10-KPeriod: FY2006

EXPEDITORS INTERNATIONAL OF WASHINGTON INC Annual Report, Year Ended Dec 31, 2006

Filed March 1, 2007For Securities:EXPD

Summary

Expeditors International of Washington, Inc. (EXPD) reported strong financial performance for the fiscal year ended December 31, 2006. The company, a global logistics services provider, demonstrated robust growth across its core business segments: airfreight, ocean freight, and customs brokerage. Net revenues saw a significant increase, driven by higher volumes and expanded market share, particularly in North America and Asia. The company maintained its focus on organic growth and operational efficiency, which was reflected in improved profitability margins despite rising overhead costs. Financially, EXPD showcased healthy earnings per share growth and a solid balance sheet, with substantial working capital and no long-term debt. The company also continued its share repurchase program, demonstrating a commitment to returning value to shareholders. Management highlighted the company's strong corporate culture and employee-centric compensation strategies as key drivers of its success and competitive advantage in the dynamic global logistics industry. Future capital expenditures are planned, primarily for real estate and technology enhancements, funded through operating cash flow.

Key Highlights

  • 1Robust revenue growth driven by increased volumes in airfreight, ocean freight, and customs brokerage services.
  • 2Strong operational income growth reflecting improved efficiency and market share gains.
  • 3Consistent growth in diluted earnings per share, indicating enhanced profitability.
  • 4Expansion of the global office network, with new locations opened in key regions like Mexico and Pakistan.
  • 5Commitment to organic growth strategy supplemented by strategic acquisitions.
  • 6No long-term debt, highlighting a strong financial position and conservative capital structure.
  • 7Active share repurchase program in place, demonstrating commitment to shareholder value.

Frequently Asked Questions

Expeditors International operates in three primary business segments: airfreight forwarding and consolidation, ocean freight forwarding and consolidation, and customs brokerage and other services. They do not own aircraft or steamships and focus on managing the logistics and customs clearance aspects of international trade.

Expeditors International manages its operations through four geographic areas: The Americas; Asia; Europe, Africa, Near/Middle East and Indian Subcontinent (EMAIR); and Australasia. Each area is further divided into sub-regions and operating units with profit and loss responsibility. They emphasize strong inter-unit communication and cooperation. The company operates through a network of full-service offices, international service centers, and contracts with independent agents globally.

Expeditors International primarily pursues organic growth by expanding its service capabilities and geographic network. While open to strategic acquisitions or joint ventures, their historical focus has been on building market share through internal efforts, leveraging its global network, technology, and a strong employee-focused culture and compensation system. They aim to develop and deliver innovative solutions to meet evolving customer needs, particularly in supply chain management and information technology.

Key risks include those associated with international trade fluctuations (economic conditions, currency exchange rates, government policies, trade restrictions), reliance on third-party vendors (airlines, steamship lines), currency exchange rate volatility, personnel retention, technological advancements, and regulatory changes, especially those related to security and customs compliance. The company also faces seasonality in its operating results.