##### 



THIRD QUARTER 2003
For the period ended September 30, 2003

Management Discussion and Analysis

This report contains forward-looking information with respect to Vitran
Corporation Inc.s (Vitran) operations and future financial results. Actual
results may differ from expected results for a variety of reasons including
factors discussed in the Companys Management Discussion and Analysis section
of Vitrans 2002 Annual Report.

This interim Management Discussion and Analysis (MD&A) should be read in
conjunction with the Companys September 30, 2003 third quarter financial
statements and the 2002 Annual MD&A document that forms part of the Vitran 2002
Annual Report.

Presidents Comment

We are pleased with Vitrans Q3 performance, the Companys eighth consecutive
period of improved profitability versus the comparable year-earlier quarter,
particularly given the continued weakness in the U.S. economy. Operating
results would have been even better, but the Canadian dollar maintained its
strength against the U.S. dollar, negatively impacting revenue and earnings.
Importantly, favorable recent trends continued during the third quarter i.e.
improved operating efficiency, lower SG&A costs and reduced interest expenses,
all of which contributed to improved earnings.

Overview

Vitrans net income for the three months ended September 30, 2003 was the
highest on record and represents the eighth consecutive quarter Vitrans
consolidated earnings per share have increased compared to the prior year
quarter. Earnings per share for the 2003 third quarter grew to $0.44 per share
basic ($0.41 diluted) from $0.38 per share basic ($0.37 diluted) a year ago.
For the nine-month period ended September 30, 2003 earnings of $1.05 per share
basic ($1.00 diluted) compared to $0.77 per share basic ($0.77 diluted) in the
2002 nine-month period reflect the accumulation of strengthened quarterly
results. The LTL segment improved income from operations by 5%, while
consolidated interest expense decreased significantly.

Consistent with the trend that started in the first quarter of 2003, the
current quarters results include the impact of a significantly stronger
Canadian dollar versus the American dollar. Average exchange rates were 1.38
and 1.42 for the 2003 three-month and nine-month periods ended September 30,
2003 versus 1.58 and 1.57 for the same periods a year ago. Consequently
Vitrans results, reported in Canadian dollars, were negatively impacted
because over two thirds of the Companys operations are U.S. based. In
addition, the stronger Canadian dollar also negatively impacted U.S. dollar
denominated revenue billed by Canadian subsidiaries, together with the related
U.S. dollar accounts receivable and cash. An additional factor making the
quarter-over-quarter comparison more challenging this year is the $0.05 basic
earning per share impact of a foreign exchange gain that was generated in the
third quarter of 2002 on the repatriation of capital from a foreign subsidiary.
The Company did not record a similar gain in 2003.

Consolidated Results

Revenue for the three-month period ended September 30, 2003 was $117.1 million
compared to $123.0 million for the same period in 2002. For the quarter the
consolidated revenue was reduced by $10.6 million or 8.6% due to a stronger
Canadian dollar. Revenue for the nine-month period was $349.0 million,
compared to $358.8 million for the same period a year ago. Consolidated
revenues for the nine-month period were supported by the LTL segment, which
despite the impact of foreign exchange equaled the prior year nine-month
period, offset by declines in the Logistics and Truckload segments. Overall,
the Companys revenues for the nine-month period were reduced by $24.3 million
or 6.8% due to a stronger Canadian dollar. Were it not for the stronger
Canadian dollar, the 2003 third quarter revenue would have been 3.8% higher
than in 2002, and the revenue for the nine months would have been 4.0% higher
than in 2002.

Gross profit for the quarter decreased to $18.5 million compared to $20.4
million for the same quarter in 2002. For the nine-month period of 2003 gross
profit declined to $52.7 million compared to $59.2 million in the same period
in 2002. The stronger Canadian dollar had the effect of reducing gross profit
by $2.2 million and $5.0 million for the quarter and nine-month period
respectively. Increased insurance expenses, healthcare and workers
compensation costs continue to impact the Companys gross margin.

1



---



##### 



Selling, general and administrative (SG&A) expenses for the quarter were down
$1.7 million to $10.5 million, or 8.9% of revenue, compared to 9.9% of revenue
in the same quarter of 2002. For the nine-month period ended September 30,
2003, SG&A expenses were $31.9 million compared to $38.7 million for the same
period in 2002. The 2002 nine-month results include the one-time special
retirement bonus of $0.8 million offset by a $0.5 million non-taxable foreign
exchange gain. The stronger Canadian dollar contributed to a decline in SG&A
of $0.8 million and $1.7 million of three and nine-month periods respectively.
The balance of the reduction has been driven by ongoing cost controls and the
elimination of discretionary spending.

