Business Context and Reporting Period
Company: Expeditors International of Washington, Inc.
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended December 31, 1995
Business Overview: The Company provides global logistics services, including air and ocean freight consolidation/forwarding, customs brokerage, distribution management, and cargo insurance. It operates a network of full-service offices and international service centers worldwide but does not own aircraft or steamships. As of February 29, 1996, the Company employed approximately 2,465 people globally.
Key Financial Metrics
Note: Specific revenue, profit, cash flow, and balance sheet totals are incorporated by reference from the 1995 Annual Report to Shareholders and are not explicitly detailed in the provided text. The following metrics are derived from the available text:
- Revenue Composition (Net Revenues):
- Airfreight Services: 47% (1995), 48% (1994), 54% (1993).
- Customs Brokerage and Import Services: 33% (1995), 35% (1994), 29% (1993).
- Ocean Freight Services: 20% (1995), 17% (1994), 17% (1993).
- Customer Concentration: No single customer accounted for 5% or more of revenues historically.
- Debt and Liquidity:
- The Company maintains an unsecured line of credit. As of August 2, 1995, the maximum principal amount was amended to $15,000,000.
- Lease payments aggregate approximately $470,000 per month.
- Allowance for Doubtful Accounts:
- Balance at end of 1995: $3,807,000.
- Charged to costs/expenses in 1995: $710,000.
- Market Data (as of March 11, 1996):
- Shares Outstanding: 12,038,687.
- Aggregate Market Value (non-affiliates): Approximately $306,722,894.
Material Changes and Operational Trends
- Service Mix Shift: Airfreight services decreased as a percentage of net revenues from 54% in 1993 to 47% in 1995, while Ocean Freight services increased from 17% to 20% over the same period.
- Geographic Expansion: The Company continued to expand its network, opening new full-service offices in 1995 in locations including Sao Paulo, Rio de Janeiro, Campinas (Brazil), Mexico City, Santiago (Chile), Philadelphia, Charleston, Memphis, Salt Lake City (USA), Salzburg, Vienna (Austria), and Cairo, Alexandria (Egypt).
- Consolidation of Operations: The Company reclassified its Taiwan exclusive agency to a consolidated subsidiary due to unilateral control over assets and operations, despite not holding record ownership of voting stock.
- Property Acquisitions: The Company entered into a contract to purchase a 150,000 square foot warehouse in Nassau County, New York, though it retained the right to terminate without financial obligation as of the filing date.
Outlook, Risks, and Management Commentary
- Seasonality: Operating results are subject to seasonal trends; the first quarter is traditionally the weakest, and the third quarter is the strongest. Revenue timing is heavily influenced by consumer demand and just-in-time production schedules.
- Competition: The industry is intensively competitive. The Company competes on price and quality of service, emphasizing computerized customer service capabilities (EDI, tracking) which smaller competitors lack. Management expects industry consolidation to continue.
- Currency Risk: Global operations expose the Company to international currency market risks and governmental interference. The Company attempts to mitigate this by accelerating international currency settlements.
- Regulatory and Cargo Liability:
- The Company is regulated by the DOT, FMC, and Customs Service in the U.S., and by local authorities abroad.
- Cargo liability is typically limited by contract (e.g., $9.07 per pound for air, $500 per package for ocean) unless higher value is declared.
- Legal Proceedings: The Company is involved in normal course claims and lawsuits, none of which management believes will have a significant effect on financial condition.
- Environmental: The Company does not anticipate material capital expenditures for environmental control purposes in the current or succeeding fiscal years.
Investor Verification Checklist
- Verify the specific revenue, net income, and cash flow figures in the 1995 Annual Report to Shareholders (incorporated by reference), as these totals are not present in the 10-K text provided.
- Confirm the status of the $15,000,000 unsecured line of credit and any outstanding borrowings under the Revolving Note.
- Review the "Selected Financial Data" in the Annual Report to assess year-over-year growth trends in absolute dollar terms.
- Monitor the impact of foreign currency fluctuations on operating margins, given the Company's global exposure and limited hedging ability in certain jurisdictions.
- Assess the integration progress of the newly consolidated Taiwan operations and the impact on reported assets and liabilities.