EXPD Expeditors International of Washington Inc

Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced quarterly net earnings attributable to shareholders of $57,752,000 for the third quarter of 2009, as compared with $85,565,000 for the same quarter of 2008, a decrease of 33%. Net revenues for the third quarter of 2009 decreased 19% to $346,512,000, as compared with $429,127,000 reported for the third quarter of 2008. Total revenues and operating income were $1,037,327,000 and $96,246,000 in 2009, as compared with $1,564,913,000 and $135,396,000 for the same quarter of 2008, decreases of 34% and 29%, respectively. Diluted net earnings attributable to shareholders per share for the third quarter of 2009 were $.27, as compared with $.39 for the same quarter in 2008, a decrease of 31%. The Company also reported that same store net revenues and operating income decreased 19% and 29%, respectively, for the third quarter of 2009 when compared with 2008.

For the nine months ended September 30, 2009, net earnings attributable to shareholders was $171,082,000 as compared with $223,286,000 in 2008, a decrease of 23%. Net revenues for the nine months decreased to $1,013,074,000 from $1,200,780,000 for 2008, down 16%. Total revenues and operating income for the nine months were $2,845,372,000 and $274,647,000 in 2009, as compared with $4,326,489,000 and $353,931,000 for the same period in 2008, decreases of 34% and 22%, respectively. Diluted net earnings attributable to shareholders per share for the first three quarters of 2009 were $.79, as compared with $1.02 for the same period of 2008, a decrease of 23%. Same store net revenues and operating income decreased 16% and 22%, respectively, for the nine months ended September 30, 2009, when compared with the same period of 2008.

“There certainly were significant challenges during the latter part of this quarter as both air and ocean carriers imposed capacity reductions in order to implement very aggressive price increases. While we wouldn’t call it ‘The Perfect Freight Storm,’ the rapidity of these carrier moves created a pricing environment that resulted in our experiencing single digit airfreight yields out of Asia during the first several weeks of September. Ocean yields were also significantly impacted. Market conditions required that we absorb these increases for several weeks as we worked with customers to raise rates in a commercially acceptable manner,” said Peter J. Rose, Chairman and Chief Executive Officer. “On a more positive note, however, year-over-year declines in freight volumes for the month of September (as compared to September 2008), were at the lowest levels we’ve experienced all year. Airfreight tonnage was down 6% while ocean freight container counts were down 17%. Lower yields aside, it was somewhat reassuring to experience freight volumes that, while albeit still negative, seemed to be moving in the right direction,” Rose went on to say.

“While we’ll be the first to acknowledge 2009 has been a tough year, we remain very positive on how we’re positioned for the future, particularly as the global economy gradually strengthens. A strong balance sheet with nearly $1 billion in cash is very stabilizing. With 252 locations throughout the world we’re able to grow market share everywhere we have a network presence. Having not resorted to layoffs, while challenging in the short-term, has allowed our people to maintain that Expeditors’ esprit de corps that we rely on to service our customers and to grow our business over the long-term,” Rose commented. “Sticking to our core values and ‘walking the walk’ when times are tough provides a tremendously stable springboard from which to expand our customer base, provide technological solutions to our customers and provide opportunities to our people as the business climate improves,” 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 4 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, 2009 and 2008 (Unaudited) (in 000's except share data)  

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

2009

 

2008

  %

Decrease

2009

 

2008

  %

Decrease

Revenues $ 1,037,327 $ 1,564,913 34 % $ 2,845,372 $ 4,326,489 34 % Net revenues $ 346,512 $ 429,127 19 % $ 1,013,074 $ 1,200,780 16 % Operating income $ 96,246 $ 135,396 29 % $ 274,647 $ 353,931 22 % Net earnings attributable to shareholders $ 57,752 $ 85,565 33 % $ 171,082 $ 223,286 23 % Diluted earnings attributable to shareholders per share $ .27 $ .39 31 % $ .79 $ 1.02 23 % Basic earnings attributable to shareholders per share $ .27 $ .40 33 % $ .81 $ 1.05 23 % Weighted average diluted shares outstanding

 

216,684,079

 

218,729,790

 

 

216,582,370

 

219,903,341

 

Weighted average basic shares outstanding

 

212,241,480

 

212,747,871

 

212,153,404

 

213,027,420

 

During the third quarter of 2009, the Company did not open any new offices and closed one satellite office in Port Elizabeth, South Africa.

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 6, 2009 will be considered in management’s 8-K “Responses to Selected Questions” expected to be filed on or about November 20, 2009.

