<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
------ SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED JANUARY
31, 1998
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
------- SECURITIES ACT OF 1934 FOR THE TRANSACTION PERIOD
FROM __________ TO _________.
COMMISSION FILE NUMBER: 000-21057
------------------------
DYNAMEX INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 86-0712225
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
1431 GREENWAY DRIVE
SUITE 345
IRVING, TEXAS 75038
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code:
(972) 756-8180
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
7,411,623 SHARES OF COMMON STOCK, $.01 PAR VALUE, OUTSTANDING AS OF MARCH
2, 1998.
<PAGE> 2
DYNAMEX INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE
----
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements.
Condensed Consolidated Balance Sheets 2
January 31, 1998 (Unaudited) and July 31, 1997
Condensed Consolidated Statements of Operations (Unaudited) 3
Three and Six Months ended January 31, 1998 and 1997
Condensed Consolidated Statements of Cash Flows (Unaudited) 4
Six Months ended January 31, 1998 and 1997
Notes to Condensed Consolidated Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of Financial Condition
-----------------------------------------------------------
and Results of Operations 6
--------------------------
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
</TABLE>
<PAGE> 3
DYNAMEX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands Except Per Share Data)
<TABLE>
<CAPTION>
July 31, January 31,
1997 1998
---------------- ----------------
ASSETS (Unaudited)
<S> <C> <C>
CURRENT
Cash and cash equivalents $ 1,326 $ 1,483
Accounts receivable - net 20,867 25,553
Prepaid and other current assets 3,301 4,436
Deferred income taxes 597 593
---------------- ----------------
26,091 32,065
PROPERTY AND EQUIPMENT - net 5,787 7,047
INTANGIBLES - net 54,036 69,313
DEFERRED INCOME TAXES 405 397
OTHER ASSETS 1,832 1,997
---------------- ----------------
$ 88,151 $ 110,819
================ ================
LIABILITIES
CURRENT
Accounts payable trade $ 1,759 928
Accrued liabilities 9,196 11,057
Income taxes payable 2,968 727
Current portion of long-term debt 740 525
---------------- ----------------
14,663 13,237
LONG-TERM DEBT 32,388 54,794
----------------
----------------
47,051 68,031
---------------- ----------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock; $0.01 par value, 10,000,000
shares authorized; none outstanding - -
Common stock; $0.01 par value, 50,000,000 shares
authorized; 7,337,505 and 7,411,623 shares outstanding 73 74
Additional paid-in capital 40,967 41,646
Retained earnings 250 2,257
Unrealized foreign currency translation adjustment (190) (1,189)
---------------- ----------------
41,100 42,788
---------------- ----------------
$ 88,151 $ 110,819
================ ================
</TABLE>
See accompanying notes to the condensed consolidated financial statements
2
<PAGE> 4
DYNAMEX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
January 31, January 31,
--------------------------- --------------------------
1997 1998 1997 1998
------------ ----------- ---------- -----------
<S> <C> <C> <C> <C>
SALES $ 29,946 $ 48,712 $ 56,846 $ 95,262
COST OF SALES 20,106 32,623 38,099 64,137
------------ ----------- ---------- -----------
GROSS PROFIT 9,840 16,089 18,747 31,125
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 7,638 11,773 14,564 22,887
DEPRECIATION AND AMORTIZATION 834 1,453 1,517 2,857
------------ ----------- ---------- -----------
OPERATING INCOME 1,368 2,863 2,666 5,381
INTEREST EXPENSE 236 1,071 508 1,899
------------ ----------- ---------- -----------
INCOME BEFORE TAXES 1,132 1,792 2,158 3,482
INCOME TAXES 453 753 861 1,475
------------ ----------- ---------- -----------
INCOME BEFORE EXTRAORDINARY ITEM 679 1,039 1,297 2,007
EXTRAORDINARY LOSS ON EARLY
RETIREMENT OF DEBT (net of income
tax benefit of $222) - - (335) -
------------ ----------- ---------- -----------
NET INCOME $ 679 $ 1,039 $ 962 $ 2,007
============ =========== ========== ===========
EARNINGS PER COMMON SHARE - BASIC:
Income before extraordinary item $ 0.10 $ 0.14 $ 0.20 $ 0.27
Extraordinary loss - - (0.05) -
------------ ----------- ---------- -----------
Net income $ 0.10 $ 0.14 $ 0.15 $ 0.27
============ =========== ========== ===========
EARNINGS PER COMMON SHARE - ASSUMING DILUTION:
Income before extraordinary item
