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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
Date of Report January 6, 2000
(Date of earliest event reported) (December 30, 1999)
DYNAMEX INC.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Delaware 000-21057 86-0712225
(State or other jurisdiction (Commission File Number) (IRS Employer Identification No.)
of incorporation)
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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 5. OTHER EVENTS
On December 30, 1999, Dynamex Inc. (the Company) issued a press release
providing an update on a number of issues relating to the ongoing audits of the
Company's financial statements, preliminary first quarter 2000 results and other
related topics. In addition to the preliminary quarterly results the Company
indicated the filing of its FY99 Form 10-K and amended prior period reports will
be delayed approximately 60 days pending completion of the audit of its FY99
financial statements and re-audits of prior fiscal years. Based on the above and
resulting delays in timely filing audited financial statements with the SEC, the
American Stock Exchange (the Exchange) advised the Company it would no longer
meet the Exchange's continued listing guidelines after November 15, 1999.
Additionally, the Company indicated it has requested limited access to its line
of credit and a temporary waiver of covenants under its bank credit agreements.
Finally, the Company provided an update on a class action lawsuit and SEC
inquiry into the audits and restatement process. This press release is
incorporated herein as Exhibit 99.1.
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ITEM 7. EXHIBITS
99.1 Press release by the Company dated December 30, 1999.
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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: January 6, 2000 by /s/ Ray E. Schmitz
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Ray E. Schmitz
Vice President - Controller
(Principal Accounting Officer)
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EXHIBIT INDEX
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EXHIBIT
NUMBER DESCRIPTION
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99.1 Press release by the Company dated December 30, 1999.
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EXHIBIT 99.1
FOR IMMEDIATE RELEASE
For further information contact:
Jeff MacDowell
Vice President -
Finance and Corporate Development
(972) 756-8171
FILING OF FORM 10-K DELAYED
PRELIMINARY FIRST QUARTER 2000 RESULTS
December 30, 1999 -- Dallas, Texas -- Dynamex Inc. (Amex: DDN) today provided an
update on a number of issues relating to the ongoing audit of the Company's
financial statements, preliminary first quarter 2000 results, and related
topics.
STATUS OF AUDIT
Dynamex anticipates that the filing of the fiscal year 1999 Form 10-K and
amended reports for prior fiscal years and quarters will be delayed
approximately another 60 days. The delay in completion of the 1999 audit and
re-audit of prior period financial statements has resulted from additional
requests for information by the Company's auditor, Deloitte & Touche LLP. The
additional information requested to complete the audit in many instances is
difficult to locate due to the Company's numerous acquisitions and two corporate
accounting relocations during the past three-year period. Rick McClelland,
Chairman and CEO of Dynamex, said, "While we are disappointed with the status of
the audit, management will continue to diligently work with the auditors toward
completion of the audit process."
Management can make no assurances with respect to the filing date of its
financial statements with the SEC since the filing of such documents is
contingent upon the completion of the audit and re-audit.
FIRST QUARTER FISCAL 2000
Preliminary, unaudited results for the first quarter ended October 31, 1999
indicate revenues increased 5.6% to $62.8 million vs. $59.4 million for the
prior year restated period. Revenues in the first quarter increased
approximately 3.3% over the preliminary fourth quarter 1999 revenues. EBITDA
(Earnings before interest, taxes, depreciation and amortization) for the quarter
increased 30% to approximately $4.8 million (excluding legal fees associated
with the class action lawsuit of approximately $235,000) or 7.6% of revenues vs.
$3.7 million or 6.2% of revenues for the prior year restated period. Interest
expense for the quarter was $1.2 million. Operating income and net income on a
preliminary basis cannot be determined until completion of the ongoing audit in
order to obtain depreciation and amortization expense for the period.
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Same branch revenue growth (percentage increase in revenues per day for
operations owned for more than one year) for the first quarter 2000 over first
quarter 1999 is expected to be approximately 6.8% vs. 2.8% in the fourth quarter
1999 over fourth quarter 1998. Same branch revenues in the first quarter 2000
increased 2.6% over the fourth quarter 1999.
