8-KRegulation FD

EXPEDITORS INTERNATIONAL OF WASHINGTON INC 8-K Report, Regulation FD Disclosure (Mar 4, 2013)

Filed March 4, 2013For Securities:EXPD

Summary

Expeditors International of Washington Inc. (EXPD) filed an 8-K on March 4, 2013, to address investor inquiries received following their Q4 2012 earnings release. The company reiterated its policy of not holding earnings calls, a practice that continues to be a point of interest for investors. The primary focus of the 8-K was to clarify unusual fluctuations in "Rent and Occupancy" and "Other" expense lines during the fourth quarter. The company explained that the increase in "Rent and Occupancy" expenses, totaling approximately $3 million ($1.9 million after tax), was due to a strategic decision to expand operations in two key gateway cities, leading to the write-off of previously accumulated construction-in-progress costs. The "Other" expense line saw an increase of approximately $7.7 million ($4.8 million after tax) related to foreign tax credit adjustments due to changes in international tax regulations and interpretations, which the company conservatively wrote off rather than incurring significant costs to recover. Expeditors emphasized that these items were immaterial in aggregate and did not represent one-time or non-recurring events, aligning with their philosophy of managing business without excessive categorization of "IT" happenings.

Key Highlights

  • 1Expeditors reiterates its ongoing practice of not holding quarterly earnings calls.
  • 2The company addressed inquiries regarding higher "Rent and Occupancy" expenses in Q4 2012.
  • 3An increase in "Rent and Occupancy" expenses of $3 million ($1.9 million after-tax) was attributed to strategic real estate expansion plans in two key cities.
  • 4Expeditors clarified that the increase in "Other" expenses was approximately $7.7 million ($4.8 million after-tax) and related to foreign tax credit adjustments.
  • 5These "Other" expenses stemmed from changes in global tax regulations and interpretations impacting the realization of foreign tax credits.
  • 6The company stressed that both expense variances were immaterial in aggregate and not 'one-time' or 'non-recurring' in nature.
  • 7Expeditors confirmed it is no longer a subject of the DOJ investigation into air cargo freight forwarders, with no fines or penalties imposed.

Frequently Asked Questions

Yes, Expeditors continues its practice of not holding quarterly earnings calls.

The increase was due to strategic decisions to expand operations in two key gateway cities, which led to write-offs of previously accumulated construction-in-progress costs. This amounted to approximately $3 million ($1.9 million after tax).

The 'Other' expenses increased by approximately $7.7 million ($4.8 million after tax) due to adjustments related to foreign tax credits. Changes in global tax regulations and interpretations made the realization of certain accrued foreign tax credits uncertain, prompting a conservative write-off.

Expeditors considers these events immaterial in aggregate and philosophicaly avoids labeling them as 'one-time' or 'non-recurring.' They are viewed as part of normal business operations and adjustments, not exceptional events.

No, Expeditors is no longer a subject of the DOJ investigation into air cargo freight forwarders. The DOJ confirmed this in a letter dated October 17, 2012, and no fines or penalties were imposed on the company.