UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 000-21057

DYNAMEX INC.

Delaware		86-0712225
(State of incorporation)		(I.R.S. Employer Identification No.)
5429 LBJ Freeway, Suite 1000, Dallas, Texas		75240
(Address of principal executive offices)		(Zip Code)

Title of Each Class		Name of Each Exchange on Which Registered
Common Stock, par value $0.1 per share		Nasdaq Global Select Market

     Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

     Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

     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 þ No o

     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 232.405 of this chapter) 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. þ

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer þ		Non-accelerated filer o (Do not check if a smaller reporting company)		Small reporting company filer o

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

     The aggregate market value of the voting stock held by non-affiliates of the registrant on January 31, 2010 was approximately $155,275,449.

     The number of shares of the registrant’s common stock, $.01 par value, outstanding as of August 31, 2010 was 9,753,483 shares.

DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the information required in Part III of the Form 10-K have been incorporated by reference to the Registrant’s definitive Proxy Statement on Schedule 14-A to be filed with the Commission.

 

 

TABLE OF CONTENTS

		Page
PART I
ITEM 1. BUSINESS			2
ITEM 1A. RISK FACTORS			8
ITEM 1B. UNRESOLVED STAFF COMMENTS			11
ITEM 2. PROPERTIES			11
ITEM 3. LEGAL PROCEEDINGS			13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS			14
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES			15
ITEM 6. SELECTED FINANCIAL DATA			18
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION			20
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK			28
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA			29
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE			29
ITEM 9A. CONTROLS AND PROCEDURES			29
ITEM 9B. OTHER INFORMATION			29
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE			30
ITEM 11. EXECUTIVE COMPENSATION			30
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS			30
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE			30
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES			30
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES			31
EX-3.2
EX-23.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2

PART I

     Statements and information presented within this Annual Report on Form 10-K for Dynamex Inc. (the “Company” and “Dynamex”) contain “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements can be identified by the use of predictive, future tense or forward-looking terminology, such as “believes”, “anticipates”, “expects”, “estimates”, “may”, “will” or similar terms. Forward-looking statements also include projections of financial performance, statements regarding management’s plans and objectives and statements concerning any assumptions relating to the foregoing. Certain important factors which may cause actual results to vary materially from these forward-looking statements accompany such statements and appear elsewhere in this report, including without limitation, the factors disclosed under “Risk Factors.” All subsequent written or oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified by these factors.

ITEM 1. BUSINESS

General

     Dynamex is a leading provider of same-day delivery and logistics services in the United States and Canada. The Company was organized under the laws of Delaware in 1992 as Parcelway Systems Holding Corp. and changed its name to Dynamex Inc. in 1995. Through its network of business centers, the Company provides same-day, on-demand, door-to-door delivery services utilizing company messengers and independent contractors. In addition to on-demand delivery services, the Company offers same-day scheduled local and regional distribution services, which encompass recurring – often daily – point-to-point or multiple-destination deliveries. The Company also offers fleet outsourcing services and facilities management. These services include design and management of systems to maximize efficiencies in transporting, sorting and delivering customers’ products locally or to multiple cities. With its fleet-management service, the Company may provide and manage a fleet of dedicated vehicles at multiple customer sites. On-demand service can supplement customers’ scheduled distribution arrangements or dedicated fleets. Facilities management services include the operation and management of customers’ mailrooms.

Industry Overview

     The delivery and logistics industry is large and highly fragmented. The industry is composed primarily of same-day, next-day and second-day service providers. The Company primarily services the same-day, intra-city delivery market. The same-day delivery and logistics industry in the United States and Canada consists of several thousand small, independent businesses serving local markets and a small number of multi-location regional or national operators. Relative to smaller operators in the industry, the Company believes that national operators, such as the Company, benefit from several competitive advantages including: national brand identity, professional management, the ability to service accounts on a multi-market basis and centralized administrative and management information systems.

     Management believes that the same-day delivery segment of the transportation industry is benefiting from several trends. For example, the trend toward outsourcing has resulted in numerous shippers turning to third party providers for a range of services including same-day delivery and management of in-house distribution. Many businesses that outsource their distribution requirements prefer to purchase such services from one source that can service multiple cities, thereby decreasing the number of vendors from which they purchase services. Additionally, the growth of “just-in-time” inventory practices designed to reduce inventory-carrying costs has increased the demand for the same-day delivery of inventory. Technological developments such as e-mail and facsimile have increased the pace of business and other transactions, thereby increasing demand for the same-day delivery of a wide array of items, ranging from voluminous documents, which cannot be emailed or sent by facsimile, to critical manufacturing parts and medical devices.

Business Strategy

     The Company intends to expand its operations in the U.S. and Canada to capitalize on the demand of local, regional and national businesses for innovative same-day transportation solutions. The key elements of the Company’s business strategy are as follows:

     Focus on Primary Services. The Company operates in one reportable business segment, same day delivery services, with two primary service offerings: (i) same-day, point-to-point on-demand delivery services and (ii) same-day scheduled local and regional distribution services including outsourcing services such as fleet management and facilities management. The Company focuses its same-day on-demand delivery business on transporting time sensitive items throughout metropolitan areas. The Company can generate a higher yield, relative to delivering documents within a central business district, by delivering items of greater weight over longer distances and providing value added on-demand services (such as non-technical equipment swap-out). These value-added services are generally less vulnerable to price competition than traditional on-demand delivery services. Outsourcing transportation to specialized logistics providers is a trend, and the Company intends to capitalize on that trend by concentrating its logistics services in same-day scheduled local and regional distribution and fleet management. Delivery transactions in a fleet management and distribution program are recurring in nature, which creates the potential for long-term customer relationships.

     Target National, Regional and Local Accounts. The Company’s national account managers focus on acquiring and maintaining national, regional and local accounts. The Company anticipates that its (i) existing multi-city network of locations, (ii) ability to offer value added services such as fleet management to complement its basic same-day delivery services and (iii) experienced, operations oriented management team and sales force, will create further opportunities with many of its existing customers and attract new national, regional and local accounts.

     Pursue Acquisitions. The Company believes that the highly fragmented nature of the delivery and logistics industry creates significant opportunities to expand its network and further leverage its national marketing and operational expertise. The Company will focus its acquisition program principally in the U.S. market. The Company will seek to acquire high quality, same-day delivery businesses in new markets as well as in markets in which it has already established a presence. In addition, the Company may acquire companies that provide complimentary services such as expedite, carthage and white glove deliveries. Management expects that acquisitions in existing markets will provide access to an acquired company’s customer base while creating operating efficiencies within these markets. Management believes that its operating and acquisition experience and the Company’s ability to offer cash as purchase consideration is an important advantage in pursuing acquisition candidates.

Services

     The Company capitalizes on its routing, dispatch and transportation management expertise to provide its customers with a broad range of value added, same-day on-demand and distribution services

     Same-Day On-Demand Delivery. Same-day, on-demand delivery services principally involve Company messengers or independent contractors responding to a customer’s request for immediate pick-up and delivery, generally within a 50 mile radius of the Company’s facilities. The Company also provides same-day inter-city delivery services by utilizing independent contractors and other third-party air or motor carriers. The Company focuses on the delivery of time sensitive items throughout major metropolitan areas, rather than traditional downtown document delivery. For the fiscal years (“FY”) ended July 31, 2010, 2009 and 2008, approximately 32%, 32%, and 33% respectively, of the Company’s sales were generated from same-day on-demand delivery services.

     Same-Day Scheduled Local and Regional Distribution. The Company provides same-day scheduled local and regional distribution services that include regularly scheduled deliveries made on a point-to-point basis and deliveries that may require intermediate handling, routing or sorting of items to be delivered to multiple locations. The Company’s on-demand delivery capabilities are available to supplement scheduled services as needed. A bulk shipment may be received at the Company’s warehouse where it is sub-divided into smaller bundles and sorted for delivery to specified locations. Same-day scheduled distribution services are provided on both a local and multi-city basis. For example, in Ontario, Canada, the Company services the scheduled distribution requirements of a consortium of commercial banks. These banks require regular pick-up of non-negotiable material that is then delivered by the Company on an intra- and inter-city basis.

     The Company’s distribution outsourcing services include fleet management and management of mailroom or other facilities, such as maintenance of call centers for inventory tracking and delivery. With its distribution outsourcing services, the Company is able to apply its same-day delivery capability and logistics experience to design and manage efficient delivery systems for its customers. The distribution outsourcing service offerings can expand or contract depending on the customer’s needs. Management believes that the distribution outsourcing trend has resulted in many customers increasing their use of third-party providers for a variety of delivery services.

     The largest component of the Company’s distribution outsourcing services is fleet management. The Company provides transportation services primarily for customers that previously managed such operations in-house. This service is generally provided with a fleet of dedicated vehicles that may display the customer’s logo and colors; the fleet of vehicles can range from passenger cars to tractor-trailers (or any combination). In addition, the Company’s on-demand delivery capability may supplement the customer’s fleet, allowing the customer to maintain a smaller dedicated fleet, which is more efficient. The Company’s fleet management services include designing and managing systems to maximize efficiencies in transporting, sorting and delivering customers’ products on a local and multi-city basis.

     By outsourcing their fleet management, the Company’s customers (i) utilize the Company’s distribution and route optimization experience to deliver their products more efficiently, (ii) gain the flexibility to expand or contract fleet size as necessary, and (iii) reduce the costs and administrative burden associated with owning or leasing vehicles and hiring and managing transportation employees.

     For the fiscal years ended July 31, 2010, 2009 and 2008, approximately 68%, 68%, and 67%, respectively, of the Company’s sales were generated from same-day scheduled local and regional distribution services.

     Each of the Company’s business centers generally offers the same core services. The mix of services can vary by location, depending on the customer base, competition, geographic characteristics, available labor and general economic environment. The Company can bundle its various delivery and logistics services to create customized distribution solutions and, by doing so, seeks to become the single source for its customers’ distribution needs.

Operations

     The Company’s operations are divided into regions, four U.S. and four Canadian, with each of the Company’s 51 business centers assigned to the appropriate region. Business center operations are locally managed with regional and national oversight and support provided as necessary. A business center manager is assigned to each business center and is accountable for all aspects of such business center operations including its profitability. Each business center manager reports to a regional vice president with similar responsibilities for all business centers within his region. Certain administrative and marketing functions may be centralized for multiple business centers in a given city or region. Dynamex believes that the strong operational and sales and marketing background of its senior management is important to building brand identity throughout the United States and Canada while simultaneously overseeing and encouraging individual managers to be successful in their local markets.

     Same-Day On-Demand Delivery. Most business centers have operations staffed by dispatchers, as well as customer service representatives and operations personnel. Incoming calls are received by trained customer service representatives who utilize computer systems to provide the customer with a job-specific price quote and to transmit the order to the appropriate dispatch location. All of the Company’s clients have access to a web-based electronic data interface to enter dispatch requirements, make inquiries and receive billing information. A dispatcher coordinates shipments for delivery. Shipments are routed according to the type and weight of the shipment, the geographic distance between the origin and destination, and the time allotted for the delivery.

     Same-Day Scheduled Local and Regional Distribution. A dispatcher manages the delivery flow by coordinating the scheduled deliveries with available drivers. In many cases, certain drivers will handle a group of scheduled routes on a recurring basis. Any intermediate handling required for a scheduled distribution is conducted at the Company’s warehouse or the customer’s facility.

