       |  | 
|------------- |  | --------------------- |  | 
|Title of each |  | Name of each exchange
|class         |  | on which registered  
|              |  |                      
|None          |  | Not Applicable       
|              |  |                      

Securities registered or to be registered pursuant to Section 12(g) of the Act.

Class A Voting Shares
(Title of Class)


Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act.

None
(Title of Class)


Number of outstanding shares of each of the issuers classes of capital or
common stock as of December 31, 2002.

9,559,818 Class A Voting Shares

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.

Indicate by check mark which financial statement item the registrant has elected to follow.

| |          |          |  |      |  |  |  |    
| | -------- | -------- |  | ---- |  |  |  | ---
| | Item 17x | Item 18o |  | Yesx |  |  |  | Noo

Page 1 of 50 Pages
Exhibit Index on Page 49

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TABLE OF CONTENTS

|                                                                    |  |  |    | 
|------------------------------------------------------------------- |  |  | -- | 
|PART I                                                              |  |  | 4  | 
|ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT
and ADVISORS       |  |  | 4  | 
|ITEM 2. OFFER STATISTICS and EXPECTED TIMETABLE                     |  |  | 5  | 
|ITEM 3. KEY INFORMATION                                             |  |  | 5  | 
|ITEM 4. INFORMATION ON THE COMPANY                                  |  |  | 8  | 
|ITEM 5. OPERATING and FINANCIAL REVIEW and PROSPECTS                |  |  | 22 | 
|ITEM 6. DIRECTORS, SENIOR MANAGEMENT and EMPLOYEES                  |  |  | 30 | 
|ITEM 7. MAJOR SHAREHOLDERS and RELATED
PARTY TRANSACTIONS           |  |  | 38 | 
|ITEM 8. FINANCIAL INFORMATION                                       |  |  | 39 | 
|ITEM 9. THE OFFERING and LISTING                                    |  |  | 40 | 
|ITEM 10. ADDITIONAL INFORMATION                                     |  |  | 42 | 
|ITEM 11. QUANTITATIVE and QUALITATIVE DISCLOSURES
ABOUT MARKET RISK |  |  | 45 | 
|ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN
EQUITY SECURITIES     |  |  | 47 | 
|PART II                                                             |  |  | 47 | 
|ITEM 13. DEFAULTS, DIVIDENDS ARREARAGES
and DELINQUENCIES           |  |  | 47 | 

2



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|                                                                                      |  |  |     | 
|------------------------------------------------------------------------------------- |  |  | --- | 
|ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY
HOLDERS and USE OF PROCEEDS |  |  | 47  | 
|ITEM 15. CONTROL and PROCEDURES                                                       |  |  | 47  | 
|ITEM 17. FINANCIAL STATEMENTS                                                         |  |  | 47  | 
|ITEM 18. FINANCIAL STATEMENTS                                                         |  |  | 48  | 
|ITEM 19 EXHIBITS                                                                      |  |  | 48  | 
|SCHEDULE A 302 CERTIFICATIONS                                                         |  |  | 52  | 
|SCHEDULE B CODE OF ETHICS                                                             |  |  | 54  | 
|FINANCIAL STATEMENTS                                                                  |  |  | F-1 | 

3



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PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT and ADVISORS

The names and municipalities of their employment of the directors, officers and
senior management of the Company, their positions with the Company and their
principal occupations during the past five years are as follows:

|                                      |  |                                                                                     |  |          |      |         |  |     
|------------------------------------- |  | ----------------------------------------------------------------------------------- |  | -------- | ---- | ------- |  | ----
|                                      |  | Position with the                                                                   |  |          |      |         |  |     
|Name and Municipality                 |  | Company and                                                                         |  | Director |      | Officer
|of Residence                          |  | Principal Occupation                                                                |  | Since    |      | Since  
|                                      |  |                                                                                     |  |          |      |        
|Anthony F. Griffiths
Toronto, Ontario |  | Director (Corporate Director)                                                       |  |          | 1987 |         |  |    
|                                      |  |                                                                                     |  |          |      |         |  |     
|Albert Gnat, Q.C
Caledon, Ontario     |  | Director (Senior Partner in the law firm Lang Michener)                             |  |          | 1987 |         |  |    
|                                      |  |                                                                                     |  |          |      |         |  |     
|Richard D. McGraw
Toronto, Ontario    |  | Chairman of the Board and Director (President of
the Lochan Ora Group of Companies) |  |          | 1987 |         |  | 1987
|                                      |  |                                                                                     |  |          |      |         |  |     
|Carl Cook
Indianapolis, Indiana       |  | Director (Principal, Decisions Inc.)                                                |  |          | 1995 |         |  |    
|                                      |  |                                                                                     |  |          |      |         |  |     
|G. Mark Curry
Toronto, Ontario        |  | Director (President, Revmar Inc.)                                                   |  |          | 1987 |         |  |    
|                                      |  |                                                                                     |  |          |      |         |  |     
|Rick E. Gaetz
Mississauga, Ontario    |  | Director (President and Chief Executive Officer,
Vitran Corporation Inc.)           |  |          | 1995 |         |  | 1989
|                                      |  |                                                                                     |  |          |      |         |  |     
|Graham Savage
Mississauga, Ontario    |  | Director (Managing Director, Callisto Capital LP)                                   |  |          | 1987 |         |  |    
|                                      |  |                                                                                     |  |          |      |         |  |     
|Kevin Glass
Etobicoke, Ontario        |  | Vice President Finance and Chief Financial
Officer, Vitran Corporation Inc.         |  |          |      |         |  | 1998

|                                                                                                      |  |                                                                                                             |  |                                                                             |  |                                                                                                               
|----------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------
|Principal Bankers
Bank of Nova Scotia
44 King Street West,
14th Floor
Toronto, Ontario
M5H 1H1
Canada |  | Legal Advisors
Lang, Michener
BCE Place, PO Box 747
Suite 2500, 181 Bay St.
Toronto, Ontario
M5J 2T7
Canada |  | Auditors
KPMG, LLP
4100 Yonge St.
Suite 200
Toronto, Ontario
M2P 2H3
Canada |  | Tax Counsel
PriceWaterhouseCoopers LLP
One Robert Speck Parkway
Suite 1100
Mississauga, Ontario
L4Z 3M3
Canada

REMUNERATION OF AUDITOR

KPMG LLP has served as the Corporations auditors since 1989. For the fiscal
year ended December 31, 2002 no fees were billed by KPMG LLP to the Corporation
for services other than audit related services.

4



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ITEM 2. OFFER STATISITICS and EXPECTED TIMETABLE

Not Applicable.

ITEM 3. KEY INFORMATION

EXCHANGE RATE INFORMATION

Vitrans accounts are maintained in Canadian dollars. In this Annual
Report, all dollar amounts are expressed in Canadian dollars except where
otherwise indicated.

The following tables set forth, for the periods indicated, the high and
low rates of exchange of Canadian dollars into United States dollars, the
average of such exchange rates on the last day of each month during the
periods, and the end of period rates. Such rates are shown as, or are derived
from, the reciprocals of the noon buying rates in New York City for cable
transfers payable in Canadian dollars, as certified for customs purposes by the
Federal Reserve Bank of New York.

|     |  |       |        |       |  |       |        |          |  |         |        |          |  |  |        |  |  |  |        |  |  |  |        | 
|---- |  | ----- | ------ | ----- |  | ----- | ------ | -------- |  | ------- | ------ | -------- |  |  | ------ |  |  |  | ------ |  |  |  | ------ | 
|     |  | Month |        | Month |  | Month |        | Month    |  | Month   |        | Month   
|     |  | ended |        | ended |  | ended |        | ended    |  | ended   |        | ended   
|     |  | May   |        | April |  | March |        | February |  | January |        | December
|     |  | 30,   |        | 30,   |  | 31,   |        | 28,      |  | 31,     |        | 31,     
|     |  | 2003  |        | 2003  |  | 2002  |        | 2003     |  | 2003    |        | 2002    
|     |  |       |        |       |  |       |        |          |  |         |        |         
|High |  |       | 0.7437 |       |  |       | 0.6975 |          |  |         | 0.6822 |          |  |  | 0.6720 |  |  |  | 0.6570 |  |  |  | 0.6461 | 
|Low  |  |       | 0.7032 |       |  |       | 0.6737 |          |  |         | 0.6709 |          |  |  | 0.6530 |  |  |  | 0.6349 |  |  |  | 0.6329 | 

|           |  |              |        |              |  |              |        |              |  |              |        |  |  |  |        |  |  |  |        | 
|---------- |  | ------------ | ------ | ------------ |  | ------------ | ------ | ------------ |  | ------------ | ------ |  |  |  | ------ |  |  |  | ------ | 
|           |  | 12 months    |        | 12 months    |  | 12 months    |        | 12 months    |  | 12 months   
|           |  | ended        |        | ended        |  | ended        |        | ended        |  | ended       
|           |  | December 31, |        | December 31, |  | December 31, |        | December 31, |  | December 31,
|           |  | 2002         |        | 2001         |  | 2000         |        | 1999         |  | 1998        
|           |  |              |        |              |  |              |        |              |  |             
|High       |  |              | 0.6619 |              |  |              | 0.6697 |              |  |              | 0.6969 |  |  |  | 0.6925 |  |  |  | 0.7105 | 
|Low        |  |              | 0.6200 |              |  |              | 0.6241 |              |  |              | 0.6410 |  |  |  | 0.6535 |  |  |  | 0.6321 | 
|Average    |  |              | 0.6368 |              |  |              | 0.6457 |              |  |              | 0.6732 |  |  |  | 0.6704 |  |  |  | 0.6738 | 
|Period End |  |              | 0.6329 |              |  |              | 0.6279 |              |  |              | 0.6689 |  |  |  | 0.6925 |  |  |  | 0.6534 | 

At June 10 2003, one Canadian dollar, as quoted by Federal Reserve Bank of
New York was 0.7327 in U.S. dollars.

5



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##### 



FINANCIAL INFORMATION

|                          |                                                                  |  |     |                                                           |   |              |     |              |     |              |     |              |     |       |   |         |   |       |   |         |   | 
|------------------------- | ---------------------------------------------------------------- |  | --- | --------------------------------------------------------- | - | ------------ | --- | ------------ | --- | ------------ | --- | ------------ | --- | ----- | - | ------- | - | ----- | - | ------- | - | 
|                          |                                                                  |  |     | (Canadian dollars in thousands, except per share amounts)
|                          |                                                                  |  |     |                                                          
|                          |                                                                  |  |     | Year                                                      |   | Year         |     | Year         |     | Year         |     | Year        
|                          |                                                                  |  |     | ended                                                     |   | ended        |     | ended        |     | ended        |     | ended       
|                          |                                                                  |  |     | December 31,                                              |   | December 31, |     | December 31, |     | December 31, |     | December 31,
|                          |                                                                  |  |     | 2002(1)                                                   |   | 2001(1)      |     | 2000(1)      |     | 1999(1)      |     | 1998((1)    
|                          |                                                                  |  |     |                                                           |   |              |     |              |     |              |     |             
|Statement of Income Data: |                                                                  |  |     |                                                           |   |              |     |              |     |              |     |              |     |       |   |         |   |       |   |        
|                          | Revenue                                                          |  | $   | 476,016                                                   |   |              | $   | 481,673      |     |              | $   | 480,988      |     |       | $ | 463,110 |   |       | $ | 404,197 |  
|                          | Gross profit                                                     |  |     | 77,097                                                    |   |              |     | 72,865       |     |              |     | 81,982       |     |       |   | 81,692  |   |       |   | 78,023  |  
|                          | Gross profit as a % of revenue                                   |  |     | 16.2                                                      | % |              |     | 15.1         | %   |              |     | 17.0         | %   |       |   | 17.6    | % |       |   | 19.3    | %
|                          | Income from operations before
depreciation                       |  | $   | 28,351                                                    |   |              | $   | 22,854       |     |              | $   | 34,850       |     |       | $ | 33,470  |   |       | $ | 28,352  |  
|                          | Income from continuing
operations                                |  |     | 20,024                                                    |   |              |     | 13,002       |     |              |     | 24,574       |     |       |   | 23,438  |   |       |   | 20,080  |  
|                          | Income from continuing
operations as a % of revenue              |  |     | 4.2                                                       | % |              |     | 2.7          | %   |              |     | 5.1          | %   |       |   | 5.1     | % |       |   | 5.0     | %
|                          | Net income from continuing
operations                            |  |     | 10,854                                                    |   |              |     | 3,701        |     |              |     | 9,918        |     |       |   | 8,919   |   |       |   | 8,663   |  
|                          | Net income (loss) from
discontinued operations                   |  |     |                                                          |   |              |     | (5,614       | )   |              |     | (414         | )   |       |   | 507     |   |       |   | 20      |  
|                          | Net income                                                       |  | $   | 10,854                                                    |   |              | $   | (1,913       | )   |              | $   | 9,504        |     |       | $ | 9,426   |   |       | $ | 8,683   |  
|                          | Per share:                                                       |  |     |                                                           |   |              |     |              |     |              |     |              |     |       |   |         |   |       |   |         |  
|                          | Basic  continuing operations                                    |  | $   | 1.12                                                      |   |              | $   | 0.38         |     |              | $   | 1.00         |     |       | $ | 0.90    |   |       | $ | 0.90    |  
|                          | Basic  net income (loss)                                        |  |     | 1.12                                                      |   |              |     | (0.19        | )   |              |     | 0.96         |     |       |   | 0.95    |   |       |   | 0.90    |  
|                          | Diluted  continuing operations                                  |  |     | 1.11                                                      |   |              |     | 0.38         |     |              |     | 1.00         |     |       |   | 0.87    |   |       |   | 0.88    |  
|                          | Diluted   net income (loss)                                     |  |     | 1.11                                                      |   |              |     | (0.19        | )   |              |     | 0.96         |     |       |   | 0.92    |   |       |   | 0.88    |  
|                          | Dividends (regular)                                              |  | Nil |                                                           |   | 0.035        |     |              |     | 0.070        |     |              |     | 0.070 |   |         |   | 0.070 |  
|                          | Dividends (US$)                                                  |  | Nil |                                                           |   | 0.023        |     |              |     | 0.047        |     |              |     | 0.047 |   |         |   | 0.047 |  
|                         
|Amounts under US GAAP(2): |                                                                  |  |     |                                                           |   |              |     |              |     |              |     |              |     |       |   |         |   |       |   |        
|                          | Net income (loss) before
accounting change                       |  | $   | 10,158                                                    |   |              | $   | (2,555       | )   |              | $   | 9,504        |     |       | $ | 9,426   |   |       | $ | 8,683   |  
|                          | Cumulative effect of change
in method of accounting for
goodwill |  |     | (4,796                                                    | ) |              | Nil |              | Nil |              | Nil |              | Nil
|                          | Net income                                                       |  | $   | 5,362                                                     |   |              | $   | (2,555       | )   |              | $   | 9,504        |     |       | $ | 9,426   |   |       | $ | 8,683   |  
|                          | Per share:                                                       |  |     |                                                           |   |              |     |              |     |              |     |              |     |       |   |         |   |       |   |         |  
|                          | Basic  continuing operations                                    |  | $   | 1.05                                                      |   |              | $   | 0.31         |     |              | $   | 1.00         |     |       | $ | 0.90    |   |       | $ | 0.90    |  
|                          | Basic  net income (loss)                                        |  |     | 0.55                                                      |   |              |     | (0.26        | )   |              |     | 0.96         |     |       |   | 0.95    |   |       |   | 0.90    |  
|                          | Diluted  continuing operations                                  |  |     | 1.04                                                      |   |              |     | 0.31         |     |              |     | 1.00         |     |       |   | 0.87    |   |       |   | 0.88    |  
|                          | Diluted   net income (loss)                                     |  |     | 0.55                                                      |   |              |     | (0.26        | )   |              |     | 0.96         |     |       |   | 0.92    |   |       |   | 0.88    |  

6



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|                                                   |                      |  |              |         |              |  |              |         |              |  |              |         |  |  |           |         |  |  |           |         | 
|-------------------------------------------------- | -------------------- |  | ------------ | ------- | ------------ |  | ------------ | ------- | ------------ |  | ------------ | ------- |  |  | --------- | ------- |  |  | --------- | ------- | 
|                                                   |                      |  | Year         |         | Year         |  | Year         |         | Year         |  | Year        
|                                                   |                      |  | ended        |         | ended        |  | ended        |         | ended        |  | ended       
|                                                   |                      |  | December 31, |         | December 31, |  | December 31, |         | December 31, |  | December 31,
|                                                   |                      |  | 2002(1)      |         | 2001(1)      |  | 2000(1)      |         | 1999(1)      |  | 1998 (1)    
|                                                   |                      |  |              |         |              |  |              |         |              |  |             
|Balance Sheet Data (at
period end):                |                      |  |              |         |              |  |              |         |              |  |              |         |  |  |           |         |  |  |           |        
|                                                   | Total assets         |  | $            | 191,526 |              |  | $            | 209,364 |              |  | $            | 213,307 |  |  | $         | 203,973 |  |  | $         | 207,254 | 
|                                                   | Long-term debt       |  |              | 59,176  |              |  |              | 74,703  |              |  |              | 72,598  |  |  |           | 81,104  |  |  |           | 94,212  | 
|                                                   | Shareholders equity |  |              | 82,146  |              |  |              | 78,013  |              |  |              | 79,564  |  |  |           | 70,658  |  |  |           | 64,755  | 
|Issued number of Class
A Voting
At the end of year |                      |  | 9,559,818    |         |              |  | 9,847,278    |         |              |  | 9,859,778    |         |  |  | 9,973,565 |         |  |  | 9,878,158 |        



---

|    |  | Footnotes:                                                                                                                                                                                                                                              
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) |  | The selected consolidated financial information the years ended
December 31, 1998 to 2002 are derived from the audited consolidated
financial statements of the Company. See the Consolidated Financial
Statements of the Company and the notes thereto.
|   
|(2) |  | In certain respects, generally accepted accounting principles as
applied in Canada differ from generally accepted accounting principles
as applied in the United States. See note 14 to the Consolidated
Financial Statements of the Company.           

Risk Factors

The Company is exposed to a number of general risks and uncertainties that
could impact the results.

The nature of the Companys business means that it is sensitive to general
economic conditions and seasonal fluctuations, although this is mitigated
somewhat by the variable nature of many of the Companys costs. In the trucking
industry for a typical year, the months of September and October usually have
the highest business levels, while the months of December and January generally
have the lowest business levels. The Company is not dependent on any particular
industry or customer. Adverse weather conditions such as heavy snow and ice
storms have a negative impact on operating results. Labour represents Vitrans
most significant cost and key to service quality. The Company has a history of
positive labour relations that will continue to be important to future success.
While diesel fuel represents an important cost component to Vitran, the
extensive use of owner/operators and the ability to share significant fuel
increases with customers reduces this risk.

Measures taken by the U.S. and Canadian governments to strengthen border
security could impact service levels. Vitrans cross-border activity represents
less than 5% of the LTL segment revenue, and the Company has responded to the
new requirements to ensure compliance and safety without jeopardizing the
quality of service.

As at December 31, 2002, 57.1% of debt was at fixed exchange rates,
mitigating the exposure of the Companys earnings to fluctuations in variable
interest rates. The Companys US$21.0 million

7



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##### 



8.95% fixed interest rate swap
expired January 26, 2003, and management is investigating future alternatives.
Furthermore, the $37.1 million of U.S. dollar-denominated long-term debt acts
as a hedge
to the foreign currency exposure generated by the Companys U.S. operations.
Net U.S. dollar-denominated assets at December 31, 2002 were US$89.2 million.

ITEM 4. INFORMATION ON THE COMPANY

Glossary

|                   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|------------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Backhaul           |  | The less advantageous lane from an operational
and financial standpoint. A carriers
profitability is often contingent on how well
the backhaul lane is managed from an
operational and financial standpoint.                                                                                                                                                                                                                                                         
|                   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Breakbulk Terminal |  | Consolidation and distribution centre; a
facility which unloads and consolidates
shipments received from its satellite terminals
as well as from other breakbulk terminals.                                                                                                                                                                                                                                                                                           
|                   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Carrier            |  | Any person engaged in the transport of goods
whether or not for hire or reward.                                                                                                                                                                                                                                                                                                                                                                                       
|                   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Consignee          |  | A person to whom a shipment is being or is
intended to be transported (i.e., the final
receiving person in the transportation
process).                                                                                                                                                                                                                                                                                                                               
|                   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Contract logistics |  | The outsourcing to a transportation company by
a customer on a contractual basis of the
management of all or a portion of the
customers transportation and distribution
work. The services provided by the
transportation company typically include the
coordination of most modes of transportation
(truckload, less-than-truckload, rail and
intermodal), freight consolidation, dedicated
fleet management, warehousing, management
assistance and staff training.
|                   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Frontier           |  | Frontier Transport a wholly owned subsidiary of
Vitran Inc.                                                                                                                                                                                                                                                                                                                                                                                                           
|                   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|FTA                |  | Canada-U.S. Free Trade Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|ICC                |  | The United States Interstate Commerce
Commission.                                                                                                                                                                                                                                                                                                                                                                                                                     
|                   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Intermodal         |  | The movement of freight by more than one mode
of                                                                                                                                                                                                                                                                                                                                                                                                                      

8



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##### 



|                           |  |                                                                                                                                                            
|-------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|                           |  | transportation, principally by a combination
of truck and rail.                                                                                            
|                           |  |                                                                                                                                                            
|Less-than-truckload or LTL |  | Shipments that utilize less than the capacity
(by volume or weight) of a container or
trailer.                                                             
|                           |  |                                                                                                                                                            
|Linehaul                   |  | The physical transportation over the road or by
rail from the origin terminal to the
destination terminal.                                                 
|                           |  |                                                                                                                                                            
|Longhaul                   |  | Shipments across distances greater than 1,000
miles (1,600 kilometers).                                                                                    
|                           |  |                                                                                                                                                            
|NAFTA                      |  | North American Free Trade Agreement.                                                                                                                       
|                           |  |                                                                                                                                                            
|Owner-operator             |  | An independent contractor that provides
services and equipment, generally under
exclusive use contract, to a carrier for both
local and linehaul transport.
|                           |  |                                                                                                                                                            
|Revenue Equipment          |  | Tractors with either trailers or with
containers and chassis used by a carrier to
transport freight for compensation.                                      
|                           |  |                                                                                                                                                            
|Rolling Stock              |  | Tractors, trailers and containers on chassis
used by a carrier to transport freight for
compensation.                                                      
|                           |  |                                                                                                                                                            
|Shipper or Consignor       |  | A person and/or party who offers freight for
transport.                                                                                                    
|                           |  |                                                                                                                                                            
|Shorthaul                  |  | Shipments across distances less than 1,000
miles (1,600 kilometers).                                                                                       
|                           |  |                                                                                                                                                            
|Tractor                    |  | The power unit that pulls the trailer.                                                                                                                     
|                           |  |                                                                                                                                                            
|Truckload or TL            |  | Shipments which utilize the entire capacity (by
volume or weight) of a container or trailer.                                                               
|                           |  |                                                                                                                                                            
|Unit                       |  | A trailer or container pulled behind the tractor, a railway boxcar
pulled by a train or a trailer or container on a railway flat car pulled by a train.    
|                           |  |                                                                                                                                                            
|Vitran Express             |  | A wholly owned subsidiary of Vitran Corporation
that was established when Overland
Transportation and Quast Transfer were combined
in March of 1999.       
|                           |  |                                                                                                                                                            
|Vitran Express Canada      |  | A wholly owned subsidiary of Vitran Corporation
offering LTL freight services in Canada.                                                                   

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Overview

Vitran Corporation Inc. (Vitran or the Company) is a freight services
organization offering distribution services throughout Canada and several
regions of the United States. Vitran offers a broad range of logistics services
to address shippers increasingly complex and diverse transportation and
distribution requirements.

Vitran provides a broad range of services for the movement of freight
throughout North America utilizing both highway and rail modes. The Companys
services include (1) less-than-truckload (LTL), (2) logistics services (TL) and
(3) truckload. They are provided by standalone business units that operate
independently or in concert to provide customers with customized cost-effective
logistical solutions.

LTL services represents the largest portion of Vitrans revenues and
involves the consolidation of smaller shipments to fill a container, trailer or
railway box car to capacity (either by volume or weight). Typically, LTL
carriers transport freight along scheduled routes utilizing a network of
terminals with transportation (i.e. linehaul) between terminals provided by
either rail or highway modes of carriage. At the origin and destination
terminals freight is organized for loading onto a linehaul unit or for delivery
to local consignees.

Segmented sales and revenue and other financial information on the Vitran
Corporation Inc., broken down between the United States and Canada, appears in
Note 9 to the Consolidated Financial Statements of Vitran. See page F-20.

Corporate History

Vitran was incorporated under the laws of Ontario by certificate of
incorporation effective April 29, 1981 under the name Molon Management Inc.
Until May 27, 1987, it was a private management and investment holding company
owned by unrelated third parties when it was acquired by companies controlled
by each of Richard D. McGraw, Albert Gnat and Anthony F. Griffiths
(collectively, the Original Shareholders). By certificate of amendment
effective May 27, 1987, Vitrans capital was reorganized into unlimited numbers
of Class A Voting Shares, Class B Non-Voting Shares and First Preference
Shares, of which 700 Class A Voting Shares were issued, and the corporate name
was changed to Vitran Corporation Inc.

