##### 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, 2010
 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
(Address of principal executive offices)
    
    75240
(Zip Code)
 Registrants telephone number, including area code:
(214) 560-9000
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Small reporting company o
 o þ




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##### 



DYNAMEX INC.
 INDEX
 PagePART IFINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Balance Sheets October 31, 2010 (Unaudited) and July 31, 2010
    
    
    2Condensed Statements of Consolidated Operations (Unaudited) Three months ended October 31, 2010 and 2009
    
    
    3Condensed Statements of Consolidated Cash Flows (Unaudited) Three months ended October 31, 2010 and 2009
    
    
    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 6. Exhibits
    
    
    17Signatures
    
    
    18Exhibit Index
    
    
    E-1EX-31.1EX-31.2EX-32.1EX-32.2
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PART I
FINANCIAL INFORMATION
 
  DYNAMEX INC.
 
 
 October 31,
    
    
    July 31,2010
    
    
    2010(Unaudited)ASSETSCURRENTCash and cash equivalents
    
    $
    24,326
    
    
    $
    26,318Accounts receivable (net of allowance for doubtful accounts
of $1,169 and $1,048, respectively)
    
    
    54,168
    
    
    
    47,455Income taxes receivable
    
    
    2,799
    
    
    
    4,062Prepaid and other current assets
    
    
    3,929
    
    
    
    4,032Deferred income taxes
    
    
    4,029
    
    
    
    4,029Total current assets
    
    
    89,251
    
    
    
    85,896PROPERTY AND EQUIPMENT (net of accumulated
depreciation of $33,708 and $32,780, respectively)
    
    
    11,332
    
    
    
    11,138GOODWILL
    
    
    50,711
    
    
    
    48,058INTANGIBLES  net
    
    
    2,557
    
    
    
    2,091OTHER
    
    
    2,515
    
    
    
    3,083Total assets
    
    $
    156,366
    
    
    $
    150,266LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESAccounts payable  trade
    
    $
    10,493
    
    
    $
    8,248Independent contractor owner operator settlements
    
    
    8,821
    
    
    
    7,706Accrued salaries and employee benefits
    
    
    6,236
    
    
    
    6,016Self-insured accruals
    
    
    2,180
    
    
    
    1,979Other accrued liabilities
    
    
    9,183
    
    
    
    8,876Short-term debt  revolver
    
    
    500
    
    
    
    Total current liabilities
    
    
    37,413
    
    
    
    32,825LONG-TERM DEBT
    
    
    
    
    
    
    LEASES  DEFERRED CREDITS
    
    
    2,277
    
    
    
    2,369DEFERRED INCOME TAX PAYABLE
    
    
    4,528
    
    
    
    4,523OTHER LONG-TERM LIABILITIES
    
    
    417
    
    
    
    784Total liabilities
    
    
    44,635
    
    
    
    40,501COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITYPreferred stock; $0.01 par value, 10,000 shares authorized;
none outstanding
    
    
    
    
    
    
    Common stock; $0.01 par value, 50,000 shares authorized;
9,756 and 9,753 outstanding, respectively
    
    
    97
    
    
    
    97Additional paid-in capital
    
    
    38,124
    
    
    
    37,876Retained earnings
    
    
    67,699
    
    
    
    66,310Accumulated other comprehensive incomeCumulative translation adjustment
    
    
    5,811
    
    
    
    5,482Total stockholders equity
    
    
    111,731
    
    
    
    109,765Total liabilities and stockholders equity
    
    $
    156,366
    
    
    $
    150,266
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DYNAMEX INC.
 
 
 Three months endedOctober 31,2010
    
    
    2009Sales
    
    $
    110,618
    
    
    $
    99,447Operating expenses:Purchased transportation
    
    
    72,717
    
    
    
    63,450Salaries and employee benefits
    
    
    20,436
    
    
    
    19,850Facilities and communication
    
    
    4,959
    
    
    
    4,720Other
    
    
    6,626
    
    
    
    5,725Depreciation and amortization
    
    
    1,087
    
    
    
    1,062Merger related cost
    
    
    1,811
    
    
    
    Total operating expenses
    
    
    107,636
    
    
    
    94,807Operating income
    
    
    2,982
    
    
    
    4,640Interest expense
    
    
    43
    
    
    
    48Other income, net
    
    
    (19
    )
    
    
    (12
    )Income before income taxes
    
    
    2,958
    
    
    
    4,604Income taxes
    
    
    1,569
    
    
    
    1,578Net income
    
    $
    1,389
    
    
    $
    3,026Basic earnings per common share
    
    $
    0.14
    
    
    $
    0.31Diluted earnings per common share
    
    $
    0.14
    
    
    $
    0.31Weighted average shares:Common shares outstanding
    
    
    9,754
    
    
    
    9,725Adjusted common shares  assuming
exercise of stock options
    
    
    9,769
    
    
    
    9,748
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DYNAMEX INC.
 
