Expeditors Announces 14% Increase in 2007 Annual Earnings

By: Expeditors International of Washington, Inc. via Business Wire News Releases

February 11, 2008 at 20:47 PM EST

Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced quarterly total revenues and operating income of $1,446,582,000 and $107,616,000 compared with $1,244,348,000 and $99,655,000 for the same quarter of 2006, increases of 16% and 8%, respectively. Net earnings were $70,057,000 for the fourth quarter of 2007, compared with $62,610,000 for 2006, an increase of 12%. Net revenues for the fourth quarter of 2007 increased 13% to $379,441,000 as compared with $335,855,000 reported for the fourth quarter of 2006. Diluted net earnings per share for the fourth quarter were $.32 as compared with $.28 for the same quarter in 2006, an increase of 14%. The Company also reported that same store net revenues and operating income increased 13% and 8%, respectively, for the fourth quarter of 2007 when compared with 2006.

For the year ended December 31, 2007, total revenues and operating income were $5,235,171,000 and $423,400,000 compared with $4,633,987,000 and $375,116,000 for the same period in 2006, increases of 13% respectively. Net earnings rose to $269,154,000 from $235,094,000 in 2006, an increase of 14%. Net revenues for the year increased to $1,452,961,000 from $1,290,960,000 for 2006, up 13%. Diluted net earnings per share for the year 2007 were $1.21 as compared with $1.06 for the same period of 2006, also an increase of 14%. Same store net revenues and operating income increased 12% and 13%, respectively, for the year ended December 31, 2007, when compared with the same period of 2006.

“We had a very solid 2007 and can look back with satisfaction at what we have accomplished this year,” said Peter J. Rose, Chairman and Chief Executive Officer. “We also think we did just fine in the fourth quarter considering some of the unanticipated costs we had to absorb relative to the Department of Justice’s (DOJ) ongoing investigation of the major players in our industry. Legal fees and record keeping requirements associated with complying with the DOJ’s subpoena cost us nearly $4 million this quarter. We’re not making excuses, we’re just explaining,” Rose commented.

“Looking forward to 2008, as we witness the political and economic media pundit du jour doing his or her best to talk us all into participating in some kind of a celebratory recession, we’ll continue to do what we do best. We will focus on improving customer service and gaining market share. If we’d listened to these people back in 1981, we would have never started this Company in the first place. As is our practice whenever the economic 'doom and gloomsayers' show up, we’ve officially banned the use of the 'R' word here at Expeditors. When others perceive things are slowing in the short term, we see opportunity for the long term,” Rose concluded.

Expeditors is a global logistics company headquartered in Seattle, Washington. The company employs trained professionals in 175 full service offices, 68 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.

Certain 2006 amounts have been reclassified to conform to the 2007 presentation.

Expeditors International of Washington, Inc.
Financial Highlights
Three months and Year ended
December 31, 2007 and 2006
Unaudited
(in 000's of US dollars except share data)

	Three months ended December 31,						Year ended December 31,
	2007		2006		% Inc.		2007		2006		% Inc.
Revenues	$	1,446,582	$	1,244,348	16	%	$	5,235,171	$	4,633,987	13	%
Net revenues	$	379,441	$	335,855	13	%	$	1,452,961	$	1,290,960	13	%
Operating income	$	107,616	$	99,655	8	%	$	423,400	$	375,116	13	%
Net earnings	$	70,057	$	62,610	12	%	$	269,154	$	235,094	14	%
Diluted earnings per share	$	.32	$	.28	14	%	$	1.21	$	1.06	14	%
Basic earnings per share	$	.33	$	.29	14	%	$	1.26	$	1.10	15	%
Diluted weighted average shares outstanding	221,192,441		223,282,511				221,799,868		222,223,312
Basic weighted average shares outstanding	213,095,428		213,148,011				213,314,761		213,454,579

Offices opened during the Fourth Quarter of 2007 ((a) = Full Service, (b) = Satellite)

ASIA		SOUTH PACIFIC
Yantai, People’s Republic of China(a) (Converted from a Satellite to a Full Service)		Christchurch, New Zealand(b) (Satellite of Auckland)

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 14, 2008 will be considered in management’s 8-K “Responses to Selected Questions” expected to be filed on or about February 22, 2008.

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)


		December 31,		December 31,
Assets		2007		2006

Current assets:
	Cash and cash equivalents	$	574,599	$	511,358
	Short-term investments		674		578
	Accounts receivable, net		933,519		811,486
	Deferred Federal and state income taxes		8,278		7,490
	Other current assets		17,627		10,925
	Total current assets		1,534,697		1,341,837

Property and equipment, net			497,892		449,247
Goodwill, net			7,927		7,927
Other intangibles, net			7,832		7,584
Other assets			20,717		15,743

		$	2,069,065	$	1,822,338
Liabilities and Shareholders' Equity

Current liabilities:
	Accounts payable		613,108		544,028
	Accrued expenses, primarily salaries and related costs		129,669		122,081
	Federal, state and foreign income taxes		26,976		43,036
	Total current liabilities	$	769,753	$	709,145

Deferred Federal and state income taxes		$	55,533	$	26,827

Minority interest		$	17,208	$	16,275

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 212,996,776 shares at December 31, 2007 and 213,080,466 shares at December 31, 2006		2,130		2,131
	Additional paid-in capital		50,006		119,582
	Retained earnings		1,143,464		934,058
	Accumulated other comprehensive income		30,971		14,320
	Total shareholders' equity		1,226,571		1,070,091

		$	2,069,065	$	1,822,338

Certain 2006 amounts have been reclassified to conform to the 2007 presentation.

