Expeditors Reports Third Quarter 2012 EPS of $.42 Per Share1

  Expeditors Reports Third Quarter 2012 EPS of $.42 Per Share1

Business Wire

SEATTLE -- November 06, 2012

Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced net
earnings attributable to shareholders of $88,490,000 for the third quarter of
2012, as compared with $106,604,000 for the same quarter of 2011, a decrease
of (17)%. Net revenues for the third quarter of 2012 decreased (6)% to
$465,138,000 as compared with $493,846,000 reported for the third quarter of
2011. Total revenues and operating income were $1,531,664,000 ^  and
$145,099,000 ^  in the third quarter of 2012, as compared with $1,606,368,000
and $163,758,000 for the same quarter of 2011, decreases of (5)% and (11)%,
respectively. Diluted net earnings attributable to shareholders per share for
the third quarter were $.42, as compared with $.50 for the same quarter in
2011, a decrease of (16)%.

For the nine months ended September 30, 2012, net earnings attributable to
shareholders was $249,152,000, as compared with $292,836,000 in 2011, a
decrease of (15)%. Net revenues for the nine months decreased to
$1,365,360,000 from $1,420,322,000 for 2011, down (4)%. Total revenues and
operating income for the nine months were $4,447,986,000 and $402,773,000 in
2012, as compared with $4,648,584,000 and $463,263,000 for the same period in
2011, decreases of (4)% and (13)%, respectively. Diluted net earnings
attributable to shareholders per share for the first three quarters of 2012
were $1.17, as compared with $1.36 for the same period of 2011, a decrease of
(14)%.

"Amidst the myriad of challenges we've faced this year it was not only
satisfying but a very significant achievement to our productivity and cost
management objectives to see our operating margin^2 once again above 30%,"
said Peter J. Rose, Chairman and Chief Executive Officer. “During our 30+ year
operating history, we have never had the kinds of convergence of industry
challenges, in both our customers and service providers' industries, than we
have experienced this year. Financially struggling air and ocean carriers,
airfreight markets adapting to smaller, lighter, more powerful smart phones
and mobile tablets versus heavier PCs, lackluster consumer and business demand
and global economic uncertainty have all combined to create a very uniquely
challenging business environment. In spite of all this, we have executed
efficiently and intelligently by maintaining both our uncompromising customer
service standards and a long-term focus on our investments in our people and
our systems. In addition to having the best people, we have loyal customers
and very capable and dependable service providers, all of whom are integral to
our success. For us, there is much more to feel good about than there is to
fret about. We're not about to let short-term challenges become long-term
obstacles,” Rose continued.

“Years come and years go, and, like 2009, we'll be glad to see this one end.
We remain confident, however, in our ability to weather the economic storms,
keep our culture intact, remain profitable and continue to build market share
that contributes, rather than detracts from the financial stability that our
balance sheet shows we've constructed over the years. It is as strong and as
liquid as it has ever been. We don't make public predictions, but we do
believe people should pay more attention when we express concerns over
economic uncertainty. Finally, on the subject of storms and best people, we'd
be completely remiss not to mention our U.S. Northeast Region, particularly
our people in the New York and New Jersey offices, who just bore the brunt of
Hurricane Sandy. Thankfully all were safe, however some lost homes, many lost
cars and still more had significant property damage and remain without power.
Despite that, even while assisting family, friends and neighbors, as much as
the law and public safety allowed, they were also finding solutions to our
customers' logistics challenges. Our New York office, which was in the
mandatory evacuation zone, was operational as soon as the evacuation order was
lifted. Our network has shown an outpouring of help and assistance that is the
embodiment of everything we consider sacrosanct to our Expeditors family
values. The example our people exhibit says more about our culture, about who
we are and about our enduring potential as a Company than one can put into all
of the 113 quarterly earnings releases we've issued over the years. It taught
us a whole new meaning for our motto, 'You'd be surprised how far we'll go for
you!' We couldn't be more proud,” Rose concluded.

Expeditors is a global logistics company headquartered in Seattle, Washington.
The company employs trained professionals in 189 full-service offices and 64
satellite locations located on six continents linked into a seamless worldwide
network through an integrated information management system. Services include
air and ocean freight forwarding, vendor consolidation, customs clearance,
marine insurance, distribution, domestic time definite services and other
value added international logistics services.

^1 Diluted earnings attributable to shareholders per share.