Income from operations before
depreciation (EBITD)1 expense was $8.1 million
for the third quarter of 2003 compared to $8.3 million for the same quarter of
2002. The stronger Canadian dollar had the effect of reducing EBITD by $1.4
million for the current quarter compared to the 2002 third quarter.
Depreciation expense for the three-month period was $1.9 million compared to
$2.1 million for the same period a year ago. In spite of the negative impact
of a stronger Canadian dollar on the Companys income from operations, the
consolidated operating ratio (OR)2 for the third quarter improved to 94.7%
from 95.0% in the third quarter of 2002. For the nine-month period ended
September 30, 2003 the consolidated OR was 95.7% compared to 96.0% for the same
period in 2002. Had the Canadian dollar not strengthened versus the U.S.
dollar, the operating ratio for the three-month and nine-month periods would
have been 94.2% and 95.2% respectively.

Interest expense net of interest income for the third quarter and nine-month
period ended September 31, 2003 was $0.4 million and $1.6 million compared to
$1.2 million and $4.1 million for the same period ending September 30, 2002.
The decline is attributable to a reduction in outstanding debt and reduced
spread on borrowing as a result of improved results. As well, the Companys
8.95% fixed interest rate swap expired on January 26, 2003 and was not renewed.

Improved profitability resulted in income taxes for the quarter of $1.5 million
compared to $1.2 million a year ago. For the nine-month period income taxes
were $3.1 million compared to $2.2 million for the same period a year ago.

Net income for the third quarter of 2003 was $4.2 million or $0.44 per share
basic ($0.41 per share diluted), exceeding the $0.38 per share basic ($0.37 per
share diluted) posted in the third quarter of 2002. For the nine-month period
ending September 30, 2003 net income was $10.1 million or $1.05 per share basic
($1.00 per share diluted) compared to $7.4 million or $0.77 per share basic and
diluted for the period ended September 30, 2002. Per share basic results are
based on 9,541,452 and 9,726,395 weighted average shares outstanding during the
2003 and 2002 nine-month periods. Per share diluted results are based on
10,038,335 and 9,726,395 weighted average shares outstanding during the
comparative nine-month periods.

Segmented Results

Less-than-truckload (LTL)

The LTL segment reported revenue of $95.5 million versus $98.9 million for the
comparable third quarters. The Operating Ratio (OR) improved to 93.4% in the
current quarter compared to 94.1% for the 2002 third quarter. Income from
operations improved to $6.3 million from $5.9 million. Revenue and income from
operations for the quarter were both unfavorably affected by the stronger
Canadian dollar that accounted for an $8.4 million and $1.1 million decline
respectively. Had there not been a significant change in foreign exchange
rates during the third quarter of 2003 compared to 2002 the LTL segment would
have reported revenue of $103.9 million (a 5.1% improvement over 2002) income
from operations of $7.4 million (a 26.1% improvement over 2002) and an OR of
92.9%. For the nine-month period ended September 30, 2003, revenue was $284.5
million in line with the year ago nine-month period. Income from operations
for the 2003 nine-month period grew to $16.0 million compared to $15.2 million
in 2002. The stronger Canadian dollar reduced revenue by $19.2 million and
income from operations by $2.6 million versus a year ago.

The Canadian LTL unit for the third consecutive quarter this year exceeded the
prior years quarter results. The unit continues to make market share gains
while maintaining efficiency and cost controls. Revenue increased 8.3% for the
third quarter of 2003 over the third quarter 2002 due to a 6.7% increase in
shipments, a 5.2% increase in tonnage and a 2.9% improvement revenue per
hundredweight.

Revenue at the U.S. LTL unit for the three-month period ended September 30,
2003 increased 2.2%, calculated in U.S. dollars, compared to the same quarter
in 2002. For the third quarter, compared to the same period a year ago,
shipments increased 1.0%, tonnage increased 1.5% while revenue per
hundredweight improved 0.7%.

