UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A
(Amendment No. 2)
(Mark One)
| þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For the fiscal year ended December 31, 2006
or
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For the transition period from to
Commission file number 0-21513
DXP Enterprises, Inc.
(Exact name of registrant as specified in its charter)
| Texas | 76-0509661 | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |
| 7272 Pinemont, Houston, Texas 77040 | ||
| (Address of principal executive offices) |
Registrant’s telephone number, including area code:
(713) 996-4700
(713) 996-4700
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01 Par Value
Indicate by check mark whether 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K 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. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer. (See definition of “accelerated filer and large accelerated
filer” in Rule 12b-2 of the Act).
Large accelerated filer o Accelerated Filer þ Non-accelerated filer o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Act).Yes o No þ
Aggregate market value of the registrant’s Common Stock held by non-affiliates of registrant
as of June 30, 2006: $87,186,630.
Number of shares of registrant’s Common Stock outstanding as of May 28, 2007: 5,314,089.
EXPLANATORY NOTE
The Company is filing this Amendment No. 2 to its Annual Report on Form 10-K for the year ended
December 31, 2006, as filed with the Securities Exchange Commission on March 16, 2007. The sole
purpose of this amendment is to (1) correct the inadvertent omission of the performance graph from
Item 5, (2) correct a typographical error in the first sentence of the second paragraph under
“Liquidity and Capital Resources” in Item 7 pertaining to the cash used in operating activities in
2005 which was incorrectly stated to be $1.2 million and now correctly reflects that cash used in
operating activities in 2005 was $1.4 million, (3) remove Exhibit 2.1 from Item 15(a)(3) and the
Exhibit Index which was inadvertently included as an Exhibit and is being removed because such
agreement was not material to the Company, and (4) change the title of Exhibit 10.11 from “Summary
Description of Director Compensation” to “Summary Description of Director Fees”. Additionally, in
connection with the filing of this amendment and pursuant to SEC rules, the Company is including
currently dated certifications. This amendment does not otherwise update any exhibits as originally
filed and does not otherwise reflect events occurring after the original filing date of the Annual
Report on Form 10-K for the year ended December 31, 2006.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Amendment No. 2 to the Annual Report on Form 10-K contains statements that constitute
“forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of
1995. Such statements can be identified by the use of forward-looking terminology such as
“believes”, “expects”, “may”, “estimates”, “will”, “should”, “plans” or “anticipates” or the
negative thereof or other variations thereon or comparable terminology, or by discussions of
strategy. Any such forward-looking statements are not guarantees of future performance and involve
significant risks and uncertainties, and actual results may vary materially from those discussed in
the forward-looking statements as a result of various factors. These factors include the
effectiveness of management’s strategies and decisions, our ability to effect our internal growth
strategy, general economic and business conditions, developments in technology, our ability to
effectively integrate businesses we may acquire, new or modified statutory or regulatory
requirements and changing prices and market conditions. This report identifies other factors that
could cause such differences. We cannot assure you that these are all of the factors that could
cause actual results to vary materially from the forward-looking statements. We assume no
obligation and do not intend to update these forward-looking statements.
PART II
ITEM 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
Our common stock trades on The Nasdaq Global Market under the symbol “DXPE”.
The following table sets forth on a per share basis the high and low sales prices for our
common stock as reported by Nasdaq for the periods indicated.
| High | Low | |||||||
2005 |
||||||||
First Quarter |
$ | 5.83 | $ | 4.41 | ||||
Second Quarter |
$ | 8.50 | $ | 4.64 | ||||
Third Quarter |
$ | 24.83 | $ | 6.54 | ||||
Fourth Quarter |
$ | 26.30 | $ | 12.21 | ||||
2006 |
||||||||
First Quarter |
$ | 37.44 | $ | 16.61 | ||||
Second Quarter |
$ | 59.24 | $ | 28.00 | ||||
Third Quarter |
$ | 38.49 | $ | 20.60 | ||||
Fourth Quarter |
$ | 36.61 | $ | 20.72 | ||||
1
On March 13, 2007 we had approximately 531 holders of record for outstanding shares of our
common stock. This number does not include shareholders for whom shares are held in “nominee” or
“street name”.
We anticipate that future earnings will be retained to finance the continuing development of
our business. In addition, our bank credit facility prohibits us from declaring or paying any
dividends or other distributions on our capital stock except for the monthly $0.50 per share
dividend on our Series B convertible preferred stock, which amounts to $90,000 in the aggregate per
year. Accordingly, we do not anticipate paying cash dividends on our common stock in the
foreseeable future. The payment of any future dividends will be at the discretion of our Board of
Directors and will depend upon, among other things, future earnings, the success of our business
activities, regulatory and capital requirements, our lenders, our general financial condition and
general business conditions.
Stock Performance
The following performance graph compares the performance of DXP Common Stock to the NASDAQ
Industrial Index and the NASDAQ Composite (US). The graph assumes that the value of the investment
in DXP Common Stock and in each index was $100 at December 31, 2001, and that all dividends were
reinvested.
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the Consolidated
Financial Statements and related notes contained elsewhere in this Annual Report on Form 10-K.
General Overview
Our products and services are marketed in at least 17 states to over 25,000 customers that are
engaged in a variety of industries, many of which may be countercyclical to each other. Demand for
our products generally is subject to
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changes in the United States and global economy and economic trends affecting our customers and the
industries in which they compete in particular. Certain of these industries, such as the oil and
gas industry, are subject to volatility while others, such as the petrochemical industry and the
construction industry, are cyclical and materially affected by changes in the United States and
global economy. As a result, we may experience changes in demand within particular markets,
segments and product categories as changes occur in our customers’ respective markets. During 2003,
our performance was impacted negatively by the economic downturn, particularly the downturn in
domestic manufacturing. All of our increase in sales and gross profit for 2003 compared to 2002 was
due to increased sales of products for offshore energy production. Our employee headcount decreased
by over ten percent during 2003 as we worked to bring our cost structure in line with our sales.
During 2004 the economy improved. Our employee headcount decreased by approximately 1% during 2004.
