Expeditors Reports Fourth Quarter 2014 EPS of $0.51 Per Share1

SEATTLE--(BUSINESS WIRE)--

Expeditors International of Washington, Inc. EXPD today announced net earnings attributable to shareholders of $99,381,000 for the fourth quarter of 2014, as compared with $83,496,000 for the same quarter of 2013, an increase of 19%. Net revenues² for the fourth quarter of 2014 increased 9% to $518,871,000 as compared with $478,072,000 reported for the fourth quarter of 2013. Total revenues and operating income were $1,768,830,000 and $157,871,000 in 2014, as compared with $1,625,859,000 and $133,663,000 for the same quarter of 2013, increases of 9% and 18%, respectively. Diluted net earnings attributable to shareholders per share for the fourth quarter were $0.51, as compared with $0.41 for the same quarter in 2013, an increase of 24%.

For the year ended December 31, 2014, net earnings attributable to shareholders was $376,888,000, as compared with $348,526,000 in 2013, an increase of 8%. Net revenues for the year increased to $1,981,427,000 from $1,882,853,000 for 2013, up 5%. Total revenues and operating income for the year were $6,564,721,000 and $594,648,000 in 2014, as compared with $6,080,257,000 and $552,073,000 for the same period in 2013, both increases of 8%. Diluted net earnings attributable to shareholders per share for the year ended December 31, 2014 were $1.92, as compared with $1.68 for the same period of 2013, an increase of 14%.

"During the 2014 fourth quarter we saw strong year-over-year increases in both air and ocean freight volumes. Despite the 10 basis point reduction in overall net revenue margin, airfreight and ocean freight net revenues both managed double digit increases, up 10% and 11%, respectively, as overall net revenue increased 9%. We think this is significant," said Bradley S. Powell, Senior Vice President and Chief Financial Officer. "The percentage growth in fourth quarter operating income was substantially in double digits, even when one-time charges in the 2013 fourth quarter are normalized. Operating income as a percentage of net revenue during the 2014 fourth quarter was just above our target of 30%, something we also view as significant. Net earnings per share for the fourth quarter saw a 24% increase, to $.51 per share and was significantly influenced by the $551 million in capital we returned to shareholders in the form of stock buybacks during 2014," Powell continued.

"These fourth quarter results are a great affirmation of our efforts to date. We've worked steadily to improve our performance throughout 2014, being able to see the effects of our focus and concentration reflected this quarter in double digit operating income growth, as well as double digit growth in both air and ocean freight net revenue has provided us with some important positive reinforcement at a very opportune time. This is particularly true in light of a global economy that still struggles to gain traction," said Jeffrey S. Musser, President and Chief Executive Officer. "We continue to be grateful for the dedication of our people, whose efforts, day in and day out, are what made these results happen. We would be particularly remiss not to acknowledge the long hours and extraordinary efforts by our ocean team to assist our customers in working through a most difficult and challenging ocean freight environment caused by the US West Coast labor situation," Musser went on to say. "While this year has been one of change at Expeditors, the impact of greater synergies among the various parts of our internal and external network is becoming increasingly more visible. As we work to embrace new strategies and adapt to new organizational structures, we are already seeing the benefits of more global consistency and greater accountability, all which are necessary for us to achieve our strategic goals. While we still have much to do in fully implementing our strategic assessment, we feel good about moving into 2015 with the momentum created in the last several quarters," Musser concluded.

Expeditors is a global logistics company headquartered in Seattle, Washington. The company employs trained professionals in 186 full-service offices and numerous satellite locations located on six continents linked into a seamless worldwide network through an integrated information management system. Services include the consolidation or forwarding of air and ocean freight, customs brokerage, vendor consolidation, cargo insurance, domestic time-definite transportation services, purchase order management, warehousing and distribution and customized logistics solutions.

1 Diluted earnings attributable to shareholders per share.

2 Non-GAAP measure calculated as revenues less directly related operating expenses attributable to the Company's principal services. See reconciliation on the last page of this release.

NOTE: See Disclaimer on Forward-Looking Statements on the following page of this release.

Expeditors International of Washington, Inc.
4th Quarter 2014 Earnings Release, February 24, 2015
Financial Highlights for the Three months and Years ended December 31, 2014 and 2013 (Unaudited)
(in 000's of US dollars except share data)
				Three months ended December 31,											Years ended December 31,
				2014				2013				% Increase			2014				2013				% Increase
Revenues				$	1,768,830			$	1,625,859			9%			$	6,564,721			$	6,080,257			8%
Net revenues				$	518,871			$	478,072			9%			$	1,981,427			$	1,882,853			5%
Operating income3				$	157,871			$	133,663			18%			$	594,648			$	552,073			8%
Net earnings attributable to shareholders				$	99,381			$	83,496			19%			$	376,888			$	348,526			8%
Diluted earnings attributable to shareholders				$	0.51			$	0.41			24%			$	1.92			$	1.68			14%
Basic earnings attributable to shareholders				$	0.52			$	0.41			27%			$	1.92			$	1.69			14%
Diluted weighted average shares outstanding				193,307,389				205,526,229							196,768,067				206,895,473
Basic weighted average shares outstanding				192,708,729				204,558,152							196,146,676				205,994,656

3 In the fourth quarter of 2013 the Company recorded $8 million of additional Salary and related costs related to the retirement bonus of Peter J. Rose, the Company's Chairman and Chief Executive Officer, whose retirement was announced on October 7, 2013.

