EX-99.1 2 a20134qerexhibit991.htm EXHIBIT 2013 4Q ER Exhibit 99.1

Exhibit 99.1
EARNINGS RELEASE
By:    Expeditors International of Washington, Inc.
1015 Third Avenue, Suite 1200
Seattle, Washington 98104

CONTACTS:
R. Jordan Gates                Bradley S. Powell
President and Chief Operating Officer        Senior Vice President and Chief Financial Officer
(206) 674-3427     (206) 674-3412
 
 
 
FOR IMMEDIATE RELEASE
EXPEDITORS REPORTS FOURTH QUARTER 2013 EPS OF $.41 PER SHARE 1 
    
SEATTLE, WASHINGTON - February 25, 2014, Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced net earnings attributable to shareholders of $83,496,000 for the fourth quarter of 2013, as compared with $84,208,000 for the same quarter of 2012, a decrease of (1)%. Net revenues2 for the fourth quarter of 2013 increased 4% to $478,072,000 as compared with $461,510,000 reported for the fourth quarter of 2012. Total revenues and operating income were $1,625,859,000 and $133,663,000 in 2013, as compared with $1,535,729,000 and $128,025,000 for the same quarter of 2012, increases of 6% and 4%, respectively. Diluted net earnings attributable to shareholders per share for the fourth quarter were $.41, as compared with $.40 for the same quarter in 2012, an increase of 2%.
    
For the year ended December 31, 2013, net earnings attributable to shareholders was $348,526,000, as compared with $333,360,000 in 2012, an increase of 5%. Net revenues for the year increased to $1,882,853,000 from $1,835,370,000 for 2012, up 3%. Total revenues and operating income for the year were $6,080,257,000 and $552,073,000 in 2013, as compared with $5,992,215,000 and $530,798,000 for the same period in 2012, increases of 1% and 4%, respectively. Diluted net earnings attributable to shareholders per share for the year ended December 31, 2013 were $1.68, as compared with $1.57 for the same period of 2012, an increase of 7%.
    
“Our 2013 fourth quarter showed steady growth in airfreight and ocean freight services, both in revenue and in volumes, said Peter J. Rose, Chairman and Chief Executive Officer. “Airfreight volumes rose 5% while ocean freight volumes were up nearly 16%, as compared with the fourth quarter 2012. Airfreight pricing remained remarkably consistent with the 2012 fourth quarter while pricing in the ocean freight market continued to be weak and somewhat volatile, reflecting the underlying economic challenges that faced ocean freight carriers caused primarily by overcapacity concerns. We also saw the impact of these volume increases spill over into customs brokerage and other services. While it is increasingly acknowledged that the state of the global economy is still not nearly as robust as government, economic and financial pundits would all have us believe, we’ve still found ways to grow profitably while remaining true to the fundamental principles which have been the catalyst for developing this company that had 6 offices and 20 people in 1981 into the $6 billion, nearly 14,000 person, Fortune 500 company it is today,” Rose went on to say.

“The Greek philosopher Heraclitus, 2,500 years ago, coined the phrase, 'Change is the only constant in life.' While the subject of change is currently very topical at Expeditors, the irony of this statement, is that we’ve always believed change can only be effectively managed from a touchstone of constancy. Reflecting back on my career at Expeditors, particularly the last 25 years that I've been privileged to serve as CEO, I am amazed at the changes that have occurred in the world in general and in our industry in specific. We’ve always embraced those things that must change, like technology, customer expectations, regulatory requirements etc., while at the same time reinforcing the specific things that must never change, like our culture, our values and our commitment to exceptional customer service,” Rose continued. “We have the best people, we have great customers and we'll soon have an outstanding new CEO who will be backed by an experienced and vibrant leadership team. What we do to serve our customers will continuously evolve. Our commitment to our customers, to our values and to each other, must never change. For a quarter of a century, it’s been a pleasure and an honor to lead the superb group of people who make up this great company. I’ll miss every aspect of being CEO…even, believe it or not, the good natured (at least from our perspective) sparring with the analysts. I’ll close by saying a heart-felt thank you to everyone who has contributed to making Expeditors what it is today. I’ll also thank in advance those who will assist me in my transition to being 'just' the Chairman of the Board and in supporting Jeff Musser as he becomes our new CEO,” Rose 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, 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 2013 Earnings Release, February 25, 2014

