8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report:  November 5, 2019 (Date of earliest event reported)

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

(Exact name of registrant as specified in its charter)

Washington	000-13468	91-1069248
(State or other jurisdiction of incorporation or organization)	(Commission File No.)	(IRS Employer Identification Number)
1015 Third Avenue, Seattle, Washington	(206) 674-3400	98104
(Address of principal executive offices)	(Registrant's telephone number, including area code)	(Zip Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	EXPD	NASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition.

The following information is furnished pursuant to Item 2.02, “Results of Operations and Financial Condition.”

On November 5, 2019, Expeditors International of Washington, Inc., a Washington corporation, issued a press release announcing third quarter 2019 financial results.  A copy of the press release is furnished as Exhibit 99.1 to this report.

Item 9.01 Financial Statements and Exhibits.

(d) The following items are filed as exhibits to this report:

99.1	Press release, dated November 5, 2019 issued by Expeditors International of Washington, Inc.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
November 5, 2019	/S/ Bradley S. Powell
	Bradley S. Powell, Senior
	Vice President and Chief Financial Officer

EX-99.1

Exhibit 99.1

EARNINGS RELEASE

By:	Expeditors International of Washington, Inc.
	1015 Third Avenue, Suite 1200
	Seattle, Washington 98104
	CONTACTS:
	Jeffrey S. Musser	Bradley S. Powell	Geoffrey Buscher
	President and Chief Executive Officer	Senior Vice President and Chief Financial Officer	Director - Investor Relations
	(206) 674-3433	(206) 674-3412	(206) 892-4510

FOR IMMEDIATE RELEASE

EXPEDITORS REPORTS THIRD QUARTER 2019 EPS OF $0.92

SEATTLE, WASHINGTON - November 5, 2019, Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced third quarter 2019 financial results including the following highlights compared to the same quarter of 2018:

• Diluted Net Earnings Attributable to Shareholders per share (EPS¹) remained constant at $0.92

• Net Earnings Attributable to Shareholders decreased 2% to $160 million

• Operating Income increased 2% to $207 million

• Revenues decreased 1% to $2.1 billion

• Airfreight tonnage volume decreased 7% and ocean container volume decreased 2%

“The third quarter presented challenges that were not unexpected in terms of growth in the global economy and ongoing trade disputes that extend well beyond just the United States and China,” said Jeffrey S. Musser, President and Chief Executive Officer. “We saw volumes drop in our air and ocean products but believe this was consistent with the overall market. In addition to volume changes, we also believe the market experienced corresponding changes in buy/sell rates and we were adept at negotiating in the changing pricing environment.

“We’ve always believed that a true global network of offices is critical to achieving success in the supply chain, and that played out as expected with outsized growth in regions where business has transitioned. Further, the trade environment has placed an increased need for products such as customs brokerage, and our results show that we continue to execute well in this area. A broad range of solutions, technology and expertise has never been more important to help mitigate the uncertainty and ambiguity of the current marketplace.

“Our focus on providing an extremely high level of service, coupled with deep knowledge and expertise, remains a winning strategy. We can’t execute this strategy without our global team and, as always, we are incredibly thankful for their effort and dedication.”

Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, “We again demonstrated strong performance in our customs brokerage, Transcon, ocean forwarding, and order management businesses during the quarter. In addition, we boosted our operating efficiency by paying close attention to costs across our global network.” Mr. Powell also noted that the Company’s effective tax rate was 24.9% in the quarter, compared to 21.8% in the third quarter of 2018. The three-month period ended 2018 benefited from required discrete adjustments as a result of interpretations issued related to the 2017 Tax Act for foreign tax credits earned as a result of withholding taxes paid on repatriated foreign earnings and a state income tax refund that settled during the quarter in 2018.

Expeditors is a global logistics company headquartered in Seattle, Washington. The Company employs trained professionals in 176 district offices and numerous branch 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 and distribution and customized logistics solutions.

_______________________

¹Diluted earnings attributable to shareholders per share.

