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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, 2005
 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
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DYNAMEX INC.
 INDEX
 PagePART IFINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Balance Sheets
October 31, 2005 (Unaudited) and July 31, 2005
    
    2Condensed Statements of Consolidated Operations (Unaudited)
Three months ended October 31, 2005 and 2004
    
    3Condensed Statements of Consolidated Cash Flows (Unaudited)
Three months ended October 31, 2005 and 2004
    
    4Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    8Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    14Item 4. Controls and Procedures
    
    16PART IIOTHER INFORMATIONItem 1. Legal Proceedings
    
    17Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
    
    17Item 6. Exhibits and Reports on Form 8-K
    
    17Signatures
    
    18Exhibit Index
    
    E-1Certification of Chief Executive OfficerCertification of Chief Financial OfficerCertification of Chief Executive OfficerCertification of Chief Financial Officer
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PART I
 FINANCIAL INFORMATION
 
  DYNAMEX INC.
 
   October 31,
    
    
    July 31,2005
    
    
    2005(Unaudited)ASSETSCURRENTCash and cash equivalents
    
    $
    11,321
    
    
    $
    11,678Accounts receivable (net of allowance for doubtful
accounts
of $842 and $767, respectively)
    
    
    38,544
    
    
    
    31,703Prepaid and other current assets
    
    
    2,629
    
    
    
    3,115Deferred income taxes
    
    
    1,942
    
    
    
    1,992Total current assets
    
    
    54,436
    
    
    
    48,488PROPERTY AND EQUIPMENT  net
    
    
    5,261
    
    
    
    5,597GOODWILL
    
    
    46,464
    
    
    
    46,088INTANGIBLES  net
    
    
    444
    
    
    
    463DEFERRED INCOME TAXES
    
    
    7,062
    
    
    
    7,625OTHER
    
    
    1,441
    
    
    
    1,214Total assets
    
    $
    115,108
    
    
    $
    109,475LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESAccounts payable trade
    
    $
    9,177
    
    
    $
    11,145Accrued liabilities
    
    
    16,376
    
    
    
    14,426Total current liabilities
    
    
    25,553
    
    
    
    25,571LONG-TERM DEBT
    
    
    9,308
    
    
    
    8Total liabilities
    
    
    34,861
    
    
    
    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; 11,620 and 11,612 outstanding,
respectively
    
    
    116
    
    
    
    116Additional paid-in capital
    
    
    77,396
    
    
    
    77,196Treasury Stock, 500 shares
    
    
    (7,792
    )
    
    
    Retained earnings
    
    
    6,949
    
    
    
    3,768Accumulated other comprehensive income
    
    
    3,578
    
    
    
    2,816Total stockholders equity
    
    
    80,247
    
    
    
    83,896Total liabilities and
stockholders equity
    
    $
    115,108
    
    
    $
    109,475
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DYNAMEX INC.
 
  
 Three months endedOctober 31,2005
    
    
    2004Sales
    
    $
    90,569
    
    
    $
    76,560Cost of sales:Purchased transportation
    
    
    59,220
    
    
    
    48,437Other direct costs
    
    
    6,957
    
    
    
    6,414Cost of sales
    
    
    66,177
    
    
    
    54,851Gross profit
    
    
    24,392
    
    
    
    21,709Selling, general and administrative expenses:Salaries and employee benefits
    
    
    13,405
    
    
    
    11,388Other
    
    
    5,617
    
    
    
    4,833Selling, general and administrative
expenses
    
    
    19,022
    
    
    
    16,221Depreciation and amortization
    
    
    494
    
    
    
    376(Gain) loss on disposal of property and
equipment
    
    
    
    
    
    
    5Operating income
    
    
    4,876
    
    
    
    5,107Interest expense
    
    
    84
    
    
    
    157Other income, net
    
    
    (107
    )
    
    
    (50
    )Income before income taxes
    
    
    4,899
    
    
    
    5,000Income taxes
    
    
    1,718
    
    
    
    1,827Net income
    
    $
    3,181
    
    
    $
    3,173Basic earnings per common share:
    
    $
    0.28
    
    
    $
    0.28Diluted earnings per common share:
    
    $
    0.27
    
    
    $
    0.27Weighted average shares:Common shares outstanding
    
    
    11,543
    
    
    
    11,445Adjusted common shares  assuming
exercise of stock options
    
    
    11,792
    
    
    
    11,695
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DYNAMEX INC.
 