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 economic trends, improving business climate, positive trends in freight volumes and ability to grow 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, inventory build-up, decreased consumer confidence, volatility in equity markets, energy prices, political 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

  2009   2008     Current assets: Cash and cash equivalents $ 947,269 $ 741,028 Short-term investments 629 658 Accounts receivable, net 684,248 788,176 Deferred Federal and state income taxes 7,806 7,986 Other current assets   36,568   35,511  

Total current assets

  1,676,520   1,573,359     Property and equipment, net 496,203 493,129 Goodwill, net 7,927 7,927 Other intangibles, net 5,380 6,503 Other assets   30,857   19,921   $ 2,216,887 $ 2,100,839  

Liabilities and Shareholders' Equity

  Current liabilities: Accounts payable 486,663 491,823 Accrued expenses, primarily salaries and related costs 150,880 150,487 Federal, state and foreign income taxes   17,593   28,039   Total current liabilities   655,136   670,349     Deferred Federal and state income taxes 41,796 46,574   Shareholders' equity: Preferred stock; none issued -- --

Common stock, par value $.01 per share; issued and outstanding 211,984,747 shares at September 30, 2009 and 211,973,377 shares at December 31, 2008

2,120 2,120 Additional paid-in capital 6,751 7,150 Retained earnings 1,503,162 1,372,356 Accumulated other comprehensive income (loss)   13   (15,208 ) Total shareholders' equity   1,512,046   1,366,418     Noncontrolling interest   7,909   17,498  

Total equity

  1,519,955   1,383,916       $ 2,216,887 $ 2,100,839     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,   2009     2008     2009     2008   Revenues: Airfreight services $ 457,405 $ 703,152 $ 1,203,220 $ 1,961,797 Ocean freight and ocean services 331,454 567,155 949,380 1,530,420 Customs brokerage and other services   248,468     294,606     692,772     834,272   Total revenues   1,037,327     1,564,913     2,845,372     4,326,489     Operating expenses: Airfreight consolidation 340,746 553,672 848,131 1,532,454 Ocean freight consolidation 247,733 454,622 704,850 1,234,829 Customs brokerage and other services 102,336 127,492 279,317 358,426 Salaries and related costs 194,743 224,809 571,517 646,159 Rent and occupancy costs 18,183 19,729 54,861 58,538 Depreciation and amortization 9,923 10,222 30,125 30,050 Selling and promotion 6,541 8,881 18,310 28,129 Other   20,876     30,090     63,614     83,973   Total operating expenses   941,081     1,429,517     2,570,725     3,972,558     Operating income   96,246     135,396     274,647     353,931     Interest income 2,214 5,005 8,253 14,884 Interest expense (325 ) (23 ) (404 ) (169 ) Other, net   1,192     2,225     7,826     3,337   Other income, net   3,081     7,207     15,675     18,052     Earnings before income taxes 99,327 142,603 290,322 371,983   Income tax expense 41,763 56,457 119,575 147,710         Net earnings   57,564     86,146     170,747     224,273     Net earnings attributable to noncontrolling interest 188 (581 ) 335 (987 )         Net earnings attributable to shareholders $ 57,752   $ 85,565   $ 171,082   $ 223,286     Diluted earnings attributable to shareholders per share $ 0.27   $ 0.39   $ 0.79   $ 1.02     Basic earnings attributable to shareholders per share $ 0.27   $ 0.40   $ 0.81   $ 1.05     Dividends declared and paid per common share $ -   $ -   $ 0.19   $ 0.16     Weighted average diluted shares outstanding   216,684,079     218,729,790     216,582,370     219,903,341     Weighted average basic shares outstanding   212,241,480     212,747,871     212,153,404     213,027,420     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,   2009     2008     2009     2008   Operating Activities: Net earnings $ 57,564 $ 86,146 $ 170,747 $ 224,273

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

Provision for losses on accounts receivable (778 ) 1,503 791 930 Deferred income tax (benefit) expense (6,701 ) 1,117 (12,945 ) 17,590 Excess tax benefits from stock plans (246 ) (485 ) (5,381 ) (9,880 ) Stock compensation expense 10,794 11,513 29,065 34,116 Depreciation and amortization 9,923 10,222 30,125 30,050 Loss (gain) on sale of assets 8 (46 ) (2 ) (651 ) Other 365 396 1,092 1,328 Changes in operating assets and liabilities: (Increase) decrease in accounts receivable (94,025 ) (51,422 ) 120,318 (83,446 ) Increase in other current assets (803 ) (2,544 ) (2,126 ) (1,867 )