 
 Three months endedOctober 31,2010
    
    
    2009OPERATING ACTIVITIESNet income
    
    $
    1,389
    
    
    $
    3,026Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation and amortization
    
    
    1,087
    
    
    
    1,062Amortization of deferred bank financing fees
    
    
    
    
    
    
    4Provision for doubtful accounts
    
    
    143
    
    
    
    212Stock option compensation
    
    
    209
    
    
    
    340Deferred income taxes
    
    
    
    
    
    
    171Non-cash (decrease) / increase in rent expense
    
    
    14
    
    
    
    (1
    )Gain on disposal of property and equipment
    
    
    
    
    
    
    (5
    )Changes in current operating assets and liabilities net of the
effects from business acquisitionsAccounts receivable
    
    
    (6,594
    )
    
    
    (8,083
    )Prepaids and other current assets
    
    
    1,370
    
    
    
    1,971Accounts payable and accrued liabilities
    
    
    3,572
    
    
    
    2,390Net cash provided by operating activities
    
    
    1,190
    
    
    
    1,087INVESTING ACTIVITIESPurchase of property and equipment
    
    
    (761
    )
    
    
    (511
    )Acquisitions
    
    
    (3,720
    )
    
    
    (86
    )Withdrawal / (purchase) of investments
    
    
    405
    
    
    
    (14
    )Net cash used in investing activities
    
    
    (4,076
    )
    
    
    (611
    )FINANCING ACTIVITIESBorrowings on short-term debt  revolver
    
    
    3,000
    
    
    
    Payments on short-term debt  revolver
    
    
    (2,500
    )
    
    
    Proceeds from stock option exercise
    
    
    39
    
    
    
    71Other assets and deferred financing fees
    
    
    241
    
    
    
    (291
    )Net cash provided by (used in) financing activities
    
    
    780
    
    
    
    (220
    )EFFECT OF EXCHANGE RATES ON CASH
    
    
    114
    
    
    
    (259
    )NET DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (1,992
    )
    
    
    (3
    )CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    26,318
    
    
    
    11,016CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    24,326
    
    
    $
    11,013SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONCash paid for interest
    
    $
    38
    
    
    $
    5Cash paid for taxes
    
    $
    330
    
    
    $
    581
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DYNAMEX INC.
 
 Notes to Condensed Consolidated Financial Statements (Unaudited)
 1. Summary of Significant Accounting Policies
 Description of business 
 Basis of presentation 
   Business and credit concentrations 
     Other assets  Recoverable contract contingency costs Preproduction Costs Related to Long-Term Supply Arrangements
 5




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DYNAMEX INC.
  Leases  deferred credits 
  2. Comprehensive Income
  Three months endedOctober 30,2010
    
    
    2009Net income
    
    $
    1,389
    
    
    $
    3,026Unrealized losses on investments
    
    
    
    
    
    
    (3
    )Foreign currency translation gains / (losses)
    
    
    329
    
    
    
    (123
    )Comprehensive income
    
    $
    1,718
    
    
    $
    2,900
 3. Intangibles  net
  AccumulatedAsset
    
    
    Amortization
    
    
    NetDeferred bank financing fees
    
    $
    138
    
    
    $
    (135
    )
    
    $
    3Customer lists
    
    
    3,252
    
    
    
    (1,007
    )
    
    
    2,245Trademarks and other
    
    
    537
    
    
    
    (228
    )
    
    
    309Total
    
    $
    3,927
    
    
    $
    (1,370
    )
    
    $
    2,557
 Amortization ExpenseThree months ended October 30,2010
    
    
    2009Deferred bank financing fees
    
    $
    
    
    
    $
    4Customer lists
    
    
    201
    
    
    
    97Trademarks and other
    
    
    7
    
    
    
    5Total
    
    $
    208
    
    
    $
    106
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DYNAMEX INC.
 4. Computation of Earnings Per Share
 , Earnings Per Share.
 Three months endedApril 30,2010
    
    
    2009Net income
    
    $
    1,389
    
    
    $
    3,026Weighted average common shares outstanding
    
    
    9,754
    
    
    
    9,725Common share equivalents related to options
    
    
    15
    
    
    
    23Common shares and common share equivalents
    
    
    9,769
    
    
    
    9,748Net income per common share:Basic
    
    $
    0.14
    
    
    $
    0.31Diluted
    
    $
    0.14
    
    
    $
    0.31
 5. Contingencies
   7




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DYNAMEX INC.
      6. Income Taxes
   7. Restructuring Accrual
  8




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DYNAMEX INC.
 Balance at
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance atRestructuring
    
    July 31, 2010
    
    
    Expense
    
    
    Payment
    
    
    Other (1)
    
    
    October 31, 2010Severance and stay bonuses
    
    $
    137
    
    
    $
    
    
    
    $
    (70
    )
    
    $
    
    
    
    $
    67Benefits and employer taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Travel and other
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3
    )Terminating a lease
    
    
    64
    
    
    
    
    
    
    
    (63
    )
    
    
    (1
    )
    
    
    Total restructuring
    
    $
    198
    
    
    $
    
    
    
    $
    (133
    )
    
    $
    (1
    )
    
    $
    64
 
 (1)
    
    Represents difference in end of period and for the period foreign exchange
rates. 8. Significant Events
  9




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DYNAMEX INC.
 
