EXPD Expeditors International of Washington Inc

Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced quarterly net earnings of $85,565,000 for the third quarter of 2008, as compared with $74,320,000 for the same quarter of 2007, an increase of 15%. Net revenues for the third quarter of 2008 increased 12% to $429,127,000, as compared with $384,810,000 reported for the third quarter of 2007. Total revenues and operating income were $1,564,913,000 and $135,396,000 in 2008, as compared with $1,411,025,000 and $119,521,000 for the same quarter of 2007, increases of 11% and 13%, respectively. Diluted net earnings per share for the third quarter of 2008 were $.39, as compared with $.34 for the same quarter in 2007, an increase of 15%. The Company also reported that same store net revenues and operating income increased 11% and 13%, respectively, for the third quarter of 2008 when compared with 2007. For the nine months ended September 30, 2008, net earnings rose to $223,286,000 from $199,097,000 in 2007, an increase of 12%. Net revenues for the nine months increased to $1,200,780,000 from $1,073,520,000 for 2007, up 12%. Total revenues and operating income for the nine months were $4,326,489,000 and $353,931,000 in 2008, as compared with $3,788,589,000 and $315,784,000 for the same period in 2007, increases of 14% and 12%, respectively. Diluted net earnings per share for the first three quarters of 2008 were $1.02, as compared with $.90 for the same period of 2007, an increase of 13%. Same store net revenues and operating income both increased 12%, for the nine months ended September 30, 2008, when compared with the same period of 2007. �These record quarterly results make a very significant statement. They show what can be accomplished when a company�s culture rewards its employees based upon �real world� profitability measurements that reinforce responsible risk and return decisions. Our profitability measurements are grounded in the kinds of economic reality that requires a long-term commitment to both generating and sustaining profitability through providing quality customer service. There are no short-term, �financially-engineered� profitability gimmicks in these numbers that will unravel over time because they lack economic substance,� said Peter J. Rose, Chairman and Chief Executive Officer. �These results also show that we are capable of executing effectively in the face of some rather challenging circumstances. Particularly noteworthy of our continued commitment to productivity improvement is the quarter�s record-high 31.6% operating margin (operating income divided by net revenue). As always, it is the efforts of our people and their cultural buy-in that made these achievements possible. We�ve always said that we have the best people in the industry...and they continue to prove that,� Rose continued. �The irony of reporting record quarterly profits in such tumultuous economic times is certainly not lost on us. We have great sympathy for those who have been victimized by the greed, avarice and deliberate desertion of time-proven principles of sound financial management that caused this mess in the first place. If a silver lining is to come out of all this turmoil, hopefully it will be a return to the realms of financial sanity where companies that manage prudently are differentiated from those that don�t. Fortunately for our employees, our customers and our shareholders, it is our unique culture that has always differentiated us...and it continues to do so now, at a time when such differentiation is critically needed. Here at Expeditors, we don�t need to go �back to basics�, because we�ve never left them,� Rose concluded. Expeditors is a global logistics company headquartered in Seattle, Washington. The company employs trained professionals in 