EXPD Expeditors International of Washington Inc

Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced record net earnings attributable to shareholders of $90,318,000 for the second quarter of 2010, as compared with $54,070,000 for the same quarter of 2009, an increase of 67%. Net revenues for the second quarter of 2010 increased 27% to $418,858,000 as compared with $330,047,000 reported for the second quarter of 2009. Total revenues and operating income were $1,516,770,000 and $138,496,000 in 2010, as compared with $895,360,000 and $86,927,000 for the same quarter of 2009, increases of 69% and 59%, respectively. Diluted net earnings attributable to shareholders per share for the second quarter were $.42, as compared with $.25 for the same quarter in 2009, an increase of 68%.

For the six months ended June 30, 2010, net earnings attributable to shareholders was $151,565,000, as compared with $113,330,000 in 2009, an increase of 34%. Net revenues for the six months increased to $780,681,000 from $666,562,000 for 2009, up 17%. Total revenues and operating income for the six months were $2,717,879,000 and $239,037,000 in 2010, as compared with $1,808,045,000 and $178,401,000 for the same period in 2009, increases of 50% and 34%, respectively. Diluted net earnings attributable to shareholders per share for the first two quarters of 2010 were $.70, as compared with $.52 for the same period of 2009, an increase of 35%.

“The ultimate testament to the strength of this quarter might be that when the numbers were finalized, we’d actually managed to surprise ourselves by a couple of cents,” said Peter J. Rose, Chairman and Chief Executive Officer. “Having the opportunity to add value to the supply-chains of successful companies is what adds value to Expeditors. We were somewhat awed by the strength that we saw in our customers’ supply chains this quarter and we’re obviously very grateful they chose to work with us. It was impressive that airfreight tonnage and ocean freight container count this quarter were up 54% and 26%, respectively, compared with the second quarter of 2009. The fact that this quarter’s net revenue was actually 5% higher than second quarter 2008 levels was particularly reassuring. While it’s much too soon to extrapolate this quarter’s results over the remainder of 2010, we think operating above second quarter 2008 levels is a positive development,” Rose went on to say.

“Our philosophy these last several years has been to try to not do anything stupid. We simply did what we’ve always done; focusing on improving customer service; taking market share by adding new customers; taking care of our people by not doing lay-offs; and making ourselves more productive through continued process improvement efforts. Boring consistency is what we do best,” Rose continued. “Some may point to ‘lower yields,’ or the $.01 to $.02 per share1 benefit coming from foreign exchange gains and a somewhat lower tax rate, but those factors aren’t the main thrust of what happened during the second quarter of 2010. The main story this quarter was the outstanding job, from both a productivity and customer service perspective, that our people did navigating the myriad market challenges required to manage those incredibly large freight volumes our customers entrusted to us. We’re grateful to our employees for their unfailing efforts, and to our customers for the confidence they’ve shown by trusting us with their business,” Rose concluded.

Expeditors is a global logistics company headquartered in Seattle, Washington. The company employs trained professionals in 183 full-service offices, 65 satellite locations and 2 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.

1 Diluted earnings attributable to shareholders per share.

NOTE: See Disclaimer on Forward-Looking Statements on the following page of this release.

Expeditors International of Washington, Inc.

Financial Highlights

Three months and Six months ended

June 30, 2010 and 2009

Unaudited

(in 000's of US dollars except share data)

                      Three Months Ended June 30,   Six Months Ended June 30,  

2010

   

2009

  %

Increase

 

2010

   

2009

  %

Increase

  Revenues $ 1,516,770   $ 895,360 69 % $ 2,717,879   $ 1,808,045 50   % Net revenues $ 418,858 $ 330,047 27 % $ 780,681 $ 666,562 17 % Operating income $ 138,496 $ 86,927 59 % $ 239,037 $ 178,401 34 % Net earnings attributable to shareholders $ 90,318 $ 54,070 67 % $ 151,565 $ 113,330 34 % Diluted earnings attributable to shareholders $ .42 $ .25 68 % $ .70 $ .52 35 % Basic earnings attributable to shareholders $ .43 $ .25 72 % $ .71 $ .53 34 %

Diluted weighted average shares outstanding

 

216,460,977

 

216,653,968

 

 

216,576,596

 

216,519,551

 

Basic weighted average shares outstanding

 

212,332,375

 

212,116,679

 

212,262,928

 

212,108,636

 

 

Percentage increases in same store net revenues and operating income were approximately the same as amounts reported above.