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,
			2007			2006			2007			2006
Revenues:
Airfreight		$	696,835		$	617,989		$	2,407,582		$	2,229,545
Ocean freight and ocean services			474,613			394,897			1,820,558			1,553,048
Customs brokerage and other services			275,134			231,462			1,007,031			851,394

	Total revenues		1,446,582			1,244,348			5,235,171			4,633,987

Operating expenses:
Airfreight consolidation			561,464			495,104			1,879,434			1,758,907
Ocean freight consolidation			385,751			314,900			1,473,942			1,230,468
Customs brokerage and other services			119,926			98,489			428,834			353,652
Salaries and related costs			206,519			184,402			791,879			701,824
Rent and occupancy costs			17,514			14,655			67,676			61,627
Depreciation and amortization			9,763			9,428			39,303			35,448
Selling and promotion			11,168			9,652			38,735			35,050
Other			26,861			18,063			91,968			81,895
	Total operating expenses		1,338,966			1,144,693			4,811,771			4,258,871

	Operating income		107,616			99,655			423,400			375,116

Interest expense			(37	)		(157	)		45			(198	)
Interest income			6,005			5,120			22,341			18,020
Other, net			419			(149	)		3,887			2,726

	Other income, net		6,387			4,814			26,273			20,548

Earnings before income taxes and minority interest			114,003			104,469			449,673			395,664

Income tax expense			43,590			40,973			179,815			160,661

	Net earnings before minority interest		70,413			63,496			269,858			235,003

Minority interest			(356	)		(886	)		(704	)		91

	Net earnings	$	70,057		$	62,610		$	269,154		$	235,094

Diluted earnings per share		$	0.32		$	0.28		$	1.21		$	1.06

Basic earnings per share		$	0.33		$	0.29		$	1.26		$	1.10

Weighted average diluted shares outstanding			221,192,441			223,282,511			221,799,868			222,223,312

Weighted average basic shares outstanding			213,095,428			213,148,011			213,314,761			213,454,579

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				Twelve months ended
			December 31,				December 31,
			2007		2006		2007		2006
Operating Activities:
Net earnings			$70,057		$62,610		$269,154		$235,094
Adjustments to reconcile net earnings to net cash provided by operating activities:
	Provision for losses on accounts receivable		594		445		940		1,197
	Deferred income tax expense (benefit)		(6,465	)	(11,795	)	18,991		4,172
	Excess tax benefits from stock plans		(2,333	)	(1,204	)	(28,105	)	(23,406	)
	Stock compensation expense		10,208		12,110		44,917		41,739
	Depreciation and amortization		9,763		9,428		39,303		35,448
	Loss (gain) on sale of assets		(49	)	32		(1,053	)	(182	)
	Minority interest in earnings of consolidated entities		356		886		704		(91	)
	Other		415		397		1,472		3,897
	Changes in operating assets and liabilities:
		Decrease (increase) in accounts receivable	85,717		(657	)	(84,950	)	(96,414	)
		Decrease (increase) in other current assets	1,983		2,351		(342	)	(1,571	)
		Increase (decrease) in accounts payable and other current liabilities	(94,672	)	(28,294	)	46,881		85,012
		Increase (decrease) in taxes payable, net	(2,514	)	8,589		4,673		48,392

Net cash provided by operating activities			73,060		54,898		312,585		333,287

Investing Activities:
Increase in short-term investments			(198	)	(166	)	(10	)	(419	)
Purchase of property and equipment			(11,953	)	(9,724	)	(82,786	)	(139,464	)
Proceeds from sale of property and equipment			90		80		504		397
Prepayment on long-term land lease			(4	)	-		(2,820	)	(1,761	)
Other			(473	)	253		(2,859	)	(1,260	)

Net cash used in investing activities			(12,538	)	(9,557	)	(87,971	)	(142,507	)

Financing Activities:
Net distributions to minority interests			-		(5,971	)	(316	)	(10,024	)
Proceeds from issuance of common stock			5,529		3,941		64,985		49,314
Repurchases of common stock			(21,467	)	(18,016	)	(207,584	)	(175,783	)
Excess tax benefits from stock plans			2,333		1,204		28,105		23,406
Dividends paid			(29,846	)	(23,444	)	(59,748	)	(47,020	)

