x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Washington | 91-1069248 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification Number) | |
1015 Third Avenue, 12thFloor, Seattle, Washington | 98104 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | x | Accelerated filer | ¨ | ||
Non-accelerated filer | o | (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
June 30, 2012 | December 31, 2011 | ||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 1,364,247 | $ | 1,294,356 | |||
Short-term investments | 376 | 472 | |||||
Accounts receivable, less allowance for doubtful accounts of $8,731 at June 30, 2012 and $10,381 at December 31, 2011 | 983,131 | 934,752 | |||||
Deferred Federal and state income taxes | 10,234 | 10,415 | |||||
Other | 47,409 | 46,888 | |||||
Total current assets | 2,405,397 | 2,286,883 | |||||
Property and equipment, less accumulated depreciation and amortization of $309,467 at June 30, 2012 and $296,481 at December 31, 2011 | 546,754 | 538,806 | |||||
Goodwill and other intangibles, net | 10,003 | 10,557 | |||||
Other assets, net | 30,218 | 30,581 | |||||
Total assets | $ | 2,992,372 | $ | 2,866,827 | |||
Current Liabilities: | |||||||
Accounts payable | 672,836 | 606,628 | |||||
Accrued expenses, primarily salaries and related costs | 184,114 | 169,445 | |||||
Federal, state and foreign income taxes | 25,948 | 20,072 | |||||
Total current liabilities | 882,898 | 796,145 | |||||
Deferred Federal and state income taxes | 59,417 | 60,613 | |||||
Commitments and contingencies | |||||||
Shareholders’ Equity: | |||||||
Preferred stock, none issued | — | — | |||||
Common stock, par value $.01 per share. Issued and outstanding 210,503,675 shares at June 30, 2012 and 212,003,662 shares at December 31, 2011 | 2,105 | 2,120 | |||||
Additional paid-in capital | 1,013 | 13,260 | |||||
Retained earnings | 2,044,682 | 1,991,222 | |||||
Accumulated other comprehensive loss | (4,345 | ) | (2,964 | ) | |||
Total shareholders’ equity | 2,043,455 | 2,003,638 | |||||
Noncontrolling interest | 6,602 | 6,431 | |||||
Total equity | 2,050,057 | 2,010,069 | |||||
Total liabilities and equity | $ | 2,992,372 | $ | 2,866,827 |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Revenues: | |||||||||||||||
Airfreight services | $ | 638,541 | $ | 749,861 | $ | 1,277,453 | $ | 1,450,784 | |||||||
Ocean freight and ocean services | 518,998 | 486,831 | 953,334 | 926,972 | |||||||||||
Customs brokerage and other services | 347,413 | 344,676 | 685,535 | 664,460 | |||||||||||
Total revenues | 1,504,952 | 1,581,368 | 2,916,322 | 3,042,216 | |||||||||||
Operating Expenses: | |||||||||||||||
Airfreight consolidation | 484,311 | 576,280 | 965,354 | 1,100,916 | |||||||||||
Ocean freight consolidation | 413,447 | 377,805 | 745,401 | 717,354 | |||||||||||
Customs brokerage and other services | 153,543 | 154,722 | 305,345 | 297,470 | |||||||||||
Salaries and related costs | 249,925 | 249,114 | 496,057 | 486,929 | |||||||||||
Rent and occupancy costs | 20,853 | 21,354 | 42,029 | 42,735 | |||||||||||
Depreciation and amortization | 9,670 | 9,257 | 19,215 | 18,431 | |||||||||||
Selling and promotion | 8,860 | 10,022 | 17,523 | 19,185 | |||||||||||
Other | 31,940 | 30,539 | 67,724 | 59,691 | |||||||||||
Total operating expenses | 1,372,549 | 1,429,093 | 2,658,648 | 2,742,711 | |||||||||||
Operating income | 132,403 | 152,275 | 257,674 | 299,505 | |||||||||||
Other Income (Expense): | |||||||||||||||
Interest income | 3,050 | 2,312 | 6,410 | 4,632 | |||||||||||
Interest expense | (222 | ) | (229 | ) | (842 | ) | (443 | ) | |||||||
Other, net | 3,682 | 857 | 4,779 | 1,974 | |||||||||||
Other income, net | 6,510 | 2,940 | 10,347 | 6,163 | |||||||||||
Earnings before income taxes | 138,913 | 155,215 | 268,021 | 305,668 | |||||||||||
Income tax expense | 54,892 | 60,195 | 107,278 | 119,441 | |||||||||||
Net earnings | 84,021 | 95,020 | 160,743 | 186,227 | |||||||||||
Less net earnings (losses) attributable to the noncontrolling interest | 66 | 20 | 81 | (5 | ) | ||||||||||
Net earnings attributable to shareholders | $ | 83,955 | $ | 95,000 | $ | 160,662 | $ | 186,232 | |||||||