Same branch revenue growth at the Company's Canadian operations during the first
quarter is expected to be approximately 6.8% in Canadian dollars and
approximately 10.3% in US dollars. Same branch revenue growth in the Company's
US operations during the first quarter is expected to be approximately 5.2%.
Revenue growth was adversely affected by the termination of service contracts
with unacceptable profitability margins in New England and the Canadian
Prairies, and by reduced revenues associated with a systems conversion and
competition in Dallas. Excluding the operations in New England, the Canadian
Prairies, and Dallas, same branch revenue growth is expected to be approximately
8.0% overall and 7.2% for the US operations.
Rick McClelland commented, "Our operating results are slightly ahead of internal
forecasts and should be seen as tangible evidence that there is strong client
support which is driven by service quality. Service quality is strong due to the
quality of the operating people in the field and their determination to focus on
operating the business and not be distracted by other issues. Out of 49 P&L
entities, 47 are profitable and many are performing well above industry norms.
The internal growth rate is lower than our double-digit corporate goal as a
result of reduced revenues from terminated contracts in the last year, but has
increased significantly since the fourth quarter (same branch revenue growth:
6.8% first quarter 2000 over first quarter 1999 vs. 2.8% fourth quarter 1999
over fourth quarter 1998).
"The market for our services remains strong. There has been some negative impact
related to email, but this has been more than offset by growth in demand for
same-day delivery of three dimensional product. For example, we are continuing
to see growth in "semi-technical" delivery. Our drivers in Canada are currently
delivering (and installing or repairing) over 400 debit card readers per day."
Mr. McClelland continued, "We are continuing to invest in a comprehensive
e-commerce service offering. We are in various stages of development and are in
discussions with a number of firms that have an interest in using our service as
an integral part of their e-commerce strategy (same-day product delivery).
"In addition to the e-commerce piece of our growth strategy, we are continuing
to build out the traditional local delivery service menu. We have had great
success with the Dedicated Vehicle Service in Canada (a driver and vehicle
outsourcing service). Revenue from that service has been growing in the U.S. and
we are working toward a comprehensive rollout schedule in the near future.
Revenues from accounts that use our service on a regional or national basis
remain strong.
"Our conversion to a common front-end system is progressing very well. The vast
majority of our locations now have been converted and linked together and to the
corporate office via a wide-area network with Oracle as the back-end system.
This "centralized systems strategy" has largely been funded and we are looking
forward to leverage this sophisticated asset on a go-forward basis."
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Mr. McClelland concluded his comments by saying, "We are still paying a price
due to circumstances in the past, but I want to assure our shareholders that in
addition to navigating through this audit process that we have been aggressively
managing the business with an eye to the future in order to rebuild shareholder
value. Our posture has not been one where we have stopped building the business.
We have added sales personnel. The business is growing. We are very focused on
service. Staff morale is good and client support is strong. Investments have
been funded out of cash flow. The business has positive momentum."
The restated amounts described above for the first quarter of fiscal year 1999
as well as the preliminary fourth quarter of fiscal year 1999, are subject to
audit by Deloitte & Touche LLP. This audit will likely result in further
adjustments and also change the period in which certain of the adjustments
resulting from the Special Committee process are recorded. The adjustments
resulting from the ongoing audit may also affect the preliminary results for
first quarter 2000 described herein.
AMEX LISTING STATUS AND TRADING
In late September, the Company was advised by the American Stock Exchange that
trading in the Company's stock would remain halted until the re-audited
financial information is filed with the Securities and Exchange Commission
("SEC") and the American Stock Exchange has time to review the filings. On
November 1, 1999 the American Stock Exchange advised management that the Company
would not meet the Exchange's continued listing guidelines after November 15,
1999 based upon the delay in completion of the audit and the resulting failure
to timely file audited financial statements with the SEC.
