EXPD Expeditors International of Washington Inc

Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced net earnings of $65,489,000 for the second quarter of 2007, as compared with $56,329,000 for the same quarter of 2006, an increase of 16%. Net revenues for the second quarter of 2007 increased 12% to $354,574,000, as compared with $315,687,000 reported for the same quarter of 2006. Total revenues and operating income were $1,258,618,000 and $101,738,000 in 2007, as compared with $1,131,441,000 and $88,803,000 for the same quarter of 2006, increases of 11% and 15%, respectively. Diluted net earnings per share for the second quarter were $.30, as compared with $.25 for the same quarter in 2006, an increase of 20%. The company also reported that same store net revenues and operating income increased 12% and 15%, respectively, for the second quarter of 2007 when compared with 2006. For the six months ended June 30, 2007, net earnings rose to $124,777,000 from $108,681,000 in 2006, an increase of 15%. Net revenues for the six months increased to $688,710,000 from $613,829,000 for 2006, up 12%. Total revenues and operating income for the six months were $2,377,564,000 and $196,263,000 in 2007, as compared with $2,157,978,000 and $174,204,000 for the same period in 2006, increases of 10% and 13%, respectively. Diluted net earnings per share for the first two quarters of 2007 were $.56 as compared with $.49 for the same period of 2006, an increase of 14%. Same store net revenues and operating income increased 12% and 13%, respectively, for the six months ended June 30, 2007, when compared with same period of 2006. �This quarter�s results once again illustrate that steady growth is reliant upon both consistent and fundamental execution. We experienced good solid growth in all of our major geographic areas,� commented Peter J. Rose, Chairman and Chief Executive Officer. �When Yogi Berra said, �It ain�t like football. You can�t make up no trick plays� he was speaking of baseball, but he might just as well have been talking about the global logistics business. Indeed, there are no �trick plays� or short cuts that can bail you out in this game. When the final box scores are published in this business, those who have attempted to rely on either have typically found themselves thrown out at home. While the spectacular, but intermittent, long-ball game may garner the headlines, it�s the more tedious, but consistent, short-ball game that takes home the trophies,� Rose said. �One achievement that has served us well at Expeditors has been the development of service offerings which have complementary strengths and compensatory balance, both geographically and across product lines. We benefited this quarter by capabilities that allowed us to take advantage of shifts in global growth. As fortunes and events in the global economy create favorable conditions in any one area, we�re increasingly positioned to take advantage of these opportunities. The good thing about a global business model, such as ours, is that opportunities which develop in one area typically create some kind of associated benefit in another. At the end of the day it is our employees--experienced, knowledgeable and well-trained professionals--who make this happen, and they are the ones who deserve the credit. We believe it is their continued commitment to execute a little bit better today than yesterday, day in and day out, that makes the difference in delivering the kind of customer service that sets us apart,� Rose concluded. Expeditors is a global logistics company. Headquartered