Concurrently with its initial public offering on August 5, 1987, Vitran
acquired All-Way Transportation Corporation and its affiliated company, STM
Specialized Transit Management Corporation (All-Way or the Passenger
Services Group), G&W Freightways Ltd. and certain affiliated companies from
the Original Shareholders. All-Way and its affiliates provided school bus
services to school boards and other organizations in Ontario. All-Way was sold
in February 1991 for $37 million including debt assumed and a special
distribution of $4.74 per share was paid to shareholders. In connection with
the sale of All-Way, the Company entered into a Plan of Arrangement and by
Articles of Arrangement dated February 5, 1991, certain attributes of the
Companys capital were amended.

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In October 1991, the Company established the Environmental Services Group
by purchasing all of the shares of ETL Environmental Technology Ltd. (ETL), a
Vancouver, British Columbia-based company engaged in the recycling of
pre-sorted and co-mingled non-hazardous dry waste. During the 2001 fiscal year
the Company decided to divest the Environmental Services Group and sale was
completed effective January 2, 2002.

On March 2, 1995, the Company completed the acquisition of the Overland
Group. The acquisition of Overland was a major step in Vitrans strategy to
develop a significant service capability in the United States and provide a
North American service. The acquisition of Overland not only strengthened the
Companys position as an integrated provider of freight transportation and
logistics solutions and services, but also diversified the Companys revenues
and earnings stream geographically into the more densely populated U.S.
Midwest.

On September 9, 1998 the Company acquired Quast Transfer which further
expanded its LTL operations in the Central States. Quast Transfer was a premium
carrier providing overnight service throughout 9 states including Minnesota,
Wisconsin, Illinois, Missouri, Iowa, Kansas, Nebraska, South Dakota and North
Dakota. The organizations of Overland and Quast were combined to form Overland
Quast. The integration was completed in April of 1999 and the name was changed
to Vitran Express. The service was also expanded on a unique guaranteed
satisfaction basis to provide next day service throughout 18 central states.

The Company is primarily engaged in providing a broad range of freight
services that is composed of the following subsidiaries and operating
divisions: Vitran Express Canada, Vitran Express, Vitran Logistics, and
Frontier Transport.

Corporate Structure

The Companys business is carried on through its subsidiaries with a
number of these affiliated corporations holding the relevant licenses that
permit the operations of the Companys business. The following chart sets forth
Vitrans principal operating subsidiaries (including their jurisdiction of
incorporation) as at December 31, 2002. Unless otherwise noted, all
subsidiaries are wholly owned.

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(ORG CHART)

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Management Strategy

Vitrans management strategy is to develop a professionally managed and
solutions oriented freight services organization, capable of controlled and
sustained growth. Having focused its investment in people, computer systems and
non-motorized rolling stock (i.e. trailers, containers and chassis), the
Company is now one of North Americas major freight services organizations. The
Companys objectives are to:



| |  | develop and/or acquire freight related businesses complementary to the Companys present operations which will broaden its services to customers, extend its geographic reach and enhance its overall competitive position in a North American context; 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | develop low cost solutions to the full range of distribution needs of Vitrans customers;                                                                                                                                                               
| |  | continue to develop computer applications to enhance the level of
customer service and improve cost containment and management controls;                                                                                                                
| |  | maximize the return on invested capital by minimizing capital investment in motorized rolling stock (i.e. trucks and tractors) and concentrating on freight handling and forwarding and/or owning equipment  where the utilization of equipment is high.

In order to focus entirely on freight services, management decided to
divest the non-core Environmental Services Group during 2001 and closed the
sale of the business effective January 2, 2002.

Background

Vitran commenced operations with the acquisition of G&W Freightways Ltd.
(G&W) in 1983. G&W provided services for the local pick-up, consolidation and
forwarding of LTL amounts of general freight to destination terminals for
subsequent deconsolidation and delivery, between Toronto and Montreal. This
business was expanded over the next few years by adding terminals in Hull and
Quebec City in the province of Quebec and Kitchener and London in Ontario. In
addition, G&W began contracting directly with independent owner-operators to
handle the carriage of freight between origin and destination terminals and for
local pick-up and delivery rather than utilizing third party trucking
companies. With these developments, G&W has evolved into a system of terminals
servicing some of the highest volume markets in Canada.

In August 1989, Vitran acquired Northern Pool Express Limited (NPEL).
NPEL and certain subsidiaries operating under the name Trans Western Express
and provided a freight forwarding operation which specialized in LTL amounts of
general freight primarily from Ontario and Quebec to all parts of Western
Canada. NPEL offered a national system (excluding the Atlantic provinces) of
terminals which complemented the G&W system by extending the type and
geographic area of service. NPEL was amalgamated with Trans Western Express
Limited, a wholly-owned subsidiary of the Company, under the name Trans Western
Express Inc., on December 1, 1991. On January 1, 2003 Trans Western Express
Limited and G&W Freightways Ltd. were amalgamated to form Vitran Express Canada
Inc.

In July 1990, the Company acquired certain assets of Frontier Intermodal
Systems Inc., including the trade name Can-Am. These assets were acquired by a
wholly-owned subsidiary of the Company, Borcross Limited (operating as the
Can-Am Group). Originally, the Can-Am Groups

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services included LTL, TL and
container movement of general freight between Ontario and Quebec
and the continental United States (except Alaska). The Company sold the Can-Am
Roadlink division (the TL business of the Can-Am Group) effective March 28,
1993.

In October 1991, the Company acquired certain assets of Imperial Roadways
Limited (Imperial), a carrier with LTL and TL services operating across
Canada. The assets acquired from Imperial included Imperials customer lists,
pricing schedules and trailers. The Company also hired certain management,
sales and dispatch staff. Trans Western Express existing terminal network
services Imperials customers.

In November 1991, the Company acquired the shares of Warehouser Storage &
Distribution Services Inc. (Warehouser). Warehouser was amalgamated with
Trans Western Express Inc. on January 1, 1995. Some services previously offered
by Warehouser are now marketed in conjunction with Vitran Logistics. Through
Vitran Logistics, the Company also provides contract services whereby the
appropriate Vitran services are organized to provide cost effective solutions
to its customers.

On July 16, 1993, Vitran acquired 67% of the shares of The Freight
Connection, Inc. (TFC), a public company, the shares of which are quoted on
the National Association of Securities Dealers Over-the-Counter Bulletin Board
Market under the symbol FTCN. TFC, located in Atlanta, Georgia, is an
intermodal marketing company that coordinates services to facilitate the
movement of full container or trailer loads by more than one mode of
transportation (i.e., highway and rail) utilizing other companies equipment.
The value of the net assets of TFC acquired was $1.3 million. The acquisition
of the Companys interest in TFC was financed from working capital. In 1997,
Vitran Corporation increased its ownership to 81.1% of the outstanding shares.
In 2001, Vitran Corporation purchased the remainder of the shares of TFC that
it did not already own, delisted and restructured TFC as a private company. In
2002 TFC changed its name to Vitran Logistics Corp. merged with Vitran
Logistics and redesigned the business model whereby all management and
information systems were integrated under a common umbrella and all customer
relationships were streamlined to focus on profitable long-term
relationships.

On March 2, 1995, Vitran acquired all of the outstanding shares of the
Overland Group for U.S. $25.75 million. Consideration for the acquisition
comprised U.S.$14 million in cash, the issuance by Vitran of a note for U.S.
$7.75 million due June 1, 1995 (the Overland Note) and the issuance of U.S.
$4.0 million equivalent of Vitran shares (799,984 Vitran Class A Voting Shares
at $7.00 per share). The Overland Note paid interest at the U.S. prime rate
and has been repaid in its entirety. The repayment of the Overland Note was
accomplished as part of a restructuring of Vitrans debt whereby Vitran issued
on July 25, 1995, U.S. $45 million of Senior Notes at a rate of 9.04%. Based
in Indianapolis, Indiana and operating in the U.S. Midwest and Southeast, the
Overland Group is primarily an over-the-road short haul regional LTL carrier,
which also provides TL and logistics services. Its primary service area
includes 12 states in the U.S. Midwest directly south of Vitrans traditional
primary service area in Ontario and Manitoba.

On September 9, 1998 Vitran acquired Quast. Quast is a Minnesota-based
regional overnight LTL carrier operating in nine states in the U.S. Midwest.
Consideration for the total purchase price of U.S. $32.9 million in cash and
the issuance of U.S. $2.0 million shares of Vitran Corporation Inc. (365,631
Vitran Class A Voting Shares at U.S. $5.47 per share.) The cash portion

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of the
consideration was funded by cash on hand, as well as the issuance of a
non-revolving term bank credit facility of U.S. $19.7 million, due 2000,
bearing interest at Canadian bank prime plus 1%
payable monthly. In April of 1999 Quast and Overland were amalgamated and the
name was changed to Vitran Express.

Overview

Vitran has developed into a broad integrated transportation system which
provides a range of services for the movement of general freight to all
provinces of Canada and the U.S. Midwest as well as providing and coordinating
services to and from, and within the continental United States (except Alaska).
Vitran primarily provides LTL services, as well as TL and logistics services.
Freight can be handled in railway box cars, trailers or containers that may
move by rail or over the road. The Company provides the service and combination
of equipment and mode of transport for cost-effective solution to a customers
transportation and logistics needs.

Vitran transports and manages general merchandise inventories. Its
customer base is broadly diversified. Vitran has approximately 25,000 accounts
with no one customer representing more than 1.5% of revenues.

While each segment has a particular set of competitors, the Company, as a
whole, faces competition from a broad cross-section of competitors ranging from
independent operators to large, integrated transportation companies. Vitran
endeavors to offer a high quality and reliable multi-modal service through its
geographically diverse system of terminals. Price is a major competitive
factor, especially on larger volume accounts. Other competitive factors include
a companys financial viability, its ability to pick up and deliver goods on
time and on a claim free basis, its capacity to interface with customers
electronically and its ability to maintain strict cost controls. Management
believes that marketing the combination of operations is important in helping
the Company to provide the increasingly broader and more complex range of
transportation services demanded by shippers.

Vitran and the motor carrier industry in general are dependent upon the
availability of diesel fuel. The divisions of the Company that utilize rail
intermodal services could also be affected indirectly. The Company has not
experienced any difficulty in maintaining fuel supplies sufficient to support
its operations. The Company is generally able to recover increases in fuel
costs or fuel taxes from its customers in the form of higher rates or in the
case of rapidly increasing fuel prices by implementing a temporary fuel
surcharge.

Safety is a top priority for Vitran. Each operating group employs safety
specialists and maintains safety programs designed to meet industry and
government standards in addition to Company policies. In addition, specialists
are employed to perform compliance checks and conduct safety tests throughout
the Companys operations.

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Less-Than-Truckload (LTL) Services

General

Vitran operates as an integrated provider of freight services with the
largest portion of its revenues coming from LTL services. The acquisition of
the Overland Group in 1995 and Quast Transfer in 1998 continued this trend, as
the company continued its plan to develop a North American LTL infrastructure.
The LTL segment consists of two main business units: Canadian LTL and U.S.
LTL. The main operating companies within those units are Vitran Express Canada
Inc. and Vitran Express Inc. respectively.

LTL services generally involve the pick-up of goods from a number of
shippers that are combined to make up one full trailer, container or railway
boxcar load. Typically, LTL carriers transport freight along scheduled routes
from multiple shippers to multiple consignees utilizing a network of terminals
together with linehaul units whether over the road with tractors, trailers or
containers or by rail with railway box cars or trailers or containers on a flat
rail car. LTL carriers use local units to provide pick-up and delivery service
at the origin and destination terminals.

Once a customer places an order, an LTL carrier uses local units to pick
up freight from the customer to transport it to the origin terminal. This
freight is then organized with other freight brought in from other parts of the
local market being serviced by that terminal. Terminal operations (often
referred to as a cross-dock since goods come in one door and are moved across
the dock and loaded into trailers, containers or railway box cars destined for
various destination terminals) involve the organization of the freight into
groupings by destination which will ultimately be loaded together into a
railway box car, trailer or container for transport to a destination terminal.
Terminal operators focus on maximizing the cubic space of the linehaul unit
while at the same time maximizing the weight allowed. The linehaul unit is then
transported either over the road or on the railway to its destination terminal.
The same process of cross-docking occurs at the destination terminal. Local
units then deliver the freight to consignees in the destination market.

Canadian LTL Operation

The Canadian LTL operation, which includes Vitran Express Canada Inc.,
Expéditeur T.W. Ltée, and Can Am LTL, services the entire Canadian market place
as well as Washington and Oregon on the west coast of the United States. It
utilizes 13 terminal facilities from Montreal to Vancouver and has contracted
agents in the most eastern provinces for Canada. Within this large geographic
area, customers are offered a choice of linehaul by either railway or highway
modes. Trans Western Express transports freight across Canada over-the-road or
by rail in equipment owned by CN North America and in company-owned trailers
and containers. Trans Western Express utilizes terminals in Montreal, Toronto,
Winnipeg, Saskatoon, Regina, Calgary, Edmonton, Kelowna, Vancouver, Victoria,
Seattle and Portland. In addition the Canadian LTL operation has a unique
relationship with Saia Motor Freight allowing them access to the U.S. states
not otherwise covered by Vitran Corporation Inc. Vitran Express Canada
contracts with a total of approximately 186 independent owner-operators or
cartage companies to provide pick-up and delivery service and

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linehaul freight
services. Owner-operators operating intra-city are paid on a weight basis and
those operating inter-city are paid on a mileage or percent of revenue basis.

There are three other companies in Canada that compete directly with
Vitran Express Canada in that they primarily utilize railway equipment to
transport freight across Canada. Vitran Express Canada tends to have a higher
proportion of business using over-the-road service, resulting in a greater use
of its own equipment. In addition, Vitran Express Canada competes with other
freight companies that provide nationwide highway-only freight services.

Short haul freight moving in primarily in the provinces of Ontario and
Quebec is also handled by Vitran Express Canada. This freight is primarily
delivered on an overnight basis through
a terminal network located in 7 major cities in the two provinces. Longer
transit times are involved for freight moving to the eastern provinces.

Vitran Express Canada also provides transborder services and a Canadian
expedited service called Maxximum in cooperation with Vitran Express.

Like the longer haul operation, the regional business contracts with owner
operators for linehaul and pick-up and delivery functions. The market place
for freight services is very competitive.

The Canadian LTL operation owns or leases approximately 1,276 trailers and
containers, and 289 chassis. It employs over 480 people, including
approximately 415 full time employees, 134 of which are covered by labour union
contracts. The three labour union contracts are for dock workers at three of
the companys terminals; one expiring on March 31, 2008, one on February 28,
2008, and the third is currently in negotiation.

US LTL Operation

Vitran Express, which is the only operating company for US LTL operations,
provides next day and second day service throughout 18 central states.

All LTL service is over-the-road and no intermodal transportation is used
because of the short distances traveled. Other than short-term rentals used to
service seasonal peaks, all the freight transported is shipped in owned or
leased equipment. Vitran Express services 18 states in the U.S. including
Arkansas, Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota,
Missouri, Nebraska, North Dakota, Oklahoma, Ohio, Pennsylvania, South Dakota,
Tennessee, West Virginia, and Wisconsin. Vitran Express also provides an LTL
service between the U.S. Midwest and 10 states in the U.S. Northeast as well
the District of Columbia and Puerto Rico, via a dedicated strategic partnership
with New England Motor Freight. Vitran Express also has a special relationship
with Saia Motor Freight, which extends to the remainder of the U.S. Vitran
Express transports general commodities, including raw materials and
manufactured and packaged goods with no dominant industry focus.

Vitran Express has approximately 1,532 employees as well as operating
agreements with approximately 11 owner-operators. Vitran Express utilizes over
2,075 trailers and operates approximately 55 terminals.

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Truckload (TL) Services

Truckload (TL) services generally involve the pickup of a full trailer or
container load of goods from one shipper. TL freight is typically not rehandled
as the complete full load remains in its original trailer or container for the
duration of the shipping move from shipper to consignee.

Frontier Transport Corporation

Frontier Transport Corporation (Frontier) provides truckload service in
the U.S. Midwest and in the Southeast. Frontier principally utilizes
company-owned or leased equipment and owner-operators. Frontiers Midwest
operation services the states of Indiana, Ohio, Michigan, Illinois, Kentucky,
Missouri, Tennessee, Wisconsin, Pennsylvania, Arizona, and in the south,
Georgia, North
Carolina, South Carolina, Alabama, Florida, and Tennessee. A vast majority of
the business is dry van but it does provide a temperature controlled service in
the mid west.

Frontier Transport operates out of two terminals in Atlanta, Georgia and
Indianapolis, Indiana where the main administration office is located. The
truckload (TL) group contracts with approximately 262 owner operators and
employs 52 people in administrative, recruiting and safety functions. The TL
group also utilizes over 936 trailers.

Vitran Logistics

During 2002 the operations of the freight brokerage operation and the
logistics services operation were merged under common management and
information systems to form Vitran Logistics. The industry is highly
competitive as there are many shippers agents and logistic service companies
that compete directly and indirectly with Vitran Logistics.

Logistics Services

Logistics involves the transportation and management of goods and the
provision of information about them as they pass through the supply chain from
vendor to consumer. Vitran Logistics role is to design a logistics network for
a customer, contract with the necessary suppliers (including services of Vitran
Express and Vitran Express Canada), and then implement the design and manage
the logistical system. Demand for logistics services continues to grow as more
customers outsource the management of the transportation and distribution
function in order to reduce their own logistics costs, or to concentrate on
their core business or to improve customer service.

The logistics services unit provides a range of services in Canada and the
United States including warehousing, inventory management and flow through
distribution facilities. In addition to public warehousing facilities, Vitran
Logistics maintains two dedicated flow through distribution facilities for
significant customers in Canada and in the United States. The logistics
services unit employs over 111 people.

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Freight Brokerage

The freight brokerage unit is headquartered in Toronto, Ontario, with
sales offices in Toronto, Los Angeles and Atlanta, to capitalize on
international traffic flows. Vitran Logistics can coordinate the transport of
full load freight in the most cost-efficient manner, directly from a customers
facility to the customers consignee, anywhere in North America. The freight
brokerage unit offers both intermodal and highway solutions to clients with any
type of full load requirement. Vitran Logistics supports the movement of
freight through direct computer links with both its carriers and customers. It
provides customers with real-time tracking, customer support information and
expediting as required. As the industry trend is for railways to require
large minimum volumes to establish or retain contracts with them, small agents
will be at a competitive disadvantage. Vitran Logistics has contracts with all
major railways in the United States. The freight brokerage unit employs over 44
people.

The Canadian Freight Services Industry

The Canadian freight industry is made up of a small number of national
carriers competing for freight business across the country. A larger number of
regional carriers and numerous local carriers also exist. Each of these
carriers may employ different operating strategies with respect to equipment
and employment.

Two main issues have impacted the Canadian freight industry in the last 13
years: deregulation and free trade.

Beginning in 1988, deregulation transformed the Canadian transportation
industry. Deregulation affected market entry/exit procedures that gave rise to
an increased number of new entrants into the freight industry. As a result, the
industry soon had excess capacity that was exacerbated by the recession that
followed. These factors led to severe price competition in the industry. In
recent years, the industry has experienced unprecedented consolidation and
failure of companies that were unprepared for the shifts in technology and were
unable to adjust their operations to meet changing customer requirements.
Vitran has continued to make selective investments to improve efficiency and
customer service and has grown through this period as a result.

Before NAFTA and the FTA, the geographic flow of goods and materials being
transported in Canada was primarily East-West. However, with the FTA and later
with NAFTA, the importance of the North-South orientation was firmly
established.

Since 1994 Vitran has focused on expanding its LTL infrastructure as well
as its other businesses to provide more coverage of the North American market.
The growth and development of its US based business has been very significant
in the past several years. Internally and by acquisition the LTL segment now
represents approximately 80% of total revenues.

The Canadian freight industry has benefited from improvements in
technology to enhance transportation services. Technologies such as electronic
data interchange (EDI) allow for greater efficiency in the transportation
marketplace and enhance the more efficient transfer of information

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between
customer and carrier. Advances in information systems including the internet,
have facilitated tracking of specific shipments and have improved customer
interface. Improved rail equipment has minimized the damage occurring to
freight in transit thereby making it more feasible to transport freight
longhaul by rail. Moreover, greater use of containers transported by rail has
resulted from the efficiencies and economies of double stack rail service.

Regulation

In all jurisdictions where Vitran operates, Vitran or its subsidiaries
have obtained necessary licenses if they are required to carry goods for
compensation. In Canada, a license to carry goods extra-provincially is issued
by each provincial transport board under the provisions of the Motor Vehicle
Transport Act, 1987(Canada) (MVTA). Within each province, truck
transportation licensing is required under provincial legislation. Vitran or
its subsidiaries hold licenses issued in all provinces of Canada which permit
general freight services, between the provinces, within certain of the
provinces, and internationally between the provinces and the United States.

Vitran also holds cartage licenses as required for the transportation of
freight in and around the municipalities where the Company has terminals.

Effective January 1, 1988, the federal government substantially
deregulated the transportation industry in Canada through the passage of the
National Transportation Act and the MVTA. Since that time, the market has
become highly competitive.

The Companys operations are subject to federal, provincial, state and
local environmental laws, including laws dealing with transport of hazardous
materials. The Company believes that it is in material compliance with these
requirements.

The U.S. Freight Services Industry

The fundamental business of the U.S. LTL industry is similar to Canadian
LTL operations. U.S. LTL operators are generally categorized as either
regional, inter-regional or long haul carriers, depending on the distance
freight travels. Vitran Express is considered a regional carrier. Regional
carriers usually have average lengths of haul of 600 miles or less and tend to
provide either overnight or second-day service. Regional LTL carriers usually
are able to load freight for direct transport to a destination terminal,
thereby avoiding the costly and time-consuming use of breakbulk terminals. In
contrast, long-haul LTL carriers (average lengths of haul in excess of 1,000
miles) operate networks of breakbulk and satellite terminals (hub-spoke systems
where freight is rehandled and reloaded to its ultimate destination) and rely
heavily on interim handling of freight. Inter-regional carriers (500 to 1,000
miles per average haul) also rely on breakbulk terminals but to a lesser degree
than long-haul carriers.

In general, the more business an LTL carrier has within a given
geographical area, the lower its incremental operating costs as a result of
higher equipment and personnel utilization. This is particularly true with
respect to its pick-up and delivery operation where there is less distance
between stops. Similarly, the more business a carrier experiences in a given
traffic lane (or route), resulting in greater linehaul density, the lower its
incremental costs. Other areas such as sales,

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collections, computer operations,
purchases of equipment, fuel, tires, parts, insurance, supplies, and corporate
management also lend themselves to economies of scale.

Regulation

In common with other interstate motor carriers, Vitran Express is subject
to various government regulations for operation and safety. Over the last 8
years the amount of regulation governing operations has been dramatically
reduced with the demise of the ICC and the elimination of state regulation
however there are still various agencies that rule on the issuance of
securities, and mergers.

Vitran Express, like other interstate motor carriers, is subject to
certain safety requirements governing interstate operations prescribed by the
United States Department of Transportation (DOT). The DOT has jurisdiction
over the qualification and the maximum hours of service of drivers and the
general safety of operations and equipment. The various requirements increase
the safety standards for conducting operations, but add administrative costs
and may affect the availability of qualified drivers throughout the trucking
industry.

The operations of Vitran Express are subject to federal, state and local
environmental laws, including laws dealing with transport of hazardous
materials.

Competition

Regional LTL carriers compete with other regional carriers and to a lesser
extent, interregional and national LTL carriers. To an even lesser degree,
regional LTL transportation companies compete against truckload carriers,
overnight package companies, railroads and airlines. A large number of regional
LTL carriers of various sizes operate within the same geographic areas served
by Vitran Express. Some of the competing carriers are larger than Vitran
Express in terms of tonnage handled and financial capacity.

After deregulation of the U.S. transportation industry in 1980, the
industry went through a period of intense competition which involved most LTL
carriers adopting discounting programs that severely reduced rates for some
shippers. Such attempts to gain market share through price reduction programs
exerted substantial downward pressure on the industrys price structure and
profit margins and caused many LTL carriers to cease operations. Although the
transportation industry has benefited from an improvement in economic
conditions in recent years, the industry remains highly competitive and
sensitive to changes in the economic conditions affecting its customers and the
geographic regions in which Vitran Express operates.

Environmental Services Group(Discontinued Operation)

The Environmental Services Group was established as a division of the
Company to provide solutions to the environmental/waste management industries.
The Environmental Services Group operates through its wholly-owned subsidiary,
ETL Environmental Technology Ltd. (ETL). Effective January 2, 2002 this
non-core business was sold for cash proceeds.

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Description of Property

The Company utilizes 91 facilities as of March 10, 2003, of which 26 are
owned, 52 are leased, and 13 are operated by agents.

Vitran utilizes 91 facilities located in Ontario, Quebec, Manitoba,
Saskatchewan, Alberta, British Columbia, New Brunswick, Nova Scotia, Oregon,
Indiana, Illinois, Michigan, Ohio, Kentucky, Missouri, Georgia, Minnesota,
Wisconsin, Pennsylvania, Iowa, North Dakota, South Dakota, Nebraska,
Washington, California, and Tennessee.

The nature of the freight transportation industry requires a network of
terminals. Some are more important than others but no single property is
considered material to Vitran. On an ongoing basis, The Company also
experiences turnover in properties depending on capacity requirements,
expansion initiatives and availability of locations.

Vitrans leases office space for its corporate head quarters in a building
in Toronto. The corporate office provides management services to its groups and
is responsible for corporate development, administration and finance.

