8-KRegulation FD

EXPEDITORS INTERNATIONAL OF WASHINGTON INC 8-K Report, Regulation FD Disclosure (Jul 21, 2006)

Filed July 21, 2006For Securities:EXPD

Summary

Expeditors International of Washington, Inc. (EXPD) filed an 8-K on July 21, 2006, providing updates on their business operations and addressing investor inquiries. The company reported strong freight demand in May and June 2006, with operating income growth in the second quarter expected to exceed 50% year-over-year on an apples-to-apples basis, though not reaching the 60% seen in May. Airfreight and ocean freight volumes showed significant year-over-year increases for May and June 2006. The filing also touched upon several other key areas, including the potential impact of the A380 aircraft, the normalization of relations between China and Taiwan, and the company's policy on hiring senior executives. Expeditors reiterated its commitment to its internal incentive system and addressed concerns regarding employee work authorization and stock option granting practices, emphasizing transparency and adherence to regulations.

Key Highlights

  • 1Operating income growth in Q2 2006 is preliminarily estimated to be in excess of 50% year-over-year (apples-to-apples comparison).
  • 2Airfreight tonnage increased by 28% in May 2006 and 23% in June 2006 year-over-year.
  • 3Ocean freight container count increased by 20% in May 2006 and 21% in June 2006 year-over-year.
  • 4The company does not hire senior executives from competitors and prefers internal talent development.
  • 5Expeditors anticipates no material impact from the opening of passenger flights between China and Taipei.
  • 6The company stated it has never backdated stock options and all options are priced at the market close on the date of grant, authorized by the compensation committee.
  • 7For US-based employees, the company requires I-9 form completion, proof of authorization, and a background check.

Frequently Asked Questions

Expeditors preliminarily estimates that operating income growth for the second quarter of 2006, when compared on an 'apples to apples' basis with the second quarter of 2005, will be somewhat in excess of 50%. While this is not the 60% growth seen in May, the company expressed confidence in its performance.

In May 2006, airfreight tonnages were up 28% year-over-year, and ocean freight container count was up 20% year-over-year. In June 2006, airfreight tonnages increased by 23% and ocean freight container count by 21% year-over-year.

Expeditors explicitly states that they have never backdated stock options. All stock options are authorized by the compensation committee and are priced at the closing market price on the date of the grant. They are not aware of any pending investigations related to stock options.

Expeditors does not typically hire senior executives from competitors, preferring to develop talent internally. They have hired some sales people from competitors undergoing mergers, but not enough to be significant.