in Seattle, Washington, the company employs trained professionals in 172 full-service offices, 61 satellite locations and 5 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. Expeditors International of Washington, Inc. Financial Highlights Three months and Six months ended June 30, 2007 and 2006 Unaudited (in 000's except share data) � Three Months Ended June 30, Six Months Ended June 30, � % % � 2007 � 20061 Increase � 2007 � 20061 Increase Revenues $ 1,258,618 $ 1,131,441 11% $ 2,377,564 $ 2,157,978 10% Net revenues $ 354,574 $ 315,687 12% $ 688,710 $ 613,829 12% Operating income $ 101,738 $ 88,803 15% $ 196,263 $ 174,204 13% Net earnings $ 65,489 $ 56,329 16% $ 124,777 $ 108,681 15% Diluted earnings per share $ 0.3 $ 0.25 20% $ 0.56 $ 0.49 14% Basic earnings per share $ 0.31 $ 0.26 19% $ 0.58 $ 0.51 14% Diluted weighted average shares outstanding � 221,716,414 � 224,374,720 � 222,283,372 � 224,051,286 Basic weighted average shares outstanding � 213,251,710 � 213,725,395 � 213,339,478 � 213,574,773 � 1 Certain 2006 amounts have been reclassified to conform with 2007 presentation. Offices opened during the Second Quarter of 2007 NORTH AMERICA Knoxville, Tennessee + + Satellite office of Atlanta, Georgia 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 8, 2007, will be considered in management�s 8-K �Responses to Selected Questions� expected to be filed on or about August 13, 2007. EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands, except share data) (Unaudited) � June 30, December 31, Assets 2007 2006 � Current assets: Cash and cash equivalents $ 575,042 $ 511,358 Short-term investments 466 578 Accounts receivable, net 829,202 811,486 Deferred Federal and state income taxes 7,613 7,490 Other current assets � 25,438 � 10,925 Total current assets � 1,437,761 � 1,341,837 � Property and equipment, net 455,639 450,856 Goodwill, net 7,927 7,927 Other intangibles, net 6,853 7,584 Other assets 29,081 14,134 � � $ 1,937,261 $ 1,822,338 Liabilities and Shareholders' Equity � Current liabilities: Short term borrowings 213 - Accounts payable 583,632 544,028 Accrued expenses, primarily salaries and related costs 148,602 122,081 Federal, state and foreign income taxes � 30,821 � 43,036 Total current liabilities $ 763,268 $ 709,145 � Deferred Federal and state income taxes $ 42,463 $ 26,743 � Minority interest $ 16,497 $ 16,515 � 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 212,995,326 shares at June 30, 2007, and 213,080,466 shares at December 31, 2006 2,130 2,131 Additional paid-in capital 63,581 119,582 Retained earnings 1,028,933 934,058 Accumulated other comprehensive income � 20,389 � 14,164 Total shareholders' equity � 1,115,033 � 1,069,935 � � $ 1,937,261 $ 1,822,338 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, � 2007 � � 2006 � � 2007 � � 2006 � Revenues: Airfreight $ 564,471 $ 545,273 $ 1,081,676 $ 1,036,271 Ocean freight and ocean services 450,431 380,280 825,633 724,939 Customs brokerage and other services 243,716 205,888 470,255 396,768 � � � � Total revenues � 1,258,618 � � 1,131,441 � � 2,377,564 � � 2,157,978 � � Operating expenses: Airfreight consolidation 437,446 429,976 827,090 810,557 Ocean freight consolidation 364,917 300,780 663,808 571,659 Customs brokerage and other services 101,681 84,998 197,956 161,933 Salaries and related costs 197,393 172,453 380,154 333,427 Rent and occupancy costs 15,744 15,489 32,411 31,157 Depreciation and amortization 10,275 8,626 19,850 16,679 Selling and promotion 9,581 8,957 18,677 16,914 Other � 19,843 � � 21,359 � � 41,355 � � 41,448 � Total operating