Expeditors International of Washington, Inc. (NASDAQ:EXPD) today
announced net earnings of $56,329,000 for the second quarter of
2006, compared with $36,698,000 (1) for the same quarter of 2005,
an increase of 53%. Net revenues for the second quarter of 2006
increased 25% to $313,570,000 as compared with $250,660,000
reported for the second quarter of 2005. Total revenues and
operating income were $1,129,324,000 and $88,803,000 in 2006
compared with $927,999,000 and $58,729,000 (1) for the same quarter
of 2005, increases of 22% and 51%, respectively. Diluted net
earnings per share for the second quarter were $.25 as compared
with $.17 for the same quarter in 2005, an increase of 47%. The
company also reported that same store net revenues and operating
income increased 25% and 51%, respectively, for the second quarter
of 2006 when compared with 2005. For the six months ended June 30,
2006, net earnings rose to $108,681,000 from $67,744,000 (1) in
2005, an increase of 60%. Net revenues for the six months increased
to $609,767,000 from $481,343,000 for 2005, up 27%. Total revenues
and operating income for the six months were $2,153,916,000 and
$174,204,000 in 2006 compared with $1,753,163,000 and $109,177,000
(1) for the same period in 2005, increases of 23% and 60%,
respectively. Diluted net earnings per share for the first two
quarters of 2006 were $.49 as compared with $.31 for the same
period of 2005, an increase of 58%. Same store net revenues and
operating income increased 26% and 59%, respectively, for the six
months ended June 30, 2006 when compared with same period of 2005.
"You take results like these any time you can get them," commented
Peter J. Rose, Chairman and Chief Executive Officer. "The second
quarter of 2006 was strong across the board. We remain encouraged
by the degree that our operational productivity and efficiency
initiatives continue to allow us to increase business volumes
without a commensurate increase in operating costs. We were also
pleased to see our fee-based ocean products -- order management and
ocean forwarding -- making year over year gains -- this is
something that we haven't seen in quite some time." "Our culture
makes customer service and profitability management the focus of
each and every employee. Placing this responsibility beyond the
purview of a small group empowers those who are most able to
execute and deliver," Rose continued. "The combined efforts of
every individual from the most senior District Manager to the
newest runner determines how we deliver customer service and how
well we generate profits. Our results reflect the fact that our
employees understand the culture, live it and improve upon it, each
and every day. To paraphrase Robert Frost, that makes all the
difference," Rose concluded. Expeditors is a global logistics
company. Headquartered in Seattle, Washington, the company employs
trained professionals in 167 offices and 56 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 (1)
In accordance with the provisions of FAS 123R, the Company has
elected to apply the modified retrospective method to prior year's
reported numbers. The Modified Retrospective Method calls for prior
reported numbers to be adjusted to reflect the expensing of stock
options, as has been required for disclosure in the company's 10-K
reports since 1996 and in the Company's 10-Q reports since 2002.
Accordingly certain 2005 numbers which have been adjusted
retrospectively to show the effect of stock compensation expense,
will not agree with the figures reported in the 2005 second quarter
press release dated August 2, 2005. Diluted weighted shares
outstanding for 2005 are also reported consistent with the
requirements of FAS 123R. Accordingly, the 2005 diluted weighted
shares outstanding amounts shown in this press release will not
agree with the amounts reported in above-referenced 2005 second
quarter press release. Expeditors International of Washington, Inc.
