Dynamex Announces Fourth Quarter and Fiscal Year 2002 Results.Business Editors DALLAS--(BUSINESS WIRE)--Oct. 14, 2002 Fourth Quarter Net Income of $1,222,000 or $0.11 Per Share Meets Management's Expectations; Company Finalizes Goodwill Impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. Test; Bank Credit Facility Extended Dynamex Inc. (Amex:DDN (Defense Data Network) An Internet-based global communications network created by the U.S. Department of Defense. In April 1996, users were moved to the more modern Defense Information Systems Network (DISN) made up of NIPRnet (Non-classified IP Router Network) and ), a leading provider of same-day delivery and logistics services in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of , today announced net income of $1.2 million or $0.11 per share for the fourth quarter of FY2002 versus net income of $1.5 million or $0.15 per share for the same period last year. For the year ended July July: see month. 31, 2002, the Company reported a net loss of $16.3 million or $1.53 per share, compared to net income of $2.0 million or $0.20 per share for the prior year. FY2002 includes a non-cash, after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. adjustment of $19.3 to adjust the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of goodwill to fair market value in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with FASB Statement FASB Statement A standard set by the Financial Accounting Standards Board regarding a financial accounting and reporting method. Essentially, FASB statements determine the acceptable accounting practices that Certified Public Accountants use in reporting No. 142 "Goodwill and Other Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. ." Current year earnings per share include the impact of the issuance of one million common shares in settlement of the class action lawsuit class action lawsuit A lawsuit in which one party or a limited number of parties sue on behalf of a larger group to which the parties belong. For example, investors may bring a class action lawsuit against a brokerage firm that has actively promoted a tax during the second and third quarters of FY 2002. The Company benefited in the current quarter and the full year from the adoption of FASB Statement 142, whereby the Company no longer amortizes goodwill. The Company recorded goodwill amortization of $0.9 million and $3.6 million in the fourth quarter and fiscal year ended July 31, 2001, respectively. The fourth quarter and FY2001 also benefited from recoveries of $695,000 related to the shareholder class action lawsuit and from gains on sales of surplus radio licenses of $375,000. FY2002 includes one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. charges totaling $1.2 million associated with restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. operations. Excluding the goodwill impairment and one-time charges and credits described above, FY2002 fourth quarter net income would have been $1.2 million compared to $1.0 million for the same period in FY2001 and net income for FY2002 would have been $4.2 million compared to $3.3 million for FY2001. Fourth quarter sales decreased 3.2% from the prior year period to $60 million. Earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
When a person begins a civil lawsuit, the person enters into a process called litigation. recoveries and gain on sale of radio licenses) in the prior year. The reductions in revenue and EBITDA are primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the impact of the current economic environment on premium priced on-demand On-Demand refers to a service or feature which addresses the user's need for instant gratification and immediacy of use. In most cases the value proposition for an on-demand service is wrapped up in the fact that the user or consumer of the service avoids a significant up-front services. Selling, general and administrative expenses decreased 6.9% from the prior year period to $14.1 million principally as a result of cost reduction initiatives the Company has instituted and the change in business mix. Fiscal Year 2002 and Fourth Quarter Highlights "Fourth quarter operating results were solid," said Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , Rick McClelland McClelland is the surname of:
See also: Spite a weak economy, we were able to produce earnings that were better than normalized prior year earnings and continue to reduce total debt. "When I reflect on FY2002, I do so with a great deal of pride related to the accomplishments of the people on our team," McClelland said. "Dynamex continues to be the best positioned company in the same-day transportation industry. We have a comprehensive service menu, a cost structure that has performed very well despite being severely stress tested, national coverage throughout the United States and Canada and the best systems in the industry. Most importantly Adv. 1. most importantly - above and beyond all other consideration; "above all, you must be independent" above all, most especially , the Dynamex team consists of thousands of people with a history of success in this business." "During FY2002 our field operations team did a great job of protecting earnings in a very challenging operating environment In computing, an operating environment is the environment in which users run programs, whether in a command line interface, such as in MS-DOS or the Unix shell, or in a graphical user interface, such as in the Macintosh operating system. ," McClelland continued. "They had to deal with the effects of a sluggish economy Sluggish Economy A state in the economy in which the growth is slow, flat or declining. The term can refer to