Expeditors Announces Quarterly Earnings of $.39 Per Share

    Business Editors/Logistics & Transportation Writers

    SEATTLE--(BUSINESS WIRE)--Feb. 15, 2005--Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced quarterly net earnings of $43,563,000 for the fourth quarter of 2004, compared with $36,365,000 for the same quarter of 2003, an increase of 20%. Net revenues for the fourth quarter of 2004 increased 17% to $241,160,000 as compared with $205,374,000 reported for the fourth quarter of 2003. Total revenues and operating income were $934,795,000 and $66,571,000 in 2004 compared with $731,413,000 and $58,548,000 for the same quarter of 2003, a revenue increase of 28% and an operating income increase of 14%, respectively. Diluted net earnings per share for the fourth quarter were $.39 as compared with $.33 for the same quarter in 2003, an increase of 18%. The company also reported that same store net revenues and operating income increased 18% and 14%, respectively, for the fourth quarter of 2004 when compared with 2003.
    For the year ended December 31, 2004, net earnings rose to $156,126,000 from $121,952,000 in 2003, an increase of 28%. Net revenues for the year increased to $906,237,000 from $750,510,000 for 2003, up 21%. Total revenues and operating income for the year were $3,317,499,000 and $241,045,000 in 2004 compared with $2,624,941,000 and $186,762,000 for the same period in 2003, increases of 26% and 29%, respectively. Diluted net earnings per share for the year 2004 were $1.41 as compared with $1.12 for the same period of 2003, an increase of 26%. Same store net revenues and operating income increased 20% and 29%, respectively, for the year ended December 31, 2004, when compared with the same period of 2003.
    "We are pleased to report our 2004 earnings as we certainly began this fourth quarter with the recognition that we had our work cut out for us. However, our people just dug in and persevered. They continued to execute for our shareholders by working with our customers and carriers in what was a challenging environment," said Peter J. Rose, Chairman and Chief Executive Officer. "We think our fourth quarter results, as well as our profit for the entire year, speak volumes for what the people here at Expeditors can accomplish when faced with difficult situations. Our people understand that 'best in class customer service' is the only way to perpetuate a tradition of satisfied customers and consistent financial results. When you put first things first, all the other things just fall into place," Rose commented.
    "It is a fact that we operate in a fast moving world of global logistics and supply chain management," Rose continued. "Nothing is guaranteed, but by operating with properly mentored, trained and motivated individuals on the front lines, we have the best possible conditions for success. That was certainly the story for the fourth quarter of 2004," Rose concluded.
    Expeditors is a global logistics company. Headquartered in Seattle, Washington, the company employs trained professionals in 170 offices and 12 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.

Expeditors International of Washington, Inc. Financial Highlights Three months and Year ended December 31, 2004 and 2003 Unaudited (in 000's of US dollars except share data)

Three months ended December 31, 2004 2003 % Inc. ---------------------------------------------------------------------- Revenues $934,795 $731,413 28% ---------------------------------------------------------------------- Net revenues $241,160 $205,374 17% ---------------------------------------------------------------------- Operating income $66,571 $58,548 14% ---------------------------------------------------------------------- Net earnings $43,563 $36,365 20% ---------------------------------------------------------------------- Diluted earnings per share $.39 $.33 18% ---------------------------------------------------------------------- Basic earnings per share $.41 $.35 17% ---------------------------------------------------------------------- Diluted weighted average shares outstanding 112,048,586 109,600,811 ---------------------------------------------------------------------- Basic weighted average shares outstanding 106,598,077 105,021,220 ----------------------------------------------------------------------

Year ended December 31,

2004 2003 % Inc. ---------------------------------------------------------------------- Revenues $3,317,499 $2,624,941 26% ---------------------------------------------------------------------- Net revenues $906,237 $750,510 21% ---------------------------------------------------------------------- Operating income $241,045 $186,762 29% ---------------------------------------------------------------------- Net earnings $156,126 $121,952 28% ---------------------------------------------------------------------- Diluted earnings per share $1.41 $1.12 26% ---------------------------------------------------------------------- Basic earnings per share $1.47 $1.16 27% ---------------------------------------------------------------------- Diluted weighted average shares outstanding 110,817,999 109,001,543 ---------------------------------------------------------------------- Basic weighted average shares outstanding 106,384,151 104,733,442 ----------------------------------------------------------------------

No new offices were opened in the 4th quarter of 2004.