During the second quarter of 2010, the Company opened two full-service offices: 1) in Oslo, Norway (formerly an agent location); and 2) Zhongshan, People’s Republic of China (formerly a satellite of Shenzhen, People’s Republic of China).

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 August 6, 2010 will be considered in management’s 8-K “Responses to Selected Questions” expected to be filed on or about August 13, 2010.

Disclaimer on Forward-Looking Statements:

Certain portions of this release contain forward-looking statements which are based on certain assumptions and expectations of future events that are subject to risks and uncertainties, including comments on future economic trends, improving business climate, positive trends in freight volumes, ability to improve productivity and acquire market share, and changes in foreign exchange rates. Actual future results and trends may differ materially from historical results or those projected in any forward-looking statements depending on a variety of factors including, but not limited to, our ability to maintain consistent and stable operating results, future success of our business model, ability to perpetuate profits, changes in customer demand for Expeditors’ services caused by a general economic slow-down, customers’ inventory build-up, decreased consumer confidence, volatility in equity markets, energy prices, political changes, regulatory changes or the unpredictable acts of competitors and other risks, risk factors and uncertainties detailed in our Annual and Quarterly Reports filed with the Securities and Exchange Commission.

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands, except share data) (Unaudited)             June 30, December 31,

Assets

  2010       2009   Current assets: Cash and cash equivalents $ 960,300 $ 925,929 Short-term investments 705 655 Accounts receivable, net 1,016,575 810,369 Deferred Federal and state income taxes 8,141 8,338 Other current assets   36,686     42,539 Total current assets   2,022,407     1,787,830   Property and equipment, net 483,827 495,701 Goodwill, net 7,927 7,927 Other intangibles, net 4,218 4,938 Other assets, net   28,163     27,326 $ 2,546,542   $ 2,323,722

Liabilities and Equity

  Current liabilities: Accounts payable 659,237 546,675 Accrued expenses, primarily salaries and related costs 176,943 145,545 Federal, state and foreign income taxes   28,356     16,166 Total current liabilities   864,536     708,386   Deferred Federal and state income taxes 47,198 53,989   Commitments and contingencies   Shareholders' equity: Preferred stock; none issued -- --

Common stock, par value $.01 per share; issued andoutstanding 212,018,342 shares at June 30, 2010and 212,025,494 shares at December 31, 2009

2,120 2,120 Additional paid-in capital 6,572 18,265 Retained earnings 1,634,771 1,532,018 Accumulated other comprehensive (loss) income   (17,043 )   604 Total shareholders' equity   1,626,420     1,553,007   Noncontrolling interest   8,388     8,340 Total equity   1,634,808     1,561,347     $ 2,546,542   $ 2,323,722   EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Earnings (In thousands, except share data) (Unaudited)                 Three months ended Six months ended June 30, June 30,   2010     2009     2010     2009   Revenues: Airfreight services $ 732,881 $ 371,359 $ 1,292,264 $ 745,815 Ocean freight and ocean services 493,613 299,292 874,857 617,926 Customs brokerage and other services   290,276     224,709     550,758     444,304   Total revenues   1,516,770     895,360     2,717,879     1,808,045     Operating expenses: Airfreight consolidation 571,023 257,016 998,365 507,385 Ocean freight consolidation 400,729 218,891 701,819 457,117 Customs brokerage and other services 126,160 89,406 237,014 176,981 Salaries and related costs 221,105 189,565 420,953 376,774 Rent and occupancy costs 18,699 17,954 37,926 36,678 Depreciation and amortization 9,110 10,244 18,505 20,202 Selling and promotion 7,550 5,547 14,585 11,769 Other   23,898     19,810     49,675     42,738   Total operating expenses   1,378,274     808,433     2,478,842     1,629,644     Operating income   138,496     86,927     239,037     178,401     Interest income 1,484 2,433 3,259 6,039 Interest expense (151 ) (64 ) (238 ) (79 ) Other, net   10,288     2,081     10,897     6,634   Other income, net   11,621     4,450     13,918     12,594     Earnings before income taxes 150,117 91,377 252,955 190,995   Income tax expense 59,708 37,563 101,236 77,812         Net earnings   90,409     53,814     151,719     113,183     Less: net earnings attributable to noncontrolling interest 91 (256 ) 154 (147 )         Net earnings attributable to shareholders $ 90,318   $ 54,070   $ 151,565   $ 113,330     Diluted earnings attributable to shareholders per share $ 0.42   $ 0.25   $ 0.70   $ 0.52     Basic earnings attributable to shareholders per share $ 0.43   $ 0.25   $ 0.71   $ 0.53     Dividends declared and paid per common share $ 0.20   $ 0.19   $ 0.20   $ 0.19     Weighted average diluted shares outstanding   216,460,977     216,653,968     216,576,596     216,519,551     Weighted average basic shares outstanding   212,332,375     212,116,679     212,262,928     212,108,636     EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited)                     Three months ended Six months ended June 30, June 30,   2010     2009     2010     2009   Operating Activities: Net earnings $ 90,409 $ 53,814 $ 151,719 $ 113,183