Financial Highlights Three months and Six months ended June 30,
2006 and 2005 Unaudited (in 000's except share data) Three months
ended June 30 2006 2005 (2) % Increase
------------------------------------------------------------
Revenues 1,129,324 927,999 22%
------------------------------------------------------------ Net
revenues 313,570 250,660 25%
------------------------------------------------------------
Operating income 88,803 58,729 51%
------------------------------------------------------------ Net
earnings 56,329 36,698 53%
------------------------------------------------------------
Diluted earnings per share .25 .17 47%
------------------------------------------------------------ Basic
earnings per share .26 .17 53%
------------------------------------------------------------
Diluted weighted average shares outstanding 224,374,720 220,901,114
------------------------------------------------------------ Basic
weighted average shares outstanding 213,725,395 213,552,092
------------------------------------------------------------ Six
months ended June 30 2006 2005 (2) % Increase
-----------------------------------------------------------
Revenues 2,153,916 1,753,163 23%
----------------------------------------------------------- Net
revenues 609,767 481,343 27%
-----------------------------------------------------------
Operating income 174,204 109,177 60%
----------------------------------------------------------- Net
earnings 108,681 67,744 60%
----------------------------------------------------------- Diluted
earnings per share .49 .31 58%
----------------------------------------------------------- Basic
earnings per share .51 .32 59%
----------------------------------------------------------- Diluted
weighted average shares outstanding 224,051,286 221,160,880
----------------------------------------------------------- Basic
weighted average shares outstanding 213,574,773 213,504,726
----------------------------------------------------------- Office
developments during the Second Quarter of 2006
------------------------------------------------------ North
America ------------- Reynosa, Tamaulipas, Mexico (a) Calexico,
California, USA + (a) Full-service office (previously a satellite
office) + Satellite office *T 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 2
August, 2006 will be considered in management's 8-K "Responses to
Selected Questions" expected to be filed on our about 9 August,
2006. -0- *T EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND
SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands,
except share data) (Unaudited) June 30, December 31, Assets 2006
2005 ---------------------------------------- ----------
------------ Current assets: Cash and cash equivalents $ 454,694 $
463,894 Short-term investments 415 123 Accounts receivable, net
751,929 709,331 Deferred Federal and state income taxes 6,679 7,208
Other current assets 28,191 21,405 ---------- ------------ Total
current assets 1,241,908 1,201,961 ---------- ------------ Property
and equipment, net 444,285 333,787 Goodwill, net 7,774 7,774 Other
intangibles, net 8,367 8,997 Other assets 13,216 13,525 -----------
------------- $1,715,550 $ 1,566,044 ========== ============
Liabilities and Shareholders' Equity
---------------------------------------- Current liabilities:
Accounts payable 529,518 479,546 Accrued expenses, primarily
salaries and related costs 128,516 103,674 Federal, state and
foreign income taxes 28,754 29,281 ---------- ------------ Total
current liabilities $ 686,788 $ 612,501 ---------- ------------
Deferred Federal and state income taxes $ 29,019 $ 13,278 Minority
interest $ 30,142 $ 13,883 Shareholders' equity: Preferred stock,
par value $.01 per share. Authorized 2,000,000 shares; none issued
-- -- Common stock, par value $.01 per share. Authorized
640,000,000 shares; issued and outstanding 213,258,504 shares at
June 30, 2006 and 213,227,042 shares at December 31, 2005 2,133
2,132 Additional paid-in capital 132,120 180,905 Retained earnings
831,090 745,984 Accumulated other comprehensive income 4,258
(2,639) ---------- ------------ Total shareholders' equity 969,601
926,382 ---------- ------------ ----------- -------------
$1,715,550 $ 1,566,044 ========== ============ Certain 2005 amounts
have been restated as required by the modified retrospective method
in connection with the implementation of FAS 123R and other amounts
have been reclassified to conform to the 2006 presentation. All
share and per share amounts have been adjusted for the 2-for-1
stock split effective June 2006. 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, 2006 2005 2006 2005
------------ ------------ ------------ ------------ Revenues:
Airfreight $ 545,273 $ 421,213 $ 1,036,271 $ 794,098 Ocean freight
and ocean services 380,280 336,934 724,939 634,078 Customs
brokerage and other services 203,771 169,852 392,706 324,987
------------ ------------ ------------ ------------ Total revenues
1,129,324 927,999 2,153,916 1,753,163 ------------ ------------
------------ ------------ Operating expenses: Airfreight
consolidation 429,976 330,269 810,557 614,707 Ocean freight
