##### Table of Contents



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 April 30, 2006
 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.)1870 Crown Drive, Dallas, Texas
(Address of principal executive offices)
    
    75234
(Zip Code)
 Registrants telephone number, including area code:
(214) 561-7500
 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
 o þ




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##### Table of Contents



DYNAMEX INC.
  
 INDEX
 PagePART IFINANCIAL INFORMATIONItem 1.
    
    Financial StatementsCondensed Consolidated Balance Sheets

   April 30, 2006 (Unaudited) and July 31, 2005
    
    
    2Condensed Statements of Consolidated Operations (Unaudited)

   Three and nine months ended April 30, 2006 and 2005
    
    
    3Condensed Statements of Consolidated Cash Flows (Unaudited)

   Nine months ended April 30, 2006 and 2005
    
    
    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
    
    
    18Item 4.
    
    Controls and Procedures
    
    
    19PART IIOTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    20Item 1A.
    
    Risk Factors
    
    
    20Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    21Item 6.
    
    Exhibits
    
    
    22Signatures
    
    
    
    
    23Exhibit Index
    
    
    
    E-1Certification of CEO Pursuant to Rule 13a-15(e)/15d-15(e)Certification of CFO Pursuant to Rule 13a-15(e)/15d-15(e)Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906
 1




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##### Table of Contents



PART I
FINANCIAL INFORMATION
 
 Item 1.
    
    Financial Statements
 DYNAMEX INC.
 
 
 April 30,
    
    
    July 31,2006
    
    
    2005(Unaudited)ASSETSCURRENTCash and cash equivalents
    
    $
    4,798
    
    
    $
    11,678Accounts receivable (net of allowance for doubtful accounts
of $903 and $767, respectively)
    
    
    36,609
    
    
    
    31,703Prepaid and other current assets
    
    
    2,560
    
    
    
    3,115Deferred income taxes
    
    
    3,131
    
    
    
    1,992Total current assets
    
    
    47,098
    
    
    
    48,488PROPERTY AND EQUIPMENT  net
    
    
    4,795
    
    
    
    5,597GOODWILL
    
    
    47,070
    
    
    
    46,088INTANGIBLES  net
    
    
    406
    
    
    
    463DEFERRED INCOME TAXES
    
    
    6,271
    
    
    
    7,625OTHER
    
    
    1,588
    
    
    
    1,214Total assets
    
    $
    107,228
    
    
    $
    109,475LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESAccounts payable trade
    
    $
    7,301
    
    
    $
    11,145Accrued liabilities
    
    
    19,099
    
    
    
    14,426Total current liabilities
    
    
    26,400
    
    
    
    25,571LONG-TERM DEBT
    
    
    2,406
    
    
    
    8Total liabilities
    
    
    28,806
    
    
    
    25,579COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITYPreferred stock; $0.01 par value, 10,000 shares authorized;
none outstanding
    
    
    
    
    
    
    Common stock; $0.01 par value, 50,000 shares authorized;
11,756 and 11,612 outstanding, respectively
    
    
    118
    
    
    
    116Additional paid-in capital
    
    
    79,354
    
    
    
    77,196Treasury stock, 1,074 shares, at cost
    
    
    (18,607
    )
    
    
    Retained earnings
    
    
    12,848
    
    
    
    3,768Accumulated other comprehensive income
    
    
    4,709
    
    
    
    2,816Total stockholders equity
    
    
    78,422
    
    
    
    83,896Total liabilities and stockholders equity
    
    $
    107,228
    
    
    $
    109,475
  2




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DYNAMEX INC.
 
