-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NVBjgAZkh7Z6Ef2s6axw6pzmtk+mXJ0QDGvN3wFBDg8xOy2r5Mm1wmmw860HGCLA OlxSuY3IwItNS6XQvufA0g== 0000912057-97-027859.txt : 19970815 0000912057-97-027859.hdr.sgml : 19970815 ACCESSION NUMBER: 0000912057-97-027859 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: EXPEDITORS INTERNATIONAL OF WASHINGTON INC CENTRAL INDEX KEY: 0000746515 STANDARD INDUSTRIAL CLASSIFICATION: ARRANGEMENT OF TRANSPORTATION OF FREIGHT & CARGO [4731] IRS NUMBER: 911069248 STATE OF INCORPORATION: WA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13468 FILM NUMBER: 97661222 BUSINESS ADDRESS: STREET 1: 19119 16TH AVE S STREET 2: P.O.BOX 69620 CITY: SEATTLE STATE: WA ZIP: 98188 BUSINESS PHONE: 206-246-3711 MAIL ADDRESS: STREET 1: 19119 16TH AVENUE SOUTH STREET 2: P.O.BOX 69620 CITY: SEATTLE STATE: WA ZIP: 98168-9620 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------------ ------------ Commission File Number: 0-13468 EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. (Exact name of registrant as specified in its charter) Washington 91-1069248 (State of other jurisdiction of (IRS Employer Identification Number) incorporation or organization) 999 Third Avenue, Suite 2500, Seattle, Washington 98104 (Address of principal executive offices) (Zip Code) (206) 674-3400 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- At August 8, 1997, the number of shares outstanding of the issuer's Common Stock was 24,370,709. Page 1 of 15 pages. The Exhibit Index appears on page 15. 1 PART I. FINANCIAL INFORMATION Item 1. Financial Statements. EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands, except share data)
June 30, December 31, ASSETS 1997 1996 ----------- ------------ (Unaudited) Current assets: Cash and cash equivalents $ 44,586 $ 36,966 Short term investments 2,437 357 Accounts receivable, net 182,875 168,763 Deferred Federal and state taxes 5,141 4,854 Other current assets 6,648 4,503 ----------- ----------- Total current assets 241,687 215,443 Property and equipment, net 57,510 46,246 Other assets, net 15,297 10,297 ----------- ----------- $ 314,494 $ 271,986 ----------- ----------- ----------- ----------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short term borrowings $ 15,843 $ 3,452 Accounts payable 117,463 101,670 Income taxes 6,592 5,659 Other current liabilities 21,219 21,194 ----------- ----------- Total current liabilities 161,117 131,975 Shareholders' equity: Preferred stock, par value $.01 per share. Authorized 2,000,000 shares; none issued -- -- Common stock, par value $.01 per share. Authorized 80,000,000 shares; issued and outstanding 24,346,007 shares at June 30, 1997, and 24,212,946 at December 31, 1996 243 242 Additional paid-in capital 14,814 13,179 Retained earnings 135,813 123,258 Equity adjustments from foreign currency translation 2,507 3,332 ----------- ----------- Total shareholders' equity 153,377 140,011 ----------- ----------- $ 314,494 $ 271,986 ----------- ----------- ----------- -----------
2 EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Earnings (In thousands, except share data) (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, ---------------------- ---------------------- 1997 1996 1997 1996 ---------- ---------- ---------- ---------- Revenues: Airfreight $ 156,974 $ 115,315 291,902 208,581 Ocean freight 42,068 35,270 81,878 64,654 Customs brokerage and import services 26,533 15,621 47,764 30,641 ---------- ---------- ---------- ---------- Total revenues 225,575 166,206 421,544 303,876 ---------- ---------- ---------- ---------- Operating expenses: Airfreight consolidation 127,446 92,667 236,750 167,121 Ocean freight consolidation 29,960 26,409 58,907 48,893 Salaries and related costs 36,939 25,566 69,269 48,641 Selling and promotion 3,228 2,306 6,108 4,520 Depreciation and amortization 2,662 1,942 5,044 3,829 Rent 2,584 2,111 4,995 3,894 Other 9,940 6,824 19,074 13,047 ---------- ---------- ---------- ---------- Total operating expenses 212,759 157,825 400,147 289,945 Operating income 12,816 8,381 21,397 13,931 Other income, net 568 549 1,029 1,152 ---------- ---------- ---------- ---------- Earnings before income taxes 13,384 8,930 22,426 15,083 Income tax expense 5,210 3,559 8,654 5,923 ---------- ---------- ---------- ---------- Net earnings $ 8,174 $ 5,371 13,772 9,160 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net earnings per share $ .31 $ .21 $ .53 $ .36 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Weighted average number of common shares 26,179,131 25,500,720 26,087,778 25,465,980 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
