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November 6, 2018 12:57 PM EST


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 6, 2018
(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
 
(Commission File No.)
(IRS Employer Identification Number)
incorporation or organization)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1015 Third Avenue, Seattle, Washington
98104
 
(Address of principal executive offices)
 
(Zip Code)
 
 
 
 
 
 
 
 
(206) 674-3400
 
 
 
(Registrant's telephone number, including area code)
 
 
 
 
 
 
 
 
N/A
 
 
 
(Former name or former address, if changed since last report)

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

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 chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
o
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.         o



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 6, 2018, Expeditors International of Washington, Inc., a Washington corporation, issued a press release announcing third quarter 2018 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 6, 2018 issued by Expeditors International of Washington, Inc.




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 6, 2018
 
/S/ Bradley S. Powell
 
 
Bradley S. Powell, Senior Vice President and Chief Financial Officer
 
 
 



Exhibit 99.1
expeditorswtaga04.jpg
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 2018 EPS OF $0.92
SEATTLE, WASHINGTON - November 6, 2018, Expeditors International of Washington, Inc. (NASDAQ: EXPD) today announced third quarter 2018 financial results including the following highlights compared to the same quarter of 2017:
•
Diluted Net Earnings Attributable to Shareholders per share (EPS1) increased 39% to $0.92
•
Net Earnings Attributable to Shareholders increased 35% to $163 million
•
Operating Income increased 9% to $203 million
•
Revenues increased 16% to $2.1 billion
•
Net Revenues2 increased 10% to $661 million
•
Airfreight tonnage volume increased 1% and ocean container volume increased 8%

“We generated record third quarter profitability, with the highest net revenue and operating income in our history, as we continued to win new business and grow volumes with existing customers in an unpredictable rate environment,” said Jeffrey S. Musser, President and Chief Executive Officer. “Capacity in both the air and ocean markets remained tight in many lanes. Carriers continued to take advantage of the supply and demand imbalance and sought opportunities to increase pricing in an effort to improve profitability. That presented a challenge, particularly in ocean, requiring that we work our strong relationships to secure space for our customers, while remaining disciplined on pricing.

“We continue to focus on providing outstanding service to our customers, especially in these times of uncertainty surrounding potential trade conflicts,” Mr. Musser continued. “Rates have been particularly volatile, but we have managed through similar cycles throughout our history and are adept at making adjustments to deliver quality growth over the long term. I commend our people for their exceptional efforts on behalf of our customers and our organization.”

Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, “We managed expenses well during a period of rapid changes in pricing to drive operational efficiency (operating income as a percentage of net revenue) back above 30%. Once again, our double-digit net revenue increase outpaced our growth in headcount, as we invest in people, new projects, and core technologies in support of profitable growth.” Mr. Powell also noted that the Company’s effective tax rate for the three months was 21.8%, compared to 36.7% a year ago. In addition to the lower U.S. federal tax rate that resulted from the 2017 Tax Act, the effective tax rate in the most recent quarter benefited from certain discrete adjustments as a result of recent interpretations related to the 2017 Tax Act amounts and a State income tax refund. Mr. Powell emphasized that the Company’s effective tax rate in future periods will largely depend on the mix of pretax earnings that are generated in its U.S. versus foreign operations, further interpretation and guidance to be issued on the new tax law and discrete items that occur in the reporting periods.

Expeditors is a global logistics company headquartered in Seattle, Washington. The Company employs trained professionals in 177 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.
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.
NOTE: See Disclaimer on Forward-Looking Statements on the following page of this release.

Expeditors International of Washington, Inc.
Third Quarter 2018 Earnings Release, November 6, 2018
Financial Highlights for the Nine months ended September 30, 2018 and 2017 (Unaudited)
(in 000's of US dollars except per share data)
 
Three months ended September 30,
 
Nine months ended September 30,
 
2018
 
2017
 
% Change
 
2018
 
2017
 
% Change
Revenues1
$
2,090,947

 
$
1,802,166

 
16%
 
$
5,902,768

 
$
5,019,577

 
18%
Net revenues2
$
661,314

 
$
599,142

 
10%
 
$
1,939,698

 
$
1,690,380

 
15%
Operating income3
$
203,154

 
$
186,895

 
9%
 
$
579,556

 
$
501,249

 
16%
Net earnings attributable to shareholders4
$
162,692

 
$
120,263

 
35%
 
$
438,989

 
$
322,378

 
36%
Diluted earnings attributable to shareholders per share
$
0.92

 
$
0.66

 
39%
 
$
2.46

 
$
1.77

 
39%
Basic earnings attributable to shareholders per share
$
0.94

 
$
0.67

 
40%
 
$
2.51

 
$
1.79

 
40%
Diluted weighted average shares outstanding
177,173

 
181,788

 
 
