UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C.  20549
  FORM
10-Q
 
 x    
      QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR15(d)
      OF THE SECURITIES EXCHANGE ACT OF 1934FOR
      THE QUARTER ENDED MARCH 31, 2008ORo      
      TRANSITION
      REPORT PURSUANT TO SECTION 13 OR15
      (d) OF THE SECURITIES EXCHANGE ACT OF 1934FOR
      THE TRANSITION PERIOD
      FROM                 toCommission
      file number:
 VITRAN
CORPORATION INC.
 
 
 
 Ontario,
      Canada
              
              (I.R.S.
      Employer(State
      of incorporation)
              
              Identification
      No.)
 
 185
The West Mall, Suite 701, Toronto, Ontario, Canada, M9C 5L5
 (Address
of principal executive offices)(Zip Code)
 
 416-596-7664
 (Registrant’s
telephone number, including area code)
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.  Yes      x       No    o
 
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
 
 Large
accelerated filer      o   Accelerated
filer    x                                                          Non-accelerated
filer   o                                           Smaller
reporting company   o
 
 Indicate
by check mark whether the Registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
 Yeso  Nox
 
 Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date.
 
 The
number of shares of common shares outstanding at April 23, 2008 was
13,483,159.
   
 1
  
 TABLE
OF CONTENT
  Item
              
              
              PagePART
      I
              
              Financial
      Information1.
              
              Financial
      Statements
              32.
              
              Management’s
      Discussion and Analysis
              113.
              
              Quantitative
      and Qualitative Disclosures About Market Risk
              174.
              
              Controls
      and Procedures
              18PART
      II
              
              Other
      Information1.
              
              Legal
      Proceedings
              181.
      A
              
              Risk
      Factors
              182.
              
              Unregistered
      Sale of Equity and Use of Proceeds
              183.
              
              Defaults
      Upon Senior Securities
              184.
              
              Submission
      of Matters to a Vote of Security Holders
              185.
              
              Other
      Information
              196.
              
              Exhibits
      and Reports on Form 8-K
              19
 
 
  2
  Part
I. Financial Information
 
 Item
1: Financial Statements
 
 VITRAN
CORPORATION INC.
 
 CONSOLIDATED
STATEMENTS OF INCOME
 (Unaudited)
 
 (In
thousands of United States dollars except for per share amounts)
 
 Three
      months
                Ended
                Mar.
      31, 2008
              
              
              Three
      months
                Ended
                Mar.
      31, 2007Revenue
              
              $
              177,507
              
              
              $
              154,136Operating
      expenses
              
              
              153,099
              
              
              
              128,456Selling,
      general and administrative expenses
              
              
              16,921
              
              
              
              15,099Other
      expense
              
              
              1
              
              
              
              29Depreciation
      and amortization expense
              
              
              5,560
              
              
              
              4,945Total
      operating expenses
              
              
              175,581
              
              
              
              148,529Income
      from operations before undernoted
              
              
              1,926
              
              
              
              5,607Interest
      expense, net
              
              
              2,130
              
              
              
              2,064Income
      (loss) from operations before income taxes
              
              
              (204
              )
              
              
              3,543Income
      taxes (recovery)
              
              
              (1,338
              )
              
              
              156Net
      income
              
              $
              1,134
              
              
              $
              3,387Income
      per share:Basic
              
              $
              0.08
              
              
              $
              0.25Diluted
              
              $
              0.08
              
              
              $
              0.25Weighted
      average number of shares:Basic
              
              
              13,465,357
              
              
              
              13,438,065Diluted
              
              
              13,611,446
              
              
              
              13,651,872
  See
accompanying notes to consolidated financial statements
  3
  VITRAN
CORPORATION INC.
 
 CONSOLIDATED
BALANCE SHEETS
 
 (In
thousands of United States dollars)
 
 Mar.
      31, 2008
                  
                  
                  Dec.
      31, 2007(Unaudited)
                  
                  
                  (Audited)AssetsCurrent
      assets:Accounts
      receivable
                  
                  $
                  81,932
                  
                  
                  $
                  74,261Inventory,
      deposits and prepaid expenses
                  
                  
                  11,726
                  
                  
                  
                  11,325Income
      and other taxes recoverable
                  
                  
                  1,083
                  
                  
                  
                  2,232Deferred
      income taxes
                  
                  
                  3,039
                  
                  
                  
                  2,59997,780
                  
                  
                  
                  90,417Property
      and equipment
                  
                  
                  169,232
                  
                  
                  
                  169,062Intangible
      assets
                  
                  
                  15,019
                  
                  
                  
                  13,645Goodwill
                  
                  
                  122,013
                  
                  
                  
                  124,375$
                  404,044
                  
                  
                  $
                  397,499Liabilities
      and Shareholders’ EquityCurrent
      liabilities:Bank
      overdraft
                  
                  $
                  3,111
                  
                  
                  $
                  390Accounts
      payable and accrued liabilities
                  
                  
                  73,296
                  
                  
                  
                  67,468Current
      portion of long-term debt
                  
                  
                  17,325
                  
                  
                  
                  18,14493,732
                  
                  
                  
                  86,002Long-term
      debt
                  
                  
                  109,278
                  
                  
                  
                  109,831Other
                  
                  
                  4,943
                  
                  
                  
                  3,512Deferred
      income taxes
                  
                  
                  6,125
                  
                  
                  
                  7,810Shareholders’
      equity:Common
      shares, no par value, unlimited authorized, 13,483,159 and 13,448,159
      issued and outstanding at March 31, 2008 and December 31, 2007
      respectively
                  
                  
                  77,424
                  
                  
                  
                  77,246Additional
      paid-in capital
                  
                  
                  2,713
                  
                  
                  
                  2,436Retained
      earnings
                  
                  
                  105,612
                  
                  
                  
                  104,478Accumulated
      other comprehensive income
                  
                  
                  4,217
                  
                  
                  
                  6,184189,966
                  
                  
                  
                  190,344$
                  404,044
                  
                  
                  $
                  397,499
 Contingent
liabilities (note 9)
 
 See
accompanying notes to consolidated financial statements.
  4
  VITRAN
CORPORATION INC.
 
