EXPD Expeditors International of Washington Inc

Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced quarterly total revenues and operating income of $1,582,135,000 and $148,572,000 as compared with $1,246,911,000 and $110,354,000 for the same quarter of 2009, an increase of 27% and 35%, respectively. Net earnings attributable to shareholders were $96,502,000 for the fourth quarter of 2010, compared with $69,135,000 for the same quarter of 2009, an increase of 40%. Net revenues for the fourth quarter of 2010 increased 23% to $453,362,000 as compared with $369,712,000 reported for the fourth quarter of 2009. Diluted net earnings attributable to shareholders per share for the fourth quarter were $.45 as compared with $.32 for the same quarter in 2009, an increase of 41%. The Company also reported that same store net revenues and operating income increased 23% and 35%, respectively, for the fourth quarter of 2010 when compared with 2009.

For the year ended December 31, 2010, total revenues and operating income were $5,967,573,000 and $547,230,000 as compared with $4,092,283,000 and $385,001,000 for the same period in 2009, increases of 46% and 42%, respectively. Net earnings attributable to shareholders rose to $344,172,000 from $240,217,000 in 2009, an increase of 43%. Net revenues for the year increased to $1,692,786,000 from $1,382,786,000 for 2009, up 22%. Diluted net earnings attributable to shareholders per share for the year 2010 were $1.59 as compared with $1.11 for the same period of 2009, a 43% increase. Same store net revenues and operating income increased 22% and 42%, respectively, for the year ended December 31, 2010, when compared with the same period of 2009.

“What a difference a year makes! Last year we closed our 2009 fourth quarter earnings release by saying ‘Having proven our mettle in 2009, we’re excited about 2010.’ How prophetic those words turned out to be,” said Peter J. Rose, Chairman and Chief Executive Officer. “Our 2010 was absolutely outstanding by any measure and this fourth quarter was, simply put, a great ending to an incredible year. The fourth quarter was also remarkable in that, despite handling the large year-over-year increases in shipment and clearance activity, none of the anomalies that can occur in theses kinds of environments reared their ugly heads. The competitive market mechanisms worked as close to perfect as we can remember experiencing them. Our people successfully handled some amazing volumes. Because of our no-layoff policy in 2009, we had the capacity and the experience to absorb anything 2010 threw at us,” Rose went on to say.

“The fourth quarter, just like all of 2010, was a classic case study of what happens when you don’t panic, when you trust in your people and your culture and when you rely on your proven business model. If we had lost our confidence and succumbed to the myriad of pressures we encountered in 2009, we might well have joined the ‘lemming layoff brigade.’ Had we done that, we would not have had the staying power to see our way through the volume challenges, and the corresponding opportunities, that presented themselves in 2010. Experience and tenure is what really pays off in these situations, particularly if you have the confidence to lead…which fortunately, our people did. This wasn’t our first recession, it was merely our worst. We learned from experience that a recession is the least costly time to make investments. We have always thought that recessionary investments, particularly those in technology, productivity and process improvement, have higher rates of return, as the economy turns....and indeed they did. Finally, we were grateful for the opportunity to show how much we truly appreciate and value our greatest assets, our people…and that is why they’re still here servicing more customers and creating value for our shareholders! And yes, we’re excited for whatever challenges and opportunities will come our way in 2011,” concluded Rose.

Expeditors is a global logistics company headquartered in Seattle, Washington. The company employs trained professionals in 184 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 Year ended December 31, 2010 and 2009 (Unaudited)

(in 000's except share data)

      Three months ended December 31,         Year ended December 31,         %     % 2010 2009 Increase 2010 2009 Increase Revenues $ 1,582,135 $ 1,246,911 27 % $ 5,967,573 $ 4,092,283 46 % Net revenues $ 453,362 $ 369,712 23 % $ 1,692,786 $ 1,382,786 22 % Operating income $ 148,572 $ 110,354 35 % $ 547,230 $ 385,001 42 % Net earnings attributable to shareholders1