$ 0.10 $ 0.14 $ 0.20 $ 0.27
Extraordinary loss - - (0.05) -
------------ ----------- ---------- -----------
Net income $ 0.10 $ 0.14 $ 0.15 $ 0.27
============ =========== ========== ===========
WEIGHTED AVERAGE SHARES:
Common shares outstanding 6,759 7,412 6,223 7,387
Adjusted common shares - assuming exercise
of stock options 6,947 7,616 6,443 7,558
</TABLE>
See accompanying notes to the condensed consolidated financial statements
3
<PAGE> 5
DYNAMEX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
January 31,
-----------------------------------
1997 1998
------------- -------------
OPERATING ACTIVITIES
<S> <C> <C>
Net income $ 962 2,007 $
Adjustment to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 1,517 2,857
Extraordinary loss on early retirement of debt 558 -
Unrealized foreign currency adjustment 180 (999)
Changes in current assets and current liabilities:
Accounts receivable (1,780) (1,650)
Prepaids and other assets (361) 99
Accounts payable and accrued liabilities 1,770 (2,828)
------------- -------------
Net cash provided by (used in) operating activities 2,846 (514)
------------- -------------
INVESTING ACTIVITIES
Payments for acquisitions (14,129) (18,963)
Purchase of property and equipment (759) (1,857)
------------- -------------
Net cash used in financing activities (14,888) (20,820)
------------- -------------
FINANCING ACTIVITIES
Principal payment on long-term debt (8,051) -
Net borrowing under line of credit - 22,004
Net proceeds from sale of common stock 21,148 -
Other assets, deferred offering expenses and intangibles (350) (513)
------------- -------------
Net cash provided by financing activities 12,747 21,491
------------- -------------
NET INCREASE IN CASH 705 157
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 894 1,326
============= =============
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,599 1,483
============= =============
SUPPLEMENTAL DISCLOSURE ON NON-CASH INFORMATION
Cash paid for interest $ 559 1,636
============= =============
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES
In conjunction with the acquisitions described, liabilities were assumed as
follows:
Fair value of assets acquired $ 18,401 20,809
Cash paid (14,129) (18,963)
-------------
=============
Liabilities assumed and incurred $ 4,272 1,846
============= =============
</TABLE>
See accompanying notes to the condensed consolidated financial statements
4
<PAGE> 6
DYNAMEX INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
Dynamex Inc. (the "Company") provides same-day delivery and logistics
services in the United States and Canada. The Company's primary services are (i)
same-day, on-demand delivery, (ii) scheduled distribution and (iii) fleet
management.
The financial statements of the Company include the accounts of the Company
and its wholly-owned subsidiaries: Dynamex Operations East, Inc., Dynamex
Operations West, Inc., Dynamex Canada Inc., Road Runner Transportation, Inc. and
New York Document Exchange Corporation. All significant intercompany balances
and transactions are eliminated on consolidation. The accounts of Dynamex Canada
Inc. are translated into United States dollars with the Canadian dollar as the
functional currency.
The accompanying interim financial statements are unaudited. Certain
information and disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been condensed
or omitted, although the Company believes the disclosures included herein are
adequate to make the information presented not misleading. These interim
financial statements should be read in conjunction with the Company's financial
statements for the fiscal year ended July 31, 1997.
The accompanying interim financial statements contain all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the Company's financial position at January 31, 1998, and the
results of its operations and its cash flows for the three and six month periods
ended January 31, 1998 and 1997. The results of the interim periods presented
are not necessarily indicative of results to be expected for the full fiscal
year.
2. ACQUISITIONS
Through three separate transactions during the six months ended January 31,
1998, the Company acquired the same-day delivery business of companies operating
in Hartford, Connecticut, Boston, Massachusetts, Atlanta, Georgia and New York,
New York for total consideration of approximately $19.0 million in cash and
74,118 shares of common stock.
