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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended July 31, 1998
OR
[ ] 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.)
1431 Greenway Drive 75038
Suite 345 (Zip Code)
Irving, Texas
(Address of principal executive offices)
Registrant's telephone number, including area code:
(972) 756-8180
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates
of the registrant on November 20, 1998 was approximately $43,016,990.
The number of shares of the registrant's common stock, $.01 par value,
outstanding as of November 20, 1998 was 10,069,490 shares.
DOCUMENTS INCORPORATED BY REFERENCE
None
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
A brief description of each director and executive officer of Dynamex
Inc. (the "Company") is provided below. Directors hold office until the next
annual meeting of the stockholders or until their successors are elected and
qualified. All officers serve at the discretion of the Board of Directors.
Richard K. McClelland, 46, became the President, Chief Executive
Officer and a director of the Company in May 1995 upon the closing of the
Company's acquisition of Dynamex Express (the ground courier division of Air
Canada), where he also served as President since 1988. He was elected as
Chairman of the Board of the Company in February 1996. Prior to joining Dynamex
Express in 1986, Mr. McClelland held a number of advisory and management
positions with the Irving Group, Purolator Courier Ltd. and Sunbury Transport
Ltd., where he was engaged in the domestic and international same-day air,
overnight air, and trucking businesses.
James M. Hoak, Jr., 54, has served as a director of the Company since
February 1996. Mr. Hoak has served as Chairman and a principal of Hoak Capital
Corporation (a private equity investment firm) since September 1991. He has also
served as Chairman of HBW Holdings, Inc. (an investment bank) since July 1996.
HBW Holdings, Inc. is the parent corporation of Hoak Breedlove Wesneski & Co.,
one of the underwriters in the initial public offering and follow-on offering of
the Company's common stock. Mr. Hoak served as Chairman of Heritage Media
Corporation (a broadcasting and marketing services firm) from its inception in
August 1987 to its sale in August 1997. From February 1991 to January 1995, he
served as Chairman and Chief Executive Officer of Crown Media, Inc. (a cable
television company). From 1971 to 1987, he served as President and Chief
Executive Officer of Heritage Communications, Inc. (a diversified communications
company) and as its Chairman and Chief Executive Officer from August 1987 to
December 1990. Mr. Hoak is a director of MidAmerican Energy Company, PanAmSat
Corporation, Pier 1 Imports, Inc. and Texas Industries, Inc. See Item 13. -
Certain relationships and related transactions.
Stephen P. Smiley, 49, has served as a director of the Company since
1993 and was a Vice President of the Company from December 1995 through February
1996. Mr. Smiley was President of Hoak Capital Corporation from 1991 through
February 1996. Mr. Smiley joined Hunt Financial Corporation (a private
investment company) as Executive Vice President in February 1996, and was
appointed President in January 1997. Mr. Smiley is also a director of Ergo
Science Corporation (a biopharmaceutical company).
Wayne Kern, 65, has served as a director of the Company since February
1996. Mr. Kern has served as Senior Vice President and Secretary of Heritage
Media Corporation since 1987 through August 1997. From 1991 to 1995, Mr. Kern
also served as Executive Vice President of Crown Media, Inc. From 1979 to 1991,
Mr. Kern served as the Executive or Senior Vice President, General Counsel and
Secretary of Heritage Communications, Inc. See Item 13. - Certain relationships
and related transactions.
Brian J. Hughes, 37, has served as a director of the Company since May
1995. Mr. Hughes has served as the Vice President - Investments of Guidant
Mutual Insurance Company since September 1992. From 1986 to 1992, Mr. Hughes
served as Assistant Vice President - Investments at Boatmen's National Bank.
Kenneth H. Bishop, 61, has served as a director of the Company since
August 1996. From 1974 to August 1996, Mr. Bishop was President and General
Manager of Zipper Transportation Services, Ltd. and a related company (together
"Zipper") which operated a same-day delivery business in Winnipeg, Manitoba. The
Company acquired Zipper in August 1996. See Item 13. - Certain relationships and
related transactions.
E. T. Whalen, 65, has served as a director of the Company since August
1996. Mr. Whalen is currently a consultant to Gateway Freight Services, an
entity providing freight forwarding services to major international airlines.
From 1965 until January 1996, Mr. Whalen was employed by Japan Airlines in
various management positions, including Staff Vice President-Cargo from October
1986.