consolidation 300,780 277,259 571,659 521,229 Customs brokerage and
other services 84,998 69,811 161,933 135,884 Salaries and related
costs 172,453 145,624 333,427 278,515 Rent and occupancy costs
13,372 13,457 27,095 27,205 Depreciation and amortization 8,626
7,603 16,679 14,942 Selling and promotion 8,957 7,120 16,914 14,666
Other 21,359 18,127 41,448 36,838 ------------ ------------
------------ ------------ Total operating expenses 1,040,521
869,270 1,979,712 1,643,986 ------------ ------------ ------------
------------ Operating income 88,803 58,729 174,204 109,177
------------ ------------ ------------ ------------ Interest
expense (10) (219) (37) (248) Interest income 4,390 2,725 8,664
4,872 Other, net 465 874 2,132 2,070 ------------ ------------
------------ ------------ Other income, net 4,845 3,380 10,759
6,694 ------------ ------------ ------------ ------------ Earnings
before income taxes and minority interest 93,648 62,109 184,963
115,871 Income tax expense 35,503 24,083 72,555 45,745 ------------
------------ ------------ ------------ Net earnings before minority
interest 58,145 38,026 112,408 70,126 ------------ ------------
------------ ------------ Minority interest (1,816) (1,328) (3,727)
(2,382) ------------ ------------ ------------ ------------ Net
earnings $ 56,329 $ 36,698 $ 108,681 $ 67,744 ============
============ ============ ============ Diluted earnings per share $
0.25 $ 0.17 $ 0.49 $ 0.31 ============ ============ ============
============ Basic earnings per share $ 0.26 $ 0.17 $ 0.51 $ 0.32
============ ============ ============ ============ Weighted
average diluted shares outstanding 224,374,720 220,901,114
224,051,286 221,160,880 ============ ============ ============
============ Weighted average basic shares outstanding 213,725,395
213,552,092 213,574,773 213,504,726 ============ ============
============ ============ Certain 2005 amounts have been restated
as required by the modified retrospective method in connection with
the implementation of FAS 123R and other amounts have been
reclassified to conform to the 2006 presentation. All share and per
share amounts have been adjusted for the 2-for-1 stock split
effective June 2006. 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, 2006 2005 2006 2005 --------- -------- ---------
-------- Operating Activities: Net earnings $ 56,329 $ 36,698 $
108,681 $ 67,744 Adjustments to reconcile net earnings to net cash
provided by operating activities: Provision for losses on accounts
receivable 647 (394) 493 (358) Deferred income tax expense 5,817
3,370 12,589 8,580 Stock compensation expense 9,418 9,576 17,816
16,684 Depreciation and amortization 8,626 7,603 16,679 14,942 Gain
on sale of property and equipment (68) (26) (215) (45) Minority
interest in earnings of consolidated entities 1,815 833 4,011 1,670
Other 789 1,220 1,577 293 Changes in operating assets and
liabilities: Increase in accounts receivable (49,838) (45,318)
(28,999) (1,648) Increase in other current assets (11,394) (4,539)
(6,300) (1,746) Increase in accounts payable and other current
liabilities 33,437 33,183 67,379 30,225 --------- --------
--------- -------- Net cash provided by operating activities 55,578
42,206 193,711 136,341 --------- -------- --------- --------
Investing Activities: (Increase) decrease in short- term
investments (275) 631 (283) (12) Purchase of property and equipment
(100,334) (14,175) (121,833) (43,192) Proceeds from sale of
property and equipment 87 107 265 249 Other 692 (673) 486 (1,339)
--------- -------- --------- -------- Net cash used in investing
activities (99,830) (14,110) (121,365) (44,294) --------- --------
--------- -------- Financing Activities: Proceeds (repayments) of
short-term debt, net - 43 - (2,130) Proceeds from issuance of
common stock 20,513 8,700 26,020 11,075 Repurchases of common stock
(86,669) (35,486) (113,628) (50,013) Excess tax benefits from
employee stock plans 14,973 4,747 21,008 6,322 Dividends paid
(23,575) (16,055) (23,576) (16,055) --------- -------- ---------
-------- Net cash used in financing activities (74,758) (38,051)
(90,176) (50,801) Effect of exchange rate changes on cash 6,016
(8,562) 8,630 (11,356) --------- -------- --------- --------
Increase (decrease) in cash and cash equivalents (112,994) (18,517)
(9,200) 29,890 Cash and cash equivalents at beginning of period
567,688 457,390 463,894 408,983 Cash and cash equivalents at end of
period 454,694 438,873 454,694 438,873 ========= ======== =========
======== Interest and taxes paid: Interest 8 214 32 234 Income tax
30,376 18,444 43,051 28,560 Certain 2005 amounts have been restated
as required by the modified retrospective method in connection with
the implementation of FAS 123R and other amounts have been
reclassified to conform to the 2006 presentation. 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 June
30, 2006 Revenues from unaffiliated customers $ 230,158 30,254
629,016 156,268 13,435 Transfers between geographic areas $ 27,485
1,962 4,171 7,900 1,621 ---------- ------- ---------- --------
----------- Total revenues $ 257,643 32,216 633,187 164,168 15,056
========== ======= ========== ======== =========== Net revenues $