  
 Three months endedOctober 31,2005
    
    
    2004OPERATING ACTIVITIESNet income
    
    $
    3,181
    
    
    $
    3,173Adjustments to reconcile net income to net cash provided
by (used in) operating activities:Depreciation and amortization
    
    
    494
    
    
    
    376Amortization of deferred bank financing fees
    
    
    6
    
    
    
    8Provision for losses on accounts receivable
    
    
    288
    
    
    
    175Stock option compensation
    
    
    118
    
    
    
    80Deferred income taxes
    
    
    614
    
    
    
    1,092(Gain) loss on disposal of property and equipment
    
    
    
    
    
    
    5Changes in current operating assets and liabilities:Accounts receivable
    
    
    (7,129
    )
    
    
    (4,171
    )Prepaids and other current assets
    
    
    486
    
    
    
    (2,285
    )Accounts payable and accrued liabilities
    
    
    (18
    )
    
    
    (263
    )Net cash used in operating activities
    
    
    (1,960
    )
    
    
    (1,810
    )INVESTING ACTIVITIESPurchase of property and equipment
    
    
    (117
    )
    
    
    (615
    )Purchase of investments
    
    
    (54
    )
    
    
    (154
    )Net cash used in investing activities
    
    
    (171
    )
    
    
    (769
    )FINANCING ACTIVITIESPrincipal payments on long-term debt
    
    
    (1
    )
    
    
    (1,700
    )Proceeds from line of credit
    
    
    9,300
    
    
    
    Proceeds from stock option exercise
    
    
    42
    
    
    
    268Tax benefit realized by exercise of stock options
    
    
    40
    
    
    
    126Purchase of treasury stock
    
    
    (7,792
    )
    
    
    Other assets and deferred financing fees
    
    
    (150
    )
    
    
    26Net cash provided by (used in) financing activities
    
    
    1,439
    
    
    
    (1,280
    )EFFECT OF EXCHANGE RATES ON CASH
    
    
    335
    
    
    
    644NET DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (357
    )
    
    
    (3,215
    )CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
    
    
    11,678
    
    
    
    7,927CASH AND CASH EQUIVALENTS, END OF YEAR
    
    $
    11,321
    
    
    $
    4,712SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONCash paid for interest
    
    $
    110
    
    
    $
    112Cash paid for taxes
    
    $
    1,221
    
    
    $
    855
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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 endedOctober 31,2005
    
    
    2004Net income
    
    $
    3,181
    
    
    $
    3,173Unrealized gains on investments
    
    
    24
    
    
    
    6Foreign currency translation gain
    
    
    738
    
    
    
    1,547Comprehensive income
    
    $
    3,943
    
    
    $
    4,726
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DYNAMEX INC.
 3. Intangibles
  Amortization ExpenseAccumulated
    
    
    
    
    
    
    Three months ended October 31,Asset
    
    
    Amortization
    
    
    Net
    
    
    2005
    
    
    2004Deferred bank financing fees
    
    $
    126
    
    
    $
    (76
    )
    
    $
    50
    
    
    
    6
    
    
    
    8Customer lists
    
    
    80
    
    
    
    (21
    )
    
    
    59
    
    
    
    8
    
    
    
    Trademarks and other
    
    
    470
    
    
    
    (135
    )
    
    
    335
    
    
    
    5
    
    
    
    5Total
    
    $
    676
    
    
    $
    (232
    )
    
    $
    444
    
    
    $
    19
    
    
    $
    13
  4. Computation of Earnings Per Share
 Earnings Per Share
 Three months endedOctober 31,2005
    
    
    2004Net income
    
    $
    3,181
    
    
    $
    3,173Weighted average common shares outstanding
    
    
    11,543
    
    
    
    11,445Common share equivalents related to options
    
    
    249
    
    
    
    250Common shares and common share equivalents
    
    
    11,792
    
    
    
    11,695Net income per common share:Basic
    
    $
    0.28
    
    
    $
    0.28Diluted
    
    $
    0.27
    
    
    $
    0.27
 4. Purchases of Common Stock
  6




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DYNAMEX INC.
 5. Subsequent event
  7




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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
 8
    Table of Contents   DYNAMEX INC.
  Results of Operations
  Three months endedOctober 31,2005
    