 
178,447

 
181,951

 
 
Basic weighted average shares outstanding
173,394

 
179,416

 
 
 
174,675

 
179,827

 
 
_______________________
1Effective January 1, 2018, the Company adopted required new revenue recognition guidance, resulting in a $22 million net reduction to the opening balance of retained earnings. In addition, in conjunction with the adoption of new revenue recognition guidance, the Company also changed the presentation of certain warehouse and distribution revenues from a net to a gross basis, which increased both revenues and operating expenses in customs brokerage and other services by approximately $50 million in each of the three quarters of 2018. Comparative prior year revenues (and the related volume information in the table below) has not been adjusted and continue to be reported under the Company's historical policies. 2018 reported revenues (and the related volume information) are reported under the Company's new revenue recognition accounting policies.
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.
3The year-to-date period ended September 30, 2017 includes the recovery of certain legal and related fees totaling $8 million and the favorable resolution of an indirect tax contingency of $6 million.
4The Company's consolidated effective income tax rate was 21.8% and 26.1%, respectively, for the three and nine-month periods ended September 30, 2018 as compared to 36.7% and 37.1% for the comparable periods in 2017. In addition to the lower U.S. federal tax rate that resulted from the 2017 Tax Act, the effective tax rate in 2018 benefited from significant share-based compensation deductions principally as a result of stock option exercises occurring during the second quarter of 2018, required discrete adjustments as a result of interpretations related to the 2017 Tax Act and a State income tax refund during the third quarter of 2018.
During the three and nine-month periods 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. During the three and nine-month periods ended September 30, 2017, we repurchased 3.6 million and 6.1 million shares of common stock at an average price of $56.18 and $55.93 per share, respectively.
 
Employee Full-time Equivalents as of September 30,
 
2018
 
2017
North America
6,635

 
6,061

Europe
3,270

 
2,950

North Asia
2,655

 
2,671

South Asia
1,640

 
1,613

Middle East, Africa and India
1,478

 
1,516

Latin America
831

 
802

Information Systems
904

 
877

Corporate
351

 
379

Total
17,764

 
16,869

 
 
Third quarter year-over-year percentage increase (decrease) in:
 
 
Airfreight kilos
 
Ocean freight FEU
2018
 
 
 
 
July
 
2%
 
7%
August
 
5%
 
7%
September
 
(4)%
 
9%
Quarter
 
1%
 
8%

_______________________
Investors may submit written questions via e-mail to: [email protected]. Questions received by the end of business on November 9, 2018 will be considered in management's 8-K “Responses to Selected Questions” expected to be filed on or about November 29, 2018.

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 our ability to secure space for our customers at a reasonable cost, manage through a volatile rate cycle, deliver quality growth over the long term, manage expenses, drive operational efficiency, and generate profitable market growth; the impact of the 2017 Tax Act and related interpretations on our effective tax rate; energy and fuel prices; political changes; changes and uncertainties in governmental policies and inter-governmental disputes; foreign exchange rates; regulatory actions or changes; 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, 2018
 
December 31, 2017
Assets
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
990,612

 
$
1,051,099

Accounts receivable, less allowance for doubtful accounts of $13,696 at September 30, 2018 and $12,858 at December 31, 2017
1,528,524

 
1,414,741

Deferred contract costs
168,090

 
—

Other current assets
59,247

 
75,612

Total current assets
2,746,473

 
2,541,452

Property and equipment, less accumulated depreciation and amortization of $441,433 at September 30, 2018 and $420,282 at December 31, 2017
510,328

 
525,203

Goodwill
7,927

 
7,927

Deferred Federal and state income taxes, net
43,293

 
13,207

Other assets, net
26,779

 
29,219

 
$
3,334,800

 
$
3,117,008

Liabilities and Equity
 
 
 
Current Liabilities:
 
 
 
Accounts payable
$
934,509

 
$
866,305

Accrued expenses, primarily salaries and related costs
228,785

 
206,320

Contract liabilities
195,035

 
—

Federal, state and foreign income taxes
19,139

 
20,494

Total current liabilities
1,377,468

 
1,093,119

Noncurrent Federal income taxes payable
—

 
29,516

 
 