The majority of the 2004 sales increase came from increased sales of products for offshore energy
production and general manufacturing. During 2005 the general economy and the oil and gas
exploration and production business continued to improve. Our employee headcount increased by 17.9%
as a result of two acquisitions and hiring additional personnel to support increased sales. The
majority of the 2005 sales increase came from a broad based increase in sales of pumps, bearings,
safety products and mill supplies to customers engaged in oilfield service, oil and gas production,
mining, electricity generation and petrochemical processing. Sales by the two businesses acquired
in 2005 accounted for $7.3 million of the $24.8 million 2005 sales increase. During 2006 the
general economy and the oil and gas exploration and production business continued to be positive.
Our employee headcount increased by 45% a result of four acquisitions and hiring additional
personnel to support increased sales. The majority of the 2006 sales increase came from a broad
based increase in sales of pumps, bearings, safety products and mill supplies to customers engaged
in oilfield service, oil and gas production, mining, electricity generation and petrochemical
processing. Sales by the four businesses acquired in 2006 accounted for $11.8 million of the $94.5
million 2006 sales increase.
Our sales growth strategy in recent years has focused on internal growth and acquisitions. Key
elements of our sales strategy include leveraging existing customer relationships by cross-selling
new products, expanding product offerings to new and existing customers, and increasing
business-to-business solutions using system agreements and SmartSourceSM solutions for
our integrated supply customers. We will continue to review opportunities to grow through the
acquisition of distributors and other businesses that would expand our geographic breadth and/or
add additional products and services. Our results will depend on our success in executing our
internal growth strategy and, to the extent we complete any acquisitions, our ability to integrate
such acquisitions effectively.
Our strategies to increase productivity include consolidated purchasing programs, centralizing
product distribution centers, centralizing certain customer service and inside sales functions,
converting selected locations from full warehouse and customer service operations to DXP service
centers, and using information technology to increase employee productivity.
Results of Operations
| Years Ended December 31, | ||||||||||||||||||||||||
| 2004 | % | 2005 | % | 2006 | % | |||||||||||||||||||
| (in millions, except percentages) | ||||||||||||||||||||||||
Sales |
$ | 160.6 | 100.0 | $ | 185.4 | 100.0 | $ | 279.8 | 100.0 | |||||||||||||||
Cost of sales |
121.2 | 75.5 | 135.7 | 73.2 | 201.2 | 71.9 | ||||||||||||||||||
Gross profit |
39.4 | 24.5 | 49.7 | 26.8 | 78.6 | 28.1 | ||||||||||||||||||
Selling, general
and administrative expense |
34.2 | 21.3 | 40.3 | 21.7 | 57.9 | 20.7 | ||||||||||||||||||
Operating income |
5.2 | 3.2 | 9.4 | 5.1 | 20.7 | 7.4 | ||||||||||||||||||
Interest expense |
0.9 | 0.6 | 1.0 | 0.5 | 2.0 | 0.7 | ||||||||||||||||||
Other income and minority interest |
(0.1 | ) | (0.1 | ) | (0.2 | ) | (0.1 | ) | (0.7 | ) | (0.2 | ) | ||||||||||||
Income before income taxes |
4.4 | 2.7 | 8.6 | 4.7 | 19.4 | 6.9 | ||||||||||||||||||
Provision for income taxes |
1.6 | 1.0 | 3.1 | 1.7 | 7.5 | 2.7 | ||||||||||||||||||
Net income |
$ | 2.8 | 1.7 | % | $ | 5.5 | 3.0 | % | $ | 11.9 | 4.2 | % | ||||||||||||
Per share |
||||||||||||||||||||||||
Basic earnings per share |
$ | 0.67 | $ | 1.24 | $ | 2.34 | ||||||||||||||||||
Diluted earnings per share |
$ | 0.50 | $ | 0.94 | $ | 2.08 | ||||||||||||||||||
Year Ended December 31, 2006 Compared to Year Ended December 31, 2005
SALES. Revenues for 2006 increased $94.5 million, or 51.0%, to approximately $279.8 million from
$185.4 million in 2005. Sales for the MRO segment increased $94.1 million, or 51.4% primarily due
to a broad based increase in sales of pumps, bearings, safety products and mill supplies to
companies engaged in oilfield service, oil and gas
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production, mining, electricity generation and petrochemical processing. The sales increases appear
to be at least partially the result of an improved economy and high energy prices. Sales by the
four acquisitions completed in 2006 accounted for $11.8 million of the 2006 sales increase.
Excluding sales of the acquired businesses, sales for the MRO segment increased 45.0%. Sales for
the Electrical Contractor segment increased $0.4 million, or 16.9%, to $2.8 million from $2.4
million for 2005. The sales increase for the Electrical Contractor segment resulted from the sale
of more commodity type electrical products.
GROSS PROFIT. Gross profit for 2006 increased 58.1% compared to 2005. Gross profit, as a percentage
of sales, increased by approximately 1.3% for 2006, when compared to 2005. Gross profit as a
percentage of sales for the MRO segment increased to 28.0% in 2006 from 26.6% in 2005. This
increase can be primarily attributed to increased margins on pump related equipment sold by
businesses acquired in 2005 and 2006 which are included in the MRO segment. Gross profit as a
percentage of sales for the Electrical Contractor segment decreased to 39.9% for 2006, from 42.6%
in 2005. This decrease resulted from the sale of more lower margin commodity type electrical
products.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative expense for 2006 increased
by approximately $17.6 million, or 43.7%, when compared to 2005. The increase is primarily
attributed to increased salaries, incentive compensation, employee benefits, payroll related
expenses and $0.5 million of costs for Sarbanes-Oxley compliance. Selling, general and
administrative expense associated with the four acquisitions completed in 2006 accounted for $2.6
million of the increase. Salaries have increased partially as a result of increased headcount due
to acquisitions and hiring more personnel for the purpose of supporting increasing sales. Incentive
compensation has increased as a result of increased gross profit and income before tax. The
majority of our employees receive incentive compensation which is based upon gross profit. As a
percentage of revenue, the 2006 expense decreased by approximately 1.0% to 20.7% from 21.7% for
2005. This decrease resulted from sales increasing by 51.0% while selling, general and
administrative costs increased by only 43.7%.