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

Expeditors International of Washington, Inc.

Third Quarter 2019 Earnings Release, November 5, 2019

Financial Highlights for the three and nine months ended September 30, 2019 and 2018 (Unaudited)

(in 000's of US dollars except per share data)

	Three months ended September 30,					Nine months ended September 30,
	2019		2018		% Change	2019		2018		% Change
Revenues	$	2,074,855	$	2,090,947	(1)%	$	6,130,485	$	5,902,768	4%
Directly related cost of transportation and   other expenses1	$	1,400,499	$	1,429,633	(2)%	$	4,140,320	$	3,963,070	4%
Salaries and other operating expenses2	$	467,806	$	458,160	2%	$	1,403,813	$	1,360,142	3%
Operating income	$	206,550	$	203,154	2%	$	586,352	$	579,556	1%
Net earnings attributable to shareholders	$	160,221	$	162,692	(2)%	$	453,069	$	438,989	3%
Diluted earnings attributable to    shareholders per share	$	0.92	$	0.92	—%	$	2.60	$	2.46	6%
Basic earnings attributable to shareholders    per share	$	0.94	$	0.94	—%	$	2.65	$	2.51	6%
Diluted weighted average shares    outstanding		173,483		177,173			174,463		178,447
Basic weighted average shares outstanding		170,415		173,394			171,084		174,675

¹Directly related cost of transportation and other expenses totals Operating Expenses from Airfreight services, Ocean freight and ocean services and Customs brokerage and other services as shown in the Condensed Consolidated Statements of Earnings.

²Salaries and other operating expenses totals Salaries and related, Rent and occupancy, Depreciation and amortization, Selling and promotion and Other as shown in the Condensed Consolidated Statements of Earnings.

The three and nine months ended September 30, 2019 include the effect of changing our presentation of certain import services from a net to a gross basis and our revised presentation of destination services, which increased revenues and directly related operating expenses in customs brokerage and other services but did not change operating income.

During the three and nine months ended September 30, 2019, we repurchased 0.9 million and 4.1 million shares of common stock at an average price of $69.51 and $72.60 per share, respectively. During the three and nine months ended September 30, 2018, we repurchased 2.0 million and 7.8 million shares of common stock at an average price of $73.47 and $71.58 per share, respectively.

	Employee Full-time Equivalents September 30, 2019
	2019		2018
North America		6,861		6,635
Europe		3,427		3,270
North Asia		2,483		2,655
South Asia		1,674		1,640
Middle East, Africa and India		1,565		1,478
Latin America		860		831
Information Systems		939		904
Corporate		383		351
Total		18,192		17,764

	Third quarter year-over-year percentage increase (decrease) in:
	Airfreight kilos	Ocean freight FEU
2019
July	(5)%	2%
August	(9)%	(1)%
September	(9)%	(7)%
Quarter	(7)%	(2)%

Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on November 8, 2019 will be considered in management's 8-K “Responses to Selected Questions.”

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 our ability to maintain a differentiated, knowledgeable workforce; the impact of the 2017 Tax Act and related interpretations on our effective tax rate; and 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 per share data)

(Unaudited)