 
 Three months ended
    
    
    Nine months endedApril 30,
    
    
    April 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Sales
    
    $
    86,916
    
    
    $
    81,778
    
    
    $
    263,831
    
    
    $
    236,981Cost of sales:Purchased transportation
    
    
    56,255
    
    
    $
    52,649
    
    
    
    171,507
    
    
    
    151,597Other direct costs
    
    
    6,195
    
    
    
    6,116
    
    
    
    19,702
    
    
    
    18,878Cost of sales
    
    
    62,450
    
    
    
    58,765
    
    
    
    191,209
    
    
    
    170,475Gross profit
    
    
    24,466
    
    
    
    23,013
    
    
    
    72,622
    
    
    
    66,506Selling, general and administrative expenses:Salaries and employee benefits
    
    
    12,855
    
    
    
    12,075
    
    
    
    39,729
    
    
    
    35,668Other
    
    
    5,795
    
    
    
    5,608
    
    
    
    17,044
    
    
    
    15,613Selling, general and administrative expenses
    
    
    18,650
    
    
    
    17,683
    
    
    
    56,773
    
    
    
    51,281Depreciation and amortization
    
    
    523
    
    
    
    414
    
    
    
    1,464
    
    
    
    1,159(Gain) loss on disposal of property and equipment
    
    
    
    
    
    
    (24
    )
    
    
    1
    
    
    
    (21
    )Operating income
    
    
    5,293
    
    
    
    4,940
    
    
    
    14,384
    
    
    
    14,087Interest expense
    
    
    38
    
    
    
    90
    
    
    
    213
    
    
    
    363Other income, net
    
    
    (55
    )
    
    
    (46
    )
    
    
    (219
    )
    
    
    (150
    )Income before income taxes
    
    
    5,310
    
    
    
    4,896
    
    
    
    14,390
    
    
    
    13,874Income taxes
    
    
    2,098
    
    
    
    2,166
    
    
    
    5,310
    
    
    
    5,410Net income
    
    $
    3,212
    
    
    $
    2,730
    
    
    $
    9,080
    
    
    $
    8,464Basic earnings per common share:
    
    $
    0.29
    
    
    $
    0.24
    
    
    $
    0.81
    
    
    $
    0.73Diluted earnings per common share:
    
    $
    0.29
    
    
    $
    0.23
    
    
    $
    0.80
    
    
    $
    0.72Weighted average shares:Common shares outstanding
    
    
    10,915
    
    
    
    11,586
    
    
    
    11,192
    
    
    
    11,525Adjusted common shares  assuming
exercise of stock options
    
    
    11,143
    
    
    
    11,832
    
    
    
    11,404
    
    
    
    11,765
  3




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DYNAMEX INC.
 
 
 Nine months endedApril 30,2006
    
    
    2005OPERATING ACTIVITIESNet income
    
    $
    9,080
    
    
    $
    8,464Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation and amortization
    
    
    1,464
    
    
    
    1,159Amortization of deferred bank financing fees
    
    
    18
    
    
    
    26Provision for losses on accounts receivable
    
    
    556
    
    
    
    344Stock option compensation
    
    
    606
    
    
    
    355Deferred income taxes
    
    
    216
    
    
    
    3,076Loss on disposal of property and equipment
    
    
    1
    
    
    
    (21
    )Changes in current operating assets and liabilities:Accounts receivable
    
    
    (5,460
    )
    
    
    (5,235
    )Prepaids and other current assets
    
    
    555
    
    
    
    (1,292
    )Accounts payable and accrued liabilities
    
    
    828
    
    
    
    (340
    )Net cash provided by operating activities
    
    
    7,864
    
    
    
    6,536INVESTING ACTIVITIESPurchase of property and equipment
    
    
    (560
    )
    
    
    (1,450
    )Cash payment for acquisition
    
    
    
    
    
    
    (100
    )Proceeds from sale of property and equipment
    
    
    
    
    
    
    29Purchase of investments
    
    
    (134
    )
    
    
    (270
    )Net cash used in investing activities
    
    
    (694
    )
    
    
    (1,791
    )FINANCING ACTIVITIESPrincipal payments on long-term debt
    
    
    (2
    )
    
    
    Net proceeds (payments) under line of credit
    
    
    2,400
    
    
    
    (6,201
    )Proceeds from stock option exercise
    
    
    844
    
    
    
    1,065Tax benefit realized by exercise of stock options
    
    
    708
    
    
    
    126Purchase of treasury stock
    
    
    (18,607
    )
    
