8-KOther Events

EXPEDITORS INTERNATIONAL OF WASHINGTON INC 8-K Report (Dec 18, 2000)

Filed December 18, 2000For Securities:EXPD

Summary

This Form 8-K filing from Expeditors International of Washington, Inc. (EXPD), dated December 15, 2000, provides investor insights through a series of selected inquiries and responses. A key focus for investors is the company's financial health and operational strategy. Expeditors addresses its short-term debt and contingent liabilities, clarifying that outstanding borrowings in foreign countries help manage currency fluctuations and local operational needs, despite having significant cash reserves. The company also discusses its airfreight operations, emphasizing flexibility in capacity procurement rather than rigid long-term contracts and highlighting its focus on maximizing net revenue over volume metrics. Furthermore, the filing touches upon revenue trends, economic outlook, and executive compensation. Expeditors reports consistent revenue trends with internal expectations for November, indicating no significant deviation from October's year-over-year performance. While acknowledging a growing skepticism about the economy, the company expresses satisfaction with the first two months of the current quarter. The executive compensation structure, designed as a significant incentive-based component, is defended as a critical factor in the company's historical profitability and its ability to attract and retain talent, with a shareholder-approved structure in place.

Key Highlights

  • 1Expeditors maintains short-term borrowings in local foreign currencies to manage exchange rates and remittances, despite holding significant cash reserves.
  • 2The company has a total of $65 million in unsecured borrowing capacity worldwide.
  • 3Expeditors does not disclose specific ratios of spot versus contract purchases for airfreight capacity, emphasizing flexible agreements over fixed-price, long-term contracts.
  • 4The company's policy is to not disclose year-over-year increases in airfreight volume (pounds) as it is not considered a meaningful metric for a non-asset based carrier.
  • 5Revenue trends in November were consistent with internal expectations and similar to October on a year-over-year basis.
  • 6Expeditors' business is segmented as follows: Retail (34%), Computer/Office Equipment (26%), Industrial/Electrical Components (21%), and Other (19%).
  • 7No single customer accounts for more than 5% of Expeditors' gross revenue, indicating a diversified customer base.

Frequently Asked Questions

Short-term borrowings in local foreign currencies are utilized to manage risks associated with foreign exchange rates, currency controls, and timely remittances to origin countries. Expeditors prefers these local currency borrowings over committing additional U.S. dollars in certain situations.

Expeditors' policy is to not comment on consensus estimates unless there is a severe conflict between analyst estimates and internal expectations based on observed facts. In this filing, they note that the 2001 EPS consensus estimate of $1.82 represents a 20% increase and at that time, they saw no need to comment further.

According to their last internal study, Expeditors' business is segmented as follows: Retail (34%), Computer/Office Equipment (26%), Industrial/Electrical Components (21%), and Other (19%). The 'Other' category includes customers from sectors like automotive, chemical, and paper products. The Computer/Office Equipment segment represents a significant portion of their business.

Expeditors has a diversified customer base, with no single customer representing more than 5% of its gross revenue. Out of their top 10 customers, only one is exclusive, and none of the specific large companies mentioned in the question (The Gap, Dayton Hudson, Wal-Mart, Ford, Gateway, Dell, Hewlett-Packard) are exclusive to Expeditors.