Diluted earnings attributable to shareholders per share | $ | .39 | $ | .44 | $ | .75 | $ | .86 | |||||||
Basic earnings attributable to shareholders per share | $ | .40 | $ | .45 | $ | .76 | $ | .88 | |||||||
Dividends declared and paid per common share | $ | .28 | $ | .25 | $ | .28 | $ | .25 | |||||||
Weighted average diluted shares outstanding | 213,212,912 | 215,659,043 | 213,683,587 | 215,780,230 | |||||||||||
Weighted average basic shares outstanding | 211,724,082 | 212,136,164 | 211,910,872 | 212,112,643 |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Net earnings | $ | 84,021 | $ | 95,020 | $ | 160,743 | $ | 186,227 | |||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Foreign currency translation adjustments, net of tax of $6,257 and $3,014 for the three months ended June 30, 2012 and 2011, and $758 and $7,855 for the six months ended June 30, 2012 and 2011 | (11,453 | ) | 5,372 | (1,291 | ) | 14,193 | |||||||||
Other comprehensive income (loss) | (11,453 | ) | 5,372 | (1,291 | ) | 14,193 | |||||||||
Comprehensive income | 72,568 | 100,392 | 159,452 | 200,420 | |||||||||||
Less comprehensive income (loss) attributable to the noncontrolling interest | 22 | (109 | ) | 171 | (146 | ) | |||||||||
Comprehensive income attributable to shareholders | $ | 72,546 | $ | 100,501 | $ | 159,281 | $ | 200,566 |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Operating Activities: | |||||||||||||||
Net earnings | $ | 84,021 | $ | 95,020 | $ | 160,743 | $ | 186,227 | |||||||
Adjustments to reconcile net earnings to net cash from operating activities: | |||||||||||||||
Provision for losses on accounts receivable | (388 | ) | (63 | ) | (855 | ) | 1,790 | ||||||||
Deferred income tax (benefit) expense | (5,739 | ) | 1,601 | (258 | ) | (335 | ) | ||||||||
Excess tax benefits from stock plans | (806 | ) | (2,285 | ) | (4,232 | ) | (4,531 | ) | |||||||
Stock compensation expense | 10,926 | 10,236 | 21,526 | 20,708 | |||||||||||
Depreciation and amortization | 9,670 | 9,257 | 19,215 | 18,431 | |||||||||||
Gain on sale of assets | (65 | ) | (21 | ) | (130 | ) | (51 | ) | |||||||
Other | 271 | 311 | 553 | 618 | |||||||||||
Changes in operating assets and liabilities: | |||||||||||||||
Increase in accounts receivable | (63,260 | ) | (14,173 | ) | (50,292 | ) | (7,490 | ) | |||||||
Decrease in other current assets | 1,642 | 3,896 | 3,566 | 2,481 | |||||||||||
Increase in accounts payable and accrued expenses | 70,674 | 7,943 | 84,233 | 38,130 | |||||||||||
(Decrease) increase in income taxes payable, net | (14,132 | ) | (33,665 | ) | 6,142 | (88 | ) | ||||||||
Net cash from operating activities | 92,814 | 78,057 | 240,211 | 255,890 | |||||||||||
Investing Activities: | |||||||||||||||
Decrease (increase) in short-term investments, net | 15,878 | (449 | ) | 98 | (538 | ) | |||||||||
Purchase of property and equipment | (9,814 | ) | (17,110 | ) | (26,902 | ) | (38,235 | ) | |||||||
Proceeds from sale of property and equipment | 141 | 42 | 253 | 85 | |||||||||||
Other | (232 | ) | (64 | ) | 126 | (1,506 | ) | ||||||||
Net cash from investing activities | 5,973 | (17,581 | ) | (26,425 | ) | (40,194 | ) | ||||||||
Financing Activities: | |||||||||||||||
Proceeds from issuance of common stock | 7,482 | 15,821 | 20,402 | 23,625 | |||||||||||
Repurchases of common stock | (84,401 | ) | (45,690 | ) | (106,266 | ) | (65,274 | ) | |||||||
Excess tax benefits from stock plans | 806 | 2,285 | 4,232 | 4,531 | |||||||||||
Dividends paid | (59,358 | ) | (53,014 | ) | (59,358 | ) | (53,014 | ) | |||||||
Net cash from financing activities | (135,471 | ) | (80,598 | ) | (140,990 | ) | (90,132 | ) | |||||||
Effect of exchange rate changes on cash and cash equivalents | (11,984 | ) | 7,481 | (2,905 | ) | 15,801 | |||||||||
(Decrease) increase in cash and cash equivalents | (48,668 | ) | (12,641 | ) | 69,891 | 141,365 | |||||||||
Cash and cash equivalents at beginning of period | 1,412,915 | 1,238,471 | 1,294,356 | 1,084,465 | |||||||||||
Cash and cash equivalents at end of period | $ | 1,364,247 | $ | 1,225,830 | $ | 1,364,247 | $ | 1,225,830 | |||||||