$

96,502

$

69,135

40

%

$

344,172

$

240,217

43

%

Diluted earnings attributable to shareholders per share

 

 

$

.45

$

.32

41

%

$

1.59

$

1.11

43

%

Basic earnings attributable to shareholders per share

$

.45

$

.33

36

%

$

1.62

$

1.13

43

%

Weighted average diluted shares outstanding

216,587,468

216,378,536

216,446,656

216,533,240

Weighted average basic shares outstanding

212,217,035

211,992,092

212,283,966

212,112,744

_______________________

 

1 The Company’s consolidated effective tax rate was lower in the fourth quarter and year 2010 as compared to the same periods in 2009 primarily as a result of a higher tax benefit received for disqualified dispositions of incentive stock options in 2010.

 

During the fourth quarter of 2010, the Company opened one full-service office in Curitiba, Brazil and one satellite office in Belo Horizonte, Brazil. The Company closed one satellite office in Lewiston, New York.

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 February 25, 2011 will be considered in management’s 8-K “Responses to Selected Questions” expected to be filed on or about March 4, 2011.

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, capacity to absorb additional volumes, positive trends in business volume, ability to benefit from opportunities in 2011, ability to continue our culture and business model, ability to realize higher rates of return from investments in technology, productivity, and process improvement, any future tax benefits from disqualified dispositions of incentive stock options and ability to create shareholder value. 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)         December 31,     December 31,

Assets

2010     2009   Current assets:   Cash and cash equivalents $ 1,084,465 $ 925,929 Short-term investments 524 655 Accounts receivable, net 1,003,884 810,369 Deferred Federal and state income taxes 8,706 8,338 Other current assets   42,776   42,539 Total current assets   2,140,355   1,787,830   Property and equipment, net 498,648 495,701 Goodwill, net 7,927 7,927 Other intangibles, net 3,716 4,938 Other assets, net   28,533   27,326 $ 2,679,179 $ 2,323,722

Liabilities and Equity

  Current liabilities: Accounts payable 652,161 546,675 Accrued expenses, primarily salaries and related costs 177,869 145,545 Federal, state and foreign income taxes   31,948   16,166 Total current liabilities   861,978   708,386   Deferred Federal and state income taxes 69,047 53,989   Commitments and contingencies   Shareholders' equity: Preferred stock; none issued -- --

Common stock, par value $.01 per share; issued and outstanding 212,047,774 shares at December 31, 2010 and 212,025,494 shares at December 31, 2009

2,120 2,120 Additional paid-in capital 13,412 18,265 Retained earnings 1,717,249 1,532,018 Accumulated other comprehensive income   8,125   604 Total shareholders' equity   1,740,906   1,553,007   Noncontrolling interest   7,248   8,340 Total equity   1,748,154   1,561,347     $ 2,679,179 $ 2,323,722   EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Earnings (In thousands, except share data) (Unaudited)                       Three months ended Twelve months ended December 31, December 31, 2010 2009 2010 2009 Revenues: Airfreight services $ 778,009 $ 628,097 $ 2,821,828 $ 1,831,317 Ocean freight and ocean services 481,263 348,305 1,955,400 1,297,685 Customs brokerage and other services   322,863     270,509     1,190,345     963,281   Total revenues   1,582,135     1,246,911     5,967,573     4,092,283     Operating expenses: Airfreight consolidation 604,309 493,711 2,181,598 1,341,842 Ocean freight consolidation 379,250 268,612 1,569,877 973,462 Customs brokerage and other services 145,214 114,876 523,312 394,193 Salaries and related costs 237,822 202,697 894,132 774,214 Rent and occupancy costs 19,988 19,463 77,209 74,324 Depreciation and amortization 9,310 9,910 36,900 40,035 Selling and promotion 9,593 7,985 32,055 26,295 Other   28,077     19,303     105,260     82,917   Total operating expenses   1,433,563     1,136,557     5,420,343     3,707,282     Operating income   148,572     110,354     547,230     385,001     Interest income 2,064 1,924 7,002 10,177 Interest expense (198 ) (95 ) (576 ) (499 ) Other, net   1,181     367     10,412     8,193   Other income, net   3,047     2,196     16,838     17,871     Earnings before income taxes 151,619 112,550 564,068 402,872   Income tax expense 55,171 42,900 219,863 162,475         Net earnings   96,448     69,650     344,205     240,397     Less: net earnings attributable to noncontrolling interest (54 ) 515 33 180         Net earnings attributable to shareholders $ 96,502   $ 69,135   $ 344,172   $ 240,217     Diluted earnings attributable to shareholders per share $ 0.45   $ 0.32   $ 1.59   $ 1.11     Basic earnings attributable to shareholders per share $ 0.45   $ 0.33   $ 1.62   $ 1.13     Dividends declared and paid per common share $ 0.20   $ 0.19   $ 0.40   $ 0.38     Weighted average diluted shares outstanding   216,587,468     216,378,536     216,446,656     216,533,240     Weighted average basic shares outstanding   212,217,035     211,992,092     212,283,966     212,112,744     EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited)             Three months ended     Twelve months ended December 31, December 31, 2010     2009 2010     2009 Operating Activities: Net earnings $ 96,448 $ 69,650 $ 344,205 $ 240,397