Financial Highlights for the Three months and Years ended December 31, 2013 and 2012 (Unaudited)
(in 000's of US dollars except share data)
 
Three months ended December 31,
 
 
 
Years ended December 31,
 
 
 
2013
 
2012
 
% Increase (Decrease)
 
2013
 
2012
 
% Increase
Revenues
$
1,625,859

 
$
1,535,729

 
6%
 
$
6,080,257

 
$
5,992,215

 
1%
Net revenues
$
478,072

 
$
461,510

 
4%
 
$
1,882,853

 
$
1,835,370

 
3%
Operating income3, 4
$
133,663

 
$
128,025

 
4%
 
$
552,073

 
$
530,798

 
4%
Net earnings attributable to shareholders
$
83,496

 
$
84,208

 
(1)%
 
$
348,526

 
$
333,360

 
5%
Diluted earnings attributable to shareholders
$
.41

 
$
.40

 
2%
 
$
1.68

 
$
1.57

 
7%
Basic earnings attributable to shareholders
$
.41

 
$
.41

 
—%
 
$
1.69

 
$
1.58

 
7%
Diluted weighted average shares outstanding
205,526,229

 
208,963,216

 
 
 
206,895,473

 
211,935,171

 
 
Basic weighted average shares outstanding
204,558,152

 
207,766,619

 
 
 
205,994,656

 
210,422,945

 
 
_______________________
3In 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.
4In the fourth quarter of 2012, the Company recorded approximately $8.4 million in Other operating expenses related to certain foreign indirect withholding taxes that were determined to be non-creditable and approximately $3 million of Rent and occupancy costs associated with a decision not to continue the pursuit of certain real estate projects that had been recorded under construction in process.
 
Employee headcount as of December 31,
 
2013
 
2012
North America
4,860

 
4,726

Asia Pacific
3,952

 
3,914

Europe and Africa
2,277

 
2,332

Middle East
1,222

 
1,236

South America
685

 
672

Information Systems
630

 
600

Corporate
295

 
248

Total
13,921

 
13,728

 
 
Year-over-year percentage increase (decrease) in:
 
 
Airfreight kilos
 
Ocean freight FEU
2013
 
 
 
 
October
 
6
 %
 
15
%
November
 
11
 %
 
17
%
December
 
(3
)%
 
16
%
Quarter
 
5
 %
 
16
%


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 ongoing price volatility overcapacity and volumes in the ocean markets, positive trends in air tonnage and ocean volumes, ability to maintain or grow market share, strength of the global economy, and ability to effectively manage change, including transition to a new CEO. 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)
 
 
December 31,
2013
 
December 31, 2012
Assets
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
1,247,652

 
$
1,260,842

Short-term investments
26,337

 
139

Accounts receivable, net
1,073,500

 
1,031,376

Deferred Federal and state income taxes
18,396

 
12,102

Other current assets
49,384

 
53,140

Total current assets
2,415,269

 
2,357,599

Property and equipment, net
563,064

 
556,204

Goodwill
7,927

 
7,927

Other assets, net
28,552

 
32,395

 
$
3,014,812

 
$
2,954,125

Liabilities and Equity
 
 
 
Current Liabilities:
 
 
 
Accounts payable
$
648,156

 
$
641,593

Accrued expenses, primarily salaries and related costs
200,301

 
178,995

Federal, state and foreign income taxes
21,743

 
21,970

Total current liabilities
870,200

 
842,558

Deferred Federal and state income taxes
58,281

 
78,997

Commitments and contingencies
 
 
 
Shareholders’ Equity:
 
 
 
Preferred stock; none issued
—

 
—

Common stock, par value $.01 per share; issued and outstanding 202,553,220 shares at December 31, 2013 and 206,392,013 shares at December 31, 2012
2,025

 
2,064

Additional paid-in capital
1,647

 
1,283

Retained earnings
2,087,376

 
2,018,618

Accumulated other comprehensive (loss) income
(6,265
)
 