Interest and Taxes Paid: | |||||||||||||||
Interest | $ | 233 | $ | 13 | $ | 420 | $ | 17 | |||||||
Income taxes | 77,583 | 91,035 | 104,095 | 117,311 |
Note 1. | Summary of Significant Accounting Policies |
A. | Basis of Presentation |
B. | Accounts Receivable |
C. | Use of Estimates |
D. | Recent Accounting Pronouncements |
Six months ended June 30, | |||||||
2012 | 2011 | ||||||
Dividend yield | 1.30 | % | 0.97 | % | |||
Volatility - stock option plans | 38 - 39 % | 38 - 40% | |||||
Risk free interest rates | 0.89 - 1.43% | 2.17 - 2.84% | |||||
Expected life (years) - stock option plans | 5.79 - 7.26 | 5.50 - 7.11 | |||||
Weighted average fair value of stock options granted during the period | $ | 13.53 | $ | 19.35 |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Stock compensation expense | $ | 10,926 | $ | 10,236 | $ | 21,526 | $ | 20,708 | |||||||
Recognized tax benefit | $ | 336 | $ | 39 | $ | 375 | $ | 77 |
Three months ended | ||||||||||
June 30, | ||||||||||
(Amounts in thousands, except share and per share amounts) | Net earnings attributable to shareholders | Weighted average shares | Earnings per share | |||||||
2012 | ||||||||||
Basic earnings attributable to shareholders | $ | 83,955 | 211,724,082 | $ | .40 | |||||
Effect of dilutive potential common shares | — | 1,488,830 | — | |||||||
Diluted earnings attributable to shareholders | $ | 83,955 | 213,212,912 | $ | .39 | |||||
2011 | ||||||||||
Basic earnings attributable to shareholders | $ | 95,000 | 212,136,164 | $ | .45 | |||||
Effect of dilutive potential common shares | — | 3,522,879 | — | |||||||
Diluted earnings attributable to shareholders | $ | 95,000 | 215,659,043 | $ | .44 |
Six months ended | ||||||||||
June 30, | ||||||||||
(Amounts in thousands, except share and per share amounts) | Net earnings attributable to shareholders | Weighted average shares | Earnings per share | |||||||
2012 | ||||||||||
Basic earnings attributable to shareholders | $ | 160,662 | 211,910,872 | $ | .76 | |||||
Effect of dilutive potential common shares | — | 1,772,715 | — | |||||||
Diluted earnings attributable to shareholders | $ | 160,662 | 213,683,587 | $ | .75 | |||||
2011 | ||||||||||
Basic earnings attributable to shareholders | $ | 186,232 | 212,112,643 | $ | .88 | |||||
Effect of dilutive potential common shares | — | 3,667,587 | — | |||||||
Diluted earnings attributable to shareholders | $ | 186,232 | 215,780,230 | $ | .86 |
Three months ended | Six months ended | ||||||||||
June 30, | June 30, | ||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||
Shares | 15,444,641 | 7,413,458 | 15,427,041 | 7,415,063 |
Shareholders’ equity | Noncontrolling interest | Total equity | |||||||
Balance at December 31, 2011 | $ | 2,003,638 | 6,431 | 2,010,069 | |||||
Exercise of stock options | 20,402 | — | 20,402 | ||||||
Shares repurchased under provisions of stock repurchase plans | (106,266 | ) | — | (106,266 | ) | ||||
Stock compensation expense | 21,526 | — | 21,526 | ||||||
Tax benefits from stock plans | 4,232 | — | 4,232 | ||||||
Net earnings | 160,662 | 81 | 160,743 | ||||||
Other comprehensive income (loss) | (1,381 | ) | 90 | (1,291 | ) | ||||
Dividends paid ($.28 per share) | (59,358 | ) | — | (59,358 | ) | ||||
Balance at June 30, 2012 | $ | 2,043,455 | 6,602 | 2,050,057 | |||||
Balance at December 31, 2010 | $ | 1,740,906 | 7,248 | 1,748,154 | |||||
Exercise of stock options | 23,625 | — | 23,625 | ||||||
Shares repurchased under provisions of stock repurchase plans | (65,274 | ) | — | (65,274 | ) | ||||
Stock compensation expense | 20,708 | — | 20,708 | ||||||
Tax benefits from stock plans | 4,531 | — | 4,531 | ||||||
Net earnings | 186,232 | (5 | ) | 186,227 | |||||
Other comprehensive income (loss) | 14,334 | (141 | ) | 14,193 | |||||
Dividends paid ($.25 per share) | (53,014 | ) | — | (53,014 | ) | ||||
Balance at June 30, 2011 | $ | 1,872,048 | 7,102 | 1,879,150 |
June 30, 2012 | December 31, 2011 | ||||||||||||||
Cost | Fair Value | Cost | Fair Value | ||||||||||||
Cash and Cash Equivalents: | |||||||||||||||
Cash and overnight deposits | $ | 498,782 | $ | 498,782 | $ | 445,586 | $ | 445,586 | |||||||