				Employee headcount as of December 31,
				2014			2013
North America				5,279			4,860
Asia Pacific				3,824			3,891
Europe				2,472			2,291
Middle East, Africa and India				1,344			1,316
Latin America				748			685
Information Systems				702			648
Corporate				290			277
Total				14,659			13,968

				Year-over-year percentage increase in:
				Airfreight kilos			Ocean freight FEU
2014
October				9%			11%
November				7%			10%
December				19%			6%
Quarter				11%			9%

Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on February 27, 2015 will be considered in management's 8-K "Responses to Selected Questions" expected to be filed on or about March 13, 2015.

Disclaimer on Forward-Looking Statements:

Certain portions of this release contain forward-looking statements which are based on certain assumptions and expectations of future events that are subject to risks and uncertainties, including comments on, including positive trends in air tonnage and ocean volumes and related net revenues, strength of the global economy, ability to continue to improve our performance, ability to achieve benefits from new strategies and organization structure and ability to achieve strategic goals. Actual future results and trends may differ materially from historical results or those projected in any forward-looking statements depending on a variety of factors including, but not limited to, our ability to maintain consistent and stable operating results, future success of our business model, ability to perpetuate profits, changes in customer demand for Expeditors' services caused by a general economic slow-down, customers' inventory build-up, decreased consumer confidence, volatility in equity markets, energy and fuel prices, political changes, foreign exchange rates, regulatory actions or changes or the unpredictable acts of competitors and other risks, risk factors and uncertainties detailed in our Annual Report as updated by our reports on Form 10-Q, filed with the Securities and Exchange Commission.

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)
				December 31,					December 31,
				2014					2013
Assets
Current Assets:
Cash and cash equivalents				$	927,107				$	1,247,652
Short-term investments				40,336					26,337
Accounts receivable, net				1,236,042					1,073,500
Deferred Federal and state income taxes				20,279					18,396
Other current assets				65,486					49,384
Total current assets				2,289,250					2,415,269
Property and equipment, net				538,415					563,064
Goodwill				7,927					7,927
Other assets, net				55,313					28,552
				$	2,890,905				$	3,014,812
Liabilities and Equity
Current Liabilities:
Accounts payable				$	770,238				$	648,156
Accrued expenses, primarily salaries and related costs				192,468					200,301
Federal, state and foreign income taxes				21,077					21,743
Total current liabilities				983,783					870,200
Deferred Federal and state income taxes				35,514					58,281
Commitments and contingencies
Shareholders' Equity:
Preferred stock; none issued				—					—
Common stock, par value $0.01 per share; issued and outstanding 191,655,690 shares at December 31, 2014 and 202,553,220 shares at December 31, 2013				1,916					2,025
Additional paid-in capital				1,113					1,647
Retained earnings				1,903,196					2,087,376
Accumulated other comprehensive loss				(37,817		)			(6,265		)
Total shareholders' equity				1,868,408					2,084,783
Noncontrolling interest				3,200					1,548
Total equity				1,871,608					2,086,331
				$	2,890,905				$	3,014,812

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,
				2014				2013				2014				2013
Revenues:
Airfreight services				$	780,011			$	742,371			$	2,780,840			$	2,633,830
Ocean freight and ocean services				568,249				495,552				2,174,394				1,958,231
Customs brokerage and other services				420,570				387,936				1,609,487				1,488,196
Total revenues				1,768,830				1,625,859				6,564,721				6,080,257
Operating Expenses:
Airfreight services				600,713				579,740				2,103,777				1,994,374
Ocean freight and ocean services				446,244				386,041				1,712,795				1,521,340
Customs brokerage and other services				203,002				182,006				766,722				681,690
Salaries and related costs				276,072				267,002				1,065,329				1,032,601
Rent and occupancy costs				25,851				24,990				102,810				98,437
Depreciation and amortization				11,752				12,490				49,292				48,071
Selling and promotion				11,421				9,352				38,125				33,243
Other				35,904				30,575				131,223				118,428
Total operating expenses				1,610,959				1,492,196				5,970,073				5,528,184
Operating income				157,871				133,663				594,648				552,073
Interest income				2,519				2,530				10,773				11,810
Other, net				223				1,645				5,468				8,713
Other income, net				2,742				4,175				16,241				20,523
Earnings before income taxes				160,613				137,838				610,889				572,596
Income tax expense				59,873				53,829				231,429				222,585
Net earnings				100,740				84,009				379,460				350,011
Less net earnings attributable to the noncontrolling interest				1,359				513				2,572				1,485
Net earnings attributable to shareholders				$	99,381			$	83,496			$	376,888			$	348,526
Diluted earnings attributable to shareholders per share				$	0.51			$	0.41			$	1.92			$	1.68
Basic earnings attributable to shareholders per share				$	0.52			$	0.41			$	1.92			$	1.69
Dividends declared and paid per common share				$	0.32			$	0.30			$	0.64			$	0.60
Weighted average diluted shares outstanding				193,307,389				205,526,229				196,768,067				206,895,473
Weighted average basic shares outstanding				192,708,729				204,558,152				196,146,676				205,994,656