5,734

Total shareholders’ equity
2,084,783

 
2,027,699

Noncontrolling interest
1,548

 
4,871

Total equity
2,086,331

 
2,032,570

 
$
3,014,812

 
$
2,954,125



February 25, 2014
Expeditors International of Washington, Inc.
Page 3 of 7


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,
 
2013
 
2012
 
2013
 
2012
Revenues:
 
 
 
 
 
 
 
Airfreight services
$
742,371

 
$
700,785

 
$
2,633,830

 
$
2,600,916

Ocean freight and ocean services
495,552

 
472,307

 
1,958,231

 
1,974,891

Customs brokerage and other services
387,936

 
362,637

 
1,488,196

 
1,416,408

Total revenues
1,625,859

 
1,535,729

 
6,080,257

 
5,992,215

Operating Expenses:
 
 
 
 
 
 
 
Airfreight services
579,740

 
546,395

 
1,994,374

 
1,983,696

Ocean freight and ocean services
386,041

 
364,251

 
1,521,340

 
1,542,170

Customs brokerage and other services
182,006

 
163,573

 
681,690

 
630,979

Salaries and related costs
267,002

 
246,096

 
1,032,601

 
995,052

Rent and occupancy costs
24,990

 
27,343

 
98,437

 
98,580

Depreciation and amortization
12,490

 
10,695

 
48,071

 
39,940

Selling and promotion
9,352

 
8,814

 
33,243

 
34,184

Other
30,575

 
40,537

 
118,428

 
136,816

Total operating expenses
1,492,196

 
1,407,704

 
5,528,184

 
5,461,417

Operating income
133,663

 
128,025

 
552,073

 
530,798

 
 
 
 
 
 
 
 
Interest income
2,530

 
3,522

 
11,810

 
12,763

Other, net
1,645

 
1,845

 
8,713

 
6,832

Other income, net
4,175

 
5,367

 
20,523

 
19,595

Earnings before income taxes
137,838

 
133,392

 
572,596

 
550,393

Income tax expense
53,829

 
49,893

 
222,585

 
217,424

Net earnings
84,009

 
83,499

 
350,011

 
332,969

Less net earnings (losses) attributable to the noncontrolling interest
513

 
(709
)
 
1,485

 
(391
)
Net earnings attributable to shareholders
$
83,496

 
$
84,208

 
$
348,526

 
$
333,360

Diluted earnings attributable to shareholders per share
$
.41

 
$
.40

 
$
1.68

 
$
1.57

Basic earnings attributable to shareholders per share
$
.41

 
$
.41

 
$
1.69

 
$
1.58

Dividends declared and paid per common share
$
.30

 
$
.28

 
$
.60

 
$
.56

Weighted average diluted shares outstanding
205,526,229

 
208,963,216

 
206,895,473

 
211,935,171

Weighted average basic shares outstanding
204,558,152

 
207,766,619

 
205,994,656

 
210,422,945



February 25, 2014
Expeditors International of Washington, Inc.
Page 4 of 7

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,
 
2013
 
2012
 
2013
 
2012
Operating Activities:
 
 
 
 
 
 
 
Net earnings
$
84,009

 
$
83,499

 
$
350,011

 
$
332,969

Adjustments to reconcile net earnings to net cash from operating activities:
 
 
 
 
 
 
 
(Recoveries) provision for losses on accounts receivable
(421
)
 
302

 
2,116

 
(90
)
Deferred income tax (benefit) expense
(730
)
 
7,309

 
(20,975
)
 
11,639

Excess tax benefits from stock plans
(656
)
 
(1,110
)
 
(2,339
)
 
(5,401
)
Stock compensation expense
10,753

 
11,212

 
43,813

 
44,058

Depreciation and amortization
12,490

 
10,695

 
48,071

 
39,940

Other
208

 
3,181

 
844

 
4,864

Changes in operating assets and liabilities:
 
 
 
 
 
 
 
Increase in accounts receivable
(50,093
)
 
(16,044
)
 
(64,575
)
 
(89,856
)
Decrease (increase) in other current assets
3,263

 
3,566

 
(2,015
)
 
(63
)
Increase (decrease) in accounts payable and accrued expenses
9,335

 
(30,341
)
 
44,150

 
30,625

(Decrease) in income taxes payable, net
(6,205
)
 