 CONSOLIDATED
STATEMENTS OF SHAREHOLDERS’ EQUITY
 (Unaudited)
 
 (In
thousands of United States dollars, except share amounts)
 
 AccumulatedAdditional
              
              
              
              
              
              other
              
              
              TotalCommon
      shares
              
              
              Paid-in
              
              
              Retained
              
              
              comprehensive
              
              
              Shareholders’Shares
              
              
              Amount
              
              
              Capital
              
              
              Earnings
              
              
              income
              
              
              EquityDecember
      31, 2007
              
              
              13,448,159
              
              
              $
              77,246
              
              
              $
              2,436
              
              
              $
              104,478
              
              
              $
              6,184
              
              
              $
              190,344Shares
      issued upon exercise of employee stock options
              
              
              35,000
              
              
              
              178
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              178Net
      income
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              1,134
              
              
              
              -
              
              
              
              1,134Other
      comprehensive income (loss)
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (1,967
              )
              
              
              (1,967
              )Share-based
      compensation
              
              
              -
              
              
              
              -
              
              
              
              277
              
              
              
              -
              
              
              
              -
              
              
              
              277March
      31, 2008
              
              
              13,483,159
              
              
              $
              77,424
              
              
              $
              2,713
              
              
              $
              105,612
              
              
              $
              4,217
              
              
              $
              189,966
  AccumulatedAdditional
              
              
              
              
              
              
              other
              
              
              TotalCommon
      shares
              
              
              Paid-in
              
              
              Retained
              
              
              comprehensive
              
              
              Shareholders’Shares
              
              
              Amount
              
              
              Capital
              
              
              Earnings
              
              
              income
              
              
              EquityDecember
      31, 2006
              
              
              13,419,859
              
              
              $
              76,913
              
              
              $
              1,607
              
              
              $
              90,933
              
              
              $
              3,844
              
              
              $
              173,297Shares
      issued upon exercise of employee stock options
              
              
              41,000
              
              
              
              127
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              127Net
      income
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              3,387
              
              
              
              -
              
              
              
              3,387Other
      comprehensive income
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              69
              
              
              
              69Share-based
      compensation
              
              
              -
              
              
              
              -
              
              
              
              208
              
              
              
              -
              
              
              
              -
              
              
              
              208March
      31, 2007
              
              
              13,460,859
              
              
              $
              77,040
              
              
              $
              1,815
              
              
              $
              94,320
              
              
              $
              3,913
              
              
              $
              177,088
  5
  VITRAN
CORPORATION INC.
 
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 (Unaudited)
 (In
thousands of United States dollars)
 
 Three
      months
                Ended
                Mar.
      31, 2008
              
              
              Three
      months
                Ended
                Mar.
      31, 2007Cash
      provided by (used in):Operations:Net
      income
              
              $
              1,134
              
              
              $
              3,387Items
      not involving cash from operationsDepreciation
      and amortization expense
              
              
              5,560
              
              
              
              4,945Deferred
      income taxes
              
              
              (1,198
              )
              
              
              967Share-based
      compensation expense
              
              
              277
              
              
              
              208Loss
      on sale of property and equipment
              
              
              1
              
              
              
              29Change
      in non-cash working capital components
              
              
              (1,113
              )
              
              
              (3,697
              )4,661
              
              
              
              5,839Investments:Purchase
      of property and equipment
              
              
              (7,108
              )
              
              
              (4,550
              )Proceeds
      on sale of property and equipment
              
              
              191
              
              
              
              71Additional
      payment due to acquisition of subsidiary
              
              
              -
              
              
              
              (538
              )(6,917
              )
              
              
              (5,017
              )Financing:Change
      in revolving credit facility and bank overdraft
              
              
              6,625
              
              
              
              3,284Repayment
      of long-term debt
              
              
              (2,571
              )
              
              
              (2,255
              )Repayment
      of capital leases
              
              
              (2,241
              )
              
              
              (1,640
              )Issue
      of common sharesupon
      exercise of stock options
              
              
              178
              
              
              
              1271,991
              
              
              
              (484
              )Effect
      of translation adjustment on cash
              
              
              265
              
              
              
              (249
              )Increase
      in cash and cash equivalents
              
              
              -
              
              
              
              89Cash
      and cash equivalents, beginning of period
              
              
              -
              
              
              
              1,454Cash
      and cash equivalents, end of period
              
              $
              -
              
              
              $
              1,543Change
      in non-cash working capital components:Accounts
      receivable
              
              $
              (7,671
              )
              
              $
              (7,010
              )Inventory,
      deposits and prepaid expenses
              
              
              (401
              )
              
              
              387Income
      and other taxes recoverable
              
              
              1,131
              
              
              
              (2,597
              )Accounts
      payable and accrued liabilities
              
              
              5,828
              
              
              
              5,523$
              (1,113
              )
              
              $
              (3,697
              )
  See
accompanying notes to consolidated financial statements.
  6
  
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 
 (In
thousands of United States dollars except for per share amounts)
 
 
 1.  Accounting
Policies
 
 The
interim consolidated financial statements have been prepared in accordance with
United States generally accepted accounting principles.  The Ontario
Business Corporations Act (“OBCA”) regulations allow issuers that are required
to file reports with the Securities and Exchange Commission in the United States
to file financial statements under United States GAAP to meet their continuous
disclosure obligations in Canada.  The interim consolidated
financial statements do not contain all the disclosures required by United
States generally accepted accounting principles.  The interim
consolidated financial statements have been prepared in accordance with
instructions to Quarterly Report on Form 10-Q.  The interim
consolidated financial statements should be read in conjunction with 2007 Annual
Report on Form 10-K.  The interim consolidated financial statements
follow the same accounting principles and methods of application as the most
recent annual consolidated financial statements.
 
 These
unaudited consolidated interim financial statements reflect all adjustments
which are, in the opinion of management, necessary to a fair presentation of the
results of the interim period presented.  Operating results for the
quarter ended March 31, 2008 are not necessarily indicative of the results of
operations that may be expected for the year ending December 31,
2008.
 
 2.
              New
      Accounting Pronouncements
 
 SFAS
Statement 157, “Fair Value Measurements”, defines fair values, establishes a
framework for measuring fair value in GAAP, and requires enhanced disclosures
about fair value measurements.  This statement applies when other
accounting pronouncements require or permit fair value
measurements.  SFAS Statement 157 was adopted January 1, 2008 as
described in note 10.
 
 SFAS
Statement 159, “The Fair Value Option for Financial Assets and Financial
Liabilities - Including an amendment of SFAS Statement 115” permits entities to
choose to measure many financial instruments and certain warranty and insurance
contracts at fair value on a contract-by-contract basis.   SFAS
Statement 159 was adopted January 1, 2008 as required by the
statement.  The requirements of SFAS Statement 159 did not have an
effect on the Company’s consolidated financial statements.
 
 SFAS
Statement 161, “Disclosures about Derivative Instruments and Hedging Activities
- an amendment of FASB Statement No. 133”, required enhanced disclosures about
the Company’s derivative and hedging activities.  The Company will be
required to provided enhanced disclosure about a) how and why an entity uses
derivative instruments, b) how derivative instruments and related hedged items
are accounted for under Statement 133 and c) how derivative instruments and
related hedged items affect and entity’s financial position and cash
flows.  SFAS Statement 161 will be adopted January 1, 2009 as required
by the statement.
 
 3.   Foreign
Currency Translation
 
 The
United States dollar is the functional currency of the Company’s operations in
the United States.  The Canadian dollar is the functional currency of
the Company’s Canadian operations.  Each operation translates foreign
currency denominated transactions into its functional currency using the rate of
exchange in effect at the date of the transaction.  Monetary assets
and liabilities denominated in foreign currency are translated into the
functional currency of the operation using the period-end rate of exchange
giving rise to a gain or loss that is recognized in income during the current
period.
 