    
    Other assets
    
    
    (198
    )
    
    
    (2
    )Net cash used in financing activities
    
    
    (14,855
    )
    
    
    (5,012
    )EFFECT OF EXCHANGE RATES ON CASH
    
    
    805
    
    
    
    404NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    (6,880
    )
    
    
    137CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
    
    
    11,678
    
    
    
    7,927CASH AND CASH EQUIVALENTS, END OF YEAR
    
    $
    4,798
    
    
    $
    8,064SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONCash paid for interest
    
    $
    200
    
    
    $
    341Cash paid for taxes
    
    $
    4,324
    
    
    $
    2,354
  4




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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 
    2. Comprehensive Income
  Three months ended
    
    
    Nine months endedApril 30,
    
    
    April 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Net income
    
    $
    3,212
    
    
    $
    2,730
    
    
    $
    9,080
    
    
    $
    8,464Unrealized gain (loss) on investments
    
    
    34
    
    
    
    (11
    )
    
    
    42
    
    
    
    26Foreign currency translation gain (loss)
    
    
    391
    
    
    
    (283
    )
    
    
    1,851
    
    
    
    994Comprehensive income
    
    $
    3,637
    
    
    $
    2,436
    
    
    $
    10,973
    
    
    $
    9,484
 5




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DYNAMEX INC.
 3. Intangibles
  AccumulatedAsset
    
    
    amortization
    
    
    NetDeferred bank financing fees
    
    $
    126
    
    
    $
    (88
    )
    
    $
    38Customer lists
    
    
    80
    
    
    
    (37
    )
    
    
    43Trademarks and other
    
    
    470
    
    
    
    (145
    )
    
    
    325Total
    
    $
    676
    
    
    $
    (270
    )
    
    $
    406
 Amortization expense
    
    
    Amortization expenseThree months ended April 30,
    
    
    Nine months ended April 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Deferred bank financing fees
    
    $
    6
    
    
    $
    9
    
    
    $
    18
    
    
    $
    26Customer lists
    
    
    8
    
    
    
    
    
    
    
    24
    
    
    
    Trademarks and other
    
    
    6
    
    
    
    6
    
    
    
    15
    
    
    
    16Total
    
    $
    20
    
    
    $
    15
    
    
    $
    57
    
    
    $
    41
  4. Computation of Earnings Per Share
 Earnings Per Share
 Three months ended
    
    
    Nine months endedApril 30,
    
    
    April 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Net income
    
    $
    3,212
    
    
    $
    2,730
    
    
    $
    9,080
    
    
    $
    8,464Weighted average common shares outstanding
    
    
    10,915
    
    
    
    11,586
    
    
    
    11,192
    
    
    
    11,525Common share equivalents related to options
    
    
    228
    
    
    
    246
    
    
    
    212
    
    
    
    240Common shares and common share equivalents
    
    
    11,143
    
    
    
    11,832
    
    
    
    11,404
    
    
    
    11,765Net income per common share:Basic
    
    $
    0.29
    
    
    $
    0.24
    
    
    $
    0.81
    
    
    $
    0.73Diluted
    
    $
    0.29
    
    
    $
    0.23
    
    
    $
    0.80
    
    
    $
    0.72
 5. Purchases of Common Stock
  6




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DYNAMEX INC.
  6. Long-Term Debt
 Revolving Credit Facility
  7. Commitments and Contingencies
       8. Provision for Income Taxes
  7




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DYNAMEX INC.
  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.
  Results of Operations
  Three months ended
    
    
    Nine months endedApril 30,
    
    
    April 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales:Purchased transportation
    
    
    64.7
    %
    
    
    64.4
    %
    
    
    65.0
    %
    
    
    64.0
    %Other direct costs
    
    
    7.1
    %
    
    
    7.5
    %
    
    
    7.5
    %
    
    
    8.0
    %Cost of sales
    
    
    71.8
    %
    
    
    71.9
    %
    
    
    72.5
    %
    
    
    72.0
    %Gross profit
    
    
    28.2
    %
    
    
    28.1
    %
    
    
    27.5
    %
    
    
    28.0
    %Selling, general and administrative expenses:Salaries and employee benefits
    