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,
				2014					2013					2014					2013
Operating Activities:
Net earnings				$	100,740				$	84,009				$	379,460				$	350,011
Adjustments to reconcile net earnings to net cash from operating activities:
Provision for losses (recoveries) on accounts receivable				818					(421		)			763					2,116
Deferred income tax benefit				(14,576		)			(730		)			(6,576		)			(20,975		)
Excess tax benefits from stock plans				(84		)			(656		)			(1,115		)			(2,339		)
Stock compensation expense				10,313					10,753					42,533					43,813
Depreciation and amortization				11,752					12,490					49,292					48,071
Other				(5		)			208					340					844
Changes in operating assets and liabilities:
Increase in accounts receivable				(75,513		)			(50,093		)			(206,887		)			(64,575		)
Increase in accounts payable and accrued expenses				39,388					9,335					153,424					44,150
Increase (decrease) in income taxes payable, net				14,117					(6,205		)			(12,998		)			8,435
Decrease (increase) in other current assets				2,582					3,263					(3,270		)			(2,015		)
Net cash from operating activities				89,532					61,953					394,966					407,536
Investing Activities:
(Increase) decrease in short-term investments, net				(20		)			73,489					(14,000		)			(26,201		)
Purchase of property and equipment				(10,822		)			(10,720		)			(37,472		)			(53,411		)
Escrow deposit on land acquisition				—					—					(27,101		)			—
Other, net				(842		)			1,680					(338		)			2,806
Net cash from investing activities				(11,684		)			64,449					(78,911		)			(76,806		)
Financing Activities:
Proceeds from issuance of common stock				10,800					7,660					69,269					59,752
Repurchases of common stock				(75,621		)			(136,730		)			(550,781		)			(261,936		)
Excess tax benefits from stock plans				84					656					1,115					2,339
Dividends paid				(61,827		)			(61,393		)			(124,634		)			(123,292		)
Purchase of noncontrolling interest				—					—					—					(7,730		)
Distribution to noncontrolling interest				(418		)			—					(503		)			(1,161		)
Net cash from financing activities				(126,982		)			(189,807		)			(605,534		)			(332,028		)
Effect of exchange rate changes on cash and cash equivalents				(14,239		)			727					(31,066		)			(11,892		)
Decrease in cash and cash equivalents				(63,373		)			(62,678		)			(320,545		)			(13,190		)
Cash and cash equivalents at beginning of period				990,480					1,310,330					1,247,652					1,260,842
Cash and cash equivalents at end of period				$	927,107				$	1,247,652				$	927,107				$	1,247,652
Taxes paid:
Income taxes				$	59,081				$	61,169				$	254,439				$	235,368

