Expeditors Reports First Quarter 2014 EPS of $.42 Per Share 1

SEATTLE--(BUSINESS WIRE)--

Expeditors International of Washington, Inc. EXPD today announced net earnings attributable to shareholders of $83,824,000 for the first quarter of 2014, as compared with $80,315,000 for the same quarter of 2013, an increase of 4%. Net revenues² for the first quarter of 2014 increased 4% to $464,586,000 as compared with $448,007,000 for the same quarter in 2013. Total revenues and operating income were $1,491,645,000 and $135,203,000 in the first quarter of 2014, as compared with $1,413,208,000 and $128,518,000 for the same quarter of 2013, increases of 6% and 5%, respectively. Diluted net earnings attributable to shareholders per share for the first quarter were $.42, as compared with $.39 for the same quarter in 2013, an increase of 8%.

“There were several significant external challenges this quarter, including weather issues and continued concern over the strength of the economy. We've always believed that challenging times can only be managed through disciplined execution. Despite a relatively slow start, we are very encouraged by how the 2014 first quarter finished up. Ocean freight and airfreight volume increased 12% and 6%, respectively. Disciplined execution was responsible for increasing our operating margin³ percentage from the 2013 first quarter, while also efficiently handling the acceleration in business we experienced during the last part of the quarter,” said Jeffrey S. Musser, President and Chief Executive Officer. “From a geographic standpoint, we had strong double digit operating income growth from our Americas group, while our Asia-Pacific and Europe, Africa, Near/Middle East, and Indian Subcontinent (“EMAIR”) groups, though steady, were essentially flat. From a product perspective, while we continued to manage through short cycles of rate instability and volatility, we successfully gained market share in both the ocean and airfreight markets. Customs and other services, led by our customs brokerage and Transcon products, grew revenues by 8%, illustrating the reliable and strategic anchor they are in our knowledge-based service offerings. Also noteworthy is our repurchase of 5.7 million shares of stock during the 2014 first quarter. This brings our outstanding share count to 197.2 million shares, the lowest share-count, on a split adjust basis, since going public nearly 30 years ago,” Musser continued.

“For the remainder of the year, we'll focus our attention on actively pursuing opportunities for profitable market share expansion and driving efficiencies in operational processes. We're currently conducting a very comprehensive strategic reassessment of our various market positions and organizational structures, the objective of which will be to bring greater alignment and focus on the most cost-beneficial opportunities. We won't be changing our culture, but we will be refining our focus,” Musser went on to say. “Finally, we appreciate the support of our customers, our service providers and, most importantly, all the members of the Expeditors family who come to work every day and strive to live up to the values and goals of customer service excellence we've always believed makes the true difference in who we are and what we can do,” Musser concluded.

Expeditors is a global logistics company headquartered in Seattle, Washington. The company employs trained professionals in 185 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, time-definite transportation, order management, warehousing distribution and customized logistics solutions.

¹Diluted earnings attributable to shareholders per share.

²Non-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.

³Operating margin is calculated as operating income divided by net revenues.

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

Expeditors International of Washington, Inc.
First Quarter 2014 Earnings Release, May 7, 2014
Financial Highlights for the Three months ended March 31, 2014 and 2013 (Unaudited)
(in 000's of US dollars except share data)
				Three months ended March 31,
				2014				2013				% Change
Revenues				$	1,491,645			$	1,413,208			6%
Net revenues1				$	464,586			$	448,007			4%
Operating income				$	135,203			$	128,518			5%
Net earnings attributable to shareholders				$	83,824			$	80,315			4%
Diluted earnings attributable to shareholders				$	.42			$	.39			8%
Basic earnings attributable to shareholders				$	.42			$	.39			8%
Diluted weighted average shares outstanding				201,843,858				207,613,863
Basic weighted average shares outstanding				201,118,390				206,475,095

¹Non-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.

