Expeditors Announces 14% Increase in 2007 Annual Earnings

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.