  7
  For
reporting purposes, the Canadian operations are translated into United States
dollars using the current rate method.  Under this method, all assets
and liabilities are translated at the period-end rate of exchange and all
revenue and expense items are translated at the average rate of exchange for the
period.  The resulting translation adjustment is recorded as a
separate component of shareholders’ equity.  United States dollar debt
of $67.7 million is designated as a hedge of the investment in the United States
dollar functional operations, such that related transaction gains and losses are
recorded in the separate component of shareholders’ equity.
 
 4.   Acquisition
 
 On
November 30, 2007, the Company acquired 100 percent of the outstanding shares of
Las Vegas/L.A. Express, Inc. ("LVLA").  The aggregate purchase
consideration was approximately $8.45 million (including transaction
costs).  Approximately $4.35 million of additional cash consideration
is contingent on the vendors meeting certain future financial
metrics.  All additional contingent consideration paid to the vendors
will be allocated to goodwill.    The Company has not
completed the allocation of identifiable intangible assets and
goodwill.  The total amount of goodwill, once determined, will not be
deductible for tax purposes.
 
 The
following pro forma financial information reflects the results of operations of
Vitran as if the acquisition of LVLA had taken place on January 1,
2007.  The pro forma financial information is not necessarily
indicative of the results as it would have been if the acquisition had been
effected on the assumed date and is not necessarily indicative of future
results:
  March
      31, 2007Pro
      forma revenue
              
              $
              159,922Pro
      forma net income
              
              
              3,554Pro
      forma diluted income per share
              
              $
              0.26
 
 5.   Long-term
debt
 
 On
April 10, 2008, the Company amended its credit agreement in respect of certain
financial maintenance tests.  The amendment is effective March 31,
2008 to December 31, 2008.  As at March 31, 2008, the Company is in
compliance with these amended maintenance tests and expected to be for the
balance of 2008.
 
 6.   Stock
Option Plan
 
 Under
the Company’s stock option plan, options to purchase Common Shares of the
Company may be granted to key employees, officers and directors of the Company
and its affiliates by the Board of Directors or by the Company’s Compensation
Committee.  There are 884,200 options outstanding under the
plan.  The term of each option is ten years and the vesting period is
five years.  The exercise price for options is the trading price of
the Common Shares of the Company on the Toronto Stock Exchange on the day of the
grant.
 
 The
fair value of each stock option granted was estimated using the Black-Scholes
Morton fair value option-pricing model with the following
assumptions:
  2008Options
      granted
              
              
              99,000Risk-free
      interest rate
              
              
              3.93
              %Dividend
      yield
              
              
              -Volatility
      factor of the
      future expected market price of theCompany’s common
      shares
              
              
              34.12
              %Expected
      life of the options
              
              6
      years
 The
weighted average estimated fair value at the date of grant for the options
granted in 2008 was $5.27 per share.
  8
  
 7.    
Comprehensive income
(loss)
 
 The
components of other comprehensive income (loss) such as changes in foreign
currency adjustments are required to be added to the Company’s reported net
income to arrive at comprehensive net income (loss).  Other
comprehensive income (loss) items have no impact on the reported net income as
presented on the Consolidated Statements of Income.
 
 The
following are the components of other comprehensive income, net of income taxes
for the three months ended March 31, 2008 and 2007:
 
 Three
      months
                Ended
                Mar.
      31, 2008
              
              
              Three
      months
                Ended
                Mar.
      31, 2007Net
      income
              
              $
              1,134
              
              
              $
              3,387Translation
      adjustment
              
              
              (1,025
              )
              
              
              95Interest
      rate swaps
              
              
              (1,449
              )
              
              
              (36
              )Tax
      effect
              
              
              507
              
              
              
              10Other
      comprehensive income (loss)
              
              $
              (1,967
              )
              
              $
              69Comprehensive
      net income (loss)
              
              $
              (833
              )
              
              $
              3,456
 
 8.    
Computation of Income per Share
 
 Three
      months
                  Ended
                  Mar.
      31, 2008
                
                
                Three
      months
                  Ended
                  Mar.
      31, 2007Numerator:Net
      income
                
                $
                1,134
                
                
                $
                3,387Denominator:Basic
      weighted-average shares outstanding
                
                
                13,465,357
                
                
                
                13,438,065Dilutive
      stock options
                
                
                146,089
                
                
                
                213,807Dilutive
      weighted-average shares outstanding
                
                
                13,611,446
                
                
                
                13,651,872Basic
      income per share
                
                $
                0.08
                
                
                $
                0.25Diluted
      income per share
                
                $
                0.08
                
                
                $
                0.25
 
 Diluted
income per share excludes the effect of 658,900 (2007 - 580,900) anti-dilutive
options.
 
 9.    
Contingent Liabilities
 
 The
Company is subject to legal proceedings that arise in the ordinary course of
business.  In the opinion of management, the aggregate liability, if
any, with respect to these actions will not have a material adverse effect on
the consolidated financial position, results of operations or cash
flows.  Legal costs are expensed as incurred.
 
 10.
              Risk
      Management Activities and Fair Value
  Measurements
 
 The
Company is exposed to interest rate volatility with regard to existing variable
rate debt.  The Company has entered into variable-to-fixed interest
rate swaps on variable rate term debt and revolving debt.  The swaps
are accounted for as cash flow hedges.  The effective portions of
changes in fair value of the interest rate swaps are recorded in Accumulated
Other Comprehensive Income and are recognized into earnings in the same period
in which the hedged forecasted transaction affects
earnings.  Ineffective portions of changes in fair value are
recognized into earnings as they occur.  At March 31, 2008, the
notional amount of the swaps was $66.7 million, with the average pay rate being
4.94% and the average receive rate being 2.70%.  The swaps mature at
various dates up to December 31, 2011.
 
  9
  Effective
January 1, 2008, the Company adopted SFAS No. 157, which provides a framework
for measuring fair value under GAAP.  As defined in SFAS No. 157, fair
value is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the
measurement date (exit price).  The Company utilizes market data or
assumptions that the Company believes market participants would use in pricing
the asset or liability, including assumptions about risk and the risks inherent
in the inputs to the valuation technique.  These inputs can be readily
observable, market corroborated or generally unobservable.
 
 The
Company primarily applies the market approach for recurring fair value
measurements and endeavors to utilize the best available
information.  Accordingly, the Company utilizes valuation techniques
that maximize the use of observable inputs and minimize the use of unobservable
inputs.  The Company is able to classify fair value balances based on
the observability of those inputs.
 
 SFAS
No. 157 establishes a fair value hierarchy that prioritizes the inputs used to
measure fair value. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities (Level 1
measurement) and the lowest priority to unobservable inputs (Level 3
measurement).
 
