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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended October 31, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 Commission file number: 000-21057
 DYNAMEX INC.
 (Exact name of registrant as specified in its charter)
 Delaware
(State of incorporation)
    
    86-0712225
(I.R.S. Employer Identification No.)5429 LBJ Freeway, Suite 1000, Dallas, Texas
    
    75240(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code:
(214) 560-9000
 þ o
  o þ o
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INDEX
 PagePART IFINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Balance Sheets October 31, 2007 (Unaudited) and July 31, 2007
    
    
    2Condensed Statements of Consolidated Operations (Unaudited) Three months ended October 31, 2007 and 2006
    
    
    3Condensed Statements of Consolidated Cash Flows (Unaudited) Three months ended October 31, 2007 and 2006
    
    
    4Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    9Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    14Item 4. Controls and Procedures
    
    
    15PART IIOTHER INFORMATIONItem 1. Legal Proceedings
    
    
    16Item 1A. Risk Factors
    
    
    16Item 6. Exhibits
    
    
    17Signatures
    
    
    18Exhibit Index
    
    
    E-1Certification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906
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PART I
FINANCIAL INFORMATION
 
  DYNAMEX INC.
 
 
 October 31,
    
    
    July 31,2007
    
    
    2007(Unaudited)ASSETSCURRENTCash and cash equivalents
    
    $
    4,999
    
    
    $
    8,857Accounts receivable (net of allowance for doubtful accounts
of $867 and $866, respectively)
    
    
    51,099
    
    
    
    42,649Income taxes receivable
    
    
    1,465
    
    
    
    1,092Prepaid and other current assets
    
    
    2,546
    
    
    
    3,559Deferred income taxes
    
    
    3,115
    
    
    
    3,136Total current assets
    
    
    63,224
    
    
    
    59,293PROPERTY AND EQUIPMENT  net
    
    
    8,789
    
    
    
    8,495GOODWILL
    
    
    49,145
    
    
    
    47,613INTANGIBLES  net
    
    
    705
    
    
    
    326DEFERRED INCOME TAXES
    
    
    866
    
    
    
    1,398OTHER
    
    
    4,534
    
    
    
    3,915Total assets
    
    $
    127,263
    
    
    $
    121,040LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESAccounts payable trade
    
    $
    10,167
    
    
    $
    15,426Accrued liabilities
    
    
    25,032
    
    
    
    21,679Total current liabilities
    
    
    35,199
    
    
    
    37,105LONG-TERM DEBT
    
    
    
    
    
    
    OTHER LONG-TERM LIABILITIES
    
    
    2,477
    
    
    
    2,526Total liabilities
    
    
    37,676
    
    
    
    39,631COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITYPreferred stock; $0.01 par value, 10,000 shares authorized;
none outstanding
    
    
    
    
    
    
    Common stock; $0.01 par value, 50,000 shares authorized;
10,225 and 10,145 outstanding, respectively
    
    
    102
    
    
    
    101Additional paid-in capital
    
    
    46,679
    
    
    
    45,671Retained earnings
    
    
    35,116
    
    
    
    31,122Accumulated other comprehensive income:Cumulative translation adjustment
    
    
    7,690
    
    
    
    4,515Total stockholders equity
    
    
    89,587
    
    
    
    81,409Total liabilities and stockholders equity
    
    $
    127,263
    
    
    $
    121,040
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DYNAMEX INC.
 