2



---



##### 



Logistics

For the third quarter, revenue at the Logistics segment was down 1.6% to $10.2
million compared to the third quarter of 2002. The slight decrease is
attributable to the impact of the stronger Canadian dollar offset by gains in
certain units. Revenue declines for the Freight Brokerage unit have
essentially stabilized compared to the third quarter of 2002 after four
quarters of declines arising from the program that was initiated in the third
quarter of 2002 to eliminate customers providing inadequate profitability. The
Supply Chain operation recorded a 5.8% increase in revenue at the U.S. unit as
volumes from their dedicated customer increased. The Canadian Supply Chain
unit recorded a 23.4% increase in revenue primarily due to the addition of a
new Canadian shoe retail account that began to come on stream during the
quarter.

Truckload

Revenue for the Truckload segment, excluding the impact of foreign exchange,
was down 5.3% for the third quarter of 2003 compared to the same period a year
ago. A competitive Midwestern U.S. marketplace and flat economic environment
resulted in income from operations of $0.3 million, $0.2 million less than the
prior year third quarter. However there appears to be positive momentum going
into the fourth quarter as revenue in the latter part of the quarter showed
improved momentum.

Liquidity and Capital Resources

Cash flow from operations for the nine-month period before non-cash working
capital changes generated $16.3 million compared to $13.8 million in the prior
year period and $6.8 million for the quarter compared to $5.9 million in the
prior year quarter. Non-cash working capital consumed $2.3 million in the
current quarter and consumed $0.5 million in the third quarter of 2002.

Interest bearing debt, net of cash on hand of $8.3 million, decreased by 24.4%
to $35.2 million at September 30, 2003 compared to $46.6 million at December
31, 2002. Interest bearing debt, net of cash on hand, as a percentage of total
capital, was 29.4% at the end of the 2003 third quarter compared to 36.2% at
December 31, 2002. During the nine-month period ended September 30, 2003 the
Company repaid a net $7.4 million of debt. The balance of the reduction
reflects the impact of the stronger Canadian dollar.

During the third quarter of 2003 the Company amended its existing Credit
Agreement. Under the modified agreement, the available revolving credit
facility was increased from $10.0 million to $25.0 million, outstanding term
debt was reduced by $5.2 million and the term facility was extended six months.
The Company is required to make quarterly principle payments totaling
U.S.$27.9 million by August 30, 2006.

Capital expenditures for the third quarter amounted to $1.1 million compared to
$2.0 million in the same period in 2003. The Company invested primarily in
rolling stock and information technology during the quarter. The Company did
not repurchase Class A voting shares under its normal course issuer bid during
the current quarter but has repurchased $0.9 million for the nine-month period.
During the third quarter and nine-month period the Company raised $0.9 million
and $1.1 million respectively from the issuance of Class A voting shares under
the Companys stock option plan.

Outlook

Despite a lackluster freight environment in the U.S. Midwest and the adverse
effect of foreign exchange rates on results, the Company posted a record
quarter. Continuing the trend of improving year-over-year results will depend
on maintaining a focus on efficiency, cost control and market share gains
throughout the Company, coupled with a sustained low interest rate environment.



---

|1 |  | Income from operations before depreciation (EBITD) is a non-GAAP financial
measure which does not have any standardized meaning prescribed by GAAP and
represents net income, plus (minus) income tax expense (benefit), plus net
interest expense, plus loss on sale of fixed assets and plus depreciation.
We believe EBITD is useful in evaluating our operating performance compared
to that of other companies in our industry, as the calculation of EBITD
eliminates the effects of financing, income taxes and the accounting effects
of capital spending, which items may vary for different companies for reasons
unrelated to overall operating performance. When analyzing our operating
performance, however, investors should use EBITD in addition to, not as an
alternative for income from operations and net income, as those items are
defined by GAAP. Investors should also note that our presentation of EBITD
may not be comparable to similarly titled measures used by other companies.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
|  |  | EBITD is calculated in the following manner for each of the periods presented:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

Three months
    
    Three months
    
    Nine months
    
    Nine monthsended
    
    ended
    
    ended
    
    endedSept 30, 2003
    
    Sept 30, 2002
    
    Sept 30, 2003
    
    Sept 30, 2002Net income
    
    $
    4,192
    
    
    $
    3,648
    
    
    $
    10,056
    
    
    $
    7,449Income tax expense
    
    
    1,524
    
    
    