OPERATING INCOME. Operating income for 2006 increased by approximately $11.3 million, or 119.9%,
when compared to 2005. This increase was the result of a 122.3% increase in operating income for
the MRO segment and a 49.2% increase in operating income for the Electrical Contractor segment.
Operating income for the MRO segment increased as a result of increased gross profit, partially
offset by increased selling, general, and administrative expense. Operating income for the
Electrical Contractor segment increased as a result of increased gross profit, combined with
decreased selling, general and administrative costs.
INTEREST EXPENSE. Interest expense for 2006 increased by 94% from 2005. This increase resulted from
the combination of increased debt to fund acquisitions and internal growth and an approximate 177
basis point increase in prime and LIBOR market interest rates for 2006 compared to 2005. The effect
of the increase in market interest rates was partially offset by the lower margins on our facility
put in place in August, 2005.
OTHER INCOME. Other income for 2006 increased to $0.7 million from $0.1 million for 2005 as a
result of gains recorded on sales of equipment and real estate during 2006.
INCOME TAXES. Our provision for income taxes differed from the U. S. statutory rate of 34% due to
state income taxes and non-deductible expenses. Our effective tax rate for 2006 increased to 38.6%
from 36.5% for 2005 primarily as a result of increased state income taxes. State income taxes
increased as a result of increased operations in higher tax states and the effect of the use of
state net operating loss carryforwards in 2005.
Year Ended December 31, 2005 Compared to Year Ended December 31, 2004
SALES. Revenues for 2005 increased $24.8 million, or 15.4%, to approximately $185.4 million from
$160.6 million in 2004. Sales for the MRO segment increased $24.8 million, or 15.7% primarily due
to a broad based increase in sales of pumps, bearings, safety products and mill supplies to
companies engaged in oilfield service, oil and gas production, mining, electricity generation and
petrochemical processing. The sales increases appear to be at least partially the result of an
improved economy and increased energy prices. Sales by the two businesses acquired in 2005
accounted for $7.3 million of the 2005 sales increase. Excluding sales of the acquired businesses,
sales for the MRO segment increased 11.0%. Sales for the Electrical Contractor segment were the
same at $2.4 million for 2004 and 2005.
4
GROSS PROFIT. Gross profit for 2005 increased 26.1% compared to 2004. Gross profit as a percentage
of sales increased by approximately 2.3% for 2005, when compared to 2004. Gross profit as a
percentage of sales for the MRO segment increased to 26.6% in 2005 from 24.3% in 2004. This
increase can be primarily attributed to increased margins on pump related equipment sold by the MRO
segment. The 2004 period included certain large sales of products for offshore energy production
with lower than average margins. In 2005 we replaced those sales with smaller, higher margin sales.
Gross profit as a percentage of sales for the Electrical Contractor segment increased to 42.6% for
2005, up from 41.9% in 2004. This increase resulted from the continued effort to focus on selling
higher margin specialty electrical products and to be selective on selling lower margin commodity
type electrical products.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative expense for 2005 increased
by approximately $6.1 million, or 17.8%, when compared to 2004. The increase is primarily
attributed to increased salaries, incentive compensation, employee benefits, payroll related
expenses and costs associated with two hurricanes in 2005. Selling, general and administrative
expense associated with the two businesses acquired in 2005 accounted for $0.9 million of the
increase. Salaries have increased partially as a result of hiring more sales related personnel for
the purpose of increasing sales. Incentive compensation has increased as a result of increased
gross profit. As a percentage of revenue, the 2005 expense increased by approximately 0.4% to 21.7%
from 21.3% for 2004. This increase is primarily the result of increased incentive compensation. The
majority of our employees receive incentive compensation which is based upon gross profit. Selling,
general and administrative expense as a percentage of gross profit declined in 2005 compared to
2004.
OPERATING INCOME. Operating income for 2005 increased by approximately $4.2 million, or 80.5%, when
compared to 2004. This increase was the result of an 84.1% increase in operating income for the MRO
segment and a 14.5% increase in operating income for the Electrical Contractor segment. Operating
income for the MRO segment increased as a result of increased gross profit, partially offset by
increased selling, general, and administrative expense. Operating income for the Electrical
Contractor segment increased as a result of selling, general and administrative costs decreasing
and gross profit increasing.
INTEREST EXPENSE. Interest expense for 2005 increased by $0.1 million to $1.0 million from $0.9
million for 2004. This increase resulted from the combination of increased debt to fund
acquisitions and an approximate 190 basis point increase in prime and LIBOR market interest rates
for 2005 compared to 2004. The effect of the increase in market interest rates was partially offset
by the lower margins on our facility.
Liquidity and Capital Resources
General Overview
As a distributor of MRO products and Electrical Contractor products, we require significant amounts
of working capital to fund inventories and accounts receivable. Additional cash is required for
capital items such as information technology and warehouse equipment. We also require cash to pay
our lease obligations and to service our debt.
Cash from operating activities was approximately breakeven in 2006 as compared to using $1.4
million in cash during 2005. This change between the two years was primarily attributable to
increased net income in 2006.
We paid $12.1 million of cash to purchase businesses in 2006 compared to $6.1 million in 2005.
We purchased approximately $2.4 million of capital assets during 2006 compared to $0.6 million for
2005. Capital expenditures during 2006 and 2005 were related primarily to computer equipment,
computer software, inventory handling equipment, and building improvements. Capital expenditures
for 2007 are expected to exceed the 2006 amount.
At December 31, 2006, our total long-term debt was $37.9 million compared to total capitalization
(total long-term debt plus shareholders’ equity) of $73.7 million. Approximately $31.6 million of
this outstanding debt bears interest at various floating rates. Therefore, as an example, a 200
basis point increase in interest rates would increase our annual interest expense by approximately
$632,000.