 Assets
and liabilities measured at fair value on a recurring basis include the
following as of March 31, 2008:
 
 Fair
      Value Measurements Using
              
              Liabilities(in
      thousands)
              Level
      1
              
              Level
      2
              
              Level
      3
              
              At
      Fair ValueLiabilitiesInterest
      rate swaps
              
              $
              -
              
              
              $
              2,898
              
              
              $
              -
              
              
              $
              2,898Total
      liabilities
              
              $
              -
              
              
              $
              2,898
              
              
              $
              -
              
              
              $
              2,898
 
 11.  Segmented
Information
 
 Three
      months ended
                Mar.
      31, 2008
              
              Less-than-
                truckload
              
              
              Logistics
              
              
              Truckload
              
              
              Total
              
              
              Corporate
      Office
                and
      Other
              
              
              Consolidated
                TotalsRevenue
              
              $
              149,415
              
              
              $
              19,760
              
              
              $
              8,332
              
              
              $
              177,507
              
              
              $
              -
              
              
              $
              177,507Operating,
      selling, general andadministrative
      expenses
              
              
              142,397
              
              
              
              18,637
              
              
              
              7,697
              
              
              
              168,731
              
              
              
              1,289
              
              
              
              170,020Other
      expense (income)
              
              
              22
              
              
              
              (16
              )
              
              
              (5
              )
              
              
              1
              
              
              
              -
              
              
              
              1Depreciation
      and amortization
              
              
              4,859
              
              
              
              419
              
              
              
              261
              
              
              
              5,539
              
              
              
              21
              
              
              
              5,560Income
      (loss) from operations
              
              $
              2,137
              
              
              $
              720
              
              
              $
              379
              
              
              $
              3,236
              
              
              $
              (1,310
              )
              
              
              1,926Interest
      expense, net
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              2,130Income
      taxes
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (1,338
              )Net
      income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              1,134Three
      months ended
                Mar.
      31, 2007
              
              Less-than-
                truckload
              
              
              Logistics
              
              
              Truckload
              
              
              Total
              
              
              Corporate
      Office
                and
      Other
              
              
              Consolidated
                TotalsRevenue
              
              $
              136,157
              
              
              $
              9,663
              
              
              $
              8,316
              
              
              $
              154,136
              
              
              $
              -
              
              
              $
              154,136Operating,
      selling, general andadministrative
      expenses
              
              
              125,326
              
              
              
              9,104
              
              
              
              7,776
              
              
              
              142,206
              
              
              
              1,349
              
              
              
              143,555Other
      expense (income)
              
              
              24
              
              
              
              -
              
              
              
              5
              
              
              
              29
              
              
              
              -
              
              
              
              29Depreciation
      and amortization
              
              
              4,577
              
              
              
              119
              
              
              
              240
              
              
              
              4,936
              
              
              
              9
              
              
              
              4,945Income
      (loss) from operations
              
              $
              6,230
              
              
              $
              440
              
              
              $
              295
              
              
              $
              6,965
              
              
              $
              (1,358
              )
              
              
              5,607Interest
      expense, net
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              2,064Income
      taxes
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              156Net
      income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              3,387
 
 12.  Comparative
figures
 
 Certain
comparative figures have been reclassified to conform to the financial statement
presentation adopted in the current year.
  10
  Item
2. Management’s Discussion and Analysis of Results of Operation
 
 This
MD&A and the documents incorporated by reference contains forward-looking
statements within the meaning of the United States Private Securities Litigation
Reform Act of 1995 and applicable Canadian securities laws concerning Vitran’s
business, operations, and financial performance and condition.
 
 Forward-looking
statements may be generally identifiable by use of the words “believe”,
“anticipate”, “intend”, “estimate”, “expect”, “project”, “may”, “plans”,
“continue”, “will”, “focus”, “should”, “endeavor” or the negative of these words
or other variation on these words or comparable terminology.  These
forward-looking statements are based on current expectations and are subject to
uncertainty and changes in circumstances that may cause actual results to differ
materially from those expressed or implied by such forward-looking
statements.
 
 The MD&A and the documents
incorporated by reference herein contain forward-looking statements regarding,
but not limited to, the following:
 
 •
              the Company’s objective to
      expand or acquire a less-than-truckload (“LTL”) or logistics
      operations;
 
 •
              the Company’s objective to
      complete its LTL IT system and operating integration initiatives and
      realize operating efficiencies and inter-regional sales
      growth;
 
 •
              the Company’s objective to
      complete the Toronto service centre construction in the LTL segment and
      realize operating
efficiencies;
 
 •
              the Company’s objective to
      complete construction of the dedicated facility in its Logistics segment
      and increase revenue and income from
  operations;
 
 •
              the Company’s intention to
      continue to grow its cross-border and inter-regional LTL revenue at above
      average rates;
 
 •
              the Company’s intention to
      purchase a specified level of capital assets and to finance such
      acquisitions with cash flow from operations and, if necessary, from the
      Company’s revolving credit
facilities.
 
 Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause Vitran’s actual results, performance or
achievements to differ materially from any future results, performance or
achievements expressed or implied by such forward-looking
statements.  Factors that may cause such differences include but are
not limited to technological change, increase in fuel costs, regulatory change,
changes in tax legislation, the general health of the economy, changes in labor
relations, geographic expansion, capital requirements, availability of
financing, claims and insurance costs, environmental hazards, availability of
qualified drivers and competitive factors.  More detailed information
about these and other factors is included in the MD&A.  Many of
these factors are beyond the Company’s control; therefore, future events may
vary substantially from what the Company currently foresees. You should not
place undue reliance on such forward-looking statements.  Vitran
Corporation Inc. does not assume the obligation to revise or update these
forward-looking statements after the date of this document or to revise them to
reflect the occurrence of future unanticipated events, except as may be required
under applicable securities laws.
 
 Unless otherwise indicated all
dollar references herein are in U.S. dollars.  The Company’s Annual
Report on Form 10-K, as well as all the Company’s other required filings, may be
obtained from the Company at www.vitran.com or from www.sedar.com or fromwww.sec.gov/edgar.shtml. This MD&A and the documents
incorporated by reference contain forward-looking statements within the meaning
of the United States Private Securities Litigation Reform Act of 1995 and
applicable Canadian securities laws concerning Vitran’s business, operations,
and financial performance and condition.
  11
  Overview
 
 The
first quarter of 2008 was a difficult quarter for Vitran due to higher than
expected fuel prices, abnormally severe weather conditions throughout Vitran’s
operating network and the continued impact of a downturn in economic activity in
North America since August 2006.  The Company posted first quarter
revenue and income from operations of $177.5 million and $1.9 million
respectively.  Revenue in the LTL segment increased 9.7% compared to
the first quarter of 2007; however, the competitive environment which negatively
affected results in the second half of 2007 did not improve in the first quarter
of 2008.   The Logistics segment showed the most notable
improvement, increasing revenue and income from operations.  The
results for the Logistics segment included Las Vegas/L.A. Express, Inc. (“LVLA”)
acquired November 30, 2007.
 