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
Business Segment Information
(In thousands) (Unaudited)
				UNITED STATES				OTHER NORTH AMERICA			LATIN AMERICA			ASIA PACIFIC4			EUROPE4			MIDDLE EAST, AFRICA and INDIA4			ELIMI- NATIONS				CONSOLI- DATED
Three months ended December 31, 2014:
Revenues from unaffiliated customers				$	438,744			56,599			23,464			902,310			267,923			79,790			—				1,768,830
Transfers between geographic areas				29,762				3,062			4,669			12,357			10,610			5,016			(65,476	)			—
Total revenues				$	468,506			59,661			28,133			914,667			278,533			84,806			(65,476	)			1,768,830
Net revenues				$	215,603			29,614			16,219			152,415			79,012			26,008			—				518,871
Operating income				$	40,516			13,320			5,430			69,193			20,586			8,826			—				157,871
Identifiable assets				$	1,408,598			111,324			53,815			655,148			447,349			208,684			5,987				2,890,905
Capital expenditures				$	6,964			392			733			1,161			1,130			442			—				10,822
Depreciation and amortization				$	7,453			291			246			2,023			1,314			425			—				11,752
Equity				$	1,165,488			54,338			34,386			361,529			169,117			121,520			(34,770	)			1,871,608
Three months ended December 31, 2013:
Revenues from unaffiliated customers				$	394,835			54,651			22,629			838,881			236,302			78,561			—				1,625,859
Transfers between geographic areas				24,262				3,067			5,578			12,353			10,430			4,119			(59,809	)			—
Total revenues				$	419,097			57,718			28,207			851,234			246,732			82,680			(59,809	)			1,625,859
Net revenues				$	197,560			27,388			15,918			138,453			74,203			24,550			—				478,072
Operating income				$	34,509			12,201			1,727			59,009			17,791			8,426			—				133,663
Identifiable assets				$	1,582,557			104,735			58,027			668,032			414,710			180,646			6,105				3,014,812
Capital expenditures				$	6,503			336			459			2,400			775			247			—				10,720
Depreciation and amortization				$	7,928			267			221			2,096			1,538			440			—				12,490
Equity				$	1,330,262			72,772			29,590			406,728			178,729			102,628			(34,378	)			2,086,331
Twelve months ended December 31, 2014:
Revenues from unaffiliated customers				$	1,694,819			218,735			89,058			3,233,539			1,012,389			316,181			—				6,564,721
Transfers between geographic areas				97,028				10,891			20,634			49,599			39,541			19,654			(237,347	)			—
Total revenues				$	1,791,847			229,626			109,692			3,283,138			1,051,930			335,835			(237,347	)			6,564,721
Net revenues				$	823,111			108,631			65,016			570,793			313,325			100,551			—				1,981,427
Operating income				$	221,166			36,475			19,855			230,092			62,101			24,959			—				594,648
Identifiable assets				$	1,408,598			111,324			53,815			655,148			447,349			208,684			5,987				2,890,905
Capital expenditures				$	19,610			1,439			1,574			9,073			4,246			1,530			—				37,472
Depreciation and amortization				$	31,553			1,170			911			8,233			5,690			1,735			—				49,292
Equity				$	1,165,488			54,338			34,386			361,529			169,117			121,520			(34,770	)			1,871,608
Twelve months ended December 31, 2013:
Revenues from unaffiliated customers				$	1,561,468			215,968			86,050			3,046,039			876,967			293,765			—				6,080,257
Transfers between geographic areas				89,570				11,038			21,711			46,578			38,728			16,698			(224,323	)			—
Total revenues				$	1,651,038			227,006			107,761			3,092,617			915,695			310,463			(224,323	)			6,080,257
Net revenues				$	770,519			102,864			61,478			560,900			288,407			98,685			—				1,882,853
Operating income				$	195,799			35,224			15,734			223,980			53,294			28,042			—				552,073
Identifiable assets				$	1,582,557			104,735			58,027			668,032			414,710			180,646			6,105				3,014,812
Capital expenditures				$	28,699			1,870			1,010			17,231			3,313			1,288			—				53,411
Depreciation and amortization				$	29,569			882			901			8,381			6,569			1,769			—				48,071
Equity				$	1,330,262			72,772			29,590			406,728			178,729			102,628			(34,378	)			2,086,331

4Effective in the fourth quarter of 2014, management made changes to the reporting structure of the geographic operating segments. Africa is now reported as Middle East, Africa and India ("MAIR") and certain countries have shifted between designated geographic areas. Amounts for 2013 have been recast to conform to the 2014 presentation.

Net Revenues (Non-GAAP measure)

We commonly refer to the term "net revenues" when commenting about our Company and the results of its operations. Net revenues are a Non-GAAP measure calculated as revenues less directly related operations expenses attributable to the Company's principal services. We believe that net revenues are a better measure than are total revenues when analyzing and discussing our effectiveness in managing our principal services since total revenues earned as a freight consolidator include the carriers' charges to us for carrying the shipment, whereas revenues earned in other capacities include primarily the commissions and fees earned by us. Net revenue is one of our primary operational and financial measures and demonstrates our ability to concentrate and leverage purchasing power through effective consolidation of shipments from customers utilizing a variety of transportation carriers and optimal routings. Using net revenues also provides a commonality for comparison among various services. The following table presents the calculation of net revenues.

				Three months ended								Twelve months ended
				December 31,								December 31,
(in thousands)				2014				2013				2014				2013
Total revenues				$	1,768,830			$	1,625,859			$	6,564,721			$	6,080,257
Expenses:
Airfreight services				600,713				579,740				2,103,777				1,994,374
Ocean freight and ocean services				446,244				386,041				1,712,795				1,521,340
Customs brokerage and other services				203,002				182,006				766,722				681,690
Net revenues				$	518,871			$	478,072			$	1,981,427			$	1,882,853