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Robert P. Capps, 44, joined the Company in February 1996 as Vice
President, Treasurer and Secretary. Mr. Capps was elected Chief Financial
Officer in May 1997 and Executive Vice President in June 1998. Prior to joining
the Company, he served in various financial management capacities with Hadson
Corporation (an energy company) from February 1986 through June 1995 and was
Executive Vice President and Chief Financial Officer from May 1991 through June
1995. Mr. Capps is a certified public accountant.
John J. Wellik, 37, became the Vice President - Controller and
Assistant Secretary of the Company in December 1997. Prior to joining the
Company, Mr. Wellik served as the Assistant Controller for the American Pad &
Paper Company (a paper products manufacturer) since June 1997. From January 1989
through February 1997, he served in various accounting management positions,
including Director of Financial Accounting, for Avnet, Inc. (an electronics
distributor) and Hall-Mark Electronics Corporation (an electronics distributor),
which was acquired by Avnet, Inc. in July 1993. Mr. Wellik is a certified public
accountant.
James R. Aitken, 38, was elected as the Vice President - Eastern Canada
in September 1997. He joined the Company in May 1995 in conjunction with the
Company's acquisition of Dynamex Express, was appointed General Manager -
Eastern Canada in February 1996 and served in such capacity until September
1997. Prior to joining the Company, Mr. Aitken was the Director of Sales and
Marketing with Dynamex Express, where he had been employed since 1988. During
his employment with Dynamex Express, Mr. Aitken worked in sales and marketing,
regional and branch management and client development. Mr. Aitken has over 18
years of experience in the courier industry.
Ralph Embree, 48, was elected as the Vice President - Eastern U.S. in
September 1997. He joined the Company in December 1995 in conjunction with the
Company's acquisition of Mayne Nickless and was appointed as the General Manager
- - Eastern U.S. in February 1996. Prior to joining the Company, Mr. Embree held a
variety of operations, sales and management positions with Mayne Nickless where
he was employed for seven years. Mr. Embree has over 17 years of experience in
the courier industry.
James C. Isaacson, was elected as the Vice President - Central U.S. in
September 1997. He joined the Company in May 1997 in conjunction with the
Company's acquisition of Road Runner Transportation, Inc. Prior to joining the
Company, Mr. Isaacson had been the principal stockholder and executive officer
of Road Runner since 1978. Mr. Isaacson died on September 26, 1998. See Item 13
- - Certain relationships and related transactions.
Robert Dobrient, 37, was elected as the Vice President - Marketing and
Assistant Secretary in September 1997. He joined the Company as an operations
manager in January 1997 in conjunction with the Company's acquisition of Max
America Holdings, Inc., a logistics services business in Dallas, Texas. Prior to
joining the Company, Mr. Dobrient was a principal stockholder and executive
officer of Max America since 1985. Mr. Dobrient has over 12 years of experience
in the courier industry.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors
and executive officers, and persons who own more than 10% of the Company's
common stock, are required to report their initial ownership of the Company's
common stock and any subsequent changes in that ownership to the Securities and
Exchange Commission. Specific due dates have been established for these reports,
and the Company is required to disclose in this report any failure to file by
these dates. Based solely upon a review of Forms 3, 4 and 5 furnished to the
Company, the Company believes that all of its directors, officers and applicable
stockholders timely filed these reports.
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ITEM 11. EXECUTIVE COMPENSATION
The following summary compensation table sets forth the total annual
compensation paid or accrued by the Company to or for the account of the Chief
Executive Officer and the other top four most highly compensated executive
officers of the Company (collectively the "Named Executives") whose total salary
and bonus for the fiscal year ended July 31, 1998 exceeded $100,000:
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Awards
------------------- ------
Securities
Underlying
Name and Principal Position Year Salary($) Bonus($) Options(#)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Richard K. McClelland
President and Chief Executive Officer 1998 220,000 19,890 65,000
1997 200,000 120,000 99,000
1996 194,467 50,790 --
Robert P. Capps(1)
Executive Vice President and
Chief Financial Officer 1998 161,349 -- 35,000
1997 141,950 54,250 46,000
Robert Dobrient(2)
Vice President 1998 111,346 -- --
Ralph Embree(3)
Vice President 1998 121,875 12,000 6,000
James C. Isaacson(4)
Vice President 1998 129,350 -- --
</TABLE>
(1) Mr. Capps was initially employed as an executive officer of the Company
in February 1996.
(2) Robert Dobrient was initially elected as an executive officer of the
Company in September 1997.
(3) Ralph Embree was initially elected as an executive officer of the
Company in September 1997.
(4) James C. Isaacson was initially elected as an executive officer of the
Company in September 1997.
