<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 APRIL 30, 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)
<TABLE>
<S> <C>
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)
</TABLE>
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:
9,999,583 SHARES OF COMMON STOCK, $.01 PAR VALUE, OUTSTANDING AS OF
JUNE 5, 1998.
<PAGE> 2
DYNAMEX INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Condensed Consolidated Balance Sheets 2
April 30, 1998 (Unaudited) and July 31, 1997
Condensed Consolidated Statements of Operations (Unaudited) 3
Three and Nine Months ended April 30, 1998 and 1997
Condensed Consolidated Statements of Cash Flows (Unaudited) 4
Nine Months ended April 30, 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 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
</TABLE>
<PAGE> 3
DYNAMEX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands Except Per Share Data)
<TABLE>
<CAPTION>
April 30, July 31,
1998 1997
----------- -----------
(Unaudited)
ASSETS
<S> <C> <C>
CURRENT
Cash and cash equivalents $ 2,741 $ 1,326
Accounts receivable - net 27,984 20,867
Prepaid and other current assets 4,637 3,301
Deferred income taxes 594 597
----------- -----------
35,956 26,091
PROPERTY AND EQUIPMENT - net 7,873 5,787
INTANGIBLES - net 77,518 54,036
DEFERRED INCOME TAXES 399 405
OTHER ASSETS 2,191 1,832
----------- -----------
$ 123,937 $ 88,151
=========== ===========
LIABILITIES
CURRENT
Accounts payable trade $ 923 $ 1,759
Accrued liabilities 12,894 9,196
Income taxes payable 1,538 2,968
Current portion of long-term debt 521 740
----------- -----------
15,876 14,663
LONG-TERM DEBT 63,345 32,388
----------- -----------
79,221 47,051
----------- -----------
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; 7,411,623 and 7,337,505 shares outstanding 74 73
Additional paid-in capital 41,646 40,967
Retained earnings 3,899 250
Unrealized foreign currency translation adjustment (903) (190)
----------- -----------
44,716 41,100
----------- -----------
$ 123,937 $ 88,151
=========== ===========
</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 Nine Months Ended
April 30, April 30,
--------------------- ---------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
SALES $ 53,131 $ 34,155 $148,393 $ 91,001
COST OF SALES 34,905 22,501 99,042 60,600
-------- -------- -------- --------
GROSS PROFIT 18,226 11,654 49,351 30,401
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 12,691 8,365 35,578 22,930
DEPRECIATION AND AMORITIZATION 1,676 997 4,533 2,514
-------- -------- -------- --------
OPERATING INCOME 3,859 2,292 9,240 4,957
INTEREST EXPENSE 1,123 345 3,022 853
-------- -------- -------- --------
INCOME BEFORE TAXES 2,736 1,947 6,218 4,104
INCOME TAXES 1,094 779 2,569 1,639
-------- -------- -------- --------
INCOME BEFORE EXTRAORDINARY ITEM 1,642 1,168 3,649 2,465
EXTRAORDINARY LOSS ON EARLY
RETIREMENT OF DEBT (net of income
tax benefit of $222) -- -- -- (335)
-------- -------- -------- --------
NET INCOME $ 1,642 $ 1,168 $ 3,649 $ 2,130
======== ======== ======== ========
EARNINGS PER COMMON SHARE - BASIC:
Income before extraordinary item $ 0.22 $ 0.17 $ 0.49 $ 0.38
Extraordinary loss -- -- -- (0.05)
-------- -------- -------- --------
Net income $ 0.22 $ 0.17 $ 0.49 $ 0.33
======== ======== ======== ========
EARNINGS PER COMMON SHARE -
ASSUMING DILUTION:
Income before extraordinary item $ 0.22 $ 0.17 $ 0.48 $ 0.37
Extraordinary loss -- -- -- (0.05)
-------- -------- -------- --------
Net income $ 0.22 $ 0.17 $ 0.48 $ 0.32
======== ======== ======== ========
WEIGHTED AVERAGE SHARES:
Common shares outstanding 7,412 6,966 7,395 6,465
Adjusted common shares - assuming exercise
of stock options 7,629 7,075 7,590 6,652
</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>
Nine Months Ended
April 30,
--------------------------
1998 1997
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 3,649 $ 2,130
Adjustment to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 4,533 2,514
Extraordinary loss on early retirement of debt -- 557
Unrealized foreign currency adjustment (713) (360)
Changes in current assets and current liabilities:
Accounts receivable (3,719) (2,999)
Prepaids and other assets (102) (951)
Accounts payable and accrued liabilities (214) 1,746
---------- ----------
Net cash provided by operating activities 3,434 2,637