 
 
Commitments and contingencies

 

 
 
 
 
Shareholders’ Equity:
 
 
 
Preferred stock; none issued
—

 
—

Common stock, par value $0.01 per share. Issued and outstanding 172,564 shares at September 30, 2018 and 176,374 shares at December 31, 2017
1,726

 
1,764

Additional paid-in capital
1,832

 
546

Retained earnings
2,053,389

 
2,063,512

Accumulated other comprehensive loss
(101,098
)
 
(73,964
)
Total shareholders’ equity
1,955,849

 
1,991,858

Noncontrolling interest
1,483

 
2,515

Total equity
1,957,332

 
1,994,373

 
$
3,334,800

 
$
3,117,008



06-November-2018
Expeditors International of Washington, Inc.
Page 3 of 7


EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
(In thousands, except per share data)
(Unaudited)
 
 
Three months ended
 
Nine months ended
 
September 30,
 
September 30,
 
2018
 
2017
 
2018
 
2017
Revenues:
 
 
 
 
 
 
 
Airfreight services
$
833,338

 
$
735,164

 
$
2,366,326

 
$
2,022,577

Ocean freight and ocean services
585,810

 
563,386

 
1,636,701

 
1,585,730

Customs brokerage and other services
671,799

 
503,616

 
1,899,741

 
1,411,270

Total revenues
2,090,947

 
1,802,166

 
5,902,768

 
5,019,577

Operating Expenses:
 
 
 
 
 
 
 
Airfreight services
620,554

 
547,595

 
1,727,383

 
1,490,417

Ocean freight and ocean services
435,313

 
411,061

 
1,199,887

 
1,163,051

Customs brokerage and other services
373,766

 
244,368

 
1,035,800

 
675,729

Salaries and related costs
351,577

 
319,050

 
1,042,420

 
930,159

Rent and occupancy costs
38,202

 
30,533

 
113,186

 
87,826

Depreciation and amortization
13,335

 
12,272

 
40,833

 
36,241

Selling and promotion
10,632

 
10,608

 
32,385

 
32,476

Other
44,414

 
39,784

 
131,318

 
102,429

Total operating expenses
1,887,793

 
1,615,271

 
5,323,212

 
4,518,328

Operating income
203,154

 
186,895

 
579,556

 
501,249

Other Income (Expense):
 
 
 
 
 
 
 
Interest income
4,704

 
3,444

 
14,171

 
9,565

Other, net
566

 
96

 
2,357

 
2,584

Other income (expense), net
5,270

 
3,540

 
16,528

 
12,149

Earnings before income taxes
208,424

 
190,435

 
596,084

 
513,398

Income tax expense
45,357

 
69,829

 
155,871

 
190,470

Net earnings
163,067

 
120,606

 
440,213

 
322,928

Less net earnings attributable to the noncontrolling interest
375

 
343

 
1,224

 
550

Net earnings attributable to shareholders
$
162,692

 
$
120,263

 
$
438,989

 
$
322,378

Diluted earnings attributable to shareholders per share
$
0.92

 
$
0.66

 
$
2.46

 
$
1.77

Basic earnings attributable to shareholders per share
$
0.94

 
$
0.67

 
$
2.51

 
$
1.79

Dividends declared and paid per common share
$
—

 
$
—

 
$
0.45

 
$
0.42

Weighted average diluted shares outstanding
177,173

 
181,788

 
178,447

 
181,951

Weighted average basic shares outstanding
173,394

 
179,416

 
174,675

 
179,827



06-November-2018
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
 
Nine months ended
 
September 30,
 
September 30,
 
2018
 
2017
 
2018
 
2017
Operating Activities:
 
 
 
 
 
 
 
Net earnings
$
163,067

 
$
120,606

 
$
440,213

 
$
322,928

Adjustments to reconcile net earnings to net cash from operating activities:
 
 
 
 
 
 
 
Provision for losses on accounts receivable
1,969

 
1,741

 
2,232

 
3,187

Deferred income tax expense
(23,610
)
 
(28,854
)
 
(17,522
)
 
(16,000
)
Stock compensation expense
13,902

 
11,210

 
43,171

 
39,036

Depreciation and amortization
13,335

 
12,272

 
40,833

 
36,241

Other, net
666

 
377

 
770

 
(148
)
Changes in operating assets and liabilities:
 
 
 
 
 
 
 