5
Our normal trade terms for our customers require payment within 30 days of invoice date. In
response to competition and customer demands we will offer extended terms to selected customers
with good credit history. Customers that are financially strong tend to request extended terms more
often than customers that are not financially strong. Many of our customers, including companies
listed in the Fortune 500, do not pay us within stated terms for a variety of reasons, including a
general business philosophy to pay vendors as late as possible. We generally collect the amounts
due from these large, slow-paying customers.
During 2006, the amount available to be borrowed under our credit facility increased from $11.0
million at December 31, 2005 to $13.6 million at December 31, 2006. This increase in availability
resulted from the $10 million increase in the credit facility, partially offset by a $8.0 million
increase in the amount borrowed under our lines of credit. The increased borrowings were used
primarily to fund acquisitions. Management believes that the liquidity of our balance sheet at
December 31, 2006, provides us with the ability to meet our working capital needs, scheduled
principal payments, capital expenditures and Series B preferred stock dividend payments during
2007.
Credit Facility
On August 2, 2005, we entered into a new credit facility (“Facility”) which replaced the previous
credit facility (“Old Credit Facility”). On June 5, 2006, the Facility was amended to increase the
maximum amount available to be borrowed to $40.0 million from $30.0 million.
The Facility provides for borrowings up to an aggregate of the lesser of (i) a percentage of the
collateral value based on a formula set forth therein or (ii) $40.0 million, and matures July 31,
2009. The Facility is secured by receivables, inventory and intangibles. The Facility contains
customary affirmative and negative covenants as well as financial covenants that are measured
quarterly and require that we maintain a certain cash flow and other financial ratios.
The Facility allows us to borrow at LIBOR plus a margin ranging from 0.75% to 1.25% or prime minus
a margin of 1.75% to 1.25%. At December 31, 2005 and 2006, the LIBOR based rate was LIBOR plus 75
basis points. At December 31, 2005 and 2006, the prime based rate was prime minus 175 basis points.
The LIBOR and prime based rates under the Facility are generally 150 basis points and 175 basis
points lower, respectively, than those assessed under the Old Credit Facility. At December 31,
2006, $23 million was borrowed at an interest rate of 6.125% under the LIBOR option and $3.2
million was borrowed at an interest rate of 6.5% under the prime option. At December 31, 2005, $15
million was borrowed at an interest rate of 5.125% under the LIBOR option and $3.2 million was
borrowed at an interest rate of 5.5% under the prime option. Commitment fees of .125% per annum are
payable on the portion of the Facility capacity not in use for borrowings at any given time. This
fee is 12.5 basis points lower than the same fee under the Old Credit Facility. At December 31,
2006, we were in compliance with all covenants. In addition to the $2.5 million of cash at December
31, 2006, we had $13.6 million available for borrowings under the Facility at December 31, 2006.
The Facility’s principal financial covenants include:
Fixed Charge Coverage Ratio — The Facility requires that the Fixed Charge Coverage Ratio be not
less than 2.0 to 1.0 as of each fiscal quarter end, determined on a rolling four quarters basis,
with “Fixed Charge Coverage Ratio” defined as the aggregate of net profit after taxes plus
depreciation expense, amortization expense, and cash capital contributions minus dividends and
distributions divided by the aggregate of the current maturity of long-term debt and capitalized
lease payments.
Debt to Credit Facility Adjusted EBITDA — The Facility requires that the Company’s ratio of Total
Funded Debt to Credit Facility Adjusted EBITDA, determined on a rolling four quarters basis, not
exceed 4.0 to 1.0 as of each quarter end. Total Funded Debt is defined under the Facility for
financial covenant purposes as the sum of all obligations for borrowed money (excluding
subordinated debt) plus all capital lease obligations. Credit Facility Adjusted EBITDA is defined
under the credit facility for financial covenant purposes as net profit before tax, plus interest
expense (net of capitalized interest expense), depreciation expense and amortization expense,
inclusive of acquisitions.
Borrowings
6
| December 31, | Increase | |||||||||||
| 2005 | 2006 | (Decrease) | ||||||||||
| (in Thousands) | ||||||||||||
Current portion of long-term debt |
$ | 1,358 | $ | 2,771 | $ | 1,413 | ||||||
Long-term debt, less current portion |
25,109 | 35,174 | 10,065 | |||||||||
Total long-term debt |
$ | 26,467 | $ | 37,945 | $ | 11,478 | (2) | |||||
Amount available (1) |
$ | 10,972 | $ | 13,601 | $ | 2,629 | (3) | |||||
| (1) | Represents amount available to be borrowed at the indicated date under the Facility. | |
| (2) | The funds obtained from the increase in long-term debt were primarily used to complete four acquisitions. | |
| (3) | The $2.6 million increase in the amount available is primarily a result of the $10 million increase in the Facility, partially offset by increased borrowings under the line of credit. |
Performance Metrics
| December 31, | Increase | |||||||||||
| 2005 | 2006 | (Decrease) | ||||||||||
Days of sales outstanding (in days) |
52.3 | 50.2 | (2.1 | ) | ||||||||
Inventory turns |
6.9 | 5.9 | (1.0 | ) | ||||||||
Results for businesses acquired in 2005 and 2006 were annualized to
compute these performance metrics.
Accounts receivable days of sales outstanding were 50.2 at December 31, 2006 compared to 52.3
days at December 31, 2005. The decrease resulted primarily from a change in customer mix which
resulted in faster collection of accounts receivable. Annualized inventory turns were 5.9 times at
December 31, 2006 compared to 6.9 times at December 31, 2005. The decline in inventory turns
resulted from decisions made by inventory management to increase inventory to support increased
sales to purchase inventory before price increases and to react to longer lead times.
Funding Commitments
We believe our cash generated from operations and available under our Facility will meet our
normal working capital needs during the next twelve months. However, we may require additional debt
or equity financing to fund potential acquisitions. Such additional financings may include
additional bank debt or the public or private sale of debt or equity securities. In connection
with any such financing, we may issue securities that substantially dilute the interests of our
shareholders. We may not be able to obtain additional financing on attractive terms, if at all.
