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Expeditors Reports Record Second Quarter 2011 EPS Of $.44 Per Share 1

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 5, 2011 will be considered in management's 8-K “Responses to Selected Questions” expected to be filed on or about August 19, 2011.

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 ability to improve productivity and operating income, ability to grow market share, global economic and political uncertainty, ability to attract and retain the best and brightest people, ability to gain efficiencies from investments in information technology, and our ability to help customers navigate through dynamic ocean and airfreight markets. 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 actions or changes or the unpredictable acts of competitors and other risks, risk factors and uncertainties detailed in our Annual Report 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

2011   2010
 
Current assets:
Cash and cash equivalents $ 1,225,830 $ 1,084,465
Short-term investments 1,071 524
Accounts receivable, net 1,028,015 1,003,884
Deferred Federal and state income taxes 9,469 8,706
Other current assets   48,657   42,776
Total current assets   2,313,042   2,140,355
 
Property and equipment, net 523,400 498,648
Goodwill, net 7,927 7,927
Other intangibles, net 3,159 3,716
Other assets, net   30,476   28,533
$ 2,878,004 $ 2,679,179

Liabilities and Equity

 
Current liabilities:
Accounts payable 688,854 652,161
Accrued expenses, primarily salaries and related costs 196,813 177,869
Federal, state and foreign income taxes   35,858   31,948
Total current liabilities   921,525   861,978
 
Deferred Federal and state income taxes 77,329 69,047
 
Commitments and contingencies
 
Shareholders' equity:
Preferred stock; none issued -- --

Common stock, par value $.01 per share; issued and outstanding 211,992,082 shares at June 30, 2011 and 212,047,774 shares at December 31, 2010

2,120 2,120
Additional paid-in capital 2,698 13,412
Retained earnings 1,844,771 1,717,249
Accumulated other comprehensive income   22,459   8,125
Total shareholders' equity   1,872,048   1,740,906
 
Noncontrolling interest   7,102   7,248
Total equity   1,879,150   1,748,154
   
$ 2,878,004 $ 2,679,179
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,
2011 2010 2011 2010
Revenues:
Airfreight services $ 749,861 $ 732,881 $ 1,450,784 $ 1,292,264
Ocean freight and ocean services 486,831 493,613 926,972 874,857
Customs brokerage and other services   344,676     290,276     664,460     550,758  
Total revenues   1,581,368     1,516,770     3,042,216     2,717,879  
 
Operating expenses:
Airfreight consolidation 576,280 571,023 1,100,916 998,365
Ocean freight consolidation 377,805 400,729 717,354 701,819
Customs brokerage and other services 154,722 126,160 297,470 237,014
Salaries and related costs 249,114 221,105 486,929 420,953
Rent and occupancy costs 21,354 18,699 42,735 37,926
Depreciation and amortization 9,257 9,110 18,431 18,505
Selling and promotion 10,022 7,550 19,185 14,585
Other   30,539     23,898     59,691     49,675  
Total operating expenses   1,429,093     1,378,274     2,742,711     2,478,842  
 
Operating income   152,275     138,496     299,505     239,037  
 
Interest income 2,312 1,484 4,632 3,259
Interest expense (229 ) (151 ) (443 ) (238 )
Other, net   857     10,288     1,974     10,897  
Other income, net   2,940     11,621     6,163     13,918  
 
Earnings before income taxes 155,215 150,117 305,668 252,955
 
Income tax expense 60,195 59,708 119,441 101,236
       
Net earnings   95,020     90,409     186,227     151,719  
 
Less: net earnings (losses) attributable to the noncontrolling interests 20 91 (5 ) 154
       
Net earnings attributable to shareholders $ 95,000   $ 90,318   $ 186,232   $ 151,565  
 
Diluted earnings attributable to shareholders per share $ 0.44   $ 0.42   $ 0.86   $ 0.70  
 
Basic earnings attributable to shareholders per share $ 0.45   $ 0.43   $ 0.88   $ 0.71  
 
Dividends declared and paid per common share $ 0.25   $ 0.20   $ 0.25   $ 0.20  
 
Weighted average diluted shares outstanding   215,659,043     216,460,977     215,780,230     216,576,596  
 
Weighted average basic shares outstanding   212,136,164     212,332,375     212,112,643     212,262,928  
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,
2011 2010 2011 2010
Operating Activities:
Net earnings $ 95,020 $ 90,409 $ 186,227 $ 151,719

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

Provision for losses on accounts receivable (63 ) (618 ) 1,790 1,825
Deferred income tax expense (benefit) 1,601 10,814 (335 ) 3,086
Excess tax benefits from stock plans (2,285 ) (4,107 ) (4,531 ) (8,119 )
Stock compensation expense 10,236 11,003 20,708 22,201
Depreciation and amortization 9,257 9,110 18,431 18,505
Gain on sale of assets (21 ) (109 ) (51 ) (404 )
Other 311 367 618 845
Changes in operating assets and liabilities:
Increase in accounts receivable (14,173 ) (219,602 ) (7,490 ) (232,567 )
Decrease in other current assets 3,896 2,947 2,481 1,136

Increase in accounts payable and accrued expenses

7,943 121,941 38,130 165,110

(Decrease) increase in income taxes payable, net

  (33,665 )   (1,609 )   (88 )   24,332  
Net cash provided by operating activities   78,057     20,546     255,890     147,669  
 