In March 1998, the Company completed the acquisition of a same-day delivery
company in Memphis, Tennessee for total consideration of approximately $1.6
million in cash.
3. EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128 ("SFAS No. 128"), "Earnings Per
Share," which requires presentation of basic and diluted earnings per share.
Basic earnings per share is computed by dividing income available to common
shareholders by the weighted average number of common shares outstanding for the
reporting period. Diluted earnings per share reflects the potential dilution
that could occur if securities or other contracts to issue common stock were
exercised or converted into common stock. As required, the Company adopted the
provisions of SFAS No. 128 in the quarter ended January 31, 1998. All prior
period weighted average and per share information has been restated in
accordance with SFAS No. 128. Outstanding stock options issued by the Company
represent the only dilutive effect reflected in diluted weighted average shares.
5
<PAGE> 7
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 Operations constitute forward-looking statements.
Certain factors which may cause actual results to vary materially from these
forward-looking statements accompany such statements, appear elsewhere in this
report, and are contained in the Company's Annual Report on Form 10-K for the
fiscal year ended July 31, 1997.
GENERAL
The Company is a leading provider of same-day delivery and logistics
services in the U.S. and Canada. Through internal growth and acquisitions, the
Company has built the only national network of same-day delivery and logistics
systems in Canada and has established operations in 20 U.S. metropolitan areas.
The Company completed its initial public offering ("IPO") in August 1996 and
concurrently completed the acquisition of five same-day transportation
companies. Subsequent to the IPO and through January 31, 1998, the Company
completed 14 acquisitions at various dates. Three of these acquisitions were
consummated during the six months ended January 31, 1998. All of these
acquisitions have been accounted for using the purchase method of accounting.
Accordingly, the results of the acquired operations are included in the
Company's consolidated results of operations from the date of acquisition. As a
result of the effect of these various acquisitions, the historical operating
results of the Company for a given period are not necessarily comparable to
prior or subsequent periods.
A significant portion of the Company's revenues are generated in Canada.
For the three and six month periods ended January 31, 1998, Canadian revenues
accounted for approximately 38% and 39%, respectively, of total consolidated
revenues. For the three and six month periods ended January 31, 1997, Canadian
revenues accounted for 57% and 58%, respectively, of total consolidated
revenues. The increase in the proportion of revenues generated in the United
States is a result of the majority of the Company's acquisitions over the last
year taking place in the United States. Before consideration of corporate costs,
the majority of which are incurred in the United States, the cost structure of
the Company's operations in the United States and in Canada are essentially the
same. Therefore, operating profit, expressed as a percentage of sales, generated
in each country has not been materially different.
The conversion rate between the Canadian dollar and the U.S. dollar has
declined significantly during fiscal 1998 as compared to the same periods in
1997. As the Canadian dollar is the functional currency for the Company's
Canadian operations, this decline has had a negative effect on the Company's
reported revenues. The effect of this decline on the Company's net income for
the three months ended January 31, 1998 has not been material, although there
can be no assurance that fluctuations in such currency exchange rate will not in
the future have material adverse effect on the Company's business, financial
condition or results of operations.
6
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated certain items from
the Company's consolidated statements of operations expressed as a percentage of
sales:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
January 31, January 31,
---------------------------- ----------------------------
1997 1998 1997 1998
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 67.1 67.0 67.0 67.3
----------- ----------- ----------- ------------
Gross profit 32.9 33.0 33.0 32.7
Selling, general and
administrative expenses 25.5 24.1 25.6 24.0
Depreciation and amortization 2.8 3.0 2.7 3.0
----------- ----------- ------------
-----------
Operating income 4.6 5.9 4.7 5.7
Interest expense 0.8 2.2 0.9 2.0
----------- ----------- ----------- ------------
Income before taxes and extraordinary
item 3.8% 3.7% 3.8% 3.7%
=========== =========== =========== ============
</TABLE>
Three months ended January 31, 1998 compared to three months ended January 31,
1997.