    1,240
    
    
    
    3,079
    
    
    
    2,245Interest expense, net
    
    
    428
    
    
    
    1,214
    
    
    
    1,597
    
    
    
    4,062Loss on sale of fixed assets
    
    
    52
    
    
    
    63
    
    
    
    182
    
    
    
    487Depreciation expense
    
    
    1,877
    
    
    
    2,094
    
    
    
    5,804
    
    
    
    6,289EBITD
    
    $
    8,073
    
    
    $
    8,259
    
    
    $
    20,718
    
    
    $
    20,532




|2 |  | Operating Ratio (OR) is a non-GAAP financial measure which does not have any
standardized meaning prescribed by GAAP and is the sum of operating expenses,
selling, general and administrative expenses and depreciation expense, divided
by revenue. Although OR is not a recognized financial measure defined by
GAAP, it is a widely recognized measure in the transportation industry which
we believe provides a comparable benchmark for evaluating our performance
compared to our competitors. Investors should also note that our presentation
of OR may not be comparable to similarly titled measures by other companies.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Three months
    
    Three months
    
    Nine months
    
    Nine monthsended
    
    ended
    
    ended
    
    endedSept 30, 2003
    
    Sept 30, 2002
    
    Sept 30, 2003
    
    Sept 30, 2002Operating expenses
    
    $
    98,593
    
    
    $
    102,604
    
    
    $
    296,304
    
    
    $
    299,602Selling, general
and administrative
expenses
    
    
    10,457
    
    
    
    12,144
    
    
    
    31,937
    
    
    
    38,695Depreciation expense
    
    
    1,877
    
    
    
    2,094
    
    
    
    5,804
    
    
    
    6,289$
    110,927
    
    
    $
    116,842
    
    
    $
    334,045
    
    
    $
    344,586Revenue
    
    $
    117,123
    
    
    $
    123,007
    
    
    $
    348,959
    
    
    $
    358,829OR
    
    
    94.7%
    
    
    
    95.0%
    
    
    
    95.7%
    
    
    
    96.0%


3



---



##### 



VITRAN CORPORATION INC.
CONSOLIDATED STATEMENTS OF INCOME and RETAINED EARNINGS

Three months
    
    Three months
    
    Nine months
    
    Nine monthsended
    
    ended
    
    ended
    
    endedSept. 30, 2003
    
    Sept. 30, 2002
    
    Sept. 30, 2003
    
    Sept. 30, 2002(Unaudited)(In thousands of Canadian dollars except for per share amounts)Revenue
    
    $
    117,123
    
    
    $
    123,007
    
    
    $
    348,959
    
    
    $
    358,829Operating expenses
    
    
    98,593
    
    
    
    102,604
    
    
    
    296,304
    
    
    
    299,602Gross profit
    
    
    18,530
    
    
    
    20,403
    
    
    
    52,655
    
    
    
    59,227Selling, general and administrative expenses
    
    
    10,457
    
    
    
    12,144
    
    
    
    31,937
    
    
    
    38,695Income from operations before depreciation
    
    
    8,073
    
    
    
    8,259
    
    
    
    20,718
    
    
    
    20,532Depreciation expense
    
    
    1,877
    
    
    
    2,094
    
    
    
    5,804
    
    
    
    6,2896,196
    
    
    
    6,165
    
    
    
    14,914
    
    
    
    14,243Interest expense, net
    
    
    (428
    )
    
    
    (1,214
    )
    
    
    (1,597
    )
    
    
    (4,062
    )Loss on sale of fixed assets
    
    
    (52
    )
    
    
    (63
    )
    
    
    (182
    )
    
    
    (487
    )(480
    )
    
    
    (1,277
    )
    
    
    (1,779
    )
    
    
    (4,549
    )Income from operations before income taxes
    
    
    5,716
    
    
    
    4,888
    
    
    
    13,135
    
    
    
    9,694Income taxes
    
    
    1,524
    
    
    
    1,240
    
    
    
    3,079
    
    
    
    2,245Net income
    
    $
    4,192
    
    
    $
    3,648
    
    
    $
    10,056
    
    
    $
    7,449Retained earnings, beginning of period
    
    $
    49,888
    
    
    $
    37,791
    
    
    $
    44,528
    
    
    $
    39,204Cost of repurchase of Class A shares in excess of book value
    
    
    