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 16, 2005 will be considered in management's 8-K "Responses to Selected Questions" expected to be filed on or about February 21, 2005.

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands, except share data) (Unaudited)

December December 31, 31, Assets 2004 2003 ------------------------------------------- ----------- -----------

Current assets: Cash and cash equivalents $408,983 $295,832 Short-term investments 109 82 Accounts receivable, net 614,044 452,551 Deferred Federal and state income taxes 3,268 3,593 Other current assets 22,724 17,941 ----------- ----------- Total current assets 1,049,128 769,999 ----------- -----------

Property and equipment, net 287,379 241,702 Goodwill, net 7,774 7,774 Other intangibles, net 10,839 11,163 Other assets 12,201 13,440

----------- ----------- $1,367,321 $1,044,078 =========== =========== Liabilities and Shareholders' Equity --------------------------------------------

Current liabilities: Short-term debt 2,250 217 Accounts payable 410,251 301,122 Accrued expenses, primarily salaries and related costs 84,778 74,905 Federal, state and foreign income taxes 20,668 10,141 ----------- ----------- Total current liabilities $517,947 $386,385 ----------- -----------

Deferred Federal and state income taxes $34,498 $8,968

Minority interest $7,472 $3,224

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 106,643,953 shares at December 31, 2004 and 105,056,454 shares at December 31, 2003 1,066 1,051 Additional paid-in capital 44,678 25,491 Retained earnings 749,974 617,216 Accumulated other comprehensive income 11,686 1,743 ----------- ----------- Total shareholders' equity 807,404 645,501 ----------- -----------

----------- ----------- $1,367,321 $1,044,078 =========== ===========

Certain 2003 amounts have been reclassified to conform to the 2004 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, 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Revenues: Airfreight $453,650 $351,194 $1,553,881 $1,213,167 Ocean freight and ocean services 319,912 247,324 1,178,975 954,541 Customs brokerage and other services 161,233 132,895 584,643 457,233

------------ ------------ ------------ ------------ Total revenues 934,795 731,413 3,317,499 2,624,941 ------------ ------------ ------------ ------------

Operating expenses: Airfreight consolidation 360,857 275,464 1,204,932 934,199 Ocean freight consolidation 264,990 199,323 968,008 763,425 Customs brokerage and other services 67,788 51,252 238,322 176,807 Salaries and related costs 125,648 103,647 479,364 398,475 Rent and occupancy costs 13,543 12,123 51,620 47,100 Depreciation and amortization 7,145 6,600 26,703 24,392 Selling and promotion 7,860 7,073 28,248 23,496 Other 20,393 17,383 79,257 70,285 ------------ ------------ ------------ ------------ Total operating expenses 868,224 672,865 3,076,454 2,438,179 ------------ ------------ ------------ ------------

Operating income 66,571 58,548 241,045 186,762 ------------ ------------ ------------ ------------

Interest expense (8) (45) (42) (186) Interest income 1,967 1,162 5,667 4,522 Other, net 585 1,079 2,910 4,544

------------ ------------ ------------ ------------ Other income, net 2,544 2,196 8,535 8,880 ------------ ------------ ------------ ------------

Earnings before income taxes and minority interest 69,115 60,744 249,580 195,642

Income tax expense 24,195 23,001 88,415 71,142

------------ ------------ ------------ ------------ Net earnings before minority interest 44,920 37,743 161,165 124,500 ------------ ------------ ------------ ------------

Minority interest (1,357) (1,378) (5,039) (2,548)

------------ ------------ ------------ ------------ Net earnings $43,563 $36,365 $156,126 $121,952 ============ ============ ============ ============

Diluted earnings per share $0.39 $0.33 $1.41 $1.12 ============ ============ ============ ============

Basic earnings per share $0.41 $0.35 $1.47 $1.16 ============ ============ ============ ============

Weighted average diluted shares outstanding 112,048,586 109,600,811 110,817,999 109,001,543 ============ ============ ============ ============