the economy as a whole or a component of the economy, such as weak housing starts. , shippers who were moving away from premium priced on-demand services in favor of upon the side of; favorable to; for the advantage of. See also: favor slower, lower cost modes and the continuing erosion of the document market." "This negative operating environment was further exacerbated by the terrorist attacks of Sept 11th and the effects of the attacks during the months that followed," McClelland said. "Our operations in the NYC NYC abbr. New York City NYC New York City area and Washington Washington, town, England Washington, town (1991 pop. 48,856), Sunderland metropolitan district, NE England. Washington was designated one of the new towns in 1964 to alleviate overpopulation in the Tyneside-Wearside area. D.C. represent 24% of our total sales in the United States. A successful response was critically important. The bottom line is that our operations there remained profitable and our team played an important role supporting the relief efforts." "In response to all of these issues, our people at the Corporate Headquarters and in the field carved carve v. carved, carv·ing, carves v.tr. 1. a. To divide into pieces by cutting; slice: carved a roast. b. out non-essential non-essential Adjective not absolutely necessary non-essential adj → unnötig n non-essentials → nicht (lebens)notwendige Dinge pl costs," said McClelland. "At the same time, our sales and operations teams focused on existing account retention and new business development, concentrating their efforts on promoting other services in our portfolio that perform especially well in a down economy. While we were unable to completely offset the effects of the soft on-demand market, we were able increase sales related to our other services, protect cash flow, pay down debt and set the stage for the next growth phase of the Company." "Our goal is to position the business so that we can achieve an internal growth rate of 10% in FY2004. This will allow us to leverage the fixed costs fixed costs, n.pl the costs that do not change to meet fluctuations in enrollment or in use of services (e.g., salaries, rent, business license fees, and depreciation). related to our facilities, systems and certain other SG&A costs which should facilitate an increase in EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. of more than 100%," McClelland concluded. Debt Reduction The Company continued its aggressive debt reduction in the fourth quarter 2002. The Company reduced long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. $2.1 million, including its scheduled quarterly term-loan installment of $1.375 million. Long-term debt has been reduced approximately 28%, or $12.0 million during FY2002. Sales Per Day Sales Per Day in the fourth quarter continued to be impacted by the soft economy as well as the decline in the exchange rate between the Canadian dollar Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents and the U.S. dollar. Excluding the effect of the exchange rate, Sales Per Day, compared to the prior year, decreased 2.5% in the fourth quarter 2002, an improvement from the decline of 3.8% in the third quarter 2002. Management expects Sales Per Day growth for the first quarter of FY2003 compared to the current quarter and expects breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations or slightly positive year-over-year growth compared to the first quarter of FY2002. Margins and Operating Expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. The gross margin was 29.0% of sales in the fourth quarter 2002 compared to 30.3% in the prior year due to the continuing shift in business mix from on-demand to other services as a result of the sales focus toward regional and national accounts and the continued weakness in the economy as well as higher insurance costs. In contrast, the change in business mix combined with the cost reduction initiatives resulted in lower SG&A expenses in the fourth quarter 2002 versus the prior year period, both in absolute dollars and as a percentage of sales. Depreciation and Amortization Depreciation and amortization ("D&A") in the fourth quarter 2002 decreased to $740,000 from $1.6 million in the fourth quarter of 2001. As a percent of sales, D&A decreased to 1.2% from 2.6%. This decrease is attributable to the adoption of FASB Statement 142, whereby the Company no longer amortizes goodwill, and the reduction in amortization of covenants not-to-compete that are fully amortized after three years. The new accounting standard benefited the fourth quarter and full fiscal year 2002 earnings by approximately $0.9 million and $3.6 million, respectively, in reduced amortization of goodwill. Interest Expense Interest expense for the three months ended July 31, 2002 was $722,000, 29% below the prior year period. This decrease is attributable to lower outstanding debt and to a lower prime rate during the current quarter versus the prior year. Goodwill Impairment Test The Company finalized See finalization. the transitional goodwill impairment test required by FASB Statement No. 142 that eliminates goodwill amortization and changes the method by which goodwill impairment is measured from an undiscounted cash flow method to a fair value method. The Company will record a non-cash, after-tax goodwill impairment charge of $19.3 million that will be presented as a separate caption between net income before cumulative effect of accounting change and net income in the Statement of Consolidated Operations. FASB FASB See: Financial Accounting Standards Board FASB See Financial Accounting Standards Board (FASB). No. 3 "Reporting Accounting Changes in Interim Financial Statements", requires that financial information for the interim periods of the fiscal year that precede the period in which the transitional goodwill impairment loss is measured, shall be restated to reflect the accounting change in those periods. As a result, the Company will adjust, in future SEC filings, the financial statements for the first three quarters of FY2002 to reflect this change. Extension of Bank Credit Facility Dynamex also announced that it has extended and amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. its bank credit facility. The new facility matures on November November: see month. 