 
 Three months endedOctober 31,2007
    
    
    2006Sales
    
    $
    111,752
    
    
    $
    100,615Cost of sales:Purchased transportation
    
    
    73,922
    
    
    
    65,832Other direct costs
    
    
    8,125
    
    
    
    7,856Cost of sales
    
    
    82,047
    
    
    
    73,688Gross profit
    
    
    29,705
    
    
    
    26,927Selling, general and administrative expenses:Salaries and employee benefits
    
    
    16,073
    
    
    
    14,081Other
    
    
    6,587
    
    
    
    6,447Selling, general and administrative expenses
    
    
    22,660
    
    
    
    20,528Depreciation and amortization
    
    
    671
    
    
    
    592(Gain) loss on disposal of property and equipment
    
    
    (10
    )
    
    
    8Operating income
    
    
    6,384
    
    
    
    5,799Interest expense
    
    
    79
    
    
    
    111Other income, net
    
    
    (100
    )
    
    
    (92
    )Income before income taxes
    
    
    6,405
    
    
    
    5,780Income taxes
    
    
    2,411
    
    
    
    2,131Net income
    
    $
    3,994
    
    
    $
    3,649Basic earnings per common share:
    
    $
    0.39
    
    
    $
    0.34Diluted earnings per common share:
    
    $
    0.39
    
    
    $
    0.34Weighted average shares:Common shares outstanding
    
    
    10,174
    
    
    
    10,601Adjusted common shares  assuming
exercise of stock options
    
    
    10,283
    
    
    
    10,755
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DYNAMEX INC.
 
 
 Three months endedOctober 31,2007
    
    
    2006OPERATING ACTIVITIESNet income
    
    $
    3,994
    
    
    $
    3,649Adjustments to reconcile net income to net cash provided
by (used in) operating activities:Depreciation and amortization
    
    
    671
    
    
    
    592Amortization of deferred bank financing fees
    
    
    8
    
    
    
    6Provision for losses on accounts receivable
    
    
    151
    
    
    
    156Stock option compensation
    
    
    175
    
    
    
    149Deferred income taxes
    
    
    552
    
    
    
    209Lessor financed leasehold improvements
    
    
    
    
    
    
    1,162Non-cash rent expense
    
    
    15
    
    
    
    229Loss on disposal of property and equipment
    
    
    (9
    )
    
    
    8Changes in current operating assets and liabilities:Accounts receivable
    
    
    (8,601
    )
    
    
    (6,319
    )Prepaids and other current assets
    
    
    640
    
    
    
    424Accounts payable and accrued liabilities
    
    
    (1,908
    )
    
    
    (432
    )Net cash used in operating activities
    
    
    (4,312
    )
    
    
    (167
    )INVESTING ACTIVITIESPurchase of property and equipment
    
    
    (809
    )
    
    
    (1,579
    )Acquisition of customer lists
    
    
    (415
    )
    
    
    Purchase of investments
    
    
    (173
    )
    
    
    (166
    )Net cash used in investing activities
    
    
    (1,397
    )
    
    
    (1,745
    )FINANCING ACTIVITIESPrincipal payments on long-term debt
    
    
    
    
    
    
    (1
    )Net borrowings under line of credit
    
    
    
    
    
    
    2,900Proceeds from stock option exercise
    
    
    767
    
    
    
    135Tax benefit realized by exercise of stock options
    
    
    67
    
    
    
    39Purchase and retirement of treasury stock
    
    
    
    
    
    
    (1,094
    )Other assets and deferred financing fees
    
    
    (353
    )
    
    
    (905
    )Net cash provided by financing activities
    
    
    481
    
    
    
    1,074EFFECT OF EXCHANGE RATES ON CASH
    
    
    1,370
    
    
    
    134NET DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (3,858
    )
    
    
    (704
    )CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
    
    
    8,857
    
    
    
    6,058CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    4,999
    
    
    $
    5,354SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONCash paid for interest
    
    $
    48
    
    
    $
    98Cash paid for taxes
    
    $
    2,314
    
    
    $
    962
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DYNAMEX INC.
 