	September 30, 2019			December 31, 2018
Assets:
Current Assets:
Cash and cash equivalents	$	1,215,970		$	923,735
Accounts receivable, less allowance for doubtful accounts of    $11,853 at September 30, 2019 and $15,345 at December 31, 2018		1,319,032			1,581,530
Deferred contract costs		130,690			159,510
Other		103,521			70,041
Total current assets		2,769,213			2,734,816
Property and equipment, less accumulated depreciation and    amortization of $468,059 at September 30, 2019 and $446,977 at    December 31, 2018		494,153			504,105
Operating lease right-of-use assets		374,231			—
Goodwill		7,927			7,927
Deferred federal and state income taxes, net		44,351			40,465
Other assets, net		16,578			27,246
Total assets	$	3,706,453		$	3,314,559
Liabilities:
Current Liabilities:
Accounts payable	$	744,002		$	902,259
Accrued expenses, primarily salaries and related costs		207,752			215,813
Contract liabilities		152,717			190,343
Current portion of operating lease liabilities		61,842			—
Federal, state and foreign income taxes		17,273			18,424
Total current liabilities		1,183,586			1,326,839
Noncurrent portion of operating lease liabilities		313,580			—
Commitments and contingencies
Shareholders’ Equity:
Preferred stock, none issued		—			—
Common stock, par value $0.01 per share. Issued and    outstanding: 170,243 shares at September 30, 2019 and 171,582    shares at December 31, 2018		1,702			1,716
Additional paid-in capital		23,301			1,896
Retained earnings		2,301,156			2,088,707
Accumulated other comprehensive loss		(118,774	)		(105,481	)
Total shareholders’ equity		2,207,385			1,986,838
Noncontrolling interest		1,902			882
Total equity		2,209,287			1,987,720
Total liabilities and equity	$	3,706,453		$	3,314,559

05-November-2019 Expeditors International of Washington, Inc. Page 3 of 6

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Earnings

(In thousands, except per share data)

(Unaudited)

	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
Revenues:
Airfreight services	$	715,450	$	833,338	$	2,171,928	$	2,366,326
Ocean freight and ocean services		585,374		585,810		1,697,824		1,636,701
Customs brokerage and other services		774,031		671,799		2,260,733		1,899,741
Total revenues		2,074,855		2,090,947		6,130,485		5,902,768
Operating Expenses:
Airfreight services		522,868		620,554		1,574,717		1,727,383
Ocean freight and ocean services		424,215		435,313		1,234,845		1,199,887
Customs brokerage and other services		453,416		373,766		1,330,758		1,035,800
Salaries and related		356,331		351,577		1,069,592		1,042,420
Rent and occupancy		41,987		38,202		124,407		113,186
Depreciation and amortization		12,386		13,335		38,456		40,833
Selling and promotion		10,133		10,632		32,852		32,385
Other		46,969		44,414		138,506		131,318
Total operating expenses		1,868,305		1,887,793		5,544,133		5,323,212
Operating income		206,550		203,154		586,352		579,556
Other Income (Expense):
Interest income		5,501		4,704		18,123		14,171
Other, net		1,895		566		5,822		2,357
Other income (expense), net		7,396		5,270		23,945		16,528
Earnings before income taxes		213,946		208,424		610,297		596,084
Income tax expense		53,319		45,357		156,029		155,871
Net earnings		160,627		163,067		454,268		440,213
Less net earnings attributable to the noncontrolling    interest		406		375		1,199		1,224
Net earnings attributable to shareholders	$	160,221	$	162,692	$	453,069	$	438,989
Diluted earnings attributable to shareholders per share	$	0.92	$	0.92	$	2.60	$	2.46
Basic earnings attributable to shareholders per share	$	0.94	$	0.94	$	2.65	$	2.51
Weighted average diluted shares outstanding		173,483		177,173		174,463		178,447
Weighted average basic shares outstanding		170,415		173,394		171,084		174,675