---------- ----------
INVESTING ACTIVITIES
Payments for acquisitions (28,540) (16,544)
Purchase of property and equipment (3,033) (1,377)
---------- ----------
Net cash used in financing activities (31,573) (17,921)
---------- ----------
FINANCING ACTIVITIES
Principal payment on long-term debt -- (5,498)
Net borrowing under line of credit 30,454 678
Net proceeds from sale of common stock -- 21,148
Other assets, deferred offering expenses and intangibles (900) (746)
---------- ----------
Net cash provided by financing activities 29,554 15,582
---------- ----------
NET INCREASE IN CASH 1,415 298
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,326 894
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,741 $ 1,192
========== ==========
SUPPLEMENTAL DISCLOSURE ON NON-CASH INFORMATION
Cash paid for interest $ 2,785 $ 898
========== ==========
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 $ 31,669 $ 21,771
Cash paid (28,540) (16,544)
---------- ----------
Liabilities assumed and incurred $ 3,129 $ 5,227
========== ==========
</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., New York Document Exchange Corporation and U.S.C. Management Systems, Inc.
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 April 30, 1998, and the
results of its operations and its cash flows for the three and nine month
periods ended April 30, 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
During the nine months ended April 30, 1998, the Company acquired eight
same-day delivery businesses operating in eight U.S. cities and one Canadian
city for total consideration of approximately $28.5 million in cash and 74,118
shares of common stock.
In May 1998, the Company completed the acquisition of a same-day
delivery business operating in one U.S. city for total consideration of
approximately $5.3 million in cash and 39,960 shares of common stock.
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
4. SUBSEQUENT EVENT
In May, 1998, the Company completed a public offering of 2,817,166
shares of Common stock at a price of $12.875 per share. Of the 2,817,166 shares
offered, 2,500,000 shares were sold by the Company and 317,166 shares were sold
by selling shareholders. Net proceeds to the Company were approximately $29.9
million and were used to reduce amounts outstanding under the Company's
revolving credit facility. Concurrent with the closing of the offering, the
Company's revolving credit facility was amended to (i) provide for total
borrowings of up to $115.0 million, (ii) extend the maturity date from August
31, 2000 to May 31, 2001 and (iii) increase the purchase price thresholds above
which the Company must obtain the primary lenders consent to consummate
acquisitions.
6
<PAGE> 8
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 United States 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 21
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 April 30,
1998, the Company completed 19 acquisitions at various dates. 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 nine month periods ended April 30, 1998, Canadian
revenues accounted for approximately 36% and 38%, respectively, of total
consolidated revenues. For the three and nine month periods ended April 30,
1997, Canadian revenues accounted for 51% and 56%, 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 is
very similar. Therefore, operating profit, expressed as a percentage of sales,
generated in each country is not 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 nine months ended April 30, 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.
7
<PAGE> 9
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 Nine Months Ended
April 30, April 30,
------------------ ------------------
1998 1997 1998 1997
------ ------ ------ ------
<S> <C> <C> <C> <C>
Sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 65.7 65.9 66.7 66.6
------ ------ ------ ------
Gross profit 34.3 34.1 33.3 33.4
Selling, general and
administrative expenses 23.9 24.5 24.0 25.2
Depreciation and amortization 3.2 2.9 3.1 2.8
------ ------ ------ ------
Operating income 7.2 6.7 6.2 5.4
Interest expense 2.1 1.0 2.0 0.9
------ ------ ------ ------
Income before taxes and extraordinary
item 5.1% 5.7% 4.2% 4.5%
====== ====== ====== ======
</TABLE>
Three months ended April 30, 1998 compared to three months ended April 30, 1997.