Adjustments to reconcile net earnings to net cash provided by operating activities:

Provision for losses on accounts receivable (618 ) (1,075 ) 1,825 1,569 Deferred income tax expense (benefit) 10,814 (12,695 ) 3,086 (6,244 ) Excess tax benefits from stock plans (4,107 ) (2,073 ) (8,119 ) (5,135 ) Stock compensation expense 11,003 11,371 22,201 18,271 Depreciation and amortization 9,110 10,244 18,505 20,202 Gain on sale of assets (109 ) (6 ) (404 ) (10 ) Other 367 365 845 727 Changes in operating assets and liabilities: (Increase) decrease in accounts receivable (219,602 ) 60,379 (232,567 ) 214,343 Decrease (increase) in other current assets 2,947 (1,308 ) 1,136 (1,323 )

Increase (decrease) in accounts payable and accrued expenses

121,941 (20,329 ) 165,110 (100,499 ) (Decrease) increase in income taxes payable, net   (1,609 )   (13,601 )   24,332     2,284   Net cash provided by operating activities   20,546     85,086     147,669     257,368     Investing Activities: Decrease (increase) in short-term investments 6 (13 ) (30 ) 31 Purchase of property and equipment (8,118 ) (7,166 ) (15,700 ) (15,822 ) Proceeds from sale of property and equipment 111 33 170 77 Prepayment on long-term land lease - (7,344 ) - (7,344 ) Other   (707 )   (109 )   (895 )   (1,591 ) Net cash used in investing activities   (8,708 )   (14,599 )   (16,455 )   (24,649 )   Financing Activities: Proceeds from issuance of common stock 11,020 8,868 23,240 17,404 Repurchases of common stock (53,649 ) (23,760 ) (71,668 ) (42,972 ) Excess tax benefits from stock plans 4,107 2,073 8,119 5,135 Dividends paid (42,397 ) (40,276 ) (42,397 ) (40,276 ) Purchase of noncontrolling interest   -     -     -     (2,122 ) Net cash used in financing activities   (80,919 )   (53,095 )   (82,706 )   (62,831 )   Effect of exchange rate changes on cash and cash equivalents   (12,267 )   14,911     (14,137 )   5,066     (Decrease) increase in cash and cash equivalents (81,348 ) 32,303 34,371 174,954   Cash and cash equivalents at beginning of period   1,041,648     883,679     925,929     741,028     Cash and cash equivalents at end of period $ 960,300   $ 915,982   $ 960,300   $ 915,982     Interest and taxes paid: Interest $ 152 65 $ 239 80 Income taxes 56,846 59,746 76,842 75,110   EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Business Segment Information (In thousands) (Unaudited)           Other             Europe                 United North Latin and Middle East Austral- Elimi- Consoli- States America America Asia Africa and India asia nations dated Three months ended June 30, 2010 Revenues from unaffiliated customers $ 331,619 41,675 18,621 855,568 172,869 75,916 20,502 1,516,770 Transfers between geographic areas   25,429 2,346 4,231 5,573 10,429 3,894 2,585 (54,487 ) - Total revenues $ 357,048 44,021 22,852 861,141 