    
    
    
    (216
    )
    
    
    (504
    )
    
    
    (634
    )Effect of adoption of new goodwill accounting standard (note 3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,796
    )Retained earnings, end of period
    
    $
    54,080
    
    
    $
    41,223
    
    
    $
    54,080
    
    
    $
    41,223Income
per share: (note 6):Basic
    
    $
    0.44
    
    
    $
    0.38
    
    
    $
    1.05
    
    
    $
    0.77Diluted
    
    $
    0.41
    
    
    $
    0.37
    
    
    $
    1.00
    
    
    $
    0.77


See accompanying notes to consolidated financial statements.





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##### 



VITRAN CORPORATION INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

Three months
    
    Three months
    
    Nine months
    
    Nine monthsended
    
    ended
    
    ended
    
    endedSept. 30, 2003
    
    Sept. 30, 2002
    
    Sept. 30, 2003
    
    Sept. 30, 2002(Unaudited)(In thousands of Canadian dollars)Cash provided by (used in):Operations:Net income
    
    $
    4,192
    
    
    $
    3,648
    
    
    $
    10,056
    
    
    $
    7,449Items not involving cash from operations:Depreciation and amortization
    
    
    1,877
    
    
    
    2,094
    
    
    
    5,804
    
    
    
    6,289Future income taxes
    
    
    697
    
    
    
    67
    
    
    
    291
    
    
    
    (471
    )Loss on sale of fixed assets
    
    
    52
    
    
    
    63
    
    
    
    182
    
    
    
    4876,818
    
    
    
    5,872
    
    
    
    16,333
    
    
    
    13,754Change in non-cash working capital components
    
    
    (2,347
    )
    
    
    (508
    )
    
    
    (6,187
    )
    
    
    (234
    )4,471
    
    
    
    5,364
    
    
    
    10,146
    
    
    
    13,520Investments:Purchase of fixed assets
    
    
    (1,094
    )
    
    
    (2,001
    )
    
    
    (3,440
    )
    
    
    (5,567
    )Proceeds on sale of fixed assets
    
    
    54
    
    
    
    150
    
    
    
    475
    
    
    
    848Proceeds on sale of discontinued business
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,685(1,040
    )
    
    
    (1,851
    )
    
    
    (2,965
    )
    
    
    (2,034
    )Financing:Change in revolving credit facility
    
    
    5,230
    
    
    
    1,533
    
    
    
    5,230
    
    
    
    (313
    )Repayment of long-term debt
    
    
    (7,680
    )
    
    
    (72
    )
    
    
    (12,601
    )
    
    
    (12,851
    )Issue of Class A voting shares
    
    
    878
    
    
    
    
    
    
    
    1,105
    
    
    
    51Repurchase of Class A voting shares
    
    
    
    
    
    
    (431
    )
    
    
    (926
    )
    
    
    (1,723
    )(1,572
    )
    
    
    1,030
    
    
    
    (7,192
    )
    
    
    (14,836
    )Effect of translation adjustment on cash
    
    
    176
    
    
    
    447
    
    
    
    (4,296
    )
    
    
    (1,057
    )Increase (decrease) in cash position
    
    
    2,035
    
    
    
    4,990
    
    
    
    (4,307
    )
    
    
    (4,407
    )Cash position, beginning of period
    
    
    6,282
    
    
    
    3,482
    
    
    
    12,624
    
    
    
    12,879Cash position, end of period
    
    $
    8,317
    
    
    $
    8,472
    
    
    $
    8,317
    
    
    $
    8,472Change in non-cash working capital components:Accounts receivable
    
    $
    (2,768
    )
    
    $
    (2,252
    )
    
    $
    (5,508
    )
    
    $
    (5,870
    )Inventory, deposits and prepaid expenses
    
    
    (1,289
    )
    
    
    (1,531
    )
    
    
    1,558
    
    
    
    (1,667
    )Income and other taxes recoverable/payable
    
    
    193
    
    
    
    1,534
    
    
    
    506
    
    
    
    796Accounts payable and accrued liabilities
    
    
    1,517
    
    
    
    1,741
    
    
    
    (2,743
    )
    
    
    6,507$
    (2,347
    )
    
    $
    (508
    )
    
    $
    (6,187
    )
    
    $
    (234
    )


See accompanying notes to consolidated financial statements.