     The largest component of the Company’s distribution outsourcing services is its fleet management. Fleet management services are coordinated by the Company’s logistics specialists who have experience in designing, implementing and managing integrated networks for transportation services. Based upon the specialist’s analysis of a customer’s fleet and distribution requirements, the Company develops a plan to optimize fleet configuration and

route design. The Company coordinates with independent contractors to implement the fleet management plan. Such independent contractors are generally dedicated to a particular customer and may display the customer’s name and logo on its vehicles. The Company can supplement these dedicated independent contractors with its on-demand capability as necessary.

     Prices for the Company’s services are determined at the local level based on the distance, weight and time-sensitivity of a particular delivery. The Company generally enters into customer contracts for local and regional distribution, and fleet and facilities management. The customer can generally terminate the contract with notice that ranges from 30 to 90 days. The Company does not typically enter into contracts with its customers for on-demand delivery services.

     Substantially all of the Dynamex drivers are independent contractors who provide their own vehicles, pay all expenses of operating their vehicles and receive a percentage of the delivery charge as payment for their services. Management believes that this makes the drivers more responsive and efficient. Also, this significantly lowers the capital required to operate the business, which reduces the Company’s fixed costs.

Sales and Marketing

     The Company markets its services through an integrated sales force comprised of national sales executives, local account executives and inside sales executives. The total sales force including management, national sales executives, local account executives, inside sales executives and administrative sales support staff totaled 111 associates as of July 31, 2010.

     The Company’s sales management team is comprised of three local and/or national sales vice presidents, seven regional sales directors and four sales managers. The company’s sales team is comprised of 17 national sales executives, 68 local account executives, eight inside sales executives and four administrative personnel.

     The national sales executive’s focus is on national customers that can utilize the Company’s services across multiple markets and geographies. In addition, the national sales executives augment local efforts to expand the demand for services and identify cross-selling opportunities with larger companies with multiple locations.

     The Company’s local account executives focus on regional business development initiatives. This group targets business opportunities in their respective markets and geographies and conduct regular calls to existing and potential customers to identify and support delivery and logistics needs. Additionally, the inside sales executives contact existing customers to assess customer requirements and identify additional sales opportunities.

     The Company is expanding the sales program and investing in technology to reach customers that need to work with service providers that offer a range of logistics solutions across the United States and Canada. The Company maintains a data base of sales patterns to analyze customer needs, identify cross-selling opportunities and conduct performance audits. The sales team is an important component of the Company. They not only focus on business development opportunities on a local and national level but also customer service which includes prompt response to customer inquiries.

Customers

     The Company’s target customer is a business that distributes time-sensitive items to multiple locations. The primary industries served by the Company include medical laboratories and hospitals, office products, pharmaceuticals, retail electronics, financial services, auto parts, construction and Canadian governmental agencies. During the years ended July 31, 2010, 2009 and 2008, sales to Office Depot, Inc. represented approximately 11.6%, 14.0% and 14.6%, respectively, of the Company’s sales. Sales to the Company’s five largest customers, including Office Depot, represented approximately 22%, 24% and 27% of the Company’s consolidated sales for the years ended July 31, 2010, 2009 and 2008, respectively.

     A significant number of the Company’s customers are located in Canada. For the fiscal years ended July 31, 2010, 2009 and 2008, approximately 38%, 36% and 38% of the Company’s sales, respectively, were generated in Canada. See Note 12 of Notes to the Consolidated Financial Statements for additional information concerning the Company’s foreign operations.

Competition

     The market for the Company’s same-day delivery and logistics services has been and is expected to remain highly competitive. The Company competes on reliability, quality, breadth of service and price.

     Most of the Company’s competitors in the same-day, intra-city delivery market are privately held companies that operate in only one location, with no single competitor dominating the market. Price competition for basic delivery services is particularly intense.

     The market for the Company’s logistics services is also highly competitive, and can be expected to remain competitive as additional companies seek to capitalize on the growth in the industry. The Company’s principal competitors for such services are other delivery companies and in-house transportation departments. The Company generally competes on the basis of price and its ability to provide customized service regionally and nationally, which is an important advantage in this highly fragmented industry.

     The Company’s principal competitors for drivers are other delivery companies within each market area. Management believes that payments to independent contractors, which are based on a percentage of the delivery charge, the large volume of available work and the use of proprietary technology, are factors that are attractive to independent contractors and help the Company to recruit and retain independent contractors.

Regulation

     The Company’s business and operations are subject to various federal (U.S. and Canadian), state, provincial and local regulations and, in many instances, require permits and licenses from state authorities. The Company holds nationwide general commodities authority from the Federal Highway Administration of the U.S. Department of Transportation to transport certain property as a motor carrier on an inter-state basis within the contiguous 48 states. Where required, the Company holds statewide general commodities authority. The Company holds permanent extra-provincial (and where required, intra-provincial) operating authority in all Canadian provinces where the Company does business.

     In connection with the operation of certain motor vehicles, the handling of hazardous materials and other safety matters, including insurance requirements, the Company is subject to regulation by the U. S. Department of Transportation, the states and by the appropriate Canadian federal and provincial regulations. The Company is also subject to regulation by the U. S. Department of Transportation and the Occupational Safety and Health Administration, provincial occupational health and safety legislation and federal and provincial employment laws concerning such matters as hours of work and driver logbooks. To the extent the Company holds licenses to operate two-way radios to communicate with its fleet, the Federal Communications Commission regulates the Company. The Company believes that it is in substantial compliance with all of these regulations. The failure of the Company to comply with the applicable regulations could result in substantial fines or possible revocations of one or more of the Company’s operating permits.

Safety

     From time to time, the independent contractors performing services for the Company are involved in accidents. The Company carries liability insurance with a per claim limit of $30 million. Independent contractors are required to maintain liability insurance of at least $250,000 per accident or higher amounts as required. The Company also has insurance policies covering property (owned, leased and under consignment to Dynamex), which coverage includes all independent contractors. The Company reviews prospective independent contractors to ensure that they have acceptable driving records and conducts criminal background checks via a third party agency. In addition, where required by applicable law, contractually or by Company policy, the Company requires prospective independent contractors to take a physical examination and to pass a drug test. Independent contractors are provided information on any additional safety requirements as dictated by customer specifications.

Intellectual Property

     The Company has registered “DYNAMEX”, “DXFRANCHISE POWERED BY DYNAMEX”, “POWERED BY DYNAMEX”, “DYNAMEX DELIVERS NOW”, “DXNOW.COM” and “STRATEGIC STOCKING LOCATIONS” as federal trademarks in the Canadian Intellectual Office and the U.S. Patents and Trademark’s office for federal trademark registration of such names. No assurance can be given that any such registration will be effective to prevent others from using the trademark concurrently or to allow the Company to use the trademark in certain locations.

Employees

     At July 31, 2010, the Company employed approximately 1,500 workers in the following roles: approximately 800 in various management, supervisory, sales, and administrative positions in branch and regional operations, approximately 550 employed as messengers and mailroom workers, and approximately 150 in various corporate functions such as information technology, finance, sales, and marketing. Approximately 70 employees are represented by major international labor unions in Canada.

Independent Contractors

     At July 31, 2010, the Company had contracts with approximately 3,700 independent contractors of which approximately 1,700 are located in Canada and approximately 2,000 are located in the United States. Approximately 70% of the independent contractors in Canada are represented by major international labor unions. Unions do not represent any of the Company’s U.S. independent contractors. Management believes that the Company’s relationship with the independent contractors is good. See “Risk Factors — Certain Tax and Legal Matters Related to Independent Contractors”, and “Risk Factors — We Are Dependent Upon Independent Contractors Represented by International Labor Unions in Canada.”

Available Information

     The Company electronically files its annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K with the Securities and Exchange Commission (“SEC”). Copies of the Company’s filings with the SEC may be obtained from its website at HTTP://WWW.DYNAMEX.COM or at the SEC’s website, at HTTP://WWW.SEC.GOV. Access to these filings is free of charge.

ITEM 1A. RISK FACTORS

     In addition to other information in this report, the following risk factors should be considered carefully in evaluating the Company and its business. This report contains forward-looking statements, which involve risks and uncertainties. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth in the following risk factors and elsewhere in this report.

Certain Tax and Legal Matters Related to Independent Contractors

     Substantially all of our drivers at July 31, 2010 were independent contractors as opposed to employees of the Company. The Company does not pay or withhold any federal or state employment tax with respect to or on behalf of independent contractors. From time to time, taxing authorities in the United States and Canada have sought to assert that independent contractors in the transportation industry, including those utilized by the Company, are employees, rather than independent contractors. The Company believes that the independent contractors utilized by the Company are not employees under existing interpretations of federal (U.S. and Canadian), state and provincial laws. However, there can be no assurance that federal (U.S. and Canadian), state, provincial authorities or independent contractors will not challenge this position, or that other laws or regulations, including tax laws, or interpretations thereof, will not change. If, as a result of any of the foregoing, the Company were required to pay withholding taxes and pay for and administer added employee benefits to these drivers, the Company’s operating costs would increase. Additionally, if the Company is required to pay back-up withholding with respect to amounts previously paid to such drivers, it may also be required to pay penalties or be subject to other liabilities as a result of incorrect classification of such drivers. Any of the foregoing circumstances could have a material adverse impact on the Company’s financial condition and results of operations, and/or cause the Company to restate financial information from prior periods. See “Business — Services” and “ Business — Independent Contractors.”

     Certain states, including California and Massachusetts, have alleged that the Company has misclassified its drivers as independent contractors rather than employees. The California Employment Development Department conducted an employment tax audit of the Company’s California operations in 2006. Based on its conclusion that certain independent contractors used by the Company should be reclassified as employees, a Notice of Assessment was issued by the EDD in April 2007. The Company believes that the independent contractors were properly classified and has filed a Petition for Reassessment, however, the Company recorded a liability of $0.8 million in fiscal year 2006. The California Employment Development Department has recently commenced an additional audit to include subsequent years.

     The Company is currently the subject of a wage/hour examination in Massachusetts related to the alleged misclassification of independent contractors.

     The Company is currently a party to lawsuit brought by certain independent contractors in California alleging, among other things, that the Company has misclassified its drivers in California as independent contractors rather than employees and seeking recovery of overtime pay and other benefits and expense reimbursements. We believe that our classification of independent contractors is proper under applicable law. In the event of an adverse determination in these actions, the Company could be required to pay overtime pay and other benefits and expense reimbursements to former and current independent contractors who are members of the class for prior periods and, in the case of current independent contractors, prospectively. To the extent that we are required to pay our independent contractors overtime pay and other benefits and expense reimbursements, our operating costs will increase, which could adversely impact our financial condition and results of operations. See “Business – Services” and “Business – Independent Contractors” and “Legal Proceedings” in Part I, Item 3 of this Form 10-K.

Loss of a Key Customer May Adversely Impact our Business

The Company’s five largest customers represent over 20% of the Company’s consolidated sales. The loss of any of these customers may adversely impact our business, financial condition and results of operations.

We Are Dependent on Availability of Independent Contractors

     We are dependent upon our ability to attract and retain independent contractors who possess the skills and experience necessary to meet the needs of our operations. We compete in markets where unemployment has

traditionally been relatively low and the competition for independent contractors is intense. We must continually evaluate and upgrade our pool of available independent contractors to keep pace with demands for delivery services. We have no assurance that qualified independent contractors will continue to be available in sufficient numbers and on terms acceptable to us. Our inability to attract and retain qualified independent contractors could have a material adverse impact on our business, financial condition and results of operations.

Global Economic Conditions Could Adversely Affect the Company’s Business and Financial Results

     Most sectors of the economy have been or could be adversely impacted by slowdowns in economic activity. Any resulting decreases in customer traffic or average value per transaction will negatively impact the Company’s financial performance as reduced sales result in operations de-leveraging which creates downward pressure on margins that could potentially have a material adverse impact on the Company’s liquidity and capital resources, including our ability to raise additional capital if needed, the ability of banks to honor draws on our credit facility, or otherwise negatively impact the Company’s business and financial results.

