Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced quarterly net earnings attributable to shareholders of $96,105,000 for the third quarter of 2010, as compared with $57,752,000 for the same quarter of 2009, an increase of 66%. Net revenues for the third quarter of 2010 increased 32% to $458,743,000 as compared with $346,512,000 reported for the third quarter of 2009. Total revenues and operating income were $1,667,559,000 and $159,621,000 in 2010, as compared with $1,037,327,000 and $96,246,000 for the same quarter of 2009, increases of 61% and 66%, respectively. Diluted net earnings attributable to shareholders per share for the third quarter of 2010 were $.44, as compared with $.27 for the same quarter in 2009, an increase of 63%.

For the nine months ended September 30, 2010, net earnings attributable to shareholders was $247,670,000, as compared with $171,082,000 in 2009, an increase of 45%. Net revenues for the nine months increased to $1,239,424,000 from $1,013,074,000 for 2009, up 22%. Total revenues and operating income for the nine months were $4,385,438,000 and $398,658,000 in 2010, as compared with $2,845,372,000 and $274,647,000 for the same period in 2009, increases of 54% and 45%, respectively. Diluted net earnings attributable to shareholders per share for the first three quarters of 2010 were $1.14, as compared with $.79 for the same period of 2009, an increase of 44%.

“Sometimes even the word ‘Wow!’ would be a classical understatement. After last year, we had hoped 2010 would be a stronger year, but having operating income be up 66% and 18% over the 2009 and 2008 third quarters, respectively, is way beyond anything we would have dared to predict 12 months ago,” said Peter J. Rose, Chairman and Chief Executive Officer. “It is particularly reassuring when market share gains made when volumes were down actually show up en masse when the market turns. To paraphrase an old adage, ‘You can tell a Company by who their employees, customers and service providers are.’…and we certainly are fortunate to have a great cadre of all three. We continue to be very grateful to them all. At the end of the day, this business is about people. We think these results illustrate why we are so confident that we have the very best,” Rose continued.

“The thing we’ve been most impressed with internally is how productivity measures and efficiency gains have helped us absorb these large increases in business volumes. Operating income as a percentage of net revenue was at a record high for us this quarter,” Rose commented. “We couldn’t be more proud of the ingenuity and the commitment to operational excellence and customer service that was shown by our people. This is something we feel is truly significant to who we are and what we try to accomplish. As we move forward, we will continue to focus on the basics that we’ve always relied on to keep us grounded, even through the tough times: flawless customer service, effective sales, seamless execution and comprehensive compliance. Those are our objectives, and this year, so far at least, we seem to be doing just fine,” 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 Nine months ended

September 30, 2010 and 2009

(Unaudited)

(in 000's except share data)
 
           

 

Three Months Ended

September 30,

Nine Months Ended

September 30,

2010

2009
%

Increase

2010

2009
%

Increase
Revenues $ 1,667,559 $ 1,037,327 61 % $ 4,385,438 $ 2,845,372 54 %
Net revenues $ 458,743 $ 346,512 32 % $ 1,239,424 $ 1,013,074 22 %
Operating income $ 159,621 $ 96,246 66 % $ 398,658 $ 274,647 45 %
Net earnings attributable to shareholders $ 96,105 $ 57,752 66 % $ 247,670 $ 171,082 45 %
Diluted earnings attributable to shareholders $ .44 $ .27 63 % $ 1.14 $ .79 44 %
Basic earnings attributable to shareholders $ .45 $ .27 67 % $ 1.17 $ .81 44 %
Weighted average diluted shares outstanding

 

216,342,380

 

216,684,079

 

 

216,497,838

 

216,582,370

 
Weighted average basic shares outstanding

 

212,392,286

 

212,241,480

 

212,306,521

 

212,153,404

 
 

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

During the third quarter of 2010, the Company did not open or close any offices.

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 5, 2010, will be considered in management’s 8-K “Responses to Selected Questions” expected to be filed on or about November 29, 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 economic trends, improving business climate, positive trends in business volumes, ability to improve productivity and acquire market share. 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)
 
 
September 30, December 31,

Assets
2010   2009
 
Current assets:
Cash and cash equivalents $ 1,057,226 $ 925,929
Short-term investments 601 655
Accounts receivable, net 1,082,733 810,369
Deferred Federal and state income taxes 8,325 8,338
Other current assets   34,760   42,539
Total current assets   2,183,645   1,787,830
 
Property and equipment, net 493,046 495,701
Goodwill, net 7,927 7,927
Other intangibles, net 3,965 4,938
Other assets, net   27,600   27,326
$ 2,716,183 $ 2,323,722

Liabilities and Equity
 
Current liabilities:
Accounts payable 700,585 546,675
Accrued expenses, primarily salaries and related costs 188,919 145,545
Federal, state and foreign income taxes   31,761   16,166
Total current liabilities   921,265   708,386
 