Increase in accounts receivables
(210,092
)
 
(126,102
)
 
(156,321
)
 
(123,790
)
Increase in accounts payable and accrued expenses
115,629

 
61,833

 
127,860

 
96,132

Increase in deferred contract costs
(34,623
)
 
—

 
(51,235
)
 
—

Increase in contract liabilities
36,256

 
—

 
49,149

 
—

Increase (decrease) in income taxes payable, net
9,292

 
38,149

 
(9,258
)
 
10,814

Decrease (increase) in other current assets
930

 
(5,872
)
 
862

 
(6,147
)
Net cash from operating activities
86,721

 
85,360

 
470,754

 
362,253

Investing Activities:
 
 
 
 
 
 
 
Purchase of property and equipment
(11,733
)
 
(34,462
)
 
(37,642
)
 
(67,603
)
Other, net
1,109

 
(261
)
 
(886
)
 
(892
)
Net cash from investing activities
(10,624
)
 
(34,723
)
 
(38,528
)
 
(68,495
)
Financing Activities:
 
 
 
 
 
 
 
Proceeds from issuance of common stock
47,806

 
65,915

 
169,566

 
162,781

Repurchases of common stock
(147,828
)
 
(202,776
)
 
(555,760
)
 
(340,736
)
Dividends paid
—

 
—

 
(79,180
)
 
(75,726
)
Payments for taxes related to net share settlements
—

 
—

 
(3,215
)
 
—

Distributions to noncontrolling interest
(633
)
 
—

 
(633
)
 
—

Purchase of noncontrolling interest
(613
)
 
—

 
(613
)
 
—

Net cash from financing activities
(101,268
)
 
(136,861
)
 
(469,835
)
 
(253,681
)
Effect of exchange rate changes on cash and cash equivalents
(5,071
)
 
4,758

 
(22,878
)
 
18,932

(Decrease) increase in cash and cash equivalents
(30,242
)
 
(81,466
)
 
(60,487
)
 
59,009

Cash and cash equivalents at beginning of period
1,020,854

 
1,114,910

 
1,051,099

 
974,435

Cash and cash equivalents at end of period
$
990,612

 
$
1,033,444

 
$
990,612

 
$
1,033,444

Taxes paid:
 
 
 
 
 
 
 
Income taxes
$
59,313

 
$
58,257

 
$
183,444

 
$
190,911


06-November-2018
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
 
NORTH ASIA
 
SOUTH ASIA
 
EUROPE
 
MIDDLE
EAST, AFRICA 
AND INDIA
 
ELIMI-
NATIONS
 
CONSOLI-
DATED
Three months ended September 30, 2018:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues from unaffiliated customers
$
597,183

 
88,877

 
39,389

 
741,997

 
198,537

 
312,724

 
112,240

 
—

 
2,090,947

Transfers between geographic areas
31,860

 
3,998

 
4,054

 
6,592

 
6,855

 
14,488

 
5,807

 
(73,654
)
 
—

Total revenues
$
629,043

 
92,875

 
43,443

 
748,589

 
205,392

 
327,212

 
118,047

 
(73,654
)
 
2,090,947

Net revenues
$
283,807

 
34,411

 
15,808

 
146,890

 
47,166

 
99,794

 
34,055

 
(617
)
 
661,314

Operating income
$
79,567

 
10,476

 
2,409

 
72,823

 
15,543

 
15,658

 
6,671

 
7

 
203,154

Identifiable assets
$
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

Depreciation and amortization
$
8,185

 
497

 
375

 
1,319

 
554

 
1,958

 
447

 
—

 
13,335

Equity
$
1,334,952

 
66,399

 
25,663

 
197,939

 
86,048

 
157,973

 
119,718

 
(31,360
)
 
1,957,332

Three months ended September 30, 2017:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues from unaffiliated customers
$
476,575

 
65,544

 
24,181

 
686,915

 
170,225

 
273,606

 
105,120

 
—

 
1,802,166

Transfers between geographic areas
26,888

 
2,782

 
3,679

 
5,253

 
5,681

 
10,302

 
5,318

 
(59,903
)
 
—

Total revenues
$
503,463

 
68,326

 
27,860

 
692,168

 
175,906


283,908

 
110,438

 
(59,903
)
 
1,802,166

Net revenues
$
257,030

 
30,664

 
14,710

 
138,667

 
41,411

 
85,390

 
29,956

 
1,314

 
599,142

Operating income
$
74,645

 
9,215

 
2,652

 
72,070

 
11,697

 
11,124

 
5,495

 
(3
)
 