 CONSOLIDATED
RESULTS
 
 The
following table summarizes the Consolidated Statements of Income for the
three-month periods ended March 31:
 
 For
      the three months ended March 31,(in
      thousands)
              
              2008
              
              
              2007
              
              
              2008
      vs 2007Revenue
              
              $
              177,507
              
              
              $
              154,136
              
              
              
              15.2
              %Operating
      expenses
              
              
              153,099
              
              
              
              128,456
              
              
              
              19.2
              %SG&A
      expenses
              
              
              16,921
              
              
              
              15,099
              
              
              
              12.1
              %Other
      expense
              
              
              1
              
              
              
              29
              
              
              
              (96.6
              %)Depreciation
      and amortization
              
              
              5,560
              
              
              
              4,945
              
              
              
              12.4
              %Income
      from operations
              
              
              1,926
              
              
              
              5,607
              
              
              
              (65.6
              %)Interest
      expense, net
              
              
              2,130
              
              
              
              2,064
              
              
              
              3.2
              %Income
      (recovery) tax
              
              
              (1,338
              )
              
              
              156
              
              
              
              (957.7
              %)Net
      income
              
              $
              1,134
              
              
              $
              3,387
              
              
              
              (66.5
              %)Income
      per share:Basic - net
    income
              
              $
              0.08
              
              
              $
              0.25Diluted - net
      income
              
              $
              0.08
              
              
              $
              0.25Operating Ratio(1)
              
              
              98.9
              %
              
              
              96.4
              %
 
 Revenue
increased 15.2% to $177.5 million for the first quarter of 2008 compared to
$154.1 million in the first quarter of 2007.  Revenue in the LTL and
Logistics segments increased 9.7% and 104.5%, respectively, while the Truckload
segment was flat compared to the first quarter of 2007.  Revenue for
the first quarter of 2008 compared to 2007 was augmented by the contribution of
LVLA, acquired on November 30, 2007.  Domestic U.S. revenue accounts
for 68.1% of total revenue in the first quarter of 2008 compared to 71.1% in the
first quarter of 2007.  Income from operations for the first quarter
declined to $1.9 million compared to $5.6 million in the same period a year
ago.  The Company’s consolidated operating ratio was 98.9% for the
first quarter of 2008 compared to 96.4% in the first quarter of
2007.  Detailed explanations for the fluctuations in revenue and
income from operations are discussed below in “Segmented Results”.
 
 Selling,
general and administrative expenses (“SG&A”) increased 12.1% to $16.9
million in the first quarter compared to $15.1 million in the first quarter of
2007.  The increase in SG&A expenses for the quarter can be
attributed to the addition of LVLA, increased share-based compensation and
healthcare expenses.  Furthermore, with the addition of LVLA and
increases in healthcare and on-going compensation-related expenses, SG&A
should continue to be higher than the prior year periods.
 
 The
Company incurred interest expense of $2.1 million in the first quarter of 2008
and in the first quarter of 2007.  The Company’s total long-term debt
increased to $126.6 million for the first quarter of 2008 compared to the $108.3
million in the 2007 first quarter.  The increase in debt is primarily
attributable to real estate additions of $6.4 million in the first quarter of
2008.  Total debt at March 31, 2008 consisted of $48.4 million drawn
on the Company’s revolving credit facilities, $56.7 million of term debt, $0.9
million note payable and $20.6 million of capital leases.
 
  12
  Income
tax recovery for the first quarter of 2008 was $1.3 million compared to an
expense of $0.2 million for the same quarter a year ago.  The tax
recovery in the first quarter of 2008 compares to an effective tax rate of 4.4%
for the first quarter of 2007.  The tax recovery can be attributed to
a decline in earnings before tax and a decline in the effective tax
rate.  The decrease in the effective rate can be attributed to an
increase in a higher proportion of income being earned in lower tax foreign
jurisdictions as well as a decline in future tax rates in Canada.On a consolidated basis,
the Company generated taxable losses in the United States, which have been
recognized as future tax assets.  These taxable losses are the result
of tax depreciation and amortization on capital assets and goodwill in excess of
GAAP depreciation and amortization attributable to the Company’s acquired
business of the last three years.  Management believes the Company
will generate sufficient taxable income to use these losses in the
future.  Should the Company’s
earnings before income tax increase in subsequent quarters, the quarterly
effective tax rate should also increase.
 
 Net
income decreased by 66.5% to $1.1 million for the 2008 first quarter compared to
$3.4 million for the same quarter in 2007.  This resulted in basic and
diluted income per share of $0.08 for the first quarter of 2008 compared to
basic and diluted income per share from operations of $0.25 for the first
quarter of 2007.  The weighted average number of shares for the
current quarter was 13.5 million basic and 13.6 million diluted compared to 13.4
million basic and 13.7 million diluted shares in the first quarter of
2007.
 
 SEGMENTED
RESULTS
 
 Less-Than-Truckload
(LTL)
 
 The
table below provides summary information for the LTL segment for the three-month
periods ended March 31:
 
 For
      the three months ended March 31,(in
      thousands)
                
                2008
                
                
                2007
                
                
                2008
      vs 2007Revenue
                
                $
                149,415
                
                
                $
                136,157
                
                
                
                9.7
                %Income
      from operations
                
                
                2,137
                
                
                
                6,230
                
                
                
                (65.7
                %)Operating
      ratio
                
                
                98.6
                %
                
                
                95.4
                %Number
      of shipments (2)
                
                
                977,811
                
                
                
                993,376
                
                
                
                (1.6
                %)Weight
      (000s of lbs) (3)
                
                
                1,490,474
                
                
                
                1,467,846
                
                
                
                1.5
                %Revenue
      per shipment (4)
                
                $
                152.81
                
                
                $
                137.06
                
                
                
                11.5
                %Revenue
      per hundredweight (5)
                
                $
                10.02
                
                
                $
                9.28
                
                
                
                8.0
                %
 
 Revenue
in the LTL segment increased 9.7% to $149.4 million, in the first quarter of
2008 compared to $136.2 million in the same period a year ago.  The
increase in revenue was influenced by fuel surcharge which represented 15.8% of
revenue in the first quarter of 2008 compared to 11.2% of revenue in the first
quarter of 2007.  Vitran’s inter-regional service offering from the
central states to the west coast continues to grow and the LTL segment’s cross
border service offering increased 51.5% compared to the 2007 first
quarter.   However, these improvements were mitigated by the
persistent slow down in the North American economy and competitive pricing
pressure compared to the first quarter of 2007.  Furthermore,
abnormally severe weather conditions and rail service issues in Canada in
February and March, compared to the first quarter of 2007, resulted in operating
inefficiencies, increased expenses and lost volumes.  Further
impacting the LTL segments results was an increase in fuel costs that reduced
the fuel surcharge recovery margin.  The LTL segment’s shipments
decreased 1.6% and tonnage increased 1.5% in the 2008 first quarter compared to
the 2007 first quarter. Revenue per hundredweight increased 8.0% taking into
account that the Canadian LTL domestic revenue was translated into US dollars at
a more favorable foreign exchange rate compared to the first quarter of
2007.  Removing this foreign exchange component revenue per
hundredweight increased 3.3% compared to the first quarter of
2007.  The increase in revenue per hundredweight is due to the
increase in fuel surcharge compared to the 2007 first
quarter.  Consequently, the 2008 first quarter operating ratio was
98.6% compared to 95.4% in the 2007 first quarter.
 
