10-KPeriod: FY2000

EXPEDITORS INTERNATIONAL OF WASHINGTON INC Annual Report, Year Ended Dec 31, 2000

Filed April 2, 2001For Securities:EXPD

Summary

Expeditors International of Washington, Inc. (EXPD) operates as a global logistics provider, specializing in airfreight, ocean freight, and customs brokerage services. For the fiscal year ended December 31, 2000, the company demonstrated strong growth, with total revenues reaching $1.695 billion, a significant increase from $1.445 billion in 1999. This growth was driven by robust performance across all its service segments, particularly airfreight and ocean freight, which benefited from increased shipments, higher carrier rates, and expanded market share. The company's financial health appears solid, with net earnings of $83 million in 2000, up from $59 million in 1999. This profitability is supported by effective cost management, with salaries and related costs remaining a consistent percentage of net revenues, attributed to an incentive-based compensation philosophy and operational improvements. EXPD also maintained a strong liquidity position, with significant cash generated from operations and no long-term debt at the end of the fiscal year. The company's strategic focus on organic growth supplemented by selective acquisitions, coupled with a commitment to technological advancement and customer service, positions it well within the competitive global logistics landscape.

Key Highlights

  • 1Expeditors International (EXPD) reported a substantial increase in total revenues to $1.695 billion in fiscal year 2000, up from $1.445 billion in 1999, indicating strong top-line growth.
  • 2Net earnings also saw a significant rise, reaching $83 million in 2000, a notable improvement from $59 million in 1999, demonstrating enhanced profitability.
  • 3The company's core business segments—airfreight, ocean freight, and customs brokerage—all experienced growth, with airfreight and ocean freight being key drivers of revenue increases.
  • 4EXPD maintained a strong liquidity position, generating $154 million in cash from operating activities in 2000 and reporting no long-term debt at year-end.
  • 5Salaries and related costs, the largest variable expense, remained a relatively stable percentage of net revenues (53% in 2000), reflecting efficient cost management and the company's incentive compensation structure.
  • 6The company continues its strategy of organic growth supplemented by strategic acquisitions, opening 11 new offices in 2000 across various global regions.
  • 7EXPD is actively managing foreign exchange risk through currency settlements and has planned for the transition to the Euro, with no significant disruption anticipated.

Frequently Asked Questions

Revenue growth in 2000 was driven by increased shipments and tonnages in both airfreight and ocean freight services, particularly on key trade lanes like the Far East to North America. Higher airline and ocean carrier rates, which were passed on to customers, also contributed. Additionally, growth in customs brokerage and import services was supported by the company's reputation for quality service, the trend of market consolidation, and the increasing importance of distribution services.

Expeditors manages its expenses through a combination of operational efficiency and its unique compensation philosophy. Salaries and related costs, while increasing in absolute terms due to hiring and compensation levels, remained a relatively consistent percentage of net revenues. This is largely due to an incentive-based compensation program where key employees share in the operating profit of their business units. The company also invests in technology and process improvements to enhance productivity.

Expeditors demonstrated a strong financial position in 2000. The company generated substantial cash flow from operations ($154 million) and ended the year with no long-term debt. Its working capital was robust at $223 million, supported by cash and short-term investments of $171 million. While the company utilizes short-term borrowings internationally, its overall liquidity is considered sufficient to meet its operational and capital needs.

Expeditors faces several risks inherent in its global operations, including international trade fluctuations, currency exchange rate volatility, and reliance on third-party vendors. The company mitigates these risks through careful vendor management, accelerating international currency settlements to manage foreign exchange exposure, and diversifying its operational footprint. They also emphasize retaining key personnel and investing in technology to maintain a competitive edge.