Contractual Obligations
The impact that our contractual obligations as of December 31, 2006 are expected to have on
our liquidity and cash flow in future periods is as follows:
| Payments Due by Period | ||||||||||||||||||||
| Less than 1 | 1–3 | More than | ||||||||||||||||||
| Total | Year | Years | 3-5 Years | 5 Years | ||||||||||||||||
Long-term debt, including current
Portion (1) |
$ | 37,945 | $ | 2,771 | $ | 31,621 | $ | 1,803 | $ | 1,750 | ||||||||||
Operating lease obligations |
9,736 | 2,865 | 4,887 | 1,825 | 159 | |||||||||||||||
Estimated interest payments (2) |
1,767 | 605 | 743 | 304 | 115 | |||||||||||||||
Total |
$ | 49,448 | $ | 6,241 | $ | 37,251 | $ | 3,932 | $ | 2,024 | ||||||||||
7
| (1) | Amounts represent the expected cash payments of our long-term debt and do not include any fair value adjustment. | |
| (2) | Assumes interest rates in effect at December 31, 2006. Assumes debt is paid on maturity date and not replaced. Does not include interest on the revolving line of credit as borrowings under this facility fluctuate. The amounts of interest incurred for borrowings under the revolving lines of credit were $654,000, $755,000 and $1,301,000 for 2004, 2005 and 2006, respectively. Management anticipates an increased level of interest payments on the Facility in 2007 as a result of increased average interest rates and increased debt levels. |
Off-Balance Sheet Arrangements
As part of our ongoing business, we do not participate in transactions that generate
relationships with unconsolidated entities or financial partnerships, such as entities often
referred to as structured finance or special purpose entities (“SPE’s”), which would have been
established for the purpose of facilitating off-balance sheet arrangements or other contractually
narrow or limited purposes. As of December 31, 2006, we were not involved in any unconsolidated
SPE transactions.
Indemnification
In the ordinary course of business, DXP enters into contractual arrangements under which DXP
may agree to indemnify customers from any losses incurred relating to the services we perform.
Such indemnification obligations may not be subject to maximum loss clauses. Historically,
payments made related to these indemnities have been immaterial.
Discussion of Critical Accounting Policies
The preparation of financial statements in conformity with accounting principles generally accepted
in the United States of America requires us to make estimates and assumptions in determining the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and expenses during the
reporting period. The significant estimates made by us in the accompanying financial statements
relate to reserves for accounts receivable collectibility, inventory valuations, income taxes and
self-insured medical claims. Actual results could differ from those estimates. Management
periodically re-evaluates these estimates as events and circumstances change. Together with the
effects of the matters discussed above, these factors may significantly impact the Company’s
results of operations from period-to-period.
Critical accounting policies are those that are both most important to the portrayal of a company’s
financial position and results of operations, and require management’s subjective or complex
judgments. These policies have been discussed with the Audit Committee of the Board of Directors of
DXP. Below is a discussion of what we believe are our critical accounting policies. Also, see Note
1 of the Notes to the Consolidated Financial Statements.
Revenue Recognition
We recognize revenues when an agreement is in place, price is fixed, title for product passes
to the customer or services have been provided, and collectibility is reasonably assured.
Allowance for Doubtful Accounts
Provisions to the allowance for doubtful accounts are made monthly and adjustments are made
periodically (as circumstances warrant) based upon the expected collectibility of all such
accounts. Write-offs could be materially different from the reserve provided if economic
conditions change or actual results deviate from historical trends.
Inventory
8
Inventory consists principally of finished goods and is priced at lower of cost or
market, cost being determined using both the first-in, first-out (FIFO) and the last-in, first out
(LIFO) method. Reserves are provided against inventory for estimated obsolescence based upon the
aging of the inventory and market trends. Actual obsolescence could be materially different from
the reserve if economic conditions or market trends change significantly.
Self-insured Medical Claims
We accrue for the estimated outstanding balance of unpaid medical claims for our employees and
their dependents. The accrual is adjusted monthly based on recent claims experience. The actual
claims could deviate from recent claims experience and be materially different from the reserve.
Goodwill and Other Intangible Assets
Goodwill and other intangible assets attributable to our reporting units are tested for impairment
by comparing the fair value of each reporting unit with its carrying value. Significant estimates
used in the determination of fair value include estimates of future cash flows, future growth
rates, costs of capital and estimates of market multiples. As required under current accounting
standards, we test for impairment annually at year end unless factors otherwise indicate that
impairment may have occurred. We did not have any impairments under the provisions of SFAS No. 142
as of December 31, 2006.
Purchase Accounting
The Company estimates the fair value of assets, including property, machinery and equipment and its
related useful lives and salvage values, and liabilities when allocating the purchase price of an
acquisition.
Income Taxes
Deferred income tax assets and liabilities are computed for differences between the financial
statement and income tax bases of assets and liabilities. Such deferred income tax asset and
liability computations are based on enacted tax laws and rates applicable to periods in which the
differences are expected to reverse. Valuation allowances are established to reduce deferred
income tax assets to the amounts expected to be realized.
Adoption of SFAS 123(R)
Effective January 1, 2006, the Company adopted the fair value recognition provisions of Statement
of Financial Accounting Standard 123(R) “Share-Based Payment” (“SFAS 123(R)”) using the modified
prospective transition method. In addition, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 107 “Share-Based Payment” (“SAB 107”) in March, 2005, which provides
supplemental SFAS 123(R) application guidance based on the views of the SEC. Under the modified
prospective transition method, compensation cost recognized in the year ended December 31, 2006
includes: (a) compensation cost for all share-based payments granted prior to, but not yet vested
as of January 1, 2006, based on the grant date fair value estimated in accordance with the original
provisions of SFAS No. 123, and (b) compensation cost for all share-based payments granted
beginning January 1, 2006, based on the grant date fair value estimated in accordance with the
provisions of SFAS 123(R). In accordance with the modified prospective transition method, results
for prior periods have not been restated.