3 EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, ------------------ ------------------ 1997 1996 1997 1996 -------- -------- -------- -------- Operating Activities: Net earnings $ 8,174 $ 5,371 13,772 9,160 Adjustments to reconcile net earnings to net cash provided by operating activities: Provision for losses on accounts receivable 193 491 966 859 Deferred income tax benefit (773) (92) (662) (553) Depreciation and amortization 2,662 1,942 5,044 3,829 Other 227 92 378 195 Changes in operating assets and liabilities: Increase in accounts receivable (14,671) (19,861) (12,006) (20,118) Increase in other current assets (1,711) (1,344) (1,950) (2,122) Increase in accounts payable and other current liabilities 7,591 14,791 14,558 17,790 -------- -------- -------- -------- Net cash provided by operating activities 1,692 1,390 20,100 9,040 -------- -------- -------- -------- Investing Activities: Increase in short-term investments (2,077) (1,861) (2,072) (1,601) Purchase of property and equipment (1,299) (16,285) (12,855) (17,907) Acquisitions, net of cash acquired (7,076) -- (7,076) -- Other (253) (2,864) 292 (2,734) -------- -------- -------- -------- Net cash used in investing activities (10,705) (21,010) (21,711) (22,242) -------- -------- -------- -------- Financing Activities: Short-term borrowings, net 11,206 13,522 10,657 13,468 Proceeds from issuance of common stock 376 502 883 945 Repurchases of common stock (147) (345) (153) (851) Dividends paid (1,217) (964) (1,217) (964) -------- -------- -------- -------- Net cash provided by financing activities 10,218 12,715 10,170 12,598 Effect of exchange rate changes on cash (296) (132) (939) (47) -------- -------- -------- -------- Increase (decrease) in cash and cash equivalents 909 (7,037) 7,620 (651) Cash and cash equivalents at beginning of period 43,677 42,528 36,966 36,142 -------- -------- -------- -------- Cash and cash equivalents at end of period $ 44,586 $ 35,491 44,586 35,491 -------- -------- -------- -------- -------- -------- -------- --------
4 EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements Note 1. Summary of Significant Accounting Policies The attached condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. As a result, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The Company believes that the disclosures made are adequate to make the information presented not misleading. The condensed consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Certain 1996 amounts have been reclassified to conform to the 1997 presentation. These condensed consolidated financial statements should be read in conjunction with the financial statements and related notes included in the Company's Form 10-K as filed with the Securities and Exchange Commission on or about March 31, 1997. In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, Earnings Per Share (Statement 128). The statement establishes standards for the computation, presentation, and disclosure of earnings per share (EPS), replacing the presentation of currently required Primary EPS with a presentation of Basic EPS. It also requires dual presentation of Basic EPS and Diluted EPS on the face of the income statement for entities with complex capital structures. Basic EPS, unlike Primary EPS, exludes all dilution while Diluted EPS, like the current Fully Diluted EPS, reflects the potential dilution that could occur from the exercise or conversion of securities into common stock or from other contracts to issue common stock. Statement 128 is effective for financial statements for periods ending after December 15, 1997 and earlier application is not permitted. The Company does not expect the impact of the adoption of this statement to be material to previously reported EPS amounts. 5 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL Expeditors International of Washington, Inc. is engaged in the business of global logistics management, including international freight forwarding and consolidation, for both air and ocean freight. The Company also acts as a customs broker in all the domestic offices, and in many of its overseas offices. The Company also provides additional services for its customers including value added distribution, purchase order management, vendor consolidation and other logistics solutions. The Company offers domestic forwarding services only in conjunction with international shipments. The Company does not compete for overnight courier or small parcel business. The Company does not own or operate aircraft or steamships. International trade is influenced by many factors, including economic and political conditions in the United States and abroad, currency exchange rates, and United States and foreign laws and policies relating to