Corporate commercial paper | 804,782 | 805,080 | 791,729 | 791,902 | |||||||||||
Time deposits | 60,683 | 60,683 | 57,041 | 57,041 | |||||||||||
Total cash and cash equivalents | 1,364,247 | 1,364,545 | 1,294,356 | 1,294,529 | |||||||||||
Short-Term Investments: | |||||||||||||||
Time deposits | 376 | 376 | 472 | 472 | |||||||||||
Total | $ | 1,364,623 | $ | 1,364,921 | $ | 1,294,828 | $ | 1,295,001 |
(in thousands) | UNITED STATES | OTHER NORTH AMERICA | LATIN AMERICA | ASIA PACIFIC | EUROPE and AFRICA | MIDDLE EAST and INDIA | ELIMI- NATIONS | CONSOLI- DATED | ||||||||||||||||
Three months ended June 30, 2012: | ||||||||||||||||||||||||
Revenues from unaffiliated customers | $ | 379,126 | 49,802 | 21,366 | 780,858 | 202,301 | 71,499 | — | 1,504,952 | |||||||||||||||
Transfers between geographic areas | 22,504 | 2,466 | 4,791 | 11,038 | 9,603 | 4,670 | (55,072 | ) | — | |||||||||||||||
Total revenues | $ | 401,630 | 52,268 | 26,157 | 791,896 | 211,904 | 76,169 | (55,072 | ) | 1,504,952 | ||||||||||||||
Net revenues | $ | 182,291 | 25,115 | 14,724 | 135,908 | 71,497 | 24,116 | — | 453,651 | |||||||||||||||
Operating income | $ | 49,193 | 8,085 | 4,118 | 51,768 | 12,951 | 6,288 | — | 132,403 | |||||||||||||||
Identifiable assets at quarter end | $ | 1,597,543 | 93,374 | 52,019 | 687,586 | 412,752 | 152,754 | (3,656 | ) | 2,992,372 | ||||||||||||||
Capital expenditures | $ | 5,236 | 153 | 400 | 2,602 | 1,111 | 312 | — | 9,814 | |||||||||||||||
Depreciation and amortization | $ | 5,756 | 181 | 207 | 1,645 | 1,430 | 451 | — | 9,670 | |||||||||||||||
Equity | $ | 1,295,963 | 51,248 | 31,903 | 462,123 | 144,659 | 94,892 | (30,731 | ) | 2,050,057 | ||||||||||||||
Three months ended June 30, 2011: | ||||||||||||||||||||||||
Revenues from unaffiliated customers | $ | 390,806 | 47,816 | 21,136 | 816,350 | 229,724 | 75,536 | — | 1,581,368 | |||||||||||||||
Transfers between geographic areas | 25,973 | 2,783 | 5,220 | 10,170 | 11,355 | 4,500 | (60,001 | ) | — | |||||||||||||||
Total revenues | $ | 416,779 | 50,599 | 26,356 | 826,520 | 241,079 | 80,036 | (60,001 | ) | 1,581,368 | ||||||||||||||
Net revenues | $ | 181,603 | 21,581 | 15,157 | 150,616 | 78,828 | 24,776 | — | 472,561 | |||||||||||||||
Operating income | $ | 57,752 | 5,761 | 4,486 | 61,542 | 16,877 | 5,857 | — | 152,275 | |||||||||||||||
Identifiable assets at quarter end | $ | 1,411,881 | 91,678 | 58,396 | 678,668 | 479,852 | 155,503 | 2,026 | 2,878,004 | |||||||||||||||
Capital expenditures | $ | 3,350 | 448 | 144 | 4,622 | 7,881 | 665 | — | 17,110 | |||||||||||||||
Depreciation and amortization | $ | 4,926 | 277 | 264 | 1,847 | 1,416 | 527 | — | 9,257 | |||||||||||||||
Equity | $ | 1,123,482 | 52,814 | 33,784 | 420,962 | 184,252 | 94,447 | (30,591 | ) | 1,879,150 |
(in thousands) | UNITED STATES | OTHER NORTH AMERICA | LATIN AMERICA | ASIA PACIFIC | EUROPE and AFRICA | MIDDLE EAST and INDIA | ELIMI- NATIONS | CONSOLI- DATED | ||||||||||||||||
Six months ended June 30, 2012: | ||||||||||||||||||||||||
Revenues from unaffiliated customers | $ | 756,428 | 99,756 | 40,635 | 1,468,928 | 408,572 | 142,003 | — | 2,916,322 | |||||||||||||||
Transfers between geographic areas | 44,712 | 4,931 | 9,870 | 22,010 | 19,070 | 9,321 | (109,914 | ) | — | |||||||||||||||
Total revenues | $ | 801,140 | 104,687 | 50,505 | 1,490,938 | 427,642 | 151,324 | (109,914 | ) | 2,916,322 | ||||||||||||||
Net revenues | $ | 363,766 | 47,357 | 29,559 | 267,722 | 143,030 | 48,788 | — | 900,222 | |||||||||||||||
Operating income | $ | 94,718 | 14,454 | 8,880 | 99,006 | 27,198 | 13,418 | — | 257,674 | |||||||||||||||
Identifiable assets at quarter end | $ | 1,597,543 | 93,374 | 52,019 | 687,586 | 412,752 | 152,754 | (3,656 | ) | 2,992,372 | ||||||||||||||
Capital expenditures | $ | 14,995 | 329 | 655 | 7,889 | 2,053 | 981 | — | 26,902 | |||||||||||||||
Depreciation and amortization | $ | 11,378 | 368 | 424 | 3,269 | 2,834 | 942 | — | 19,215 | |||||||||||||||
Equity | $ | 1,295,963 | 51,248 | 31,903 | 462,123 | 144,659 | 94,892 | (30,731 | ) | 2,050,057 | ||||||||||||||
Six months ended June 30, 2011: | ||||||||||||||||||||||||