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The following table sets forth information regarding the grant of stock
options under the Company's Amended and Restated 1996 Stock Option Plan ("Option
Plan") during fiscal 1998 to the Named Executives:
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
Individual Grants
-----------------
Potential
% of Realized Value at
Number of Total Assumed Annual
Securities Options/ Rates of Stock Price
Underlying SARs Appreciation
options/ Granted to Exercise for Option Term
SARs Employees or Base --------------------
Granted in Fiscal Price Expiration
Name (#) Year ($/Share) Date 5%($) 10%($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Richard K. McClelland 15,000 7.5% $ 10.375 24-Oct-07 $ 98,000 $ 248,000
50,000 24.9% $ 11.875 3-Jun-08 373,000 946,000
Robert P. Capps 10,000 5.0% $ 10.375 24-Oct-07 65,000 165,000
25,000 12.5% $ 11.875 3-Jun-08 187,000 473,000
Robert Dobrient -- -- -- -- -- --
Ralph Embree 6,000 3.0% $ 10.375 24-Oct-07 39,000 99,000
James C. Isaacson -- -- -- -- -- --
</TABLE>
The following table sets forth information with respect to shares
exercised during the fiscal year 1998 by the Named Executives and information
with respect to options to purchase shares of the Company's common stock granted
under the Option Plan to the Named Executives and held by them at July 31, 1998:
Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
FY-End FY-End
Shares Acquired Exercisable/ Exercisable/
Name on Exercise Value Realized Unexercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Richard K. McClelland 48,000 $ 377,040 52,800/166,200 $308,550/$453,575
Robert P. Capps -- -- 9,200/71,800 32,200/140,050
Robert Dobrient -- -- -/- -/-
Ralph Embree -- -- 5,700/28,800 19,950/86,550
James C. Isaacson -- -- -/- -/-
</TABLE>
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OPERATIONS AND COMPENSATION OF THE BOARD OF DIRECTORS
There were 5 meetings of the Board of Directors during fiscal year
1998. No director attended fewer than 75% of the meetings of the Board (and any
committees thereof) that he was required to attend.
Directors who are employees of the Company do not receive additional
compensation for serving as directors. Each director who is not an employee of
the Company will receive an annual fee of $6,000 as compensation for his or her
services as a member of the Board of Directors. Non-employee directors will
receive an additional fee of $500 for each meeting of the Board of Directors
attended in person by such director and $250 for each telephonic meeting in
which such director participates. Non-employee directors who serve on a
committee of the Board of Directors will receive $500 for each committee meeting
attended in person and $250 for each telephonic committee meeting in which such
director participates. All directors of the Company are reimbursed for
out-of-pocket expenses incurred in attending meetings of the Board of Directors
or committees thereof, and for other expenses incurred in their capacities as
directors of the Company.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company has entered into an employment agreement with Mr.
McClelland which provides for the payment of a base salary in the annual amount
of $220,000, participation in an executive bonus plan, an auto allowance of
Canadian $900 per month and participation in other employee benefit plans. The
agreement also provides that upon Mr. McClelland's exercise of certain stock
options to purchase 48,000 shares of common stock, the Company shall pay Mr.
McClelland a bonus equal to the exercise price multiplied by the number of
shares to be purchased by virtue of such exercise. Unless terminated earlier,
the employment agreement shall continue until May 31, 2000, upon which date such
agreement will be automatically extended for successive one-year renewal terms
unless notice is given upon the terms provided in such agreement. Additionally,
upon a sale or transfer of substantially all of the assets of the Company or
certain other events that constitute a change of control of the Company,
including the acquisition by a stockholder, other than certain named
stockholders, of securities representing 15% of the votes that may be cast for
director elections, the Company shall continue to pay Mr. McClelland the
compensation set forth in such agreement for the greater of two years from the
date of such change of control or the remainder of the agreement term. During
the term of the employment agreement and pursuant to such agreement, Mr.
McClelland shall be a member of the Board of Directors of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No executive officer of the Company serves as a member of the Board of
Directors or Compensation Committee of any entity, which has one or more
executive officers serving as a member of the Company's Board of Directors or
Compensation Committee. See Item 13. - Certain relationships and related
transactions, for certain fiscal 1998 transactions involving members of the
Compensation Committee.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's common stock as of November 20, 1998 for
(i) each person known by the Company to own beneficially more than 5% of the
common stock, (ii) each nominee director (all of whom are nominees), (iii) each
Named Executive and (iii) all directors and executive officers of the Company as
a group. Except pursuant to applicable community property laws and except as
otherwise indicated, each stockholder identified in the table possesses sole
voting and investment power with respect to its or his shares.