tariffs, trade restrictions, foreign investments and taxation. Periodically, governments consider a variety of changes to current tariffs and trade restrictions. The Company cannot predict which, if any, of these proposals may be adopted. Nor can the Company predict the effects adoption of any such proposal will have on the Company's business. Doing business in foreign locations also subjects the Company to a variety of risks and considerations not normally encountered by domestic enterprises. In addition to being affected by governmental policies concerning international trade, the Company's business may also be affected by political developments and changes in government personnel or policies in the nations in which it does business. The Company's ability to provide services to its customers is highly dependant on good working relationships with a variety of entities including airlines, ocean steamship lines, and governmental agencies. The Company considers its current working relationships with these entities to be satisfactory. However, changes in space allotments available from carriers, governmental deregulation efforts, "modernization" of the regulations governing customs brokerage, and/or changes in governmental quota restrictions could affect the Company's business in unpredictable ways. Historically, the Company's operating results have been subject to a seasonal trend when measured on a quarterly basis. The first quarter has traditionally been the weakest and the third quarter has traditionally been the strongest. This pattern is the result of, or is influenced by, numerous factors including climate, national holidays, consumer demand, economic conditions and a myriad of other similar and subtle forces. In addition, this historical quarterly trend has been influenced by the growth and diversification of the Company's international network and service offerings. The Company cannot accurately forecast many of these factors nor can the Company estimate accurately the relative influence of any particular factor and, as a result, there can be no assurance that historical patterns, if any, will continue in future periods. 6 A significant portion of the Company's revenues are derived from customers in industries whose shipping patterns are tied closely to consumer demand, and from customers in industries whose shipping patterns are dependent upon just-in-time production schedules. Therefore, the timing of the Company's revenues are, to a large degree, impacted by factors out of the Company's control, such as a sudden change in consumer demand for retail goods and/or manufacturing production delays. Additionally, many customers ship a significant portion of their goods at or near the end of a quarter, and therefore, the Company may not learn of a shortfall in revenues until late in a quarter. To the extent that a shortfall in revenues or earnings was not expected by securities analysts, any such shortfall from levels predicted by securities analysts could have an immediate and adverse effect on the trading price of the Company's stock. SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS UNDER SECURITIES LITIGATION REFORM ACT OF 1995; CERTAIN CAUTIONARY STATEMENTS Certain portions of this report of Form 10-Q contain forward-looking statements which must be considered in connection with the discussion of the important factors that could cause actual results to differ materially from the forward-looking statements. In addition to risk factors identified elsewhere in this report, attention should be given to the factors identified and discussed in the report on Form 10-K filed on or about March 31, 1997. 7 RESULTS OF OPERATIONS The following table shows the consolidated net revenues (revenues less consolidation expenses) attributable to the Company's principal services and the Company's expenses for the three and six-month periods ended June 30, 1997 and 1996, expressed as percentages of net revenues. With respect to the Company's services other than consolidation, net revenues are identical to revenues. Management believes that net revenues are a better measure than total revenues of the relative importance of the Company's principal services since total revenues earned by the Company as a freight consolidator include the carriers' charges to the Company for carrying the shipment whereas revenues earned by the Company in its other capacities include only the commissions and fees actually earned by the Company. The table and the accompanying discussion and analysis should be read in conjunction with the condensed consolidated financial statements and related notes thereto which appear elsewhere in this Quarterly Report.
