##### 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, 2008
 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
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




---



##### 



DYNAMEX
INC.
 INDEX
 PagePART I FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Balance Sheets
October 31, 2008 (Unaudited) and July 31, 2008
    
    
    2Condensed Statements of Consolidated Operations (Unaudited)
Three months ended October 31, 2008 and 2007
    
    
    3Condensed Statements of Consolidated Cash Flows (Unaudited)
Three months ended October 31, 2008 and 2007
    
    
    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
    
    
    16PART II OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    17Item 1A. Risk Factors
    
    
    18Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    22Item 6. Exhibits
    
    
    22Signatures
    
    
    23Exhibit Index
    
    
    E-1EX-10.1EX-31.1EX-31.2EX-32.1EX-32.2
  1




---



##### Table of Contents



PART I
FINANCIAL INFORMATION
 
  DYNAMEX INC.
 
 
 October 31,
    
    
    July 31,2008
    
    
    2008(Unaudited)ASSETSCURRENTCash and cash equivalents
    
    $
    9,156
    
    
    $
    19,888Accounts receivable (net of allowance for doubtful accounts
of $971 and $915, respectively)
    
    
    47,682
    
    
    
    47,288Income taxes receivable
    
    
    652
    
    
    
    1,546Prepaid and other current assets
    
    
    3,607
    
    
    
    4,429Deferred income taxes
    
    
    3,781
    
    
    
    3,504Total current assets
    
    
    64,878
    
    
    
    76,655PROPERTY AND EQUIPMENT  net
    
    
    8,569
    
    
    
    8,670GOODWILL
    
    
    46,257
    
    
    
    48,109INTANGIBLES  net
    
    
    756
    
    
    
    808OTHER
    
    
    3,989
    
    
    
    4,382Total assets
    
    $
    124,449
    
    
    $
    138,624LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESAccounts payable trade
    
    $
    7,321
    
    
    $
    12,621Accrued liabilities
    
    
    24,112
    
    
    
    24,160Total current liabilities
    
    
    31,433
    
    
    
    36,781LONG-TERM DEBT
    
    
    
    
    
    
    OTHER LONG-TERM LIABILITIES
    
    
    4,363
    
    
    
    4,209Total liabilities
    
    
    35,796
    
    
    
    40,990COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITYPreferred stock; $0.01 par value, 10,000 shares authorized;
none outstanding
    
    
    
    
    
    
    Common stock; $0.01 par value, 50,000 shares authorized;
9,843 and 10,148 outstanding, respectively
    
    
    98
    
    
    
    101Additional paid-in capital
    
    
    37,209
    
    
    
    45,311Retained earnings
    
    
    49,950
    
    
    
    46,905Accumulated other comprehensive income:Cumulative translation adjustment
    
    
    1,396
    
    
    
    5,317Total stockholders equity
    
    
    88,653
    
    
    
    97,634Total liabilities and stockholders
equity
    
    $
    124,449
    
    
    $
    138,624
  2




---



##### Table of Contents



DYNAMEX INC.
 
 
 Three months endedOctober 31,2008
    
    
    2007Sales
    
    $
    115,452
    
    
    $
    111,752Cost of sales:Purchased transportation
    
    
    75,382
    
    
    
    73,922Other direct costs
    
    
    9,061
    
    
    
    8,125Cost of sales
    
    
    84,443
    
    
    
    82,047Gross profit
    
    
    31,009
    
    
    
    29,705Selling, general and administrative expenses:Salaries and employee benefits
    
    
    17,918
    
    
    
    16,073Other
    
    
    6,764
    
    
    
    6,587Selling, general and administrative expenses
    
    
    24,682
    
    
    
    22,660Depreciation and amortization
    
    
    783
    
    
    
    671Gain on disposal of property and equipment
    
    
    (3
    )
    
    
    (10
    )Operating income
    
    
    5,547
    
    
    
    6,384Interest expense
    
    
    38
    
    
    
    79Other income, net
    
    
    (18
    )
    
    
    (100
    )Income before income taxes
    
    
    5,527
    
    
    
    6,405Income taxes
    
    
    2,482
    
    
    
    2,411Net income
    
    $
    3,045
    
    
    $
    3,994Basic earnings per common share:
    
    $
    0.31
    
    
    $
    0.39Diluted earnings per common share:
    
    $
    0.30
    
    
    $
    0.39Weighted average shares:Common shares outstanding
    
    
    9,948
    
    
    
    10,174Adjusted common shares  assuming
exercise of stock options
    
    
    10,045
    
    
    
    10,283
  3




---



##### Table of Contents



DYNAMEX INC.
 