    
    2004Sales
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales:Purchased transportation
    
    
    65.4
    %
    
    
    63.3
    %Other direct costs
    
    
    7.7
    %
    
    
    8.4
    %Cost of sales
    
    
    73.1
    %
    
    
    71.7
    %Gross profit
    
    
    26.9
    %
    
    
    28.3
    %Selling, general and administrative expenses:Salaries and employee benefits
    
    
    14.8
    %
    
    
    14.9
    %Other
    
    
    6.2
    %
    
    
    6.3
    %Selling, general and administrative expenses
    
    
    21.0
    %
    
    
    21.2
    %Depreciation and amortization
    
    
    0.5
    %
    
    
    0.5
    %(Gain) loss on disposal of property and equipment
    
    
    0.0
    %
    
    
    0.0
    %Operating income
    
    
    5.4
    %
    
    
    6.7
    %Interest expense
    
    
    0.0
    %
    
    
    0.2
    %Other income, net
    
    
    -0.1
    %
    
    
    -0.1
    %Income before income taxes
    
    
    5.5
    %
    
    
    6.5
    %Income taxes
    
    
    1.9
    %
    
    
    2.4
    %Net income
    
    
    3.6
    %
    
    
    4.1
    %
  Three months endedOctober 31,2005
    
    
    2004Sales by service type:On demand
    
    $
    34,586
    
    
    
    38.2
    %
    
    $
    30,613
    
    
    
    40.0
    %Scheduled/distribution
    
    
    28,248
    
    
    
    31.2
    %
    
    
    21,970
    
    
    
    28.7
    %Outsourcing
    
    
    27,735
    
    
    
    30.6
    %
    
    
    23,977
    
    
    
    31.3
    %Total sales
    
    $
    90,569
    
    
    
    100.0
    %
    
    $
    76,560
    
    
    
    100.0
    %Sales by country:United States
    
    $
    59,354
    
    
    
    65.5
    %
    
    $
    51,228
    
    
    
    66.9
    %Canada
    
    
    31,215
    
    
    
    34.5
    %
    
    
    25,332
    
    
    
    33.1
    %Total sales
    
    $
    90,569
    
    
    
    100.0
    %
    
    $
    76,560
    
    
    
    100.0
    %
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DYNAMEX INC.
 Three months ended October 31, 2005 compared to three months ended October 31, 2004
        Liquidity and Capital Resources
  10




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DYNAMEX INC.
      Three months endedOctober 31,2005
    
    
    2004Net income
    
    $
    3,181
    
    
    $
    3,173Adjustments:Income tax expense
    
    
    1,718
    
    
    
    1,827Interest expense
    
    
    84
    
    
    
    157Depreciation and amortization
    
    
    494
    
    
    
    376EBITDA
    
    $
    5,477
    
    
    $
    5,533
  11




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DYNAMEX INC.
 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
   Claims Exposure
  12




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DYNAMEX INC.
 Highly Competitive Industry
  Foreign Exchange
  Permits and Licensing
  Dependence on Key Personnel
  Risks Associated with the Same-day Transportation Industry; General Economic Conditions
  Technological Advances
  Dependence on Availability of Qualified Delivery Personnel
  13




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DYNAMEX INC.




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.
    
    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 owner-operators may be impacted by our ability
to pass on fuel cost increases to customers to maintain profit margins and the quality
of driver pay.





Item 3. Quantitative and Qualitative Disclosures About Market Risk


Foreign Exchange Exposure




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DYNAMEX INC.
  Interest Rate Exposure
  15




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DYNAMEX INC.
 
 Item 4. Controls and Procedures
   16




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DYNAMEX INC.
 
 PART II
 OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 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 planOctober 10 to 31,
2005
    
    
    500,400
    
    
    
    $15.57
    
    
    
    500,400
    
    
    $2.2 million
  
 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
 17




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DYNAMEX INC.
 
 SIGNATURES
  DYNAMEX INC.Dated: December 12, 2005
    
    by
    
    /s/ Richard K. McClellandRichard K. McClellandPresident, Chief Executive Officer andChairman of the Board(Principal Executive Officer)Dated: December 12, 2005
    
    by
    
    /s/ Ray E. SchmitzRay E. SchmitzVice President  Chief Financial Officer(Principal Financial Officer)Dated: December 12, 2005
    
    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