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##### 



VITRAN CORPORATION INC.
CONSOLIDATED BALANCE SHEETS

AS ATSept. 30, 2003
    
    Dec. 31, 2002(Unaudited)(In thousands of Canadian dollars)AssetsCurrent assets:Cash
    
    $
    8,317
    
    
    $
    12,624Accounts receivable
    
    
    52,256
    
    
    
    46,748Inventory, deposits and prepaid expenses
    
    
    8,216
    
    
    
    9,77468,789
    
    
    
    69,146Fixed assets
    
    
    42,331
    
    
    
    48,570Future income taxes
    
    
    51
    
    
    
    236Goodwill (note 3)
    
    
    60,265
    
    
    
    69,208$
    171,436
    
    
    $
    187,160Liabilities and Shareholders EquityCurrent liabilities:Revolving credit facility (note 4)
    
    $
    5,230
    
    
    $
    Accounts payable and accrued liabilities
    
    
    40,348
    
    
    
    43,091Income and other taxes payable
    
    
    3,253
    
    
    
    2,747Current
portion of long-term debt (note 5)
    
    
    10,802
    
    
    
    11,05259,633
    
    
    
    56,890Long-term debt (note 5)
    
    
    27,533
    
    
    
    48,124Shareholders equity:Capital stock (note 6)
    
    
    38,338
    
    
    
    37,655Retained earnings
    
    
    54,080
    
    
    
    44,528Cumulative translation adjustment (note 2)
    
    
    (8,148
    )
    
    
    (37
    )84,270
    
    
    
    82,146$
    171,436
    
    
    $
    187,160


See accompanying notes to consolidated financial statements.





---



##### 



Notes

(Unaudited)
(In thousands of Canadian dollars except for per share amounts)



|1 |  | Accounting Policies
|- |  | -------------------



| |  | The interim consolidated financial statements have been
prepared in accordance with Canadian generally accepted
accounting principles and follow the same accounting principles
and methods of application as the most recent annual
consolidated financial statements. The interim consolidated
financial statements do not contain all the disclosures
required by Canadian generally accepted accounting principles
and should be read in conjunction with the Companys annual
consolidated financial statement included in the 2002 Annual
Report. These unaudited 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.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|2 |  | 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 period. 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 gains and losses related to this debt are
also accumulated in the separate component of shareholders
equity. As a result of the significant strengthening of the
Canadian dollar during 2003, the cumulative foreign currency
adjustment account has moved from an unrealized loss of $37,000
at December 31, 2002 to an unrealized loss of $8.1 million at
September 30, 2003.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3 |  | Goodwill
|- |  | --------



| |  | 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.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | As at June 30, 2002, the Corporation completed its
initial goodwill impairment test and concluded that an
impairment existed. As at September 30, 2002 this was
quantified and recognized as a change in accounting
policy and charged to opening retained earnings as of
January 1, 2002. 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.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | As at September 30, 2003, the Corporation completed
its annual goodwill impairment test and concluded
that there was no impairment.
| |  | -----------------------------------------------------------------------------------------------------------------------------------



|4 |  | Revolving Credit Facility
|- |  | -------------------------



| |  | The Corporation has a revolving credit facility of up to
$25.0 million, which may be drawn in the form of Bankers
Acceptances, Prime Rate Loans, Base Rate Canada Loans and
LIBOR loans, each subject to specific provisions. The
term credit facility is secured by accounts receivable
and general security agreements of the Corporation and of
its subsidiaries.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Corporation has drawn US$3.9 million under
the facility and has letters of credit
amounting to $3.0 million outstanding at
September 30, 2003.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------



|5 |  | Long-Term Debt
|- |  | --------------

Sept. 30, 2003
    
    Dec. 31, 2002(a) Term bank credit facility
    
    $
    37,694
    
    
    $
    58,529(b) Mortgages payable
    
    
    472
    
    
    
    647(c) Capital lease
    
    
    169
    
    
    
    38,335
    
    
    
    59,176Less current portion
    
    
    10,802
    
    
    