ITEM 5. OPERATING and FINANCIAL REVIEW and PROSPECTS

SAFE HARBOUR CLAUSE

Information in this document relating to projected growth, improvements in
productivity and future results constitute forward-looking statements. Actual
results in future periods may differ materially from the forward-looking
statements because of a number of risks and uncertainties, including but not
limited to economic factors, demand for the Companys services, fuel price
fluctuations, the availability of employee drivers and independent contractors,
risk associated with geographic expansion, capital requirements, claims
exposure and insurance costs competition and environmental hazards.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The company prepares its financial statements in accordance with generally
accepted accounting principles in (GAAP) in Canada with a reconciliation to
United States GAAP, as disclosed in note 14 to the Consolidated Financial
Statements.

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenue and expenses during the
reporting period. Significant accounting policies and methods used in
preparation of the financial statements are described in note 1 to the
Consolidated Financial Statements. The Company evaluates its estimates and
assumptions on a regular basis, based on historical experience and other
relevant factors. Significant estimates are used in determining, but not
limited to, the allowance for doubtful accounts, income tax valuation
allowances and the fair value of reporting

22



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##### 



units for purposes of goodwill
impairment tests. Actual results could differ materially from those estimates
and assumptions.

Revenue Recognition

The Companys less-than-truckload, truckload business units and freight
brokerage operations recognize revenue and direct shipment costs upon the
delivery of the related freight. Revenue for the logistics operations is
recognized as the management services are provided.

Allowance for Doubtful Accounts

The Company records an allowance for doubtful accounts related to accounts
receivable that are considered to be impaired. The allowance is based on the
Companys knowledge of the financial condition of its customers, the aging of
the receivables, current business environment, customer and industry
concentrations, and historical experience. A change to these factors could
impact the estimated allowance and the provision for bad debts recorded in
selling, general and administrative expenses.

Income Tax Valuation Allowance

The Company records a valuation allowance against future income tax assets
generated when management believes it is more likely than not that some portion
or all of the future income tax assets will not be realized. Management
considers such factors as projected future taxable income and tax planning
strategies. A change to these factors could impact the estimated valuation
allowance and income tax expense.

Goodwill

The Company performs its annual goodwill impairment tests in the third
quarter of each year, and more frequently if events or changes in circumstances
indicate that an impairment loss may have been incurred. Impairment is tested
at the reporting unit level by comparing the reporting units carrying amount
to its fair value. The process of determining fair values is subjective and
requires management to exercise judgment in making assumptions about future
results, including revenue and cash flow projections at the reporting unit
level. Vitran recorded an impairment loss in the third quarter of 2002. Future
goodwill impairment tests may result in further impairment charges.

OPERATING and FINANCIAL REVIEW and REPORTS
YEAR ENDED DECEMBER 31, 2002 COMPARED TO THE YEAR ENDED
DECEMBER 31, 2001

Overview

The economic environment in 2002 continued to be depressed and posed
considerable challenges to Vitran. These challenges were effectively dealt with
by operating initiatives that were put in place in 2001 and the continued
disciplined focus on costs and efficiencies by operating management in 2002.
This allowed Vitran to maintain the positive earnings momentum that was created
in the second half of 2001, and the Company posted four successive quarters of
improved year-over-year results.

23



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Vitran generated significant improvement in consolidated operating
results, with the U.S. LTL and Freight Brokerage business units posting the
most significant gains. The Company also finished the year with a strengthened
balance sheet, reflecting materially lower net debt.

Consolidated Results

Revenue from continuing operations decreased 1.2% to $476.0 million in
2002 from $481.7 million in 2001. This is partly due to the continued subdued
North American economic environment, particularly in the United States, but is
mainly a result of reduced revenue at the Logistics segment where the Freight
Brokerage business unit has been merged with Vitran Logistics and restructured
to focus on profitable long-term business.

The gross profit of $77.1 million is 5.8% higher than 2001, reflecting an
improvement in the margin to 16.2% in 2002 from 15.1% in 2001. Operating
efficiencies were achieved throughout the Company, but the largest improvements
were recorded in the U.S. LTL and Logistics business units.

Selling, general and administrative (SG&A) expenses for 2002 were $48.7
million, 2.5% less than 2001. Redundancies eliminated by merging the Freight
Brokerage business unit and cost cutting programs put in place at the U.S. LTL
business unit contributed to the reduction in SG&A. Foreign exchange gains
included in SG&A of $1.0 million were generated on the repatriation of capital
from a foreign subsidiary both in 2002 and in 2001. SG&A in the current year
was also $0.8 million higher than last year due to the special retirement bonus
to the founding President and Chief Executive Officer. Income from continuing
operations before depreciation expense increased by 24.1% to $28.4 million,
from $22.9 million in 2001. This improvement is driven by the significant
increase in gross profit, augmented by the decline in SG&A expenses.
Depreciation expense as a percentage of revenue was 1.7% for 2002 compared to
2.0% for 2001 due to the continued reduction of older redundant equipment and
improved asset utilization. As a result of the operating improvements, the
consolidated operating ratio improved to 95.8% in 2002 from 97.3% in 2001.

Interest expense, net of interest income, was $5.2 million for 2002
compared to $5.9 million for 2001. The decline is attributable to the Company
making its final payment of US$5.7 million on its 9.04% senior notes and
further reducing its other debt obligations by $10.8 million during the year.
In addition, the Company met certain financial covenants that reduced its
interest rate on floating rate debt by 50 basis points during 2002.
Income tax expense for the year was $3.6 million versus $0.2 million in 2001,
reflecting improved profitability.

Net income was $10.9 million in 2002, yielding a $1.12 earnings per share
basic compared to a net loss of $1.9 million in 2001 and $0.19 loss per share
basic. The 2001 results include a net loss of $5.6 million on the sale of the
Companys non-core environmental business. The weighted average number of
shares outstanding decreased from 9.9 million in 2001 to 9.7 million in 2002 as
a result of the repurchase of 298,100 shares for cancellation. From a
continuing operations perspective, net income increased by 193.3% to $10.9
million for 2002 versus $3.7 million for 2001. This improvement is even more
noteworthy given
the unfavourable economic conditions under which it was achieved.

24



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Segmented Results

Less-Than-Truckload (LTL)

Notwithstanding the sluggish North American economy, revenue at the LTL
segment increased slightly from $375.6 million last year to $379.3 million in
the current year. The gross profit, however, increased significantly by 7.5% to
$63.4 million in 2002 due to operating efficiencies achieved in both Canada and
the U.S., but more particularly at the U.S. LTL
business unit. Fuel price pressure that persisted throughout 2002 was offset by
the Companys ability to pass through fuel price increases to its customers.

The Canadian LTL unit continued its stalwart performance in 2002,
improving both revenue and operating ratio year-over-year. Revenue and income
from operations gains were most notable in the expedited and cross-border
markets, offset slightly by declines in the national market. However, the
national business finished strongly in the fourth quarter with the addition of
new customers. Another notable achievement was yield improvement, where revenue
per hundredweight improved by 8.5%.

Revenue at the U.S. LTL unit of $236.0 million was essentially in line
with the 2001 figure of $237.6 million. While revenue per hundredweight
declined by 6.5%, tonnage and shipments increased by 5.5% and 1.3%,
respectively. Operating initiatives have led to improved earnings momentum, and
U.S. LTL more than doubled income from operations in 2002. The most significant
improvements were a 19.3% reduction in maintenance, a 9.6% reduction in claims
expense and other initiatives that reduced total SG&A by 10.0% for 2002
compared to 2001. The improvement in earnings has been achieved not only under
difficult economic conditions, but also in the face of significantly rising
liability insurance and health care costs.

Logistics

Revenues for the Logistics segment were down 23.5%, primarily the result
of a 30.3% reduction of revenue at the Freight Brokerage business unit. This
reduction resulted from the redesign of the business model whereby all
management and information systems were integrated under a common umbrella and
unprofitable customer relationships were eliminated. As a result of the success
of these initiatives and the continued superior performance at the rest of the
Logistics segment, the operating ratio improved from 99.8% in 2001 to 96.6% in
2002, and income from operations increased dramatically from $0.1 million to
$1.5 million.

Truckload (TL)

Revenue for the TL segment increased in 2002 by 7.9% to $53.3 million from
$49.4 million in 2001. Significant growth was achieved at the southern region
but was somewhat offset by a competitive market in the northern region with
overall revenue per trailer increasing 6.8% year-over-year. Income from
operations declined 8.6% in 2002 compared to 2001, primarily due to a 92.9%
increase in liability insurance and 114.2% increase in health care insurance.
These large increases were somewhat offset by operating efficiency gains in
trailer utilization, reduced empty miles driven, and driver safety programs.

YEAR ENDED DECEMBER 31, 2001 COMPARED TO THE YEAR ENDED
DECEMBER 31, 2000

25



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Overview

The economic environment in 2001 was extremely challenging which had a
negative impact on operating results, as it did with all of our major
competitors. Management changes implemented during the second quarter to more
aggressively deal with the economic downturn started to bear fruit later in the
year and the company finished 2001 with a stronger final quarter than in 2000.

On a consolidated basis, our core transportation group generated
profitable results and positive cash flow, albeit at levels less than in 2000.
Revenue from continuing operations was slightly higher than the prior year but
increased operating costs resulted in a lower gross margin and operating
income. On a net income basis the company lost money for the year, but this
was due to the write-off necessitated by disposing of the non-core
Environmental Services business.

Consolidated Results

Vitrans revenue from continuing operations of $481.7 million was in line
with the prior year despite a slower economy and a tougher, more challenging
operating environment. While overall tonnage from the Companys asset-based
segments declined on a year-over-year basis, a stable pricing environment meant
that our yield increased to offset the volume decrease.

Gross profit for the full year declined $9.1 million, or 11.1% to $72.9
million. This resulted in a gross profit margin of 15.1% compared to 17.0% in
2000. Operating efficiencies achieved in the second half of the year resulted
in a gross margin of 15.6% compared to 14.7% in the first half of the year.

Selling, general and administrative (SG&A) expenses increased $2.9
million, or 6.1% to $50.0 million in 2001 compared to $47.1 million in 2000.
The increase can be primarily attributed to reorganization expenses recorded
during the year, the benefits of which started materializing in the latter part
of 2001.

Income from continuing operations before depreciation expense declined to
$22.9 million from $34.9 million in 2000. This decrease was driven by higher
operating costs on a stable revenue base. Depreciation expense as a percentage
of revenue was 2.0% for 2001 compared to 2.1% for 2000, representing a $0.4
million decrease. This decrease was due to the sale of redundant equipment as
management focused on cost control and capital efficiency in the slowing
economy. The consolidated operating ratio before goodwill amortization
increased from 94.9% in 2000 to 97.3% in 2001.

Interest expense net of interest income was $5.9 million for 2001 compared
to $7.2 million for 2000. The decline was the result of lower interest rates
on the Companys floating rate debt.

Income taxes for the year were $0.2 million, resulting in an effective tax
rate of 4.0% compared to 28.6% for 2000. This decrease was due to a greater
percentage of the Companys income being earned in lower tax jurisdictions and
non-taxable foreign exchange gains.

26



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##### 



During the year the Company decided to divest the Environmental Services
business and provided for losses on disposition amounting to $4.1 million.
This operation was not involved in the freight business and was considered
non-core. On January 2, 2002 substantially all the capital assets of the
business were sold for cash proceeds of $2.7 million. The loss from
discontinued operation for 2001, including the provision for loss on
disposition, was $5.6 million. In 2000 the Environmental Services business had
a net loss of $0.4 million.

Basic earnings from continuing operations before amortization expense was
$0.59 per share for 2001 compared to $1.18 per share in 2000. As a result of
the loss from discontinued
non-core operations, the Company had a net loss of $0.19 per share basic
compared to net income of $0.96 per share basic for 2000.

Segmented Results

Less-than-truckload (LTL)

Notwithstanding the adverse economic conditions, the LTL segment generated
revenue in 2001 of $375.6 million, which was in line with the $376.1 million
recorded in 2000. Operating income declined by $10.6 million to $13.7 million
in 2001 as a result of higher operating costs on a stable revenue base.

The Canadian LTL division maintained its reliable performance in 2001
increasing revenues 1.1% over 2000 revenues. Revenue per hundredweight
increased 10.5% while tonnage and shipments declined 8.5% and 4.1%
respectively, compared to the prior year. Operating costs at the Canadian LTL
unit were higher on a year-over-year basis primarily due to increased linehaul
costs.

Revenue at the US LTL business declined 0.9% in 2001 compared to 2000.
Revenue per hundredweight increased 0.8% while tonnage and shipments declined
5.7% and 4.6% compared to 2000. Operating income declined 67.0% for the full
year compared with fiscal 2000; however, year-over-year the decline in the
second half of the year was only 24.0% as a result of management and
operational changes. A realigned management structure and cost controls
reduced SG&A expenses, but the most important gains were made in reducing
terminal, dock and cartage costs where management focus significantly reduced
salaries and wages on a per-shipment basis.

Logistics

Revenues for the Logistics segment, including Intermodal and Highway
Brokerage, were down 1.0% to $56.7 million from $57.3 million in 2000. The
Logistics business unit recorded its third consecutive year of record setting
revenue and operating income as a result of a significant increase in activity.
However, these gains were more than offset by shortfalls in the Intermodal and
Highway Brokerage business. During the year Vitran purchased the remaining
shares of The Freight Connection that it did not already own and privatized the
public company so that it could be integrated with Vitran Logistics. This
initiative, along with other changes, are expected to improve operating results
in 2002.

27



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Truckload (TL)

Revenue for the TL segment increased in 2001 by 3.7% to $49.4 million from
$47.7 million recorded in 2000. The TL segment had a disappointing year at the
operating income line as results decreased from $2.4 million in 2000 to $1.5
million in 2001. A significant portion of the decline can be attributed to an
increase in insurance and contract hauling costs.

OUTLOOK

While freight volumes improved slightly during the year, the operating
environment remains challenging, with cost pressure continuing in a number of
areas and no material
improvement expected in the economy. Having said that, management used
2002 to consolidate the operating efficiency programs that were started in 2001
and significantly improved operating results in a sluggish freight environment.
It is anticipated that these initiatives will continue to bear fruit in 2003
and resume the improving operating ratio trend.

The focus at the Canadian LTL unit will be to build on the excellent yield
and sales successes that were achieved in 2002, while at the same time
maintaining the existing operating ratio. At U.S. LTL the focus will be to
continue enhancing operating margins by generating more cost reductions and
improving density throughout the system. Cross-border activity, which increased
at a double digit pace in 2002, will also be a critical focus as this
represents a significant opportunity for both LTL units.

The management, operations and systems at the Logistics unit have been
fully integrated, and operating margins in 2003 should improve as the full year
effect of these successes are realized.

The Truckload unit will aim to build on the sales successes achieved in
2002, with the objective being to improve margins by achieving a better balance
of inbound and outbound freight.

While all segments of the business should improve in 2003, the biggest
opportunity continues to be the U.S. LTL operation, where cost reduction and
density improvement provide significant upside potential.

LIQUIDITY AND CAPITAL RESOURCES

While the economic environment continued to be very challenging in 2002,
the Company generated significantly improved cash flow and reduced debt net of
cash on hand to
a five-year low.

Cash flow from continuing operations before working capital changes for
the year was $18.8 million compared to $15.3 million in 2001. There was a
reduction of $6.6 million in non-cash working capital in 2002. The majority of
the working capital improvement was due to Vitrans continued effort to improve
its collection of accounts receivable, which contributed $3.3 million over
2001.

28



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##### 



Interest-bearing debt, net of cash on hand of $12.6 million, decreased to
$46.6 million in 2002, from $66.8 million at the end of 2001. The
interest-bearing debt is comprised of US$37.1 million drawn under the term
credit facility and other debt of $0.6 million. Interest-bearing debt, net of
cash on hand, as a percentage of total capital decreased from 47.2% in 2001 to
36.2% in 2002. During the year, the Company repaid US$5.7 million of the Senior
Notes and $10.8 million of other debt. At December 31, the Company utilized the
revolving credit facility for a standby letter of credit of US$2.2 million. At
December 31, 2002, the Company had $6.5 million of available unused revolving
credit facilities and $12.6 million of cash on hand.

Capital expenditures for the year amounted to $7.2 million compared to
$5.6 million in 2001. Of this, $4.0 million was used in leasehold improvements
and building construction while the remaining $3.2 million was invested in
tractors and trailers, information technology, and other machinery and
equipment. The construction expenditure represented the final payments for
the new Vancouver terminal constructed for the Canadian LTL operation. The
Company also added $9.3 million of new tractors and $13.4 million of trailing
equipment to
the fleet using lease financing during the year. This compares to $nil and
$11.4 million in 2001 respectively. The average age of the tractor fleet is 3.7
years and of the trailing fleet is 5.2 years.

Management expects that the existing working capital, together with
available revolving facilities, is sufficient to fund operating and capital
requirements in 2003, as well as service principal debt repayment requirements
of $11.1 million.

29



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ITEM 6. DIRECTORS, SENIOR MANAGEMENT and EMPLOYEES

The term of a director is the lessor of one year or until the next annual
meeting. The directors were last elected at the annual meeting held April 29,
2003 and will hold office until the next annual meeting. The next annual
meeting is scheduled for April 2004. The names and municipalities of residence
of the directors and officers of the Company, their positions with the Company
and their principal occupations during the past five years are as follows:

|                                                   |  |                                                                                        |  |          |      |         |  |                   |      |  |  |                     |           | 
|-------------------------------------------------- |  | -------------------------------------------------------------------------------------- |  | -------- | ---- | ------- |  | ----------------- | ---- |  |  | ------------------- | --------- | 
|                                                   |  |                                                                                        |  |          |      |         |  |                   |      |  |  | Approximate Number 
|                                                   |  |                                                                                        |  |          |      |         |  |                   |      |  |  | of Class A Voting  
|                                                   |  | Position with the                                                                      |  |          |      |         |  |                   |      |  |  | Shares Beneficially
|Name and Municipality                              |  | Company and                                                                            |  | Director |      | Officer |  | Owned as of March
|of Residence                                       |  | Principal Occupation                                                                   |  | Since    |      | Since   |  | 10, 2003         
|                                                   |  |                                                                                        |  |          |      |         |  |                  
|Anthony F. Griffiths(2)(3)
Toronto, Ontario        |  | Director (Corporate Director)                                                          |  |          | 1987 |         |  |                   | 1987 |  |  |                     | 807,427   | 
|                                                  
|Albert Gnat, Q.C(3)(4)(5)
Caledon, Ontario         |  | Vice-Chairman of the
Board and Director
(Senior Partner in the
law firm Lang Michener) |  |          | 1987 |         |  |                   | 1987 |  |  |                     | 957,421   | 
|                                                  
|Richard D. McGraw
(1)(2)(3)(4)(5)
Toronto, Ontario |  | Chairman of the Board and
Director (President of
Lochan Ora Group of
Companies)        |  |          | 1987 |         |  |                   | 1987 |  |  |                     | 1,314,839 | 
|                                                  
|Carl Cook(4)
Indianapolis, Indiana                 |  | Director (Principal,
Decisions Inc.)                                                   |  |          | 1995 |         |  |                   | -    |  |  |                     | 376,421   | 
|                                                  
|G. Mark Curry(1)(2)
Toronto, Ontario               |  | Director (President,
Revmar Inc.)                                                      |  |          | 1987 |         |  |                   | -    |  |  |                     | 50,000    | 
|                                                  
|Rick E. Gaetz
Mississauga, Ontario                 |  | Director (President and
Chief Executive Officer,
Vitran Corporation Inc.)              |  |          | 1995 |         |  |                   | 1989 |  |  |                     | 69,120    | 
|                                                  
|Graham Savage (1)(3)(5)
Mississauga, Ontario       |  | Director (Managing
Director, Callisto
Capital LP)                                      |  |          | 1987 |         |  |                   | -    |  |  |                     | 0         | 
|                                                  
|Kevin Glass
Etobicoke,
Ontario                     |  | Vice President Finance
and Chief Financial
Officer, Vitran
Corporation Inc.            |  |          |      |         |  |                   | 1998 |  |  |                     | 30,000    | 



---

|(1) |  | Member of the Audit Committee               
|--- |  | --------------------------------------------
|   
|(2) |  | Member of the Compensation Committee        
|   
|(3) |  | Member of the Executive Committee           
|   
|(4) |  | Member of the Capital Expenditure Committee 
|   
|(5) |  | Member of the Corporate Governance Committee

Except as otherwise noted below, the directors and officers of the Company
have held their present or similar positions with the same or predecessor firms
for the past five years, with the following exceptions:

Mr. Griffiths was the President, CEO, and Chairman of the Board of Mitel
Corporation from January 1991 to January 1993. From January 1993 to March 1996,
Mr. Griffiths was an independent consultant.

30



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##### 



Mr. Savage was the Senior Vice-President, Finance and Chief Financial
Officer of Rogers Communications Inc. from 1989 to 1996.

The Board of Directors of the Company has established five Board
committees that are comprised of:

1.     The Executive Committee, composed of Mr. McGraw and four unrelated
directors, has a mandate to examine operating performance, strategies, policies
and procedures of the Corporation and other matters that require attention
prior to the next Board meeting. It acts in a consultative capacity and does
not have approval authority.

2.     The Audit Committee, is composed only of outside, unrelated directors. In
accordance with the Audit Committee Charter, each member is financially
literate and one member of the Audit Committee, Mr. Savage, has been designated
by the Board as having financial expertise. The roles of the Audit Committee
include ensuring that the Corporations audited financial statements present
the financial position and results of operations fairly in accordance with
generally accepted accounting principles, that accounting principles are
appropriate in the circumstances, and that any issues arising between
Management and the auditors are either resolved or a course of action put in
place that will lead to resolution. The Committee also ensures that action is
taken regarding the auditors report to Management on internal controls and
accounting systems, and the procedures for reviewing financial information
prior to distribution to shareholders are adequate.

3.     The Capital Expenditures Committee, composed of Mr. McGraw and two unrelated
directors with one acting as Chairman, reviews planned capital expenditures for
the Corporation. The Board of Directors has established a procedure whereby
the Capital Expenditure Committee may approve capital expenditures up to
$200,000 on behalf of the Board with the requirement to report these capital
expenditure approvals to the full Board at its next meeting.

4.     The Compensation Committee, composed solely of outside, unrelated directors,
reviews compensation policies to ensure that they are consistent with corporate
objectives and administers the Corporations executive compensation program.
Recommendations with respect to the remuneration of senior executive staff and
the CEO are made by the Committee to the full Board. The Committee also
evaluates the performance of the Corporations executive officers relative to
expectations.

5.     The Corporate Governance Committee, composed solely of outside, unrelated
directors, reviews the corporate governance policies to ensure that they are
consistent with corporate objectives. In addition the Committee reviews the
effectiveness of the Board as a whole, the committees of the Board and the
contribution of individual directors. Recommendations with respect to
corporate governance policies are made by the Committee to the full Board.

The Board of Directors of the Company may also establish other committees
from time to time to assist in the discharge of its responsibilities.

31



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##### 



Compensation of Directors

Director and committee fees are paid to unrelated directors. For the
financial year ended December 31, 2002, directors fees were paid to six of the
seven directors of the Corporation on the basis of a retainer of $7,500 plus
$1,000 for each meeting of the Board of Directors which he attended and an
additional fee of $6,685 was paid to Mr. Griffiths as Chairman of the Board.
Mr. McGraw was paid $10,000 per month commencing May 2, 2002 when he assumed
the position of Chairman of the Board. Fees for the Audit, Compensation,
Capital Expenditures and Corporate Governance Committees were paid to six of
seven directors on the basis of a retainer of $2,000 to the chair of each
committee plus $750 for each meeting. Fees for the Executive Committee were
paid to four of the seven directors on the basis of $750 for each meeting.

During the 2002 fiscal year of the Corporation, the Corporation made lease
and operating cost payments totalling $10,355 with respect to an automobile
used by Mr. Gnat, a director of the Corporation.

Nothing has been accrued for the pension or retirement of the directors.

D&O Insurance

The Corporation has purchased a policy of insurance for the benefit of its
directors and officers, and the directors and officers of its subsidiaries,
against liability incurred by them in the performance of their duties as
directors and officers of the Corporation, or its subsidiaries, as the case may
be. The amount of premium paid with respect to this policy for the financial
year ended December 31, 2002 was $90,815. The policy does not specify that any
part of the premium is paid in respect of either directors as a group or
officers as a group. The entire premium is paid by the Corporation. The
current annual policy limit is $25.0 million subject to a deductible of $0.5
million per. There have been no claims under the directors and officers
insurance.