Deferred Federal and state income taxes 58,800 53,989
 
Commitments and contingencies
 
Shareholders' equity:
Preferred stock; none issued -- --
Common stock, par value $.01 per share; issued and

outstanding 212,090,154 shares at September 30, 2010,
and 212,025,494 shares at December 31, 2009 2,121 2,120
Additional paid-in capital 5,823 18,265
Retained earnings 1,715,876 1,532,018
Accumulated other comprehensive income   4,802   604
Total shareholders' equity   1,728,622   1,553,007
 
Noncontrolling interest   7,496   8,340
Total equity   1,736,118   1,561,347
   
$ 2,716,183 $ 2,323,722
 
       
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,
  2010     2009     2010     2009  
Revenues:
Airfreight services $ 751,555 $ 457,405 $ 2,043,819 $ 1,203,220
Ocean freight and ocean services 599,280 331,454 1,474,137 949,380
Customs brokerage and other services   316,724     248,468     867,482     692,772  
Total revenues   1,667,559     1,037,327     4,385,438     2,845,372  
 
Operating expenses:
Airfreight consolidation 578,924 340,746 1,577,289 848,131
Ocean freight consolidation 488,808 247,733 1,190,627 704,850
Customs brokerage and other services 141,084 102,336 378,098 279,317
Salaries and related costs 235,357 194,743 656,310 571,517
Rent and occupancy costs 19,295 18,183 57,221 54,861
Depreciation and amortization 9,085 9,923 27,590 30,125
Selling and promotion 7,877 6,541 22,462 18,310
Other   27,508     20,876     77,183     63,614  
Total operating expenses   1,507,938     941,081     3,986,780     2,570,725  
 
Operating income   159,621     96,246     398,658     274,647  
 
Interest income 1,679 2,214 4,938 8,253
Interest expense (140 ) (325 ) (378 ) (404 )
Other, net   (1,666 )   1,192     9,231     7,826  
Other income, net   (127 )   3,081     13,791     15,675  
 
Earnings before income taxes 159,494 99,327 412,449 290,322
 
Income tax expense 63,456 41,763 164,692 119,575
       
Net earnings   96,038     57,564     247,757     170,747  
 
Less: net earnings attributable to noncontrolling interest (67 ) (188 ) 87 (335 )
       
Net earnings attributable to shareholders $ 96,105   $ 57,752   $ 247,670   $ 171,082  
 
Diluted earnings attributable to shareholders per share $ 0.44   $ 0.27   $ 1.14   $ 0.79  
 
Basic earnings attributable to shareholders per share $ 0.45   $ 0.27   $ 1.17   $ 0.81  
 
Dividends declared and paid per common share $ -   $ -   $ 0.20   $ 0.19  
 
Weighted average diluted shares outstanding   216,342,380     216,684,079     216,497,838     216,582,370  
 
Weighted average basic shares outstanding   212,392,286     212,241,480     212,306,521     212,153,404  
 
           
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,
2010 2009 2010 2009
Operating Activities:
Net earnings $ 96,038 $ 57,564 $ 247,757 $ 170,747
Adjustments to reconcile net earnings to net cash provided by operating activities:
 
Provision for losses on accounts receivable 1,284 (778 ) 3,109 791
Deferred income tax (benefit) expense (565 ) (6,701 ) 2,521 (12,945 )
Excess tax benefits from stock plans (3,470 ) (246 ) (11,589 ) (5,381 )
Stock compensation expense 10,846 10,794 33,047 29,065
Depreciation and amortization 9,085 9,923 27,590 30,125
Gain (loss) on sale of assets (57 ) 8 (461 ) (2 )
Other 387 365 1,232 1,092
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (34,203 ) (94,025 ) (266,770 ) 120,318
Increase in other current assets (4,095 ) (803 ) (2,959 ) (2,126 )

Increase (decrease) in accounts payable and accrued expenses
25,330 71,711 190,440 (28,788 )
Increase (decrease) in income taxes payable, net   12,438     (5,350 )   36,770     (3,066 )
Net cash provided by operating activities   113,018     42,462     260,687     299,830  
 
Investing Activities:
Decrease in short-term investments 137 17 107 48
Purchase of property and equipment (10,953 ) (9,514 ) (26,653 ) (25,336 )
Proceeds from sale of property and equipment 98 48 268 125
Prepayment on long-term land lease - (1,898 ) - (9,242 )
Other   1,208     438     313     (1,153 )
Net cash used in investing activities   (9,510 )   (10,909 )   (25,965 )   (35,558 )
 
Financing Activities:
Proceeds from issuance of common stock 37,718 25,107 60,958 42,511
Repurchases of common stock (67,782 ) (34,103 ) (139,450 ) (77,075 )
Excess tax benefits from stock plans 3,470 246 11,589 5,381
Dividends paid - - (42,397 ) (40,276 )
Distributions to noncontrolling interest (963 ) (1,009 ) (963 ) (1,009 )
Purchase of noncontrolling interest   -     -     -     (2,122 )
Net cash used in financing activities   (27,557 )   (9,759 )   (110,263 )   (72,590 )
 