 Notes to Condensed Consolidated Financial Statements (Unaudited)
 1. Summary of Significant Accounting Polices
 Description of Business
 Basis of presentation 
   Business and credit concentrations 
   Other assets  Recoverable contract contingency costs
 Other long-term liabilities 
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DYNAMEX INC.
  2. Comprehensive Income
  Three months endedOctober 31,2007
    
    
    2006Net income
    
    $
    3,994
    
    
    $
    3,649Unrealized gains (losses) on investments
    
    
    92
    
    
    
    (12
    )Foreign currency translation gains
    
    
    3,083
    
    
    
    127Comprehensive income
    
    $
    7,169
    
    
    $
    3,764
 3. Intangibles  net
  Amortization ExpenseAccumulated
    
    
    
    
    
    
    Three months ended October 31,Asset
    
    
    Amortization
    
    
    Net
    
    
    2007
    
    
    2006Deferred bank financing fees
    
    $
    132
    
    
    $
    (130
    )
    
    $
    2
    
    
    
    8
    
    
    
    6Customer lists
    
    
    507
    
    
    
    (102
    )
    
    
    405
    
    
    
    23
    
    
    
    8Trademarks and other
    
    
    470
    
    
    
    (172
    )
    
    
    298
    
    
    
    5
    
    
    
    5Total
    
    $
    1,109
    
    
    $
    (404
    )
    
    $
    705
    
    
    $
    36
    
    
    $
    19
 4. Computation of Earnings Per Share
 Earnings Per Share
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DYNAMEX INC.
 Three months endedOctober 31,2007
    
    
    2006Net income
    
    $
    3,994
    
    
    $
    3,649Weighted average common shares outstanding
    
    
    10,174
    
    
    
    10,601Common share equivalents related to options
    
    
    109
    
    
    
    154Common shares and common share equivalents
    
    
    10,283
    
    
    
    10,755Net income per common share:Basic
    
    $
    0.39
    
    
    $
    0.34Diluted
    
    $
    0.39
    
    
    $
    0.34
 5. Repurchase of Equity Securities
  6. Contingencies
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DYNAMEX INC.
     7. Income Taxes
  8




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DYNAMEX INC.
 
 Item 2.
 Managements Discussion and Analysis of Financial Condition and Results of Operations
 This discussion contains forward-looking statements, which involve assumptions regarding Company
operations and future prospects. Although the Company believes its expectations are based on
reasonable assumptions, such statements are subject to risk and uncertainty, including, among other
things, competition, foreign exchange, and risks associated with the same-day transportation
industry. These and other risks are mentioned from time to time in the Companys filings with the
Securities and Exchange Commission. Caution should be taken that these factors could cause the
actual results to differ from those stated or implied in this and other Company communications.
 General
        Critical Accounting Policies
  9




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DYNAMEX INC.
  Recent Accounting Pronouncements
    Results of Operations
  10




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DYNAMEX INC.
 Three months endedOctober 31,2007
    
    2006Sales
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales:Purchased transportation
    
    
    66.1
    %
    
    
    65.4
    %Other direct costs
    
    
    7.3
    %
    
    
    7.8
    %Cost of sales
    
    
    73.4
    %
    
    
    73.2
    %Gross profit
    
    
    26.6
    %
    
    
    26.8
    %Selling, general and administrative expenses:Salaries and employee benefits
    
    
    14.4
    %
    
    
    14.0
    %Other
    
    
    5.9
    %
    
    
    6.4
    %Selling, general and administrative expenses
    
    
    20.3
    %
    
    
    20.4
    %Depreciation and amortization
    
    
    0.6
    %
    
    
    0.6
    %Loss on disposal of property and equipment
    
    
    0.0
    %
    
    
    0.0
    %Operating income
    
    
    5.7
    %
    
    
    5.8
    %Interest expense
    
    
    0.1
    %
    
    
    0.1
    %Other income, net
    
    
    -0.1
    %
    
    
    -0.1
    %Income before income taxes
    
    
    5.7
    %
    
    
    5.8
    %Income taxes
    
    
    2.2
    %
    
    
    2.1
    %Net income
    
    
    3.5
    %
    
    
    3.7
    %
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DYNAMEX INC.
  Three months endedOctober 31,2007
    
    
    2006Sales by service type:On demand
    
    
    37,261
    
    
    
    33.3
    %
    
    
    36,525
    
    
    