32



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##### 



Compensation of Officers

Summary Compensation Table

The following table sets forth all compensation for the periods indicated, paid
in respect of the individuals (the Named Executive Officers) who were, at
December 31, 2002, the Chief Executive Officer and the two most highly
compensated executive officers (as defined in the Regulation to the Securities
Act (Ontario)) of the Corporation.

|                                                                                                |  |      |                |     |  |                     |                         |                        |  |                         |  |         |    |                  |  |                   |  |              |  |             |  |                
|----------------------------------------------------------------------------------------------- |  | ---- | -------------- | --- |  | ------------------- | ----------------------- | ---------------------- |  | ----------------------- |  | ------- | -- | ---------------- |  | ----------------- |  | ------------ |  | ----------- |  | ---------------
|                                                                                                |  |      |                |     |  | Annual Compensation |                         | Long-Term Compensation |  |                        
|                                                                                                |  |      |                |     |  |                     |                         |                        |  |                        
|                                                                                                |  |      |                |     |  |                     |                         |                        |  |                         |  |         |    |                  |  | Awards            |  | Payouts      |  |            
|                                                                                                |  |      |                |     |  |                     |                         |                        |  |                         |  |         |    |                  |  |                   |  |              |  |            
|                                                                                                |  |      |                |     |  |                     |                         |                        |  |                         |  |         |    |                  |  |                   |  | Restricted   |  |             |  |                
|                                                                                                |  |      |                |     |  |                     |                         |                        |  |                         |  |         |    |                  |  |                   |  | Shares       |  |             |  |                
|                                                                                                |  |      |                |     |  |                     |                         |                        |  |                         |  |         |    |                  |  |                   |  | or           |  |             |  |                
|                                                                                                |  |      |                |     |  |                     |                         |                        |  |                         |  | Other   |    | Securities Under |  | Restricted        |  |              |  | (2)        
|                                                                                                |  |      |                |     |  |                     |                         |                        |  |                         |  | Annual  |    | Options          |  | Share             |  | LTIP         |  | All Other  
|Name and Principal                                                                              |  |      |                |     |  | Salary              |                         | Bonus                  |  | Compensation            |  | Granted |    | Units            |  | Payouts           |  | Compensation
|Position                                                                                        |  | Year |                | ($) |  | ($)                 |                         | ($)                    |  | (#)                     |  | ($)     |    | ($)              |  | ($)              
|                                                                                                |  |      |                |     |  |                     |                         |                        |  |                         |  |         |    |                  |  |                  
|Richard D. McGraw
Chairman of the Board
(President &
Chief Executive Officer
until May 2, 2002) |  |      | 2002
2001
2000 |     |  |                     | 99,275
297,825
285,000  |                        |  | Nil
Nil
150,000         |  |         | (1 | )                |  | Nil
15,000
Nil    |  | Nil
Nil
Nil  |  | Nil
Nil
Nil |  | 830,000
Nil
Nil
|                                                                                               
|Rick E. Gaetz
President &
Chief Executive Officer
(Chief Operating Officer
until May 2, 2002)   |  |      | 2002
2001
2000 |     |  |                     | 350,000
303,121
275,000 |                        |  | 350,000
141,456
160,000 |  |         | (1 | )                |  | 50,000
15,000
Nil |  | Nil
Nil
Nil  |  | Nil
Nil
Nil |  | Nil
Nil
Nil    
|                                                                                               
|Kevin A. Glass
Vice President Finance
& Chief Financial
Officer                                 |  |      | 2002
2001
2000 |     |  |                     | 240,000
224,675
215,000 |                        |  | 120,000
59,912
65,000   |  |         | (1 | )                |  | 14,000
15,000
Nil |  | Nil
Nil
Nil  |  | Nil
Nil
Nil |  | Nil
Nil
Nil    

(1)  For each of the above named executive officers, perquisites and other
personal benefits were no greater than the lesser of $50,000 and 10% of the
total annual salary and bonus of such Named Executive Officers for the 2002
financial year.

(2)  On May 2, 2002, Mr. Richard McGraw resigned as President and Chief
Executive Officer of Vitran Corporation Inc., to become the non-executive
Chairman of the Board, replacing Anthony F. Griffiths, also a co-founder of the
Company, who remains on Vitrans Board of Directors. Mr. McGraw was awarded a
special one-time retirement bonus of $830,000 for his achievements as founding
President and Chief Executive Officer.

Employment Arrangements

The Corporation has entered into arrangements effective February 25, 2003
with each of Messrs. Gaetz and Glass providing for termination payments to each
of these individuals in the event that their employment with the Corporation is
terminated as a result of a change of control. In the case of Mr. Gaetz, the
termination payment will be two and half times his average last

33



---



##### 



three years
salary and bonus and in the case of Mr. Glass, one and half times his average
last three years salary and bonus. In addition, in the event of a change of
control of the Corporation
or a sale of all or substantially all of its assets, each of Messrs Gaetz
and Glass may be entitled to a bonus based on the transaction value.

Share Compensation Arrangements

The Companys existing Option Plan authorizes the granting to directors,
full-time officers and employees of the Company of options to purchase Class A
Shares. Such options may be granted by the directors of the Company at their
discretion. The current policy is to grant options at the market value of the
securities underlying the options on the date of the grant. The options vest
over the first 6 years and expire at the end of 10 years. Such options are to
contain provisions whereby, in the event of retirement on or after attaining
the age of 65 years, or, with the consent of the Board of Directors of the
Company, on or after attaining the age of 55 years, or due to disability to an
extent and in a manner as determined by the Board of Directors or the death of
the optionee prior to the expiry of his options, the right to exercise such
options is to continue in the hands of the optionee or his legal personal
representatives for a period of 6 months after the date of such retirement or
death. An optionee may not exercise any options prior to the first anniversary
of their issuance. On the first anniversary of the issuance of such options and
on each subsequent anniversary of their issuance, the optionee acquires the
right to exercise either one fifth of the total number of options (in the case
of options with a six year vesting period) or one third of the total number of
options (in the case of options with a four year vesting period). All rights of
exercise under the Option Plan are cumulative.



|(a) |  | Options/SARs Granted to Named Executive Officers During the Most Recently
Completed Financial Year
|--- |  | --------------------------------------------------------------------------------------------------

Details of options granted the Named Executive Officers during the
financial year ended December 31, 2002, are shown in the table set out below.
During the financial year ended December 31, 2002, no stock appreciation rights
(SAR) were granted to Named Executive Officers and, as of December 31, 2002,
no SARs were outstanding.

|                  |  |            |        |              |   |              |      |              |     |                     |      |               |     |   |      |  |     |               |  | 
|----------------- |  | ---------- | ------ | ------------ | - | ------------ | ---- | ------------ | --- | ------------------- | ---- | ------------- | --- | - | ---- |  | --- | ------------- |  | 
|                  |  |            |        |              |   | % of Total   |      |              |     |                     |      | Market Value  |     |   |      | 
|                  |  |            |        |              |   | Options      |      |              |     |                     |      | of Securities |     |   |      | 
|                  |  | Securities |        | Granted to   |   |              |      |              |     | Underlying          |      |               |     |  
|                  |  | Under      |        | Employees    |   |              |      |              |     | Options on the Date |      |               |     |  
|                  |  | Options    |        | in Financial |   | Exercise     |      | of Grant     |     | Expiration         
|Name              |  | (#)        |        | Year         |   | ($/Security) |      | ($/Security) |     | Date               
|                  |  |            |        |              |   |              |      |              |     |                    
|Richard D. McGraw |  | Nil        |        |              | 0 | %            |      |              | N/A |                     |      |               | N/A |   |      |  | N/A |              
|Rick E. Gaetz     |  |            | 50,000 |              |   |              | 28.6 | %            |     | $                   | 3.50 |               |     | $ | 3.50 |  |     | Feb. 20, 2112
|Kevin A. Glass    |  |            | 14,000 |              |   |              | 8.0  | %            |     | $                   | 3.50 |               |     | $ | 3.50 |  |     | Feb. 20, 2112



|(b) |  | Options Exercised by Named Executive Officers During the Most Recently
Completed Financial Year and Financial Year-End Option Value
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------

34



---



##### 



Details of options exercised by the Named Executive Officers of the
Company during the financial year ended December 31, 2002 and the number and
value of unexercised options as at December 31, 2002, are shown in the table
set out below.

|                                                                |  |             |  |           |  |                        |         |                         |  |             |        |               |  |                      |         |  |  |   |         | 
|--------------------------------------------------------------- |  | ----------- |  | --------- |  | ---------------------- | ------- | ----------------------- |  | ----------- | ------ | ------------- |  | -------------------- | ------- |  |  | - | ------- | 
|                                                                |  | Securities  |  | Aggregate |  |                        |         |                         |  |             |        |               |  | Value of Unexercised
|                                                                |  | Acquired on |  | Value     |  | Unexercised Options at |         | In-the-Money Options at
|Name and Principal                                              |  | Exercise    |  | Realized  |  | December 31, 2002      |         | December 31, 2002      
|Position                                                        |  | (#)         |  | ($)       |  | (#)                    |         | ($)                    
|                                                                |  |             |  |           |  |                        |         |                        
|                                                                |  |             |  |           |  | Exercisable            |         | Unexercisable           |  | Exercisable |        | Unexercisable
|                                                                |  |             |  |           |  |                        |         |                         |  |             |        |              
|Richard D. McGraw
Chairman of the
Board                         |  | Nil         |  | Nil       |  |                        | 185,500 |                         |  |             | 37,000 |               |  | $                    | 441,440 |  |  | $ | 77,660  | 
|                                                               
|Rick E. Gaetz
President and
Chief Executive
Officer             |  | Nil         |  | Nil       |  |                        | 185,500 |                         |  |             | 87,000 |               |  | $                    | 547,440 |  |  | $ | 314,660 | 
|                                                               
|Kevin A. Glass
Vice President
Finance &
Chief Financial
Officer |  | Nil         |  | Nil       |  |                        | 64,000  |                         |  |             | 45,000 |               |  | $                    | 133,640 |  |  | $ | 139,320 | 



---

|    |  | Note:                                                                                 
|--- |  | --------------------------------------------------------------------------------------
|   
|(1) |  | All Securities granted in 2002 were of options to purchase Class A Voting
Shares.     
|   
|(2) |  | Options are granted at the market value of Class A Voting Shares at the
time of grant.

The closing price of Vitran Corporation Inc. Class A Voting Shares on The
Toronto Stock Exchange on December 31, 2002 was $8.24.

35



---



##### 



Options to Purchase

From time to time, the Board of Directors may grant, at its discretion,
stock options to the Directors, officers and employees of the Company, in
accordance with the rules of and subject to the approval of The Toronto Stock
Exchange.

The following table sets out information relating to outstanding options
to purchase Class A Voting Shares issued by the Company that were outstanding
as of March 10, 2003 with the number of persons in each category shown in
parentheses:

|                                             |  |                 |         |               |  |                   |  |             |      |  |  |                    |  |  |  | 
|-------------------------------------------- |  | --------------- | ------- | ------------- |  | ----------------- |  | ----------- | ---- |  |  | ------------------ |  |  |  | 
|                                             |  | Number of       |         |               |  |                   |  |             |      |  |  | Exercise Price Per
|                                             |  | Class A Voting  |         |               |  |                   |  |             |      |  |  | Class A Voting    
|                                             |  | Shares Optioned |         | Date of Grant |  | Share             |  | Expiry Date
|                                             |  |                 |         |               |  |                   |  |            
|Executive Officers (two)                     |  |                 | 12,500  |               |  | March 9, 1999     |  | $           | 8.25 |  |  | March 9, 2009     
|                                             |  |                 | 75,000  |               |  | October 1, 1999   |  | $           | 7.00 |  |  | October 1, 2009   
|                                             |  |                 | 50,000  |               |  | October 19,1998   |  | $           | 6.00 |  |  | October 19, 2008  
|                                             |  |                 | 10,000  |               |  | March 1, 1998     |  | $           | 7.25 |  |  | March 1, 2008     
|                                             |  |                 | 40,000  |               |  | March 1, 1997     |  | $           | 4.25 |  |  | March 1, 2007     
|                                             |  |                 | 50,000  |               |  | May 6, 1994       |  | $           | 5.88 |  |  | May 6, 2004       
|                                             |  |                 | 50,000  |               |  | August 7, 1996    |  | $           | 4.00 |  |  | August 7, 2006    
|                                             |  |                 | 30,000  |               |  | February 19, 2001 |  | $           | 4.00 |  |  | February 19, 2011 
|                                             |  |                 | 64,000  |               |  | February 20, 2002 |  | $           | 3.50 |  |  | February 20, 2012 
|                                            
|Directors (including Chairman and            |  |                 | 100,000 |               |  | April 21, 1994    |  | $           | 6.00 |  |  | April 21, 2004    
|Vice-Chairman but excluding                  |  |                 | 40,000  |               |  | March 1, 1997     |  | $           | 4.25 |  |  | March 1, 2007     
|Executive Officers)(six)                     |  |                 | 135,000 |               |  | March 1, 1998     |  | $           | 7.25 |  |  | March 1, 2008     
|                                             |  |                 | 7,500   |               |  | March 9, 1999     |  | $           | 8.25 |  |  | March 9, 2009     
|                                             |  |                 | 50,000  |               |  | October 1, 1999   |  | $           | 7.00 |  |  | October 1, 2009   
|                                             |  |                 | 15,000  |               |  | February 11, 2001 |  | $           | 4.00 |  |  | February 11. 2011 
|                                             |  |                 | 50,000  |               |  | February 20, 2002 |  | $           | 3.50 |  |  | February 20, 2012 
|                                            
|Other employees of subsidiaries (thirty one) |  |                 | 9,500   |               |  | March 9, 1999     |  | $           | 8.25 |  |  | March 9, 2009     
|                                             |  |                 | 20,000  |               |  | December 10, 1998 |  | $           | 7.50 |  |  | December 10, 2008 
|                                             |  |                 | 30,000  |               |  | August 4, 1998    |  | $           | 7.60 |  |  | August 4, 2008    
|                                             |  |                 | 9,500   |               |  | March 1, 1998     |  | $           | 7.25 |  |  | March 1, 2008     
|                                             |  |                 | 27,000  |               |  | March 1, 1997     |  | $           | 4.25 |  |  | March 1, 2007     
|                                             |  |                 | 22,700  |               |  | April 21, 1994    |  | $           | 6.00 |  |  | April 21, 2004    
|                                             |  |                 | 6,960   |               |  | May 6, 1994       |  | $           | 5.88 |  |  | July 19, 2004     
|                                             |  |                 | 15,000  |               |  | August 19, 1994   |  | $           | 7.00 |  |  | August 19, 2004   
|                                             |  |                 | 20,000  |               |  | October 31, 1994  |  | $           | 7.00 |  |  | October 31, 2004  
|                                             |  |                 | 5,000   |               |  | April 5, 1995     |  | $           | 7.75 |  |  | April 5, 2005     
|                                             |  |                 | 5,000   |               |  | June 1, 1995      |  | $           | 8.75 |  |  | June 1, 2005      
|                                             |  |                 | 22,500  |               |  | August 7, 1996    |  | $           | 4.00 |  |  | August 7, 2006    
|                                             |  |                 | 10,000  |               |  | May 6, 1999       |  | $           | 8.50 |  |  | May 6, 2009       
|                                             |  |                 | 65,000  |               |  | October 1,1999    |  | $           | 7.00 |  |  | October 1, 2009   
|                                             |  |                 | 15,000  |               |  | May 2, 2000       |  | $           | 5.25 |  |  | May 2, 2010       
|                                             |  |                 | 10,000  |               |  | September 5, 2000 |  | $           | 6.20 |  |  | September 5, 2010 
|                                             |  |                 | 25,000  |               |  | January 19, 2001  |  | $           | 5.10 |  |  | January 19, 2011  
|                                             |  |                 | 25,000  |               |  | February 19, 2001 |  | $           | 4.00 |  |  | February 19, 2011 
|                                             |  |                 | 61,000  |               |  | February 20, 2002 |  | $           | 3.50 |  |  | February 20, 2012 

As of March 10, 2003 options to purchase 779,000 Class A Voting Shares
were held by the directors and executive officers of the Company as a group. No
options to purchase Class A Voting Shares were exercised by officers but,
10,640 options to purchase Class A. Voting Shares were exercised by employees
of the Company during the year ended December 31, 2002. For the period January
1, 2003 to March 10, 2003, 21,000 options to purchase Class A. Voting shares
were exercised by employees of the Company.

36



---



##### 



Employee Stock Option Plan

The Employee Stock Option Plan was presented by the Company for approval
at the May 17, 1995 Annual Meeting because the Toronto Stock Exchange has
promulgated new rules governing the content of employee stock option plans and
the Company wished to enact a new plan which would be congruous with these new
rules. The adoption of the Employee Stock Option Plan was approved at the May
17, 1995 Annual Meeting. Pursuant to the Employee Stock Option Plan, the Board
of Directors is authorized to issue, from time to time in its discretion,
options to employees, officers and directors of the Company to acquire Class A
Voting Shares of the Company at such prices as may be fixed by the Board of
Directors at that time, provided that the price shall not be less than the
minimum price then permitted by regulatory authorities having jurisdiction,
currently the market price at the date the option is granted. Options granted
under the plan shall be non-assignable and non-transferable and shall be for a
term not exceeding 10 years. The number of Class A Voting Shares issuable
pursuant to the Employee Stock Option Plan was initially set at 150,000. An
amendment to the Vitran Employee Stock Option Plan was approved at the May 22,
1996 Annual Meeting to increase the number of Class A Voting Shares issuable
from 150,000 to 650,000. An amendment to the Vitran Employee Stock Option Plan
was approved at the May 4, 1999 Annual Meeting to increase the number of Class
A Voting Shares issuable from 650,000 to 1,000,000. A further amendment to the
Vitran Employee Stock Option Plan was approved at the May 3, 2000 Annual
Meeting extending the term of existing options under the plan to ten years. The
Company continues to have approximately 1,000,000 Class A Voting Shares
issuable under the existing Option Plan, resulting in a total for the Class A
Voting Shares issuable under employee stock option plans of approximately 10%
of the Class A Voting Shares outstanding as of the record date for the Annual
Meeting.

No option may be granted to insiders (as defined in the Securities Act
(Ontario)) if such options, together with any other options previously granted
by the Company (collectively the Share Compensation Arrangements) could
result in:



| | (i)   |  | the number of Class A Voting Shares reserved for issuance
pursuant to Share Compensation Arrangements to insiders collectively
exceeding 12% of the number of Class A Voting Shares then issued and
outstanding less Class A Voting Shares issued within the previous 12
months pursuant to Share Compensation Arrangements (the Outstanding
Issue);
| | ----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (ii)  |  | the issuance to insiders collectively, within the 12 months
immediately preceding or 12 months immediately following the date of
grant of such options, of a number of Class A Voting Shares
exceeding 5% of the Outstanding Issue; or                                                                                                                
|
| | (iii) |  | the issuance to any one insider, within the 12 months
immediately preceding or 12 months immediately following the date of
grant of such options, of a number of Class A Voting Shares
exceeding 5% of the Outstanding Issue.                                                                                                                         

The number of Class A Voting Shares reserved for issuance at any time to
any one person pursuant to Share Compensation Arrangements shall not exceed 5%
of the number of Class A Voting Shares then issued and outstanding.

37



---



##### 



For simplicity, holders of options under the original Option Plan of the
Company will continue to hold their options subject to the terms of the Option
Plan and will not have their options
replaced by options under the Employee Stock Option Plan. The terms of the
options existing under the Option Plan conform to the terms of the Employee
Stock Option Plan in all material respects. No new options will be granted
under the Option Plan.

ITEM 7. MAJOR SHAREHOLDERS and RELATED PARTY TRANSACTIONS

To the knowledge of the directors and officers of the Company, as of March
10, 2003 the only persons or companies beneficially owning, directly or
indirectly, or exercising control or direction over more than 10% of the
outstanding Class A Voting Shares of the Company are as follows (1):

|                      |  |                                   |  |                   |     |                  |       |  |  | 
|--------------------- |  | --------------------------------- |  | ----------------- | --- | ---------------- | ----- |  |  | 
|                      |  |                                   |  | Number of Class A |     |                  |       | 
|                      |  |                                   |  | Voting Shares (1) |     | % of Outstanding
|Title of Class        |  | Identity of Person or Group       |  | Shares            |     | Class A Voting  
|                      |  |                                   |  |                   |     |                 
|Class A voting shares |  | Richard D. McGraw                 |  | 1,314,839         | (2) |                  | 13.8%
|Class A voting shares |  | Fidelity Investments              |  | 986,000           | (3) |                  | 10.3%
|Class A voting shares |  | Officers and Directors as a class |  | 3,605,228         |     |                  | 37.8%



---

|    |  | NOTES:                                                                                                                                                                                                                                                                                                                       
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) |  | The information as to Class A Voting Shares beneficially owned directly
or indirectly by each shareholder or over which each shareholder exercises
control or direction, not being within the knowledge of the Company, has
been furnished by the respective shareholders individually.                                      
|   
|(2) |  | These shares are presently registered in the name of Lochan Ora
Investments Limited (100,000 shares) Waterstone Investments Corporation
(1,018,396) and Parkway Automotive Investments Limited (196,443 shares),
companies controlled by Richard D. McGraw, President, Chief Executive
Officer and a director of the Company.
|   
|(3) |  | In the fourth quarter of 2001 Vitran Corporation Inc. received
notification from Fidelity Investment that they had acquired shares
exceeding the 10% ownership threshold.                                                                                                                                                    

To the best of managements knowledge, the Company is not owned or
controlled directly or indirectly by any other company or foreign governments.

As of December 31, 2002 there were 8,464,883 Class A Voting Shares held by
residents in the Canada, representing 88.5% of the outstanding Class A Voting
Shares. The computation of the number and percentage of Class A Voting Shares
held in the Canada is based upon the number of Class A Voting Shares held of
record by holders with Canadian addresses. Residents of the Canada may
beneficially own Class A Voting Shares that are held of record by non-residents
of the Canada.

38



---



##### 



ITEM 8. FINANCIAL INFORMATION

Financial Statements

Consolidated Balance Sheets as at December 31, 2002, and 2001 and the
Consolidated Statements of Income, Retained Earnings and Cash Flow for the
years ended December 31, 2002, 2001, and 2000, reported on by KPMG LLP,
Chartered Accountants. These statements are prepared in accordance with
generally accepted accounting principles in Canada, which differ from generally
accepted accounting principles in the United States. See Note 14 to the
financial statements. Page F-27.

Dividend Policy

On November 6, 2001 Vitran announced that its Board of Directors has voted
to suspend payment of the semi-annual dividend of $0.035 per share, effective
immediately. The change in policy has been made so that all internally
generated funds will be used to repay debt and support future capital
expenditure programs.

There have been no changes to the Dividend Policy since November 6, 2001.

39



---



##### 



ITEM 9. THE OFFERING and LISTING

The Class A Voting Shares are listed for trading under the symbol VTN.A
on The Toronto Stock Exchange (the TSE) and on the American Stock Exchange
(AMEX), effective April 6, 2000, under the symbol VNN. The following table
sets forth the market price range and trading volume of the Class A Voting
Shares on the TSE and AMEX for the periods indicated (the quarterly information
is based on a December 31 fiscal year end).

|                              |  |      |      |     |  |        |      |  |  |  |           | 
|----------------------------- |  | ---- | ---- | --- |  | ------ | ---- |  |  |  | --------- | 
|                              |  | High |      | Low |  | Volume
|                              |  |      |      |     |  |       
|Toronto Stock Exchange (CDN$) |  |      |      |     |  |        |      |  |  |  |           | 
|2003                          |  |      |      |     |  |        |      |  |  |  |           | 
|First Quarter                 |  | $    | 9.08 |     |  | $      | 7.96 |  |  |  | 1,375,700 | 
|2002                          |  |      |      |     |  |        |      |  |  |  |           | 
|Fourth Quarter                |  | $    | 8.24 |     |  | $      | 6.83 |  |  |  | 77,700    | 
|Third Quarter                 |  | $    | 7.95 |     |  | $      | 6.07 |  |  |  | 98,300    | 
|Second Quarter                |  | $    | 8.20 |     |  | $      | 4.26 |  |  |  | 217,100   | 
|First Quarter                 |  | $    | 5.35 |     |  | $      | 3.25 |  |  |  | 217,300   | 
|2001                          |  |      |      |     |  |        |      |  |  |  |           | 
|Fourth Quarter                |  | $    | 3.94 |     |  | $      | 3.20 |  |  |  | 765,000   | 
|Third Quarter                 |  | $    | 4.24 |     |  | $      | 2.99 |  |  |  | 39,000    | 
|Second Quarter                |  | $    | 4.75 |     |  | $      | 3.50 |  |  |  | 49,500    | 
|First Quarter                 |  | $    | 5.50 |     |  | $      | 4.00 |  |  |  | 180,400   | 
|American Stock Exchange (US$) |  |      |      |     |  |        |      |  |  |  |           | 
|2003                          |  |      |      |     |  |        |      |  |  |  |           | 
|First Quarter                 |  | $    | 6.00 |     |  | $      | 5.05 |  |  |  | 521,000   | 
|2002                          |  |      |      |     |  |        |      |  |  |  |           | 
|Fourth Quarter                |  | $    | 5.29 |     |  | $      | 4.55 |  |  |  | 104,600   | 
|Third Quarter                 |  | $    | 5.12 |     |  | $      | 3.80 |  |  |  | 117,000   | 
|Second Quarter                |  | $    | 5.43 |     |  | $      | 2.80 |  |  |  | 179,400   | 
|First Quarter                 |  | $    | 3.48 |     |  | $      | 1.98 |  |  |  | 61,800    | 
|2001                          |  |      |      |     |  |        |      |  |  |  |           | 
|Fourth Quarter                |  | $    | 2.45 |     |  | $      | 2.00 |  |  |  | 102,400   | 
|Third Quarter                 |  | $    | 2.95 |     |  | $      | 2.35 |  |  |  | 94,600    | 
|Second Quarter                |  | $    | 3.00 |     |  | $      | 2.15 |  |  |  | 172,600   | 
|First Quarter                 |  | $    | 3.63 |     |  | $      | 2.90 |  |  |  | 207,900   | 

40



---



##### 



|                              |  |      |       |     |  |   |      | 
|----------------------------- |  | ---- | ----- | --- |  | - | ---- | 
|                              |  | High |       | Low
|                              |  |      |       |    
|Five Year Annual Information  |  |      |       |     |  |   |      | 
|Toronto Stock Exchange (CDN$) |  |      |       |     |  |   |      | 
|2002                          |  | $    | 8.24  |     |  | $ | 3.25 | 
|2001                          |  | $    | 5.50  |     |  | $ | 2.99 | 
|2000                          |  | $    | 7.25  |     |  | $ | 4.25 | 
|1999                          |  | $    | 10.00 |     |  | $ | 7.00 | 
|1998                          |  | $    | 8.95  |     |  | $ | 4.75 | 
|American Stock Exchange (US$) |  |      |       |     |  |   |      | 
|2002                          |  | $    | 5.43  |     |  | $ | 1.98 | 
|2001                          |  | $    | 3.63  |     |  | $ | 2.00 | 
|2000                          |  | $    | 5.13  |     |  | $ | 2.63 | 
|1999                          |  | $    | 6.75  |     |  | $ | 4.84 | 
|1998                          |  | $    | 6.50  |     |  | $ | 1.63 | 

|                              |  |      |      |     |  |   |      | 
|----------------------------- |  | ---- | ---- | --- |  | - | ---- | 
|                              |  | High |      | Low
|                              |  |      |      |    
|Recent Six Month Information  |  |      |      |     |  |   |      | 
|Toronto Stock Exchange (CDN$) |  |      |      |     |  |   |      | 
|May 2003                      |  | $    | 8.87 |     |  | $ | 8.45 | 
|April                         |  | $    | 8.50 |     |  | $ | 8.20 | 
|March                         |  | $    | 8.85 |     |  | $ | 8.50 | 
|February                      |  | $    | 9.03 |     |  | $ | 8.50 | 
|January                       |  | $    | 9.08 |     |  | $ | 7.96 | 
|December 2002                 |  | $    | 8.24 |     |  | $ | 7.85 | 
|American Stock Exchange (US$) |  |      |      |     |  |   |      | 
|May 2003                      |  | $    | 6.50 |     |  | $ | 5.88 | 
|April                         |  | $    | 5.94 |     |  | $ | 5.65 | 
|March                         |  | $    | 6.00 |     |  | $ | 5.70 | 
|February                      |  | $    | 5.95 |     |  | $ | 5.67 | 
|January                       |  | $    | 5.90 |     |  | $ | 5.05 | 
|December 2002                 |  | $    | 5.40 |     |  | $ | 5.00 | 

The Toronto Stock Exchange approved a normal course issuer bid that
allowed the Corporation, through the exchange, to acquire for cancellation, up
to 5% of outstanding Class A voting shares from November 1996 to November 1997.
During that period, 23,500 shares were repurchased.