182 full-service offices, 69 satellite locations and 4 international service centers located on six continents linked into a seamless worldwide network through an integrated information management system. Services include air and ocean freight forwarding, vendor consolidation, customs clearance, marine insurance, distribution and other value added international logistics services. Expeditors International of Washington, Inc. and Subsidiaries Financial Highlights Three months and Nine months ended September 30, 2008 and 2007 (Unaudited) (in thousand's of US dollars except share data) � � � Three Months Ended September 30, � Nine Months Ended September 30, 2008 � 2007 � %Increase 2008 � 2007 � %Increase Revenues $ 1,564,913 $ 1,411,025 11 % $ 4,326,489 $ 3,788,589 14 % Net revenues $ 429,127 $ 384,810 12 % $ 1,200,780 $ 1,073,520 12 % Operating income $ 135,396 $ 119,521 13 % $ 353,931 $ 315,784 12 % Net earnings $ 85,565 $ 74,320 15 % $ 223,286 $ 199,097 12 % Diluted earnings per share $ .39 $ .34 15 % $ 1.02 $ .90 13 % Basic earnings per share $ .40 $ .35 14 % $ 1.05 $ .93 13 % Diluted weighted average shares outstanding � 218,729,790 � � 221,649,693 � � 219,903,341 � 221,993,433 Basic weighted average shares outstanding � 212,747,871 � � 213,485,465 � 213,027,420 � 213,388,675 � Offices opened during the Third Quarter of 2008 ((a) = Full Service, (b) = Satellite) � � LATIN AMERICA EUROPE UNITED STATES (a)L�zaro C�rdenas, Mexico(satellite of Guadalajara) (b)Bucharest, Romania (b)Milwaukee, Wisconsin(formerly a satellite of Chicago) � Investors may submit written questions via e-mail to: investor@expeditors.com � Or by fax to: (206) 674-3459. � Questions received by the end of business on November 6, 2008 will be considered in management's 8-K "Responses to Selected Questions" expected to be filed on or about November 14, 2008. � EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands, except share data) (Unaudited) � � � � September 30, December 31, Assets 2008 2007 � Current assets: Cash and cash equivalents $ 696,349 $ 574,599 Short-term investments 406 674 Accounts receivable, net 995,107 933,519 Deferred Federal and state income taxes 8,098 8,278 Other current assets � 34,379 � 17,627 Total current assets � 1,734,339 � 1,534,697 � Property and equipment, net 501,664 497,892 Goodwill, net 7,927 7,927 Other intangibles, net 6,725 7,832 Other assets 19,682 20,717 � � $ 2,270,337 $ 2,069,065 Liabilities and Shareholders' Equity � Current liabilities: Accounts payable 667,104 613,108 Accrued expenses, primarily salaries and related costs 154,436 129,669 Federal, state and foreign income taxes � 30,727 � 26,976 Total current liabilities � 852,267 � 769,753 � Deferred Federal and state income taxes 61,317 55,533 � Minority interest 16,869 17,208 � Shareholders' equity: Preferred stock, par value $.01 per share. Authorized 2,000,000 shares; none issued -- -- Common stock, par value $.01 per share. Authorized 320,000,000 shares; issued and outstanding 211,868,068 shares at September 30, 2008 and 212,996,776 shares at December 31, 2007 2,119 2,130 Additional paid-in capital - 50,006 Retained earnings 1,328,572 1,143,464 Accumulated other comprehensive income � 9,193 � 30,971 Total shareholders' equity � 1,339,884 � 1,226,571 � � $ 2,270,337 $ 2,069,065 � EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Earnings (In thousands, except share data) (Unaudited) � � � � � � Three months ended Nine months ended September 30, September 30, 2008 2007 2008 2007 Revenues: Airfreight $ 703,152 $ 629,071 $ 1,961,797 $ 1,710,747 Ocean freight and ocean services 567,155 520,312 1,530,420 1,345,945 Customs brokerage and other services 294,606 261,642 834,272 731,897 � � � � Total revenues � 1,564,913 � � 1,411,025 � � 4,326,489 � � 3,788,589 � � Operating expenses: Airfreight consolidation 553,672 490,880 1,532,454 1,317,970 Ocean freight consolidation 454,622 424,383 1,234,829 1,088,191 Customs brokerage and other services 127,492 110,952 358,426 308,908 Salaries and related costs 224,809 205,206 646,159 585,360 Rent and occupancy costs 19,729 17,751 58,538 50,162 Depreciation and amortization 10,222 9,690 30,050 29,540 Selling and promotion 8,881 8,890 28,129 27,567 Other � 30,090 � � 23,752 � � 83,973 � � 65,107 � Total operating expenses � 1,429,517 � � 1,291,504 � � 3,972,558 � � 3,472,805 � � Operating income � 135,396 � � 119,521 � � 353,931 � � 315,784 � � Interest expense (23 ) (22 ) (169 ) 82 Interest income 5,005 5,586 14,884 16,336 Other, net 2,225 1,038 3,337 3,468 � � � � Other income, net � 7,207 � � 6,602 � � 18,052 � � 19,886 � � Earnings before income taxes and minority interest 142,603 126,123 371,983 335,670 � Income tax expense 56,457 51,750 147,710 136,225 � � � � Net earnings before minority interest � 86,146 � � 74,373 � � 224,273 � � 199,445 � � Minority interest (581 ) (53 ) (987 ) (348 ) � � � � Net earnings $ 85,565 � $ 74,320 � $ 223,286 � $ 199,097 � � Diluted earnings per share $ 0.39 � $ 0.34 � $ 1.02 � $ 0.90 � � Basic earnings per share $ 0.40 � $ 0.35 � $ 1.05 � $ 0.93 � � Dividends declared and paid per common share $ - � $ - � $ 0.16 � $ 0.14 � � Weighted average diluted shares outstanding � 218,729,790 � � 221,649,693 � � 219,903,341 � � 221,993,433 � � Weighted average basic shares outstanding � 212,747,871 � � 213,485,465 � � 213,027,420 � � 213,388,675 � � EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) � � � � Three months ended � Nine months ended September 30, September 30, 2008 � 2007 2008 � 2007 Operating Activities: Net earnings $ 85,565 $ 74,320 $ 223,286 $ 199,097 Adjustments to reconcile net earnings to net cash provided by operating activities: Provision for losses on accounts receivable 1,503 701 930 346 Deferred income tax expense 1,117 13,216 17,590 25,456 Excess tax benefits from stock plans (485 ) (4,149 ) (9,880 ) (25,772 ) Stock compensation expense 11,513 11,206 34,116 34,709 Depreciation and amortization 10,222 9,690 30,050 29,540 Gain on sale of assets (46 ) (802 ) (651 ) (1,004 ) Minority interest in earnings of consolidated entities 581 53 987 348 Other 396 369 1,328 1,057 Changes in operating assets and liabilities: Increase in accounts receivable (51,422 ) (157,406 ) (83,446 ) (170,667 ) Increase in other current assets (2,544 ) (1,821 ) (1,867 ) (2,325 ) Increase in accounts payable and other current liabilities 13,796 79,108 95,898 141,553 Increase (decrease) in income taxes payable, net � 21,482 � � 12,029 � � (1,955 ) � 7,187 � � Net cash provided by operating activities � 91,678 � � 36,514 � � 306,386 � � 239,525 � � Investing Activities: (Increase) decrease in short-term investments (6 ) 26 210 188 Purchase of property and equipment (24,631 ) (39,650 ) (49,157 ) (70,833 ) Proceeds from sale of property and equipment 106 131 287 414 Prepayment on long-term land lease - (40 ) - (2,816 ) Other � 635 � � (786 ) � 690 � � (2,386 ) � Net cash used in investing activities � (23,896 ) � (40,319 ) � (47,970 ) � (75,433 ) � Financing Activities: Net distributions to minority interests (772 ) - (879 ) (316 ) Repayments of short-term debt, net - (203 ) - - Proceeds from issuance of common stock 26,737 31,588 46,888 59,456 Repurchases of common stock (75,332 ) (57,122 ) (144,920 ) (186,117 ) Excess tax benefits from stock plans 485 4,149 9,880 25,772 Dividends paid � 2 � � - � � (34,161 ) � (29,902 ) � Net cash used in financing activities (48,880 ) (21,588 ) (123,192 ) (131,107 ) � Effect of exchange rate changes on cash � (26,041 ) � 7,533 � � (13,474 ) � 12,839 � � (Decrease) increase in cash and cash equivalents (7,139 ) (17,860 ) 121,750 