(11,520
)
 
8,435

 
1,441

Net cash from operating activities
61,953

 
60,749

 
407,536

 
370,126

Investing Activities:
 
 
 
 
 
 
 
Decrease (increase) in short-term investments, net
73,489

 
131

 
(26,201
)
 
342

Purchase of property and equipment
(10,720
)
 
(10,554
)
 
(53,411
)
 
(47,626
)
Other
1,680

 
15

 
2,806

 
290

Net cash from investing activities
64,449

 
(10,408
)
 
(76,806
)
 
(46,994
)
Financing Activities:
 
 
 
 
 
 
 
Proceeds from issuance of common stock
7,660

 
7,510

 
59,752

 
52,511

Repurchases of common stock
(136,730
)
 
(108,921
)
 
(261,936
)
 
(302,414
)
Excess tax benefits from stock plans
656

 
1,110

 
2,339

 
5,401

Dividends paid
(61,393
)
 
(57,905
)
 
(123,292
)
 
(117,263
)
Purchase of noncontrolling interest
—

 
—

 
(7,730
)
 
—

Distribution to noncontrolling interest
—

 
(105
)
 
(1,161
)
 
(1,282
)
Net cash from financing activities
(189,807
)
 
(158,311
)
 
(332,028
)
 
(363,047
)
Effect of exchange rate changes on cash and cash equivalents
727

 
1,170

 
(11,892
)
 
6,401

Decrease in cash and cash equivalents
(62,678
)
 
(106,800
)
 
(13,190
)
 
(33,514
)
Cash and cash equivalents at beginning of period
1,310,330

 
1,367,642

 
1,260,842

 
1,294,356

Cash and cash equivalents at end of period
$
1,247,652

 
$
1,260,842

 
$
1,247,652

 
$
1,260,842

Taxes paid:
 
 
 
 
 
 
 
Income taxes
$
61,169

 
$
52,168

 
$
235,368

 
$
207,174



February 25, 2014
Expeditors International of Washington, Inc.
Page 5 of 7

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
Business Segment Information
(In thousands) (Unaudited)
 
UNITED
STATES
 
OTHER
NORTH
AMERICA
 
LATIN
AMERICA
 
ASIA
PACIFIC
 
EUROPE and
AFRICA
 
MIDDLE
EAST and
INDIA
 
ELIMI-
NATIONS
 
CONSOLI-
DATED
Three months ended December 31, 2013:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues from unaffiliated customers
$
394,835

 
54,651

 
22,629

 
844,148

 
229,823

 
79,773

 
—

 
1,625,859

Transfers between geographic areas
24,262

 
3,067

 
5,578

 
12,388

 
10,036

 
4,478

 
(59,809
)
 
—

Total revenues
$
419,097

 
57,718

 
28,207

 
856,536

 
239,859

 
84,251

 
(59,809
)
 
1,625,859

Net revenues
$
197,560

 
27,388

 
15,918

 
139,239

 
73,387

 
24,580

 
—

 
478,072

Operating income
$
34,509

 
12,201

 
1,727

 
59,682

 
17,506

 
8,038

 
—

 
133,663

Identifiable assets
$
1,582,557

 
104,735

 
58,027

 
669,040

 
445,722

 
148,626

 
6,105

 
3,014,812

Capital expenditures
$
6,503

 
336

 
459

 
2,404

 
684

 
334

 
—

 
10,720

Depreciation and amortization
$
7,928

 
267

 
221

 
2,106

 
1,531

 
437

 
—

 
12,490

Equity
$
1,330,262

 
72,772

 
29,590

 
408,824

 
196,087

 
83,174

 
(34,378
)
 
2,086,331

Three months ended December 31, 2012:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues from unaffiliated customers
$
381,638

 
51,557

 
20,887

 
800,835

 
210,352

 
70,460

 
—

 
1,535,729

Transfers between geographic areas
25,386

 
2,868

 
4,770

 
11,035

 
10,097

 
4,300

 
(58,456
)
 
—

Total revenues
$
407,024

 
54,425

 
25,657

 
811,870

 
220,449

 
74,760

 
(58,456
)
 