We Depend Upon Key Personnel for Our Continued Operations

     Our success is largely dependent on the skills, experience and performance of certain key members of our management. The loss of the services of any of these key employees could have a material adverse impact on our business, financial condition and results of operations. Our future success and plans for growth also depend on our ability to attract and retain skilled personnel in all areas of our business. There is strong competition for skilled personnel in the same-day delivery and logistics businesses.

We Are Dependent Upon Independent Contractors Represented by International Labor Unions in Canada

     Approximately 70% of our independent contractor drivers in Canada are represented by major international labor unions. We have never had a work stoppage and management believes our relationships with those unions are good. Should we experience a work stoppage in the future, this could have a material adverse impact on the Company’s financial condition and results of operations. See “Business – Independent Contractors.”

Competition May Adversely Affect Our Results

     The market for same-day delivery and logistics services has been and is expected to remain highly competitive. Competition is often intense, particularly for basic delivery services. High fragmentation and low barriers to entry characterize the industry. We compete with other companies in the industry for customers and also for qualified independent contractors. Because of the low cost of entry, companies that do not currently operate delivery and logistics businesses may enter the industry in the future. See “Business – Competition” in Part I.

We Are Highly Dependent Upon Our Technology Infrastructure

     We rely heavily on technology to operate our transportation and business networks, and any disruption to our technology infrastructure or our website could harm our operations and our reputation among our customers. Our ability to attract and retain customers and to compete effectively depends in part upon the sophistication and reliability of our technology network, including our ability to provide features of service that are important to our customers. Any disruption to our technology infrastructure or our web site could adversely impact our customer service, our ability to receive orders and respond promptly to delivery assignments which may result in increased costs. While we have invested and will continue to invest in technology security initiatives and disaster recovery plans, these measures cannot fully insulate us from technology disruptions and the resulting adverse impact on our business, financial condition and results of operations.

Fluctuations of Foreign Exchange Rates May Adversely Affect Our Results

     About one-third of the Company’s operations are conducted in Canada. Exchange rate fluctuations between the U.S. and Canadian dollar result in fluctuations in reported amounts from Canadian operations in our Consolidated Financial Statements. The Canadian dollar is the functional currency for Canadian operations; therefore, any change in the exchange rate will affect our reported sales, expenses and net income. Historically, we have not entered into hedging transactions with respect to our foreign currency exposure, but may do so in the future. We cannot be assured that fluctuations in foreign currency exchange rates will not have a material adverse impact on our business, financial condition or results of operations. See “Management’s Discussion and Analysis of Financial Condition and Results of Operation” in Part 7 of this Form 10-K.

An Increase in Claims May Expose Us to Losses

     As of July 31, 2010, the Company utilized the services of approximately 3,700 independent contractors, who may occasionally be involved in accidents or other activities that may give rise to liability claims. We currently carry liability insurance with a per-occurrence and an aggregate limit of $30 million. Our independent contractors are required to maintain liability insurance of at least $250,000 per accident or higher amounts as required. The Company also has insurance policies covering property (owned, leased and under consignment to Dynamex), which coverage includes all independent contractors. We make no assurance that we will be able to obtain insurance at acceptable levels and costs in the future or that our insurer will be solvent at the time of settlement of an insured claim. We make no assurance that we have the proper amount of coverage – whether under the liability insurance or the surety bonds – relative to potential claims. If we were to experience a material increase in the frequency or severity of accidents, liability claims, workers’ compensation claims or unfavorable resolutions of claims, our business, financial condition and results of operations could be materially adversely impacted.

Rising Fuel Costs May Adversely Impact Our Financial Condition and Results of Operations

     The independent contractors we engage are responsible for all vehicle expense including maintenance, insurance, fuel and all other operating costs. To offset the impact of fuel price increases on our independent contractors, we make every reasonable effort to adjust customer billings to include the higher cost of fuel. If future fuel cost adjustments are insufficient to offset independent contractors’ costs, we may be unable to attract a sufficient number of independent contractors, and this may adversely impact our business, financial condition and results of operations.

Failure to Maintain Permits and Licensing May Adversely Impact Our Ability to Operate

     Although certain aspects of the transportation industry have been significantly deregulated, our delivery operations are still subject to various federal (U.S. and Canadian), state, provincial and local laws, ordinances and regulations that in many instances require certificates, permits and licenses. If we fail to maintain required certificates, permits or licenses, or if we fail to comply with applicable laws, ordinances or regulations, we may incur substantial fines or possible revocation of our authority to conduct certain of our operations. See “Business — Regulation.”

Technological Advances May Adversely Impact Our Business

     Technological advances in the nature of facsimile, electronic mail and electronic signature capture have affected the market for on-demand document delivery services. Although we have shifted our focus to logistics and the distribution of items that cannot be faxed or emailed, there can be no assurance that these or other technologies will not have a material adverse impact on our business, financial condition and results of operations in the future.

We May Need Additional Financing to Pursue Our Acquisition Strategy

     We intend to pursue acquisitions that are complementary to our existing operations. We may be required to incur additional debt and issue additional securities that may potentially result in dilution to current holders and also

may result in increased goodwill, intangible assets and amortization expense. We have no assurance that we will be able to obtain additional financing if necessary, or that such financing can be obtained on terms we will deem acceptable. As a result, we may be unable to successfully implement our acquisition strategy. See “Business —Industry Overview” and “Management’s Discussion and Analysis of Financial Condition and Results of Operation — Liquidity and Capital Resources” in Item 7 of this Form 10-K

Factors Beyond Our Control May Affect the Volatility of Our Stock Price

     Prices for our common stock will be determined in the marketplace and may be influenced by many factors, including the depth and liquidity of the market for our common stock, investor perception of us and general economic and market conditions. Variations in our operating results, general trends in the industry and other factors could cause the market price of our common stock to fluctuate significantly. In addition, general trends and developments in the industry, government regulation and other factors could have a significant impact on the price of our common stock. The stock market has, on occasion, experienced extreme price and volume fluctuations that have often particularly affected market prices for smaller companies and that often have been unrelated or disproportionate to the operating performance of the affected companies, and the price of our common stock could be affected by such fluctuations.

ITEM 1B. UNRESOLVED STAFF COMMENTS

     None.

ITEM 2. PROPERTIES

     The Company leased facilities in 84 locations at July 31, 2010. These facilities are principally used for operations and general and administrative functions. The chart below summarizes the locations of facilities that the Company leases:

		Number of
		Leased
Location		Properties
Unites States
Arizona			1
California			11
Colorado			1
Connecticut			1
Deleware			1
Georgia			1
Illinois			2
Indiana			1
Kansas			1
Massachusetts			1
Maryland			1
Michigan			1
Minnesota			2
New Jersey			3
Nevada			1
New York			6
Ohio			3
Oregon			1
Pennsylvania			3
Tennessee			1
Texas			4
Virginia			3
Washington			2
United States Total			52

		Number of
		Leased
Location		Properties
Canada
Alberta			5
British Columbia			7
Manitoba			2
Newfoundland			1
Nova Scotia			1
Ontario			12
Quebec			2
Saskatchewan			2
Canada Total			32
Grand Total			84

     The Company believes that its properties are well maintained, in good condition and adequate for its present needs. The Company anticipates that suitable additional or replacement space will be available when required.

     Facility rental expense for the fiscal years ended July 31, 2010, 2009 and 2008 was approximately $12.1 million, $11.6 million and $10.6 million, respectively. The Company’s principal executive offices are located in Dallas, Texas. See Note 6 of Notes to the Consolidated Financial Statements for additional information about lease payments.

ITEM 3. LEGAL PROCEEDINGS

     The California Employment Development Department (EDD) conducted an employment tax audit of the Company’s California operations in 2006. Based on its conclusion that certain independent contractors used by the Company should be reclassified as employees, a Notice of Assessment was issued by the EDD in April 2007 in the amount of $2.8 million; $2.0 million of which the EDD claims represents personal income tax of the reclassified individuals. The Company intends to vigorously contest the assessment; however, the Company recorded a liability of $0.8 million in fiscal year 2006. The Company has collected and submitted documentation which will work to reduce the personal income tax (PIT) portion of the assessment through the California PIT abatement process. As of July 31, 2010, the Company had been notified that the amount of personal income tax assessed by the Notice of Assessment had been abated by $0.8 million. The Company expects the remaining personal income tax to also be abated. The Company believes that the independent contractors were properly classified and has filed a Petition for Reassessment. The California Employment Development Department has recently commenced an audit of subsequent years.

     On April 15, 2005, a putative class action was filed against the Company by a former independent contractor in the Superior Court of California, Los Angeles County, alleging that the Company unlawfully misclassified its California drivers as independent contractors, rather than employees, and asserting, as a consequence, entitlement on behalf of the purported class claimants to overtime compensation and other benefits under California wage and hour laws, reimbursement of certain operating expenses, and various insurance and other benefits and the obligation of the Company to pay employer payroll taxes under federal and state law. In early February 2009, Plaintiff filed an Amended Complaint, which among other matters, added an additional named Plaintiff. Plaintiffs filed a Motion for Class Certification in June 2009, seeking the certification of a Class with four Subclasses, each dependent on the type of service rendered by the independent contractor and the weight of the vehicle provided by the independent contractor. On July 28, 2009, the Court granted the Motion. The four subclasses were each subject to between four and eight exclusions. In January 2010, the Parties agreed to a process whereby the Court modified its earlier Order granting certification of a Class to clarify that the earlier Order “conditionally” granted Certification. The Order initiated a process whereby a questionnaire was to be sent by an impartial Class Administrator to each potential member of the Class to gather information. As a part of the process, the Court would dismiss from the Class those individuals who failed to respond to the questionnaire within the allotted time. Incomplete or deficient questionnaires could be cured through written or telephonic inquiry by the Class Administrator. Approximately 260 questionnaires were timely returned. Further clarification and additional information has been requested from approximately 120 of the individuals returning the questionnaires with a due date of August 12, 2010. A further certification hearing will be held on October 25, 2010, and a tentative trial date has been set for April 4, 2011.

     The Company believes that its independent contractors are properly classified as independent contractors and intends to vigorously defend this litigation. Given the nature and preliminary status of the claims, however, the Company cannot yet determine the amount or a reasonable range of potential loss in these matters, if any.

     On May 19, 2009, a truck leasing company filed an action against the Company in U.S. District Court raising claims for breach of contract, promissory estoppel, unjust enrichment, conversion, and tortious interference with business relationships. The action further seeks injunctive relief and punitive damages. The action relates to a certain Program Agreement between the truck leasing company and the Company, the lease of vehicles to various independent contractors and the early termination of such leases. The Company filed a response denying all the claims and presenting affirmative defenses. In December 2009, the truck leasing company filed an Amended Complaint adding both a customer of the Company as an additional defendant and making additional claims against the Company. A confidential agreement in principle to resolve and settle all claims against the Company was reached in July 2010.

     The Company is currently the subject of a wage/hour examination in Massachusetts related to the alleged misclassification of independent contractors. The Company believes that the independent contractors are properly classified and intends to vigorously contest this examination. Given the nature and preliminary status of the examination, the Company cannot yet determine the amount or a reasonable range of potential loss in this matter, if any.