 
 Three months endedOctober 31,2008
    
    
    2007OPERATING ACTIVITIESNet income
    
    $
    3,045
    
    
    $
    3,994Adjustments to reconcile net income to net cash provided
by (used in) operating activities:Depreciation and amortization
    
    
    783
    
    
    
    671Amortization of deferred bank financing fees
    
    
    
    
    
    
    8Provision for losses on accounts receivable
    
    
    189
    
    
    
    151Stock option compensation
    
    
    286
    
    
    
    175Deferred income taxes
    
    
    (9
    )
    
    
    552Non-cash rent expense
    
    
    18
    
    
    
    15Gain on disposal of property and equipment
    
    
    (3
    )
    
    
    (9
    )Changes in current operating assets and liabilities:Accounts receivable
    
    
    (584
    )
    
    
    (8,601
    )Prepaids and other current assets
    
    
    1,716
    
    
    
    640Accounts payable and accrued liabilities
    
    
    (5,419
    )
    
    
    (1,908
    )Net cash provided by (used in) operating activities
    
    
    22
    
    
    
    (4,312
    )INVESTING ACTIVITIESPurchase of property and equipment
    
    
    (578
    )
    
    
    (809
    )Acquisition of customer lists
    
    
    
    
    
    
    (415
    )Purchase of investments
    
    
    (51
    )
    
    
    (173
    )Net cash used in investing activities
    
    
    (629
    )
    
    
    (1,397
    )FINANCING ACTIVITIESProceeds from stock option exercise
    
    
    
    
    
    
    767Tax benefit realized by exercise of stock options
    
    
    
    
    
    
    67Purchase and retirement of treasury stock
    
    
    (8,391
    )
    
    
    Other assets and deferred financing fees
    
    
    332
    
    
    
    (353
    )Net cash provided by (used in) financing activities
    
    
    (8,059
    )
    
    
    481EFFECT OF EXCHANGE RATES ON CASH
    
    
    (2,066
    )
    
    
    1,370NET DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (10,732
    )
    
    
    (3,858
    )CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
    
    
    19,888
    
    
    
    8,857CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    9,156
    
    
    $
    4,999SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONCash paid for interest
    
    $
    30
    
    
    $
    48Cash paid for taxes
    
    $
    1,160
    
    
    $
    2,314
  4




---



##### Table of Contents



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
 5




---



##### Table of Contents



DYNAMEX INC.
 Other long-term liabilities 
  2. Comprehensive Income
  Three months endedOctober 31,2008
    
    
    2007Net income
    
    $
    3,045
    
    
    $
    3,994Unrealized gains (losses) on investments
    
    
    (112
    )
    
    
    92Foreign currency translation gains (losses)
    
    
    (3,809
    )
    
    
    3,083Comprehensive income
    
    $
    (876
    )
    
    $
    7,169
 3. Intangibles  net
  Amortization ExpenseAccumulated
    
    
    
    
    
    
    Three months ended October 31,Asset
    
    
    Amortization
    
    
    Net
    
    
    2008
    
    
    2007Deferred bank financing fees
    
    $
    132
    
    
    $
    (132
    )
    
    
    (0
    )
    
    
    
    
    
    
    8Customer lists
    
    
    565
    
    
    
    (89
    )
    
    
    476
    
    
    
    35
    
    
    
    23Trademarks and other
    
    
    470
    
    
    
    (190
    )
    
    
    280
    
    
    
    5
    
    
    
    5Total
    
    $
    1,167
    
    
    $
    (411
    )
    
    $
    756
    
    
    $
    40
    
    
    $
    36
 6




---



##### Table of Contents



DYNAMEX INC.
 4. Computation of Earnings Per Share
 Earnings Per Share
 Three months endedOctober 31,2008
    
    
    2007Net income
    
    $
    3,045
    
    
    $
    3,994Weighted average common shares outstanding
    
    
    9,948
    
    
    
    10,174Common share equivalents related to options
    
    
    97
    
    
    
    109Common shares and common share equivalents
    
    
    10,045
    
    
    
    10,283Net income per common share:Basic
    
    $
    0.31
    
    
    $
    0.39Diluted
    
    $
    0.30
    
    
    $
    0.39
 5. Repurchase of Equity Securities
  6. Contingencies
    7




---



##### Table of Contents



DYNAMEX INC.
        8




---



##### Table of Contents



DYNAMEX INC.
 7. Income Taxes
  9




---



##### Table of Contents



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
        10




---



##### Table of Contents



DYNAMEX INC.
 Critical Accounting Policies
  Recent Accounting Pronouncements
    11




---



##### Table of Contents



DYNAMEX INC.
 Results of Operations
  Three months endedOctober 31,2008
    
    
    2007Sales
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales:Purchased transportation
    
    
    65.3
    %
    
    
    66.1
    %Other direct costs
    
    
    7.8
    %
    
    
    7.3
    %Cost of sales
    
    
    73.1
    %
    
    
    73.4
    %Gross profit
    
    
    26.9
    %
    
    
    26.6
    %Selling, general and administrative expenses:Salaries and employee benefits
    