Three Months Ended June 30, Six Months Ended June 30, 1997 1996 1997 1996 ---- ---- ---- ---- Percent Percent Percent Percent of Net of Net of Net of Net Amount Revenues Amount Revenues Amount Revenues Amount Revenues ------- -------- ------- -------- -------- -------- ------- -------- (Amounts in thousands) Net Revenues: Airfreight 29,528 43 $22,648 48 55,152 44 41,460 47 Ocean freight 12,108 18 8,861 19 22,971 18 15,761 18 Customs brokerage and import services 26,533 39 15,621 33 47,764 38 30,641 35 ------- -------- ------- -------- -------- -------- ------- -------- Net revenues 68,169 100 47,130 100 125,887 100 87,862 100 ------- -------- ------- -------- -------- -------- ------- -------- Operating expenses: Salaries and related costs 36,939 54 25,566 54 69,269 55 48,641 55 Other 18,414 27 13,183 28 35,221 28 25,290 29 ------- -------- ------- -------- -------- -------- ------- -------- Total operating expenses 55,353 81 38,749 82 104,490 83 73,931 84 ------- -------- ------- -------- -------- -------- ------- -------- Operating income 12,816 19 8,381 18 21,397 17 13,931 16 Other income, net 568 1 549 1 1,029 1 1,152 1 ------- -------- ------- -------- -------- -------- ------- -------- Earnings before income taxes 13,384 20 8,930 19 22,426 18 15,083 17 Income tax expense 5,210 8 3,559 8 8,654 7 5,923 7 ------- -------- ------- -------- -------- -------- ------- -------- Net earnings $ 8,174 12% $ 5,371 11% 13,772 11% $ 9,160 10% ------- -------- ------- -------- -------- -------- ------- -------- ------- -------- ------- -------- -------- -------- ------- --------
8 Airfreight net revenues increased 30% and 33% for the three and six-month periods ended June 30, 1997 as compared with the same periods for 1996. This increase was primarily due to increased airfreight tonnage handled by the Company's expanding global network. Ocean freight net revenues increased 37% and 46% for the three and six-month periods ended June 30, 1997 as compared with the same periods for 1996. The Company continued to aggressively market competitive ocean freight rates primarily on freight moving eastbound from the Far East. During the second quarter of 1997, pricing pressures continued on this lane, however, the Company believes that pricing had stabilized late in the second quarter. Despite the falling prices, the Company was able to maintain margins and expand market share, a development management believes to be significant in assessing its strength in the transpacific market. The ocean forwarding business and ECMS (Expeditors Cargo Management Systems), the Company's ocean freight consolidation management and purchase order tracking service, were again instrumental in helping the Company to expand its market share. Customs brokerage and import services increased 70% and 56% for the three and six-month periods ended June 30, 1997 as compared with the same periods for 1996. This increase is the result of 1) the Company's entry into the truck and rail border brokerage business in the United States, 2) the Company's growing reputation for providing high quality service, 3) consolidation within the customs brokerage market as customers seek out brokers with sophisticated computerized capabilities critical to an overall logistics management program, and 4) the growing importance of distribution services as a separate and distinct service which is included in this category. Salaries and related costs increased during the three and six-month periods ended June 30, 1997 compared with the same period in 1996 as a result of (1) the Company's increased hiring of sales, operations, and administrative personnel in existing and new offices to accommodate increases in business activity, and (2) increased compensation levels. Salaries and related costs have, however, remained virtually constant as a percentage of net revenue--a measure that management believes is significant in assessing the effectiveness of corporate cost containment objectives. The relatively consistent relationship between salaries and net revenues is the result of a compensation philosophy that has been maintained since the inception of the Company: offer a modest base salary and the opportunity to share in a fixed and determinable percentage of the operating profit of the business unit controlled by each key employee. Using this compensation model, changes in individual compensation will occur in proportion to changes in Company profits. Management believes that the organic growth in revenues, net revenue and net income for the three and six-month periods ended June 30, 1997 and 1996 are a direct result of the incentives inherent in the Company's compensation program. Other operating expenses increased for the three and six-month periods ended June 30, 1997 as compared with the same period in 1996 as rent expense, communications expense, quality and training expenses, and other costs expanded to accommodate the Company's growing operations. Other operating expenses as a percentage of net revenues decreased approximately 1% in the three and six-month periods ended June 30, 1997 as compared with the same period in 1996. This decrease is primarily due to economies of scale realized as the Company's semi-variable other operating expenses were spread over increased net revenues. 