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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported) March 7, 2000 (February 29, 2000)
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DYNAMEX INC.
(Exact name of registrant as specified in its charter)
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Delaware 000-21057 86-0712225
(State or other jurisdiction (Commission File Number) (IRS Employer Identification No.)
of incorporation)
1431 Greenway Drive, Suite 345, Irving, TX 75038
(Address of principal executive offices) (Zip Code)
Registrants' telephone number, including area code (972) 756-8180
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ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
On February 29, 2000, Deloitte & Touche LLP ("D&T") delivered a
letter to Registrant in a meeting with the Chief Executive Officer, the Vice
President and Controller and the Vice President Finance that stated the
client-auditor relationship between Dynamex Inc. and Deloitte & Touche LLP has
ceased.
The reports of D&T on the consolidated financial statements of the
Registrant for the fiscal years ended July 31, 1998 and July 31, 1997 did not
contain any adverse opinion or disclaimer of opinion nor were such reports
qualified or modified as to uncertainty, audit scope or accounting principles.
As discussed below, On September 17, 1999, the Registrant announced that the
previously issued 1997 and 1998 annual financial statements and the auditors'
reports thereon should not be relied upon.
In connection with the audits of the Registrant's consolidated
financial statements for the fiscal year ended July 31, 1999, 1998 and 1997 and
during the subsequent unaudited interim periods since the most recently ended
fiscal year, there were no disagreements with D&T on matters of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which, if not resolved to the satisfaction of D&T, would have caused
D&T to make reference to the matter in their report other than as follows:
In connection with the audit of the Registrant's consolidated financial
statements for the fiscal year ended July 31, 1998, D&T reported to the
Registrant's Audit Committee the following disagreements between D&T and the
Registrant, each of which were satisfactorily resolved before D&T issued an
unqualified opinion with respect to the Registrant's financial statements:
o D&T disagreed with the Registrant's view that a gain should be
recognized immediately on the sale of the Registrant's
Canadian strategic stocking location services division.
o D&T disagreed with the adequacy of Registrant's allowance for
doubtful accounts.
o D&T disagreed with the Registrant's accounting for the
settlement of certain employment obligations as additional
purchase consideration.
o D&T disagreed with the Registrant's accounting for certain
vehicle rental costs recorded as additional purchase
consideration for an acquired entity.
In late November 1998, D&T apprised a member of the Audit Committee and
the Chief Financial Officer of the Registrant of certain material weaknesses in
internal control noted during the audit of the financial statements of the
Registrant for the fiscal year ended July 31, 1998 by providing them a draft of
a letter communicating internal control related matters ("Management Letter").
D&T subsequently delivered to the Audit Committee its Management Letter and a
letter addressing required communications with the Audit Committee identifying
significant deficiencies that could adversely affect the Registrant's ability to
record, process, summarize, and report financial data consistent with the
assertions of management in the financial statements. The material weaknesses in
internal control included the following: (1) Inadequate overall internal control
design; (2) absence of appropriate reviews and approvals of transactions,
accounting entries, or systems output; (3) inadequate procedures for
appropriately assessing and applying accounting principles; (4) inadequate
provisions for the safeguarding of assets; (5) failure to perform tasks that are
part of a sound system of internal control, such as preparation of timely
account reconciliations; and, (6) absence of a sufficient level of control
consciousness within the organization. On January 24, 1999 the Chief Financial
Officer and the Controller of the Registrant resigned.
On January 25, 1999 the Registrant appointed a new Vice President and
Controller and a new Vice President Finance. The Audit Committee instructed the
new financial management team to address the weaknesses noted by D&T in their
Management Letter and to implement appropriate internal controls. On February 1,
1999, D&T was engaged, among other things, to assist the Registrant with
analyzing its core financial processes, identifying improvement opportunities
and developing an achievable implementation plan.
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At the April 27, 1999 Audit Committee meeting, the D&T Management
Letter, the findings and recommendations from the special engagement described
above and Management's progress in addressing internal control weaknesses were
discussed. D&T indicated verbally that based on its discussions with certain
members of management, the Registrant appeared to be making progress on those
matters outlined in the Management Letter.
On June 14, 1999, the Registrant announced that it had discovered
potentially unsupportable accounting entries in the third quarter 1998. The
Audit Committee of the Board of Directors formed a Special Committee of outside
directors to review the matter further. The Special Committee engaged the law
firm of Weil, Gotshal & Manges LLP to assist in the review. Weil, Gotshal &
Manges LLP engaged D&T to assist in connection with the review. D&T suspended
all audit work related to the Registrant pending the results of the review by
the Special Committee. On September 17, 1999, the Registrant announced the
results of the review of the Special Committee. The Registrant indicated that it
would restate its previously reported financial results for fiscal years 1997
and 1998, the first three quarters of fiscal year 1998, and the first three
quarters of fiscal year 1999. The Registrant also stated that the previously
issued 1997 and 1998 annual financial statements and the independent auditors'
reports thereon, as well as the interim financial statements for 1997, 1998 and
1999, should not be relied upon.
By letter dated September 16, 1999, D&T was engaged to perform the
audits of Dynamex Inc.'s restated financial statements for the years ended July
31, 1998 and 1997, subject to the terms and conditions therein. D&T verbally
advised the Registrant that, due to the results of the Special Committee's
review, the scope of the audits would be significantly expanded and that D&T
would be unwilling to rely on the representations of prior financial management.
D&T also advised the Registrant that subject to the same terms and conditions,
it would accept an engagement to continue as auditor for the fiscal year ended
July 31, 1999. Subsequent to September 16, 1999, D&T verbally advised the
Registrant that the documentary evidence then available to D&T was not
sufficient to complete its audits and requested additional documentation. The
Registrant made all reasonable efforts to respond to those requests. On February
29, 2000, D&T advised the Registrant that it was resigning due to the lack of
sufficient evidential matter to render an opinion on the financial statements of
the Registrant.
The Registrant has provided D&T with a copy of the foregoing
disclosure, and has requested that D&T furnish it with a letter addressed to the
Securities and Exchange Commission stating whether or not it agrees with such
disclosure. The Registrant will file a copy of such letter by an amendment to
this Report on Form 8-K promptly following its receipt from D&T.
The Registrant has not yet engaged a new independent accounting firm to
audit its financial statements.
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ITEM 7. EXHIBITS
16.1 Letter of Deloitte & Touche LLP dated March __, 2000 *
* To be filed by amendment
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SIGNATURES
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 hereunto duly authorized.
DYNAMEX INC.
Dated: March 7, 2000 by /s/ Richard K. McClelland
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Richard K. McClelland
President and Chief Executive Officer
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