^2 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.
Third Quarter 2012 Earnings Release, November 6, 2012
 
Financial Highlights for the Three and Nine months ended September 30, 2012 and 2011 (Unaudited)
(in 000's of US dollars except share data)
 
                   Three months ended                           Nine months ended                
                   September 30,                                September 30,
                   2012             2011             %          2012             2011             %
Revenues           $ 1,531,664      $ 1,606,368      (5  )%     $ 4,447,986      $ 4,648,584      (4  )%
Net revenues       $ 465,138        $ 493,846        (6  )%     $ 1,365,360      $ 1,420,322      (4  )%
Operating          $ 145,099        $ 163,758        (11 )%     $ 402,773        $ 463,263        (13 )%
income
Net earnings
attributable       $ 88,490         $ 106,604        (17 )%     $ 249,152        $ 292,836        (15 )%
to
shareholders
Diluted
earnings
attributable       $ .42            $ .50            (16 )%     $ 1.17           $ 1.36           (14 )%
to
shareholders
Basic
earnings
attributable       $ .42            $ .50            (16 )%     $ 1.18           $ 1.38           (14 )%
to
shareholders
Diluted
weighted
average            211,397,602      214,717,451                 212,916,309      215,376,675
shares
outstanding
Basic
weighted
average            210,135,763      212,256,119                 211,314,850      212,160,994
shares
outstanding
                                                                                                   

                          Employee headcount as of September 30,
                          2012                       2011
North America             4,786                      4,631
Asia Pacific              3,936                      4,094
Europe and Africa         2,336                      2,227
Middle East               1,249                      1,233
South America             683                        631
Information Systems       603                        552
Corporate                 241                        215
Total                     13,834                     13,583
                                                      

                Year-over-year percentage decrease in:
                Airfreight kilos     Ocean freight FEU
2012
July            (19)%                (3)%
August          (7)%                 (6)%
September       (2)%                 (2)%
Quarter         (9)%                 (4)%
                                      

During the third quarter of 2012, the Company opened four full service
offices: (1) Copenhagen, Denmark; (2) Santo Domingo, Dominican Republic; (3)
Luxembourg, Luxembourg; and (4) Hannover, Germany (formerly a satellite
office). The Company opened one satellite office in Le Havre, France and
closed one satellite office in Kristiansand, Norway.

Investors may submit written questions via e-mail to: investor@expeditors.com.
    Questions received by the end of business on November 9, 2012 will be
 considered in management's 8-K “Responses to Selected Questions” expected to
                   be filed on or about November 30, 2012.

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 uncertain global
economy and industry challenges, lackluster consumer and business demand,
ability to maintain or increase operating margin and ability to remain
profitable and continue to build market share. 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,
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)
 
                                               September 30,     December 31,
                                               2012              2011
Assets
Current Assets:
Cash and cash equivalents                      $  1,367,642      $ 1,294,356
Accounts receivable, net                          1,015,350        934,752
Deferred Federal and state income taxes           10,955           10,415
Other current assets                              46,048           47,360     
Total current assets                              2,439,995        2,286,883  
Property and equipment, net                       551,610          538,806
Goodwill and other intangibles, net               9,774            10,557
Other assets, net                                 30,808           30,581     
                                               $  3,032,187      $ 2,866,827  
Liabilities and Equity
Current Liabilities:
Accounts payable                                  667,395          606,628
Accrued expenses, primarily salaries and          174,862          169,445
related costs
Federal, state and foreign income taxes           23,943           20,072     
Total current liabilities                         866,200          796,145    
Deferred Federal and state income taxes           70,288           60,613
                                                                  
Commitments and contingencies
                                                                  
Shareholders’ Equity:
Preferred stock; none issued                      —                —
Common stock, par value $.01 per share;
issued and outstanding 208,950,205                2,090            2,120
shares at September 30, 2012 and
212,003,662 shares at December 31, 2011
Additional paid-in capital                        118              13,260
Retained earnings                                 2,082,542        1,991,222
Accumulated other comprehensive income            5,267            (2,964    )
(loss)
Total shareholders’ equity                        2,090,017        2,003,638  
Noncontrolling interest                           5,682            6,431      
Total equity                                      2,095,699        2,010,069  
                                               $  3,032,187      $ 2,866,827  
                                                                  

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
 
Condensed Consolidated Statements of Earnings
(In thousands, except share data)
(Unaudited)
 
                     Three months ended                      Nine months ended
                     September 30,                           September 30,
                     2012                2011                2012                2011
Revenues:
Airfreight           $ 622,678           $ 736,946           $ 1,900,131         $ 2,187,730
services
Ocean freight
and ocean              549,250             510,521             1,502,584           1,437,493
services
Customs
brokerage and          359,736             358,901             1,045,271           1,023,361    
other services
Total revenues         1,531,664           1,606,368           4,447,986           4,648,584    
Operating
Expenses:
Airfreight             471,947             558,047             1,437,301           1,658,963
consolidation
Ocean freight          432,518             392,249             1,177,919           1,109,603
consolidation
Customs
brokerage and          162,061             162,226             467,406             459,696
other services
Salaries and           252,899             258,512             748,956             745,441
related costs
Rent and
occupancy              21,304              21,352              63,333              64,087
costs
Depreciation
and                    10,030              9,199               29,245              27,630
amortization
Selling and            7,847               9,342               25,370              28,527
promotion
Other                  27,959              31,683              95,683              91,374       
Total
operating              1,386,565           1,442,610           4,045,213           4,185,321    
expenses
Operating              145,099             163,758             402,773             463,263      
income
                                                                                  