     The Company is a party to various legal proceedings arising in the ordinary course of its business. The Company believes that the ultimate resolution of these proceedings will not, in the aggregate, have a material adverse impact on the business, financial condition, results of operations, or liquidity of the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information — The Company’s common stock commenced trading on the NASDAQ Global Select Market under the symbol “DDMX” on March 14, 2005. Previously, the common stock was listed on the AMEX. The following table summarizes, for the periods indicated, the range of high and low closing sale prices for our common stock, as reported on the NASDAQ Global Select Market. The NASDAQ prices represent inter-dealer quotations without retail markups, markdowns or commissions and may not represent actual transactions.

Bid

Bid

Fiscal 2010

High

Low

High

Low

First Quarter

$

19.66

$

15.13

10/22/09

08/14/09

Second Quarter

18.89

15.92

11/09/09

01/29/10

Third Quarter

18.14

14.61

04/29/10

02/04/10

Fourth Quarter

17.97

12.15

05/12/10

06/29/10

Fiscal 2009

High

Low

High

Low

First Quarter

$

29.80

$

20.74

09/18/08

10/28/08

Second Quarter

25.45

11.02

11/03/08

12/16/08

Third Quarter

14.93

10.62

04/21/09

02/04/09

Fourth Quarter

18.18

13.92

05/08/09

07/02/09

Stock Price Performance

     Set forth below is a line graph indicating the stock price performance of the Company’s common stock for the period beginning August 1, 2005 and ending July 31, 2010 as contrasted with the NASDAQ Composite Index ** and the AMEX Composite Index and the Russell 2000 Stock Index***. The graph assumes that $100 was invested at the beginning of the period and has been adjusted for any stock dividends distributed after August 1, 2010. No cash or stock dividends have been paid during the current fiscal year.

COMPARATIVE CUMULATIVE TOTAL RETURN
AMONG DYNAMEX INC.,
NASDAQ COMPOSITE INDEX, AMEX COMPOSITE INDEX
AND RUSSELL 2000 INDEX

ASSUMES $100 INVESTED ON AUGUST 1, 2005
ASSUMES DIVIDENDS REINVESTED
FISCAL YEAR ENDING JULY 31, 2010

     Holders — At August 31, 2010, the approximate number of holders of record of common stock was 214, although there are a much larger number of beneficial owners.

     Dividends — The Company has not declared or paid any cash dividends on its common stock since its inception. The Company does not anticipate paying cash dividends in fiscal 2011. See “Management’s Discussion and Analysis of Financial Condition and Results of Operation – Liquidity and Capital Resources” in Item 7 of this Form 10-K.

     Securities Authorized for Issuance Under Equity Compensation Plans – The following table provides information regarding the Company’s equity compensation plan as of July 31, 2010.

		Number of securities to be								Number of securities
		issued upon exercise of				Weighted-average exercise				remaining available for future
		outstanding options,				price of outstanding				issuance under equity
Plan category		warrants and rights				options, warrants and rights				compensation plans
Equity compensation plans approved by security holders			550,764			$	21.60				995,436
Equity compensation plans not approved by security holders			—				—				—
Total			550,764			$	21.60				995,436

ITEM 6. SELECTED FINANCIAL DATA

     The following selected historical financial and other data for the three years ended July 31, 2010 and the balance sheet data at July 31, 2010 and 2009 have been derived from the audited Consolidated Financial Statements of the Company appearing elsewhere herein. The following selected historical financial and other data for the two years ended July 31, 2007 and the balance sheet data at July 31, 2008, 2007 and 2006 have been derived from the Consolidated Financial Statements of the Company not appearing herein. The selected financial data are qualified in their entirety, and should be read in conjunction with the Company’s Consolidated Financial Statements, including the notes thereto, and “Management’s Discussion and Analysis of Financial Condition and Results of Operation” appearing elsewhere herein.

		Years ending July 31,
		2010				2009				2008				2007				2006
		(in thousands, except per share amounts)
Statements of operations data:
Sales		$	406,448			$	402,109			$	455,776			$	413,774			$	358,374
Operating expenses (1)			385,601				383,483				427,730				389,660				336,437
Depreciation and amortization			4,240				3,440				2,825				2,357				1,931
Restructuring cost (4)			282				1,104				—				—				—
Operating income			16,325				14,082				25,221				21,757				20,006
Interest expense			179				177				232				299				295
Other income (2)			(289	)			(411	)			(516	)			(2,079	)			(275	)
Income before income taxes			16,435				14,316				25,505				23,537				19,986
Income taxes			5,780				5,566				9,722				8,575				7,594
Net income		$	10,655			$	8,750			$	15,783			$	14,962			$	12,392
Earnings per share:
basic		$	1.09			$	0.89			$	1.55			$	1.41			$	1.12
diluted		$	1.09			$	0.89			$	1.53			$	1.39			$	1.11
Weighted average common shares outstanding:
basic			9,736				9,782				10,207				10,612				11,057
diluted			9,753				9,809				10,297				10,738				11,197
Other data:
Earnings before interest, taxes, depreciation and amortization (EBITDA) (3)
Net income		$	10,655			$	8,750			$	15,783			$	14,962			$	12,392
Adjustments:
Income tax expense			5,780				5,566				9,722				8,575				7,594
Interest expense			179				177				232				299				295
Depreciation and amortization			4,240				3,440				2,825				2,357				1,931
EBITDA		$	20,854			$	17,933			$	28,562			$	26,193			$	22,212

		July 31,
		2010				2009				2008				2007				2006
		(in thousands)
Balance sheet data:
Working capital		$	53,071			$	38,319			$	39,874			$	23,337			$	18,889
Total assets			150,266				129,499				138,624				121,040				110,525
Long-term debt, excluding current portion			—				—				—				—				905
Stockholders’ equity			109,765				96,080				97,634				81,409				79,212

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

     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 Operation constitute forward-looking statements. Certain factors, which may cause actual results to vary materially from these forward-looking statements, accompany such statements or appear elsewhere in this report, including without limitation, the factors disclosed under “Risk Factors.”

General

     Sales consist primarily of charges to customers for delivery services and weekly or monthly charges for recurring services, such as facilities management. Sales are recognized when the service is performed. The yield (value per transaction) for a particular service is dependent upon a number of factors including size and weight of articles transported, distance transported, special handling requirements, requested delivery time and local market conditions. Generally, articles of greater weight transported over longer distances and those that require special handling produce higher yields.

     A significant portion of the Company’s sales are generated in Canada. For the fiscal years ended July 31, 2010, 2009, and 2008, approximately 38.0%, 35.9% and 38.4%, respectively, of sales were generated in Canada. The exchange rate between the Canadian dollar and the U.S. dollar increased 11.6% in the twelve month period ended July 31, 2010, compared to the corresponding period in the prior year, which had the effect of increasing reported sales by $16 million. During FY 2009, the exchange rate between the Canadian dollar and the U.S. dollar decreased 14.0%, compared to FY 2008, which had the effect of decreasing 2009 reported sales by $20 million.

     The conversion rate of Canadian dollars to U.S. dollars increased during the fiscal year ending July 31, 2010 compared to July 31, 2009 and decreased during the fiscal year ending July 31, 2009 compared to July 31, 2008. As the Canadian dollar is the functional currency for the Company’s Canadian operations, these changes in the exchange rate have affected the Company’s reported sales and net income. Management does not believe that the effect of these changes on the Company’s net income for the fiscal years ended July 31, 2010, 2009 and 2008 has been significant, although there can be no assurance that fluctuations in such currency exchange rate will not, in the future, have a material effect on the Company’s business, financial condition or results of operations.

     Operating expenses are purchased transportation, salaries and employee benefits, facilities and communication, depreciation and amortization and other costs. Purchased transportation is driver, messenger, and third-party delivery charges. Salary and employee benefits cost includes employee salaries, benefits and workers’ compensation costs. Facilities and communications includes warehouse, radio and communications costs. Other costs include bad debt, insurance, uniforms, office costs, and general and administrative costs. Substantially all of the drivers used by the Company in purchased transportation are independent contractors who provide their own vehicles, as opposed to employees of the Company.

     Generally, the Company’s on-demand purchased transportation costs are at a lower percentage of sales, yielding higher margins before overhead, compared to scheduled local and regional distribution or fleet management services. Purchased transportation costs for on-demand driver services represent a lower percentage of sales since the vehicles are generally smaller. However, scheduled local and regional distribution and fleet management services generally have fewer administrative requirements related to order taking, dispatching drivers and billing and collection. As a result of these variances, the Company’s operating expenses are dependent in part on the mix of business for a particular period.

     During the twelve months ended July 31, 2010, 2009, and 2008 sales to Office Depot, Inc. represented approximately 11.6%, 14.0%, and 14.6% respectively, of the Company’s consolidated sales. Sales to the Company’s five largest customers, including Office Depot, represented approximately 22%, 24%, and 27% of the Company’s consolidated sales for the twelve months ended July 31, 2010, 2009, and 2008 respectively.

Critical Accounting Policies

     The Company believes that the following are its most significant accounting policies:

     Use of estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the balance sheet dates and the reported amounts of revenues and expenses. Actual results may differ from such estimates. The Company reviews all significant estimates affecting the financial statements on a recurring basis and records the effect of any necessary adjustments prior to their issuance.

     Revenue recognition — Revenues are recognized after services are rendered to customers. There may be a time lag between pickup and delivery and the generation of an invoice. Accordingly, unbilled revenue is recognized for those shipments that have been delivered but have not been invoiced.

     Intangibles — Intangibles arise from acquisitions accounted for as purchased business combinations and from the payment of financing costs associated with the Company’s credit facility. Intangibles include goodwill, covenants not-to-compete and other identifiable intangibles. Goodwill represents the excess of the purchase price over all tangible and identifiable intangible net assets acquired. The Company tests goodwill for impairment at least annually. The Company has two reporting units for the purpose of assessing potential future impairments of goodwill, Canada and the United States. These two regions were identified as reporting units in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 350-20-35-34, Intangibles, because discrete financial information is available and management regularly reviews the operating results of these regions. The Company performs its annual goodwill impairment test as of the first day of the fourth quarter of each year. Based on this test, the Company has determined that no impairment exists during the three years ended July 31, 2010. Other intangible assets are being amortized over periods ranging from 2 to 25 years.

     Other assets, recoverable contract contingency costs — The Company has recorded as an Other Asset certain costs related to contractually reimbursable contingency costs incurred in connection with the launch of certain contracts in accordance with ASC 340-10-05, Pre-Production Costs Related to Long-Term Supply Arrangements, These costs will be recovered during the initial contract term, from a designated portion of the unit price specified in the contract. Should the contract be cancelled for any reason, the customer is obligated to reimburse the Company for any unamortized balance. Recoverable contract contingency costs capitalized, net of amortization, at July 31, 2010 and 2009 amount to $340 thousand and $778 thousand, respectively.

     Self-insured claims liability — The Company is primarily self-insured for U.S. workers’ compensation and non-owned vehicle liability claims. A liability for unpaid claims and the associated claim expenses, including incurred but unreported losses, are recorded based on the Company’s estimates of the aggregate liability for claims incurred. The Company’s estimates are based on actual experience and historical assumptions of development of unpaid liabilities over time. Factors affecting the determination of amounts to be accrued for claims include, but are not limited to, cost, frequency, or payment patterns resulting from new types of claims, the hazard level of our operations, tort reform or other legislative changes, unfavorable jury decisions, court interpretations, changes in the medical conditions of claimants and economic factors such as inflation. The method of calculating the estimated accrued liability for claims is subject to inherent uncertainty. If actual results are less favorable than what are used to calculate the accrued liability, the Company would have to record expenses in excess of what has already been accrued.