Sales for the three months ended January 31, 1998 increased $18.8 million,
or 62.7%, to $48.7 million from $29.9 million for the three months ended January
31, 1997 due primarily to the acquisitions which occurred at various dates in
fiscal year 1997 and in the first half of fiscal year 1998, as well as increased
sales from the Company's existing operations. Due to a decline in the conversion
rate between the U.S. dollar and the Canadian dollar, the Company's reported
sales for the three months ended January 31, 1998 were approximately $1.1
million less than would have been reported for such period had the conversion
rate been the same as in the three months ended January 31, 1997.
Cost of sales for the three months ended January 31, 1998 increased $12.5
million, or 62.3%, to $32.6 million from $20.1 million for the three months
ended January 31, 1997 reflecting the acquisitions and increased sales from
existing operations described above. As a percentage of sales, such amounts
remained relatively consistent at 67.0% for the three months ended January 31,
1998 as compared to 67.1% for the three months ended January 31, 1997.
7
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Selling, general and administrative expenses for the three months
ended January 31, 1998 increased $4.1 million, or 54.1%, to $11.8 million from
$7.6 million for the three months ended January 31, 1997, primarily reflecting
the expenses of the acquired operations and increased spending for marketing,
technology and administrative support. As a percentage of sales, selling,
general and administrative expenses decreased to 24.1% from 25.5% which
reflects the spreading of certain fixed costs over a larger revenue base as
well as the elimination of other costs through the consolidation of
administrative and support functions in certain branches, and the generally
lower administrative costs required for outsourcing and scheduled distribution
services.
Depreciation and amortization for the three months ended January 31,
1998 increased $619,000, or 74.2%, to $1.5 million from $834,000 for the three
months ended January 31, 1997, and as a percentage of sales, to 3.0% from 2.8%.
These increases result from depreciation and amortization of assets acquired
with the acquisitions discussed above, including intangible assets such as
goodwill.
Interest expense for the three months ended January 31, 1998 increased
$835,000, or 353.8%, to $1.1 million from $236,000 for the three months ended
January 31, 1997 as a result of the additional borrowings required to finance
the acquisitions.
Six months ended January 31, 1998 compared to six months ended January 31,
1997.
Sales for the six months ended January 31, 1998 increased $38.4
million, or 67.6%, to $95.3 million from $56.9 million for the six months ended
January 31, 1997 due primarily to the acquisitions which occurred at various
dates in fiscal year 1997 and in the first quarter of fiscal year 1998, as well
as increased sales from the Company's existing operations. Due to a decline in
the conversion rate between the U.S. dollar and the Canadian dollar, the
Company's reported sales for the six months ended January 31, 1998 were
approximately $1.4 million less than would have been reported for such period
had the conversion rate been the same as in the six months ended January 31,
1997.
Cost of sales for the six months ended January 31, 1998 increased
$26.0 million, or 68.3%, to $64.1 million from $38.1 million for the six months
ended January 31, 1997 due primarily to the acquisitions and increased sales
volumes from existing operations as described above. As a percentage of
sales, such costs increased slightly to 67.3% for the six months ended January
31, 1998 from 67.0% for the six months ended January 31, 1997. This increase
reflects the generally lower gross profit associated with certain services,
specifically outsourcing or fleet management services and scheduled
distribution services, which comprise an increased proportion of the Company's
business.
Selling, general and administrative expenses for the six months ended
January 31, 1998 increased $8.3 million, or 57.1%, to $22.9 million from $14.6
million for the six months ended January 31, 1997, primarily reflecting the
expenses of the acquired operations and increased spending for marketing,
technology and administrative support. As a percentage of sales, selling,
general and administrative expenses decreased to 24.0% from 25.6% which
reflects the spreading of certain fixed costs over a larger revenue base, the
elimination of certain costs through the consolidation of administrative and
support functions in certain branches as well as the generally lower
administrative costs required for the outsourcing and scheduled distribution
services mentioned above.
8
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Depreciation and amortization for the six months ended January 31,
1998 increased $1.4 million, or 88.3%, to $2.9 million from $1.5 million for
the six months ended January 31, 1997, and, as a percentage of sales, to 3.0%
from 2.7%. These increases primarily result from depreciation and amortization
of assets acquired with the acquisitions previously discussed.