05-November-2019 Expeditors International of Washington, Inc. Page 4 of 6

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
Operating Activities:
Net earnings	$	160,627		$	163,067		$	454,268		$	440,213
Adjustments to reconcile net earnings to net cash from    operating activities:
Provisions for losses on accounts receivable		757			1,969			453			2,232
Deferred income tax benefit		(5,822	)		(23,610	)		(17	)		(17,522	)
Stock compensation expense		12,155			13,902			49,361			43,171
Depreciation and amortization		12,386			13,335			38,456			40,833
Other, net		652			666			812			770
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable		43,885			(210,092	)		246,175			(156,321	)
(Decrease) increase in accounts payable and accrued    expenses		(58,816	)		115,629			(141,199	)		127,860
Decrease (increase) in deferred contract costs		10,301			(34,623	)		28,550			(51,235	)
(Decrease) increase in contract liabilities		(13,211	)		36,256			(36,933	)		49,149
(Decrease) increase in income taxes payable, net		(671	)		9,292			(33,284	)		(9,258	)
(Decrease) increase in other, net		(744	)		930			47			862
Net cash from operating activities		161,499			86,721			606,689			470,754
Investing Activities:
Purchase of property and equipment		(15,521	)		(11,733	)		(37,943	)		(37,642	)
Other, net		232			1,109			1,525			(886	)
Net cash from investing activities		(15,289	)		(10,624	)		(36,418	)		(38,528	)
Financing Activities:
Proceeds from issuance of common stock		60,713			47,806			120,190			169,566
Repurchases of common stock		(61,999	)		(147,828	)		(296,922	)		(555,760	)
Dividends Paid		—			—			(85,184	)		(79,180	)
Payments for taxes related to net share settlement of equity    awards		—			—			(6,674	)		(3,215	)
Distributions to noncontrolling interest		—			(633	)		—			(633	)
Purchase of noncontrolling interest		—			(613	)		—			(613	)
Net cash from financing activities		(1,286	)		(101,268	)		(268,590	)		(469,835	)
Effect of exchange rate changes on cash and cash equivalents		(11,604	)		(5,071	)		(9,446	)		(22,878	)
Change in cash and cash equivalents		133,320			(30,242	)		292,235			(60,487	)
Cash and cash equivalents at beginning of period		1,082,650			1,020,854			923,735			1,051,099
Cash and cash equivalents at end of period	$	1,215,970		$	990,612		$	1,215,970		$	990,612
Taxes Paid:
Income taxes	$	61,201		$	59,313		$	196,169		$	183,444

05-November-2019 Expeditors International of Washington, Inc. Page 5 of 6

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Business Segment Information

(In thousands)

(Unaudited)

	UNITED STATES		OTHER NORTH AMERICA		LATIN AMERICA		NORTH ASIA		SOUTH ASIA		EUROPE		MIDDLE EAST, AFRICA AND INDIA		ELIMI- NATIONS			CONSOLI- DATED
For the three months ended September 30, 2019:
Revenues1	$	692,229		88,088		38,341		624,351		196,569		320,769		115,397		(889	)		2,074,855
Directly related cost of transportation and    other expenses2	$	389,254		51,420		22,990		489,195		145,345		221,149		81,592		(446	)		1,400,499
Salaries and other operating expenses3	$	210,767		25,731		14,547		70,410		32,482		86,156		28,151		(438	)		467,806
Operating income	$	92,208		10,937		804		64,746		18,742		13,464		5,654		(5	)		206,550
Identifiable assets at period end	$	2,059,345		128,336		72,029		489,322		164,976		563,289		226,657		2,499			3,706,453
Capital expenditures	$	7,644		513		833		523		631		5,119		258		—			15,521
Equity	$	1,578,682		60,526		27,217		216,061		77,733		169,450		111,355		(31,737	)		2,209,287
For the three months ended September 30, 2018:
Revenues1	$	629,043		92,875		43,443		748,589		205,392		327,212		118,047		(73,654	)		2,090,947
Directly related cost of transportation and    other expenses2	$	345,236		58,464		27,635		601,699		158,226		227,418		83,992		(73,037	)		1,429,633
Salaries and other operating expenses3	$	204,240		23,935		13,399		74,067		31,623		84,136		27,384		(624	)		458,160
Operating income	$	79,567		10,476		2,409		72,823		15,543		15,658		6,671		7			203,154
Identifiable assets at period end	$	1,694,556		174,402		53,322		540,465		156,887		508,855		212,817		(6,504	)		3,334,800
Capital expenditures	$	6,889		301		227		1,280		910		751		1,375		—			11,733
Equity	$	1,334,952		66,399		25,663		197,939		86,048		157,973		119,718		(31,360	)		1,957,332