In March 1998, The Toronto Stock Exchange approved a normal course issuer
bid that allowed the Corporation to acquire through the exchange, up to 5% of
outstanding Class A voting shares over a twelve-month period ending March 16,
1999. During that period, 39,500 shares were repurchased.

In September of 1999, the Toronto Stock Exchange approved a normal course
issuer bid that allowed the Corporation to acquire through the exchange, up to
5% of outstanding Class A voting shares over a twelve-month period ending
September 16, 2000. During that period, 111,000 shares were repurchased.

41



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A normal course issuer bid was approved by The Toronto Stock Exchange in
October 2000, that allows the Company to acquire through the exchange, up to 5%
of outstanding Class A voting shares over a twelve-month period ending October
2, 2001. Over the twelve-month period ended 23,500 shares had been repurchased.

A normal course issuer bid was approved by The Toronto Stock Exchange in
October 2001, that allows the Company to acquire through the exchange, up to 5%
of outstanding Class A voting shares over a twelve-month period ending October
2, 2002. Over the twelve-month period ended 285,400 shares had been
repurchased.

A normal course issuer bid was approved by The Toronto Stock Exchange in
October 2002, that allows the Company to acquire through the exchange, up to 5%
of outstanding Class A voting shares over a twelve-month period ending October
2, 2003. As of December 31, 2002, 25,200 shares have been repurchased.

ITEM 10. ADDITIONAL INFORMATION

Material Contracts, Documents on Display

Please refer to Item 19 (D) Exhibits for list of documents on display at
the Securities Exchange Commission.

Exchange of Controls and Other Limitations Affecting Security Holders

There is no law or governmental decree or regulation in Canada that
restricts the export or import of capital, or affects the remittance of
dividends, interest or other payments to a non-resident holder of Class A
Voting Shares, other than withholding tax requirements. See Item 7.

There is no limitation imposed by the laws of Canada, the laws of Ontario
or by the charter or other constituent documents of Vitran on the right of a
non-resident to hold or vote Class A Voting Shares, other than as provided in
the Investment Canada Act (Canada) (the Investment Act). The following
discussion summarizes the principal features of the Investment Act for a
non-resident who proposes to acquire Class A Voting Shares. It is general only,
it is not a substitute for independent advice from an investors own advisor,
and it does not anticipate statutory or regulatory amendments.

The Investment Act generally prohibits implementation of a reviewable
investment by an individual, government or agency thereof, corporation,
partnership, trust or joint venture that is not a Canadian as defined in the
Investment Act (a non-Canadian), unless after review the minister responsible
for the Investment Act (the Minister) is satisfied that the investment is
likely to be of net benefit to Canada. An investment in Class A Voting Shares
by a non-Canadian other than a World Trade Organization Investor (as that
term is defined in the Investment Act and which term includes United States
citizens) when Vitran is not controlled by a World Trade Organization Investor,
would be reviewable under the Investment Act if it is an investment to acquire
control of Vitran and the value of the assets of Vitran as shown on its
financial statements is $5 million or

42



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more, or if an order for review is made
by the federal cabinet on the grounds that the investment related to Canadas
cultural heritage or national identity.

The acquisition by a World Trade Organization Investor of control of a
Canadian business in any of the following sectors is also subject to review if
the value of the assets of the Canadian business exceeds $5 million (as shown
on its financial statements): oil, gas, uranium, financial services (except
insurance), transportation services (as shown on Standard Industrial
Classification coding) and cultural businesses, which include broadcast media
(publication, distribution or sale of books, magazines, periodicals,
newspapers, music, film and video products and the exhibition of film and video
products), television and radio services.

As Vitrans business is coded for Standard Industrial Classification
purposes under transportation services and the value of its assets exceeds $5
million (as shown on its financial statements), acquisition of control of
Vitran by a non-Canadian would require approval under the Investment Act.

A non-Canadian would acquire control of Vitran for the purposes of the
Investment Act if the non-Canadian acquired a majority of the Class A Voting
Shares. The acquisition of less than a majority but one-third or more of the
Class A Voting Shares would be presumed to be an acquisition of control of
Vitran unless it would be established that, on the acquisition, Vitran was not
controlled in fact by the acquirer through the ownership of Class A Voting
Shares.

Certain transactions relating to Class A Voting Shares would be exempt
from the Investment Act, including:



|(a) |  | an acquisition of Class A
Voting Shares by a person in the ordinary course of that persons business as a trader or dealer in securities;                                                                                                                         
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | an acquisition of control of Vitran in connection with the realization of security granted for a loan or other financial
assistance and not for a purpose related to the provisions of the Investment Act; and                                                    
|   
|(c) |  | an acquisition of control of Vitran by reason of an
amalgamation, merger, consolidation or corporate reorganization following which the ultimate direct or indirect control in fact of Vitran, through the ownership of Class A Voting Shares, remained unchanged.

Subject to the restrictions noted above in respect of certain sectors,
including transportation services, generally, an investment in a Canadian
business by a World Trade Organization Investor, or by a non-Canadian when a
Canadian business is controlled by a World Trade Organization Investor, would
be reviewable under the Investment Act if it is an investment to acquire
control of such Canadian business and the value of its assets is not less than
a specified amount, which is $160 million.

43



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Taxation

Certain Canadian Federal Income Tax Considerations for Holders of Class A
Voting Shares

The following summary describes the principal Canadian federal income tax
considerations generally applicable to a holder of Class A Voting Shares who,
for purposes of the Income Tax Act (Canada)(the Canadian Tax Act) and the
Convention between Canada and the United States of America with Respect to
Taxes on Income and on Capital(the Convention) and at all relevant times, is
resident in the United States and not resident in Canada, deals at arms length
with Vitran, holds Class A Voting Shares as capital property and does not use
or hold and is not deemed to use or hold Class A Voting Shares in or in the
course of carrying on business in Canada (a United States Holder).

The following summary is based upon the current provisions of the Canadian
Tax Act, the regulations thereunder, all specific proposals to amend the
Canadian Tax Act and the regulations announced by the Minister of Finance
(Canada) prior to the date hereof and the Companys understanding of the
published administrative practices of Revenue Canada, Customs, Excise and
Taxation. This summary does not take into account or anticipate any other
changes in the governing law, whether by judicial, governmental or legislative
decision or action, nor does it take into account the tax legislation or
considerations of any province, territory or non-Canadian (including U.S.)
jurisdiction, which legislation or considerations may differ significantly from
those described herein.

This summary is of a general nature only and is not intended to be, and
should not be interpreted as legal or tax advice to any prospective purchaser
or holder of Class A Voting Shares and no representation with respect to the
Canadian federal income tax consequences to any such prospective purchaser is
made. Accordingly, prospective purchasers of Class A Voting Shares should
consult their own tax advisors with respect to their individual circumstances.

Dividends on Class A Voting Shares

Dividends and amounts deemed for purposes of the Canadian Tax Act to be

dividends, paid or credited on Class A Voting Shares to non-residents of Canada
will be subject to Canadian withholding tax at the rate of 25% of the gross
amount of such dividends. In the case of United States Holders, under the
Convention, the rate of withholding tax is reduced to 15% of the gross amount
of such dividends, unless the holder is a corporation resident in the United
States which owns at least 10% of the voting shares of Vitran, in which case
the withholding tax is levied at the rate of 10% of the gross amount of such
dividends. Pursuant to a Protocol executed on November 9, 1995, the
aforementioned rate of 10% was reduced to 6% in 1996 and 5% in 1997.

Pursuant to the Convention, certain tax-exempt entities resident in the
United States may be exempt from Canadian withholding taxes, including any
withholding tax levied in respect of dividends received on the Class A Voting
Shares.

44



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Disposition of Class A Voting Shares

In general, a United States Holder will not be subject to Canadian income
tax on capital gains arising on the disposition of Class A Voting Shares,
unless: (i) at any time in the five year period immediately preceding the
disposition, not less than 25% of the issued shares of any series or class
(including any interest in, option in respect of or right of conversion into
such shares) of the capital stock of Vitran belonged to the United States
Holder, to persons with whom the United States Holder did not deal at arms
length or to the United States Holder and persons with whom the United States
Holder did not deal at arms length; and (ii) the United States Holder is not
entitled to relief under the Convention. Under the Convention, capital gains
arising on the disposition of Class A Voting Shares by a United States Holder
will not be subject to Canadian tax provided that the value of the Class A
Voting Shares at the time of the disposition is not derived principally from
real property (as defined in the Convention) situated in Canada.

Memorandum and Articles of Association

Please refer to Item 19 Exhibits.

ITEM 11. QUANTITATIVE and QUALITATIVE DISCLOSURES
ABOUT MARKET RISK

The Companys primary market risk exposures are interest rate risk and
foreign currency risk. The Company is exposed to interest rate risk on its cash
and short-term deposits and floating rate long-term debt obligations, which are
principally comprised of borrowings under a revolving and non-revolving term
bank credit facility entered into in October 1999. These borrowings bear
interest at the LIBOR rate plus 1.75%. The Company estimates that based on
balances outstanding at December 31, 2002, a one percent change in interest
rates would result in a change in interest expense and income before income
taxes of approximately $235,551. The Company has entered into an interest rate
swap contract to fix its funding costs on US$21.0 million of the term bank
facility. The interest rate swap reduces the Companys exposure to fluctuation
on short-term interest.

The Companys reporting currency is the Canadian dollar. The Company is
exposed to foreign exchange risk associated with its investment in and the
operation of its U.S. subsidiaries. This risk is partially offset by certain
long-term debt obligations denominated in U.S. dollars, $37.1 million
outstanding under the revolving facility and term bank credit facility. Other
than these borrowings denominated in U.S. dollars, the Company does not hedge
its exposure to foreign exchange risk. Gains and losses resulting from the
effects of changes in the U.S. dollar to Canadian dollar exchange rate on the
net assets of self-sustaining U.S. operations are accumulated in a separate
component of shareholders equity.

At December 31, 2002, the Company had an interest rate swap agreement in
place on $U.S. $21,000,000 drawn under the term bank facility. See note 10 to
the Consolidated Financial Statements of the Company for more information.

45



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Interest Rate Risk

The following table sets out the weighted average interest rates and
maturities of the Companys cash, bank indebtedness and long-term debt at
December 31, 2002:

|                      |                                                |                           |      |                     |           |                       |       |            |        |      |      |            |        |       |      |           |        |  |            |   |           |  |         | 
|--------------------- | ---------------------------------------------- | ------------------------- | ---- | ------------------- | --------- | --------------------- | ----- | ---------- | ------ | ---- | ---- | ---------- | ------ | ----- | ---- | --------- | ------ |  | ---------- | - | --------- |  | ------- | 
|                      |                                                |                           |      |                     |           | Expected to mature in
|                      |                                                |                           |      |                     |           |                      
|                      |                                                |                           |      |                     |           | 2003                  |       | 2004       |        | 2005 |      | 2006       |        | Total
|                      |                                                |                           |      |                     |           |                       |       |            |        |      |      |            |        |      
|Cash on hand          |                                                |                           |      |                     |           |                       |       |            |        |      |      |            |        |       |      |           |        |  |            |  
|                      |                                                | Canadian dollars          |      |                     | 251,648   |                       |       |            |        |      |      |            |        |       |      |           |        |  |            |   | 251,648   | 
|                      |                                                | U.S. dollars              |      |                     | 7,842,433 |                       |       |            |        |      |      |            |        |       |      |           |        |  |            |   | 7,842,423 | 
|Long-term debt:       |                                                |                           |      |                     |           |                       |       |            |        |      |      |            |        |       |      |           |        |  |            |  
|Term Bank Loan        |                                                |                           |      |                     |           |                       |       |            |        |      |      |            |        |       |      |           |        |  |            |  
|                      | (U.S.$) 20,600,000                             |                           |      |                     |           |                       |       |            |        |      |      |            |        |       |      |           |        |  |            |   |          
|                      | Interest rate-fixed 8.95% to
Jan 27, 03        |                           |      |                     |           |                       |       |            |        |      |      |            |        |       |      |           |        |  |            |   |          
|                      | Interest rate-floating
3.85% after
Jan. 27, 03 |                           |      |                     |           |                       |       |            |        |      |      |            |        |       |      |           |        |  |            |   |          
|                      | (U.S.$) 14,500,000                            
|                      | Interest rate-floating 3.92%                   |                           |      |                     |           |                       |       |            |        |      |      |            |        |       |      |           |        |  |            |   |          
|                      | (US$) 2,000,000                               
|                      | Interest rate-floating 4.33%                   |                           |      |                     |           |                       |       |            |        |      |      |            |        |       |      |           |        |  |            |   |          
|                      | Repayments (CDN$)                              |                           |      | 10,937,500          |           |                       |       | 19,531,250 |        |      |      | 24,218,750 |        |       |      | 3,841,460 |        |  |            |   |          
|Average interest rate |                                                |                           | 4.17 | %                   |           |                       | 4.17  | %          |        |      | 4.17 | %          |        |       | 4.17 | %         |        |  | 58,528,960 |  
|                      |                                                | Term bank loans (U.S.$)   |      |                     | 26,859    |                       |       |            |        |      |      |            |        |       |      |           |        |  |            |   |           | 
|                      |                                                |                           |      | Interest rate-fixed |           |                       | 10.75 | %          |        |      |      |            |        |       |      |           |        |  |            |   |           |  | 26,859  | 
|                      |                                                | Mortgages payable (U.S.$) |      |                     | 45,749    |                       |       |            | 49,588 |      |      |            | 53,919 |       |      |           | 58,539 |  |            |   |           | 
|                      |                                                |                           |      | Interest rate-fixed |           |                       | 8.25  | %          |        |      | 8.25 | %          |        |       | 8.25 | %         |        |  | 8.25       | % |           |  | 383,278 | 

Exchange Rate Sensitivity

The Companys material assets and liabilities at December 31, 2002, which
are denominated in U.S. dollars and subject to exchange rate risk, are set
forth below.

|            |  |                     |         | 
|----------- |  | ------------------- | ------- | 
|            |  | ($CDN in thousands)
|Assets      |  | $                   | 140,692 | 
|Liabilities |  | $                   | 112,176 | 

Foreign Currency Translation

The assets and liabilities denominated in a foreign currency of
self-sustaining operations are translated at exchange rates in effect at the
balance sheet date. The resulting gains and losses are accumulated in a
separate component of shareholders equity. Revenue and expense items are
translated at average exchange rates prevailing during the year. The
Corporations foreign currency denominated debt is designated as a hedge to the
foreign currency exposure generated by the self-sustaining foreign operations.
As such the translation gain and losses are also accumulated in the separate
component of shareholders equity.

46



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Financial Instruments

Please refer to note 9 and note 10 in the attached financial statements.

Limitations

The above discussion includes only those exposures that exist as of
December 31, 2002 and, as a result, does not consider exposures or positions
that could arise after that date. The Companys ultimate realized gain or loss
with respect to interest rate and exchange rate fluctuations will depend on the
exposures that arise during the period, the Companys hedging strategies at the
time and interest and foreign exchange rates.

Off-Balance Sheet Transactions

The Company has disclosed all significant off-balance sheet transactions
on Note 11 in the attached financial statements.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

N/A

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES and DELINQUENCIES

None.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY
HOLDERS and USE OF PROCEEDS

None.

ITEM 15. CONTROLS and PROCEDURES

Based on their evaluation of Vitrans disclosure controls and procedures
as of a date within 90 days of the filing of this Annual Report, the Chief
Executive Officer and Chief Financial Officer have concluded that such controls
and procedures are effective.

There were no significant changes in Vitrans internal controls or in
other factors that could significantly affect such controls subsequent to the
date of their evaluation.

ITEM 17. FINANCIAL STATEMENTS

Report and Consolidated Balance Sheets as at December 31, 2002, and 2001
and the Consolidated Statements of Income, Retained Earnings and Cash Flow for
the years ended

47



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December 31, 2002, 2001, and 2000, reported on by KPMG LLP,
Chartered Accountants. These statements are prepared in accordance with
generally accepted accounting principles in Canada, which differ from generally
accepted accounting principles in the United States. See Note 14 to the
financial statements. Page F-27

ITEM 18. FINANCIAL STATEMENTS

See Item 17. Financial Statements.

ITEM 19. EXHIBITS



| | A) |  | Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | Report and Consolidated Balance Sheet as at December 31, 2002 and 2001,
and the Consolidated Statements of Income, Retained Earnings and Cash
Flow for the years ended December 31, 2002, 2001 and 2000, reported on by
KPMG LLP, Charted Accountants. These statements are prepared in
accordance with generally accepted accounting principles in Canada which
differ from generally accepted accounting principles in the United
States. See Note 14 to the financial statements Page F-27                                                                                                                                                                                                                                   
|
| | B) |  | Management Certifications                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |    |  | In accordance with the Sarbanes Oxley Act of 2002, Section 302 Corporate
Responsibility for Financial Reports, the Chief Executive Officer and the
Chief Financial Officer have signed the attached certifications that the
report is accurate, complete and fairly presented. Please refer to
Schedule A.                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | C) |  | Code of Ethics                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |    |  | The Corporation together with the Corporate Governance Committee has
established a Code of Ethics and Professional Conduct.This Code of Ethics
and Professional Conduct signifies voluntary assumption by Vitran
Corporation Inc. (Vitran) employees and directors of the obligation of
self-discipline above and beyond the requirements of the law. All Vitran
employees and directors should deal fairly with customers, suppliers,
fellow employees, and the general public. Acceptance of this Code is
mandatory for Vitran employees and directors. Failure to abide by the
Code will serve as a basis for disciplinary action. The Corporations
Code of Ethics and Professional Conduct can be reviewed in Schedule B.

48



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D) Exhibits

(Reference is made to Vitran Corporation Inc.  Registration Statement on Form 20-F, dated June 14, 1995, filed with the S.E.C. on June 15,
1995 for Exhibits 1.1 through 1.5, 2.1 through 2.8, and 3.1 through 3.12.
Reference is made to Vitran Corporation Inc.  Amendment Number 1 to
Registration Statement on Form 20-F/A, dated September 27, 1995, filed
with the S.E.C. on September 28, 1995 for Exhibits 2.9 and 2.10.
Reference is made to Vitran Corporation Inc.  Annual Report on Form
20-F, dated May 20, 1997 filed with the S.E.C. on May 21, 1997 for
Exhibits 2.11. Reference is made to Vitran Corporation Inc.  Annual
Report on Form 20-F, dated May 20, 1998 filed with the S.E.C. on May 21,
1998 for Exhibit 2.12. Reference is made to Vitran Corporation Inc. 
Annual Report on Form 20-F, dated May 19, 1999 filed with the S.E.C. on
May 20, 1999 for Exhibit 2.9.1, 2.9.2, 2.13, 3.13, and 3.14.)

|            |  |                                                                                                                                                         
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Document                                                                                                                                                
|            |  |                                                                                                                                                         
|1.1*        |  | Articles of Incorporation effective, April 29, 1981                                                                                                     
|1.2*        |  | Articles of Amendment effective, May 27, 1987                                                                                                           
|1.3*        |  | Articles of Amendment effective, July 16, 1987                                                                                                          
|1.4*        |  | Articles of Amendment effective, February 5, 1991                                                                                                       
|1.5*        |  | By-laws effective, May 27, 1987                                                                                                                         
|1.6*        |  | By-law to authorize the directors to borrow and give security
effective, July 16, 1987                                                                  
|2.1*        |  | Credit Agreement between the registrant, its subsidiaries and
the Royal Bank, dated April 25, 1995                                                      
|2.2*        |  | Credit Agreement between the Overland Group and Bank One,
dated February 4, 1994 (the Overland Credit Agreement)                                      
|2.3*        |  | First Amendment to the Overland Credit Agreement, effective
July 1, 1994                                                                                
|2.4*        |  | Second Amendment to the Overland Credit Agreement, effective
September 30, 1994                                                                         
|2.5*        |  | Third Amendment to the Overland Credit Agreement, dated
December 14, 1994                                                                               
|2.6*        |  | Fourth Amendment to the Overland Credit Agreement, dated
February 1, 1995                                                                               
|2.7*        |  | Fifth Amendment to the Overland Credit Agreement, effective
December 31, 1994                                                                           
|2.8*        |  | Sixth Amendment to the Overland Credit Agreement, dated March
2, 1995                                                                                   
|2.9*        |  | Operating Credit Agreement between Trans Western Express Inc.
and The Bank of Nova Scotia, dated July 25, 1995                                          
|2.9.1*      |  | First Amending Agreement to Credit Agreement between Trans
Western Express Inc. and The Bank of Nova Scotia, dated
September 3, 1998                    
|2.9.2*      |  | Second Amending Agreement to Credit Agreement between Trans
Western Express Inc. and The Bank of Nova Scotia, dated
January 8, 1999                     
|2.9.3       |  | Amended and Restated Credit Agreement between Vitran
Corporation Inc. and Trans Western Express Inc. and The Bank
of Nova Scotia, dated January 31, 2002

49



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##### 



|            |  |                                                                                                                                                                       
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Document                                                                                                                                                              
|            |  |                                                                                                                                                                       
|2.10*       |  | Note Purchase Agreement between Trans Western Express Inc.,
the registrant and certain purchasers, dated July 25, 1995.                                               
|2.11*       |  | Amendment No. 1 to Note Agreement (Amending Agreement, dated
June 28, 1996                                                                                          
|2.12*       |  | Amendment No. 2 to Note Agreement (Amending Agreement, dated
May 13, 1997                                                                                           
|2.13*       |  | Credit Agreement between the registrant and The Bank of Nova
Scotia, dated September 3, 1998                                                                          
|2.14*       |  | Credit Agreement between the registrant and The Bank of Nova
Scotia and Laurentian Bank of Canada, dated October 13, 1999                                             
|3.1*        |  | Underwriting Agreement dated December 16, 1994 between the
registrant and Midland Walwyn Capital Inc. and ScotiaMcLeod
Inc.                                           
|3.2*        |  | Special Warrant Indenture dated December 16, 1994 between the
registrant and Montreal Trust Company for Canada, as trustee                                            
|3.3*        |  | Escrow agreement dated December 16, 1994 between the
registrant and Messrs. Morris/Rose/Ledgett, Barristers and
Solicitors, as trustee                                
|3.4*        |  | Subscription Agreements:                                                                                                                                              
|3.4.1*      |  | Alcan Master Trust                                                                                                                                                    
|3.4.2*      |  | Deans Knight Capital Management                                                                                                                                       
|3.4.3*      |  | Fiducie Desjardins A/C 900111.6.42                                                                                                                                    
|3.4.4*      |  | Montreal Trust Company of Canada A/C 985630009                                                                                                                        
|3.4.5*      |  | Montreal Trust Company of Canada A/C 977050009                                                                                                                        
|3.4.6*      |  | Ontario Municipal Employees Retirement Board                                                                                                                          
|3.4.7*      |  | Royal Trust Corporation of Canada in Trust 0115977001                                                                                                                 
|3.4.8*      |  | Royal Trust Corporation of Canada in Trust 088665001                                                                                                                  
|3.4.9*      |  | Roytor & Co.                                                                                                                                                          
|3.5*        |  | Stock Option Plan dated July 16, 1987                                                                                                                                 
|3.6*        |  | Employee Stock Option Plan approved May 17, 1995                                                                                                                      
|3.7*        |  | Purchase and Sale agreement dated November 2, 1994 between
the Registrant and Carl Cook and Daniel L. Cook                                                            
|3.8*        |  | Stock Voting Agreement dated July 15, 1987 between Richard D.
McGraw, Albert Gnat and Anthony F. Griffiths                                                            
|3.9*        |  | Confidential Transportation Contract dated January 1, 1993
between Trans Western Express Inc. and Canadian National
Railway Company                                   
|3.10*       |  | Agreement dated April 24, 1995 between the registrant,
Borcross Limited, Carl Cook and Daniel L. Cook amending the
terms of the Overland Note                         
|3.11*       |  | Engagement Letter dated April 28, 1995 between the registrant
and Banc One Capital Corporation                                                                        
|3.13*
3.14* |  | Offer of Employment dated September 30, 1998 from the
registrant to Kevin Glass
Share Purchase Agreement between the registrant and Randall
Quast, dated July 21, 1998
|3.15        |  | Cancellation of Stock Voting Agreement dated February 1, 2003
between Richard D. McGraw, Albert Gnat and Anthony F.
Griffiths                                         