  13
  Logistics
 
 The
table below provides summary information for the Logistics segment for the
three-month periods ended March 31:
 
 
 For
      the three months ended March 31,(in
      thousands)
              
              2008
              
              
              2007
              
              
              2008
      vs 2007Revenue
              
              $
              19,760
              
              
              $
              9,663
              
              
              
              104.5
              %Income
      from operations
              
              
              720
              
              
              
              440
              
              
              
              63.6
              %Operating
      ratio
              
              
              96.4
              %
              
              
              95.4
              %
 
 Revenue
and income from operations for the Logistics segment increased 104.5% and 63.6%,
respectively for the first quarter of 2008 compared to the same period in
2007.  The increases are primarily attributable to the acquisition of
LVLA on November 30, 2007.  The Logistics segment, excluding LVLA,
continued to generate positive results but showed the impact of the economic
slowdown in North America.  The 2008 first quarter operating ratio was
96.4% compared to 95.4% in the 2007 first quarter.Revenue and income from
operations should increase when the supply chain unit completes the construction
of its new 500,000 square foot dedicated retail distribution facility that is
scheduled for the beginning of the third quarter 2008.
 
 Truckload
 
 The
table below provides summary information for the Truckload segment for the
three-month periods ended March 31:
 
 For
      the three months ended March 31,(in
      thousands)
              
              2008
              
              
              2007
              
              
              2008
      vs 2007Revenue
              
              $
              8,332
              
              
              $
              8,316
              
              
              
              0.0
              %Income
      from operations
              
              
              379
              
              
              
              295
              
              
              
              28.5
              %Operating
      ratio
              
              
              95.5
              %
              
              
              96.5
              %
 
 Revenue
in the Truckload segment of $8.3 million for the first quarter of 2008 was flat
compared to the first quarter of 2007.  Revenue per mile(6)decreased
4.2% but was offset by the 6.5% increase in shipments compared to the 2007 first
quarter.  As a result income from operations increased $0.1
million.   Consequently the Truckload segment posted an operating
ratio of 95.5% in the first quarter of 2008 compared to 96.5% for the first
quarter of 2007.
 
 LIQUIDITY
AND CAPITAL RESOURCES
 
 Cash
flow from operations including working capital changes decreased to $4.7 million
for the 2008 first quarter compared to $5.8 million in 2007.  The
decline is primarily attributable to non-cash deferred income tax recovery plus
the changes in working capital compared to the first quarter of
2007.  Accounts receivable increased compared to December 31, 2007 due
to higher revenue, average days sales outstanding was 39.8 days compared to 38.9
days for the Company.  Accounts payable and accrued liabilities
increased compared to December 31, 2007 due to the timing of
payments.
 
 Interest-bearing
debt, excluding bank overdraft, was $126.6 million at March 31, 2008 consisting
of $56.7 million of term debt, capital leases of $20.6 million, $0.9 million
note payable and $48.4 million drawn under the revolving credit
facility.  At December 31, 2007 interest-bearing debt was $128.0
million consisting of $58.9 million of term debt, capital leases of $22.9
million, $1.2 million note payable and $45.0 million drawn under the revolving
credit facility.  During the first quarter, the Company repaid $2.6
million of term debt and $2.2 million of capital leases.  At March 31,
2008, the Company had $28.2 million of unused credit facilities.
 
  14
  Capital
expenditures amounted to $7.1 million for the first quarter of 2008 and were
funded out of operating cash flows and the revolving credit facilities of the
Company.  The majority of capital expenditures were for the
acquisition of the LTL service centres in Kansas City (Kansas), Las Vegas
(Nevada) and the construction of the new LTL service centre in Toronto
(Ontario).  The table below sets forth the Company’s capital
expenditures for the three-month period ended March 31, 2008.
 
 For
      the three months ended March 31,(in
      thousands of dollars)
              
              2008
              
              
              2007Real
      estate and buildings
              
              $
              6,376
              
              
              $
              3,247Tractors
              
              
              47
              
              
              
              -Trailing
      fleet
              
              
              209
              
              
              
              969Information
      technology
              
              
              228
              
              
              
              169Leasehold
      improvements
              
              
              72
              
              
              
              18Other
      equipment
              
              
              176
              
              
              
              147Total
              
              $
              7,108
              
              
              $
              4,550
 
 Management
estimates that cash capital expenditures, excluding real estate additions for
the remainder of 2008, will be between $5.0 million and $7.5 million, the
majority of which will be fleet replacement and information technology
expenditures.  Real estate additions, the majority of which will be
for the completion of construction of the new Toronto service centre, will be
approximately $2.0 million.  The Company also anticipates entering
into operating leases to fund the acquisition of equipment with a capital cost
of between $5.0 million and $9.0 million.  The Company expects to
finance its cash capital requirements with cash flow from operations, and if
required, its revolving credit facilities.
 
 The
Company has contractual obligations for principal payments that include
long-term debt consisting of term debt facilities, revolving credit facilities
and capital leases for operating equipment. The Company utilizes off-balance sheetoperating
leases primarily consisting of tractor, trailing fleet and real estate
leases.  Operating leases form an integral part of the Company’s
financial structure and operating methodology as they provide an alternative
cost effective and flexible form of financing.
 
 The
following table summarizes our significant contractual obligations and
commercial commitments as of March 31, 2008:
 
 (in
      thousands of dollars)
              
              
              
              
              Payments
      due by periodContractual
      Obligations
              
              Total
              
              
              2008
              
              
              2009
      & 2010
              
              
              2011
      & 2012
              
              
              ThereafterTerm
      credit facilities
              
              $
              56,655
              
              
              $
              6,765
              
              
              $
              23,890
              
              
              $
              26,000
              
              
              $ NilRevolving
      credit facilities
              
              
              48,464
              
              
              Nil
              
              
              Nil
              
              
              
              48,464
              
              
              NilCapital
      lease obligations
              
              
              20,619
              
              
              
              5,751
              
              
              
              9,224
              
              
              
              5,644
              
              
              NilNote
      payable
              
              
              865
              
              
              
              865
              
              
              Nil
              
              
              Nil
              
              
              NilSub-total
              
              
              126,603
              
              
              
              13,381
              
              
              
              33,114
              
              
              
              80,108
              
              
              NilOperating
      leases
              
              
              56,722
              
              
              
              14,782
              
              
              
              23,513
              
              
              
              13,848
              
              
              
              4,579Total
      Contractual Obligations
              
              $
              183,325
              
              
              $
              28,163
              
              
              $
              56,627
              
              
              $
              93,956
              
              
              $
              4,579
 
  15
  In
addition to the above-noted contractual obligations, the Company, as at March
31, 2008, utilized the revolving credit facilities for standby letters of credit
of $17.0 million.  The letters of credit are used as collateral for
self-insured retention of insurance claims.
 