Weighted average basic shares outstanding 106,598,077 105,021,220 106,384,151 104,733,442 ============ ============ ============ ============

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, 2004 2003 2004 2003 -------- -------- --------- --------- Operating Activities: Net earnings $43,563 $36,365 $156,126 $121,952 Adjustments to reconcile net earnings to net cash provided by operating activities: Provision for losses on accounts receivable 48 40 2,355 380 Deferred income tax expense (benefit) 1,476 (6,910) 19,511 (69) Tax benefits from employee stock plans 4,822 (1,191) 19,459 3,880 Depreciation and amortization 7,145 6,600 26,703 24,392 Loss (gain) on sale of property and equipment 47 (40) (19) (186) Impairment write down of other assets - 2,000 - Other 798 886 3,206 3,620 Changes in operating assets and liabilities: Increase in accounts receivable (2,804) (2,011) (150,213) (66,237) Decrease (increase) in other current assets 4,498 10,565 (4,476) (9,494) Increase in minority interest 1,353 929 4,103 1,624 Increase (decrease) in accounts payable and other current liabilities (10,786) (26,688) 113,904 34,473 -------- -------- --------- ---------

Net cash provided by operating activities 50,160 18,545 192,659 114,335 -------- -------- --------- ---------

Investing Activities: Decrease (increase) in short-term investments (31) 38 (23) (5) Purchase of property and equipment (16,719) (7,551) (66,244) (20,745) Proceeds from sale of property and equipment 125 126 565 415 Other 495 (5,178) 722 (5,562) -------- -------- --------- ---------

Net cash used in investing activities (16,130) (12,565) (64,980) (25,897) -------- -------- --------- ---------

Financing Activities: Borrowings (repayments) of short- term debt, net 2,073 153 1,863 (1,171) Proceeds from issuance of common stock 2,543 1,802 28,983 20,024 Repurchases of common stock (2,472) (1,595) (29,240) (20,105) Dividends paid (11,726) (8,404) (23,368) (16,772) -------- -------- --------- ---------

Net cash used in financing activities (9,582) (8,044) (21,762) (18,024)

Effect of exchange rate changes on cash 6,914 4,901 7,234 13,559 -------- -------- --------- ---------

Increase in cash and cash equivalents 31,362 2,837 113,151 83,973

Cash and cash equivalents at beginning of period 377,621 292,995 295,832 211,859

Cash and cash equivalents at end of period 408,983 295,832 408,983 295,832 ======== ======== ========= =========

Interest and taxes paid: Interest 4 27 41 166 Income tax 9,740 25,197 43,946 78,820

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Business Segment Information (In thousands) (Unaudited)

Other Australia/ United N. Far New States America East Europe Zealand --------------------------------------------- Three months ended December 31, 2004

Revenues from unaffiliated customers $172,871 21,773 536,892 137,994 12,050 Transfers between geographic areas $19,159 1,274 2,909 5,823 1,463 --------------------------------------------- Total revenues $192,030 23,047 539,801 143,817 13,513 =============================================

Net revenues $96,756 11,775 63,715 45,800 7,307 Operating income $14,588 4,572 31,054 9,458 1,814 Identifiable assets at quarter end $646,198 47,594 279,840 304,701 22,361 Capital expenditures $3,844 745 2,942 8,269 104 Depreciation and amortization $3,487 334 1,168 1,361 191 Equity $873,767 20,035 205,387 90,053 13,131 ---------------------------------------------

Three months ended December 31, 2003

Revenues from unaffiliated customers $138,059 17,536 412,787 111,743 9,573 Transfers between geographic areas $15,494 947 2,307 4,055 1,012 --------------------------------------------- Total revenues $153,553 18,483 415,094 115,798 10,585 =============================================

Net revenues $86,620 9,845 52,084 38,644 5,409 Operating income $15,353 3,504 24,227 10,340 1,362 Identifiable assets at quarter end $537,679 32,478 162,991 239,068 17,793 Capital expenditures $3,676 129 685 1,011 145 Depreciation and amortization $3,600 304 857 1,207 192 Equity $682,585 12,931 120,714 63,619 11,945 ---------------------------------------------