---

|* |  | Previously filed
|- |  | ----------------

50



---



##### 



SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant certifies that it meets all of the requirements for
filing on Form 20-F and has duly caused this annual report to its registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized.

|                   |  |                                                                
|------------------ |  | ---------------------------------------------------------------
|                   |  | Vitran Corporation Inc.                                        
|                   |  |                                                                
|                   |  | /s/ Richard E. Gaetz                                           
|                   |  |                                                                
|Date June 11, 2003 |  | Richard E. Gaetz
President &
Chief Executive Officer           
|                   |  |                                                                
|                   |  | /s/ Kevin A. Glass                                             
|                   |  |                                                                
|Date June 11, 2003 |  | Kevin A. Glass
Vice President Finance &
Chief Executive Officer

51



---



##### 



Schedule A

302 Certification

I, RICK E. GAETZ, certify that:



|1. |  | I have reviewed this annual report
on Form 20-F of Vitran Corporation
Inc.;                                                                                                                                                                                                                                                                                                           
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;                                                              
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial conditions, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;                                                                                
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                                                                             
|  
|a) |  | designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;                                                                                          
|  
|b) |  | evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the Evaluation Date); and                                                                                                                                                                                            
|  
|c) |  | presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of
the Evaluation Date:                                                                                                                                                                                                                  
|  
|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):                                                                                                                                        
|  
|a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and                                                                                        
|  
|b) |  | any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and                                                                                                                                                                                                                                
|  
|6. |  | The registrants other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.

|                    |  |                                      
|------------------- |  | -------------------------------------
|Date: Feb. 20, 2002 |  | /s/ Richard E. Gaetz                 
|                    |  |                                      
|                    |  | Rick E. Gaetz
Chief Executive Officer

52



---



##### 



Schedule A

302 Certification

I, KEVIN A. GLASS, certify that:



|1. |  | I have reviewed this annual report
on Form 20-F of Vitran Corporation
Inc.;                                                                                                                                                                                                                                                                                                           
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;                                                              
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial conditions, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;                                                                                
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                                                                             
|  
|a) |  | designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;                                                                                          
|  
|b) |  | evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the Evaluation Date); and                                                                                                                                                                                            
|  
|c) |  | presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of
the Evaluation Date:                                                                                                                                                                                                                  
|  
|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):                                                                                                                                        
|  
|a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and                                                                                        
|  
|b) |  | any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and                                                                                                                                                                                                                                
|  
|6. |  | The registrants other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.

|                    |  |                                       
|------------------- |  | --------------------------------------
|Date: Feb. 18, 2003 |  | /s/ Kevin A. Glass                    
|                    |  |                                       
|                    |  | Kevin A. Glass
Chief Financial Officer

53



---



##### 



Schedule B
Code of Ethics and Professional Conduct
for Directors and Senior Executives

This Code of Ethics and Professional Conduct signifies voluntary assumption by
Vitran Corporation Inc. (Vitran) employees and directors of the obligation of
self-discipline above and beyond the requirements of the law. All Vitran
employees and directors should deal fairly with customers, suppliers, fellow
employees, and the general public. Acceptance of this Code is mandatory for
Vitran employees and directors. Failure to abide by the Code will serve as a
basis for disciplinary action.



| | 1.  |  | I will at all times observe the highest principles of honesty and
fair practice.                                                                                                    
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2.  |  | I will conduct my professional life in accordance with the interest
of Vitran.                                                                                                      
|
| | 3.  |  | I will treat all information concerning the affairs of customers and
suppliers while employed by Vitran, as strictly confidential.                                                  
|
| | 4.  |  | I will not accept any other employment, fee, commission, or other
valuable consideration for my services, from any one other than the
Vitran without prior consent of my supervisor.
|
| | 5.  |  | I will not voluntarily supply a competitor or competitors with
sensitive information.                                                                                               
|
| | 6.  |  | I will maintain accurate books and records.                                                                                                                                         
|
| | 7.  |  | I will appropriately use Vitran property.                                                                                                                                           
|
| | 8.  |  | I will avoid insider trading.                                                                                                                                                       
|
| | 9.  |  | I will respond appropriately to government investigations.                                                                                                                          
|
| | 10. |  | I will ensure safety and healthful workplace.                                                                                                                                       
|
| | 11. |  | I will not permit or cause any employee or agent acting on my behalf
to do anything which, if done by me, would constitute a violation of
this Code.                                

54



---



##### 



Consolidated Financial Statements of

VITRAN CORPORATION INC.

Years ended December 31, 2002, 2001 and 2000
(Amounts in Canadian dollars)





---



##### 



|                                                                                                   |  |                                                            
|-------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------
|KPMGLLPChartered Accountants
Yonge Corporate Centre
4100 Yonge Street Suite 200
Toronto ON M2P 2H3 |  | Telephone (416) 228-7000
Telefax (416) 228-7123
www.kpmg.ca

AUDITORS REPORT

To the Board of Directors of Vitran Corporation Inc.

We have audited the consolidated balance sheets of Vitran Corporation Inc. as
at December 31, 2002 and 2001 and the consolidated statements of income,
retained earnings and cash flows for each of the years in the three-year period
ended December 31, 2002. These financial statements are the responsibility of
the Corporations management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in
accordance with Canadian generally accepted auditing standards and United
States generally accepted auditing standards. Those standards require that we
plan and perform an audit to obtain reasonable assurance whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation.

In our opinion, these consolidated financial
statements present fairly, in all material respects, the financial position of
the Corporation as at December 31, 2002 and 2001 and the results of its
operations and its cash flows for each of the years in the three-year period
ended December 31, 2002 in accordance with Canadian generally accepted
accounting principles.

KPMG LLP(signed)

Chartered Accountants

Toronto, Canada
January 31, 2003

F-1



---



##### 



VITRAN CORPORATION INC.
Consolidated Balance Sheets
(Amounts in thousands of Canadian dollars)

December 31, 2002 and 2001

|                                          |                                                |   |         |        |      |   |         |        | 
|----------------------------------------- | ---------------------------------------------- | - | ------- | ------ | ---- | - | ------- | ------ | 
|                                          |                                                |   | 2002    |        | 2001
|                                          |                                                |   |         |        |     
|Assets                                    |                                                |   |         |        |      |   |         |       
|Current assets:                           |                                                |   |         |        |      |   |         |       
|                                          | Cash                                           |   | $       | 12,624 |      |   | $       | 12,879 | 
|                                          | Accounts receivable                            |   |         | 46,748 |      |   |         | 49,999 | 
|                                          | Net assets of discontinued operations (note 2) |   |         |       |      |   |         | 3,000  | 
|                                          | Inventory, deposits and prepaid expenses       |   |         | 9,774  |      |   |         | 8,702  | 
|                                          | Income taxes recoverable                       |   |         |       |      |   |         | 4,505  | 
|                                          | Future income tax assets (note 5)              |   |         | 4,602  |      |   |         | 4,597  | 
|                                          |                                                |   |         |        |      |   |         |        | 
|                                          |                                                |   | 73,748  |        |      |   | 83,682  |       
|Capital assets (note 3)                   |                                                |   | 48,570  |        |      |   | 51,021  |       
|Goodwill, net of accumulated amortization |                                                |   | 69,208  |        |      |   | 74,661  |       
|                                          |                                                |   |         |        |      |   |         |        | 
|                                          |                                                | $ | 191,526 |        |      | $ | 209,364 |       
|                                          |                                                |   |         |        |      |   |         |        | 
|Liabilities and Shareholders Equity      |                                                |   |         |        |      |   |         |       
|Current liabilities:                      |                                                |   |         |        |      |   |         |       
|                                          | Revolving credit facility                      |   | $       |       |      |   | $       | 4,936  | 
|                                          | Accounts payable and accrued liabilities       |   |         | 43,091 |      |   |         | 40,083 | 
|                                          | Income and other taxes payable                 |   |         | 2,747  |      |   |         | 4,527  | 
|                                          | Current portion of long-term debt (note 4)     |   |         | 11,052 |      |   |         | 10,970 | 
|                                          |                                                |   |         |        |      |   |         |        | 
|                                          |                                                |   | 56,890  |        |      |   | 60,516  |       
|Long-term debt (note 4)                   |                                                |   | 48,124  |        |      |   | 63,733  |       
|Future income tax liabilities (note 5)    |                                                |   | 4,366   |        |      |   | 5,737   |       
|Shareholders equity:                     |                                                |   |         |        |      |   |         |       
|                                          | Capital stock (note 6)                         |   |         | 37,655 |      |   |         | 38,794 | 
|                                          | Retained earnings                              |   |         | 44,528 |      |   |         | 39,204 | 
|                                          | Cumulative translation adjustment (note 7)     |   |         | (37    | )    |   |         | 1,380  | 
|                                          |                                                |   |         |        |      |   |         |        | 
|                                          |                                                |   | 82,146  |        |      |   | 79,378  |       
|                                          |                                                |   |         |        |      |   |         |        | 
|                                          |                                                | $ | 191,526 |        |      | $ | 209,364 |       
|                                          |                                                |   |         |        |      |   |         |        | 

Lease commitments (note 11)
Contingent liabilities (note 12)

On behalf of the Board:

|           |  |          |  |               |  |         
|---------- |  | -------- |  | ------------- |  | --------
|Rick Gaetz |  | Director |  | Graham Savage |  | Director
|           |  |          |  |               |  |         
|[Signed]   |  |          |  | [Signed]      |  |         

See accompanying notes to consolidated financial statements.

F-2



---



##### 



VITRAN CORPORATION INC.
Consolidated Statements of Income
(Amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

|                                                                                                      |         |   |         |       |      |   |         |        |   |   |         |       |  
|----------------------------------------------------------------------------------------------------- | ------- | - | ------- | ----- | ---- | - | ------- | ------ | - | - | ------- | ----- | -
|                                                                                                      |         |   | 2002    |       | 2001 |   | 2000   
|                                                                                                      |         |   |         |       |      |   |        
|Revenue                                                                                               |         | $ | 476,016 |       |      | $ | 481,673 |        |   | $ | 480,988 |      
|Operating expenses                                                                                    |         |   | 398,919 |       |      |   | 408,808 |        |   |   | 399,006 |      
|                                                                                                      |         |   |         |       |      |   |         |        |   |   |         |      
|Gross profit                                                                                          |         |   | 77,097  |       |      |   | 72,865  |        |   |   | 81,982  |      
|Selling, general and administrative expenses                                                          |         |   | 48,746  |       |      |   | 50,011  |        |   |   | 47,132  |      
|                                                                                                      |         |   |         |       |      |   |         |        |   |   |         |      
|Income from continuing operations
before depreciation                                                 |         |   | 28,351  |       |      |   | 22,854  |        |   |   | 34,850  |      
|Depreciation                                                                                          |         |   | 8,327   |       |      |   | 9,852   |        |   |   | 10,276  |      
|                                                                                                      |         |   |         |       |      |   |         |        |   |   |         |      
|Income from continuing operations
before the undernoted                                               |         |   | 20,024  |       |      |   | 13,002  |        |   |   | 24,574  |      
|Interest on long-term debt                                                                            |         |   | (5,331  | )     |      |   | (6,181  | )      |   |   | (7,510  | )    
|Interest income                                                                                       |         |   | 174     |       |      |   | 240     |        |   |   | 280     |      
|Loss on sale of capital assets                                                                        |         |   | (453    | )     |      |   | (1,160  | )      |   |   | (1,002  | )    
|                                                                                                      |         |   |         |       |      |   |         |        |   |   |         |      
|                                                                                                      |         |   | (5,610  | )     |      |   | (7,101  | )      |   |   | (8,232  | )    
|                                                                                                      |         |   |         |       |      |   |         |        |   |   |         |      
|Income from continuing operations before
income taxes, minority interest and
amortization of goodwill |         |   | 14,414  |       |      |   | 5,901   |        |   |   | 16,342  |      
|Income taxes (recovery) (note 5):                                                                     |         |   |         |       |      |   |         |        |   |   |         |      
|                                                                                                      | Current |   |         | 3,654 |      |   |         | 1,247  |   |   |         | 5,484 |  
|                                                                                                      | Future  |   |         | (94   | )    |   |         | (1,009 | ) |   |         | (813  | )
|                                                                                                      |         |   |         |       |      |   |         |        |   |   |         |      
|                                                                                                      |         |   | 3,560   |       |      |   | 238     |        |   |   | 4,671   |      
|                                                                                                      |         |   |         |       |      |   |         |        |   |   |         |      
|Income from continuing operations before
minority interest and amortization of goodwill               |         |   | 10,854  |       |      |   | 5,663   |        |   |   | 11,671  |      
|Minority interest                                                                                     |         |   |        |       |      |   | 132     |        |   |   | 49      |      
|                                                                                                      |         |   |         |       |      |   |         |        |   |   |         |      
|Income from continuing operations before
amortization of goodwill                                     |         |   | 10,854  |       |      |   | 5,795   |        |   |   | 11,720  |      
|Amortization of goodwill, net of income taxes
of nil (2001 - $291; 2000 - $278)                       |         |   |        |       |      |   | 2,094   |        |   |   | 1,802   |      
|                                                                                                      |         |   |         |       |      |   |         |        |   |   |         |      
|Net income from continuing operations                                                                 |         |   | 10,854  |       |      |   | 3,701   |        |   |   | 9,918   |      
|Loss from discontinued operations (note 2)                                                            |         |   |        |       |      |   | (5,614  | )      |   |   | (414    | )    
|                                                                                                      |         |   |         |       |      |   |         |        |   |   |         |      
|Net income (loss)                                                                                     |         | $ | 10,854  |       |      | $ | (1,913  | )      |   | $ | 9,504   |      
|                                                                                                      |         |   |         |       |      |   |         |        |   |   |         |      

F-3



---



##### 



VITRAN CORPORATION INC.
Consolidated Statements of Income (continued)
(Amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

|                                   |                                                                                                                               |  |   |           |  |      |   |           |   |  |   |           |   | 
|---------------------------------- | ----------------------------------------------------------------------------------------------------------------------------- |  | - | --------- |  | ---- | - | --------- | - |  | - | --------- | - | 
|                                   |                                                                                                                               |  |   | 2002      |  | 2001 |   | 2000     
|                                   |                                                                                                                               |  |   |           |  |      |   |          
|Earnings (loss) per share:         |                                                                                                                               |  |   |           |  |      |   |           |   |  |   |          
|                                   | Basic  continuing operations
before amortization of goodwill                                                                 |  | $ | 1.12      |  |      | $ | 0.59      |   |  | $ | 1.18      |  
|                                   | Basic  continuing operations                                                                                                 |  |   | 1.12      |  |      |   | 0.38      |   |  |   | 1.00      |  
|                                   | Basic  discontinued operations                                                                                               |  |   |          |  |      |   | (0.57     | ) |  |   | (0.04     | )
|                                   | Basic  net income (loss)                                                                                                     |  |   | 1.12      |  |      |   | (0.19     | ) |  |   | 0.96      |  
|                                   | Diluted  continuing operations
before amortization of goodwill                                                               |  |   | 1.11      |  |      |   | 0.59      |   |  |   | 1.18      |  
|                                   | Diluted  continuing operations                                                                                               |  |   | 1.11      |  |      |   | 0.38      |   |  |   | 1.00      |  
|                                   | Diluted  discontinued operations                                                                                             |  |   |          |  |      |   | (0.57     | ) |  |   | (0.04     | )
|                                   | Diluted  net income (loss)                                                                                                   |  |   | 1.11      |  |      |   | (0.19     | ) |  |   | 0.96      |  
|Weighted average number of shares: |                                                                                                                               |  |   |           |  |      |   |           |   |  |   |          
|                                   | Weighted average number of
shares outstanding                                                                                 |  |   | 9,691,041 |  |      |   | 9,859,296 |   |  |   | 9,894,727 |  
|                                   | Potential exercise of options                                                                                                 |  |   | 93,025    |  |      |   |          |   |  |   |          |  
|                                   | Diluted shares                                                                                                                |  |   | 9,784,066 |  |      |   | 9,859,296 |   |  |   | 9,894,727 |  
|                                   | Diluted earnings per share for 2002 exclude
the effect of 464,000 (2001 - 901,300; 2000 - 829,300) out of the money options |  |   |           |  |      |   |           |   |  |   |           |  

See accompanying notes to consolidated financial statements.

F-4



---



##### 



VITRAN CORPORATION INC.
Consolidated Statements of Retained Earnings
(Amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

|                                                                    |  |      |        |      |  |      |        |   |  |   |        |  
|------------------------------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | -
|                                                                    |  | 2002 |        | 2001 |  | 2000
|                                                                    |  |      |        |      |  |     
|Retained earnings, beginning of year                                |  | $    | 39,204 |      |  | $    | 41,463 |   |  | $ | 32,873 |  
|Effect of adoption of new goodwill
accounting standard (note 1(f))  |  |      | (4,796 | )    |  |      |       |   |  |   |       |  
|                                                                    |  |      |        |      |  |      |        |   |  |   |        |  
|                                                                    |  |      | 34,408 |      |  |      | 41,463 |   |  |   | 32,873 |  
|Net income (loss)                                                   |  |      | 10,854 |      |  |      | (1,913 | ) |  |   | 9,504  |  
|Dividends  nil per share (2001 - $0.035;
2000 - $0.07 per share)   |  |      |       |      |  |      | (346   | ) |  |   | (694   | )
|Cost of repurchase of Class A voting
shares in excess of book value |  |      | (734   | )    |  |      |       |   |  |   | (220   | )
|                                                                    |  |      |        |      |  |      |        |   |  |   |        |  
|Retained earnings, end of year                                      |  | $    | 44,528 |      |  | $    | 39,204 |   |  | $ | 41,463 |  
|                                                                    |  |      |        |      |  |      |        |   |  |   |        |  

See accompanying notes to consolidated financial statements.

F-5



---



##### 



VITRAN CORPORATION INC.
Consolidated Statements of Cash Flows
(Amounts in thousands of Canadian dollars)

Years ended December 31, 2002, 2001 and 2000

|                                                 |                                               |                                |         |         |       |      |        |        |        |   |         |         |        |  
|------------------------------------------------ | --------------------------------------------- | ------------------------------ | ------- | ------- | ----- | ---- | ------ | ------ | ------ | - | ------- | ------- | ------ | -
|                                                 |                                               |                                |         | 2002    |       | 2001 |        | 2000  
|                                                 |                                               |                                |         |         |       |      |        |       
|Cash provided by (used in):                      |                                               |                                |         |         |       |      |        |        |        |   |         |        
|Operations:                                      |                                               |                                |         |         |       |      |        |        |        |   |         |        
|                                                 | Net income from continuing operations         |                                | $       | 10,854  |       |      | $      | 3,701  |        |   | $       | 9,918   |       
|                                                 | Items not involving cash from operations:     |                                |         |         |       |      |        |        |        |   |         |         |       
|                                                 |                                               | Depreciation and amortization  |         |         | 8,327 |      |        |        | 12,237 |   |         |         | 12,356 |  
|                                                 |                                               | Future income taxes            |         |         | (94   | )    |        |        | (1,009 | ) |         |         | (813   | )
|                                                 |                                               | Loss on sale of capital assets |         |         | 453   |      |        |        | 1,160  |   |         |         | 1,002  |  
|                                                 |                                               | Foreign exchange gains         |         |         | (696  | )    |        |        | (642   | ) |         |         |       |  
|                                                 |                                               | Minority interest              |         |         |      |      |        |        | (132   | ) |         |         | (49    | )
|                                                 |                                               |                                |         |         |       |      |        |        |        |   |         |         |       
|                                                 |                                               |                                | 18,844  |         |       |      | 15,315 |        |        |   | 22,414  |        
|                                                 | Change in non-cash working capital components |                                |         | 6,630   |       |      |        | 1,113  |        |   |         | 254     |       
|                                                 |                                               |                                |         |         |       |      |        |        |        |   |         |         |       
|                                                 |                                               |                                | 25,474  |         |       |      | 16,428 |        |        |   | 22,668  |        
|Investments:                                     |                                               |                                |         |         |       |      |        |        |        |   |         |        
|                                                 | Purchase of capital assets                    |                                |         | (7,158  | )     |      |        | (5,613 | )      |   |         | (8,181  | )     
|                                                 | Proceeds on sale of capital assets            |                                |         | 1,121   |       |      |        | 4,667  |        |   |         | 779     |       
|                                                 | Proceeds on sale of discontinued operations   |                                |         | 2,685   |       |      |        |       |        |   |         |        |       
|                                                 |                                               |                                |         |         |       |      |        |        |        |   |         |         |       
|                                                 |                                               |                                | (3,352  | )       |       |      | (946   | )      |        |   | (7,402  | )      
|Financing:                                       |                                               |                                |         |         |       |      |        |        |        |   |         |        
|                                                 | Change in revolving credit facility           |                                |         | (4,936  | )     |      |        | (2,740 | )      |   |         | 2,077   |       
|                                                 | Repayment of long-term debt                   |                                |         | (14,501 | )     |      |        | (8,826 | )      |   |         | (40,235 | )     
|                                                 | Issue of long-term debt                       |                                |         |        |       |      |        | 7,186  |        |   |         | 28,422  |       
|                                                 | Dividends                                     |                                |         |        |       |      |        | (346   | )      |   |         | (694    | )     
|                                                 | Issue of Class A voting shares                |                                |         | 51      |       |      |        |       |        |   |         | 39      |       
|                                                 | Repurchase of Class A voting shares           |                                |         | (1,924  | )     |      |        | (43    | )      |   |         | (693    | )     
|                                                 |                                               |                                |         |         |       |      |        |        |        |   |         |         |       
|                                                 |                                               |                                | (21,310 | )       |       |      | (4,769 | )      |        |   | (11,084 | )      
|Cash used in discontinued operations (note 2)    |                                               |                                |        |         |       |      | (2,265 | )      |        |   | (3,091  | )      
|Effect of translation adjustment on cash         |                                               |                                | (1,067  | )       |       |      | (450   | )      |        |   | 677     |        
|                                                 |                                               |                                |         |         |       |      |        |        |        |   |         |         |       
|Increase (decrease) in cash and cash equivalents |                                               |                                | (255    | )       |       |      | 7,998  |        |        |   | 1,768   |        
|Cash and cash equivalents, beginning of year     |                                               |                                | 12,879  |         |       |      | 4,881  |        |        |   | 3,113   |        
|                                                 |                                               |                                |         |         |       |      |        |        |        |   |         |         |       
|Cash and cash equivalents, end of year           |                                               | $                              | 12,624  |         |       | $    | 12,879 |        |        | $ | 4,881   |        
|                                                 |                                               |                                |         |         |       |      |        |        |        |   |         |         |       
|Change in non-cash working capital components:   |                                               |                                |         |         |       |      |        |        |        |   |         |        
|                                                 | Accounts receivable                           |                                | $       | 3,251   |       |      | $      | 8,451  |        |   | $       | (656    | )     
|                                                 | Inventory, deposits and prepaid expenses      |                                |         | (1,072  | )     |      |        | (1,975 | )      |   |         | (1,816  | )     
|                                                 | Income and other taxes recoverable/payable    |                                |         | 1,443   |       |      |        | (2,018 | )      |   |         | 1,012   |       
|                                                 | Accounts payable and accrued liabilities      |                                |         | 3,008   |       |      |        | (3,345 | )      |   |         | 1,714   |       
|                                                 |                                               |                                |         |         |       |      |        |        |        |   |         |         |       
|                                                 |                                               | $                              | 6,630   |         |       | $    | 1,113  |        |        | $ | 254     |        
|                                                 |                                               |                                |         |         |       |      |        |        |        |   |         |         |       
|Supplemental cash flow information:              |                                               |                                |         |         |       |      |        |        |        |   |         |        
|                                                 | Cash paid for:                                |                                |         |         |       |      |        |        |        |   |         |         |       
|                                                 |                                               | Interest                       |         | $       | 5,233 |      |        | $      | 6,873  |   |         | $       | 6,655  |  
|                                                 |                                               | Taxes                          |         |         | 2,781 |      |        |        | 4,348  |   |         |         | 4,775  |  
|                                                 |                                               |                                |         |         |       |      |        |        |        |   |         |         |       

See accompanying notes to consolidated financial statements.