    
    14.8
    %
    
    
    14.8
    %
    
    
    15.1
    %
    
    
    15.1
    %Other
    
    
    6.7
    %
    
    
    6.9
    %
    
    
    6.5
    %
    
    
    6.6
    %Selling, general and administrative expenses
    
    
    21.5
    %
    
    
    21.7
    %
    
    
    21.6
    %
    
    
    21.7
    %Depreciation and amortization
    
    
    0.6
    %
    
    
    0.5
    %
    
    
    0.6
    %
    
    
    0.5
    %Gain on disposal of property and equipment
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Operating income
    
    
    6.1
    %
    
    
    5.9
    %
    
    
    5.3
    %
    
    
    5.8
    %Interest expense
    
    
    0.0
    %
    
    
    0.1
    %
    
    
    0.1
    %
    
    
    0.2
    %Other income, net
    
    
    -0.1
    %
    
    
    -0.1
    %
    
    
    -0.1
    %
    
    
    -0.1
    %Income before income taxes
    
    
    6.2
    %
    
    
    5.9
    %
    
    
    5.3
    %
    
    
    5.7
    %Income taxes
    
    
    2.4
    %
    
    
    2.6
    %
    
    
    2.0
    %
    
    
    2.3
    %Net income
    
    
    3.8
    %
    
    
    3.3
    %
    
    
    3.3
    %
    
    
    3.4
    %
 10




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DYNAMEX INC.
  Three months endedApril 302006
    
    
    2005Sales by service type:On demand
    
    $
    31,868
    
    
    
    36.7
    %
    
    $
    31,130
    
    
    
    38.1
    %Scheduled/distribution
    
    $
    26,284
    
    
    
    30.2
    %
    
    $
    25,346
    
    
    
    31.0
    %Outsourcing
    
    $
    28,764
    
    
    
    33.1
    %
    
    $
    25,302
    
    
    
    30.9
    %Total sales
    
    $
    86,916
    
    
    
    100.0
    %
    
    $
    81,778
    
    
    
    100.0
    %Sales by country:United States
    
    $
    56,187
    
    
    
    64.6
    %
    
    $
    54,689
    
    
    
    66.9
    %Canada
    
    $
    30,729
    
    
    
    35.4
    %
    
    $
    27,089
    
    
    
    33.1
    %Total sales
    
    $
    86,916
    
    
    
    100.0
    %
    
    $
    81,778
    
    
    
    100.0
    %
 Nine months endedApril 302006
    
    
    2005Sales by service type:On demand
    
    $
    98,477
    
    
    
    37.3
    %
    
    $
    92,513
    
    
    
    39.1
    %Scheduled/distribution
    
    $
    80,987
    
    
    
    30.7
    %
    
    $
    70,952
    
    
    
    29.9
    %Outsourcing
    
    $
    84,367
    
    
    
    32.0
    %
    
    $
    73,516
    
    
    
    31.0
    %Total sales
    
    $
    263,831
    
    
    
    100.0
    %
    
    $
    236,981
    
    
    
    100.0
    %Sales by country:United States
    
    $
    170,815
    
    
    
    64.7
    %
    
    $
    157,668
    
    
    
    66.5
    %Canada
    
    $
    93,016
    
    
    
    35.3
    %
    
    $
    79,313
    
    
    
    33.5
    %Total sales
    
    $
    263,831
    
    
    
    100.0
    %
    
    $
    236,981
    
    
    
    100.0
    %
 Three months ended April 30, 2006 compared to three months ended April 30, 2005
  nd
  11




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DYNAMEX INC.
      Nine months ended April 30, 2006 compared to nine months ended April 30, 2005
  nd
  12




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DYNAMEX INC.
      Liquidity and Capital Resources
     13




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DYNAMEX INC.
   Three months ended
    
    
    Nine months endedApril 30,
    
    
    April 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Net income
    
    $
    3,212
    
    
    $
    2,730
    
    
    $
    9,080
    
    
    $
    8,464Adjustments:Income tax expense
    
    
    2,098
    
    
    