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

Provision for losses on accounts receivable 305 13 3,414 804 Deferred income tax expense (benefit) 8,048 11,336 10,569 (1,609 ) Excess tax benefits from stock plans (12,274 ) (345 ) (23,863 ) (5,726 ) Stock compensation expense 10,696 10,070 43,743 39,135 Depreciation and amortization 9,310 9,910 36,900 40,035 Loss (gain) on sale of assets 140 (40 ) (321 ) (42 ) Other 304 878 1,536 1,970 Changes in operating assets and liabilities: Decrease (increase) in accounts receivable 77,947 (121,395 ) (188,823 ) (1,077 ) Decrease (increase) in other current assets 1,484 1,835 (1,475 ) (291 )

(Decrease) increase in accounts payable and accrued expenses

(60,302 ) 58,698 130,138 29,910 Increase (decrease) in income taxes payable, net   2,725     (9,640 )   39,495     (12,706 ) Net cash provided by operating activities   134,831     30,970     395,518     330,800     Investing Activities: Decrease (increase) in short-term investments 81 (22 ) 188 26 Purchase of property and equipment (15,755 ) (9,364 ) (42,408 ) (34,700 ) Proceeds from sale of property and equipment 92 151 360 276 Prepayment on long-term land lease, net - 4,193 - (5,049 ) Other   (632 )   (748 )   (319 )   (1,901 ) Net cash used in investing activities   (16,214 )   (5,790 )   (42,179 )   (41,348 )   Financing Activities: Proceeds from issuance of common stock 38,826 4,414 99,784 46,925 Repurchases of common stock (106,862 ) (7,434 ) (246,312 ) (84,509 ) Excess tax benefits from stock plans 12,274 345 23,863 5,726 Dividends paid (42,475 ) (40,279 ) (84,872 ) (80,555 ) Distributions to noncontrolling interest (88 ) (75 ) (1,051 ) (1,084 ) Purchase of noncontrolling interest   -     (1,729 )   -     (3,851 ) Net cash used in financing activities   (98,325 )   (44,758 )   (208,588 )   (117,348 )   Effect of exchange rate changes on cash and cash equivalents   6,947     (1,762 )   13,785     12,797     Increase (decrease) in cash and cash equivalents 27,239 (21,340 ) 158,536 184,901   Cash and cash equivalents at beginning of period   1,057,226     947,269     925,929     741,028     Cash and cash equivalents at end of period $ 1,084,465   $ 925,929   $ 1,084,465   $ 925,929     Interest and taxes paid: Interest $ 57 100 $ 110 497 Income taxes 42,369 37,028 171,618 158,745   EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Business Segment Information (In thousands) (Unaudited)             Other             Europe             United North Latin Asia and Middle East Elimi- Consoli- States America America Pacific Africa and India nations dated Three months ended December 31, 2010 Revenues from unaffiliated customers $ 368,584 43,083 19,010 867,844 203,958 79,656 1,582,135 Transfers between geographic areas   26,804 3,114 4,850 