F-6



---



##### 



VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

1. Significant accounting policies:



|(a) |  | Basis of presentation:                                                                                                                                                                                                                                                            
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | These consolidated financial statements include the accounts of the
Corporation and its subsidiary companies, all of which are wholly
owned. All material intercompany transactions and balances have been
eliminated on consolidation.                                           
|   
|    |  | All amounts in these consolidated financial statements are expressed
in Canadian dollars, unless otherwise stated.                                                                                                                                                                
|   
|(b) |  | Revenue recognition:                                                                                                                                                                                                                                                              
|   
|    |  | The Corporations less-than-truckload, truckload business units and
freight brokerage operations recognize revenue and direct shipment
costs upon the delivery of the related freight. Revenue for the
logistics operations is recognized as the management services are
provided.
|   
|(c) |  | Cash and cash equivalents:                                                                                                                                                                                                                                                        
|   
|    |  | Cash and cash equivalents include cash on account and short-term
investments with original maturities of three months or less and are
stated at cost, which approximates market value.                                                                                            
|   
|(d) |  | Inventory:                                                                                                                                                                                                                                                                        
|   
|    |  | Inventory consists of tires and spare parts and is valued at the lower
of cost and replacement cost.                                                                                                                                                                              

F-7



---



##### 



VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

1. Significant accounting policies (continued):



|(e) |  | Capital assets:                                                                                                                                                      
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Capital assets are recorded at cost. Depreciation of capital assets
is provided from the date assets are put in service over their
estimated useful lives as follows:

|                                     |                         |               |               |                    |          |  |  |  | 
|------------------------------------ | ----------------------- | ------------- | ------------- | ------------------ | -------- |  |  |  | 
|Asset                                |                         | Basis         |               | Rate              
|                                     |                         |               |               |                   
|Buildings                            |                         | Straight line |               | 20 - 31.5 years   
|Leasehold interests and
improvements |                         | Straight line |               | Over term of lease
|Vehicles:                            |                         |               |               |                    |          |  |  | 
|                                     | Trailers and containers |               | Straight line |                    | 10 years
|                                     | Trucks                  |               | Straight line |                    | 7 years 
|Machinery and equipment              |                         | Straight line |               | 5 - 10 years      



|    |  | Tires purchased as part of a vehicle are capitalized as a cost of the
vehicle. Replacement tires are expensed when placed in service.                                                                                                                                                                                                                                                                                                                                                                                               
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(f) |  | Goodwill:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|    |  | Goodwill represents the excess of acquisition cost over the fair value of
net assets of businesses acquired. Prior to January 1, 2002, goodwill
was amortized over 40 years on a straight-line basis.                                                                                                                                                                                                                                                                                                                               
|   
|    |  | Effective January 1, 2002, the Corporation adopted The Canadian Institute
of Chartered Accountants (CICA) new accounting standard for goodwill
and other intangible assets. The Corporation no longer amortizes
goodwill but annually compares the fair value of its reporting units to
the carrying value to determine if an impairment loss has occurred. Any
transitional impairment would be recognized as an effect of a change in
accounting policy and would be charged to opening retained earnings as of
January 1, 2002.

F-8



---



##### 



VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

1. Significant accounting policies (continued):



|    |  | As at June 30, 2002, the Corporation completed its initial goodwill
impairment test and concluded that an impairment existed. As at
September 30, 2002, the amount of the charge was quantified. Charges
of $1.3 million and $3.5 million, respectively, were recorded in the
freight brokerage and the truckload reporting units to adjust the
carrying value of goodwill for each reporting unit to its implied fair
value. Such amount has been reflected as a direct charge to retained
earnings effective January 1, 2002 without restatement of prior period
figures.                                                                                                                                         
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(g) |  | Foreign currency translation:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|    |  | The assets and liabilities denominated in a foreign currency of
self-sustaining foreign operations are translated into Canadian
dollars at exchange rates in effect at the balance sheet date.
Revenue and expense items are translated at average exchange rates
prevailing during the year. The resulting translation gains and
losses are accumulated in a separate component of shareholders
equity. Certain of the Corporations foreign currency-denominated
debt acts as a hedge to the foreign currency exposure generated by the
self-sustaining foreign operations. As such, the translation gain and
losses related to this debt are also accumulated in the separate
component of shareholders equity.
|   
|    |  | In respect of other transactions denominated in foreign currencies,
the monetary assets and liabilities of the Corporation which are
denominated in foreign currencies are translated at the year-end
exchange rates. Revenue and expenses are translated at rates of
exchange prevailing on the transaction dates. All of the exchange
gains or losses resulting from these other transactions are recognized
in income.                                                                                                                                                                                                                                                                                           

F-9



---



##### 



VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

1. Significant accounting policies (continued):



|(h) |  | Income taxes:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The Corporation uses the asset and liability method of accounting for
income taxes. Under the asset and liability method, future tax assets
and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax
bases. Future tax assets and liabilities are measured using enacted
or substantively enacted tax rates expected to apply to taxable income
in the years in which those temporary differences are expected to be
recovered or settled. The effect on future tax assets and liabilities
of a change in tax rates is recognized in income in the year that
includes the date of enactment or substantive enactment.                                                                                                                        
|   
|(i) |  | Stock-based compensation:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|    |  | The CICA has issued changes to accounting standards for stock-based
compensation. Under this new standard, effective January 1, 2002, all
stock-based compensation to non-employees and direct awards of stock
to employees will be accounted for using the fair value method. The
Corporation has not granted any such awards. The Corporation has a
stock option plan for employees and directors. In accordance with the
new standard, the Corporation has elected to use the settlement method
for stock options granted to employees and no compensation expense has
been recorded. Consideration paid by employees on the exercise of
options is recorded as share capital. Note 6(d) provides supplemental
fair value, pro forma net income and pro forma earnings per share
disclosure as though the fair valued based accounting method had been
used to account for stock options.

F-10



---



##### 



VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

1. Significant accounting policies (continued):



|(j) |  | Use of estimates:                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenue
and expenses during the year. Actual results could differ from those
estimates.

2. Acquisitions and divestitures:

The Freight Connection Inc.:

During the third quarter 2001, the Corporation acquired the remaining
18.9% of the voting shares of The Freight Connection Inc. (TFCI). There
was no goodwill recorded on the transaction. Subsequent to the purchase
of shares, the Corporation delisted and restructured TFCI as a private
company.

Environmental Services Group:

On May 15, 2001, the Corporation determined that it planned to divest its
Environmental Services Business. A provision for the loss on sale of
discontinued business was recorded to account for the sale of capital
assets and estimated realizable value of the remaining assets and
liabilities. Effective January 2, 2002, the Corporation sold
substantially all the capital assets of the business to Metro Waste Paper
Recovery Inc. for cash proceeds of $2.7 million.

As a result of the plan of disposal, the results of operations for
discontinued operations were reported as discontinued operations and
previously reported financial statements were restated. Interest was
allocated to discontinued operations based on the debt directly
attributable to the business and for debt not directly attributable to the
business based on its share of the Corporations net assets. Income taxes
were allocated based on the effective tax rate of the discontinued
operations.

F-11



---



##### 





| |  | VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Years ended December 31, 2002, 2001 and 2000                                                                                                               

2. Acquisitions and divestitures (continued):

The summarized statement of operations for discontinued operations is as
follows:

|                                                                  |  |      |        |      |  |   |        |  
|----------------------------------------------------------------- |  | ---- | ------ | ---- |  | - | ------ | -
|                                                                  |  | 2001 |        | 2000
|                                                                  |  |      |        |     
|Revenue                                                           |  | $    | 19,687 |      |  | $ | 27,486 |  
|                                                                  |  |      |        |      |  |   |        |  
|Loss from operations                                              |  | $    | (2,097 | )    |  | $ | (110   | )
|Interest expense                                                  |  |      | (564   | )    |  |   | (480   | )
|Other income (loss)                                               |  |      | (85    | )    |  |   | 1      |  
|                                                                  |  |      |        |      |  |   |        |  
|Loss before income taxes                                          |  |      | (2,746 | )    |  |   | (589   | )
|Income tax recovery                                               |  |      | (1,182 | )    |  |   | (175   | )
|                                                                  |  |      |        |      |  |   |        |  
|Loss before provision for loss
on sale of discontinued operations |  |      | (1,564 | )    |  |   | (414   | )
|Provision for loss on sale of
discontinued operations             |  |      | (4,050 | )    |  |   |       |  
|                                                                  |  |      |        |      |  |   |        |  
|Net loss from discontinued operations                             |  | $    | (5,614 | )    |  | $ | (414   | )
|                                                                  |  |      |        |      |  |   |        |  

The summarized balance sheet for discontinued operations is as follows:

|                                                           |  |      |        |  
|---------------------------------------------------------- |  | ---- | ------ | -
|                                                           |  | 2001
|                                                           |  |     
|Current assets                                             |  | $    | 2,785  |  
|Capital assets                                             |  |      | 3,661  |  
|Goodwill                                                   |  |      | 848    |  
|Future income taxes                                        |  |      | 1,282  |  
|                                                           |  |      |        |  
|                                                           |  |      | 8,576  |  
|Current liabilities                                        |  |      | 2,273  |  
|Non-current liabilities                                    |  |      | 1      |  
|                                                           |  |      |        |  
|Net assets of discontinued operations before provision     |  |      | 6,302  |  
|Provision for exit costs and loss on discontinued
business |  |      | (3,302 | )
|                                                           |  |      |        |  
|Net assets of discontinued operations                      |  | $    | 3,000  |  
|                                                           |  |      |        |  

F-12



---



##### 



VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

2. Acquisitions and divestitures (continued):

Cash provided by (used in) discontinued operations is as follows:

|                                     |  |      |        |      |  |   |        |  
|------------------------------------ |  | ---- | ------ | ---- |  | - | ------ | -
|                                     |  | 2001 |        | 2000
|                                     |  |      |        |     
|Operating activities                 |  | $    | (1,934 | )    |  | $ | (459   | )
|Investing activities                 |  |      | (257   | )    |  |   | (2,689 | )
|Financing activities                 |  |      | (74    | )    |  |   | 57     |  
|                                     |  |      |        |      |  |   |        |  
|Cash used in discontinued
operations |  | $    | (2,265 | )    |  | $ | (3,091 | )
|                                     |  |      |        |      |  |   |        |  

3. Capital assets:

|                                     |  |      |        |      |  |   |        | 
|------------------------------------ |  | ---- | ------ | ---- |  | - | ------ | 
|                                     |  | 2002 |        | 2001
|                                     |  |      |        |     
|Land                                 |  | $    | 8,292  |      |  | $ | 8,318  | 
|Buildings                            |  |      | 31,963 |      |  |   | 28,482 | 
|Leasehold interests and improvements |  |      | 3,028  |      |  |   | 2,654  | 
|Vehicles                             |  |      | 29,906 |      |  |   | 33,199 | 
|Machinery and equipment              |  |      | 21,515 |      |  |   | 21,542 | 
|                                     |  |      |        |      |  |   |        | 
|                                     |  |      | 94,704 |      |  |   | 94,195 | 
|Less accumulated depreciation        |  |      | 46,134 |      |  |   | 43,174 | 
|                                     |  |      |        |      |  |   |        | 
|                                     |  | $    | 48,570 |      |  | $ | 51,021 | 
|                                     |  |      |        |      |  |   |        | 

F-13



---



##### 



VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

4. Long-term debt:

|                                      |  |      |        |      |  |   |        | 
|------------------------------------- |  | ---- | ------ | ---- |  | - | ------ | 
|                                      |  | 2002 |        | 2001
|                                      |  |      |        |     
|(a) Guaranteed Senior Notes, due 2002 |  | $    |       |      |  | $ | 9,079  | 
|(b) Term bank credit facility         |  |      | 58,529 |      |  |   | 64,685 | 
|(c) Mortgages payable                 |  |      | 647    |      |  |   | 939    | 
|                                      |  |      |        |      |  |   |        | 
|                                      |  |      | 59,176 |      |  |   | 74,703 | 
|Less current portion                  |  |      | 11,052 |      |  |   | 10,970 | 
|                                      |  |      |        |      |  |   |        | 
|                                      |  | $    | 48,124 |      |  | $ | 63,733 | 
|                                      |  |      |        |      |  |   |        | 



|(a) |  | The Guaranteed Senior Notes, due 2002 (the Senior Notes), bear interest
at 9.04% per annum payable quarterly. During 2002, U.S. $5.7 million (2001 
U.S. $5.6 million) of the Senior Notes was repaid in accordance with the
terms. Upon full repayment in 2002, the Senior Note holders released security
on accounts receivable and the general security agreements of the Corporation
and all of its Canadian subsidiaries.                                                                                                                                                   
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | The term bank credit facility is secured by accounts receivable and
general security agreements of the Corporation and of all its subsidiaries.                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|    |  | During 2002, $4.0 million of Canadian dollar denominated borrowings and
U.S. $1.0 million of foreign currency-denominated borrowings were repaid.
At December 31, 2002, U.S. $37.1 million (2001  $38.1 million) of
foreign currency-denominated borrowings bearing interest at LIBOR plus
1.75% were drawn under this facility. The agreement requires 17.5% of
the total principal to be repaid in 2003, with escalating annual
repayments, payable in quarterly instalments to January 31, 2006. The
provisions of the term facility impose certain financial maintenance
tests.

F-14



---



##### 



VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

4. Long-term debt (continued):



|(c) |  | The mortgages are secured by certain land and buildings, bear interest
at rates ranging from 8.25% to 10.75% and are repayable over various
terms. At December 31, 2002, mortgages include U.S. $410,000 of foreign
currency-denominated borrowings (2001  U.S. $589,000).
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(d) |  | The Corporation has a revolving credit facility of up to $10.0
million, of which letters of credit of $3.5 million were outstanding at
December 31, 2002.                                                                                                                  
|   
|    |  | At December 31, 2002, the required future principal repayments on all
long-term debt are as follows:                                                                                                                                                                       

|                         |  |   |        | 
|------------------------ |  | - | ------ | 
|Year ending December 31: |  |   |        | 
|2003                     |  | $ | 11,052 | 
|2004                     |  |   | 19,609 | 
|2005                     |  |   | 24,304 | 
|2006                     |  |   | 3,934  | 
|2007                     |  |   | 100    | 
|Thereafter               |  |   | 177    | 
|                         |  |   |        | 
|                         |  | $ | 59,176 | 
|                         |  |   |        | 

F-15



---



##### 



VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

5. Income taxes:

Income tax expense differs from the amount which would be obtained by
applying statutory federal and provincial income tax rates to the
respective years income from continuing operations before income taxes,
minority interest and amortization of goodwill as follows:

|                                                                          |                                                          |   |       |        |      |   |       |        |   |   |       |        |  
|------------------------------------------------------------------------- | -------------------------------------------------------- | - | ----- | ------ | ---- | - | ----- | ------ | - | - | ----- | ------ | -
|                                                                          |                                                          |   | 2002  |        | 2001 |   | 2000 
|                                                                          |                                                          |   |       |        |      |   |      
|Effective statutory federal
and provincial income tax rate                |                                                          |   | 38.62 | %      |      |   | 41.75 | %      |   |   | 43.90 | %     
|                                                                          |                                                          |   |       |        |      |   |       |        |   |   |       |       
|Effective tax expense on income before
income taxes and minority interest |                                                          | $ | 5,566 |        |      | $ | 2,435 |        |   | $ | 7,106 |       
|Increase (decrease) results from:                                         |                                                          |   |       |        |      |   |       |        |   |   |       |       
|                                                                          | Capital losses on asset disposition                      |   |       |       |      |   |       | 234    |   |   |       |       |  
|                                                                          | Non-taxable foreign exchange gain                        |   |       | (384   | )    |   |       | (428   | ) |   |       |       |  
|                                                                          | Deductible foreign exchange loss                         |   |       | (174   | )    |   |       | (88    | ) |   |       | (432   | )
|                                                                          | Income taxed at different rates
in foreign jurisdictions |   |       | (2,158 | )    |   |       | (2,538 | ) |   |       | (2,400 | )
|                                                                          | Effect of tax rate changes
on loss carryforwards         |   |       |       |      |   |       | 396    |   |   |       |       |  
|                                                                          | Other                                                    |   |       | 710    |      |   |       | 227    |   |   |       | 397    |  
|                                                                          |                                                          |   |       |        |      |   |       |        |   |   |       |       
|Actual income tax expense                                                 |                                                          | $ | 3,560 |        |      | $ | 238   |        |   | $ | 4,671 |       
|                                                                          |                                                          |   |       |        |      |   |       |        |   |   |       |       

F-16



---



##### 



VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

5. Income taxes (continued):

A summary of the principal components of future income tax assets and
liabilities is as follows:

|                               |                                                     |   |       |       |      |   |       |       | 
|------------------------------ | --------------------------------------------------- | - | ----- | ----- | ---- | - | ----- | ----- | 
|                               |                                                     |   | 2002  |       | 2001
|                               |                                                     |   |       |       |     
|Future income tax assets:      |                                                     |   |       |       |      |   |       |      
|                               | Losses carried forward (net of valuation allowance) |   | $     | 2,227 |      |   | $     | 1,741 | 
|                               | Allowance for doubtful accounts                     |   |       | 895   |      |   |       | 1,053 | 
|                               | Insurance reserves                                  |   |       | 1,188 |      |   |       | 1,389 | 
|                               | Other                                               |   |       | 292   |      |   |       | 414   | 
|                               |                                                     |   |       |       |      |   |       |       | 
|                               |                                                     | $ | 4,602 |       |      | $ | 4,597 |      
|                               |                                                     |   |       |       |      |   |       |       | 
|Future income tax liabilities: |                                                     |   |       |       |      |   |       |      
|                               | Capital assets                                      |   | $     | 1,542 |      |   | $     | 2,653 | 
|                               | Goodwill amortization                               |   |       | 2,216 |      |   |       | 2,689 | 
|                               | Other                                               |   |       | 608   |      |   |       | 395   | 
|                               |                                                     |   |       |       |      |   |       |       | 
|                               |                                                     | $ | 4,366 |       |      | $ | 5,737 |      
|                               |                                                     |   |       |       |      |   |       |       | 

The Corporation has Canadian non-capital tax loss carryforwards of
approximately $6.6 million (2001  $5.3 million) expiring over the next seven
years and for which the tax benefit has been recognized as set out above.

F-17



---



##### 



VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

6. Capital stock:



|(a) |  | Authorized:                                                                                                                                                         
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The Corporations capital stock consists of an unlimited number of
Class A voting shares, Class B non-voting shares and first preference
shares, issuable in series.
|   
|(b) |  | Issued:                                                                                                                                                             

|                                                       |  |        |           |        |  |        |        |        |  |  |           |   |  |   |        |  
|------------------------------------------------------ |  | ------ | --------- | ------ |  | ------ | ------ | ------ |  |  | --------- | - |  | - | ------ | -
|                                                       |  | 2002   |           | 2001  
|                                                       |  |        |           |       
|Class A voting shares                                  |  | Number |           | Amount |  | Number |        | Amount
|                                                       |  |        |           |        |  |        |        |       
|Balance, beginning of year                             |  |        | 9,847,278 |        |  | $      | 38,794 |        |  |  | 9,859,778 |   |  | $ | 38,837 |  
|Shares repurchased for
cancellation                    |  |        | (298,100  | )      |  |        | (1,190 | )      |  |  | (12,500   | ) |  |   | (43    | )
|Shares issued upon exercise
of employees stock options |  |        | 10,640    |        |  |        | 51     |        |  |  |          |   |  |   |       |  
|                                                       |  |        |           |        |  |        |        |        |  |  |           |   |  |   |        |  
|Balance, end of year                                   |  |        | 9,559,818 |        |  | $      | 37,655 |        |  |  | 9,847,278 |   |  | $ | 38,794 |  
|                                                       |  |        |           |        |  |        |        |        |  |  |           |   |  |   |        |  



|(c) |  | Normal course issuer bid:                                                                                                                                                                                                                                                                       
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The Corporation repurchased for cancellation 298,100 Class A voting
shares during 2002 (2001  12,500) under a normal course issuer bid, at a
total cost of $1,924,000 (2001  $43,000). The cost of the repurchase in
2002 was $734,000 (2001  nil) in excess of the book value of the shares.

F-18



---



##### 



VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

6. Capital stock (continued):



|(d) |  | Stock options:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The Corporation provides a stock option plan to key employees,
officers and directors to encourage executives to acquire a meaningful
equity ownership interest in the Corporation over a period of time
and, as a result, reinforce executives attention on the long-term
interest of the Corporation and its shareholders. Under the plan,
options to purchase Class A voting shares of the Corporation may be
granted to key employees, officers and directors of the Corporation
and its affiliates by the Board of Directors or by the Corporations
Compensation Committee. There are 1,240,300 options authorized under
the plan. The term of each option is 10 years and the vesting period
is generally five years. The exercise price for options is the
trading price of the Class A voting shares of the Corporation on The
Toronto Stock Exchange on the day of the grant.
|   
|    |  | The following tables outline the impact and assumptions used if the
compensation cost for the Corporations stock options was determined
under the fair value-based method. The Corporation has applied the
pro forma disclosure provisions of the new standard to awards granted
on or after January 1, 2002. The pro forma effect of awards granted
prior to January 1, 2002 has not been included.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

|                                     |  |   |        | 
|------------------------------------ |  | - | ------ | 
|Net income, as reported              |  | $ | 10,854 | 
|Pro forma net income                 |  |   | 10,802 | 
|Pro forma income per share  basic   |  |   | 1.11   | 
|Pro forma income per share  diluted |  |   | 1.10   | 

F-19



---



##### 



VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

6. Capital stock (continued):



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

|                                                                                         |  |          |      |  
|---------------------------------------------------------------------------------------- |  | -------- | ---- | -
|Risk-free interest rate                                                                  |  |          | 5.3  | %
|Dividend yield                                                                           |  |          | 0.0  | %
|Volatility factor of the future expected market
price of the Corporations common shares |  |          | 33.8 | %
|Expected life of the options                                                             |  | 10 years

Details of stock options are as follows:

|                               |  |        |           |       |  |          |      |       |  |  |           |          |  |   |      | 
|------------------------------ |  | ------ | --------- | ----- |  | -------- | ---- | ----- |  |  | --------- | -------- |  | - | ---- | 
|                               |  | 2002   |           | 2001 
|                               |  |        |           |      
|                               |  |        |           |       |  | Weighted |      |       |  |  |           | Weighted
|                               |  |        |           |       |  | average  |      |       |  |  |           | average 
|                               |  |        |           |       |  | exercise |      |       |  |  |           | exercise
|                               |  | Shares |           | price |  | Shares   |      | price
|                               |  |        |           |       |  |          |      |      
|Outstanding,
beginning of year |  |        | 1,049,800 |       |  | $        | 6.08 |       |  |  | 1,109,800 |          |  | $ | 6.26 | 
|Granted                        |  |        | 175,000   |       |  |          | 3.50 |       |  |  | 100,000   |          |  |   | 4.28 | 
|Forfeited                      |  |        | (25,000   | )     |  |          | 6.55 |       |  |  | (160,000  | )        |  |   | 6.33 | 
|Exercised                      |  |        | (10,640   | )     |  |          | 4.82 |       |  |  |          |          |  |   |     | 
|                               |  |        |           |       |  |          |      |       |  |  |           |          |  |   |      | 
|Outstanding, end of year       |  |        | 1,189,160 |       |  |          | 5.70 |       |  |  | 1,049,800 |          |  |   | 6.08 | 
|                               |  |        |           |       |  |          |      |       |  |  |           |          |  |   |      | 
|Exercisable, end of year       |  |        | 774,460   |       |  | $        | 6.06 |       |  |  | 698,960   |          |  | $ | 6.01 | 
|                               |  |        |           |       |  |          |      |       |  |  |           |          |  |   |      | 

F-20



---



##### 



VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

6. Capital stock (continued):

At December 31, 2002, the range of exercise prices, the weighted average
exercise price and the weighted average remaining contractual life are as
follows:

|                  |  |                     |           |                     |  |             |      |             |  |          |      |  |  |          |         |  |  |   |      | 
|----------------- |  | ------------------- | --------- | ------------------- |  | ----------- | ---- | ----------- |  | -------- | ---- |  |  | -------- | ------- |  |  | - | ---- | 
|                  |  | Options outstanding |           | Options exercisable
|                  |  |                     |           |                    
|                  |  |                     |           |                     |  | Weighted    |      |             |  |          |      |  |  |          |         |  |  |  
|                  |  |                     |           |                     |  | average     |      |             |  |          |      |  |  |          |         |  |  |  
|                  |  |                     |           |                     |  | remaining   |      | Weighted    |  |          |      |  |  | Weighted
|                  |  |                     |           |                     |  | contractual |      | average     |  |          |      |  |  | average 
|Range of exercise |  | Number              |           | life                |  | exercise    |      | Number      |  | exercise
|prices            |  | outstanding         |           | (years)             |  | price       |      | exercisable |  | price   
|                  |  |                     |           |                     |  |             |      |             |  |         
|$3.50 - $6.20     |  |                     | 725,160   |                     |  |             | 5.47 |             |  | $        | 4.69 |  |  |          | 447,160 |  |  | $ | 5.15 | 
|$7.00 - $8.75     |  |                     | 464,000   |                     |  |             | 5.87 |             |  |          | 7.28 |  |  |          | 327,300 |  |  |   | 7.29 | 
|                  |  |                     |           |                     |  |             |      |             |  |          |      |  |  |         
|$3.50 - $8.75     |  |                     | 1,189,160 |                     |  |             | 5.63 |             |  |          | 5.70 |  |  |          | 774,460 |  |  |   | 6.06 | 
|                  |  |                     |           |                     |  |             |      |             |  |          |      |  |  |         

Compensation expense related to stock options was nil for each of the
years ended December 31, 2002, 2001 and 2000.

7. Cumulative translation adjustment:

The cumulative translation adjustment represents the unrealized foreign
currency translation gain on the Corporations net investment in
self-sustaining foreign operations in the United States arising from
changes in the foreign exchange rate between the Canadian dollar and the
United States dollar, net of the translation gain or loss on the $37.1
million (2001  $45.8 million) United States dollar-denominated debt that
is designated as a hedge to the foreign currency exposure generated by the
self-sustaining foreign operations.