9 Other income, net, increased marginally for the three month period ended June 30, 1997 compared with the same period of 1996, due to higher interest income. Other income, net, decreased for the six month period ended June 30, 1997 as compared with the same period in 1996, principally due to lower interest income on smaller average cash balances during the first quarter of 1997. The Company pays income taxes in the United States and other jurisdictions. In addition, the Company pays various other taxes, which are typically included in costs of operations. Effective income tax rates per financial statements during the three and six-month periods ended June 30, 1997 remained virtually constant as compared with the same period in 1996. Currency and Other Risk Factors International air/ocean freight forwarding and customs brokerage are intensively competitive and are expected to remain so for the foreseeable future. There are a large number of entities competing in the international logistics industry, however, the Company's primary competition is confined to a relatively small number of companies within this group. While there is currently a marked trend within the industry toward consolidation into large firms with multinational offices and agency networks, regional and local broker/forwarders remain a competitive force. Historically, the primary competitive factors in the international logistics industry have been price and quality of service, including reliability, responsiveness, expertise, convenience, and scope of operations. The Company emphasizes quality service and believes that its prices are competitive with those of others in the industry. Recently, customers have exhibited a trend toward the more sophisticated and efficient procedures for the management of the logistics supply chain by embracing strategies such as just-in-time inventory management. Accordingly, sophisticated computerized customer service capabilities and a stable worldwide network have become significant factors in attracting and retaining customers. Developing these systems and a worldwide network has added a considerable indirect cost to the services provided to customers. Smaller and middle-tier competitors, in general, do not have the resources available to develop customized systems and worldwide network. As a result, there is a significant amount of consolidation currently taking place in the industry. Management expects that this trend toward consolidation will continue for the short to medium-term. The nature of the Company's worldwide operations necessitates the Company dealing with a multitude of currencies other than the U.S. dollar. This results in the Company being exposed to the inherent risks of the international currency markets and governmental interference. Many of the countries where the Company maintains offices and/or agency relationships have strict currency control regulations which influence the Company's ability to hedge foreign currency exposure. The Company tries to compensate for these exposures by accelerating international currency settlements among these offices or agents. Foreign currency gains and losses recognized during the second quarter and for the first six months of 1997 and 1996 were immaterial. 10 The Company has traditionally generated revenues from airfreight, ocean freight and customs brokerage and import services. In light of the customer-driven trend to provide customer rates on a door-to-door basis, management foresees the potential, in the medium to long-term, for fees normally associated with customs house brokerage to be de-emphasized and included as a component of other services offered by the Company. Sources of Growth Acquisitions - Historically, growth through aggressive acquisition has proven to be a challenge for many of the Company's competitors and typically involves the purchase of significant "goodwill", the value of which can be realized in large measure only by retaining the customers and profit margins of the acquired business. As a result, the Company has pursued a strategy emphasizing organic growth supplemented by certain strategic acquisitions, where future economic benefit significantly exceeds the "goodwill" recorded in the transaction. During the second quarter, the Company completed the acquisition of SeaSky Express, Ltd. This entity had served as the Company's exclusive agent in Ireland. The Company paid approximately $8.5 million dollars for all of the outstanding shares of Seasky Express, Ltd. and its wholly-owned subsidiaries. In connection with this transaction, the Company recorded approximately $5.4 million in "Goodwill" which the Company will amortize over 40 years. The strategic motivations for this acquisition included 1) obtaining expertise in European road freight, 2) establishing a clear identity and presence in this key market, and 3) a reluctance to risk the loss of customers inherent in starting a new venture which would compete with an established and motivated "former agent." Office Openings - The Company opened five start-up offices during the second quarter of 1997.