No future grants will be made under the Company’s stock option plans. The Company now uses
restricted stock for share-based compensation programs. Unrecognized compensation expense for
restricted stock awards was $856,000 at December 31, 2006. The weighted average period over which
this amount is expected to be recognized is 21.1 months.
Recent Accounting Pronouncements
See Note 2 of the Notes to the Consolidated Financial Statements for discussion of recent
accounting pronouncements.
9
Inflation
We do not believe the effects of inflation have any material adverse effect on our results of
operations or financial condition. We attempt to minimize inflationary trends by passing
manufacturer price increases on to the customer whenever practicable.
PART IV
ITEM 15. Exhibits, Financial Statement Schedules.
(a) Documents included in this report:
| 1. | Financial Statements (included under Item 8): |
| Page | ||||
| DXP Enterprises, Inc. and Subsidiaries: | ||||
Reports of Independent Registered Public Accounting Firm |
18 | |||
Consolidated Financial Statements |
||||
Consolidated Balance Sheets |
21 | |||
Consolidated Statements of Income |
22 | |||
Consolidated Statements of Shareholders’ Equity |
23 | |||
Consolidated Statements of Cash Flows |
24 | |||
Notes to Consolidated Financial Statements |
25 |
| 2. | Financial Statement Schedules: | |
| Schedule II – Valuation and Qualifying Accounts. | ||
| All other schedules have been omitted since the required information is not significant or is included in the Consolidated Financial Statements or notes thereto or is not applicable. | ||
| 3. | Exhibits: |
The following exhibits are filed herewith or are incorporated by reference to exhibits
previously filed with the SEC.
| Exhibit | ||
| No. | Description | |
2.1
|
Stock Purchase Agreement between DXP Enterprises, Inc., as Purchaser, and R. A. Mueller, Inc., dated December 1, 2005, whereby DXP Enterprises, Inc. acquired all of the outstanding shares of R. A. Mueller, Inc. (incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on December 5, 2005). | |
2.2
|
Asset Purchase Agreements between PMI Operating Company, Ltd., as Purchaser, Production Pump Systems of Levelland, L.P., Machine Tech Services, L.P., Production Pump Systems, L.P., and the Partners dated May 1, 2006 (incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on June 2, 2006). | |
2.3
|
Asset Purchase Agreement between DXP Enterprises, Inc., as Purchaser, and Safety International, Inc., dated October 11, 2006 (incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on October 11, 2006). |
10
| Exhibit | ||
| No. | Description | |
2.4
|
Asset Purchase Agreement between DXP Enterprises, Inc., as Purchaser, and Gulf Coast Torch & Regulator, dated October 19, 2006 (incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on October 19, 2006). | |
2.5
|
Asset Purchase Agreement between DXP Enterprises, Inc., as Purchaser, and Safety Alliance, dated November 1, 2006 (incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on November 1, 2006). | |
3.1
|
Restated Articles of Incorporation, as amended (incorporated by reference to Exhibit 4.1 to Registrant’s Registration Statement on Form S-8 (Reg. No. 333-61953), filed with the Commission on August 20, 1998). | |
3.2
|
Bylaws (incorporated by reference Exhibit 3.2 to the Registrant’s Registration Statement on Form S-4 (Reg. No. 333-10021), filed with the Commission on August 12, 1996). | |
4.1
|
Form of Common Stock certificate (incorporated by reference to Exhibit 4.3 to the Registrant’s Registration Statement on Form S-8 (Reg. No. 333-61953), filed with the Commission on August 20, 1998). | |
4.2
|
See Exhibit 3.1 for provisions of the Company’s Restated Articles of Incorporation, as amended, defining the rights of security holders. | |
4.3
|
Exhibit 3.2 for provisions of the Company’s Bylaws defining the rights of security holders. | |
+10.1
|
DXP Enterprises, Inc. 1999 Employee Stock Option Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999). | |
+10.2
|
DXP Enterprises, Inc. 1999 Non-Employee Director Stock Option Plan (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999). | |
+10.3
|
DXP Enterprises, Inc. Long Term Incentive Plan, as amended (incorporated by reference to Exhibit 4.4 to the Registrant’s Registration Statement on Form S-8 (Reg. No. 333-61953), filed with the Commission on August 20, 1998). | |
+10.4
|
Amended and Restated Stock Option Agreement dated effective as of March 31, 1996, between SEPCO Industries, Inc. and David R. Little (incorporated by reference to the Registrant’s Registration Statement on Form S-4 (Reg. No. 333-10021), filed with the Commission on August 12, 1996). | |
+10.5
|
Promissory Note dated December 31, 2001 in the aggregate principal amount of $915,974.00, made by David R. Little payable to DXP Enterprises, Inc. (incorporated by reference to Exhibit 10.5 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003). | |
+10.6
|
Amendment No. One to DXP Enterprises, Inc. Non-Employee Director Stock Option Plan (incorporated by reference to Exhibit 10.8 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003). | |
10.7
|
Credit Agreement by and among DXP Enterprises, Inc., as Borrower, and Wells Fargo Bank, as Bank, dated as of August 2, 2005. (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed with the Commission on August 4, 2005). | |
+10.8
|
Employment Agreement dated effective as of January 1, 2004, between DXP Enterprises, Inc. and David R. Little (incorporated by reference to Exhibit 10.10 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003). |
11
| Exhibit | ||
| No. | Description | |
+10.9
|
Employment Agreement dated effective as of June 1, 2004, between DXP Enterprises, Inc. and Mac McConnell (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2004.). | |
+10.10
|
Amendment No. One to DXP Enterprises, Inc. 1999 Employee Stock Option Plan (incorporated by reference to Exhibit 10.10 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004). | |
+10.11
|
Summary Description of Director Fees (incorporated by reference to Exhibit 10.11 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004). | |
+10.12
|
Summary Description of Executive Officer Cash Bonus Plan (incorporated by reference to Exhibit 10.12 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004). | |
+10.13
|
Amendment No. Two to DXP Enterprises, Inc. Non-Employee Director Stock Option Plan (incorporated by reference to Exhibit 10.13 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004). | |
+10.14
|
DXP Enterprises, Inc. 2005 Restricted Stock Plan (incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form S-8 (Reg. No. 333-134606), filed with the Commission on May 31, 2006). | |
10.15
|
First Amendment to Credit Agreement by and among DXP Enterprises, Inc., as Borrower, and Wells Fargo Bank, as Bank, dated as of August 2, 2005 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on June 6, 2006). | |
10.16
|
First Modification to Promissory Note by and among DXP Enterprises, Inc., as Borrower, and Wells Fargo Bank, as Bank, dated as of August 2, 2005 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed with the Commission on June 6, 2006). | |
+10.17
|
Amendment No. One to Employment Agreement dated effective as of January 1, 2004, between DXP Enterprises, Inc. and David R. Little (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on July 25, 2006). | |
+10.18
|
Amendment No. One to DXP Enterprises, Inc. 2005 Restricted Stock Plan (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed with the Commission on July 25, 2006). | |
21.1
|
Subsidiaries of the Company (incorporated by reference to Exhibit 21.1 to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 16, 2007). | |
23.1
|
Consent from Hein & Associates LLP, Independent Registered Public Accounting Firm (incorporated by reference to Exhibit 23.1 to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 16, 2007). | |
*31.1
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and rule 15d-14(a) of the Securities Exchange Act, as amended. | |
*31.2
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and rule 15d-14(a) of the Securities Exchange Act, as amended. | |
*32.1
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
Exhibits designated by the symbol * are filed with this Annual Report on Form 10-K/A. All exhibits
not so designated are incorporated by reference to a prior filing with the SEC as indicated.