 A
significant decrease in demand for the Company’s services could limit the
Company’s ability to generate cash flow and affect its
profitability.  The Company’s credit agreement contains certain
financial maintenance tests that require the Company to achieve stated levels of
financial performance, which, if not achieved, could cause an acceleration of
the payment schedules.  On April 10, 2008, the Company amended its
credit agreement in respect of certain financial maintenance
tests.  The amendment is effective March 31, 2008 to December 31,
2008.  As at March 31, 2008, the Company is in compliance with these
amended maintenance tests and expected to be for the balance of
2008.  Management does not anticipate a significant decline in
business levels or financial performance and expects that existing working
capital, together with available revolving facilities, will be sufficient to
fund operating and capital requirements in 2008 as well as service the
contractual obligations.
 
 OUTLOOK
 
 The
first quarter of 2008 was a demanding quarter for Vitran as high fuel prices,
uncharacteristically poor weather conditions and the lackluster economic
environment continued to impact the operating results and most acutely in the
LTL segment.  That being said the LTL segment continued to grow its
inter-regional and cross border services while maintaining its regional customer
base to ensure that the Company will be well positioned for the completion of
its IT initiatives and any economic improvement.
 
 The
U.S. LTL business unit will endeavour to complete its IT systems integration
early in the second quarter in order to stimulate operating efficiency
initiatives and to launch new inter-regional sales
opportunities.  With the winter season complete, the Canadian LTL
business unit will be able to complete its new Toronto service centre in the
second quarter and then focus on service centre
efficiencies.   The Logistics segment will continue to make
progress to completing its new dedicated logistics facility in Toronto with an
early third quarter launch.
 
 Lastly
the Company remains committed to its objectives to expand or acquire into new
regional LTL markets and opportunistically add complementary Logistics
operations.
 
 QUARTERLY
RESULTS
 
 (thousands of
      dollars
                except
      per share
                amounts)
              
              
              2008
      Q1
              
              
              
              2007
      Q4
              
              
              
              2007
      Q3
              
              
              
              2007
      Q2
              
              
              
              2007
      Q1
              
              
              
              2006
      Q4
              
              
              
              2006
      Q3
              
              
              
              2006
      Q2Revenue
              
              $
              177,507
              
              
              $
              174,310
              
              
              $
              171,927
              
              
              $
              170,144
              
              
              $
              154,136
              
              
              $
              153,779
              
              
              $
              121,512
              
              
              $
              123,641Income
      from operations
              
              
              1,926
              
              
              
              2,750
              
              
              
              5,569
              
              
              
              9,073
              
              
              
              5,607
              
              
              
              8,143
              
              
              
              6,797
              
              
              
              8,128Net
      Income
              
              
              1,134
              
              
              
              1,669
              
              
              
              3,121
              
              
              
              5,533
              
              
              
              3,387
              
              
              
              4,974
              
              
              
              4,885
              
              
              
              5,776Income
      per share:Basic
              
              $
              0.08
              
              
              $
              0.12
              
              
              $
              0.23
              
              
              $
              0.41
              
              
              $
              0.25
              
              
              $
              0.37
              
              
              $
              0.38
              
              
              $
              0.45Diluted
              
              
              0.08
              
              
              
              0.12
              
              
              
              0.23
              
              
              
              0.41
              
              
              
              0.25
              
              
              
              0.37
              
              
              
              0.38
              
              
              
              0.45Weighted
      average number of shares:Basic
              
              
              13,465,357
              
              
              
              13,457,619
              
              
              
              13,475,685
              
              
              
              13,463,374
              
              
              
              13,438,065
              
              
              
              13,413,153
              
              
              
              12,744,936
              
              
              
              12,732,644Diluted
              
              
              13,611,446
              
              
              
              13,621,272
              
              
              
              13,668,819
              
              
              
              13,661,467
              
              
              
              13,651,872
              
              
              
              13,624,031
              
              
              
              12,966,835
              
              
              
              12,964,761
 
  16
  
 Definitions
of non-GAAP measures:
 
 (1)
              Operating
      ratio (“OR”) is a non-GAAP financial measure which does not have any
      standardized meaning prescribed by GAAP. OR is the sum of operating
      expenses, selling, general and administrative expenses, other expenses
      (income), and depreciation and amortization expense, divided by revenue.
      OR allows management to measure the Company and its various segments’
      operating efficiency.  OR is a widely recognized measure in the
      transportation industry which provides a comparable benchmark for
      evaluating the Company’s performance compared to its competitors.
      Investors should also note that the Company’s presentation of OR may not
      be comparable to similarly titled measures by other companies. OR is
      calculated as follows:
 
 Three
      months ended March 31,
              
              2008
              
              
              2007Operating
      expenses
              
              $
              153,099
              
              
              $
              128,456Selling,
      general and administrative expenses
              
              
              16,921
              
              
              
              15,099Other
      expenses
              
              
              1
              
              
              
              29Depreciation
      and amortization expense
              
              
              5,560
              
              
              
              4,945$
              175,581
              
              
              $
              148,529Revenue
              
              $
              177,507
              
              
              $
              154,136Operating
      ratio (“OR”)
              
              
              98.9
              %
              
              
              96.4
              %
 
 (2)
              A
      shipment is a single movement of goods from a point of origin to its final
      destination as described on a bill of lading
  document.
 
 (3)
              Weight
      represents the total pounds
shipped.
 
 (4)
              Revenue
      per shipment represents revenue divided by the number of
      shipments.
 
 (5)
              Revenue
      per hundredweight is the price obtained for transporting 100 pounds of LTL
      freight from point to point, calculated by dividing the revenue for an LTL
      shipment by the hundredweight (weight in pounds divided by 100) for a
      shipment.
 
 (6)
              Revenue
      per total mile represents revenue divided by the total miles
      driven.
 