North Indian America Far East Europe Africa Sub-continent - ------- -------- ------ ------ ------------- -- -- Dublin, Ireland -- Madras, India Cork, Ireland Bangalore, India Shannon, Ireland
Internal Growth - Management believes that a comparison of "same store" growth is critical in the evaluation of the quality and extent of the Company's internally generated growth. This "same store" analysis isolates the financial contributions from offices that have been included in the Company's operating results for at least one full year. The table below presents same store comparisons for the second quarter of 1997 (which is the measure of any increase from the same quarter of 1996) and for the second quarter of 1996 (which measures growth over 1995).
For the three months ended June 30, 1997 1996 ---- ---- Net revenue 29% 21% Operating income 44% 23%
11 Liquidity and Capital Resources The Company's principal source of liquidity is cash generated from operations. At June 30, 1997, working capital was $80.6 million, including cash and short-term investments of $47.0 million. The Company had no long-term debt at June 30, 1997. While the nature of its business does not require an extensive investment in property and equipment, the Company is actively looking for suitable facilities and/or property to acquire at or near airports in certain cities in North America and overseas. The Company expects to spend approximately $30.0 million on property and equipment in 1997, which is expected to be financed with cash, short-term floating rate and/or long-term fixed-rate borrowings. The Company maintains foreign and domestic borrowings under unsecured bank lines of credit totaling $30.0 million. At June 30, 1997, the Company was directly liable for $10.3 million drawn on these lines of credit and was contingently liable for an additional $16.1 million from standby letters of credit. In addition, the Company maintains a bank facility with its U.K. bank for $8.3 million. Management believes that the Company's current cash position, bank financing arrangements, and operating cash flows will be sufficient to meet its capital and liquidity requirements for the foreseeable future. In some cases, the Company's ability to repatriate funds from foreign operations may be subject to foreign exchange controls. In addition, certain undistributed earnings of the Company's subsidiaries accumulated through December 31, 1992 would, under most circumstances, be subject to some additional United States income tax if distributed to the Company. The Company has not provided for this additional tax because the Company intends to reinvest such earnings to fund the expansion of its foreign activities, or to distribute them in a manner in which no significant additional taxes would be incurred. 12 EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company is ordinarily involved in claims and lawsuits which arise in the normal course of business, none of which currently, in management's opinion, will have a significant effect on the Company's financial condition. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (a) The annual meeting of the Shareholders was held on May 7, 1997. (b) The following directors were elected to the Board of Directors to serve a term of one year and until their successors are elected and qualified:
For Withheld --- -------- P.J. Rose 22,524,463 26,976 K.M. Walsh 22,524,111 27,328 J.L.K. Wang 22,524,463 26,976 J.J. Casey 22,524,059 27,380 D.P. Kourkoumelis 22,524,229 27,210 J.W. Meisenbach 22,524,008 27,431
For Against Abstain Non-Vote --- ------- ------- -------- (c) 1997 Stock Option Plan 13,921,078 6,451,766 70,464 2,108,131 (d) 1997 Executive Incentive Compensation Plan 21,549,439 406,070 97,858 498,072
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits required by Item 601 of Regulation S-K. Exhibit Number Description ------- ----------- 27 Financial Data Schedule, Edgar Filing Only (b) Reports on Form 8-K No reports on Form 8-K were filed in the quarter ended June 30, 1997. 13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. August 8, 1997 /s/ PETER J. ROSE ------------------------------------------------ Peter J. Rose, Chairman and Chief Executive Officer (Principal Executive Officer) August 8, 1997 /s/ R. JORDAN GATES ------------------------------------------------ R. Jordan Gates, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) 14 EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Form 10-Q Index and Exhibits June 30, 1997 Exhibit Number Description - ------- ----------- 27 Financial Data Schedule (Filed Electronically Only) 15 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SET FORTH AS ITEM 1 OF FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 44,586 2,437 182,875 0 0 241,687 57,510 0 314,494 161,117 0 0 0 243 153,134 314,494 0 421,544 0 295,657 104,490 0 0 22,426 8,654 0 0 0 0 13,772 .53 .53
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