##### 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 October 31, 2009
 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
    
    86-0712225(State of incorporation)
    
    (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 o
  Large accelerated filer o
Accelerated filer þNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company o
 o þ




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##### 



DYNAMEX INC.
 INDEX
 PagePART IFINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Balance Sheets
October 31, 2009 (Unaudited) and July 31, 2009
    
    
    2Condensed Statements of Consolidated Operations (Unaudited)
Three months ended October 31, 2009 and 2008
    
    
    3Condensed Statements of Consolidated Cash Flows (Unaudited)
Three months ended October 31, 2009 and 2008
    
    
    4Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition
and
Results of Operations
    
    
    10Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    15Item 4. Controls and Procedures
    
    
    15PART IIOTHER INFORMATIONItem 1. Legal Proceedings
    
    
    16Item 1A. Risk Factors
    
    
    17Item 6. Exhibits
    
    
    20Signatures
    
    
    21Exhibit Index
    
    
    E-1EX-10.1EX-31.1EX-31.2EX-32.1EX-32.2
  1




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##### Table of Contents



PART I
FINANCIAL INFORMATION
 
 Item 1.
    
    Financial Statements
 
 DYNAMEX INC.
 October 31,
    
    
    July 31,2009
    
    
    2009(Unaudited)ASSETSCURRENTCash and cash equivalents
    
    $
    11,013
    
    
    $
    11,016Accounts receivable (net of allowance for doubtful accounts
of $1,950 and $1,801, respectively)
    
    
    51,416
    
    
    
    43,545Income taxes receivable
    
    
    2,217
    
    
    
    3,043Prepaid and other current assets
    
    
    3,246
    
    
    
    4,396Deferred income taxes
    
    
    4,270
    
    
    
    4,270Total current assets
    
    
    72,162
    
    
    
    66,270PROPERTY AND EQUIPMENT  net
    
    
    11,155
    
    
    
    11,532GOODWILL
    
    
    47,448
    
    
    
    47,496INTANGIBLES  net
    
    
    961
    
    
    
    975OTHER
    
    
    3,538
    
    
    
    3,226Total assets
    
    $
    135,264
    
    
    $
    129,499LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESAccounts payable trade
    
    $
    6,107
    
    
    $
    5,581Accrued liabilities
    
    
    24,231
    
    
    
    22,370Total current liabilities
    
    
    30,338
    
    
    
    27,951LONG-TERM DEBT
    
    
    
    
    
    
    OTHER LONG-TERM LIABILITIES
    
    
    5,535
    
    
    
    5,468Total liabilities
    
    
    35,873
    
    
    
    33,419COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITYPreferred stock; $0.01 par value, 10,000 shares authorized;
none outstanding
    
    
    
    
    
    
    Common stock; $0.01 par value, 50,000 shares authorized;
9,729 and 9,725 outstanding, respectively
    
    
    97
    
    
    
    97Additional paid-in capital
    
    
    36,687
    
    
    
    36,276Retained earnings
    
    
    58,681
    
    
    
    55,655Accumulated other comprehensive income:Cumulative translation adjustment
    
    
    3,926
    
    
    
    4,052Total stockholders equity
    
    
    99,391
    
    
    
    96,080Total liabilities and stockholders equity
    
    $
    135,264
    
    
    $
    129,499
  2




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DYNAMEX INC.
 Three months endedOctober 31,2009
    
    
    2008Sales
    
    $
    99,447
    
    
    $
    115,452Operating expenses:Purchased transportation
    
    
    63,590
    
    
    
    73,841Salaries and employee benefits
    
    
    19,710
    
    
    
    24,135Facilities and communication
    
    
    4,720
    
    
    
    4,821Other
    
    
    5,725
    
    
    
    6,327Depreciation and amortization
    
    
    1,062
    
    
    
    783Total operating expenses
    
    
    94,807
    
    
    
    109,907Operating income
    
    
    4,640
    
    
    
    5,545Interest expense
    
    
    48
    
    
    
    38Other income, net
    
    
    (12
    )
    
    
    (20
    )Income before income taxes
    
    
    4,604
    
    
    
    5,527Income taxes
    
    
    1,578
    
    
    
    2,482Net income
    
    $
    3,026
    
    
    $
    3,045Basic earnings per common share
    
    $
    0.31
    
    
    $
    0.31Diluted earnings per common share
    
    $
    0.31
    
    
    $
    0.30Weighted average shares:Common shares outstanding
    
    
    9,725
    
    
    
    9,948Adjusted common shares  assuming
exercise of stock options
    
    
    9,748
    
    
    
    10,045
  3




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DYNAMEX INC.
 Three months endedOctober 31,2009
    
    
    2008OPERATING ACTIVITIESNet income
    
    $
    3,026
    
    
    $
    3,045Adjustments to reconcile net income to net cash provided
by (used in) operating activities:Depreciation and amortization
    
    
    1,062
    
    
    
    783Amortization of deferred bank financing fees
    
    
    4
    
    
    
    Provision for losses on accounts receivable
    
    
    212
    
    
    
    189Stock option compensation
    
    
    340
    
    
    