     Allowance for doubtful accounts — The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make payments when due or within a reasonable period of time thereafter. Estimates are used in determining this allowance based on the Company’s historical collection experience, current trends, credit policy and a percentage of accounts receivable by aging category. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make required payments, additional allowances may be required. The allowance for doubtful accounts represented approximately 2.2% of accounts receivable at July 31, 2010 compared to approximately 4.1% at July 31, 2009. The allowance for doubtful accounts was higher last year due to the onset of the intensified global financial crisis. The decrease in the allowance from the prior year is due to an improvement in the Company’s collections statistics.

     Income taxes — Income taxes consist of taxes currently due plus deferred taxes related primarily to differences between the financial reporting and income tax reporting. The net deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. During the year ended July 31, 2009, the Company repatriated approximately $4.7 million from its Canadian subsidiary. The Company establishes valuation allowances in accordance with the provisions of ASC 740 Income Taxes.

     Stock-based compensation — ASC 718, Compensation — Stock Compensation, requires the measurement of all employee share-based payments to employees, including grants of employee stock options, using a fair-value-based method and the recording of such expense in our consolidated statements of operations.

     The fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in 2010, 2009, and 2008, respectively: dividend yield of 0% for all years; expected volatility of 48%, 43%, and 43%; risk-free interest rate of 2.4%, 2.8%, and 3.9%, and expected lives of an average of 6.8, 6.9 and 7.2 years for options granted to employees and of 6.7, 6.8 and 6.8 years for options granted to non-employee directors. The weighted average grant-date fair value of stock options granted during the years 2010, 2009 and 2008 was $9.14, $10.12 and $14.80, respectively.

     As discussed in Notes 1 and 9 of this Form 10-K, option expense in 2010, 2009 and 2008 amounted to $1,448,000, $1,418,000 and $1,180,000, respectively, under the fair value approach. Based on the outstanding and unvested awards as of July 31, 2010, the anticipated effect on net income for fiscal 2011, net of taxes, will be approximately $1,013,000.

     Foreign currency translation — Assets and liabilities in foreign currencies are translated into U.S. dollars at the rates in effect at the balance sheet date. Revenues and expenses are translated at average rates during the year. The net exchange differences resulting from these translations are recorded in stockholders’ equity. Where amounts denominated in a foreign currency are converted into U.S. dollars by remittance or repayment, the realized exchange differences are included as other income, net in the Consolidated Statement of Operations.

     Treasury stock acquired and retired — Treasury stock is recorded at cost. Delaware law permits treasury shares to be retired when appropriately authorized by the Board of Directors, and the Company has retired such shares by appropriate reductions in the value of common stock and additional paid-in capital.

     Leases — deferred credits — The Company has lease agreements that contain tenant improvement allowances and rent escalation clauses. The Company recognizes a deferred rent liability for tenant improvement allowances within other long-term liabilities and amortizes these amounts over the term of the lease. The Company records rental expense on a straight-line basis over the term of the lease when a lease has rent escalation clauses.

Results of Operations

     The following table sets forth for the periods indicated certain items from the Company’s Consolidated Statement of Operations, expressed as a percentage of sales:

		Years Ended July 31,
		2010				2009				2008
Sales			100.0	%			100.0	%			100.0	%
Operating expenses:
Purchased transportation			64.8	%			63.4	%			64.4	%
Salaries and employee benefits			19.8	%			21.0	%			19.9	%
Facilities and communication			4.8	%			4.8	%			4.0	%
Other			5.5	%			6.1	%			5.6	%
Depreciation and amortization			1.0	%			0.9	%			0.6	%
Restructuring cost			0.1	%			0.3	%			0.0	%
Total operating expenses			96.0	%			96.5	%			94.5	%
Operating income			4.0	%			3.5	%			5.5	%
Interest expense			0.0	%			0.0	%			0.1	%
Other income, net			0.0	%			-0.1	%			-0.1	%
Income before income taxes			4.0	%			3.6	%			5.5	%
Income taxes			1.4	%			1.4	%			2.1	%
Net income			2.6	%			2.2	%			3.4	%

The following tables sets forth for the periods indicated, the Company’s sales accumulated by service type and country:

		Years Ended July 31,
		2010								2009								2008
Sales by service type:
On demand		$	129,374				31.8	%		$	127,797				31.8	%		$	148,410				32.6	%
Scheduled/distribution			277,074				68.2	%			274,312				68.2	%			307,366				67.4	%
Total sales		$	406,448				100.0	%		$	402,109				100.0	%		$	455,776				100.0	%
Sales by country:
United States		$	252,143				62.0	%		$	257,623				64.1	%		$	280,583				61.6	%
Canada			154,305				38.0	%			144,486				35.9	%			175,193				38.4	%
Total sales		$	406,448				100.0	%		$	402,109				100.0	%		$	455,776				100.0	%

Year Ended July 31, 2010 Compared to Year Ended July 31, 2009

     Net income for the twelve months ended July 31, 2010 was $10.7 million ($1.09 per fully diluted share) compared to $8.8 million ($0.89 per fully diluted share) for the twelve months ended July 31, 2009. FY 2009 results include a restructuring charge of $1.1 million pre-tax, $0.7 million after tax ($0.07 per fully diluted share), related to the closing of the Canadian Administrative office and the elimination of the position of President Dynamex U.S. and a first quarter special payment of $1.5 million pre-tax, $1.0 million after-tax ($0.10 per fully diluted share), to the former President and CEO of the Company.

     Sales for the twelve months ending July 31, 2010 increased 1.1% to $406.5 million from $402.1 million for the same period in the prior year. The higher exchange rate between the Canadian dollar and the U.S. dollar increased sales by 4.0%, and this was offset in part by lower core sales and lower fuel surcharges. The decline in core sales is attributable to lower sales from our largest customer and the general macroeconomic challenges to our customers’ businesses. Total core sales per business-day declined 2.5%, and lower fuel surcharges account for approximately 0.4% of the decline in sales.

     Purchased transportation for the twelve months ended July 31, 2010 increased 3.3%, to $263.2 million from $254.8 million for the same period in the prior year. Purchased transportation, as a percentage of sales, was 64.8% for the twelve months ended July 31, 2010 compared to 63.4% for the twelve months ended July 31, 2009. The increase as a percentage of sales was primarily due to the impact of a more competitive pricing environment.

     Salaries and employee benefits for the twelve months ended July 31, 2010 decreased 4.9%, to $80.4 million from $84.5 million for the same period in the prior year. The decline is attributable to Company cost reduction initiatives including the management realignment and reduction in force that occurred during FY 2009, and the closing of the Canadian administrative office. In addition, the prior fiscal year includes a $1.5 million one-time, pre-tax special payment to the current Chairman of the Board and former President and CEO. Cost reduction initiatives were offset, in part, by the higher exchange rate between the Canadian dollar and the U.S. dollar. On a constant dollar basis (holding the exchange rate constant), salaries and employee benefit costs declined $6.6 million or 7.8% Salaries and employee benefits were 19.8% of sales for the twelve months ended July 31, 2010, compared to 21.0% for the twelve months ended July 31, 2009..

     Facilities and communication expense was $19.4 million for the twelve months ended July 31, 2010 and 2009 and remained a consistent 4.8% percentage of sales.

     Other expenses for the twelve months ended July 31, 2010 decreased $2.2 million to $22.6 million from $24.8 million for the same period in the prior year. The decrease is primarily attributable to a year over year $1.8 million reduction to bad debt expense (reflecting improvements in collections), and lower vehicle insurance costs of $1.0 million. These reductions to expense were partially offset by a stronger Canadian currency, which increased expenses by $0.6 million. Other expenses, as a percentage of sales, were 5.5% in the current year compared to 6.1% in the prior year.

     Depreciation and amortization for the twelve months ended July 31, 2010 was $4.2 million compared to $3.4 million for the same period in the prior year. The increase is principally due to the purchase of specialized equipment during FY 2009 to service a specific customer. As a percent of sales, depreciation and amortization was 1.0%, compared to 0.9% in the prior year period.

     The Company recorded a $0.3 million pre-tax restructuring charge in the company’s FY 2010 second fiscal quarter to expense the remaining lease obligation of the Toronto, Canada administration office upon the “cease use” date of the facility. In 2009 the Company announced the closure of the Canadian administrative office in Toronto, Canada, the consolidation of all finance and accounting functions into the Dallas corporate office and elimination of the position of President U.S. operations. The restructuring was undertaken to reduce redundant overhead expenses. The Company has completed the restructuring process and will not incur any further charges.

     Interest expense for the twelve months ended July 31, 2010 was $179,000, compared to $177,000 for the same period in the prior year. Interest expense is principally attributable to the cost of availability charges and letters of credit related to the bank credit facility.

     Other income, net for the twelve months ended July 31, 2010, was $289,000 compared to $411,000 for the same period in the prior year. The decline from the prior year is primarily due to lower realized currency gains in Canada.

     Income tax expense for the twelve month period ended July 31, 2010 increased $0.2 million to $5.7 million on higher income. The effective income tax rate was 35.2% for the current period compared to 38.9% for the prior year. The current year benefited from a reduction in the effective income tax rate for Canada to 31.0% from 35.5%. In addition to the lower Canadian tax rate, pre-tax Canadian income is a higher percentage of consolidated pre-tax income for the twelve months ended July 31, 2010, compared to the same period in the prior year. Moreover, in the prior year, the Company repatriated excess cash from Canada to the U.S. to support its share repurchase program. The Company’s current annual effective income tax rate in the U.S. is approximately 42.5% and 31.0% in Canada.

Year Ended July 31, 2009 Compared to Year Ended July 31, 2008

     Net income for the year ended July 31, 2009 was $8.8 million ($0.89 per fully diluted share) compared to $15.8 million ($1.53 per fully diluted share) for the year ended July 31, 2008.

     Sales for the year ended July 31, 2009 decreased 11.8% to $402 million from $456 million for the same period in the prior year. The average conversion rate between the Canadian dollar and the U.S. dollar decreased 14.0% over the prior year period, which had the effect of decreasing sales by approximately $23.4 million or 5.1%. Also, management estimates that approximately 2.6% of the year-over-year decrease in sales is attributable to a reduction in fuel surcharges. The core growth rate, the rate excluding the impact of the fuel surcharge and changes in the foreign exchange rate, was an approximately 4.0% decrease for the year ended July 31, 2009 (a 5.6% decrease in the U.S. and 1.7% decrease in Canada). Canadian sales, including fuel surcharges, decreased approximately 4.2% in Canadian dollars compared to the previous year.

     Purchased transportation for the year ended July 31, 2009 decreased 13.2% to $254.8 million from $293.5 million for the same period in the prior year. Purchased transportation, as a percentage of sales was 63.4% for the year ended July 31, 2009, compared to 64.4% for the year ended July 31, 2008.

     Salaries and employee benefits for the year ended July 31, 2009 decreased 6.9% to $84.5 million from $90.7 million for the same period in the prior year. Slightly over half the decline is due to the weaker Canadian dollar, lower bonus accruals and the reduction in force the Company announced in the FY 2009 second quarter with the balance due to lower shipment volumes. Those reductions were offset, in part, by a $1.5 million one-time, pre-tax special payment to the current Chairman of the Board and former President and CEO in the first quarter of 2009 and higher salaries and benefits of approximately $0.5 million from the expansion of the sales force. Salaries and employee benefits, as a percentage of sales was 21.0% for the year ended July 31, 2009, compared to 19.9% for the year ended July 31, 2008.

     Facilities and communication expense for the year ended July 31, 2009 increased 5.0%, to $19.4 million from $18.5 million for the same period in the prior year. Facilities and communication expense as a percentage of sales was 4.8% for the year ended July 31, 2009, compared to 4.0% for the year ended July 31, 2008. The increase primarily related to new leased facilities to service business expansion.

