EXPD Expeditors International of Washington Inc

Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced net earnings of $37,744,000 for the first quarter of 2005, compared with $31,844,000 for the same quarter of 2004, an increase of 19%. Net revenues for the first quarter increased 14% to $230,683,000 as compared with $202,496,000 reported for the first quarter of 2004. Total revenues and operating income were $825,164,000 and $57,557,000 in 2005 compared with $686,850,000 and $48,808,000 for the same quarter of 2004, an increase of 20% and 18%, respectively. Diluted net earnings per share for the first quarter was $.34 as compared with $.29 for the same quarter in 2004, an increase of 17%. The company also reported that same store net revenues and operating income increased 13% and 18%, respectively, during the first quarter of 2005 as compared with the same period in 2004. "We are certainly satisfied with what we accomplished for the first quarter of 2005," said Peter J. Rose, Chairman and Chief Executive Officer. "Given that we are completing our 25th full year, we are perhaps a little more reflective than usual, but it may be time to put these results into some historical perspective. It wasn't too long ago, 1997 in fact, when we only did slightly more business for an entire year than we just did in what historically has been our weakest quarter of the year. We think this is indicative of what will happen when you recruit, train and mentor the right people, maintain a clear and consistent focus on customer service, and never stop trying to develop and deploy strong technological solutions to meet the unique needs of each customer," Rose went on to say. "This quarter's net revenue growth, measured year-over-year, was pretty much uniform across all our products. We also managed to expand our operating margin by a few basis points. That was no small feat, particularly given that the first quarter of 2004 was an exceptionally strong quarter," Rose continued. "We opened several new offices during the first quarter and have continued to strengthen our position in the People's Republic of China, something we think bodes well for the future. We look forward to the challenges that the next three quarters will bring," Rose concluded. Expeditors is a global logistics company headquartered in Seattle, Washington. The company employs trained professionals in 159 full-service offices, 53 satellite locations and 7 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. -0- *T Expeditors International of Washington, Inc. Financial Highlights Three months ended March 31, 2005 and 2004 Unaudited (in 000's of US dollars except share data) Three Months Three Months Ended Ended March 31, 2005 March 31, 2004 % Increase ------------------------------------------- --------------- ---------- Revenues $ 825,164 $ 686,850 20% --------------------------- --------------- ------------- ---------- Net Revenues $ 230,683 $ 202,496 14% --------------------------- --------------- ------------- ---------- Operating Income $ 57,557 $ 48,808 18% --------------------------- --------------- ------------- ---------- Net Earnings $ 37,744 $ 31,844 19% --------------------------- --------------- ------------- ---------- Diluted Earnings per share $ .34 $ .29 17% --------------------------- --------------- ------------- ---------- Basic Earnings per share $ .35 $ .30 17% --------------------------- --------------- ------------- ---------- Diluted weighted average shares outstanding 112,151,805 109,613,044 --------------------------- --------------- ------------- ---------- Basic weighted average shares outstanding 106,728,418 105,131,114 --------------------------- --------------- ------------- ---------- Offices Opened during the 1st Quarter of 2005 LATIN ASIA EUROPE AMERICA Dongguan, PRC Warsaw, Poland Porto Alegre, Brazil Nanjing, PRC Malmoe, Sweden (1) NORTH MIDDLE AMERICA EAST Monterrey, Mexico Tiruppur, India (1) (1) Satellite 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 May 6, 2005 will be considered in management's 8-K "Responses to Selected Questions" expected to be filed on or about May 11, 2005. EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands, except share data) (Unaudited) March 31, December 31, Assets 2005 2004 ------ ------------ --------------- Current assets: Cash and cash equivalents $ 457,390 $ 408,983 Short-term investments 749 109 Accounts receivable, net 568,468 614,044 Other current assets 20,475 22,724 ----------- ------------ Total current assets 1,047,082 1,045,860 ----------- ------------ Property and equipment, net 306,003 287,379 Goodwill, net 7,774 7,774 Other intangibles, net 10,319 10,839 Other assets 14,210 12,201 ------------ ------------- $ 1,385,388 $ 1,364,053 =========== ============ Liabilities and Shareholders' Equity ------------------------------------ Current liabilities: Short-term debt - 2,250 Accounts payable 402,210 410,251 Accrued expenses, primarily salaries and related costs 88,892 84,778 Deferred Federal and state income taxes 7,043 6,369 Federal, state and foreign income taxes 20,700 20,668 ----------- ------------ Total current liabilities $ 518,845 $ 524,316 ----------- ------------ Deferred Federal and state income taxes $ 26,291 $ 24,861 Minority interest $ 8,309 $ 7,472 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 106,618,156 shares at March 31, 2005 and 106,643,953 shares at December 31, 2004 1,066 1,066 Additional paid-in capital 35,462 44,678 Retained earnings 787,718 749,974 Accumulated other comprehensive income 7,697 11,686 ----------- ------------ Total shareholders' equity 831,943 807,404 ----------- ------------ ------------ ------------- $ 1,385,388 $ 1,364,053 =========== ============ EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Earnings (In thousands, except share data) (Unaudited) Three months ended March 31, 2005 2004 ------------ ------------ Revenues: Airfreight $ 372,885 $ 324,859 Ocean freight and ocean services 