Revenues from unaffiliated customers | $ | 767,911 | 91,663 | 41,469 | 1,544,480 | 443,335 | 153,358 | — | 3,042,216 | |||||||||||||||
Transfers between geographic areas | 49,938 | 5,465 | 10,841 | 19,353 | 22,062 | 8,709 | (116,368 | ) | — | |||||||||||||||
Total revenues | $ | 817,849 | 97,128 | 52,310 | 1,563,833 | 465,397 | 162,067 | (116,368 | ) | 3,042,216 | ||||||||||||||
Net revenues | $ | 359,537 | 42,282 | 30,260 | 292,104 | 152,753 | 49,540 | — | 926,476 | |||||||||||||||
Operating income | $ | 111,486 | 11,550 | 9,249 | 120,980 | 34,584 | 11,656 | — | 299,505 | |||||||||||||||
Identifiable assets at quarter end | $ | 1,411,881 | 91,678 | 58,396 | 678,668 | 479,852 | 155,503 | 2,026 | 2,878,004 | |||||||||||||||
Capital expenditures | $ | 7,380 | 608 | 300 | 9,334 | 19,587 | 1,026 | — | 38,235 | |||||||||||||||
Depreciation and amortization | $ | 9,911 | 580 | 533 | 3,816 | 2,526 | 1,065 | — | 18,431 | |||||||||||||||
Equity | $ | 1,123,482 | 52,814 | 33,784 | 420,962 | 184,252 | 94,447 | (30,591 | ) | 1,879,150 |
• | Total dedication, first and foremost, to providing superior customer service; |
• | Aggressive marketing of all of the Company’s service offerings; |
• | Ongoing development of key employees and management personnel via formal and informal means; |
• | Creation of unlimited advancement opportunities for employees dedicated to hard work, personal growth and continuous improvement; |
• | Individual commitment to the identification and mentoring of successors for every key position so that when inevitable change is required, a qualified and well-trained internal candidate is ready to step forward; and |
• | Continuous identification, design and implementation of system solutions, both technological and otherwise, to meet and exceed the needs of our customers while simultaneously delivering tools to make our employees more efficient and more effective. |
• | accounts receivable valuation; |
• | accrual of costs related to ancillary services the Company provides; |
• | accrual of insurance liabilities for the portion of the freight related exposure which the Company has self-insured; |
• | accrual of various tax liabilities; |
• | accrual of loss contingencies; and |
• | calculation of share-based compensation expense. |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||||||||||||||
Amount | Percent of net revenues | Amount | Percent of net revenues | Amount | Percent of net revenues | Amount | Percent of net revenues | |||||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||||||
Net Revenues: | ||||||||||||||||||||||||||||
Airfreight services | $ | 154,230 | 34 | % | $ | 173,581 | 37 | % | $ | 312,099 | 35 | % | $ | 349,868 | 38 | % | ||||||||||||
Ocean freight and ocean services | 105,551 | 23 | 109,026 | 23 | 207,933 | 23 | 209,618 | 23 | ||||||||||||||||||||
Customs brokerage and other services | 193,870 | 43 | 189,954 | 40 | 380,190 | 42 | 366,990 | 39 | ||||||||||||||||||||
Net revenues | 453,651 | 100 | 472,561 | 100 | 900,222 | 100 | 926,476 | 100 | ||||||||||||||||||||
Overhead Expenses: | ||||||||||||||||||||||||||||
Salaries and related costs | 249,925 | 55 | 249,114 | 53 | 496,057 | 55 | 486,929 | 53 | ||||||||||||||||||||
Other | 71,323 | 16 | 71,172 | 15 | 146,491 | 16 | 140,042 | 15 | ||||||||||||||||||||
Total overhead expenses | 321,248 | 71 | 320,286 | 68 | 642,548 | 71 | 626,971 | 68 | ||||||||||||||||||||
Operating income | 132,403 | 29 | 152,275 | 32 | 257,674 | 29 | 299,505 | 32 | ||||||||||||||||||||
Other income, net | 6,510 | 1 | 2,940 | 1 | 10,347 | 1 | 6,163 | 1 | ||||||||||||||||||||
Earnings before income taxes | 138,913 | 30 | 155,215 | 33 | 268,021 | 30 | 305,668 | 33 | ||||||||||||||||||||
Income tax expense | 54,892 | 12 | 60,195 | 13 | 107,278 | 12 | 119,441 | 13 | ||||||||||||||||||||
Net earnings | 84,021 | 18 | 95,020 | 20 | 160,743 | 18 | 186,227 | 20 | ||||||||||||||||||||
Less net earnings (losses) attributable to noncontrolling interest | 66 | — | 20 | — | 81 | — | (5 | ) | — | |||||||||||||||||||