Interest               2,831               2,888               9,241               7,520
income
Interest               (182        )       (279        )       (1,024      )       (722        )
expense
Other, net             1,232               10,792              6,011               12,766       
Other income,          3,881               13,401              14,228              19,564       
net
Earnings
before income          148,980             177,159             417,001             482,827
taxes
Income tax             60,253              70,283              167,531             189,724      
expense
Net earnings           88,727              106,876             249,470             293,103      
Less net
earnings
attributable           237                 272                 318                 267          
to the
noncontrolling
interest
Net earnings
attributable         $ 88,490            $ 106,604           $ 249,152           $ 292,836      
to
shareholders
Diluted
earnings
attributable         $ .42               $ .50               $ 1.17              $ 1.36         
to
shareholders
per share
Basic earnings
attributable
to                   $ .42               $ .50               $ 1.18              $ 1.38         
shareholders
per share
Dividends
declared and         $ —                 $ —                 $ .28               $ .25          
paid per
common share
Weighted
average                211,397,602         214,717,451         212,916,309         215,376,675  
diluted shares
outstanding
Weighted
average basic          210,135,763         212,256,119         211,314,850         212,160,994  
shares
outstanding
                                                                                  

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
 
Condensed Consolidated Statements of Cash Flows
(In thousands) (Unaudited)
 
                     Three months ended                  Nine months ended
                     September 30,                       September 30,
                     2012              2011              2012              2011
Operating
Activities:
Net earnings         $ 88,727          $ 106,876         $ 249,470         $ 293,103
Adjustments to
reconcile net
earnings to
net cash from
operating
activities:
Provision for
losses on              463               (629      )       (392      )       1,161
accounts
receivable
Deferred
income tax             4,588             (9,328    )       4,330             (9,663    )
expense
(benefit)
Excess tax
benefits from          (59       )       (537      )       (4,291    )       (5,068    )
stock plans
Stock
compensation           11,320            12,738            32,846            33,446
expense
Depreciation
and                    10,030            9,199             29,245            27,630
amortization
Gain on sale           (13       )       (3        )       (143      )       (54       )
of assets
Other                  1,273             1,210             1,826             1,828
Changes in
operating
assets and
liabilities:
Increase in
accounts               (23,520   )       (4,312    )       (73,812   )       (11,802   )
receivable
Increase in
other current          (7,195    )       (8,344    )       (3,629    )       (5,863    )
assets
(Decrease)
increase in
accounts               (23,267   )       (24,070   )       60,966            14,060
payable and
accrued
expenses
Increase in
income taxes           6,819             10,505            12,961            10,417     
payable, net
Net cash from
operating              69,166            93,305            309,377           349,195    
activities
Investing
Activities:
Purchase of
property and           (10,170   )       (20,619   )       (37,072   )       (58,854   )
equipment
Proceeds from
sale of                41                24                294               109
property and
equipment
Other, net             (32       )       (632      )       192               (2,676    )
Net cash from
investing              (10,161   )       (21,227   )       (36,586   )       (61,421   )
activities
Financing
Activities:
Proceeds from
issuance of            24,599            30,966            45,001            54,591
common stock
Repurchases of         (87,227   )       (43,298   )       (193,493  )       (108,572  )
common stock
Excess tax
benefits from          59                537               4,291             5,068
stock plans
Dividends paid         —                 —                 (59,358   )       (53,014   )
Distributions
to                     (1,177    )       (822      )       (1,177    )       (822      )
noncontrolling
interest
Net cash from
financing              (63,746   )       (12,617   )       (204,736  )       (102,749  )
activities
Effect of
exchange rate
changes on             8,136             (24,477   )       5,231             (8,676    )
cash and cash
equivalents
Increase in
cash and cash          3,395             34,984            73,286            176,349
equivalents
Cash and cash
equivalents at         1,364,247         1,225,830         1,294,356         1,084,465  
beginning of
period
Cash and cash
equivalents at       $ 1,367,642       $ 1,260,814       $ 1,367,642       $ 1,260,814  
end of period
Interest and
taxes paid:
Interest             $ 27              $ 48              $ 447             $ 65
Income taxes           50,911            65,856            155,006           183,167
                                                                            

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
 
Business Segment Information
(In thousands) (Unaudited)
 