    36.3
    %Scheduled/distribution
    
    
    36,493
    
    
    
    32.7
    %
    
    
    31,657
    
    
    
    31.5
    %Outsourcing
    
    
    37,998
    
    
    
    34.0
    %
    
    
    32,433
    
    
    
    32.2
    %Total sales
    
    $
    111,752
    
    
    
    100.0
    %
    
    $
    100,615
    
    
    
    100.0
    %Sales by country:United States
    
    $
    69,483
    
    
    
    62.2
    %
    
    $
    63,962
    
    
    
    63.6
    %Canada
    
    
    42,269
    
    
    
    37.8
    %
    
    
    36,653
    
    
    
    36.4
    %Total sales
    
    $
    111,752
    
    
    
    100.0
    %
    
    $
    100,615
    
    
    
    100.0
    %
 Three months ended October 31, 2007 compared to three months ended October 31, 2006
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DYNAMEX INC.
  Liquidity and Capital Resources
      Compliance Area
    
    Covenant
    
    Level at October31, 2007Ratio of funded debt to EBITDA
    
    Maximum of 2.00 to 1.00
    
    0.21Total indebtedness
    
    $20 million, including LOCs
    
    $5.8 millionLetters of credit sublimit
    
    $7.5 million
    
    $5.8 millionMaximum treasury stock
    
    $20 million
    
    $0purchases in any fiscal yearFixed charge coverage ratio
    
    Equal to or greater than 1.50 to 1.00
    
    1.73
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DYNAMEX INC.
 Three months endedOctober 31,2007
    
    
    2006Net income
    
    $
    3,994
    
    
    $
    3,649Adjustments:Income tax expense
    
    
    2,411
    
    
    
    2,131Interest expense
    
    
    79
    
    
    
    111Depreciation and amortization
    
    
    671
    
    
    
    592EBITDA
    
    $
    7,155
    
    
    $
    6,483
  Inflation
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Foreign Exchange Exposure
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DYNAMEX INC.
 Interest Rate Exposure
  
 Item 4. Controls and Procedures
   15




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DYNAMEX INC.
 
 PART II
 OTHER INFORMATION
 
 Item 1. Legal Proceedings
       
 Item 1A. Risk Factors.
  16




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DYNAMEX INC.
 
 Item 6. Exhibits
 Exhibits:31.1
    
    Certification of Chief Executive Officer of the Registrant,
pursuant to 17 CFR 240. 13a  15(e) or 17 CFR 240. 15d  15(e)31.2
    
    Certification of Chief Financial Officer of the Registrant,
pursuant to 17 CFR 240. 13a  15(e) or 17 CFR 240. 15d  15(e)32.1
    
    Certification of Chief Executive Officer of the Registrant,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 200232.2
    
    Certification of Chief Financial Officer of the Registrant,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
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DYNAMEX INC.
 
 SIGNATURES
  DYNAMEX INC.Dated: December 7, 2007
    
    by
    
    /s/ Richard K. McClellandRichard K. McClellandPresident, Chief Executive Officer andChairman of the Board(Principal Executive Officer)Dated: December 7, 2007
    
    by
    
    /s/ Ray E. SchmitzRay E. SchmitzVice President  Chief Financial Officer(Principal Financial Officer)Dated: December 7, 2007
    
    by
    
    /s/ Samuel T. HicksSamuel T. HicksCorporate Controller(Principal Accounting Officer)
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EXHIBIT INDEX
 Exhibits
 31.1
    
    Certification of Chief Executive Officer of the Registrant, pursuant to 17 CFR 240. 13a -
15(e) or 17 CFR 240. 15d  15(e)
 31.2
    
    Certification of Chief Financial Officer of the Registrant, pursuant to 17 CFR 240. 13a -
15(e) or 17 CFR 240. 15d  15(e)
 32.1
    
    Certification of Chief Executive Officer of the Registrant, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 32.2
    
    Certification of Chief Financial Officer of the Registrant, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 E - 1