    11,052$
    27,533
    
    
    $
    48,124




|(a) |  | The term bank credit facility is secured by accounts
receivable and general security agreements of the Corporation
and of its subsidiaries.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------



| |  | During 2003, US$5.4 million of foreign currency-denominated borrowings
have been repaid. At September 30, 2003 US$27.9 million (Dec. 31, 2002
- US$37.1 million) of foreign currency-denominated borrowings bearing
interest at LIBOR plus 1.75% were drawn under this facility. The
provisions of the term facility impose certain financial maintenance
tests.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) |  | 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 September 30, 2003, mortgages include US$349,000 of
foreign currency-denominated borrowings (Dec. 31, 2002  US$410,000).
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





---



##### 





| |  | At September 30, 2003, the required future principal repayments on all long-term debt are
as follows:
| |  | -----------------------------------------------------------------------------------------------------

Year ending December 31:2003
    
    $
    2,4592004
    
    
    11,2882005
    
    
    11,7822006
    
    
    12,5202007
    
    
    135Thereafter,
    
    
    151$
    38,335




|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
| | ------------

Sept. 30, 2003
    
    Dec. 31, 2002Class A voting shares
    
    Number
    
    Amount
    
    Number
    
    AmountBalance, beginning of year
    
    
    9,559,818
    
    
    $
    37,655
    
    
    
    9,847,278
    
    
    $
    38,794Shares repurchased for cancellation
    
    
    (106,500
    )
    
    
    (422
    )
    
    
    (298,100
    )
    
    
    (1,190
    )Shares issued upon exercise of employees stock options
    
    
    170,860
    
    
    
    1,105
    
    
    
    10,640
    
    
    
    51Balance, end of period
    
    
    9,624,178
    
    
    $
    38,338
    
    
    
    9,559,818
    
    
    $
    37,655




| | (c)   Weighted average number of shares
| | ---------------------------------------



| |  | The Corporation uses the treasury-stock method to calculate diluted earnings per share. Under the treasury-stock method, the weighted average number of shares outstanding for basic earnings per share
is adjusted to reflect the assumed exercise of the Corporations outstanding stock options less the shares that could otherwise be acquired from the assumed proceeds on exercise.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Three months
    
    Three months
    
    Nine months
    
    Nine monthsended
    
    ended
    
    ended
    
    endedSept. 30, 2003
    
    Sept. 30, 2002
    
    Sept. 30, 2003
    
    Sept. 30, 2002Weighted average number of shares:Basic
    
    
    9,557,681
    
    
    
    9,635,312
    
    
    
    9,541,452
    
    
    
    9,726,395Potential exercise of stock options
    
    
    599,479
    
    
    
    287,823
    
    
    
    496,883
    
    
    
    Diluted
    
    
    10,157,159
    
    
    
    9,923,135
    
    
    
    10,038,335
    
    
    
    9,726,395




|7 |  | Stock Option Plan
|- |  | -----------------



| |  | Under the Corporations stock option
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. Currently there are 995,700 options outstanding at an average exercise
price of $5.54 per option. The term of each option is ten 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 table outlines the impact 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.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Three months
    
    Three months
    
    Nine months
    
    Nine monthsended
    
    ended
    
    ended
    
    endedSept. 30, 2003
    
    Sept. 30, 2002
    
    Sept. 30, 2003
    
    Sept. 30, 2002Options granted
    
    nil
    
    nil
    
    nil
    
    
    175,000Net income, as reported
    
    $
    4,192
    
    
    $
    3,648
    
    
    $
    10,056
    
    
    $
    7,449Pro forma net income
    
    $
    4,179
    
    
    $
    3,635
    
    
    $
    10,017
    
    
    $
    7,410Pro forma basic income per share
    
    $
    0.44
    
    
    $
    0.38
    
    
    $
    1.05
    
    
    $
    0.77Pro forma diluted income per share
    
    $
    0.41
    
    
    $
    0.37
    
    
    $
    1.00
    
    
    $
    0.77




|8 |  | 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.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|9 |  | Segmented Information
|- |  | ---------------------

Three months ended September 30, 2003Less-than-
    
    
    
    
    
    
    
    
    
    
    
    
    
    Corporate
    
    Consolidatedtruckload
    
    Logistics
    
    Truckload
    
    Total
    
    Office and Other
    
    TotalsRevenue
    
    $
    95,505
    
    
    $
    10,160
    
    
    $
    11,458
    
    
    $
    117,123
    
    
    $
    
    
    