Net earnings attributable to shareholders | $ | 83,955 | 18 | % | $ | 95,000 | 20 | % | $ | 160,662 | 18 | % | $ | 186,232 | 20 | % |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Salaries and related costs | $ | 249,925 | $ | 249,114 | $ | 496,057 | $ | 486,929 | |||||||
As a % of net revenue | 55.1 | % | 52.7 | % | 55.1 | % | 52.6 | % | |||||||
Stock compensation expense | $ | 10,926 | $ | 10,236 | $ | 21,526 | $ | 20,708 | |||||||
As a % of net revenue | 2.4 | % | 2.2 | % | 2.4 | % | 2.2 | % |
RISK FACTOR | DISCUSSION AND POTENTIAL SIGNIFICANCE | |
Litigation/Investigations | As a multinational corporation, the Company is subject to formal or informal investigations or litigation from governmental authorities or others in the countries in which it does business. Included among these investigations, the Company is currently subject to, and is cooperating fully with, investigations by the U.S. Department of Justice and the Commerce Department's Bureau of Industry and Security. These investigations and other periodic investigations will require further management time and could cause the Company to incur substantial additional legal and related costs, which may include fines and/or penalties that could have a material impact on the Company's results of operations and cash flows. The Company may also become subject to other civil litigation arising from such investigations or litigations, including but not limited to shareholder class action lawsuits and derivative claims made on behalf of plaintiffs. |
Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs | Maximum number of shares that may yet be purchased under the plans or programs | |||||||||
April 1-30, 2012 | 4,142 | $ | 46.22 | 4,142 | 29,065,352 | ||||||||
May 1-31, 2012 | 659,660 | 39.21 | 659,660 | 28,388,337 | |||||||||
June 1-30, 2012 | 1,550,533 | 37.63 | 1,550,533 | 26,881,952 | |||||||||
Total | 2,214,335 | $ | 38.12 | 2,214,335 | 26,881,952 |
(a) | On August 6, 2012, the Company's Board of Directors amended Article IV(1) of the Company's Bylaws, effective immediately, in order to increase the maximum potential size of the Board of Directors from nine to ten directors. The preceding description is qualified in its entirety by reference to the complete text of the Company's Bylaws, as amended, which are attached as Exhibit 3.2 to this Form 10-Q. |
(b) | Not applicable. |
Exhibit Number | Description | |
3.2 | The Company's Bylaws, as amended on August 6, 2012. | |
10.1 | The Company's 2012 Stock Option Plan. (Incorporated by reference to Appendix A of the Company's Notice of Annual Meeting of Shareholders and Proxy Statement pursuant to Regulation 14A filed on March 20, 2012.) | |
10.2 | Form of Stock Option Agreement used in connection with options granted under the Company's 2012 Stock Option Plan. (Incorporated by reference to Appendix B of the Company's Notice of Annual Meeting of Shareholders and Proxy Statement pursuant to Regulation 14A filed on March 20, 2012.) | |
31.1 | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2 | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32 | Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101.INS | Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. | ||
August 8, 2012 | /s/ PETER J. ROSE | |
Peter J. Rose, Chairman and Chief Executive Officer | ||
August 8, 2012 | /s/ BRADLEY S. POWELL | |
Bradley S. Powell, Senior Vice President and Chief Financial Officer |
Exhibit Number | Description | |
3.2 | The Company's Bylaws, as amended on August 6, 2012. | |
31.1 | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2 | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32 | Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101.INS | Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
i. | by (1) a shareholder that holds of record stock of the corporation entitled to vote at the meeting on such business (including any election of a director) (a “Record Holder”) or (2) a person (a “Nominee Holder”) that holds such stock through a nominee or “street name” holder of record of such stock and can demonstrate to the corporation such indirect ownership of such stock and such Nominee Holder's entitlement to vote such stock on such business, and |