12
+ Indicates a management contract or compensation plan or arrangement.
The Company undertakes to furnish to any shareholder so requesting a copy of any of the
exhibits to this Annual Report on Form 10-K upon payment to the Company of the reasonable costs
incurred by the Company in furnishing any such exhibit.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S
REPORT ON FINANCIAL STATEMENT SCHEDULE
REPORT ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors and Shareholders
DXP Enterprises, Inc. and Subsidiaries
Houston, Texas
DXP Enterprises, Inc. and Subsidiaries
Houston, Texas
We have audited, in accordance with auditing standards of the Public Company Accounting Oversight
Board (United States), the consolidated financial statements of DXP Enterprises, Inc. and
Subsidiaries included in this Form 10-K and have issued our report thereon dated March 16, 2007.
Our audits were made for the purpose of forming an opinion on the basic financial statements taken
as a whole. The financial statement schedule listed in Item 15 herein (Schedule II-Valuation and
Qualifying Accounts) is the responsibility of the Company’s management and is presented for the
purpose of complying with the Securities and Exchange Commission’s rules and is not part of the
basic financial statements. The financial statement schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects with the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
/s/ HEIN & ASSOCIATES LLP
HEIN & ASSOCIATES LLP
HEIN & ASSOCIATES LLP
Houston, Texas
March 16, 2007
March 16, 2007
SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS
DXP ENTERPRISES, INC.
Years Ended December 31, 2006, 2005 and 2004
(in thousands)
DXP ENTERPRISES, INC.
Years Ended December 31, 2006, 2005 and 2004
(in thousands)
| Balance at | Charged to | Charged to | Balance | |||||||||||||||||
| Beginning | Cost and | Other | At End | |||||||||||||||||
| Description | of Year | Expenses | Accounts | Deductions | of Year | |||||||||||||||
Year ended December
31, 2006 |
||||||||||||||||||||
Deducted
from assets
accounts |
||||||||||||||||||||
Allowance
for doubtful
accounts |
$ | 1,835 | $ | 384 | $ | — | $ | 737 | $ | 1,482 | ||||||||||
Valuation
allowance for
deferred tax
assets |
$ | 44 | $ | — | $ | — | $ | 3 | (2) | $ | 41 | |||||||||
Year ended December
31, 2005 |
||||||||||||||||||||
Deducted
from assets
accounts |
||||||||||||||||||||
Allowance
for doubtful
accounts |
$ | 1,776 | $ | 273 | $ | 48 | (3) | $ | 262 | (1) | $ | 1,835 | ||||||||
Valuation
allowance for
deferred tax
assets |
$ | 78 | $ | — | $ | — | $ | 34 | (2) | $ | 44 | |||||||||
Year ended December
31, 2004 |
||||||||||||||||||||
Deducted
from assets
accounts |
||||||||||||||||||||
Allowance
for doubtful
accounts |
$ | 1,420 | $ | 492 | $ | — | $ | 136 | (1) | $ | 1,776 | |||||||||
Valuation
allowance for
deferred tax
assets |
$ | 219 | $ | — | $ | — | $ | 141 | (2) | $ | 78 | |||||||||
| (1) | Uncollectible accounts written off, net of recoveries | |
| (2) | Reduction results from expiration or use of state net operating loss carryforwards. | |
| (3) | Reserve for receivables of acquired businesses. |
13
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.