Sales for the three months ended April 30, 1998 increased $18.9
million, or 55.6%, to $53.1 million from $34.2 million for the three months
ended April 30, 1997 primarily due to the acquisitions which occurred at various
dates in fiscal year 1997 and in the nine months 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 April 30, 1998 were approximately
$494,000 less than would have been reported for such period had the conversion
rate been the same as in the three months ended April 30, 1997.
Cost of sales for the three months ended April 30, 1998 increased $12.4
million, or 55.1%, to $34.9 million from $22.5 million for the three months
ended April 30, 1997 primarily due to the acquisitions and increased sales from
existing operations. As a percentage of sales, such amounts remained relatively
consistent at 65.7% for the three months ended April 30, 1998 as compared to
65.9% for the three months ended April 30, 1997.
8
<PAGE> 10
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
April 30, 1998 increased $4.3 million, or 51.2%, to $12.7 million from $8.4
million for the three months ended April 30, 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 23.9% from 24.5% 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.
Depreciation and amortization for the three months ended April 30, 1998
increased $703,000, or 70.5%, to $1.7 million from $997,000 for the three months
ended April 30, 1997 and, as a percentage of sales, to 3.2% from 2.9%. 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 April 30, 1998 increased
$755,000, or 218.8%, to $1.1 million from $345,000 for the three months ended
April 30, 1997 as a result of the additional borrowings required to finance the
acquisitions.
Nine months ended April 30, 1998 compared to nine months ended April 30, 1997.
Sales for the nine months ended April 30, 1998 increased $57.4 million,
or 63.1%, to $148.4 million from $91.0 million for the nine months ended April
30, 1997 primarily due to the acquisitions which occurred at various dates in
fiscal year 1997 and in the first nine months 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 nine months ended April 30, 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 nine months ended April 30, 1997.
Cost of sales for the nine months ended April 30, 1998 increased $38.4
million, or 63.4%, to $99.0 million from $60.6 million for the nine months ended
April 30, 1997 primarily due to the acquisitions and increased sales volumes
from existing operations. As a percentage of sales, such costs remained
relatively consistent at 66.7% for the nine months ended April 30, 1998 as
compared to 66.6% for the nine months ended April 30, 1997.
Selling, general and administrative expenses for the nine months ended
April 30, 1998 increased $12.7 million, or 55.5%, to $35.6 million from $22.9
million for the nine months ended April 30, 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 25.2% which reflects
the spreading of certain fixed costs over a larger revenue base, as well as the
elimination of certain costs through the consolidation of administrative and
support functions in certain branches.
9
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Depreciation and amortization for the nine months ended April 30, 1998
increased $2.0 million, or 80.0%, to $4.5 million from $2.5 million for the nine
months ended April 30, 1997 and, as a percentage of sales, to 3.1% from 2.8%.
These increases primarily result from depreciation and amortization of assets
acquired with the acquisitions previously discussed.
Interest expense for the nine months ended April 30, 1998 increased
$2.1 million, or 246.2%, to $3.0 million from $853,000 for the nine months ended
April 30, 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.
During the nine months ended April 30, 1998, the Company completed eight
acquisitions for aggregate consideration of approximately $29.2 million. Of this
aggregate consideration, approximately $630,000 was paid by the issuance of
74,118 shares of the Company's Common Stock to the sellers of the acquired
businesses and approximately $28.5 million was paid in cash. Subsequent to April
30, 1998, the Company completed one additional acquisition for total
consideration of approximately $5.3 million in cash and 39,960 shares of the
Company's stock. The cash portion of the consideration paid for these
acquisitions was provided by proceeds from the Company's revolving credit
facility.
In connection with certain acquisitions, the Company agreed to pay the
sellers additional consideration if the acquired operations meet certain
performance goals related to their earnings before interest, taxes, depreciation
and amortization, as adjusted for certain factors. The maximum amount of
additional consideration payable, if all performance goals are met, is
approximately $20.7 million, of which $19.8 million is payable in cash and
$900,000 is payable in shares of the Company's Common Stock. These payments of
additional consideration are to be made on 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.