Interest expense for the six months ended January 31, 1998 increased
$1.4 million, or 273.8%, to $1.9 million from $508,000 for the six months ended
January 31, 1997 as a result of the additional borrowings required to finance
the acquisitions.
LIQUIDITY AND CAPITAL RESOURCES
The Company's capital needs arise primarily from its acquisition
program and, to a lesser extent, capital expenditures and working capital
needs. In the six months ended January 31, 1998, three acquisitions were
completed for total consideration of approximately $19.6 million. In addition,
capital expenditures for the six months ended January 31, 1998 were
approximately $1.9 million. Cash flow used in operations for the six months
ended January 31, 1998 was approximately $500,000, reflecting working capital
demands which exceeded internally generated cash flow.
Of the total consideration of approximately $19.6 million for the
acquisitions completed during the six months ended January 31, 1998,
approximately $600,000 was paid by the issuance of 74,118 shares of the
Company's Common Stock to the sellers of the acquired businesses and
approximately $19.0 million of the consideration was paid in cash. The cash
portion of the consideration paid for the acquisitions was provided by proceeds
from the Company's revolving credit facility.
In connection with certain acquisitions consummated after the IPO,
the sellers may be paid additional consideration if the acquired operations
meet certain performance goals related to the earnings before interest, taxes,
depreciation and amortization of the businesses. The maximum amount of
additional consideration payable, if all performance goals are met, is
approximately $11.0 million, of which $10.1 million is payable in cash and
$900,000 is payable in shares of the Company's Common Stock. Payments of such
additional consideration are to be made at specified dates through October
2000. Management intends to fund the cash portion of this additional
consideration with internally generated cash flow and, to the extent necessary,
with borrowings under the credit facility.
In August 1997, the Company amended its revolving credit facility to
provide for total borrowings of up to $75.0 million, of which approximately
$54.0 million was outstanding as of January 31, 1998. Any amounts outstanding
under the facility are due August 31, 2000. Interest under the facility is
payable quarterly at prime, or certain other interest rate elections based on
LIBOR plus an applicable margin ranging from 1.25% to 2.00%. The applicable
margin can vary from quarter to quarter based on the ratio of the Company's
funded debt to cash flow, each as defined in the credit facility. At January
31, 1998, the weighted average interest rate for all outstanding borrowings was
approximately 7.64%.
9
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
The Company has entered into interest rate protection arrangements
with its agent bank on a portion of the borrowings under the credit facility.
The interest rate on $15.0 million of outstanding debt has been fixed at 6.26%,
plus the applicable margin, and a collar of between 5.50% and 6.50%, plus the
applicable margin, has been placed on $9.0 million of outstanding debt. These
hedging arrangements mature on August 31, 2000. Amounts outstanding under the
credit facility are secured by all of the Company's U.S. assets and 65% of the
stock of its Canadian subsidiary. The credit facility also contains
restrictions on the payment of dividends, incurring additional debt, capital
expenditures and investments by the Company as well as requiring the Company to
maintain certain financial ratios. Generally, the Company must obtain the
lender's consent to consummate any acquisition.
The Company's EBITDA, defined as income excluding interest, taxes,
depreciation and amortization of goodwill and other intangible assets,
increased to approximately $8.2 million for the six months ended January 31,
1998 from approximately $4.2 million for the six months ended January 31, 1997.
Management has included EBITDA in its discussion herein as a measure of
liquidity because it believes that it is a widely accepted financial indicator
of a company's ability to service and/or incur indebtedness, maintain current
operating levels of fixed assets and acquire additional operations and
businesses. EBITDA should not be considered as a substitute for statement of
operations or cash flow data from the Company's financial statements, which
have been prepared in accordance with generally accepted accounting principles.
In addition, the Company's working capital as of January 31, 1998 increased to
approximately $18.8 million from approximately $11.4 million as of July 31,
1997. These increases in liquidity are due in part to the increased level of
operations arising from acquired businesses and internal sales growth, as well
as from improved profitability in the Company's existing operations.