 Item
3. Quantitative and Qualitative Disclosures About Market Risk
 
 The
Company is exposed to the impact of interest rate changes.  The
Company’s exposure to changes in interest rates is limited to borrowings under
the term bank facilities and revolving credit facilities that have variable
interest rates tied to the LIBOR rate.  As a majority of the Company’s
debt is tied to variable interest rates, the Company estimates that the fair
value of the long-term debt approximates the carrying value.
  (in
      thousands of dollars)
                  
                  Payments
      due by periodLong-term
      debt
                  
                  Total
                  
                  
                  2008
                  
                  
                  2009
      & 2010
                  
                  
                  2011
      & 2012
                  
                  
                  ThereafterVariable
      RateTerm
      bank facility
                  
                  $
                  54,000
                  
                  
                  $
                  6,000
                  
                  
                  $
                  22,000
                  
                  
                  $
                  26,000
                  
                  
                  $
                  NilAverage
      interest rate (LIBOR)
                  
                  
                  3.95
                  %
                  
                  
                  3.95
                  %
                  
                  
                  3.95
                  %
                  
                  
                  3.95
                  %Term
      bank facility
                  
                  $
                  2,655
                  
                  
                  $
                  765
                  
                  
                  $
                  1,890
                  
                  
                  $
                  Nil
                  
                  
                  $
                  NilAverage
      interest rate (LIBOR)
                  
                  
                  4.45
                  %
                  
                  
                  4.45
                  %
                  
                  
                  4.45
                  %Revolving bank
      facility
                  
                  
                  35,800
                  
                  
                  Nil
                  
                  
                  Nil
                  
                  
                  
                  35,800
                  
                  
                  NilAverage
      interest rate (LIBOR)
                  
                  
                  3.95
                  %
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  3.95
                  %
                  
                  NilRevolving bank
      facility
                  
                  
                  12,664
                  
                  
                  Nil
                  
                  
                  Nil
                  
                  
                  
                  12,664
                  
                  
                  NilAverage
      interest rate (CAD BA)
                  
                  
                  5.00
                  %
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  5.00
                  %Fixed
      RateCapital
      lease obligations
                  
                  
                  20,619
                  
                  
                  
                  5,751
                  
                  
                  
                  9,224
                  
                  
                  
                  5,644
                  
                  
                  NilAverage
      interest rate
                  
                  
                  6.15
                  %
                  
                  
                  6.15
                  %
                  
                  
                  6.15
                  %
                  
                  
                  6.15
                  %Note
      payable
                  
                  
                  865
                  
                  
                  
                  865
                  
                  
                  Nil
                  
                  
                  Nil
                  
                  
                  NilAverage
      interest rate
                  
                  
                  6.00
                  %
                  
                  
                  6.00
                  %
                  
                  
                  6.00
                  %
                  
                  
                  6.00
                  %
                  
                  
                  6.00
                  %Total
                  
                  $
                  126,603
                  
                  
                  $
                  13,381
                  
                  
                  $
                  33,114
                  
                  
                  $
                  80,108
                  
                  
                  $
                  Nil
 
 
  17
  
 The
Company uses variable-to-fixed interest rate swaps on its term and revolving
credit facilities with a notional amount of $66.7 at March 31,
2008.  The average pay rate on the swaps is 4.94% and the average
receive rate is the three-month LIBOR rate which is currently 2.7%.
 
 The
Company is exposed to foreign currency risk as fluctuations in the United States
dollar against the Canadian dollar can impact the financial results of the
Company.  The Company’s Canadian operations realize foreign currency
exchange gains and losses on the United States dollar denominated revenue
generated against Canadian dollar denominated expenses.  Furthermore,
the Company reports its results in United States dollars thereby exposing the
results of the Company’s Canadian operations to foreign currency
fluctuations.  In addition, the Company’s United States dollar debt of
$67.7 million is designated as a hedge of the investment in the United States’
self-sustaining foreign operations.
 
 Item
4. Controls and Procedures
 
 a)
              As
      of April 23, 2008, the Chief Executive Officer and the Chief Financial
      Officer evaluated the effectiveness of the Company’s disclosure controls
      and procedures in accordance with Rule 13a-15 under the Exchange Act for
      the quarter ended March 31, 2008.  Based on their evaluation,
      the Company’s Chief Executive Officer and the Chief Financial Officer
      concluded that Vitran’s disclosure controls and procedures enable Vitran
      to record, process, summarize and report in a timely manner the
      information that we are required to disclose in our Exchange Act
      reports.
 
 b)
              There
      were no changes in our internal control over financial reporting that
      occurred during the period covered by this report that have materially
      affected, or are reasonably likely to materially affect, the Company’s
      internal control over financial
reporting.
 
 Part
II. Other Information
 
 Item
1. Legal Proceedings
 
 The
Company is subject to various legal proceedings and claims that have arisen in
the ordinary course of its business that have not been fully
adjudicated.  Many of these are covered in whole or in part by
insurance.  The management of Vitran does not believe that these
actions, when finally concluded and determined, will have a significant adverse
effect upon Vitran’s financial condition, results of operations or cash
flows.
 
 Item
1A.  Risk Factors
 
 See
Part 1A of the Company’s 2007 Annual Report on Form 10-K.
 
 Item 2. Unregistered Sale of Equity
and Use of Proceeds       -
-     None
 
 Item 3. Defaults Upon Senior
Securities     -
-     None
 
 Item
4. Submission of Matters to a Vote of Security Holders
 
 a)
              On
      April 23, 2008 the Company held an Annual and Special Meeting of
      Shareholders.
 
 b)
              The
      following directors were elected with the indicated number of votes set
      forth below:
 
 Nominee
              
              For
              
              
              WithheldRichard
      D. McGraw
              
              
              6,554,872
              
              
              
              5,484,875Richard
      E. Gaetz
              
              
              12,009,555
              
              
              
              30,792Anthony
      F. Griffiths
              
              
              11,801,417
              
              
              
              238,930John
      R. Gossling
              
              
              11,975,655
              
              
              
              64,692Georges
      L. Hébert
              
              
              11,975,655
              
              
              
              64,692William
      S. Deluce
              
              
              11,975,655
              
              
              
              64,692
 
  18
  
 
 c)
              The
      proposal for the ratification of the appointment of KPMG LLP as
      Independent Auditors for 2008 was voted on and approved at the meeting by
      the following vote:
 For:  11,791,495
              Withheld:  248,853
 
 d)
              To
      confirm the resolution authorizing the amendment of by-law No. 6 to
      clarify that a share certificate is required to register the transfer of
      certificated shares, but not for a transfer of
      uncertificated  shares was voted on and approved at the meeting
      by the following vote:
                For:  11,634,828              Against:  1,873
  
 Item 5. Other
Information     -
-       None
 
 Item
6. Exhibits and Reports on Form 8-K
 
 Exhibits
 
 Exhibit
                Number
              Description
      of Exhibit31
              Certifications
      pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated
      April 23, 2008.32
              Certifications
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated
      April 23, 2008.
   SIGNATURE
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
 
 VITRAN
      CORPORATION INC./s/SEAN P.
      WASHCHUKSean
      P. WashchukDate:  April
      23, 2008
              Vice
      President of Finance andChief
      Financial Officer(Principle
      Financial Officer)/s/ FAYAZ D. SULEMANFayaz
      D. SulemanDate:  April
      23, 2008
              Corporate
      Controller(Principle
      Accounting Officer)
 19