30, 2003 and consists of a revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility of $19,500,000 and an amortizing term loan of $18,315,000. The term loan includes quarterly payments of $1,375,000 beginning October October: see month. 31, 2002. The facility was also amended to adjust the Minimum Net Worth Covenant covenant (kŭv`ənənt), agreement entered into voluntarily by two or more parties to do or refrain from doing certain acts. In the Bible and in theology the covenant is the agreement or engagement of God with man as revealed in the to reflect the FASB Statement No. 142 goodwill adjustment. Outlook The following outlook for FY2003 is provided in connection with Regulation FD and to ensure that all investors continue to have equal access to information. The following outlook contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve assumptions regarding Company operations and future prospects. Caution should be taken that the actual results could differ materially from those stated or implied in this and other Company communications. This outlook is based upon management's expectation that the economy will improve gradually grad·u·al adj. Advancing or progressing by regular or continuous degrees: gradual erosion; a gradual slope. n. Roman Catholic Church 1. during FY 2003 and there will not be a double-dip recession double-dip recession An extended decline in economic activity following an aborted recovery from a previous recession. A relatively weak economic recovery sometimes causes investors to worry about the economy entering another recession. . The Company expects Total Sales Per Day year-over-year growth in fiscal year 2003 of between 3% and 5% compared to FY2002. For the first quarter of FY2003, the Company expects sales per day to be at approximately the same level as the prior year, and exceed the prior year in the last three quarters of FY2003. Dynamex expects FY2003 gross margins to decline slightly versus the prior year as the percentage of scheduled and distribution and outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. sales increases compared to on-demand sales. EBITDA margins are expected to average between 5.6% and 6.0% of sales in FY2003. The Company expects SG&A expenses to increase between 2.5% and 4.0% in FY2003 compared to FY2002 but decline slightly as a percentage of sales. Depreciation and amortization is not expected to change significantly in FY2003 from current levels. Interest expense is expected to decline in FY2003 due to a lower average level of debt and relatively stable interest rates. The Company expects interest rates to increase modestly over the next year as the economy improves. Capital expenditures are expected to range between $1.5 and $2.0 million for FY2003. The Company expects net income for FY2003 to range from $4.2 to $5.1 million, $0.37 to $0.46 basic earnings per share. Also, the Company expects to reduce long-term debt by approximately $6.0 million in FY2003. Investor Call The Company will host an investor conference call on Tuesday Tuesday: see week. , October 15, 2002 at 1:30 p.m. Central Daylight Time at Toll Free 888/417-2310. A participant will need the following information to access the conference call: Company name - "Dynamex". A telephone replay of the conference call will be available through October 22, 2002 at Toll Free 877/519-4471, Passcode 3537425 The conference call also will be available on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the through the Company's website at www.dynamex.com. To listen to the live call, please go to the website at least fifteen minutes early to register, download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install any necessary audio software. For those who cannot listen to the live broadcast, an Internet replay will be available shortly after the call for 30 days. Dynamex is a leading provider of same-day delivery and logistics services in the United States and Canada. Additional press releases and investor relations Investor relations The process by which the corporation communicates with its investors. information as well as the Company's Internet e-commerce e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. services package, dxNow(TM), is available at www.dynamex.com and www.dxnow.com. This release contains forward-looking statements that 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, the effect of changing economic conditions, acquisition strategy, competition, foreign exchange, the ability to meet the terms of current borrowing arrangements, and risks associated with the local delivery industry. These and other risks are mentioned from time to time in the Company's filings with 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. The Company does not undertake any obligation to publicly release any revision to any forward-looking statements contained herein to reflect events and circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or occurring after the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" 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.