297,144 233,046 Customs brokerage and other services 155,135 128,945 ------------ ------------ Total revenues 825,164 686,850 ------------ ------------ Operating expenses: Airfreight consolidation 284,438 246,652 Ocean freight consolidation 243,970 186,819 Customs brokerage and other services 66,073 50,883 Salaries and related costs 124,554 111,041 Rent and occupancy costs 13,748 12,751 Depreciation and amortization 7,339 6,259 Selling and promotion 7,546 6,510 Other 19,939 17,127 ------------ ------------ Total operating expenses 767,607 638,042 ------------ ------------ Operating income 57,557 48,808 ------------ ------------ Interest expense (29) (5) Interest income 2,147 1,006 Other, net 1,196 1,157 ------------ ------------ Other income, net 3,314 2,158 ------------ ------------ Earnings before income taxes and minority interest 60,871 50,966 Income tax expense 22,074 18,160 ------------ ------------ Net earnings before minority interest 38,797 32,806 ------------ ------------ Minority interest (1,053) (962) ------------ ------------ Net earnings $ 37,744 $ 31,844 ============ ============ Diluted earnings per share $ 0.34 $ 0.29 ============ ============ Basic earnings per share $ 0.35 $ 0.30 ============ ============ Weighted average diluted shares outstanding 112,151,805 109,613,044 ============ ============ Weighted average basic shares outstanding 106,728,418 105,131,114 ============ ============ EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) Three months ended March 31, 2005 2004 -------- -------- Operating Activities: Net earnings $37,744 $31,844 Adjustments to reconcile net earnings to net cash provided by operating activities: Provision for losses on accounts receivable 36 682 Deferred income tax expense 4,259 4,847 Tax benefits from employee stock plans 2,936 1,922 Depreciation and amortization 7,339 6,259 Loss (gain) on sale of property and equipment (19) 13 Other (927) 729 Changes in operating assets and liabilities: Decrease (increase) in accounts receivable 43,670 (12,578) Decrease in other current assets 2,793 723 Increase in minority interest 837 962 Increase (decrease) in accounts payable and other current liabilities (2,958) 40,572 -------- -------- Net cash provided by operating activities 95,710 75,975 -------- -------- Investing Activities: Decrease (increase) in short-term investments (643) 31 Purchase of property and equipment (29,017) (8,638) Proceeds from sale of property and equipment 142 52 Other (666) (681) -------- -------- Net cash used in investing activities (30,184) (9,236) -------- -------- Financing Activities: Repayments of short-term debt, net (2,173) (215) Proceeds from issuance of common stock 2,375 1,427 Repurchases of common stock (14,527) (1,537) -------- -------- Net cash used in financing activities (14,325) (325) Effect of exchange rate changes on cash (2,794) 2,080 -------- -------- Increase in cash and cash equivalents 48,407 68,494 Cash and cash equivalents at beginning of period 408,983 295,832 Cash and cash equivalents at end of period 457,390 364,326 ======== ======== Interest and taxes paid: Interest 20 10 Income tax 10,116 8,465 EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Business Segment Information (In thousands) (Unaudited) United Other Far Australia/ States N. America East Europe New Zealand --------- ---------- -------- -------- ---------- Three months ended March 31, 2005 Revenues from unaffiliated customers $168,671 20,209 442,013 126,840 11,740 Transfers between geographic areas $ 16,394 1,169 2,722 5,415 1,222 -------- ---------- -------- -------- ---------- Total revenues $185,065 21,378 444,735 132,255 12,962 ======== ========== ======== ======== ========== Net revenues $ 94,069 11,356 60,657 42,170 6,715 Operating income $ 18,288 2,236 27,635 5,387 1,658 Identifiable assets at quarter end $653,209 46,554 302,033 288,449 24,603 Capital expenditures $ 25,972 305 1,076 1,210 68 Depreciation and amortization $ 3,509 367 1,170 1,513 154 Equity $897,165 18,920 226,108 88,662 14,147 -------- ---------- -------- -------- ---------- Three months ended March 31, 2004 Revenues from unaffiliated customers $136,556 17,132 367,660 112,229 9,818 Transfers between geographic areas $ 14,496 805 2,356 4,008 1,109 -------- ---------- -------- -------- ---------- Total revenues $151,052 17,937 370,016 116,237 10,927 ======== ========== ======== ======== ========== Net revenues $ 80,863 9,555 55,713 37,707 5,655 Operating income $ 13,193 1,990 24,665 5,567 1,235 Identifiable assets at quarter end $567,459 35,353 192,442 250,360 19,733 Capital expenditures $ 3,125 505 1,984 2,156 110 Depreciation and amortization $ 3,309 283 846 1,214 149 Equity $726,342 13,364 138,746 67,794 13,035 -------- ---------- -------- -------- ---------- Latin Middle Elimi- Consoli- America East nations dated ------- ------- --------- ---------- Three months ended March 31, 2005 Revenues from unaffiliated customers 13,104 42,587 825,164 Transfers between geographic areas 1,559 1,857 (30,338) - ------- ------- --------- ---------- Total revenues 14,663 44,444 (30,338) 825,164 ======= ======= ========= ========== Net revenues 5,658 10,058 230,683 Operating income 953 1,400 57,557 Identifiable assets at quarter end 21,591 43,332 5,617 1,385,388 Capital expenditures 191 195 29,017 Depreciation and amortization 261 365 7,339 Equity 7,026 19,511 (439,596) 831,943 ------- ------- --------- ---------- Three months ended March 31, 2004 Revenues from unaffiliated customers 11,577 31,878 686,850 Transfers between geographic areas 1,580 1,338 (25,692) - ------- ------- --------- ---------- Total revenues 13,157 33,216 (25,692) 686,850 ======= ======= ========= ========== Net revenues 4,882 8,121 202,496 Operating income 673 1,485 48,808 Identifiable assets at quarter end 18,675 32,117 5,913 1,122,052 Capital expenditures 166 592 8,638 Depreciation and amortization 175 283 6,259 Equity 3,864 14,809 (296,523) 681,431 ------- ------- --------- ---------- *T