<TABLE>
<CAPTION>
Shares Beneficially Owned
Name of Beneficial Owner Number(1) Percent
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Richard K. McClelland 55,800 *
James M. Hoak, Jr.(2) 1,333,442 13.24%
Stephen P. Smiley 7,160 *
Wayne Kern 11,460 *
Brian J. Hughes(3) -- *
Kenneth H. Bishop 4,422 *
E.T. Whalen 4,000 *
Robert P. Capps 11,200 *
Robert Dobrient -- *
Ralph Embree 6,900 *
James C. Isaacson -- *
All directors and executive officers as a group 1,447,484 14.37%
Other 5% stockholders:
William Blair & Company, L.L.C.(4) 614,954 6.11%
222 W. Adams Street
Chicago, IL 60606
</TABLE>
* Indicates less than 1%
(1) Includes shares issuable upon the exercise of stock options outstanding
and fully vested as of November 20, 1998.
(2) Mr. Hoak's address is One Galleria Tower, Suite 1050, 13355 Noel Road,
Dallas, Texas 75240. Excludes an aggregate of 26,572 shares owned by
Mr. Hoak's wife and children, as to which shares Mr. Hoak disclaims
beneficial ownership.
(3) Excludes 254,000 shares beneficially owned by Guidant Mutual Insurance
Company, which employs Mr. Hughes as Vice President - Investments. Mr.
Hughes disclaims beneficial ownership of such shares.
(4) As of most recent information provided by William Blair & Company,
L.L.C. (March 31, 1998). Includes 495,720 shares with respect to which
William Blair & Company, L.L.C. has sole investment power in its
capacity as an investment adviser and an aggregate of 119,234 shares
that are owned directly by William Blair & Company, L.L.C. and certain
of its members.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT AND OTHERS
During the fiscal year ended July 31, 1998, the Company paid $147,000
to James C. Isaacson, a Vice President of the Company, for rent on certain
properties owned by Mr. Isaacson. Rent payments for these properties are $11,300
per month.
CERTAIN BUSINESS RELATIONSHIPS
During the fiscal year ended July 31, 1998, the Company paid Hoak
Breedlove Wesneski & Co. usual and customary fees related to investment banking
services rendered in such firm's capacity as a co-manager of the
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follow-on public offering of the Company's common stock in the aggregate of
$458,000. Mr. Hoak is the Chairman and a director of Hoak Breedlove Wesneski &
Co. In addition, Mr. Hoak is Chairman and a principal stockholder of Hoak
Breedlove Wesneski & Co.'s parent corporation and Wayne Kern, a director of the
Company, is the Secretary of such parent corporation.
During the fiscal year ended July 31, 1998, the Company paid $109,000
to a company affiliated with Kenneth Bishop, a director of the Company, for rent
on certain properties owned by such company. Rent payments for these properties
are $9,000 per month.
INDEBTEDNESS OF MANAGEMENT
The Company has loaned its Chief Executive Officer, Richard K.
McClelland, $204,000 in connection with the exercise of certain stock options at
the time of the follow-on public offering in May 1998. The principal amount of
this loan is due in eight quarterly installments of $25,500 plus accrued
interest which accrues on the aggregate unpaid amount at the prime rate
published by the Company's primary lenders. At November 20, 1998, the principal
balance outstanding was $178,500.
The Company believes that all of the transactions set forth above were
made on terms no less favorable to the Company than could have been obtained
from unaffiliated third parties. All future transactions, including loans,
between the Company and its officers, directors, principal stockholders and
affiliates, will be approved by a majority of the Board of Directors, including
a majority of the independent and disinterested outside directors, and have been
and will be on terms no less favorable to the Company than could be obtained
from unaffiliated third parties.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.,
A Delaware corporation
By: /s/ Robert P. Capps
-----------------------------------------
Robert P. Capps, Executive Vice President
Dated: November 30, 1998
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Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below be the following persons of the registrant and in the
capacities indicated on November 30, 1998.
Name Title
---- -----
/s/ Richard K. McClelland Chairman of the Board, Chief Executive
- ------------------------------- Officer, President and Director
Richard K. McClelland (Principal Executive Officer)
/s/ Robert P. Capps Executive Vice President, Chief Financial
- ------------------------------- Officer and Secretary
Robert P. Capps (Principal Financial Officer)
/s/ John J. Wellik Vice President, Controller and Assistant
- ------------------------------- Secretary
John J. Wellik (Principal Accounting Officer)
/s/ James M. Hoak Director
- -------------------------------
James M. Hoak
/s/ Wayne Kern Director
- -------------------------------
Wayne Kern
/s/ Stephen P. Smiley Director
- -------------------------------
Stephen P. Smiley
/s/ Brian J. Hughes Director
- -------------------------------
Brian J. Hughes
/s/ Kenneth H. Bishop Director
- -------------------------------
Kenneth H. Bishop
/s/ E. T. Whalen Director
- -------------------------------
E. T. Whalen