     Other expenses for the year ended July 31, 2009 decreased 1.1%, to $24.8 million from $25.1 million for the same period in the prior year. Other expenses as a percentage of sales was 6.1% for the year ended July 31, 2009, compared to 5.5% for the year ended July 31, 2008. Fiscal year 2009 included legal costs of approximately $0.5 million for the California class-action litigation and $0.2 million related to the evaluation of our sales organization and processes.

     Depreciation and amortization was $3.4 million for the year ended July 31, 2009, compared to $2.8 million for the same period in the prior year. The increase was principally due to more capital expenditures over the preceding two fiscal years. As a percent of sales, depreciation and amortization was 0.9%, compared to 0.6% in the prior year period. As part of a five-year contract with a specific customer, the Company purchased approximately $2.8 million of specialized equipment, which increased depreciation.

     During the quarter ended July 31, 2009 the Company announced the closure of the Canadian administrative office in Toronto, Canada and the elimination of the position of President U.S. operations. The restructuring was to reduce redundant overhead expenses. The Company recorded a pre-tax charge of $1.1 million during the fourth quarter of fiscal year 2009. See ‘Restructuring’ in Note 5 of this Form 10-K.

     Other income, net for the year ended July 31, 2009, was $411,000 compared to $516,000 for the same period in the prior year. This decrease is principally attributable to lower interest rates and a decrease in investments in Canada. The Company repatriated excess Canadian cash to support its share repurchase program during the first quarter of FY 2009. Then, during the second quarter of FY 2009, the Company decided to suspend the share repurchase program.

     Interest expense for the year ended July 31, 2009 decreased 23.7% to $177,000 from $232,000 for the same period in the prior year. Lower interest expense compared to the prior year is primarily attributable to lower interest rates and a reduced use of the Company’s line of credit.

     Income tax expense for the twelve month period ended July 31, 2009 decreased $4.1 million to $5.6 million on lower income. The effective income tax rate was 38.9% for the year ended July 31, 2009, compared to 38.1% for the previous year. The increase in the effective tax rate is primarily attributable to both a higher effective U.S. tax rate and a higher proportion of income being generated in the U.S., compared to the prior year. Also, the effective U.S. tax rate was approximately 2.0% higher than the prior year due to the Company’s decision to repatriate excess Canadian cash to support its share repurchase program. The Canadian effective tax rate was 32.3% for the year ended July 31, 2009.

Liquidity and Capital Resources

     Our primary sources of liquidity are cash flow provided from operations and our revolving credit facility. Net cash provided by operating activities for the twelve months ended July 31, 2010 was $18.3 million compared to $7.8 million in the prior period. The increase in cash provided by operating activities this year compared to last year is principally attributable to improved net income and the decrease in cash needed to fund current operating assets and liabilities.

     Net cash used in investing activities in the twelve months ended July 31, 2010 was $3.7 million, compared to $6.0 million used during the twelve months ended July 31, 2009. The decrease was due to a purchase of specialized equipment to serve a specific customer in the prior year. 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 independent contractors who provide their own vehicles.

     The Board of Directors has authorized the Company to purchase up to $78 million of Dynamex Inc. common stock on the open market. Through July 31, 2009, the Company had repurchased a total of 2.4 million shares at an average price of $20.81 per share for a total dollar cost of $50 million leaving a balance of $28 million in the current authorization. The Company suspended the share repurchase program in the second quarter of FY 2009. Delaware law permits treasury shares to be retired when appropriately authorized by the Board of Directors, and the Company has retired such shares by appropriate reductions in the value of common stock and additional paid-in capital.

     The Company’s revolving credit facility was initially established in 2004 and last amended on January 26, 2009. The credit facility has a maturity date of July 31, 2013 and has no scheduled principal payments prior to maturity. The $40 million revolving credit facility is secured by all of the Company’s U.S. assets and 100% of the stock of its domestic subsidiaries. At July 31, 2010, there were $6.1 million stand-by letters of credit issued but no outstanding borrowings under the revolving credit facility.

The revolving credit facility requires us to satisfy certain customary financial and other covenants, including:

Compliance Area		Covenant		Level at July 31, 2010
Ratio of funded debt to EBITDA		Maximum of 2.00 to 1.00		0.26 to 1.00
Total indebtedness		$40 million, including LOC’s		$6.1 million
Letters of credit sublimit		$10 million		$6.1 million
Treasury stock purchases during the subject period		Ratio of funded debt to EBITDA maximum of 1.50 to 1.00; based on pro forma effect of treasury stock purchases		0.26 to 1.00
Fixed charge coverage ratio		Equal to or greater than 1.50 to 1.00		10.69 to 1.00

     Management expects internally generated cash flow and temporary borrowings from its bank credit facility will be sufficient to fund its operations, capital requirements and common stock repurchases, if the repurchase program is reinstituted.

Contractual Obligations

     The following table sets forth the Company’s contractual commitments as of July 31, 2010 for the periods indicated (in thousands):

						Less than
		Total				1 Year				1 - 3 Years				3 - 5 years				Thereafter
Operating Leases			38,598				11,751				15,982				8,228				2,637

     The Company has entered into an employment agreement with its President and CEO which provides for the payment of a base salary in the annual amount of $550 thousand, participation in an executive bonus plan, an auto allowance, and participation in other employee benefit plans. The Company has entered into an employment agreement with its Chief Operating Officer which provides for the payment of a base salary in the annual amount of $250 thousand, participation in an executive bonus plan, an auto allowance, and participation in other employee benefit plans. In addition, the Company has entered into retention agreements with certain key executive officers and other employees that provide certain benefits in the event their employment is terminated subsequent to a change in control of the Company, as defined in the retention agreements. The potential exposure ranges between $1.6 million and $1.8 million. As of July 31, 2010, the Company had outstanding stand-by letters of credit totaling $6.1 million.

Income Taxes

     The provision for income taxes was $5.8 million in fiscal 2010 compared to $5.6 million and $9.7 million in the years ended July 31, 2009 and 2008, respectively. The difference between the statutory rates and the effective federal income tax rates is primarily attributable to foreign and state income taxes and other expenses that are non-deductible for tax purposes. The effective income tax rate was 35.2% for the current year compared to 38.9% for the prior year. The decrease in the effective tax rate is primarily attributable to both a lower effective Canadian tax rate and a higher proportion of income being generated in Canada in the current year compared to the prior year.

     During the year ended July 31, 2009, the Company repatriated approximately $4.7 million from its Canadian subsidiary. This transaction resulted in an 2.9% increase in the FY 2009’s effective U.S. federal income tax rate.

Inflation

     Inflationary pressures have not had a material effect on the Company’s results of operations for fiscal 2010. There can be no assurance the Company’s business will not be affected by inflation in the future.

Recent Accounting Pronouncements

     In May 2009, the FASB issued ASC 855, Subsequent Events. This standard incorporates into authoritative accounting literature certain guidance that already existed within generally accepted auditing standards; the rules concerning recognition and disclosure of subsequent events will remain essentially unchanged. ASC 855 provides general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. Also, in March 2010, the FASB issued amended guidance to ASC 855, Subsequent Events. Under this amended guidance, public entities are no longer required to disclose the date through which subsequent events have been evaluated. The adoption of these provisions did not have a material effect on the Consolidated Financial Statements.

“Safe Harbor” Statement Under The Private Securities Litigation Reform Act:

     With the exception of historical information, the matters discussed in this report are “forward looking statements” as that term is defined in Section 21E of the Securities Exchange Act of 1934.

     The risk factors described in this report could cause actual results to differ materially from those predicted. By way of example:

	•		a change in the current tax status of independent contractor to employees.
	•		the loss of any of our key customers
	•		the ability of the Company to attract and retain qualified independent contractors at acceptable rates
	•		the competitive nature of the same-day delivery business.
	•		the ability of the Company to retain key employees
	•		global economic conditions could adversely affect the Company’s business and financial results
	•		the ability of the Company to pass on fuel cost increases to customers to maintain profit margins and the quality of independent contractor payments.
	•		a significant reduction in the exchange rate between the Canadian dollar and the U.S. dollar.
	•		Maintaining good relationships with International Labor Unions
	•		a significant increase in the number of workers’ compensation or vehicle liability claims such that the Company’s self insurance expense would increase significantly.
	•		failure of the Company to maintain required certificates, permits or licenses, or to comply with applicable laws, ordinances or regulations could result in substantial fines or possible revocation of the Company’s authority to conduct certain of its operations.
	•		the ability of the Company to obtain adequate financing.

ITEM 7A.		QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Foreign Exchange Exposure

     Significant portions of the Company’s operations are conducted in Canada. Exchange rate fluctuations between the U.S. and Canadian dollar result in fluctuations in the amounts relating to the Canadian operations reported in the Company’s consolidated financial statements. The Company historically has not entered into hedging transactions with respect to its foreign currency exposure, but may do so in the future.

     The sensitivity analysis model used by the Company for foreign exchange exposure compares the revenue and net income figures from Canadian operations over the previous four quarters at the actual exchange rate versus a 10% decrease in the exchange rate. Based on this model, a 10% decrease would result in a decrease in revenue of approximately $15.4 million and a decrease in net income of approximately $0.7 million over this period. There can be no assurances that the above projected exchange rate decrease will materialize. Fluctuations of exchange rates are beyond the control of the Company’s management.

Interest Rate Exposure

     The Company has no interest rate protection arrangements in effect at the present time. The Company does not hold or issue derivative financial instruments for speculative or trading purposes.

ITEM 8.		FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     See Item 15(a).

ITEM 9.		CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

     None.

ITEM 9A.		CONTROLS AND PROCEDURES

(a). Evaluation of disclosure control and procedures

     An evaluation was carried out under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the Company’s fiscal year. Based upon the evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were effective.

     There were no significant changes in the Company’s internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

(b). Management’s report on internal control over financial reporting.

     Management’s report on internal control over financial reporting, which appears on page F-2 of this Annual Report, is incorporated herein by reference.

ITEM 9B.		OTHER INFORMATION

     None.

PART III

ITEM 10.		DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

     The information set forth under the caption “Directors and Executive Officers” in the Company’s definitive proxy statement to be filed in connection with the 2011 Annual Meeting of Stockholders is incorporated herein by reference.

     The Company has adopted a code of ethics that applies to all members of Board of Directors and employees of the Company, including, the principal executive officer, principal financial officer, principal accounting officer, or persons performing similar functions. The Company has notice of amendments to, or waivers of, the code posted on the Company’s internet website at the internet address: http://www.dynamex.com. Copies of the code may be obtained free of charge from the Company’s website at the above internet address.

ITEM 11.		EXECUTIVE COMPENSATION

     The information set forth under the caption “Directors and Executive Officers” in the Company’s definitive proxy statement to be filed in connection with the 2011 Annual Meeting of Stockholders is incorporated herein by reference.

ITEM 12.		SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

     The information set forth under the caption “Beneficial Ownership of Common Stock” in the Company’s definitive proxy statement to be filed in connection with the 2011 Annual Meeting of Stockholders is incorporated herein by reference.

ITEM 13.		CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

     The information set forth under the caption “Certain Relationships and Related Transactions” in the Company’s definitive proxy statement to be filed in connection with the 2011 Annual Meeting of Stockholders is incorporated herein by reference.

ITEM 14.		PRINCIPAL ACCOUNTING FEES AND SERVICES

     The information set forth under the caption “Principal Accountant Fees and Services” in the Company’s definitive proxy statement to be filed in connection with the 2011 Annual Meeting of Stockholders is incorporated herein by reference.