ii. | who complies with the notice procedures and subject to the limitations set forth in Article II(15) (Record Holders and Nominee Holders are referred to as “Noticing Shareholders”). |
i. | For the purposes of an annual meeting, not earlier than the close of business on the 120th day and not later than the close of business on the later of (i) the 90th day prior to the first anniversary of the preceding year's annual meeting and (ii) the 35th day after the first public announcement of the adoption of this Article II(15); provided, however, that in the event the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the shareholder to be timely must be so delivered not earlier than the close of business on the 120th day prior to the date of such annual meeting and not later than the close of business on the later of the 90th day prior to the date of such annual meeting or, if the first public announcement of the date of such annual meeting is less than 100 days prior to the date of such annual meeting, the 10th day following the day on which public announcement of the date of such meeting is first made by the corporation. In no event shall any adjournment or |
ii. | For the purposes of a special meeting, not earlier than the close of business on the 120th day and not later than the close of business on the 90th day prior to the date of such special meeting of shareholders; provided, however, that if the first public announcement of the date of such special meeting is less than 100 days prior to the date of such special meeting, the 10th day following the day on which public announcement of the date of such meeting is first made by the corporation. |
i. | Set forth, as to the Noticing Shareholder and, if the Noticing Shareholder holds for the benefit of another, the beneficial owner on whose behalf the nomination or proposal is made, the following information together with a representation as to the accuracy of the information: |
(A) | the name and address of the Noticing Shareholder as they appear on the corporation's books and, if the Noticing Shareholder holds for the benefit of another, the name and address of such beneficial owner (collectively “Holder”), |
(B) | the class or series and number of shares of the corporation that are, directly or indirectly, owned beneficially and/or of record, |
(C) | any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the corporation or with a value derived in whole or in part from the value of any class or series of shares of the corporation, whether or not the instrument or right shall be subject to settlement in the underlying class or series of capital stock of the corporation or otherwise (a “Derivative Instrument”) that is directly or indirectly owned beneficially by the Holder and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the corporation, |
(D) | any proxy, contract, arrangement, understanding, or relationship pursuant to which the Holder has a right to vote or has granted a right to vote any shares of any security of the corporation, |
(E) | any short interest in any security of the corporation (for purposes of these Bylaws a person shall be deemed to have a short interest in a security if the Holder directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security), |
(F) | any rights to dividends on the shares of the corporation owned |
(G) | any proportionate interest in shares of the corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership or limited liability company or similar entity in which the Holder is a general partner or, directly or indirectly, beneficially owns an interest in a general partner, is the manager, managing member or directly or indirectly beneficially owns an interest in the manager or managing member of a limited liability company or similar entity, |
(H) | any performance-related fees (other than an asset-based fee) that the Holder is entitled to based on any increase or decrease in the value of shares of the corporation or Derivative Instruments, if any, |