Management expects the Company's capital expenditures, consisting
primarily of improvements to facilities and technology, to increase somewhat as
its operations continue to expand. However, the amount of these capital
expenditures is expected to remain relatively minor compared to the capital
requirements related to the Company's acquisition program. The Company does not
have significant capital expenditure requirements to replace or expand the
number of vehicles used in its operations because substantially all of its
drivers are owner-operators who provide their own vehicles.
Management expects that the Company's capital requirements, other
than to fund acquisitions, will be met from internally generated cash flow.
Management expects to continue to meet the capital requirements of its
acquisition program from the following sources: (i) internally generated cash
flow, (ii) proceeds from borrowings under its revolving credit facility and
(iii) the issuance of its Common Stock to the sellers of acquired businesses.
However, the portion of future acquisition costs which will be funded with such
Common Stock is dependent upon the sellers' willingness to accept the stock as
partial consideration and the Company's willingness to issue such stock based
on the market price of the stock.
The extent to which these existing sources of capital will be
adequate to fund the Company's acquisition program is dependent upon the number
of economically and strategically attractive acquisitions available to the
Company, the size of the acquisitions and the amount of internally generated
cash flow. Should these factors be such that currently available capital
resources are inadequate, the Company may seek
10
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
additional sources of capital. Such sources could include additional bank
borrowings or the issuance of debt or equity
securities. Should these additional sources of capital not be available or be
available only on terms which the Company
does not find attractive, the Company may be forced to reduce its acquisition
activity. This in turn could negatively
affect the Company's ability to implement its business strategy in the manner,
or in the time frame, anticipated by
management.
YEAR 2000 COMPLIANCE
Currently, there is significant uncertainty among software users
regarding the impact of the year 2000 on installed software. Other than the
Company's propriety software system that is currently used in its
Minneapolis/St. Paul operations, the Company uses software that has been
licensed from third-party vendors. The Company is in the process of
determining the extent to which its licensed and proprietary software is year
2000 compliant and the cost of obtaining such compliance. The Company does not
believe that its cost of addressing the year 2000 issue or the effects of any
year 2000 non-compliance in any proprietary or licensed software will result in
any material adverse impact on the Company's business or financial condition.
INFLATION
The Company does not believe that inflation has had a material effect
on the Company's results of operations nor does it believe it will do so in the
foreseeable future.
11
<PAGE> 13
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
--------------------------------
(a) Exhibits:
11.1 Calculation of Net Income Per Common Share
27.1 Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were Filed during the quarter ended
January 31, 1998.
12
<PAGE> 14
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DYNAMEX INC.
Dated: March 6, 1998 by /s/ Richard K. McClelland
-------------------------------------
Richard K. McClelland
President, Chief Executive Officer
and Chairman of the Board
(Principal Executive Officer)
Dated: March 6, 1998 by /s/ Robert P. Capps
-------------------------------------
Robert P. Capps
Vice President-Chief Financial Officer
(Principal Financial Officer)
13
<PAGE> 15
EXHIBIT INDEX
EXHIBITS
--------
11.1 Calculation of Net Income Per Common Share
27.1 Financial Data
14
<PAGE> 1
EXHIBIT 11.1
DYNAMEX INC. AND SUBSIDIARIES
CALCULATION OF NET INCOME (LOSS) PER COMMON SHARE
(In Thousands except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
January 31, January 31,
1997 1998 1997 1998
<S> <C> <C> <C> <C> <C>
Net Income $ 679 $ 1,039 $ 962 $ 2,007
Weighted Average Common shares
Outstanding 6,759 7,412 6,223 7,387
Common Share Equivalents Related to
Options and Warrants 188 204 220 171
Common Shares and Common Share
Equivalents 6,947 7,616 6,443 7,558
Common Stock Price used under Treasury
Stock Method $ 10.17 $ 10.56 $ 9.87 $ 9.50
Net Income per Common Share:
Basic $ 0.10 $ 0.14 $ 0.15 $ 0.27
Diluted
$ 0.10 $ 0.14 $ 0.15 $ 0.27
</TABLE>
15
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<PERIOD-END> JAN-31-1998 JAN-31-1997 JUL-31-1997
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0 0 0
0 0 0
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</TABLE>