PART IV

ITEM 15.		EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) (1) Financial Statements

     See Index to Consolidated Financial Statements on page F-1.

(b) Exhibits

     Reference is made to the Exhibit Index on page E-1 for a list of all exhibits filed as a part of this report.

(c) Financial Statement Schedules

All schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are considered inapplicable and therefore have been omitted.

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/ Ray E. Schmitz
		Ray E. Schmitz, Executive Vice-President and Chief Financial Officer Dated: September 22, 2010

     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons of the registrant and in the capacities indicated on September 22, 2010.

Name		Title
/s/ James L. Welch		Chief Executive Officer, President and Director
James L. Welch		(Principal Executive Officer)
/s/ Ray E. Schmitz		Executive Vice President, Chief Financial Officer
Ray E. Schmitz		(Principal Financial Officer)
/s/ Gilbert Jones		Vice President, Corporate Controller
Gilbert Jones		(Principal Accounting Officer)
/s/ Richard K. McClelland		Chairman of the Board and Director
Richard K. McClelland
/s/ Wayne Kern		Director
Wayne Kern
/s/ Stephen P. Smiley		Director
Stephen P. Smiley
/s/ Brian J. Hughes		Director
Brian J. Hughes
/s/ Bruce E. Ranck		Director
Bruce E. Ranck
/s/ Craig R. Lentzsch		Director
Craig R. Lentzsch

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

		Page
Dynamex Inc.
Management’s Report on Internal Controls over Financial Reporting			F-2
Reports of Independent Registered Public Accounting Firm			F-3
Consolidated Balance Sheets, July 31, 2010 and 2009			F-5
Consolidated Statements of Operations for the fiscal years ended July 31, 2010, 2009 and 2008			F-6
Consolidated Statements of Stockholders’ Equity for the fiscal years ended July 31, 2010, 2009 and 2008			F-7
Consolidated Statements of Cash Flows for the fiscal years ended July 31, 2010, 2009 and 2008			F-8
Notes to the Consolidated Financial Statements			F-9

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

To the Board of Directors and
Stockholders of Dynamex Inc.

Management of Dynamex Inc. is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Dynamex Inc.’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management, including our Chief Executive Officer and our Chief Financial Officer, assessed the effectiveness of Dynamex Inc.’s internal control over financial reporting as of July 31, 2010. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control — Integrated Framework. Based on our assessment and those criteria, we believe that Dynamex Inc. maintained effective internal control over financial reporting as of July 31, 2010.

Dynamex Inc.’s independent registered public accounting firm, BDO USA, LLP, has issued an attestation report dated September 22, 2010 on the effectiveness of Dynamex Inc.’s internal control over financial reporting. That report is included herein.

/s/ James L. Welch				/s/ Ray E. Schmitz
James L. Welch				Ray E. Schmitz
Chief Executive Officer, President and Director				Executive Vice President, Chief Financial Officer
(Principal Executive Officer)				(Principal Financial Officer)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Stockholders of Dynamex Inc.

Dallas, Texas

We have audited the accompanying consolidated balance sheets of Dynamex Inc. and Subsidiaries (the “Company”) as of July 31, 2010 and 2009 and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended July 31, 2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company at July 31, 2010 and 2009, and the results of its operations and its cash flows for each of the three years in the period ended July 31, 2010, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company’s internal control over financial reporting as of July 31, 2010, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated September 22, 2010 expressed an unqualified opinion thereon.

/s/ BDO USA, LLP
BDO USA, LLP

Dallas, Texas
September 22, 2010

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Stockholders of Dynamex Inc.
Dallas, Texas

We have audited the internal control over financial reporting maintained by Dynamex Inc. and Subsidiaries (the “Company”) as of July 31, 2010, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Management of the Company is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of July 31, 2010, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of the Company as of July 31, 2010 and 2009, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended July 31, 2010. Our report dated September 22, 2010 expressed an unqualified opinion on those consolidated financial statements.

/s/ BDO USA, LLP
BDO USA, LLP

Dallas, Texas
September 22, 2010

DYNAMEX INC.

Consolidated Balance Sheets
July 31, 2010 and 2009
(in thousands, except per share data)

		2010				2009
ASSETS
CURRENT
Cash and cash equivalents		$	26,318			$	11,016
Accounts receivable (net of allowance for doubtful accounts of $1,048 and $1,801, respectively)			47,455				43,545
Income taxes receivable			4,062				3,043
Prepaid and other current assets			4,032				4,396
Deferred income taxes			4,029				4,270
Total current assets			85,896				66,270
PROPERTY AND EQUIPMENT — net			11,138				11,532
GOODWILL			48,058				47,496
INTANGIBLES — net			2,091				975
OTHER			3,083				3,226
Total assets		$	150,266			$	129,499
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable — trade		$	8,248			$	5,581
Independent contractor owner operator settlements			7,706				6,870
Accrued salaries and employee benefits			6,016				5,296
Self-insured accruals			1,979				3,294
Other accrued liabilities			8,876				6,910
Total current liabilities			32,825				27,951
LONG-TERM DEBT			—				—
LEASES — DEFERRED CREDITS			2,369				2,742
DEFERRED INCOME TAX PAYABLE			4,523				2,031
DEFERRED COMPENSATION			784				695
Total liabilities			40,501				33,419
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; 9,753 and 9,725 outstanding, respectively			97				97
Additional paid-in capital			37,876				36,276
Retained earnings			66,310				55,655
Accumulated other comprehensive income:
Cumulative translation adjustment			5,482				4,052
Total stockholders’ equity			109,765				96,080
Total liabilities and stockholders’ equity		$	150,266			$	129,499

See accompanying notes to the consolidated financial statements.

DYNAMEX INC.

Consolidated Statements of Operations
Years ended July 31, 2010, 2009 and 2008
(in thousands, except per share data)

		2010				2009				2008
Sales		$	406,448			$	402,109			$	455,776
Operating expenses:
Purchased transportation			263,237				254,789				293,459
Salaries and employee benefits			80,422				84,515				90,744
Facilities and communication			19,381				19,378				18,458
Other			22,561				24,801				25,069
Depreciation and amortization			4,240				3,440				2,825
Restructuring cost			282				1,104				—
Total operating expenses			390,123				388,027				430,555
Operating income			16,325				14,082				25,221
Interest expense			179				177				232
Other income, net			(289	)			(411	)			(516	)
Income before income taxes			16,435				14,316				25,505
Income taxes			5,780				5,566				9,722
Net income		$	10,655			$	8,750			$	15,783
Basic earnings per common share		$	1.09			$	0.89			$	1.55
Diluted earnings per common share		$	1.09			$	0.89			$	1.53
Weighted average shares:
Common shares outstanding			9,736				9,782				10,207
Adjusted common shares — assuming exercise of stock options			9,753				9,809				10,297

See accompanying notes to the consolidated financial statements.

DYNAMEX INC.

Consolidated Statements of Stockholders’ Equity
Years ended July 31, 2010, 2009 and 2008
(in thousands)

																		Accumulated
										Additional								Other
		Common Stock								Paid-in				Retained				Comprehensive
		Shares				Amount				Capital				Earnings				Income				Total
BALANCE AT JULY 31, 2007			10,145			$	101			$	45,671			$	31,122			$	4,515			$	81,409
Issuance of common stock, including tax benefit of $328			124				1				1,425												1,426
Stock option compensation											1,180												1,180
Treasury stock purchase and retirement			(121	)			(1	)			(2,965	)											(2,966	)
Net income															15,783								15,783
Unrealized foreign currency translation adjustment																			802				802
Total comprehensive income																							16,585
BALANCE AT JULY 31, 2008			10,148				101				45,311				46,905				5,317				97,634
Issuance of common stock, including tax benefit of $16			16				0				140												140
Stock option compensation											1,418												1,418
Treasury stock purchase and retirement			(439	)			(4	)			(10,593	)											(10,597	)
Net income															8,750								8,750
Unrealized foreign currency translation adjustment																			(1,265	)			(1,265	)
Total comprehensive income																							7,485
BALANCE AT JULY 31, 2009			9,725				97				36,276				55,655				4,052				96,080
Issuance of common stock, including tax benefit of $0			28				0				152												152
Stock option compensation											1,448												1,448
Net income															10,655								10,655
Unrealized foreign currency translation adjustment																			1,430				1,430
Total comprehensive income																							12,085
BALANCE AT JULY 31, 2010			9,753			$	97			$	37,876			$	66,310			$	5,482			$	109,765

See accompanying notes to the consolidated financial statements.

DYNAMEX INC.

Consolidated Statements of Cash Flows
Years ended July 31, 2010, 2009 and 2008
(in thousands)

		2010				2009				2008
OPERATING ACTIVITIES
Net income		$	10,655			$	8,750			$	15,783
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			4,240				3,440				2,825
Amortization of deferred bank financing fees			5				2				10
Provision for losses on accounts receivable			(347	)			1,487				1,039
Stock option compensation			1,448				1,418				1,180
Deferred income taxes			2,732				822				1,472
Lessor financed leasehold improvements			—				896				—
Non-cash rent expense			7				143				49
Gain on disposal of property and equipment			(2	)			(34	)			(8	)
Changes in current operating assets and liabilities:
Accounts receivable			(3,563	)			2,255				(5,678	)
Prepaids and other current assets			(1,944	)			(1,465	)			(1,405	)
Accounts payable and accrued liabilities			5,019				(9,907	)			1,087
Net cash provided by operating activities			18,250				7,807				16,354
INVESTING ACTIVITIES
Purchase of property and equipment			(3,283	)			(6,253	)			(2,845	)
Proceeds from sale of equipment			49				—				—
Acquisition of customer lists			(399	)			(367	)			(491	)
Withdrawal (purchase) of deferred compensation investments			(66	)			650				(322	)
Net cash used in investing activities			(3,699	)			(5,970	)			(3,658	)
FINANCING ACTIVITIES
Receipts under line of credit			—				7,300				23,200
Payments receipts under line of credit			—				(7,300	)			(23,200	)
Proceeds from stock option exercise			152				124				1,099
Tax benefit realized from exercise of stock options			—				16				328
Purchase and retirement of treasury stock			—				(10,597	)			(2,966	)
Other assets and deferred financing fees			225				411				(176	)
Net cash provided by (used in) financing activities			377				(10,046	)			(1,715	)
EFFECT OF EXCHANGE RATES ON CASH			374				(663	)			50
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			15,302				(8,872	)			11,031
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR			11,016				19,888				8,857
CASH AND CASH EQUIVALENTS, END OF YEAR		$	26,318			$	11,016			$	19,888
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest		$	105			$	137			$	157
Cash paid for taxes		$	5,302			$	5,901			$	8,043

See accompanying notes to the consolidated financial statements.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

		Description of business — Dynamex Inc. and Subsidiaries (the “Company” or “Dynamex”) provide same-day delivery and logistics services in the United States and Canada. The Company’s primary services are (i) same-day, on-demand delivery and (ii) scheduled and distribution and fleet outsourcing and facilities management.
		The operating subsidiaries of the Company, with country of incorporation, are as follows:

	•		Dynamex Operations East Inc. (U.S.)
	•		Dynamex Operations West Inc. (U.S.)
	•		Dynamex Fleet Services, Inc. (U.S.)
	•		Dynamex Franchise Holdings, Inc. (U.S.)
	•		Dynamex Domestic Franchising, Inc. (U.S.)
	•		Dynamex Canada Limited (Canada)
	•		Dynamex Canada Franchise Holdings, Inc. (Canada)
	•		Dynamex Canada Holdings, Inc. (U.S.)
	•		Dynamex Provincial Couriers, Inc. (U.S.)