    2,166
    
    
    
    5,310
    
    
    
    5,410Interest expense
    
    
    38
    
    
    
    90
    
    
    
    213
    
    
    
    363Depreciation and amortization
    
    
    523
    
    
    
    414
    
    
    
    1,464
    
    
    
    1,159EBITDA
    
    $
    5,871
    
    
    $
    5,400
    
    
    $
    16,067
    
    
    $
    15,396
  Inflation
  Risk Factors
 In addition to other information in this report, the following risk factors should be considered
carefully in evaluating the Company and its business. This report contains forward-looking
statements, which involve risks and uncertainties. The Companys actual results could differ
materially from those anticipated in these forward-looking statements as a result of certain
factors, including those set forth in the following risk factors and elsewhere in this report.
 Certain Tax Matters Related to Drivers
  14




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DYNAMEX INC.
  Claims Exposure
  Highly Competitive Industry
  Foreign Exchange
  Permits and Licensing
  Dependence on Key Personnel
 15




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DYNAMEX INC.
  Risks Associated with the Same-day Transportation Industry; General Economic Conditions
  Technological Advances
  Dependence on Availability of Qualified Delivery Personnel
  Fuel Costs
  Safe Harbor Statement Under The Private Securities Litigation Reform Act
   
    
    The competitive nature of the same-day delivery business.
    
    The ability of the Company to attract and retain qualified delivery personnel as
well as retain key management personnel.
    
    A change in the current tax status of independent contractor drivers to employees or
a change in the treatment of the reimbursement of vehicle operating costs to employee
drivers.
 16




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##### Table of Contents



DYNAMEX INC.
 
    
    A significant increase in the number of workers compensation or vehicle liability claims.
    
    A significant reduction in the exchange rate between the Canadian dollar and the U.S. dollar.
    
    Failure of the Company to maintain required certificates, permits or licenses or to
comply with applicable laws, ordinances or regulations could result in substantial
fines or possible revocation of the Companys authority to conduct certain of its
operations.
    
    The ability of the Company to obtain adequate financing.
    
    The ability of the Company to retain independent contractor drivers may be impacted
by our ability to pass on fuel cost increases to customers to maintain profit margins
and the quality of driver pay.
 17




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##### Table of Contents



DYNAMEX INC.
 
 
 Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
 Foreign Exchange Exposure
   Interest Rate Exposure
  18




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DYNAMEX INC.
 
 Item 4.
    
    Controls and Procedures
   19




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DYNAMEX INC.
 
 PART II
OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings
      
 Item 1A.
    
    Risk Factors.
  20




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DYNAMEX INC.
 
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds.
 (c) Common Stock Repurchases
 Total number
    
    Average
    
    Total number of
    
    Approximate dollar valueof shares
    
    price paid
    
    shares purchased as part of
    
    of shares that may yet bePeriod
    
    purchased
    
    per share
    
    a publicly announced plan
    
    purchased under the planMarch 1 to March
31, 2006
    
    
    201,000
    
    
    $
    18.77
    
    
    
    201,000
    
    
    $
    3,772,124April 1 to April 30,
2006
    
    
    250,000
    
    
    $
    19.35
    
    
    
    250,000
    
    
    $
    4,837,530
  21




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##### Table of Contents



DYNAMEX INC.
 
 Item 6.
    
    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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##### Table of Contents



DYNAMEX INC.
 
 
 SIGNATURES
  DYNAMEX INC.Dated: June 8, 2006
    
    by
    
    /s/ Richard K. McClellandRichard K. McClellandPresident, Chief Executive Officer andChairman of the Board(Principal Executive Officer)Dated: June 8, 2006
    
    by
    
    /s/ Ray E. SchmitzRay E. SchmitzVice President  Chief Financial Officer(Principal Financial Officer)Dated: June 8, 2006
    
    by
    
    /s/ Samuel T. HicksSamuel T. HicksCorporate Controller(Principal Accounting Officer)
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##### Table of Contents



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 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