                                   OTHER                                 EUROPE      MIDDLE                    
                   UNITED          NORTH       LATIN       ASIA          and         EAST        ELIMI-         CONSOLI-
                                                                                     and
                   STATES          AMERICA     AMERICA     PACIFIC       AFRICA      INDIA       NATIONS        DATED
Three months
ended
September
30, 2012:
Revenues
from               $ 383,830       50,208      20,815      804,855       198,124     73,832      —              1,531,664
unaffiliated
customers
Transfers
between              24,423        2,677       4,140       10,676        9,624       4,507       (56,047  )     —
geographic
areas
Total              $ 408,253       52,885      24,955      815,531       207,748     78,339      (56,047  )     1,531,664
revenues
Net revenues       $ 187,737       23,412      13,978      146,992       69,841      23,178      —              465,138
Operating          $ 56,096        6,886       4,239       59,620        13,312      4,946       —              145,099
income
Identifiable       $ 1,570,615     102,020     58,687      714,982       423,488     162,225     170            3,032,187
assets
Capital            $ 5,681         222         405         1,934         1,476       452         —              10,170
expenditures
Depreciation
and                $ 5,942         188         220         1,691         1,555       434         —              10,030
amortization
Equity             $ 1,281,250     58,471      33,444      499,590       158,939     96,621      (32,616  )     2,095,699
Three months
ended
September
30, 2011:
Revenues
from               $ 388,736       49,341      21,353      839,069       229,776     78,093      —              1,606,368
unaffiliated
customers
Transfers
between              27,161        2,989       5,025       10,500        10,727      4,596       (60,998  )     —
geographic
areas
Total              $ 415,897       52,330      26,378      849,569       240,503     82,689      (60,998  )     1,606,368
revenues
Net revenues       $ 189,381       23,783      15,035      162,785       77,768      25,094      —              493,846
Operating          $ 57,564        7,345       4,846       69,001        18,616      6,386       —              163,758
income
Identifiable       $ 1,509,393     87,554      52,058      667,421       414,991     149,253     2,499          2,883,169
assets
Capital            $ 7,435         315         162         7,201         4,981       525         —              20,619
expenditures
Depreciation
and                $ 4,904         250         240         1,822         1,488       495         —              9,199
amortization
Equity             $ 1,242,594     49,134      27,258      435,466       146,652     92,668      (31,714  )     1,962,058
                                                                                                                 
Nine months
ended
September
30, 2012:
Revenues
from               $ 1,140,258     149,964     61,450      2,273,783     606,696     215,835     —              4,447,986
unaffiliated
customers
Transfers
between              69,135        7,608       14,010      32,686        28,694      13,828      (165,961 )     —
geographic
areas
Total              $ 1,209,393     157,572     75,460      2,306,469     635,390     229,663     (165,961 )     4,447,986
revenues
Net revenues       $ 551,503       70,769      43,537      414,714       212,871     71,966      —              1,365,360
Operating          $ 150,814       21,340      13,119      158,626       40,510      18,364      —              402,773
income
Identifiable       $ 1,570,615     102,020     58,687      714,982       423,488     162,225     170            3,032,187
assets
Capital            $ 20,676        551         1,060       9,823         3,529       1,433       —              37,072
expenditures
Depreciation
and                $ 17,320        556         644         4,960         4,389       1,376       —              29,245
amortization
Equity             $ 1,281,250     58,471      33,444      499,590       158,939     96,621      (32,616  )     2,095,699
Nine months
ended
September
30, 2011:
Revenues
from               $ 1,156,647     141,004     62,822      2,383,549     673,111     231,451     —              4,648,584
unaffiliated
customers
Transfers
between              77,099        8,454       15,866      29,853        32,789      13,305      (177,366 )     —
geographic
areas
Total              $ 1,233,746     149,458     78,688      2,413,402     705,900     244,756     (177,366 )     4,648,584
revenues
Net revenues       $ 548,918       66,065      45,295      454,889       230,521     74,634      —              1,420,322
Operating          $ 169,050       18,895      14,095      189,981       53,200      18,042      —              463,263
income
Identifiable       $ 1,509,393     87,554      52,058      667,421       414,991     149,253     2,499          2,883,169
assets
Capital            $ 14,815        923         462         16,535        24,568      1,551       —              58,854
expenditures
Depreciation
and                $ 14,815        830         773         5,638         4,014       1,560       —              27,630
amortization
Equity             $ 1,242,594     49,134      27,258      435,466       146,652     92,668      (31,714  )     1,962,058

Contact:

Expeditors International of Washington, Inc.
R. Jordan Gates, 206-674-3427
President and Chief Operating Officer
or
Bradley S. Powell, 206-674-3412
Senior Vice President and Chief Financial Officer