183,298 79,810 23,087 (54,487 ) 1,516,770   Net revenues $ 163,036 19,424 12,729 124,802 64,054 22,287 12,526 418,858 Operating income $ 52,516 5,572 3,787 52,464 14,888 5,599 3,670 138,496 Identifiable assets $ 1,324,522 85,645 46,951 517,346 394,430 134,715 35,827 7,106 2,546,542 Capital expenditures $ 3,366 149 357 1,386 2,231 591 38 8,118 Depreciation and amortization $ 4,848 353 211 1,693 1,225 612 168 9,110 Equity $ 1,047,968 46,978 22,232 315,631 134,216 77,541 22,471 (32,229 ) 1,634,808   Three months ended June 30, 2009 Revenues from unaffiliated customers $ 222,569 29,500 14,804 427,914 135,259 50,466 14,848 895,360 Transfers between geographic areas   18,046 1,742 3,069 3,903 5,826 3,700 2,552 (38,838 ) - Total revenues $ 240,615 31,242 17,873 431,817 141,085 54,166 17,400 (38,838 ) 895,360   Net revenues $ 129,236 14,852 11,173 91,492 53,648 19,382 10,264 330,047 Operating income $ 27,345 3,082 3,716 35,894 7,996 5,599 3,295 86,927 Identifiable assets $ 1,023,955 62,133 32,222 452,563 360,322 114,673 27,824 252 2,073,944 Capital expenditures $ 5,514 142 180 470 256 558 46 7,166 Depreciation and amortization $ 5,470 347 246 1,913 1,492 619 157 10,244 Equity $ 862,133 39,227 12,813 334,446 142,949 69,815 18,034 (24,734 ) 1,454,683   Six months ended June 30, 2010 Revenues from unaffiliated customers $ 618,555 77,287 34,917 1,474,457 334,714 139,148 38,801 2,717,879 Transfers between geographic areas   44,172 4,155 7,892 10,350 18,362 7,470 4,918 (97,319 ) - Total revenues $ 662,727 81,442 42,809 1,484,807 353,076 146,618 43,719 (97,319 ) 2,717,879   Net revenues $ 309,941 35,846 24,247 220,797 123,977 42,233 23,640 780,681 Operating income $ 90,690 9,471 7,318 88,353 26,742 9,924 6,539 239,037 Identifiable assets $ 1,324,522 85,645 46,951 517,346 394,430 134,715 35,827 7,106 2,546,542 Capital expenditures $ 7,840 325 634 2,012 3,452 1,335 102 15,700 Depreciation and amortization $ 9,870 706 416 3,405 2,537 1,219 352 18,505 Equity $ 1,047,968 46,978 22,232 315,631 134,216 77,541 22,471 (32,229 ) 1,634,808   Six months ended June 30, 2009 Revenues from unaffiliated customers $ 458,897 59,268 30,933 856,196 268,125 107,579 27,047 1,808,045 Transfers between geographic areas   36,554 3,624 6,511 7,636 12,599 7,267 4,853 (79,044 ) - Total revenues $ 495,451 62,892 37,444 863,832 280,724 114,846 31,900 (79,044 ) 1,808,045   Net revenues $ 260,381 31,052 21,686 186,190 107,765 40,458 19,030 666,562 Operating income $ 57,981 7,422 6,080 74,121 16,767 9,938 6,092 178,401 Identifiable assets $ 1,023,955 62,133 32,222 452,563 360,322 114,673 27,824 252 2,073,944 Capital expenditures $ 11,612 291 411 1,010 1,341 899 258 15,822 Depreciation and amortization $ 10,780 673 485 3,845 2,897 1,214 308 20,202 Equity $ 862,133 39,227 12,813 334,446 142,949 69,815 18,034 (24,734 ) 1,454,683