DYNAMEX INC.
CONSOLIDATED BALANCE SHEETS
July 31, 2002 and 2001
(in thousands)
2002 2001
------ ------
ASSETS
CURRENT
Cash and cash equivalents $4,489 $8,066
Accounts receivable (net of allowance for
doubtful accounts
of $562 and $772, respectively) 23,165 24,799
Prepaid and other current assets 3,223 3,328
Deferred income taxes 1,657 1,577
-------- ---------
Total current assets 32,534 37,770
PROPERTY AND EQUIPMENT - net 4,627 6,165
INTANGIBLES - net 44,689 74,527
DEFERRED INCOME TAXES 11,407 2,635
OTHER 613 815
-------- ---------
Total assets $93,870 $121,912
======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable trade $3,894 $4,265
Accrued liabilities 13,543 12,709
Income taxes payable - 371
Current portion of long-term debt 5,778 11,066
-------- ---------
Total current liabilities 23,215 28,411
LONG-TERM DEBT 25,531 32,198
OTHER LIABILITIES - 1,313
-------- ---------
Total liabilities 48,746 61,922
-------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock; $0.01 par value, 10,000 shares
authorized; none outstanding - -
Common stock; $0.01 par value, 50,000 shares
authorized;
11,207 and 10,207 outstanding, respectively 112 102
Additional paid-in capital 74,061 72,759
Accumulated deficit (27,828) (11,576)
Accumulated other comprehensive loss:
Cumulative translation adjustment (1,221) (1,295)
-------- ---------
Total stockholders' equity 45,124 59,990
-------- ---------
Total liabilities and stockholders' equity $93,870 $121,912
======== =========
DYNAMEX INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share data)
Three months ended Year ended
July 31, July 31,
-------------------- -------------------
2002 2001 2002 2001
----------- -------- --------- ---------
(unaudited)
Sales $60,103 $62,121 $235,945 $249,414
Cost of sales 42,646 43,310 165,919 172,908
----------- -------- --------- ---------
Gross profit 17,457 18,811 70,026 76,506
Selling, general and
administrative expenses 14,133 15,181 56,945 60,739
Depreciation and amortization 740 1,631 2,957 7,414
Recovery on settlement of
shareholder litigation (695) (695)
(Gain) loss on disposal of
property and equipment (3) (390) (21) (403)
----------- -------- --------- ---------
Operating income 2,587 3,084 10,145 9,451
Interest expense 723 1,023 3,065 5,184
Other (income) expense (106) (69) 413 (219)
----------- -------- --------- ---------
Income before taxes 1,970 2,130 6,667 4,486
Income tax expense 748 645 3,658 2,461
----------- -------- --------- ---------
Net income before cumulative
effect of change in
accounting principle 1,222 1,485 3,009 2,025
Cumulative effect of change in
accounting principle - 19,261
----------- -------- --------- ---------
Net income (loss) $1,222 $1,485 $(16,252) $2,025
=========== ======== ========= =========
Earnings (loss) per common
share - basic:
Before cumulative effect of
accounting change $0.11 $0.15 $0.28 $0.20
Accounting change - - (1.81) -
----------- -------- --------- ---------
Basic earnings (loss) per
common share $0.11 $0.15 $(1.53) $0.20
=========== ======== ========= =========
Earnings (loss) per common
share - assuming dilution:
Before cumulative effect of
accounting change $0.11 $0.14 $0.28 $0.20
Accounting change - - (1.81) -
----------- -------- --------- ---------