	UNITED STATES		OTHER NORTH AMERICA		LATIN AMERICA		NORTH ASIA		SOUTH ASIA		EUROPE		MIDDLE EAST, AFRICA AND INDIA		ELIMI- NATIONS			CONSOLI- DATED
For the nine months ended September 30, 2019:
Revenues1	$	2,033,088		265,035		111,277		1,879,155		555,128		952,790		336,383		(2,371	)		6,130,485
Directly related cost of transportation and    other expenses2	$	1,142,701		157,997		64,149		1,475,395		407,642		657,720		236,184		(1,468	)		4,140,320
Salaries and other operating expenses3	$	636,243		76,283		41,342		208,781		97,324		258,339		86,385		(884	)		1,403,813
Operating income	$	254,144		30,755		5,786		194,979		50,162		36,731		13,814		(19	)		586,352
Identifiable assets at period end	$	2,059,345		128,336		72,029		489,322		164,976		563,289		226,657		2,499			3,706,453
Capital expenditures	$	23,544		1,509		1,071		1,167		1,235		8,015		1,402		—			37,943
Equity	$	1,578,682		60,526		27,217		216,061		77,733		169,450		111,355		(31,737	)		2,209,287
For the nine months ended September 30, 2018:
Revenues1	$	1,790,869		257,206		122,170		2,065,405		560,070		977,967		342,589		(213,508	)		5,902,768
Directly related cost of transportation and    other expenses2	$	957,997		157,599		75,694		1,640,724		423,612		677,167		242,208		(211,931	)		3,963,070
Salaries and other operating expenses3	$	620,029		70,036		38,996		211,576		92,409		248,906		79,782		(1,592	)		1,360,142
Operating income	$	212,843		29,571		7,480		213,105		44,049		51,894		20,599		15			579,556
Identifiable assets at period end	$	1,694,556		174,402		53,322		540,465		156,887		508,855		212,817		(6,504	)		3,334,800
Capital expenditures	$	16,092		4,020		899		2,623		1,934		9,167		2,907		—			37,642
Equity	$	1,334,952		66,399		25,663		197,939		86,048		157,973		119,718		(31,360	)		1,957,332

¹In 2019, the Company revised its process to record the transfer, between its geographic operating segments, of revenues and the directly related cost of transportation expenses for freight service transactions between Company origin and destination locations. This change better aligns revenue reporting with the location where the services are performed, as well as the transactional reporting being developed as part of the Company’s new accounting systems and processes. Prior year segment revenues have not been revised. The change in presentation had no impact on consolidated or segment operating income. The 2019 results also include the effect of changing the presentation of certain import services from a net to a gross basis, which increased segment revenues and directly related operating expenses but did not change operating income. The impact of these changes on reported segment revenues was immaterial and prior year segment revenues have not been revised.

²Directly related cost of transportation and other expenses totals Operating Expenses from Airfreight services, Ocean freight and ocean services and Customs brokerage and other services as shown in the Condensed Consolidated Statements of Earnings.

³Salaries and other operating expenses totals Salaries and related, Rent and occupancy, Depreciation and amortization, Selling and promotion and Other as shown in the Condensed Consolidated Statements of Earnings.

05-November-2019 Expeditors International of Washington, Inc. Page 6 of 6

XML

Document And Entity Information	Nov. 05, 2019
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Nov. 05, 2019
Entity Registrant Name	EXPEDITORS INTERNATIONAL OF WASHINGTON INC
Entity Central Index Key	0000746515
Entity Emerging Growth Company	false
Entity File Number	000-13468
Entity Incorporation, State or Country Code	WA
Entity Tax Identification Number	91-1069248
Entity Address, Address Line One	1015 Third Avenue
Entity Address, City or Town	Seattle
Entity Address, State or Province	WA
Entity Address, Postal Zip Code	98104
City Area Code	206
Local Phone Number	674-3400
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of each class	Common Stock, $0.01 par value
Trading Symbol(s)	EXPD
Name of each exchange on which registered	NASDAQ