Effect of exchange rate changes on cash and cash equivalents   20,975     9,493     6,838     14,559  
 
Increase in cash and cash equivalents 96,926 31,287 131,297 206,241
 
Cash and cash equivalents at beginning of period   960,300     915,982     925,929     741,028  
 
Cash and cash equivalents at end of period $ 1,057,226   $ 947,269   $ 1,057,226   $ 947,269  
 
Interest and taxes paid:
Interest $ 140 317 $ 379 397
Income taxes 52,407 46,607 129,249 121,717
 
                 
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
September 30, 2010
Revenues from unaffiliated customers $ 361,120 43,380 20,400 947,751 190,350 83,451 21,107 1,667,559
Transfers between geographic areas   28,571 3,567 4,190 6,118 11,045 4,448 2,475 (60,414 ) -
Total revenues $ 389,691 46,947 24,590 953,869 201,395 87,899 23,582 (60,414 ) 1,667,559
 
Net revenues $ 179,290 20,911 13,181 140,715 68,158 23,962 12,526 458,743
Operating income $ 61,735 6,846 3,837 60,299 17,128 6,029 3,747 159,621
Identifiable assets $ 1,437,318 78,347 48,887 532,736 433,020 139,478 41,328 5,069 2,716,183
Capital expenditures $ 5,297 92 354 1,502 2,963 394 351 10,953
Depreciation and amortization $ 4,882 316 223 1,708 1,184 609 163 9,085
Equity $ 1,121,817 40,708 23,974 318,005 155,428 80,774 28,205 (32,793 ) 1,736,118
 
Three months ended
September 30, 2009
Revenues from unaffiliated customers $ 246,066 32,214 16,552 516,897 147,354 60,269 17,975 1,037,327
Transfers between geographic areas   18,293 1,716 3,461 4,227 6,487 3,738 2,595 (40,517 ) -
Total revenues $ 264,359 33,930 20,013 521,124 153,841 64,007 20,570 (40,517 ) 1,037,327
 
Net revenues $ 139,232 16,667 10,960 89,490 57,857 20,771 11,535 346,512
Operating income $ 37,502 4,090 2,611 33,303 9,650 5,424 3,666 96,246
Identifiable assets $ 1,135,327 73,500 37,216 435,584 376,050 121,079 35,518 2,613 2,216,887
Capital expenditures $ 7,656 186 171 248 506 588 159 9,514
Depreciation and amortization $ 5,048 358 245 1,868 1,593 646 165 9,923
Equity $ 964,177 44,455 14,982 290,779 137,278 70,531 22,487 (24,734 ) 1,519,955
 
Nine months ended
September 30, 2010
Revenues from unaffiliated customers $ 979,675 120,667 55,317 2,422,208 525,064 222,599 59,908 4,385,438
Transfers between geographic areas   72,743 7,722 12,082 16,468 29,407 11,918 7,393 (157,733 ) -
Total revenues $ 1,052,418 128,389 67,399 2,438,676 554,471 234,517 67,301 (157,733 ) 4,385,438
 
Net revenues $ 489,231 56,757 37,428 361,512 192,135 66,195 36,166 1,239,424
Operating income $ 152,425 16,317 11,155 148,652 43,870 15,953 10,286 398,658
Identifiable assets $ 1,437,318 78,347 48,887 532,736 433,020 139,478 41,328 5,069 2,716,183
Capital expenditures $ 13,137 417 988 3,513 6,415 1,729 454 26,653
Depreciation and amortization $ 14,753 1,023 639 5,112 3,721 1,828 514 27,590
Equity $ 1,121,817 40,708 23,974 318,005 155,428 80,774 28,205 (32,793 ) 1,736,118
 
Nine months ended
September 30, 2009
Revenues from unaffiliated customers $ 704,962 91,482 47,486 1,373,093 415,479 167,848 45,022 2,845,372
Transfers between geographic areas   54,847 5,340 9,972 11,863 19,086 11,005 7,448 (119,561 ) -
Total revenues $ 759,809 96,822 57,458 1,384,956 434,565 178,853 52,470 (119,561 ) 2,845,372
 
Net revenues $ 399,614 47,718 32,645 275,680 165,623 61,229 30,565 1,013,074
Operating income $ 95,483 11,512 8,691 107,424 26,417 15,362 9,758 274,647
Identifiable assets $ 1,135,327 73,500 37,216 435,584 376,050 121,079 35,518 2,613 2,216,887
Capital expenditures $ 19,268 477 582 1,259 1,847 1,486 417 25,336
Depreciation and amortization $ 15,828 1,031 729 5,714 4,490 1,860 473 30,125
Equity $ 964,177 44,455 14,982 290,779 137,278 70,531 22,487 (24,734 ) 1,519,955
 

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