 Item 2.
 Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion should be read in conjunction with the information contained in the
Companys consolidated financial statements, including the notes thereto, and the other financial
information appearing elsewhere in this report. Statements regarding future economic performance,
managements plans and objectives, and any statements concerning its assumptions related to the
foregoing contained in Managements Discussion and Analysis of Financial Condition and Results of
Operation constitute forward-looking statements. Certain factors, which may cause actual results
to vary materially from these forward-looking statements, accompany such statements or appear
elsewhere in this report, including without limitation, the factors disclosed under Risk Factors.
 General
      Critical Accounting Policies
  10




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DYNAMEX INC.
 Results of Operations
  Three months endedOctober 31,2010
    
    2009Sales
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Purchased transportation
    
    
    65.7
    %
    
    
    63.8
    %Salaries and employee benefits
    
    
    18.5
    %
    
    
    20.0
    %Facilities and communication
    
    
    4.5
    %
    
    
    4.7
    %Other
    
    
    6.0
    %
    
    
    5.7
    %Depreciation and amortization
    
    
    1.0
    %
    
    
    1.1
    %Merger related cost
    
    
    1.6
    %
    
    
    0.0
    %Total operating expenses
    
    
    97.3
    %
    
    
    95.3
    %Operating income
    
    
    2.7
    %
    
    
    4.7
    %Interest expense
    
    
    0.0
    %
    
    
    0.1
    %Other income, net
    
    
    0.0
    %
    
    
    0.0
    %Income before income taxes
    
    
    2.7
    %
    
    
    4.6
    %Income taxes
    
    
    1.4
    %
    
    
    1.6
    %Net income
    
    
    1.3
    %
    
    
    3.0
    %
  Three months endedOctober 30,(amounts in thousands)2010
    
    
    2009Sales by service type:On demand
    
    $
    34,145
    
    
    
    30.9
    %
    
    $
    31,430
    
    
    
    31.6
    %Scheduled/distribution
    
    
    76,473
    
    
    
    69.1
    %
    
    
    68,017
    
    
    
    68.4
    %Total sales
    
    $
    110,618
    
    
    
    100.0
    %
    
    $
    99,447
    
    
    
    100.0
    %Sales by country:United States
    
    $
    68,862
    
    
    
    62.3
    %
    
    $
    63,020
    
    
    
    63.4
    %Canada
    
    
    41,756
    
    
    
    37.7
    %
    
    
    36,427
    
    
    
    36.6
    %Total sales
    
    $
    110,618
    
    
    
    100.0
    %
    
    $
    99,447
    
    
    
    100.0
    %
 Three months ended October 31, 2010 compared to three months ended October 31, 2009
  11




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DYNAMEX INC.
           12




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DYNAMEX INC.
  Liquidity and Capital Resources
      Level at OctoberCompliance Area
    
    Covenant
    
    31, 2010Ratio of funded debt to EBITDA
    
    Maximum of 2.00 to 1.00
    
    0.22 to 1.00Total indebtedness
    
    $40 million, including Standby
Letters of Credit
    
    $4.0 millionLetters of credit sublimit
    
    $10.0 million
    
    $4.0 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
    
    0.22 to 1.00Fixed charge coverage ratio
    
    Equal to or greater than 1.50 to 1.00
    
    10.91 to 1.00
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DYNAMEX INC.
 Three months endedOctober 31,(amounts in thousands)2010
    
    
    2009Net income
    
    $
    1,389
    
    
    $
    3,026Adjustments:Income tax expense
    
    
    1,569
    
    
    
    1,578Interest expense
    
    
    43
    
    
    
    48Depreciation and amortization
    
    
    1,087
    
    
    
    1,062EBITDA
    
    
    4,088
    
    
    
    5,714EBITDA % to Sales
    
    
    3.7
    %
    
    
    5.7
    %
  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 6. Exhibits
  10.1
    
    Agreement and Plan of Merger, dated as of October 1, 2010, by
and among Dynamex Inc., DashNow Holding Corp., and DashNow Acquisition Corp.
(filed as Exhibit 2.1 to the Companys Current Report on Form 8-K filed on
October 1, 2010 and incorporated herein by reference).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 2, 2010
    by
    /s/ James L. WelchJames L. WelchPresident and Chief Executive Officer
(Principal Executive Officer)Dated:      December 2, 2010
    by
    /s/ Ray E. SchmitzRay E. SchmitzExecutive Vice President  Chief Financial Officer
(Principal Financial Officer)Dated:      December 2, 2010
    by
    /s/ Gilbert JonesGilbert JonesVice President - Corporate Controller

(Principal Accounting Officer) 18




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EXHIBIT INDEX
 Exhibits
 10.1
    
    Agreement and Plan of Merger, dated as of October 1, 2010, by and among Dynamex Inc.,
DashNow Holding Corp., and DashNow Acquisition Corp. (filed as Exhibit 2.1 to the Companys
Current Report on Form 8-K filed on October 1, 2010 and incorporated herein by reference).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
 E - 1