    $
    117,123Operating, selling, general
and administrative expenses
    
    $
    87,621
    
    
    $
    9,595
    
    
    $
    11,003
    
    
    
    108,219
    
    
    $
    831
    
    
    
    109,050Depreciation
    
    $
    1,598
    
    
    $
    88
    
    
    $
    172
    
    
    
    1,858
    
    
    $
    19
    
    
    
    1,877Income (loss) from operations
    
    $
    6,286
    
    
    $
    477
    
    
    $
    283
    
    
    $
    7,046
    
    
    $
    (850
    )
    
    
    6,196Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (428
    )Gain (loss) on sale of fixed assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (52
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,524Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    4,192


Three months ended September 30, 2002Less-than-
    
    
    
    
    
    
    
    
    
    
    
    
    
    Corporate
    
    Consolidatedtruckload
    
    Logistics
    
    Truckload
    
    Total
    
    Office and Other
    
    TotalsRevenue
    
    $
    98,859
    
    
    $
    10,330
    
    
    $
    13,818
    
    
    $
    123,007
    
    
    $
    
    
    
    $
    123,007Operating, selling, general
and administrative expenses
    
    
    91,138
    
    
    
    9,878
    
    
    
    13,249
    
    
    
    114,265
    
    
    
    483
    
    
    
    114,748Depreciation
    
    
    1,858
    
    
    
    88
    
    
    
    130
    
    
    
    2,076
    
    
    
    17
    
    
    
    2,094Income (loss) from operations
    
    $
    5,863
    
    
    $
    364
    
    
    $
    439
    
    
    $
    6,666
    
    
    $
    (500
    )
    
    
    6,165Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,214
    )Gain (loss) on sale of fixed assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (63
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,240Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    3,648


Nine months ended September 30, 2003Less-than-
    
    
    
    
    
    
    
    
    
    
    
    
    
    Corporate
    
    Consolidatedtruckload
    
    Logistics
    
    Truckload
    
    Total
    
    Office and Other
    
    TotalsRevenue
    
    $
    284,464
    
    
    $
    29,490
    
    
    $
    35,005
    
    
    $
    348,959
    
    
    $
    
    
    
    $
    348,959Operating, selling, general
and administrative expenses
    
    
    263,499
    
    
    
    28,400
    
    
    
    33,748
    
    
    
    325,647
    
    
    
    2,594
    
    
    
    328,241Depreciation
    
    
    4,971
    
    
    
    243
    
    
    
    534
    
    
    
    5,748
    
    
    
    56
    
    
    
    5,804Income (loss) from operations
    
    $
    15,994
    
    
    $
    847
    
    
    $
    723
    
    
    $
    17,564
    
    
    $
    (2,650
    )
    
    
    14,914Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,597
    )Gain (loss) on sale of fixed assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (182
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,079Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    10,056






---



##### 



Nine months ended September 30, 2002Less-than-
    
    
    
    
    
    
    
    
    
    
    
    
    
    Corporate
    
    Consolidatedtruckload
    
    Logistics
    
    Truckload
    
    Total
    
    Office and Other
    
    TotalsRevenue
    
    $
    284,371
    
    
    $
    34,011
    
    
    $
    40,447
    
    
    $
    358,829
    
    
    $
    
    
    
    $
    358,829Operating, selling, general
and administrative expenses
    
    
    263,602
    
    
    
    32,864
    
    
    
    38,565
    
    
    
    335,031
    
    
    
    3,266
    
    
    
    338,297Depreciation
    
    
    5,577
    
    
    
    259
    
    
    
    403
    
    
    
    6,239
    
    
    
    49
    
    
    
    6,289Income (loss) from operations
    
    $
    15,192
    
    
    $
    888
    
    
    $
    1,479
    
    
    $
    17,559
    
    
    $
    (3,315
    )
    
    
    14,243Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,062
    )Gain (loss) on sale of fixed assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (487
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,245Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    7,449Total AssetsSeptember 30, 2003
    
    $
    149,805
    
    
    $
    10,817
    
    
    $
    14,571
    
    
    $
    175,193
    
    
    $
    (3,757
    )
    
    $
    171,436December 31, 2002
    
    $
    158,197
    
    
    $
    11,553
    
    
    $
    17,127
    
    
    $
    186,877
    
    
    $
    283
    
    
    $
    187,160