Twelve months ended December 31, 2004

Revenues from unaffiliated customers $628,093 77,696 1,880,135 492,651 44,042 Transfers between geographic areas $69,695 4,288 11,096 18,921 5,262 --------------------------------------------- Total revenues $697,788 81,984 1,891,231 511,572 49,304 =============================================

Net revenues $362,961 42,954 252,189 164,132 25,583 Operating income $63,589 10,828 118,395 29,026 6,242 Identifiable assets at quarter end $646,198 47,594 279,840 304,701 22,361 Capital expenditures $34,856 2,150 11,153 13,445 845 Depreciation and amortization $13,539 1,211 4,044 5,099 665 Equity $873,767 20,035 205,387 90,053 13,131 ---------------------------------------------

Twelve months ended December 31, 2003

Revenues from unaffiliated customers $519,488 65,843 1,446,760 406,186 32,077 Transfers between geographic areas $41,714 2,352 7,147 11,715 3,876 --------------------------------------------- Total revenues $561,202 68,195 1,453,907 417,901 35,953 =============================================

Net revenues $309,980 35,912 203,969 137,117 18,985 Operating income $55,623 8,364 87,313 22,512 3,988 Identifiable assets at quarter end $537,679 32,478 162,991 239,068 17,793 Capital expenditures $9,322 1,017 3,510 3,371 324 Depreciation and amortization $12,879 1,248 3,146 4,892 667 Equity $682,585 12,931 120,714 63,619 11,945 ---------------------------------------------

Latin Middle Elimi- Consoli- America East nations dated --------------------------------------- Three months ended December 31, 2004

Revenues from unaffiliated customers 13,322 39,893 934,795 Transfers between geographic areas 1,520 1,778 (33,926) - --------------------------------------- Total revenues 14,842 41,671 (33,926) 934,795 =======================================

Net revenues 5,704 10,103 241,160 Operating income 1,866 3,219 66,571 Identifiable assets at quarter end 21,711 40,667 4,249 1,367,321 Capital expenditures 539 276 16,719 Depreciation and amortization 239 365 7,145 Equity 6,647 19,049 (420,665) 807,404 ---------------------------------------

Three months ended December 31, 2003

Revenues from unaffiliated customers 11,333 30,382 731,413 Transfers between geographic areas 1,269 1,224 (26,308) - --------------------------------------- Total revenues 12,602 31,606 (26,308) 731,413 =======================================

Net revenues 4,745 8,027 205,374 Operating income 742 3,020 58,548 Identifiable assets at quarter end 20,492 29,350 4,227 1,044,078 Capital expenditures 1,569 336 7,551 Depreciation and amortization 208 232 6,600 Equity 3,521 14,049 (263,863) 645,501 ---------------------------------------

Twelve months ended December 31, 2004

Revenues from unaffiliated customers 52,347 142,535 3,317,499 Transfers between geographic areas 6,188 6,373 (121,823) - --------------------------------------- Total revenues 58,535 148,908 (121,823) 3,317,499 =======================================

Net revenues 21,274 37,144 906,237 Operating income 4,298 8,667 241,045 Identifiable assets at quarter end 21,711 40,667 4,249 1,367,321 Capital expenditures 1,744 2,051 66,244 Depreciation and amortization 770 1,375 26,703 Equity 6,647 19,049 (420,665) 807,404 ---------------------------------------

Twelve months ended December 31, 2003

Revenues from unaffiliated customers 37,495 117,092 2,624,941 Transfers between geographic areas 4,288 3,576 (74,668) - --------------------------------------- Total revenues 41,783 120,668 (74,668) 2,624,941 =======================================

Net revenues 14,801 29,746 750,510 Operating income 2,073 6,889 186,762 Identifiable assets at quarter end 20,492 29,350 4,227 1,044,078 Capital expenditures 1,899 1,302 20,745 Depreciation and amortization 608 952 24,392 Equity 3,521 14,049 (263,863) 645,501 ---------------------------------------

Certain 2003 amounts have been reclassified to conform to the 2004 presentation.

--30--CA/se*

CONTACT: Expeditors International of Washington, Inc. R. Jordan Gates, 206-674-3427

KEYWORD: WASHINGTON INDUSTRY KEYWORD: AIRLINES TRANSPORTATION EARNINGS SOURCE: Expeditors International of Washington, Inc.

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