8,976 11,371 4,266 (59,381 ) - Total revenues $ 395,388 46,197 23,860 876,820 215,329 83,922 (59,381 ) 1,582,135   Net revenues $ 177,438 20,322 13,509 146,191 72,528 23,374 453,362 Operating income $ 45,968 7,204 4,830 64,006 19,245 7,319 148,572 Identifiable assets $ 1,343,098 95,298 51,326 612,085 432,019 144,043 1,310 2,679,179 Capital expenditures $ 4,991 157 332 1,776 7,968 531 15,755 Depreciation and amortization $ 5,372 321 241 1,885 940 551 9,310 Equity $ 1,089,053 46,601 27,462 371,610 160,428 84,456 (31,456 ) 1,748,154   Three months ended December 31, 2009 Revenues from unaffiliated customers $ 277,141 37,790 16,574 683,208 167,280 64,918 1,246,911 Transfers between geographic areas   21,117 2,004 3,548 7,460 8,613 3,597 (46,339 ) - Total revenues $ 298,258 39,794 20,122 690,668 175,893 68,515 (46,339 ) 1,246,911   Net revenues $ 148,265 17,613 11,537 107,382 63,809 21,106 369,712 Operating income $ 22,426 8,741 3,847 50,116 17,536 7,688 110,354 Identifiable assets $ 1,188,111 82,166 42,478 493,338 387,494 128,690 1,445 2,323,722 Capital expenditures $ 5,639 247 107 1,097 1,560 714 9,364 Depreciation and amortization $ 5,181 360 358 1,920 1,478 613 9,910 Equity $ 965,620 40,421 17,809 341,991 148,592 77,566 (30,652 ) 1,561,347   Twelve months ended December 31, 2010 Revenues from unaffiliated customers $ 1,348,259 163,750 74,327 3,349,960 729,022 302,255 5,967,573 Transfers between geographic areas   99,547 10,836 16,932 32,837 40,778 16,184 (217,114 ) - Total revenues $ 1,447,806 174,586 91,259 3,382,797 769,800 318,439 (217,114 ) 5,967,573   Net revenues $ 666,669 77,079 50,937 543,869 264,663 89,569 1,692,786 Operating income $ 198,393 23,521 15,985 222,944 63,115 23,272 547,230 Identifiable assets $ 1,343,098 95,298 51,326 612,085 432,019 144,043 1,310 2,679,179 Capital expenditures $ 18,128 574 1,320 5,743 14,383 2,260 42,408 Depreciation and amortization $ 20,125 1,344 880 7,511 4,661 2,379 36,900 Equity $ 1,089,053 46,601 27,462 371,610 160,428 84,456 (31,456 ) 1,748,154   Twelve months ended December 31, 2009 Revenues from unaffiliated customers $ 982,103 129,272 64,060 2,101,323 582,759 232,766 4,092,283 Transfers between geographic areas   75,964 7,344 13,520 26,771 27,699 14,602 (165,900 ) - Total revenues $ 1,058,067 136,616 77,580 2,128,094 610,458 247,368 (165,900 ) 4,092,283   Net revenues $ 547,879 65,331 44,182 413,627 229,432 82,335 1,382,786 Operating income $ 117,908 20,253 12,538 167,299 43,953 23,050 385,001 Identifiable assets $ 1,188,111 82,166 42,478 493,338 387,494 128,690 1,445 2,323,722 Capital expenditures $ 24,908 724 688 2,772 3,407 2,201 34,700 Depreciation and amortization $ 21,010 1,391 1,087 8,106 5,968 2,473 40,035 Equity $ 965,620 40,421 17,809 341,991 148,592 77,566 (30,652 ) 1,561,347