Diluted earnings (loss)
per common share $0.11 $0.14 $(1.53) $0.20
=========== ======== ========= =========
Weighted average shares:
Common shares outstanding 11,207 10,207 10,614 10,207
Adjusted common shares -
assuming
exercise of stock
options 11,245 10,250 10,614 10,237
Selected items as a percentage
of sales
Sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 71.0% 69.7% 70.3% 69.3%
----------- -------- --------- ---------
Gross profit 29.0% 30.3% 29.7% 30.7%
Selling, general and
administrative expenses 23.5% 24.4% 24.1% 24.4%
Depreciation and amortization 1.2% 2.6% 1.3% 3.0%
Recovery on settlement of
shareholder litigation 0.0% -1.1% 0.0% -0.3%
(Gain) loss on disposal of
property and equipment 0.0% -0.6% 0.0% -0.2%
----------- -------- --------- ---------
Operating income 4.3% 5.0% 4.3% 3.8%
EBITDA Margin 5.7% 6.0% 5.4% 6.4%
EBITDA (excludes litigation
recovery, gain on sale of
surplus radio licenses and
non-cash foreign exchange loss) 3,430 3,699 13,383 16,014
DYNAMEX INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended July 31, 2002 and 2001
(in thousands)
2002 2001
------ ------
OPERATING ACTIVITIES
Net income (loss) $(16,252) $2,025
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 2,872 3,117
Amortization and write down of goodwill and other
intangibles 30,110 4,297
Provision for losses on accounts receivable 623 970
Deferred income taxes (8,853) 579
(Gain) loss on disposal of property and equipment (20) (403)
Provision for settlement of shareholder litigation - -
Changes in current operating assets and liabilities:
Accounts receivable 1,177 1,118
Prepaids and other current assets (61) (438)
Accounts payable and accrued liabilities 92 (3,494)
------- -------
Net cash provided by operating activities 9,688 7,771
------- -------
INVESTING ACTIVITIES
Cash payments for acquisitions - (1,011)
Purchase of property and equipment (1,362) (2,199)
Net proceeds from disposal of property and equipment 12 474
------- -------
Net cash used in investing activities (1,350) (2,736)
------- -------
FINANCING ACTIVITIES
Principal payments on long-term debt (11,253) (3,809)
Net borrowings (payments) under line of credit (700) 1,300
Other assets and deferred financing fees (334) 86
------- -------
Net cash used in financing activities (12,287) (2,423)
------- -------
EFFECT OF EXCHANGE RATES ON CASH 372 (146)
------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (3,577) 2,466
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 8,066 5,600
------- -------
CASH AND CASH EQUIVALENTS, END OF YEAR $4,489 $8,066
======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest $2,508 $5,928
======= =======
Cash paid for taxes $2,067 $1,467
======= =======
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES
Issuance of 1,000 shares in shareholder class
action lawsuit settlement $1,313 $ -
Issuance of note receivable to finance customer
trade receivable 166 -
Assets acquired, liabilities paid and
consideration paid
for acquisitions were as follows:
Accrual of earnouts to former owners - 819
Change in accrued earnouts - 1,240
Prior year earnouts converted to notes
payable - (1,048)
------- -------
Cash payments for acquistions $ - $1,011
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