(I) | any arrangements, rights, or other interests described in this Article II(15)(b)(i)(C)-(H) held by members of such Holder's immediate family sharing the same household, |
(J) | any other information relating to the Holder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations thereunder, and |
(K) | any other information as reasonably requested by the corporation. |
ii. | If the notice relates to any business other than a nomination of a director or directors that the shareholder proposes to bring before the meeting, the notice must set forth: |
(A) | a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting, and any material interest of the Holder, in such business, and |
(B) | a description of all agreements, arrangements and understandings, direct and indirect, between the Holder, and any other person or persons (including their names) in connection with the proposal of such business by the Holder. |
iii. | Set forth, as to each person, if any, whom the Holder proposes to nominate for election or reelection to the Board of Directors: |
(A) | all information relating to the Holder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14 of the Exchange Act and |
(B) | a description of all direct and indirect compensation and other material monetary agreements, arrangements, and understandings during the past three years, and any other material relationships, between or among the Holder and respective affiliates and associates, or others acting in concert therewith, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, or others acting in concert therewith, on the other hand, including, without limitation all information that would be required to be disclosed pursuant to Item 404 of Regulation S-K if the Holder making the nomination or on whose behalf the nomination is made, if any, or any affiliate or associate thereof or person acting in concert therewith, were the “registrant” for purposes of Item 404 and the nominee were a director or executive officer of such registrant. |
iv. | A representation that the Noticing Shareholder intends to vote or cause to be voted such stock at the meeting and intends to appear in person or by a representative at the meeting to nominate the person or propose the business specified in the notice. |
v. | With respect to each nominee for election or reelection to the Board of Directors, the Noticing Shareholder shall include a completed and signed questionnaire, representation, and agreement required by Article II(16). The corporation may require any proposed nominee to furnish such other information as may reasonably be required by the corporation to determine the eligibility of the proposed nominee to serve as an independent director of the corporation or that could be material to a reasonable shareholder's understanding of the independence, or lack thereof, of the nominee. |
i. | any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how the person, if elected as a director of the corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the corporation, or |
ii. | any Voting Commitment that could limit or interfere with the person's ability to comply, if elected as a director of the corporation, with the person's fiduciary duties under applicable law, |
1. | I have reviewed this quarterly report on Form 10-Q of Expeditors International of Washington, Inc.; |
2. | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and |
d) | Disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/S/ PETER J. ROSE |
Peter J. Rose Chairman and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Expeditors International of Washington, Inc.; |
2. | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and |
d) | Disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/S/ BRADLEY S. POWELL |
Bradley S. Powell Senior Vice President and Chief Financial Officer |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
August 8, 2012 | /S/ PETER J. ROSE |
Peter J. Rose Chairman and Chief Executive Officer | |
August 8, 2012 | /S/ BRADLEY S. POWELL |
Bradley S. Powell Senior Vice President and Chief Financial Officer |
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