Net cash used in financing activities			(43,451	)	(42,286	)	(174,558	)	(160,107	)

Effect of exchange rate changes on cash			346		8,774		13,185		16,791

Increase in cash and cash equivalents			17,417		11,829		63,241		47,464

Cash and cash equivalents at beginning of period			557,182		499,529		511,358		463,894

Cash and cash equivalents at end of period			574,599		511,358		574,599		511,358

Interest and taxes paid:
Interest			49		140		83		194
Income tax			47,814		42,951		146,353		103,715

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 December 31, 2007

Revenues from unaffiliated customers	$	289,736	37,373	822,553	191,512	21,203	20,414	63,791			1,446,582

Transfers between geographic areas	$	27,880	2,616	5,066	11,068	2,376	3,226	3,519	(55,751	)	-
Total revenues	$	317,616	39,989	827,619	202,580	23,579	23,640	67,310	(55,751	)	1,446,582

Net revenues	$	155,236	18,058	96,653	68,201	12,485	11,222	17,586			379,441
Operating income	$	23,325	6,251	49,773	15,696	3,615	3,508	5,448			107,616
Identifiable assets at quarter end	$	939,203	72,150	422,038	443,758	34,174	46,492	100,934	10,316		2,069,065
Capital expenditures	$	4,392	583	3,354	2,258	281	302	783			11,953
Depreciation and amortization	$	5,347	324	1,154	1,856	255	322	505			9,763
Equity	$	1,371,296	32,309	306,115	156,349	19,410	25,341	48,477	(732,726	)	1,226,571

Three months ended December 31, 2006

Revenues from unaffiliated customers	$	244,506	31,661	721,165	161,801	14,565	17,248	53,402			1,244,348
Transfers between geographic areas	$	27,109	2,128	4,108	9,035	1,780	2,272	3,149	(49,581	)	-
Total revenues	$	271,615	33,789	725,273	170,836	16,345	19,520	56,551	(49,581	)	1,244,348

Net revenues	$	138,390	15,727	88,717	59,765	9,067	9,069	15,120			335,855
Operating income	$	21,982	4,512	45,746	15,744	2,468	3,034	6,169			99,655
Identifiable assets at quarter end	$	906,256	62,584	360,904	363,332	26,055	33,273	67,794	2,140		1,822,338
Capital expenditures	$	5,863	299	2,010	846	71	145	490			9,724
Depreciation and amortization	$	5,072	325	1,339	1,736	201	395	360			9,428
Equity	$	1,215,454	26,160	249,017	117,738	14,844	16,133	31,570	(600,825	)	1,070,091

Twelve months ended December 31, 2007

Revenues from unaffiliated customers	$	1,069,734	134,436	2,959,873	684,661	71,091	79,314	236,062			5,235,171
Transfers between geographic areas	$	105,263	9,030	18,234	36,563	7,854	11,640	13,883	(202,467	)	-
Total revenues	$	1,174,997	143,466	2,978,107	721,224	78,945	90,954	249,945	(202,467	)	5,235,171

Net revenues	$	586,938	65,534	402,613	245,761	42,044	42,920	67,151			1,452,961
Operating income	$	120,311	15,893	197,017	50,762	11,913	9,958	17,546			423,400
Identifiable assets at quarter end	$	939,203	72,150	422,038	443,758	34,174	46,492	100,934	10,316		2,069,065
Capital expenditures	$	25,437	1,899	41,773	7,879	1,420	1,259	3,119			82,786
Depreciation and amortization	$	21,204	1,321	4,917	7,759	922	1,523	1,657			39,303
Equity	$	1,371,296	32,309	306,115	156,349	19,410	25,341	48,477	(732,726	)	1,226,571


Twelve months ended December 31, 2006

Revenues from unaffiliated customers	$	940,186	120,381	2,616,098	618,999	54,948	67,463	215,912			4,633,987
Transfers between geographic areas	$	109,552	7,956	16,228	32,595	6,383	8,368	11,293	(192,375	)	-
Total revenues	$	1,049,738	128,337	2,632,326	651,594	61,331	75,831	227,205	(192,375	)	4,633,987

Net revenues	$	533,060	61,531	359,613	216,110	32,894	32,931	54,821			1,290,960
Operating income	$	102,041	15,433	178,265	48,366	8,887	7,519	14,605			375,116
Identifiable assets at quarter end	$	906,256	62,584	360,904	363,332	26,055	33,273	67,794	2,140		1,822,338
Capital expenditures	$	121,005	820	8,269	6,086	446	1,205	1,633			139,464
Depreciation and amortization	$	18,533	1,339	5,108	6,739	785	1,548	1,396			35,448
Equity	$	1,215,454	26,160	249,017	117,738	14,844	16,133	31,570	(600,825	)	1,070,091

Certain 2006 amounts have been reclassified to conform to the 2007 presentation.

Contacts:

Expeditors International of Washington, Inc.
President and Chief Operating Officer
R. Jordan Gates, 206-674-3427