Investing Activities:
(Increase) decrease in short-term investments (449 ) 6 (538 ) (30 )
Purchase of property and equipment (17,110 ) (8,118 ) (38,235 ) (15,700 )
Proceeds from sale of property and equipment 42 111 85 170
Other   (64 )   (707 )   (1,506 )   (895 )
Net cash used in investing activities   (17,581 )   (8,708 )   (40,194 )   (16,455 )
 
Financing Activities:
Proceeds from issuance of common stock 15,821 11,020 23,625 23,240
Repurchases of common stock (45,690 ) (53,649 ) (65,274 ) (71,668 )
Excess tax benefits from stock plans 2,285 4,107 4,531 8,119
Dividends Paid   (53,014 )   (42,397 )   (53,014 )   (42,397 )
Net cash used in financing activities   (80,598 )   (80,919 )   (90,132 )   (82,706 )
 
Effect of exchange rate changes on cash and cash equivalents   7,481     (12,267 )   15,801     (14,137 )
 
(Decrease) increase in cash and cash equivalents (12,641 ) (81,348 ) 141,365 34,371
 
Cash and cash equivalents at beginning of period   1,238,471     1,041,648     1,084,465     925,929  
 
Cash and cash equivalents at end of period $ 1,225,830   $ 960,300   $ 1,225,830   $ 960,300  
 
Interest and taxes paid:
Interest $ 13 35 $ 17 44
Income taxes 91,035 56,846 117,311 76,842
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES
Business Segment Information
(In thousands)
(Unaudited)
    Other       Europe      
United North Latin Asia and Middle East Elimi- Consoli-
States America America Pacific Africa and India nations dated
Three months ended
June 30, 2011
Revenues from unaffiliated customers $ 390,806 47,816 21,136 816,350 229,724 75,536 1,581,368
Transfers between geographic areas   25,973 2,783 5,220 10,170 11,355 4,500 (60,001 ) -
Total revenues $ 416,779 50,599 26,356 826,520 241,079 80,036 (60,001 ) 1,581,368
 
Net revenues $ 181,603 21,581 15,157 150,616 78,828 24,776 472,561
Operating income $ 57,752 5,761 4,486 61,542 16,877 5,857 152,275
Identifiable assets $ 1,411,881 91,678 58,396 678,668 479,852 155,503 2,026 2,878,004
Capital expenditures $ 3,350 448 144 4,622 7,881 665 17,110
Depreciation and amortization $ 4,926 277 264 1,847 1,416 527 9,257
Equity $ 1,123,482 52,814 33,784 420,962 184,252 94,447 (30,591 ) 1,879,150
 
Three months ended
June 30, 2010
Revenues from unaffiliated customers $ 331,619 41,675 18,621 876,070 172,869 75,916 1,516,770
Transfers between geographic areas   25,429 2,346 4,231 8,158 10,429 3,894 (54,487 ) -
Total revenues $ 357,048 44,021 22,852 884,228 183,298 79,810 (54,487 ) 1,516,770
 
Net revenues $ 163,036 19,424 12,729 137,328 64,054 22,287 418,858
Operating income $ 52,516 5,572 3,787 56,134 14,888 5,599 138,496
Identifiable assets $ 1,324,522 85,645 46,951 553,173 394,430 134,715 7,106 2,546,542
Capital expenditures $ 3,366 149 357 1,424 2,231 591 8,118
Depreciation and amortization $ 4,848 353 211 1,861 1,225 612 9,110
Equity $ 1,047,968 46,978 22,232 338,102 134,216 77,541 (32,229 ) 1,634,808
 
Six months ended
June 30, 2011
Revenues from unaffiliated customers $ 767,911 91,663 41,469 1,544,480 443,335 153,358 3,042,216
Transfers between geographic areas   49,938 5,465 10,841 19,353 22,062 8,709 (116,368 ) -
Total revenues $ 817,849 97,128 52,310 1,563,833 465,397 162,067 (116,368 ) 3,042,216
 
Net revenues $ 359,537 42,282 30,260 292,104 152,753 49,540 926,476
Operating income $ 111,486 11,550 9,249 120,980 34,584 11,656 299,505
Identifiable assets $ 1,411,881 91,678 58,396 678,668 479,852 155,503 2,026 2,878,004
Capital expenditures $ 7,380 608 300 9,334 19,587 1,026 38,235
Depreciation and amortization $ 9,911 580 533 3,816 2,526 1,065 18,431
Equity $ 1,123,482 52,814 33,784 420,962 184,252 94,447 (30,591 ) 1,879,150
 
Six months ended
June 30, 2010
Revenues from unaffiliated customers $ 618,555 77,287 34,917 1,513,258 334,714 139,148 2,717,879
Transfers between geographic areas   44,172 4,155 7,892 15,268 18,362 7,470 (97,319 ) -
Total revenues $ 662,727 81,442 42,809 1,528,526 353,076 146,618 (97,319 ) 2,717,879
 
Net revenues $ 309,941 35,846 24,247 244,437 123,977 42,233 780,681
Operating income $ 90,690 9,471 7,318 94,892 26,742 9,924 239,037
Identifiable assets $ 1,324,522 85,645 46,951 553,173 394,430 134,715 7,106 2,546,542
Capital expenditures $ 7,840 325 634 2,114 3,452 1,335 15,700
Depreciation and amortization $ 9,870 706 416 3,757 2,537 1,219 18,505
Equity $ 1,047,968 46,978 22,232 338,102 134,216 77,541 (32,229 ) 1,634,808




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