    286Deferred income taxes
    
    
    171
    
    
    
    (9
    )Non-cash rent expense
    
    
    (1
    )
    
    
    18Gain on disposal of property and equipment
    
    
    (5
    )
    
    
    (3
    )Changes in current operating assets and liabilities:Accounts receivable
    
    
    (8,083
    )
    
    
    (584
    )Prepaids and other current assets
    
    
    1,971
    
    
    
    1,716Accounts payable and accrued liabilities
    
    
    2,390
    
    
    
    (5,419
    )Net cash provided by operating activities
    
    
    1,087
    
    
    
    22INVESTING ACTIVITIESPurchase of property and equipment
    
    
    (511
    )
    
    
    (578
    )Acquisition of customer lists
    
    
    (86
    )
    
    
    Purchase of investments
    
    
    (14
    )
    
    
    (51
    )Net cash used in investing activities
    
    
    (611
    )
    
    
    (629
    )FINANCING ACTIVITIESProceeds from stock option exercise
    
    
    71
    
    
    
    Purchase and retirement of treasury stock
    
    
    
    
    
    
    (8,391
    )Other assets and deferred financing fees
    
    
    (291
    )
    
    
    332Net cash used in financing activities
    
    
    (220
    )
    
    
    (8,059
    )EFFECT OF EXCHANGE RATES ON CASH
    
    
    (259
    )
    
    
    (2,066
    )NET DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (3
    )
    
    
    (10,732
    )CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
    
    
    11,016
    
    
    
    19,888CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    11,013
    
    
    $
    9,156SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONCash paid for interest
    
    $
    5
    
    
    $
    30Cash paid for taxes
    
    $
    581
    
    
    $
    1,160
  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 
   Business and credit concentrations 
   Other assets  Recoverable contract contingency costs
 Other long-term liabilities 
 5




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DYNAMEX INC.
   2. Comprehensive Income
  Three months endedOctober 31,2009
    
    
    2008Net income
    
    $
    3,026
    
    
    $
    3,045Unrealized losses on investments
    
    
    (3
    )
    
    
    (112
    )Foreign currency translation losses
    
    
    (123
    )
    
    
    (3,809
    )Comprehensive income
    
    $
    2,900
    
    
    $
    (876
    )
 3. Intangibles  net
  Amortization ExpenseAccumulated
    
    
    
    
    
    
    Three months ended October 31,Asset
    
    
    Amortization
    
    
    Net
    
    
    2009
    
    
    2008Deferred bank financing fees
    
    $
    138
    
    
    $
    (134
    )
    
    
    4
    
    
    
    4
    
    
    
    Customer lists
    
    
    1,036
    
    
    
    (342
    )
    
    
    694
    
    
    
    97
    
    
    
    35Trademarks and other
    
    
    470
    
    
    
    (208
    )
    
    
    262
    
    
    
    5
    
    
    
    5Total
    
    $
    1,644
    
    
    $
    (684
    )
    
    $
    960
    
    
    $
    106
    
    
    $
    40
 4. Computation of Earnings Per Share
 Earnings Per Share
 6




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DYNAMEX INC.
 Three months endedOctober 31,2009
    
    
    2008Net income
    
    $
    3,026
    
    
    $
    3,045Weighted average common shares outstanding
    
    
    9,725
    
    
    
    9,948Common share equivalents related to options
    
    
    23
    
    
    
    97Common shares and common share equivalents
    
    
    9,748
    
    
    
    10,045Net income per common share:Basic
    
    $
    0.31
    
    
    $
    0.31Diluted
    
    $
    0.31
    
    
    $
    0.30
 5. Repurchase of Equity Securities
  6. Contingencies
   7




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DYNAMEX INC.
      7. Income Taxes
   8




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DYNAMEX INC.
 8. Restructuring Accrual
  Balance at
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance atRestructuring
    
    July 31, 2009
    
    
    Expense
    
    
    Payment
    
    
    Other (1)
    
    
    October 31, 2009Severance and stay bonuses
    
    $
    952
    
    
    $
    
    
    
    $
    (548
    )
    
    $
    
    
    
    $
    404Benefits and employer taxes
    
    
    98
    
    
    
    
    
    
    
    (9
    )
    
    
    
    
    
    
    89Travel and other
    
    
    70
    
    
    
    
    
    
    
    (96
    )
    
    
    1
    
    
    
    (25
    )Total restructuring
    
    $
    1,120
    
    
    $
    
    
    
    $
    (653
    )
    
    $
    1
    
    
    $
    468
 
 (1)
    
    Represents difference in end of period and for the period foreign exchange rates. 9




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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
  10




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DYNAMEX INC.
  Recent Accounting Pronouncements
  Results of Operations
  Three months endedOctober 31,2009
    
    2008Sales
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Purchased transportation
    