45,824 � Cash and cash equivalents at beginning of period 703,488 575,042 574,599 511,358 � Cash and cash equivalents at end of period $ 696,349 � $ 557,182 � $ 696,349 � $ 557,182 � � Interest and taxes paid: Interest $ 20 $ 25 $ 166 $ 163 Income tax 32,114 24,227 123,999 98,539 � EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Business Segment Information (In thousands) (Unaudited) � � � UnitedStates � OtherN. America � Asia � Europe � Austral-Asia � LatinAmerica � MiddleEast � Elimi-nations � Consoli-dated Three months ended September 30, 2008 � Revenues from unaffiliated customers $ 336,093 43,225 852,255 215,018 21,575 23,843 72,904 - 1,564,913 Transfers between geographic areas � 30,709 2,883 5,624 11,966 2,307 4,425 4,757 (62,671 ) - Total revenues $ 366,802 46,108 857,879 226,984 23,882 28,268 77,661 (62,671 ) 1,564,913 � Net revenues $ 165,133 19,199 119,309 74,089 13,146 14,981 23,270 - 429,127 Operating income $ 43,147 4,096 57,498 16,039 4,325 3,811 6,480 - 135,396 Identifiable assets at quarter end $ 976,454 79,031 527,520 467,859 38,139 60,000 116,698 4,636 2,270,337 Capital expenditures $ 9,207 658 9,861 3,748 49 183 925 - 24,631 Depreciation and amortization $ 5,402 371 1,686 1,611 220 332 600 - 10,222 Equity $ 1,480,452 39,480 389,404 173,682 25,478 28,922 56,352 (853,886 ) 1,339,884 � Three months ended September 30, 2007 � Revenues from unaffiliated customers $ 273,476 36,209 825,183 174,668 18,049 20,155 63,285 - 1,411,025 Transfers between geographic areas � 29,031 2,450 4,719 9,564 1,927 2,827 3,598 (54,116 ) - Total revenues $ 302,507 38,659 829,902 184,232 19,976 22,982 66,883 (54,116 ) 1,411,025 � Net revenues $ 153,030 17,399 112,327 62,932 10,820 10,952 17,350 - 384,810 Operating income $ 37,465 3,971 55,772 12,965 3,236 2,044 4,068 - 119,521 Identifiable assets at quarter end $ 908,430 77,717 494,081 449,433 36,591 41,328 97,700 (71 ) 2,105,209 Capital expenditures $ 4,496 304 31,058 2,095 248 194 1,255 - 39,650 Depreciation and amortization $ 5,385 334 1,166 1,773 242 384 406 - 9,690 Equity $ 1,330,031 36,581 375,287 150,828 23,384 21,307 44,117 (794,202 ) 1,187,333 � Nine months ended September 30, 2008 � Revenues from unaffiliated customers $ 954,317 119,691 2,300,191 609,879 64,821 70,329 207,261 - 4,326,489 Transfers between geographic areas � 81,632 7,579 16,364 33,725 6,599 11,381 13,293 (170,573 ) - Total revenues $ 1,035,949 127,270 2,316,555 643,604 71,420 81,710 220,554 (170,573 ) 4,326,489 � Net revenues $ 468,034 53,882 322,738 212,148 37,970 41,785 64,223 - 1,200,780 Operating income $ 109,244 10,495 151,072 44,259 11,914 10,588 16,359 - 353,931 Identifiable assets at quarter end $ 976,454 79,031 527,520 467,859 38,139 60,000 116,698 4,636 2,270,337 Capital expenditures $ 20,003 1,848 16,371 7,042 402 959 2,532 - 49,157 Depreciation and amortization $ 16,172 1,011 4,439 5,060 716 969 1,683 - 30,050 Equity $ 1,480,452 39,480 389,404 173,682 25,478 28,922 56,352 (853,886 ) 1,339,884 � Nine months ended September 30, 2007 � Revenues from unaffiliated customers $ 779,998 97,063 2,137,320 493,149 49,888 58,900 172,271 - 3,788,589 Transfers between geographic areas � 77,383 6,414 13,168 25,495 5,478 8,414 10,364 (146,716 ) - Total revenues $ 857,381 103,477 2,150,488 518,644 55,366 67,314 182,635 (146,716 ) 3,788,589 � Net revenues $ 431,702 47,476 305,960 177,560 29,559 31,698 49,565 - 1,073,520 Operating income $ 96,986 9,642 147,244 35,066 8,298 6,450 12,098 - 315,784 Identifiable assets at quarter end $ 908,430 77,717 494,081 449,433 36,591 41,328 97,700 (71 ) 2,105,209 Capital expenditures $ 21,045 1,316 38,419 5,621 1,139 957 2,336 - 70,833 Depreciation and amortization $ 15,857 997 3,763 5,903 667 1,201 1,152 - 29,540 Equity $ 1,330,031 36,581 375,287 150,828 23,384 21,307 44,117 (794,202 ) 1,187,333 