Management is scheduled to meet with the American Stock Exchange's Listing
Qualifications Department on January 18, 2000 to present information in support
of continued listing on the Exchange. Management intends to make all efforts to
maintain the listing status of its common stock, but no assurance can be made
that the Company's listing on the American Stock Exchange will be maintained.
Even if management is successful in its efforts, the Company's stock will not
trade until after the Exchange has had time to review the Company's fiscal year
1999 filings with the SEC. In any event, trading in the Company's stock will not
recommence for a minimum of approximately 60 days.
BANK AGREEMENT
As discussed in the September 17, 1999 press release, the Company may be in
violation of certain financial covenants and is in violation of certain
financial reporting covenants under its bank credit agreement. The Company
continues to work with its banks to achieve any necessary waivers or amendments.
However, there is no assurance that such waivers or amendments will be achieved.
Any necessary waivers or amendments cannot be finalized until the ongoing audit
nears completion.
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Management has requested a temporary waiver of the covenants and limited access
to the line of credit. The bank group has requested certain information,
including the preliminary first quarter 2000 results, prior to considering the
request. Management intends to promptly provide this information to the Banks.
CLASS ACTION LAWSUIT AND SEC INQUIRY
On October 14, 1999, plaintiffs filed a second amended class action complaint in
the pending shareholder class action in the United States District Court for the
Northern District of Texas. The complaint alleges that the defendants issued a
series of materially false and misleading statements and omitted material facts
concerning the Company's financial condition and business operations in
violation of the Securities Act of 1933 and the Securities Exchange Act of 1934.
The complaint names as defendants the Company, certain of its current and former
officers, the underwriters of the Company's 1998 secondary equity offering, and
Deloitte & Touche (Canada). The plaintiffs seek unspecified damages on behalf of
all other purchasers of the Company's common stock during the period of
September 18, 1997 through and including September 17, 1999. At this date, no
class has been certified nor has any discovery commenced. On December 8, 1999,
Dynamex moved to dismiss the complaint in its entirety on the grounds that
plaintiffs' complaint fails to meet the required pleading standards and that the
claims are deficient as a matter of law.
The Special Committee of the Board of Directors has kept the SEC apprised of the
status of its inquiry and the restatement process. The Company now has received
an informal request for information from the Staff of the Commission for
documents concerning the circumstances of the proposed restatement of the
Company's prior period financial statements. The Company is cooperating with the
Commission in connection with this inquiry.
* * *
Dynamex is a leading provider of same-day delivery and logistics services in the
United States and Canada. Additional press releases and investor relations
information as well as the Company's internet e-commerce services package,
dxNow(TM), is available at www.dynamex.com and www.dxnow.com.
This release contains forward-looking statements which involve assumptions
regarding Company operations and future prospects. Although the Company believes
its expectations are based on reasonable assumptions, such statements are
subject to risk and uncertainty, including, among other things, those that may
arise during the completion of the Company's fiscal year 1999 audit or the
preparation of restated financial statements for fiscal year 1997, fiscal year
1998, and each quarter commencing with the first quarter of 1997 (including the
possibility that additional entries may be identified that impact the Company's
financial results for the current and/or prior reporting periods or that there
may be a change in the period in which certain of the adjustments are recorded),
the possibility that the Company's stock will be delisted from the American
Stock Exchange, the outcome of the shareholder class action and SEC inquiry,
acquisition strategy, competition, foreign exchange, and risks associated with
the local delivery industry. These and other risks are mentioned from time to
time in the Company's filings with
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the Securities and Exchange Commission. In light of such risks and
uncertainties, the Company's actual results could differ materially from such
forward-looking statements. Prior to the filing of periodic reports relating to
the restatement, the Company does not undertake any obligation to publicly
release any revision to any forward-looking statements contained herein to
reflect events and circumstances occurring after the date hereof or to reflect
the occurrence of unanticipated events. Caution should be taken that these
factors could cause the actual results to differ from those stated or implied in
this and other Company communications.