				Employee headcount as of March 31
				2014			2013
North America				4,926			4,705
Asia Pacific				3,889			3,867
Europe and Africa				2,343			2,361
Middle East and India				1,221			1,216
Latin America				713			665
Information Systems				633			628
Corporate				292			273
Total				14,017			13,715

				Year-over-year percentage increase in:
				Airfreight kilos			Ocean freight FEU
2014
January				3%			15%
February				5%			1%
March				7%			17%
Quarter				6%			12%

Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on May 9, 2014 will be considered in management's 8-K “Responses to Selected Questions” expected to be filed on or about May 16, 2014.

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 ability to increase operating margins, efficiently handle accelerating business, manage through rate instability and volatility, gain market share in both ocean and air markets, obtain profitable market share, improve operational processes and successfully complete and implement comprehensive strategic reassessment to improve alignment and operations. 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 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)
				March 31,					December 31,
				2014					2013
Assets
Current Assets:
Cash and cash equivalents				$	1,131,046				$	1,247,652
Short-term investments				86,491					26,337
Accounts receivable, net				1,062,924					1,073,500
Deferred Federal and state income taxes				18,248					18,396
Other current assets				36,284					49,384
Total current assets				2,334,993					2,415,269
Property and equipment, net				556,071					563,064
Goodwill				7,927					7,927
Other assets, net				26,513					28,552
				$	2,925,504				$	3,014,812
Liabilities and Equity
Current Liabilities:
Accounts payable				677,582					648,156
Accrued expenses, primarily salaries and related costs				196,157					200,301
Federal, state and foreign income taxes				27,754					21,743
Total current liabilities				901,493					870,200
Deferred Federal and state income taxes				63,997					58,281
Commitments and contingencies
Shareholders' Equity:
Preferred stock; none issued				—					—
Common stock, par value $.01 per share. Issued and outstanding 197,166,665 shares at March 31, 2014 and 202,553,220 shares at December 31, 2013				1,972					2,025
Additional paid-in capital				728					1,647
Retained earnings				1,964,122					2,087,376
Accumulated other comprehensive loss				(8,691		)			(6,265		)
Total shareholders' equity				1,958,131					2,084,783
Noncontrolling interest				1,883					1,548
Total equity				1,960,014					2,086,331
				$	2,925,504				$	3,014,812

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
(In thousands, except share data)
(Unaudited)
				Three months ended
				March 31,
				2014					2013
Revenues:
Airfreight services				$	647,138				$	620,374
Ocean freight and ocean services				469,224					445,479
Customs brokerage and other services				375,283					347,355
Total revenues				1,491,645					1,413,208
Operating Expenses:
Airfreight services				482,882					464,919
Ocean freight and ocean services				367,375					344,923
Customs brokerage and other services				176,802					155,359
Salaries and related costs				255,942					248,417
Rent and occupancy costs				25,162					24,193
Depreciation and amortization				12,382					11,278
Selling and promotion				8,173					7,257
Other				27,724					28,344
Total operating expenses				1,356,442					1,284,690
Operating income				135,203					128,518
Interest income				2,697					3,243
Other, net				(281		)			1,531
Other income, net				2,416					4,774
Earnings before income taxes				137,619					133,292
Income tax expense				53,424					52,682
Net earnings				84,195					80,610
Less net earnings attributable to the noncontrolling interest				371					295
Net earnings attributable to shareholders				$	83,824				$	80,315
Diluted earnings attributable to shareholders per share				$	.42				$	.39
Basic earnings attributable to shareholders per share				$	.42				$	.39
Weighted average diluted shares outstanding				201,843,858					207,613,863
Weighted average basic shares outstanding				201,118,390					206,475,095