    
    15.5
    %
    
    
    14.4
    %Other
    
    
    5.9
    %
    
    
    5.9
    %Selling, general and administrative expenses
    
    
    21.4
    %
    
    
    20.3
    %Depreciation and amortization
    
    
    0.7
    %
    
    
    0.6
    %Loss on disposal of property and equipment
    
    
    0.0
    %
    
    
    0.0
    %Operating income
    
    
    4.8
    %
    
    
    5.7
    %Interest expense
    
    
    0.0
    %
    
    
    0.1
    %Other income, net
    
    
    0.0
    %
    
    
    -0.1
    %Income before income taxes
    
    
    4.8
    %
    
    
    5.7
    %Income taxes
    
    
    2.1
    %
    
    
    2.2
    %Net income
    
    
    2.7
    %
    
    
    3.5
    %
 12




---



##### Table of Contents



DYNAMEX INC.
  Three months endedOctober 31,(Amounts in thousands)2008
    
    
    2007Sales by service type:On demand
    
    
    37,703
    
    
    
    32.7
    %
    
    
    37,261
    
    
    
    33.3
    %Scheduled/distribution
    
    
    77,749
    
    
    
    67.3
    %
    
    
    74,491
    
    
    
    66.7
    %Total sales
    
    $
    115,452
    
    
    
    100.0
    %
    
    $
    111,752
    
    
    
    100.0
    %Sales by country:United States
    
    $
    72,360
    
    
    
    62.7
    %
    
    $
    69,483
    
    
    
    62.2
    %Canada
    
    
    43,092
    
    
    
    37.3
    %
    
    
    42,269
    
    
    
    37.8
    %Total sales
    
    $
    115,452
    
    
    
    100.0
    %
    
    $
    111,752
    
    
    
    100.0
    %
 Three months ended October 31, 2008 compared to three months ended October 31, 2007
        13




---



##### Table of Contents



DYNAMEX INC.
  Liquidity and Capital Resources
      Compliance Area
    
    Covenant
    
    Level at October 31, 2008Ratio of funded debt to EBITDA
    
    Maximum of 2.00 to 1.00
    
    0.25 to 1.00Total indebtedness
    
    $40 million, including LOCs
    
    $7.2 millionLetters of credit sublimit
    
    $7.5 million
    
    $7.2 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
    
    0.86 to 1.00Fixed charge coverage ratio
    
    Equal to or greater than 1.35 to 1.00
    
    12.03 to 1.00
  14




---



##### Table of Contents



DYNAMEX INC.
  Three months endedOctober 31,(Amounts in thousands)2008
    
    
    2007Net income
    
    $
    3,045
    
    
    $
    3,994Adjustments:Income tax expense
    
    
    2,482
    
    
    
    2,411Interest expense
    
    
    38
    
    
    
    79Depreciation and amortization
    
    
    783
    
    
    
    671EBITDA
    
    $
    6,348
    
    
    $
    7,155
  Inflation
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Foreign Exchange Exposure
   Interest Rate Exposure
  15




---



##### Table of Contents



DYNAMEX INC.
 
 Item 4. Controls and Procedures
   16




---



##### Table of Contents



DYNAMEX INC.
 
 PART II
OTHER INFORMATION
 
 Item 1. Legal Proceedings
      17




---



##### Table of Contents



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 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
  Competition May Adversely Affect Our Results
  18




---



##### Table of Contents



DYNAMEX INC.
 An Increase in Claims May Expose Us to Losses
  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
  19




---



##### Table of Contents



DYNAMEX INC.
  Failure to Maintain Permits and Licensing May Adversely Affect Our Ability to Operate
  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
  20




---



##### Table of Contents



DYNAMEX INC.
  Factors Beyond Our Control May Affect the Volatility of Our Stock Price
  Changing Fuel Costs May Adversely Affect Our Financial Condition and Results of Operations
  21




---



##### Table of Contents



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 planAugust 1 to August 31,
2008
    
    
    210,700
    
    
    $
    28.42
    
    
    
    210,700
    
    
    $32.6 millionSeptember 1 to
September 30, 2008
    
    
    11,400
    
    
    $
    29.55
    
    
    
    11,400
    
    
    $32.3 millionOctober 1 to October
31, 2008
    
    
    84,200
    
    
    $
    24.53
    
    
    
    84,200
    
    
    $30.2 million
  
 Item 6. Exhibits
  10.1
    
    Employment agreement between Dynamex Inc. and James L. Welch dated November 1, 200831.1
    
    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
 22




---



##### Table of Contents



DYNAMEX INC.
 
 SIGNATURES
  DYNAMEX INC.Dated: December 10, 2008
    
    by
    
    /s/ James L. WelchJames L. WelchPresident and Chief Executive Officer(Principal Executive Officer)Dated: December 10, 2008
    
    by
    
    /s/ Ray E. SchmitzRay E. SchmitzVice President  Chief Financial Officer(Principal Financial Officer)Dated: December 10, 2008
    
    by
    
    /s/ Gilbert JonesGilbert JonesCorporate Controller(Principal Accounting Officer)
 23




---



##### Table of Contents



EXHIBIT INDEX
 Exhibits
 10.1
    
    Employment agreement between Dynamex Inc. and James L. Welch dated November 1, 200831.1
    
    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