		Principles of consolidation — The consolidated financial statements include the accounts of Dynamex Inc. and its wholly-owned subsidiaries. All significant inter-company accounts and transactions have been eliminated. All dollar amounts in the financial statements and notes to the financial statements are stated in thousands of dollars unless otherwise indicated.
		Use of estimates — The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the balance sheet dates and the reported amounts of revenues and expenses. Actual results may differ from such estimates. The Company reviews all significant estimates affecting the financial statements on a recurring basis and records the effect of any necessary adjustments prior to their issuance.
		Property and equipment — Property and equipment are carried at cost less accumulated depreciation and amortization. Depreciation is provided using the straight-line method over the estimated useful lives of the related assets for financial reporting purposes and principally on accelerated methods for tax purposes. Leasehold improvements are depreciated using the straight-line method over their estimated useful lives or the lease term, whichever is shorter. Ordinary maintenance and repairs are charged to expense as incurred. Expenditures that extend the physical or economic life of property and equipment are capitalized. The estimated useful lives of property and equipment are as follows:

	Equipment		3-7 years
	Software		3-5 years
	Furniture		7 years
	Vehicles		5 years

The Company periodically reviews property and equipment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable or their depreciation or amortization periods should be accelerated. When any such impairment exists, the related assets will be written down to their fair value.

The Company capitalizes external costs of developing or obtaining computer software for internal use. Costs incurred to develop internal-use software during the application development stage are capitalized, while data conversion, training and maintenance costs associated with internal-use software are expensed as incurred. As of July 31, 2010 and 2009, the net book value of capitalized software costs was $944 and $973, respectively. Amortization expense related to capitalized software was $715, $826 and $756 in fiscal years 2010, 2009 and 2008, respectively.

Business and credit concentrations — Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of temporary cash investments and trade receivables.

		The Company places its temporary cash investments with high-credit, quality financial institutions. At times such amounts may exceed F.D.I.C. limits. The Company limits the amount of credit exposure with any one financial institution and believes no significant concentration of credit risk exists with respect to cash investments.
		The Company’s customers are not concentrated in any specific geographic region or industry. During the years ended July 31, 2010, 2009, and 2008, sales to Office Depot, Inc. represented approximately 11.6%, 14.0% and 14.6%, respectively, of the Company’s revenue. Sales to the Company’s five largest customers, including Office Depot, represented approximately 22%, 24% and 27% of the Company’s consolidated sales for the years ended July 31, 2010, 2009 and 2008, respectively.
		A significant number of the Company’s customers are located in Canada. For the fiscal years ended July 31, 2010, 2009 and 2008, approximately 38%, 36% and 38% of the Company’s sales, respectively, were generated in Canada. See Note 12 of Notes to the Consolidated Financial Statements for additional information concerning the Company’s foreign operations.
		Office Depot represented approximately 15.7% and 21.6% of the net accounts receivable at July 31, 2010 and July 31, 2009, respectively. There were no other significant accounts receivable from a single customer. The Company establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information.
		Goodwill and intangibles — Intangibles arise from acquisitions accounted for as purchased business combinations and include goodwill, covenants not-to-compete and other identifiable intangibles and from the payment of financing costs associated with the Company’s credit facility. Goodwill represents the excess purchase price over all tangible and identifiable intangible net assets acquired. The Company adopted ASC 350, Intangibles, which requires, among other things, that companies no longer amortize goodwill and instead sets forth methods to periodically evaluate goodwill for impairment. The Company conducts on at least an annual basis a review of its reporting units to determine whether their carrying value exceeds their market value and, if so, performs a detailed analysis of the reporting unit’s assets and liabilities to determine whether the goodwill is impaired. The Company performed its goodwill impairment test as of the first day of the fourth quarter of fiscal 2010. Based on this test, no impairment was indicated. Other intangible assets are being amortized over periods ranging from 2 to 25 years. Deferred bank financing fees are amortized over the term of the related credit facility. Amortization of deferred financing fees is classified as interest expense in the Consolidated Statement of Operations. Aggregate amortization expense during the years ended July 31, 2010, 2009 and 2008 totaled $576, $206 and $81, respectively. Estimated amortization expense for the succeeding five fiscal years is approximately $794 for 2011, $857 for 2012, $560 for 2013, $18 for 2014, and $18 for 2015.
		Revenue recognition — Revenues are recognized when services are rendered to customers, that is, primarily when the pickup and delivery is complete. There may be a time lag between the completion of the service and the generation of an invoice. Accordingly, unbilled revenue is recognized for those shipments that have been completed but have not been invoiced.
		Cash and cash equivalents — The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.
		Allowance for doubtful accounts — The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make payments when due or within a reasonable period of time thereafter. Estimates are used in determining this allowance based on the Company’s historical collection experience, current trends, credit policy and aging category. If the financial condition of the Company’s customers were to deteriorate, thus impairing their ability to make required payments, additional allowances may be required. The Company’s allowance at July 31, 2010 is approximately 2.2% of outstanding accounts receivable compared to approximately 4.1% at July 31, 2009. The allowance for doubtful accounts was higher last year due to the onset of the intensified global financial crisis. The decrease in the allowance from the prior year is due to an improvement in the Company’s collections statistics.

		Financial instruments — Carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value due to the short-term maturities of these assets and liabilities. Long-term debt consists primarily of variable rate borrowings under the bank credit agreement. The carrying value of these borrowings approximates fair value.
		Other assets — Recoverable contract contingency costs — The Company has recorded as an Other Asset certain costs related to contractually reimbursable contingency costs incurred in connection with the launch of certain contracts in accordance with ASC 340-10-05, Pre-Production Costs Related to Long-Term Supply Arrangements, These costs will be recovered during the initial contract term, from a designated portion of the unit price specified in the contract. Should the contract be cancelled for any reason, the customer is obligated to reimburse the Company for any unamortized balance. Recoverable contract contingency costs capitalized, net of amortization, at July 31, 2010 and 2009 amount to $340 and $778, respectively.
		Deferred compensation plan —Deferred Compensation Plan investments are recorded in other assets at fair value as determined by quoted prices in an active market and the associated liability is recorded in other long term liabilities. The Deferred compensation plan assets at July 21, 2010 and 2009 were $784 and $695, respectively. The Deferred compensation plan liability at July 21, 2010 and 2009 were $784 and $695, respectively.
		Leases — deferred credits — The Company has lease agreements that contain tenant improvement allowances and rent escalation clauses. The Company recognizes a deferred rent liability for tenant improvement allowances paid by the lessor within other long-term liabilities and amortizes these amounts over the term of the lease.. The Company records rental expense on a straight-line basis over the term of the lease when a lease has rent escalation clauses.
		Self-insured claims liability — The Company is primarily self-insured for U.S. workers’ compensation and non owned vehicle liability claims. A liability for unpaid claims and the associated claim expenses, including incurred but unreported losses, are recorded based on the Company’s estimates of the aggregate liability for claims incurred. The Company’s estimates are based on actual experience and historical assumptions of development of unpaid liabilities over time. Factors affecting the determination of amounts to be accrued for claims include, but are not limited to, cost, frequency, or payment patterns resulting from new types of claims, the hazard level of our operations, tort reform or other legislative changes, unfavorable jury decisions, court interpretations, changes in the medical conditions of claimants and economic factors such as inflation. The method of calculating the estimated accrued liability for claims is subject to inherent uncertainty. If actual results are less favorable than what are used to calculate the accrued liability, the Company would have to record expenses in excess of what has already been accrued.
		Income taxes — Income taxes consist of taxes currently due plus deferred taxes related primarily to differences between the financial reporting and income tax reporting. The net deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled.
		Stock-based compensation — ASC 718, Compensation — Stock Compensation, requires the measurement of all employee share-based payments to employees, including grants of employee stock options, using a fair-value-based method and the recording of such expense in our Consolidated Statements of Operations.
		The fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in 2010, 2009, and 2008, respectively: dividend yield of 0% for all years; expected volatility of 48%, 43%, and 43%; risk-free interest rate of 2.4%, 2.8%, and 3.9%, and expected lives of an average of 6.8, 6.9 and 7.2 years for options granted to employees and of 6.7, 6.8 and 6.8 years for options granted to non-employee directors. The weighted average grant-date fair value of stock options granted during the years 2010, 2009 and 2008 was $9.14, $10.12 and $14.80, respectively.
		As discussed in Note 9, stock-based compensation expense in 2010, 2009 and 2008 amounted to $1,448, $1,418 and $1,180, respectively, under the fair value approach. Based on the outstanding and unvested awards as of July 31, 2010, the anticipated effect on net income for fiscal 2011, net of taxes, will be approximately $1,013.

		Net income per share — Basic net income per common share is based on the weighted average number of common shares outstanding during the period. Diluted net income per common share is based on the weighted average common shares outstanding and all potentially dilutive common shares outstanding during the period determined using the treasury stock method. Diluted earnings per share reflect the potential dilution that could occur if outstanding stock options were exercised, that would then share in the earnings of the Company. Outstanding options to purchase 405, 372 and 146 shares of common stock at July 31, 2010, 2009 and 2008, respectively, were not included in the computation of net income per share as their effect would be anti-dilutive. Outstanding stock options issued by the Company represent the only dilutive effect reflected in diluted weighted average shares.
		Foreign currency translation — Assets and liabilities in foreign currencies are translated into U.S. dollars at the rates in effect at the balance sheet date. Revenues and expenses are translated at average rates during the year. The net exchange differences resulting from these translations are recorded in stockholders’ equity. Where amounts denominated in a foreign currency are converted into U.S. dollars by remittance or repayment, the realized exchange differences are included as other income (expense) in the Consolidated Statement of Operations.
		Treasury stock acquired and retired — Treasury stock is recorded at cost. Delaware law permits treasury shares to be retired when appropriately authorized by the Board of Directors, and the Company has retired such shares by appropriate reductions in the value of common stock and additional paid-in capital.
		New accounting pronouncements — In May 2009, the FASB issued ASC 855, Subsequent Events. This standard incorporates into authoritative accounting literature certain guidance that already existed within generally accepted auditing standards; the rules concerning recognition and disclosure of subsequent events will remain essentially unchanged. ASC 855 provides general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. Also, in March 2010, the FASB issued amended guidance to ASC 855, Subsequent Events. Under this amended guidance, public entities are no longer required to disclose the date through which subsequent events have been evaluated. The adoption of these provisions did not have a material effect on the Consolidated Financial Statements.
		Reclassification — Certain reclassifications have been made to conform prior year data to the current presentation.

2. COMPUTATION OF EARNINGS PER SHARE

The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computation as required by ASC 260, Earnings Per Share. Common stock equivalents related to stock options are excluded from diluted earnings per share calculation if their effect would be anti-dilutive to earnings per share.

		Years Ended July 31,
		2010				2009				2008
Net income		$	10,655			$	8,750			$	15,783
Weighted average common shares outstanding			9,736				9,782				10,207
Common share equivalents related to options			17				27				90
Common shares and common share equivalents			9,753				9,809				10,297
Basic earnings per common share		$	1.09			$	0.89			$	1.55
Diluted earnings per common share		$	1.09			$	0.89			$	1.53

3. INTANGIBLES

Intangibles consist of the following:

		July 31,
		2010				2009
Carrying amount:
Deferred bank financing fees		$	138			$	138
Customer lists			2,645				950
Trademarks and other			470				470
			3,253				1,558
Less accumulated amortization:
Deferred bank financing fees			(134	)			(133	)
Customer lists			(805	)			(246	)
Trademarks			(223	)			(204	)
			(1,162	)			(583	)
Intangibles — net		$	2,091			$	975