| DXP ENTERPRISES, INC. (Registrant) | ||||||
| By: | /s/ DAVID R. LITTLE | |||||
| David R. Little | ||||||
| Chairman of the Board, | ||||||
| President and Chief Executive Officer | ||||||
Dated: May 29, 2007
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the capacities and on the
dates indicated:
| Name | Title | Date | ||
/s/ DAVID R. LITTLE
|
Chairman of the Board, President, Chief Executive Officer and Director (Principal Executive Officer) | May 29, 2007 | ||
/s/ MAC McCONNELL
|
Senior Vice-President/Finance and Chief Financial Officer (Principal Financial and Accounting Officer) | May 29, 2007 | ||
/s/ CLETUS DAVIS
|
Director | May 29, 2007 | ||
/s/ TIMOTHY P. HALTER
|
Director | May 29, 2007 | ||
/s/ KENNETH H. MILLER
|
Director | May 29, 2007 |
EXHIBIT INDEX
| Exhibit | ||
| No. | Description | |
2.1
|
Stock Purchase Agreement between DXP Enterprises, Inc., as Purchaser, and R. A. Mueller, Inc., dated December 1, 2005, whereby DXP Enterprises, Inc. acquired all of the outstanding shares of R. A. Mueller, Inc. (incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on December 5, 2005). | |
2.2
|
Asset Purchase Agreements between PMI Operating Company, Ltd., as Purchaser, Production Pump Systems of Levelland, L.P., Machine Tech Services, L.P., Production Pump Systems, L.P., and the Partners dated May 1, 2006 (incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on June 2, 2006). | |
2.3
|
Asset Purchase Agreement between DXP Enterprises, Inc., as Purchaser, and Safety International, Inc., dated October 11, 2006 (incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on October 11, 2006). | |
2.4
|
Asset Purchase Agreement between DXP Enterprises, Inc., as Purchaser, and Gulf Coast Torch & Regulator, dated October 19, 2006 (incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on October 19, 2006). | |
2.5
|
Asset Purchase Agreement between DXP Enterprises, Inc., as Purchaser, and Safety Alliance, dated November 1, 2006 (incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on November 1, 2006). | |
3.1
|
Restated Articles of Incorporation, as amended (incorporated by reference to Exhibit 4.1 to Registrant’s Registration Statement on Form S-8 (Reg. No. 333-61953), filed with the Commission on August 20, 1998). | |
3.2
|
Bylaws (incorporated by reference Exhibit 3.2 to the Registrant’s Registration Statement on Form S-4 (Reg. No. 333-10021), filed with the Commission on August 12, 1996). | |
4.1
|
Form of Common Stock certificate (incorporated by reference to Exhibit 4.3 to the Registrant’s Registration Statement on Form S-8 (Reg. No. 333-61953), filed with the Commission on August 20, 1998). | |
4.2
|
See Exhibit 3.1 for provisions of the Company’s Restated Articles of Incorporation, as amended, defining the rights of security holders. | |
4.3
|
Exhibit 3.2 for provisions of the Company’s Bylaws defining the rights of security holders. | |
+10.1
|
DXP Enterprises, Inc. 1999 Employee Stock Option Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999). | |
+10.2
|
DXP Enterprises, Inc. 1999 Non-Employee Director Stock Option Plan (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999). | |
+10.3
|
DXP Enterprises, Inc. Long Term Incentive Plan, as amended (incorporated by reference to Exhibit 4.4 to the Registrant’s Registration Statement on Form S-8 (Reg. No. 333-61953), filed with the Commission on August 20, 1998). |
| Exhibit | ||
| No. | Description | |
+10.4
|
Amended and Restated Stock Option Agreement dated effective as of March 31, 1996, between SEPCO Industries, Inc. and David R. Little (incorporated by reference to the Registrant’s Registration Statement on Form S-4 (Reg. No. 333-10021), filed with the Commission on August 12, 1996). | |
+10.5
|
Promissory Note dated December 31, 2001 in the aggregate principal amount of $915,974.00, made by David R. Little payable to DXP Enterprises, Inc. (incorporated by reference to Exhibit 10.5 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003). | |
+10.6
|
Amendment No. One to DXP Enterprises, Inc. Non-Employee Director Stock Option Plan (incorporated by reference to Exhibit 10.8 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003). | |
10.7
|
Credit Agreement by and among DXP Enterprises, Inc., as Borrower, and Wells Fargo Bank, as Bank, dated as of August 2, 2005. (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed with the Commission on August 4, 2005). | |
+10.8
|
Employment Agreement dated effective as of January 1, 2004, between DXP Enterprises, Inc. and David R. Little (incorporated by reference to Exhibit 10.10 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003). | |
+10.9
|
Employment Agreement dated effective as of June 1, 2004, between DXP Enterprises, Inc. and Mac McConnell (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2004.). | |
+10.10
|
Amendment No. One to DXP Enterprises, Inc. 1999 Employee Stock Option Plan (incorporated by reference to Exhibit 10.10 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004). | |
+10.11
|
Summary Description of Director Fees (incorporated by reference to Exhibit 10.11 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004). | |
+10.12
|
Summary Description of Executive Officer Cash Bonus Plan (incorporated by reference to Exhibit 10.12 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004). | |
+10.13
|
Amendment No. Two to DXP Enterprises, Inc. Non-Employee Director Stock Option Plan (incorporated by reference to Exhibit 10.13 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004). | |
+10.14
|
DXP Enterprises, Inc. 2005 Restricted Stock Plan (incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form S-8 (Reg. No. 333-134606), filed with the Commission on May 31, 2006). | |
10.15
|
First Amendment to Credit Agreement by and among DXP Enterprises, Inc., as Borrower, and Wells Fargo Bank, as Bank, dated as of August 2, 2005 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on June 6, 2006). | |
10.16
|
First Modification to Promissory Note by and among DXP Enterprises, Inc., as Borrower, and Wells Fargo Bank, as Bank, dated as of August 2, 2005 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed with the Commission on June 6, 2006). | |
+10.17
|
Amendment No. One to Employment Agreement dated effective as of January 1, 2004, between DXP Enterprises, Inc. and David R. Little (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on July 25, 2006). | |
+10.18
|
Amendment No. One to DXP Enterprises, Inc. 2005 Restricted Stock Plan (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed with the Commission on July 25, 2006). |
| Exhibit | ||
| No. | Description | |
21.1
|
Subsidiaries of the Company (incorporated by reference to Exhibit 21.1 to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 16, 2007). | |
23.1
|
Consent from Hein & Associates LLP, Independent Registered Public Accounting Firm (incorporated by reference to Exhibit 23.1 to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 16, 2007). | |
*31.1
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and rule 15d-14(a) of the Securities Exchange Act, as amended. | |
*31.2
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and rule 15d-14(a) of the Securities Exchange Act, as amended. | |
*32.1
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
Exhibits designated by the symbol * are filed with this Annual Report on Form 10-K/A. All exhibits
not so designated are incorporated by reference to a prior filing with the SEC as indicated.
+ Indicates a management contract or compensation plan or arrangement.