Capital expenditures for the nine months ended April 30, 1998 were
approximately $3.0 million. 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.
Cash flow provided by operations for the nine months ended April 30,
1998 was approximately $3.4 million and, consequently, increases in working
capital during such period were completely financed by internally generated cash
flow.
On May 19, 1998, the Company completed a public offering of 2,817,166
shares of Common stock at a price of $12.875 per share. Of the 2,817,166 shares
offered, 2,500,000 shares were sold by the Company and 317,166 shares were sold
by selling shareholders. Net proceeds to the Company were approximately $29.9
million and were used to reduce amounts outstanding under the Company's
revolving credit facility.
Concurrent with the closing of the offering, the Company amended its
revolving credit facility to (i) provide for total borrowings of up to $115.0
million, (ii) extend the maturity date from August 31, 2000 to May 31, 2001 and
(iii) increase the purchase price thresholds above which the Company must obtain
the primary lenders consent to consummate acquisitions. As of April 30, 1998,
approximately $60.7 million was outstanding under the facility. Interest under
the facility is payable quarterly at prime, or certain other interest
10
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
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 April 30, 1998, the weighted average interest rate for all
outstanding borrowings was approximately 7.64%.
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. Under certain circumstances, the Company must obtain the
lender's consent to consummate acquisitions.
The Company's EBITDA, defined as income excluding interest, taxes,
depreciation and amortization of goodwill and other intangible assets, increased
to approximately $13.8 million for the nine months ended April 30, 1998 from
approximately $7.5 million for the nine months ended April 30, 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 April 30, 1998 increased to approximately $20.0 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 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 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.
11
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
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.
12
<PAGE> 14
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 April 30, 1998.
13
<PAGE> 15
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: June 12, 1998 by /s/Richard K. McClelland
-------------------------------------
Richard K. McClelland
President, Chief Executive Officer
and Chairman of the Board
(Principal Executive Officer)
Dated: June 12, 1998 by /s/ Robert P. Capps
-------------------------------------
Robert P. Capps
Vice President - Chief Financial
Officer
(Principal Financial Officer)
14
<PAGE> 16
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBITS
--------
<S> <C>
11.1 Calculation of Net Income Per Common Share
27.1 Financial Data
</TABLE>
<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 Nine Months Ended
April 30, April 30,
-------------------------------- --------------------------------
1998 1997 1998 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net Income $ 1,642 $ 1,168 $ 3,649 $ 2,130
============== ============== ============== ==============
Weighted Average Common shares
Outstanding 7,412 6,966 7,395 6,465
Common Share Equivalents Related to
Options and Warrants 217 109 195 187
-------------- -------------- -------------- --------------
Common Shares and Common Share
Equivalents 7,629 7,075 7,590 6,652
============== ============== ============== ==============
Common Stock Price used under Treasury
Stock Method $ 11.89 $ 7.94 $ 10.31 $ 9.22
============== ============== ============== ==============
Net Income per Common Share:
Basic $ 0.22 $ 0.17 $ 0.49 $ 0.33
============== ============== ============== ==============
Diluted
$ 0.22 $ 0.17 $ 0.48 $ 0.32
============== ============== ============== ==============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> FEB-01-1998
<PERIOD-END> APR-30-1998
<CASH> 2,741
<SECURITIES> 0
<RECEIVABLES> 28,420
<ALLOWANCES> 436
<INVENTORY> 0
<CURRENT-ASSETS> 35,956
<PP&E> 14,921
<DEPRECIATION> 7,048
<TOTAL-ASSETS> 123,937
<CURRENT-LIABILITIES> 15,876
<BONDS> 63,345
0
0
<COMMON> 74
<OTHER-SE> 44,642
<TOTAL-LIABILITY-AND-EQUITY> 123,937
<SALES> 53,131
<TOTAL-REVENUES> 53,131
<CGS> 0
<TOTAL-COSTS> 34,905
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,123
<INCOME-PRETAX> 2,736
<INCOME-TAX> 1,094
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,642
<EPS-PRIMARY> 0.22
<EPS-DILUTED> 0.22
</TABLE>