F-21



---



##### 



VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

8. Segmented information:

The Corporations business operations are grouped into three operating
segments: less-than-truckload, logistics and truckload, which provide
transportation services in Canada and the United States.

Segmented information is presented below for each of the years ended
December 31, 2002, 2001 and 2000:

|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  
|----------------------------------------------------------------- |  | ---------- | ------- | --------- |  | --------- | ------ | ----- |  | ---------------- | ------ | ------ |  | - | ------- | --------- |  | ------------ | ------ | - |  | - | ------- | -
|                                                                  |  | Less-than- |         |           |  |           |        |       |  |                  |        |        |  |   |         | Corporate |  | Consolidated
|Year ended December 31, 2002                                      |  | truckload  |         | Logistics |  | Truckload |        | Total |  | office and other |        | totals
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |       
|Revenue                                                           |  | $          | 379,309 |           |  | $         | 43,376 |       |  | $                | 53,331 |        |  | $ | 476,016 |           |  | $            |       |   |  | $ | 476,016 |  
|Operating, selling, general and administrative expenses           |  |            | 351,440 |           |  |           | 41,542 |       |  |                  | 51,423 |        |  |   | 444,405 |           |  |              | 3,260  |   |  |   | 447,665 |  
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  
|Income (loss) from continuing operations before
depreciation      |  |            | 27,869  |           |  |           | 1,834  |       |  |                  | 1,908  |        |  |   | 31,611  |           |  |              | (3,260 | ) |  |   | 28,351  |  
|Depreciation                                                      |  |            | 7,450   |           |  |           | 338    |       |  |                  | 522    |        |  |   | 8,310   |           |  |              | 17     |   |  |   | 8,327   |  
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  
|Income (loss) from continuing operations
before the undernoted    |  | $          | 20,419  |           |  | $         | 1,496  |       |  | $                | 1,386  |        |  | $ | 23,301  |           |  | $            | (3,277 | ) |  |   | 20,024  |  
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  
|Interest expense, net                                             |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   | (5,157  | )
|Other items, net                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   | (453    | )
|Income taxes                                                      |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   | (3,560  | )
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  
|Income from continuing operations
before amortization of goodwill |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   | 10,854  |  
|Amortization of goodwill                                          |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |        |  
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  
|Income from continuing operations                                 |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   | 10,854  |  
|Loss from discontinued operations                                 |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |        |  
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  
|Net income                                                        |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  | $ | 10,854  |  
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  
|Capital expenditures                                              |  | $          | 6,446   |           |  | $         | 379    |       |  | $                | 216    |        |  | $ | 7,041   |           |  | $            | 117    |   |  | $ | 7,158   |  
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  
|Goodwill                                                          |  | $          | 60,026  |           |  | $         | 1,664  |       |  | $                | 7,517  |        |  | $ | 69,208  |           |  | $            |       |   |  | $ | 69,208  |  
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  
|Total assets from continuing operations                           |  | $          | 162,564 |           |  | $         | 11,553 |       |  | $                | 17,127 |        |  | $ | 191,244 |           |  | $            | 282    |   |  | $ | 191,526 |  
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  
|Net assets of discontinued operations                             |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |        |  
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  
|Total assets                                                      |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  | $ | 191,526 |  
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  

F-22



---



##### 



VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

8. Segmented information (continued):

|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  
|----------------------------------------------------------------- |  | ---------- | ------- | --------- |  | --------- | ------ | ----- |  | ---------------- | ------ | ------ |  | - | ------- | --------- |  | ------------ | ------ | - |  | - | ------- | -
|                                                                  |  | Less-than- |         |           |  |           |        |       |  |                  |        |        |  |   |         | Corporate |  | Consolidated
|Year ended December 31, 2001                                      |  | truckload  |         | Logistics |  | Truckload |        | Total |  | office and other |        | totals
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |       
|Revenue                                                           |  | $          | 375,551 |           |  | $         | 56,688 |       |  | $                | 49,434 |        |  | $ | 481,673 |           |  | $            |       |   |  | $ | 481,673 |  
|Operating, selling, general and administrative expenses           |  |            | 353,094 |           |  |           | 56,215 |       |  |                  | 47,276 |        |  |   | 456,585 |           |  |              | 2,234  |   |  |   | 458,819 |  
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  
|Income (loss) from continuing operations before
depreciation      |  |            | 22,457  |           |  |           | 473    |       |  |                  | 2,158  |        |  |   | 25,088  |           |  |              | (2,234 | ) |  |   | 22,854  |  
|Depreciation                                                      |  |            | 8,755   |           |  |           | 371    |       |  |                  | 641    |        |  |   | 9,767   |           |  |              | 85     |   |  |   | 9,852   |  
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  
|Income (loss) from continuing operations
before the undernoted    |  | $          | 13,702  |           |  | $         | 102    |       |  | $                | 1,517  |        |  | $ | 15,321  |           |  | $            | (2,319 | ) |  |   | 13,002  |  
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  
|Interest expense, net                                             |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   | (5,941  | )
|Other items, net                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   | (1,028  | )
|Income taxes                                                      |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   | (238    | )
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  
|Income from continuing operations
before amortization of goodwill |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   | 5,795   |  
|Amortization of goodwill                                          |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   | (2,094  | )
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  
|Income from continuing operations                                 |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   | 3,701   |  
|Loss from discontinued operations                                 |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   | (5,614  | )
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  
|Loss for the year                                                 |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  | $ | (1,913  | )
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  
|Capital expenditures                                              |  | $          | 4,725   |           |  | $         | 609    |       |  | $                | 192    |        |  | $ | 5,526   |           |  | $            | 87     |   |  | $ | 5,613   |  
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  
|Goodwill                                                          |  | $          | 60,362  |           |  | $         | 3,164  |       |  | $                | 11,135 |        |  | $ | 74,661  |           |  | $            |       |   |  | $ | 74,661  |  
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  
|Total assets (liabilities) of continuing operations               |  | $          | 174,202 |           |  | $         | 12,902 |       |  | $                | 21,161 |        |  | $ | 208,265 |           |  | $            | (1,901 | ) |  | $ | 206,364 |  
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  
|Net assets of discontinued operations                             |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   | 3,000   |  
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  
|Total assets                                                      |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  | $ | 209,364 |  
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  

F-23



---



##### 



VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

8. Segmented information (continued):

|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  
|----------------------------------------------------------------- |  | ---------- | ------- | --------- |  | --------- | ------ | ----- |  | ---------------- | ------ | ------ |  | - | ------- | --------- |  | ------------ | ------ | - |  | - | ------- | -
|                                                                  |  | Less-than- |         |           |  |           |        |       |  |                  |        |        |  |   |         | Corporate |  | Consolidated
|Year ended December 31, 2000                                      |  | truckload  |         | Logistics |  | Truckload |        | Total |  | office and other |        | totals
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |       
|Revenue                                                           |  | $          | 376,058 |           |  | $         | 57,280 |       |  | $                | 47,650 |        |  | $ | 480,988 |           |  | $            |       |   |  | $ | 480,988 |  
|Operating, selling, general and administrative expenses           |  |            | 342,583 |           |  |           | 56,205 |       |  |                  | 44,554 |        |  |   | 443,342 |           |  |              | 2,796  |   |  |   | 446,138 |  
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  
|Income (loss) from continuing operations before
depreciation      |  |            | 33,475  |           |  |           | 1,075  |       |  |                  | 3,096  |        |  |   | 37,646  |           |  |              | (2,796 | ) |  |   | 34,850  |  
|Depreciation                                                      |  |            | 9,159   |           |  |           | 348    |       |  |                  | 688    |        |  |   | 10,195  |           |  |              | 81     |   |  |   | 10,276  |  
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  
|Income (loss) from continuing operations
before the undernoted    |  | $          | 24,316  |           |  | $         | 727    |       |  | $                | 2,408  |        |  | $ | 27,451  |           |  | $            | (2,877 | ) |  |   | 24,574  |  
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  
|Interest expense, net                                             |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   | (7,230  | )
|Other items, net                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   | (953    | )
|Income taxes                                                      |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   | (4,671  | )
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  
|Income from continuing operations
before amortization of goodwill |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   | 11,720  |  
|Amortization of goodwill                                          |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   | (1,802  | )
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  
|Income from continuing operations                                 |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   | 9,918   |  
|Loss from discontinued operations                                 |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   | (414    | )
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  
|Net income                                                        |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  | $ | 9,504   |  
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  
|Capital expenditures                                              |  | $          | 7,604   |           |  | $         | 417    |       |  | $                | 117    |        |  | $ | 8,138   |           |  | $            | 43     |   |  | $ | 8,181   |  
|                                                                  |  |            |         |           |  |           |        |       |  |                  |        |        |  |   |         |           |  |              |        |   |  |   |         |  

F-24



---



##### 



VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

8. Segmented information (continued):

Geographic information for revenue and total assets, is as follows:

|         |               |   |         |         |      |   |         |         |  |   |         |         | 
|-------- | ------------- | - | ------- | ------- | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|         |               |   | 2002    |         | 2001 |   | 2000   
|         |               |   |         |         |      |   |        
|Revenue: |               |   |         |         |      |   |         |         |  |   |         |        
|         | Canada        |   | $       | 163,324 |      |   | $       | 157,098 |  |   | $       | 153,682 | 
|         | United States |   |         | 312,692 |      |   |         | 324,575 |  |   |         | 327,306 | 
|         |               |   |         |         |      |   |         |         |  |   |         |         | 
|         |               | $ | 476,016 |         |      | $ | 481,673 |         |  | $ | 480,988 |        
|         |               |   |         |         |      |   |         |         |  |   |         |         | 

|              |               |   |         |         |      |   |         |         | 
|------------- | ------------- | - | ------- | ------- | ---- | - | ------- | ------- | 
|              |               |   | 2002    |         | 2001
|              |               |   |         |         |     
|Total assets: |               |   |         |         |      |   |         |        
|              | Canada        |   | $       | 50,834  |      |   | $       | 60,746  | 
|              | United States |   |         | 140,692 |      |   |         | 148,618 | 
|              |               |   |         |         |      |   |         |         | 
|              |               | $ | 191,526 |         |      | $ | 209,364 |        
|              |               |   |         |         |      |   |         |         | 

9. Derivative financial instruments:

The Corporation has entered into an interest rate swap contract to fix
funding costs and manage interest rate exposures.

|                   |  |          |              |                |  |          |      |   |  |  |                  | 
|------------------ |  | -------- | ------------ | -------------- |  | -------- | ---- | - |  |  | ---------------- | 
|                   |  | Notional |              | Fixed interest |  |          |      |  
|                   |  | amount   |              | rate           |  | Maturity
|                   |  |          |              |                |  |         
|Interest rate swap |  |          | U.S. $21,000 |                |  |          | 8.95 | % |  |  | January 26, 2003 | 
|                   |  |          |              |                |  |          |      |   |  |  |                  | 

Credit risk arises from the possible inability of counterparties to meet the
terms of their contracts on a net basis, which was minimal on December 31,
2002.

The fair value of the derivative instrument represents an approximation of
amounts the Corporation would have paid to or received from counterparties to
unwind its positions prior to maturity. At December 31, 2002, the
Corporations fair value obligation for the interest rate swap is $0.3
million. The Corporation has no plans to unwind this position prior to
maturity.

F-25



---



##### 



VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

10. Financial instruments:

The fair values of cash and cash equivalents, accounts receivable, and
accounts payable and accrued liabilities approximate the carrying values
because of the short-term nature of these instruments. The fair value of
the Corporations long-term debt, determined based on the future cash
flows associated with each debt instrument discounted using an estimate of
the Corporations current borrowing rate for similar debt instruments of
comparable maturity, is approximately equal to the carrying value at
December 31, 2002.

11. Lease commitments:

At December 31, 2002, future minimum rental payments relating to operating
leases for premises and equipment are as follows:

|                         |  |   |        | 
|------------------------ |  | - | ------ | 
|Year ending December 31: |  |   |        | 
|2003                     |  | $ | 24,968 | 
|2004                     |  |   | 20,567 | 
|2005                     |  |   | 15,444 | 
|2006                     |  |   | 10,611 | 
|2007                     |  |   | 7,244  | 
|Thereafter               |  |   | 11,839 | 
|                         |  |   |        | 
|                         |  | $ | 90,673 | 
|                         |  |   |        | 

12. Contingent liabilities:

There exist certain legal actions against the Corporation, none of which
is expected to have a material adverse effect on the consolidated
financial position or results of operations of the Corporation.

13. Comparative figures:

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

F-26



---



##### 



VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

14. Canadian and United States accounting policy differences:



|(a) |  | Consolidated statements of changes in shareholders equity:                                                                                                                                             
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | United States GAAP requires the inclusion of a consolidated statement
of changes in shareholders equity for each statement of income year.
Shareholders equity under United States GAAP is as follows:

|                                                |  |         |        |          |  |               |        |       |  |       |        |   |  |   |        |  
|----------------------------------------------- |  | ------- | ------ | -------- |  | ------------- | ------ | ----- |  | ----- | ------ | - |  | - | ------ | -
|                                                |  |         |        |          |  |               |        |       |  | Other |        |   |  |  
|                                                |  | Capital |        | Retained |  | comprehensive |        |       |  |      
|                                                |  | stock   |        | earnings |  | income        |        | Total
|                                                |  |         |        |          |  |               |        |      
|Balance, December 31, 1999                      |  | $       | 39,271 |          |  | $             | 32,873 |       |  | $     | (1,486 | ) |  | $ | 70,658 |  
|                                               
|Net income                                      |  |         |       |          |  |               | 9,504  |       |  |       |       |   |  |   | 9,504  |  
|Dividends                                       |  |         |       |          |  |               | (694   | )     |  |       |       |   |  |   | (694   | )
|Shares repurchased for cancellation             |  |         | (473   | )        |  |               | (220   | )     |  |       |       |   |  |   | (693   | )
|Shares issued from treasury                     |  |         | 39     |          |  |               |       |       |  |       |       |   |  |   | 39     |  
|Unrealized foreign currency gain                |  |         |       |          |  |               |       |       |  |       | 1,193  |   |  |   | 1,193  |  
|Change in obligation for derivative instruments |  |         |       |          |  |               |       |       |  |       | (443   | ) |  |   | (443   | )
|                                                |  |         |        |          |  |               |        |       |  |       |        |   |  |   |        |  
|Balance, December 31, 2000                      |  |         | 38,837 |          |  |               | 41,463 |       |  |       | (736   | ) |  |   | 79,564 |  
|                                               
|Loss for the year                               |  |         |       |          |  |               | (2,555 | )     |  |       |       |   |  |   | (2,555 | )
|Dividends                                       |  |         |       |          |  |               | (346   | )     |  |       |       |   |  |   | (346   | )
|Shares repurchased for cancellation             |  |         | (43    | )        |  |               |       |       |  |       |       |   |  |   | (43    | )
|Unrealized foreign currency gain                |  |         |       |          |  |               |       |       |  |       | 1,673  |   |  |   | 1,673  |  
|Foreign exchange adjustment                     |  |         |       |          |  |               |       |       |  |       | 642    |   |  |   | 642    |  
|Change in obligation for derivative instruments |  |         |       |          |  |               |       |       |  |       | (922   | ) |  |   | (922   | )
|                                                |  |         |        |          |  |               |        |       |  |       |        |   |  |   |        |  
|Balance, December 31, 2001                      |  |         | 38,794 |          |  |               | 38,562 |       |  |       | 657    |   |  |   | 78,013 |  
|                                               
|Net income                                      |  |         |       |          |  |               | 5,362  |       |  |       |       |   |  |   | 5,362  |  
|Shares repurchased for cancellation             |  |         | (1,190 | )        |  |               | (734   | )     |  |       |       |   |  |   | (1,924 | )
|Unrealized foreign currency loss                |  |         |       |          |  |               |       |       |  |       | (1,417 | ) |  |   | (1,417 | )
|Foreign exchange adjustment                     |  |         |       |          |  |               |       |       |  |       | 696    |   |  |   | 696    |  
|Change in obligation for derivative instruments |  |         |       |          |  |               |       |       |  |       | 1,183  |   |  |   | 1,183  |  
|Shares issued upon exercise of options          |  |         | 51     |          |  |               |       |       |  |       |       |   |  |   | 51     |  
|                                                |  |         |        |          |  |               |        |       |  |       |        |   |  |   |        |  
|Balance, December 31, 2002                      |  | $       | 37,655 |          |  | $             | 43,190 |       |  | $     | 1,119  |   |  | $ | 81,964 |  
|                                                |  |         |        |          |  |               |        |       |  |       |        |   |  |   |        |  

F-27



---



##### 



VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

14. Canadian and United States accounting policy differences (continued):



|(b) |  | Consolidated statements of cash flows:
|--- |  | --------------------------------------



| | (i) |  | Canadian GAAP permits the disclosure of a subtotal of the amount of
cash provided by operations before changes in non-cash working capital
items in the consolidated statements of cash flows. United States GAAP
does not permit this subtotal to be included.
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(c) |  | Statement of net income (loss) and comprehensive income (loss):                                                                                                                                                              
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The following table reconciles net income for the year as reported in
the consolidated statement of operations to what would have been
reported had the statements been prepared in accordance with United
States GAAP:      
|   
|    |  | United States GAAP requires the disclosures of a Statement of
Comprehensive Income. Comprehensive income generally encompasses all
changes in shareholders equity, except those arising from
transactions with shareholders.

|                                                                       |                                             |   |        |        |      |   |        |       |   |   |        |       |  
|---------------------------------------------------------------------- | ------------------------------------------- | - | ------ | ------ | ---- | - | ------ | ----- | - | - | ------ | ----- | -
|                                                                       |                                             |   | 2002   |        | 2001 |   | 2000  
|                                                                       |                                             |   |        |        |      |   |       
|Net income (loss) based on
Canadian GAAP                               |                                             | $ | 10,854 |        |      | $ | (1,913 | )     |   | $ | 9,504  |      
|Foreign exchange adjustment (i)                                        |                                             |   | (696   | )      |      |   | (642   | )     |   |   |       |      
|                                                                       |                                             |   |        |        |      |   |        |       |   |   |        |      
|Net income (loss) before effect of
change in accounting principle      |                                             |   | 10,158 |        |      |   | (2,555 | )     |   |   | 9,504  |      
|Cumulative effect of change in method
of accounting for goodwill (iii) |                                             |   | (4,796 | )      |      |   |       |       |   |   |       |      
|                                                                       |                                             |   |        |        |      |   |        |       |   |   |        |      
|Net income (loss) based on
United States GAAP                          |                                             |   | 5,362  |        |      |   | (2,555 | )     |   |   | 9,504  |      
|Other comprehensive income:                                            |                                             |   |        |        |      |   |        |       |   |   |        |      
|                                                                       | Change in cumulative translation
adjustment |   |        | (1,417 | )    |   |        | 1,673 |   |   |        | 1,193 |  
|                                                                       | Foreign exchange adjustment (i)             |   |        | 696    |      |   |        | 642   |   |   |        |      |  
|                                                                       | Obligation for derivative instruments (ii)  |   |        | 1,183  |      |   |        | (922  | ) |   |        | (443  | )
|                                                                       |                                             |   |        |        |      |   |        |       |   |   |        |      
|Comprehensive income (loss)
based on United States GAAP                |                                             | $ | 5,824  |        |      | $ | (1,162 | )     |   | $ | 10,254 |      
|                                                                       |                                             |   |        |        |      |   |        |       |   |   |        |      

F-28



---



##### 



VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

14. Canadian and United States accounting policy differences (continued):

|                                                    |                                                                            |  |           |           |      |  |           |           |   |  |           |           |  
|--------------------------------------------------- | -------------------------------------------------------------------------- |  | --------- | --------- | ---- |  | --------- | --------- | - |  | --------- | --------- | -
|                                                    |                                                                            |  | 2002      |           | 2001 |  | 2000     
|                                                    |                                                                            |  |           |           |      |  |          
|Earnings (loss) per share under
United States GAAP: |                                                                            |  |           |           |      |  |           |           |   |  |           |          
|                                                    | Basic  continuing operations                                              |  | $         | 1.05      |      |  | $         | 0.31      |   |  | $         | 1.00      |  
|                                                    | Basic  discontinued operations                                            |  |           |          |      |  |           | (0.57     | ) |  |           | (0.04     | )
|                                                    | Basic  net before cumulative
effect of accounting change                  |  |           | 1.05      |      |  |           | (0.26     | ) |  |           | 0.96      |  
|                                                    | Basic  cumulative effect of
change in method of accounting
for goodwill   |  |           | (0.50     | )    |  |           |          |   |  |           |          |  
|                                                    | Basic  net income (loss)                                                  |  |           | 0.55      |      |  |           | (0.26     | ) |  |           | 0.96      |  
|                                                    | Diluted  continuing operations                                            |  |           | 1.04      |      |  |           | 0.31      |   |  |           | 1.00      |  
|                                                    | Diluted  discontinued operations                                          |  |           |          |      |  |           | (0.57     | ) |  |           | (0.04     | )
|                                                    | Diluted  net before cumulative
effect of accounting change                |  |           | 1.04      |      |  |           | (0.26     | ) |  |           | 0.96      |  
|                                                    | Diluted  cumulative effect of
change in method of accounting
for goodwill |  |           | (0.49     | )    |  |           |          |   |  |           |          |  
|                                                    | Diluted  net income (loss)                                                |  |           | 0.55      |      |  |           | (0.26     | ) |  |           | 0.96      |  
|Weighted average number of shares:                  |                                                                            |  |           |           |      |  |           |           |   |  |           |          
|                                                    | Weighted average number of
shares outstanding                              |  |           | 9,691,041 |      |  |           | 9,859,296 |   |  |           | 9,894,727 |  
|Potential exercise of stock options                 |                                                                            |  | 93,025    |           |      |  |          |           |   |  |          |          
|Diluted shares                                      |                                                                            |  | 9,784,066 |           |      |  | 9,859,296 |           |   |  | 9,894,727 |          



| | (i) |  | A foreign exchange gain amounting to $1 million (2001  $1 million;
2000  nil) was included in selling, general and administration expenses in
2002. This gain on repatriation of capital from a subsidiary arose from the
difference between the exchange rate in effect on the date the capital was
returned to Canada compared to the historical rate in effect when the capital
was invested. Of this gain, $696 was 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, nor
recognition of associated income resulting from such capital restructurings.
This transaction was not subject to income tax.
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-29



---



##### 



VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

14. Canadian and United States accounting policy differences (continued):



| | (ii)  |  | The change in the fair value of the Corporations obligation for
its interest rate swap (note 9), which is designated as a cash flow
hedge, has been included net of the income tax effect of $744 (2001 -
$661; 2000  $346).                                                                                                                                                                                                                                
| | ----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (iii) |  | A non-cash charge of $4.8 million, to adjust the carrying value
of goodwill to its implied value was included in opening retained
earnings without the restatement of prior period figures. This charge
was the result of the Corporations adoption of the new Canadian
accounting standard for goodwill and other intangibles. Under US GAAP,
FAS 142, the non-cash charge, is not recorded to opening retained
earnings but as an income statement expense.



|(d) |  | Income from operations before depreciation and amortization:                                                                                                                                                                                                                                                                                                                                                                
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | United States GAAP requires that depreciation and amortization be
included in the determination of income from operations and does not
permit the disclosure of a subtotal of the amount of income from
continuing operations before this item and goodwill amortization to be
disclosed separately net of tax. Canadian GAAP permits the disclosure
of a subtotal of the amount of income from operations before this
item.
|   
|(e) |  | Stock-based compensation:                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|    |  | The Corporation accounts for its stock-based compensation plans under
APB Opinion No. 25 and related interpretations, under which no
compensation costs have been recognized in the financial statements
for share options granted to employees and directors.                                                                                                                                                              

F-30



---



##### 



VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

14. Canadian and United States accounting policy differences (continued):



|(f) |  | Other disclosures:                                                                                              
|--- |  | ----------------------------------------------------------------------------------------------------------------
|   
|    |  | United States GAAP requires certain additional disclosures in the
consolidated financial statements, as follows:



| | (i)   |  | The total allowance for doubtful accounts at December 31, 2002 was
$2.9 million (2001  $3.7 million).                                                                                                                                       
| | ----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (ii)  |  | Total rental expense under operating leases was $26.5 million for
the year ended December 31, 2002 (2001  $25.1 million; 2000  $19.2
million).                                                                                             
|
| | (iii) |  | At December 31, 2002, the Corporation had an aggregate of $6.5
million in unused bank credit facilities.                                                                                                                                     
|
| | (iv)  |  | At December 31, 2002, the Corporation has $10.2 million of foreign
exchange losses net in the cumulative translation adjustment,
offsetting the foreign exchange gains from its net investment in
self-sustaining foreign operation (note 7).



|(g) |  | New United States accounting pronouncements:
|--- |  | --------------------------------------------



| | (i)  |  | In August 2001, SFAS No. 143, Accounting for Asset Retirement
Obligations was approved and requires that the fair value of an
assets retirement obligation be recorded as a liability, at fair
value, in the period in which the Corporation incurs the obligation.
SFAS No. 143 is effective for the Corporations fiscal year commencing
January 1, 2003. The Corporation expects the adoption of this standard
will have no material impact on its financial position, results of
operations or cash flows.
| | ---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (ii) |  | In November of 2002, FASB issued Interpretation No. 45,
Guarantors Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others (FIN 45) which
requires certain disclosures of obligations under guarantees. The
Corporation does not have guarantees that require measurement and
disclosure under this interpretation.                                                                                                                                    

F-31