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
				Three months ended
				March 31,
				2014					2013
Operating Activities:
Net earnings				$	84,195				$	80,610
Adjustments to reconcile net earnings to net cash from operating activities:
(Recoveries) provision for losses on accounts receivable				(1,115		)			941
Deferred income tax expense				7,194					7,122
Excess tax benefits from stock plans				(489		)			(1,099		)
Stock compensation expense				10,294					11,005
Depreciation and amortization				12,382					11,278
Other				138					208
Changes in operating assets and liabilities:
Decrease in accounts receivable				12,228					38,856
Increase (decrease) in accounts payable and accrued expenses				29,546					(1,390		)
Increase in income taxes payable, net				18,205					18,218
Increase (decrease) in other current assets				1,279					(485		)
Net cash from operating activities				173,857					165,264
Investing Activities:
(Increase) decrease in short-term investments, net				(60,154		)			38
Purchase of property and equipment				(8,760		)			(10,068		)
Other, net				1,670					(444		)
Net cash from investing activities				(67,244		)			(10,474		)
Financing Activities:
Proceeds from issuance of common stock				7,892					10,929
Repurchases of common stock				(226,725		)			(17,681		)
Excess tax benefits from stock plans				489					1,099
Purchase of noncontrolling interest				—					(7,730		)
Distribution to noncontrolling interest				(85		)			—
Net cash from financing activities				(218,429		)			(13,383		)
Effect of exchange rate changes on cash and cash equivalents				(4,790		)			(7,562		)
(Decrease) increase in cash and cash equivalents				(116,606		)			133,845
Cash and cash equivalents at beginning of period				1,247,652					1,260,842
Cash and cash equivalents at end of period				$	1,131,046				$	1,394,687
Taxes paid:
Income taxes				$	27,496				$	26,951

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
Business Segment Information
(In thousands)
(Unaudited)
								OTHER									EUROPE			MIDDLE
				UNITED				NORTH			LATIN			ASIA			and			EAST and			ELIMI-				CONSOLI-
				STATES				AMERICA			AMERICA			PACIFIC			AFRICA			INDIA			NATIONS				DATED
Three months ended March 31, 2014:
Revenues from unaffiliated customers				$	400,739			51,584			20,629			714,384			227,508			76,801			—				1,491,645
Transfers between geographic areas					20,011			2,375			5,204			12,009			8,957			4,862			(53,418	)			—
Total revenues				$	420,750			53,959			25,833			726,393			236,465			81,663			(53,418	)			1,491,645
Net revenues				$	192,082			26,161			15,357			133,274			73,057			24,655			—				464,586
Operating income				$	51,898			8,375			4,859			52,841			11,066			6,164			—				135,203
Identifiable assets				$	1,437,768			105,070			61,503			697,614			457,614			162,249			3,686				2,925,504
Capital expenditures				$	3,928			264			301			3,126			852			289			—				8,760
Depreciation and amortization				$	7,852			280			212			2,108			1,492			438			—				12,382
Equity				$	1,151,455			69,702			32,017			448,196			205,060			89,068			(35,484	)			1,960,014
Three months ended March 31, 2013:
Revenues from unaffiliated customers				$	374,374			51,729			19,864			694,137			202,513			70,591			—				1,413,208
Transfers between geographic areas					20,026			2,544			4,876			10,630			8,880			4,327			(51,283	)			—
Total revenues				$	394,400			54,273			24,740			704,767			211,393			74,918			(51,283	)			1,413,208
Net revenues				$	180,343			23,781			14,411			135,550			70,614			23,308			—				448,007
Operating income				$	47,353			6,612			4,089			52,884			11,926			5,654			—				128,518
Identifiable assets				$	1,502,795			96,555			53,935			795,946			406,801			158,569			3,198				3,017,799
Capital expenditures				$	5,379			187			259			2,552			1,198			493			—				10,068
Depreciation and amortization				$	6,757			207			241			1,988			1,629			456			—				11,278
Equity				$	1,231,424			62,267			32,638			568,609			165,014			79,434			(34,765	)			2,104,621

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 must consider 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
				March 31,
(in thousands)				2014				2013
Total revenues				$	1,491,645			$	1,413,208
Expenses:
Airfreight services				482,882				464,919
Ocean freight and ocean services				367,375				344,923
Customs brokerage and other services				176,802				155,359
Net revenues				$	464,586			$	448,007