186,895

Identifiable assets
$
1,636,293

 
100,651

 
52,238

 
446,826

 
143,893

 
473,509

 
212,210

 
3,261

 
3,068,881

Capital expenditures
$
7,398

 
263

 
2,436

 
589

 
390

 
23,138

 
248

 
—

 
34,462

Depreciation and amortization
$
7,905

 
405

 
310

 
1,313

 
569

 
1,309

 
461

 
—

 
12,272

Equity
$
1,345,266

 
52,212

 
25,709

 
231,831

 
102,477

 
139,688

 
119,649

 
(35,751
)
 
1,981,081





06-November-2018
Expeditors International of Washington, Inc.
Page 6 of 7

 
UNITED
STATES
 
OTHER
NORTH
AMERICA
 
LATIN
AMERICA
 
NORTH ASIA
 
SOUTH ASIA
 
EUROPE
 
MIDDLE
EAST, AFRICA 
AND INDIA
 
ELIMI-
NATIONS
 
CONSOLI-
DATED
Nine months ended September 30, 2018:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues from unaffiliated customers
$
1,699,323

 
245,670

 
110,808

 
2,046,670

 
539,833

 
934,466

 
325,998

 
—

 
5,902,768

Transfers between geographic areas
91,546

 
11,536

 
11,362

 
18,735

 
20,237

 
43,501

 
16,591

 
(213,508
)
 
—

Total revenues
$
1,790,869

 
257,206

 
122,170

 
2,065,405

 
560,070

 
977,967

 
342,589

 
(213,508
)
 
5,902,768

Net revenues
$
832,872

 
99,607

 
46,476

 
424,681

 
136,458

 
300,800

 
100,381

 
(1,577
)
 
1,939,698

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

Depreciation and amortization
$
25,397

 
1,368

 
1,138

 
3,998

 
1,679

 
5,889

 
1,364

 
—

 
40,833

Equity
$
1,334,952

 
66,399

 
25,663

 
197,939

 
86,048

 
157,973

 
119,718

 
(31,360
)
 
1,957,332

Nine months ended September 30, 2017:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues from unaffiliated customers
$
1,354,811

 
187,997

 
69,747

 
1,873,393

 
475,163

 
764,596

 
293,870

 
—

 
5,019,577

Transfers between geographic areas
79,356

 
8,246

 
11,073

 
15,139

 
16,520

 
29,288

 
15,316

 
(174,938
)
 
—

Total revenues
$
1,434,167

 
196,243

 
80,820

 
1,888,532

 
491,683

 
793,884

 
309,186

 
(174,938
)
 
5,019,577

Net revenues
$
737,842

 
84,630

 
43,634

 
371,459

 
117,634

 
242,244

 
89,973

 
2,964

 
1,690,380

Operating income
$
191,256

 
26,583

 
8,349

 
183,515

 
37,434

 
36,189

 
17,928

 
(5
)
 
501,249

Identifiable assets at period end
$
1,636,293

 
100,651

 
52,238

 
446,826

 
143,893

 
473,509

 
212,210

 
3,261

 
3,068,881

Capital expenditures
$
19,492

 
1,066

 
3,648

 
2,492

 
1,172

 
38,717

 
1,016

 
—

 
67,603

Depreciation and amortization
$
23,389

 
1,163

 
930

 
3,995

 
1,656

 
3,707

 
1,401

 
—

 
36,241

Equity
$
1,345,266

 
52,212

 
25,709

 
231,831

 
102,477

 
139,688

 
119,649

 
(35,751
)
 
1,981,081


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 revenues are 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
 
Nine months ended
 
September 30,
 
September 30,
(in thousands)
2018
 
2017
 
2018
 
2017
Total revenues
$
2,090,947

 
$
1,802,166

 
$
5,902,768

 
$
5,019,577

Expenses:
 
 
 
 
 
 
 
Airfreight services
620,554

 
547,595

 
1,727,383

 
1,490,417

Ocean freight and ocean services
435,313

 
411,061

 
1,199,887

 
1,163,051

Customs brokerage and other services
373,766

 
244,368

 
1,035,800

 
675,729

Net revenues
$
661,314

 
$
599,142

 
$
1,939,698

 
$
1,690,380


06-November-2018
Expeditors International of Washington, Inc.
Page 7 of 7

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