Increase (decrease) in accounts payable and accrued expenses

71,711 13,796 (28,788 ) 95,898 (Decrease) increase in income taxes payable, net   (5,350 )   21,482     (3,066 )   (1,955 ) Net cash provided by operating activities   42,462     91,678     299,830     306,386     Investing Activities: Decrease (increase) in short-term investments 17 (6 ) 48 210 Purchase of property and equipment (9,514 ) (24,631 ) (25,336 ) (49,157 ) Proceeds from sale of property and equipment 48 106 125 287 Prepayment on long-term land lease (1,898 ) - (9,242 ) - Other   438     635     (1,153 )   690   Net cash used in investing activities   (10,909 )   (23,896 )   (35,558 )   (47,970 )   Financing Activities: Proceeds from issuance of common stock 25,107 26,737 42,511 46,888 Repurchases of common stock (34,103 ) (75,332 ) (77,075 ) (144,920 ) Excess tax benefits from stock plans 246 485 5,381 9,880 Dividends paid - 2 (40,276 ) (34,161 ) Distributions to noncontrolling interests (1,009 ) (772 ) (1,009 ) (879 ) Purchases of noncontrolling interest   -     -     (2,122 )   -   Net cash used in financing activities   (9,759 )   (48,880 )   (72,590 )   (123,192 )   Effect of exchange rate changes on cash   9,493     (26,041 )   14,559     (13,474 )   Increase (decrease) in cash and cash equivalents 31,287 (7,139 ) 206,241 121,750   Cash and cash equivalents at beginning of period   915,982     703,488     741,028     574,599     Cash and cash equivalents at end of period $ 947,269   $ 696,349   $ 947,269   $ 696,349     Interest and taxes paid: Interest $ 317 20 $ 397 166 Income taxes 46,607 32,114 121,717 123,999   EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Business Segment Information (In thousands) (Unaudited)                  

UnitedStates

OtherNorthAmerica LatinAmerica Asia EuropeandAfrica

Middle Eastand India

Austral-asia Elimi-nations Consoli-dated 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 $ 1,656,409 44,455 14,982 308,304 137,278 70,531 22,487 (734,491 ) 1,519,955   Three months ended September 30, 2008 Revenues from unaffiliated customers $ 338,662 43,225 21,274 852,255 215,018 72,904 21,575 1,564,913 Transfers between geographic areas   30,807 2,883 4,327 5,624 11,966 4,757 2,307 (62,671 ) - Total revenues $ 369,469 46,108 25,601 857,879 226,984 77,661 23,882 (62,671 ) 1,564,913   Net revenues $ 166,045 19,199 14,069 119,309 74,089 23,270 13,146 429,127 Operating income $ 40,847 4,586 3,700 58,111 16,804 6,867 4,481 135,396 Identifiable assets $ 980,475 79,031 55,979 527,520 467,859 116,698 38,139 4,636 2,270,337 Capital expenditures $ 9,219 658 171 9,861 3,748 925 49 24,631 Depreciation and amortization $ 5,418 371 316 1,686 1,611 600 220 10,222 Equity $ 1,488,514 40,254 26,464 397,491 175,093 57,088 25,735 (853,886 ) 1,356,753   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 $ 1,656,409 44,455 14,982 308,304 137,278 70,531 22,487 (734,491 ) 1,519,955   Nine months ended September 30, 2008 Revenues from unaffiliated customers $ 961,377 119,691 63,269 2,300,191 609,879 207,261 64,821 4,326,489 Transfers between geographic areas   81,953 7,579 11,060 16,364 33,725 13,293 6,599 (170,573 ) - Total revenues $ 1,043,330 127,270 74,329 2,316,555 643,604 220,554 71,420 (170,573 ) 4,326,489   Net revenues $ 470,573 53,882 39,246 322,738 212,148 64,223 37,970 1,200,780 Operating income $ 102,254 11,779 10,499 152,878 46,600 17,580 12,341 353,931 Identifiable assets $ 980,475 79,031 55,979 527,520 467,859 116,698 38,139 4,636 2,270,337 Capital expenditures $ 20,022 1,848 940 16,371 7,042 2,532 402 49,157 Depreciation and amortization $ 16,223 1,011 918 4,439 5,060 1,683 716 30,050 Equity $ 1,488,514 40,254 26,464 397,491 175,093 57,088 25,735 (853,886 ) 1,356,753