126,161 15,871 88,945 53,330 8,024 Operating income $ 27,659 3,864
40,855 10,051 2,127 Identifiable assets at quarter end $ 839,926
57,363 369,930 329,676 22,431 Capital expenditures $ 91,578 198
4,467 3,096 109 Depreciation and amortization $ 4,417 345 1,210
1,729 189 Equity $1,106,283 24,124 276,872 95,304 14,245 ----------
------- ---------- -------- ----------- Three months ended June 30,
2005 Revenues from unaffiliated customers $ 182,105 23,405 519,774
133,903 11,745 Transfers between geographic areas $ 19,232 1,178
3,126 5,583 1,425 ---------- ------- ---------- --------
----------- Total revenues $ 201,337 24,583 522,900 139,486 13,170
========== ======= ========== ======== =========== Net revenues $
101,950 12,839 66,894 44,724 7,054 Operating income $ 16,617 2,781
28,297 6,652 1,592 Identifiable assets at quarter end $ 666,572
47,503 317,473 289,708 23,903 Capital expenditures $ 10,465 207
1,074 1,309 469 Depreciation and amortization $ 3,713 362 1,216
1,499 172 Equity $ 911,406 19,831 245,979 85,294 15,106 ----------
------- ---------- -------- ----------- Six months ended June 30,
2006 Revenues from unaffiliated customers $ 449,380 58,635
1,185,711 296,633 25,788 Transfers between geographic areas $
52,927 3,692 7,854 15,225 3,030 ---------- ------- ----------
-------- ----------- Total revenues $ 502,307 62,327 1,193,565
311,858 28,818 ========== ======= ========== ======== ===========
Net revenues $ 251,860 30,553 169,694 101,933 15,424 Operating
income $ 52,227 7,203 82,139 20,624 4,108 Identifiable assets at
quarter end $ 839,926 57,363 369,930 329,676 22,431 Capital
expenditures $ 108,764 295 7,221 3,810 346 Depreciation and
amortization $ 8,485 696 2,400 3,265 387 Equity $1,106,283 24,124
276,872 95,304 14,245 ---------- ------- ---------- --------
----------- Six months ended June 30, 2005 Revenues from
unaffiliated customers $ 350,776 43,614 961,787 260,743 23,485
Transfers between geographic areas $ 35,626 2,347 5,848 10,998
2,647 ---------- ------- ---------- -------- ----------- Total
revenues $ 386,402 45,961 967,635 271,741 26,132 ========== =======
========== ======== =========== Net revenues $ 196,019 24,195
127,551 86,894 13,769 Operating income $ 27,261 4,801 57,144 11,764
3,220 Identifiable assets at quarter end $ 666,572 47,503 317,473
289,708 23,903 Capital expenditures $ 36,437 512 2,150 2,519 537
Depreciation and amortization $ 7,222 729 2,386 3,012 326 Equity $
911,406 19,831 245,979 85,294 15,106 ---------- ------- ----------
-------- ----------- Latin Middle Elimi- Consoli- America East
nations dated ---------------- --------- ---------- Three months
ended June 30, 2006 Revenues from unaffiliated customers 16,801
53,392 1,129,324 Transfers between geographic areas 2,111 2,680
(47,930) - ------- -------- --------- ---------- Total revenues
18,912 56,072 (47,930) 1,129,324 ======= ======== =========
========== Net revenues 8,287 12,952 313,570 Operating income 1,665
2,582 88,803 Identifiable assets at quarter end 32,241 58,371 5,612
1,715,550 Capital expenditures 468 418 100,334 Depreciation and
amortization 382 354 8,626 Equity 13,256 25,951 (586,434) 969,601
------- -------- --------- ---------- Three months ended June 30,
2005 Revenues from unaffiliated customers 15,561 41,506 927,999
Transfers between geographic areas 1,879 1,926 (34,349) - -------
-------- --------- ---------- Total revenues 17,440 43,432 (34,349)
927,999 ======= ======== ========= ========== Net revenues 6,885
10,314 250,660 Operating income 1,367 1,423 58,729 Identifiable
assets at quarter end 23,256 43,215 5,619 1,417,249 Capital
expenditures 361 290 14,175 Depreciation and amortization 286 355
7,603 Equity 8,606 20,623 (463,612) 843,233 ------- --------
--------- ---------- Six months ended June 30, 2006 Revenues from
unaffiliated customers 32,910 104,859 2,153,916 Transfers between
geographic areas 4,004 5,062 (91,794) - ------- -------- ---------
---------- Total revenues 36,914 109,921 (91,794) 2,153,916 =======
======== ========= ========== Net revenues 15,474 24,829 609,767
Operating income 2,939 4,964 174,204 Identifiable assets at quarter
end 32,241 58,371 5,612 1,715,550 Capital expenditures 791 606
121,833 Depreciation and amortization 747 699 16,679 Equity 13,256
25,951 (586,434) 969,601 ------- -------- --------- ---------- Six
months ended June 30, 2005 Revenues from unaffiliated customers
28,665 84,093 1,753,163 Transfers between geographic areas 3,438
3,783 (64,687) - ------- -------- --------- ---------- Total
revenues 32,103 87,876 (64,687) 1,753,163 ======= ========
========= ========== Net revenues 12,543 20,372 481,343 Operating
income 2,232 2,755 109,177 Identifiable assets at quarter end
23,256 43,215 5,619 1,417,249 Capital expenditures 552 485 43,192
Depreciation and amortization 547 720 14,942 Equity 8,606 20,623
(463,612) 843,233 ------- -------- --------- ---------- Certain
2005 amounts have been restated as required by the modified
retrospective method in connection with the implementation of FAS
123R and other amounts have been reclassified to conform to the
2006 presentation. *T
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