expenses � 1,156,880 � � 1,042,638 � � 2,181,301 � � 1,983,774 � � Operating income � 101,738 � � 88,803 � � 196,263 � � 174,204 � � Interest expense 118 (10 ) 104 (37 ) Interest income 5,531 4,390 10,750 8,664 Other, net 1,675 465 2,430 2,132 � � � � Other income, net � 7,324 � � 4,845 � � 13,284 � � 10,759 � � Earnings before income taxes and minority interest 109,062 93,648 209,547 184,963 � Income tax expense 43,315 35,503 84,475 72,555 � � � � Net earnings before minority interest � 65,747 � � 58,145 � � 125,072 � � 112,408 � � Minority interest (258 ) (1,816 ) (295 ) (3,727 ) � � � � Net earnings $ 65,489 � $ 56,329 � $ 124,777 � $ 108,681 � � Diluted earnings per share $ 0.30 � $ 0.25 � $ 0.56 � $ 0.49 � � Basic earnings per share $ 0.31 � $ 0.26 � $ 0.58 � $ 0.51 � � Weighted average diluted shares outstanding � 221,716,414 � � 224,374,720 � � 222,283,372 � � 224,051,286 � � Weighted average basic shares outstanding � 213,251,710 � � 213,725,395 � � 213,339,478 � � 213,574,773 � � Certain 2006 amounts have been reclassified to conform to the 2007 presentation. 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, 2007 2006 2007 2006 Operating Activities: Net earnings $65,489 $56,329 $124,777 $108,681 Adjustments to reconcile net earnings to net cash provided by operating activities: � � Provision for losses on accounts receivable (869 ) 647 (355 ) 493 Deferred income tax expense 6,772 6,309 12,240 12,589 Excess tax benefits from stock option plans (5,291 ) (14,973 ) (21,623 ) (21,008 ) Stock compensation expense 12,043 9,418 23,503 17,816 Depreciation and amortization 10,275 8,626 19,850 16,679 Gain on sale of property and equipment (79 ) (68 ) (202 ) (215 ) Minority interest in earnings of consolidated entities 258 1,816 295 3,727 Other 354 787 688 1,861 Changes in operating assets and liabilities: Increase in accounts receivable (70,962 ) (49,838 ) (13,261 ) (28,999 ) Decrease (increase) in other current assets 173 (1,299 ) (504 ) (1,772 ) Increase in accounts payable and other current liabilities 76,080 40,164 62,445 69,016 (Decrease) increase in taxes payable, net (7,311 ) (2,340 ) (4,842 ) 14,843 � � Net cash provided by operating activities 86,932 � 55,578 � 203,011 � 193,711 � � Investing Activities: Decrease (increase) in short-term investments 76 (275 ) 162 (283 ) Purchase of property and equipment (12,904 ) (100,334 ) (26,342 ) (121,833 ) Proceeds from sale of property and equipment 119 87 498 265 Prepayment on long-term land lease (2,848 ) - (2,848 ) - Deposit on building purchase (5,056 ) - (5,056 ) - Other (1,188 ) 692 � (1,528 ) 486 � � Net cash used in investing activities (21,801 ) (99,830 ) (35,114 ) (121,365 ) � Financing Activities: (Repayments) borrowings of short-term debt, net (17 ) - 203 - Proceeds from issuance of common stock 12,602 20,513 27,868 26,020 Repurchases of common stock (56,597 ) (86,669 ) (128,995 ) (113,628 ) Dividends Paid (29,902 ) (23,575 ) (29,902 ) (23,576 ) Excess tax benefits from stock option plans 5,291 14,973 21,623 21,008 Net distributions to minority interests (316 ) - � (316 ) - � � Net cash used in financing activities (68,939 ) (74,758 ) (109,519 ) (90,176 ) � Effect of exchange rate changes on cash 2,034 � 6,016 � 5,306 � 8,630 � � (Decrease) increase in cash and cash equivalents (1,774 ) (112,994 ) 63,684 (9,200 ) � Cash and cash equivalents at beginning of period 576,816 567,688 511,358 463,894 � Cash and cash equivalents at end of period 575,042 � 454,694 � 575,042 � 454,694 � � Interest and taxes paid: Interest 127 8 138 32 Income tax 41,279 30,376 74,312 43,051 � Certain 2006 amounts have been reclassified to conform to the 2007 presentation. EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Business Segment Information (In thousands) (Unaudited) � United Other Far Australia/ Latin Middle Elimi- Consoli- States N. America East Europe New Zealand America East nations dated Three months ended June 30, 2007 � � Revenues from unaffiliated customers $ 260,796 32,765 710,104 162,100 17,057 19,377 56,419 1,258,618 Transfers between geographic areas $ 25,856 1,989 4,470 8,172 1,853 3,078 3,340 (48,758 ) - Total revenues $ 286,652 34,754 714,574 170,272 18,910 22,455 59,759 (48,758 ) 1,258,618 � Net revenues $ 143,206 15,377 100,479 58,600 9,812 10,950 16,150 354,574 Operating income $ 31,459 2,941 46,587 11,951 2,658 2,354 3,788 101,738 Identifiable assets at quarter end $ 893,335 69,599 431,106 395,022 30,617 37,310 82,642 (2,370 ) 1,937,261 Capital expenditures $ 7,843 688 1,188 2,141 198 267 579 12,904 Depreciation and amortization $ 5,304 331 1,222 2,393 225 417 383 10,275 Equity $ 1,256,503 32,692 326,036 134,925 20,114 19,571 39,555 (714,363 ) 1,115,033 � Three months ended June 30, 2006 � Revenues from unaffiliated customers $ 232,275 30,254 629,016 156,268 13,435 16,801 53,392 1,131,441 Transfers between geographic areas $ 27,485 1,962 4,171 7,900 1,621 2,111 2,680 (47,930 ) - Total revenues $ 259,760 32,216 633,187 164,168 15,056 18,912 56,072 (47,930 ) 1,131,441 � Net revenues $ 128,278 15,871 88,945 53,330 8,024 8,287 12,952 315,687 Operating income $ 27,659 3,864 40,855 10,051 2,127 1,665 2,582 88,803 Identifiable assets at quarter end $ 839,926 57,363 369,930 329,676 22,431 32,241 58,371 5,612 1,715,550 Capital expenditures $ 91,578 198 4,467 3,096 109 468 418 100,334 Depreciation and amortization $ 4,417 345 1,210 1,729 189 382 354 8,626 Equity $ 1,106,283 24,124 276,872 95,304 14,245 13,256 25,951 (586,434 ) 969,601 � Six months ended June 30, 2007 � Revenues from unaffiliated customers $ 506,521 60,851 1,312,135 318,479 31,840 38,748 108,990 2,377,564 Transfers between geographic areas $ 48,354 3,967 8,450 15,933 3,550 5,584 6,763 (92,601 ) - Total revenues $ 554,875 64,818 1,320,585 334,412 35,390 44,332 115,753 (92,601 ) 2,377,564 � Net revenues $ 278,673 30,077 193,632 114,627 18,739 20,745 32,217 688,710 Operating income $ 59,522 5,670 91,471 22,102 5,062 4,406 8,030 196,263 Identifiable assets at quarter end $ 893,335 69,599 431,106 395,022 30,617 37,310 82,642 (2,370 ) 1,937,261 Capital expenditures $ 16,548 1,012 2,521 3,526 892 762 1,081 26,342 Depreciation and amortization $ 10,473 662 2,597 4,130 425 817 746 19,850 Equity $ 1,256,503 32,692 326,036 134,925 20,114 19,571 39,555 (714,363 ) 1,115,033 � Six months ended June 30, 2006 � Revenues from unaffiliated customers $ 453,442 58,635 1,185,711 296,633 25,788 32,910 104,859 2,157,978 Transfers between geographic areas $ 52,927 3,692 7,854 15,225 3,030 4,004 5,062 (91,794 ) - Total revenues $ 506,369 62,327 1,193,565 311,858 28,818 36,914 109,921 (91,794 ) 2,157,978 � Net revenues $ 255,922 30,553 169,694 101,933 15,424 15,474 24,829 613,829 Operating income $ 52,227 7,203 82,139 20,624 4,108 2,939 4,964 174,204 Identifiable assets at quarter end $ 839,926 57,363 369,930 329,676 22,431 32,241 58,371 5,612 1,715,550 Capital expenditures $ 108,764 295 7,221 3,810 346 791 606 121,833 Depreciation and amortization $ 8,485 696 2,400 3,265 387 747 699 16,679 Equity $ 1,106,283 24,124 276,872 95,304 14,245 13,256 25,951 (586,434 ) 969,601 � Certain 2006 amounts have been reclassified to conform to the 2007 presentation.