1,535,729

Net revenues
$
188,796

 
25,029

 
14,258

 
136,528

 
73,514

 
23,385

 
—

 
461,510

Operating income
$
28,201

 
11,045

 
4,237

 
57,933

 
18,804

 
7,805

 
—

 
128,025

Identifiable assets
$
1,459,425

 
92,075

 
48,995

 
776,902

 
428,053

 
147,871

 
804

 
2,954,125

Capital expenditures
$
7,412

 
281

 
241

 
1,452

 
794

 
374

 
—

 
10,554

Depreciation and amortization
$
6,358

 
200

 
229

 
1,850

 
1,605

 
453

 
—

 
10,695

Equity
$
1,197,239

 
58,071

 
29,504

 
538,710

 
167,752

 
74,950

 
(33,656
)
 
2,032,570

Twelve months ended December 31, 2013:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues from unaffiliated customers
$
1,561,468

 
215,968

 
86,050

 
3,065,412

 
850,863

 
300,496

 
—

 
6,080,257

Transfers between geographic areas
89,570

 
11,038

 
21,711

 
46,704

 
37,463

 
17,837

 
(224,323
)
 
—

Total revenues
$
1,651,038

 
227,006

 
107,761

 
3,112,116

 
888,326

 
318,333

 
(224,323
)
 
6,080,257

Net revenues
$
770,519

 
102,864

 
61,478

 
563,705

 
286,018

 
98,269

 
—

 
1,882,853

Operating income
$
195,799

 
35,224

 
15,734

 
225,322

 
52,939

 
27,055

 
—

 
552,073

Identifiable assets
$
1,582,557

 
104,735

 
58,027

 
669,040

 
445,722

 
148,626

 
6,105

 
3,014,812

Capital expenditures
$
28,699

 
1,870

 
1,010

 
17,262

 
3,148

 
1,422

 
—

 
53,411

Depreciation and amortization
$
29,569

 
882

 
901

 
8,420

 
6,244

 
2,055

 
—

 
48,071

Equity
$
1,330,262

 
72,772

 
29,590

 
408,824

 
196,087

 
83,174

 
(34,378
)
 
2,086,331

Twelve months ended December 31, 2012:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues from unaffiliated customers
$
1,529,917

 
201,521

 
82,337

 
3,074,737

 
817,408

 
286,295

 
—

 
5,992,215

Transfers between geographic areas
94,521

 
10,476

 
18,780

 
43,721

 
38,791

 
18,128

 
(224,417
)
 
—

Total revenues
$
1,624,438

 
211,997

 
101,117

 
3,118,458

 
856,199

 
304,423

 
(224,417
)
 
5,992,215

Net revenues
$
748,320

 
95,798

 
57,795

 
551,361

 
286,745

 
95,351

 
—

 
1,835,370

Operating income
$
179,015

 
32,385

 
17,356

 
216,559

 
59,314

 
26,169

 
—

 
530,798

Identifiable assets
$
1,459,425

 
92,075

 
48,995

 
776,902

 
428,053

 
147,871

 
804

 
2,954,125

Capital expenditures
$
28,088

 
832

 
1,301

 
11,275

 
4,323

 
1,807

 
—

 
47,626

Depreciation and amortization
$
23,678

 
756

 
873

 
6,810

 
5,994

 
1,829

 
—

 
39,940

Equity
$
1,197,239

 
58,071

 
29,504

 
538,710

 
167,752

 
74,950

 
(33,656
)
 
2,032,570



February 25, 2014
Expeditors International of Washington, Inc.
Page 6 of 7

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)
2013
 
2012
 
2013
 
2012
Total revenues
$
1,625,859

 
$
1,535,729

 
$
6,080,257

 
$
5,992,215

Expenses:
 
 
 
 
 
 
 
Airfreight services
579,740

 
546,395

 
1,994,374

 
1,983,696

Ocean freight and ocean services
386,041

 
364,251

 
1,521,340

 
1,542,170

Customs brokerage and other services
182,006

 
163,573

 
681,690

 
630,979

Net revenues
$
478,072

 
$
461,510

 
$
1,882,853

 
$
1,835,370



February 25, 2014
Expeditors International of Washington, Inc.
Page 7 of 7