    
    63.9
    %
    
    
    64.0
    %Salaries and employee benefits
    
    
    19.8
    %
    
    
    20.9
    %Facilities and communication
    
    
    4.7
    %
    
    
    4.2
    %Other
    
    
    5.8
    %
    
    
    5.5
    %Depreciation and amortization
    
    
    1.1
    %
    
    
    0.6
    %Total operating expenses
    
    
    95.3
    %
    
    
    95.2
    %Operating income
    
    
    4.7
    %
    
    
    4.8
    %Interest expense
    
    
    0.0
    %
    
    
    0.0
    %Other income, net
    
    
    0.0
    %
    
    
    0.0
    %Income before income taxes
    
    
    4.7
    %
    
    
    4.8
    %Income taxes
    
    
    1.6
    %
    
    
    2.1
    %Net income
    
    
    3.1
    %
    
    
    2.7
    %
 11




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DYNAMEX INC.
  Three months endedOctober 31,(amounts in thousands)2009
    
    
    2008Sales by service type:On demand
    
    
    31,430
    
    
    
    31.6
    %
    
    
    37,703
    
    
    
    32.7
    %Scheduled/distribution
    
    
    68,017
    
    
    
    68.4
    %
    
    
    77,749
    
    
    
    67.3
    %Total sales
    
    $
    99,447
    
    
    
    100.0
    %
    
    $
    115,452
    
    
    
    100.0
    %Sales by country:United States
    
    $
    63,020
    
    
    
    63.4
    %
    
    $
    72,360
    
    
    
    62.7
    %Canada
    
    
    36,427
    
    
    
    36.6
    %
    
    
    43,092
    
    
    
    37.3
    %Total sales
    
    $
    99,447
    
    
    
    100.0
    %
    
    $
    115,452
    
    
    
    100.0
    %
 Three months ended October 31, 2009 compared to three months ended October 31, 2008
         12




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DYNAMEX INC.
   Liquidity and Capital Resources
     13




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DYNAMEX INC.
  Level at October 31,Compliance Area
    
    Covenant
    
    2009Ratio of funded debt to EBITDA
    
    Maximum of 2.00 to 1.00
    
    0.35 to 1.00Total indebtedness
    
    $40 million, including LOCs
    
    $6.7 millionLetters of credit sublimit
    
    $7.5 million
    
    $6.7 millionTreasury stock purchases 
during the subject period
    
    Ratio of funded debt to EBITDA
maximum of 1.50 to 1.00; based on
pro forma effect of treasury stock
purchases
    
    0.35 to 1.00Fixed charge coverage ratio
    
    Equal to or greater than 1.50 to 1.00
    
    6.21 to 1.50
  Three months endedOctober 31,(amounts in thousands)2009
    
    
    2008Net income
    
    $
    3,026
    
    
    $
    3,045Adjustments:Income tax expense
    
    
    1,578
    
    
    
    2,482Non-cash stock option expense
    
    
    340
    
    
    
    286Interest expense
    
    
    48
    
    
    
    38Depreciation and amortization
    
    
    1,062
    
    
    
    783EBITDA
    
    $
    6,054
    
    
    $
    6,634
  Inflation
  14




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DYNAMEX INC.
 
 Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
 Foreign Exchange Exposure
   Interest Rate Exposure
  
 Item 4.
    
    Controls and Procedures
   15




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




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DYNAMEX INC.
  
 Item 1A.
    
    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.
 The current global economic crisis could adversely affect the Companys business
and financial results and have a material adverse affect on our liquidity and capital resources
  Changing Fuel Costs May Adversely Affect Our Financial Condition and Results of Operations
  Competition May Adversely Affect Our Results
  An Increase in Claims May Expose Us to Losses
  17




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DYNAMEX INC.
 We Rely on Independent Contractor Owner-Operator Drivers to Make Deliveries for Our Customers
    We May Be Adversely Affected by Local Delivery Industry and General Economic Conditions
  Fluctuations of Foreign Exchange Rates May Adversely Affect Our Results
  Failure to Maintain Permits and Licensing May Adversely Affect Our Ability to Operate
  18




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DYNAMEX INC.
 We Depend Upon Key Personnel for Our Continued Operations
  Technological Advances May Adversely Affect Our Business
  We Are Highly Dependent Upon Our Technology Infrastructure
  We Are Dependent on Availability of Qualified Delivery Personnel
  We May Need Additional Financing to Pursue Our Acquisition Strategy
  Factors Beyond Our Control May Affect the Volatility of Our Stock Price
  19




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DYNAMEX INC.
 
 Item 6.
    
    Exhibits
  10.1
    
    Consulting agreement between Dynamex Inc. and Richard K.
McClelland dated July 31, 200931.1
    
    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
 20




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DYNAMEX INC.
 
 SIGNATURES
  DYNAMEX INC.Dated:      December 10, 2009
    by
    /s/ James L. WelchJames L. WelchPresident and Chief Executive Officer
(Principal Executive Officer)Dated:      December 10, 2009
    by
    /s/ Ray E. SchmitzRay E. SchmitzExecutive Vice President  Chief Financial Officer
(Principal Financial Officer)Dated:      December 10, 2009
    by
    /s/ Gilbert JonesGilbert JonesVice President  Corporate Controller
(Principal Accounting Officer) 21




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EXHIBIT INDEX
 Exhibits10.1
    
    Consulting agreement between Dynamex Inc. and Richard K. McClelland dated July 31, 200931.1
    
    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
 E-1