August 29, 2019
Bradley S. Powell
Chief Financial Officer
Expeditors International of Washington, Inc.
1015 Third Avenue, 12th Floor
Seattle, Washington 98104
Re: Expeditors International of Washington, Inc.
Form 10-K for the Year Ended December 31, 2018
Filed February 22, 2019
File No. 000-13468
Dear Mr. Powell:
We have reviewed your filing and have the following comments. In some of
our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by providing
the requested
information or advise us as soon as possible when you will respond. If you do
not believe our
comments apply to your facts and circumstances, please tell us why in your
response.
After reviewing your response to these comments, we may have additional
comments.
Form 10-K for the Year Ended December 31, 2018
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations, page 22
1. We note your presentation of net revenue, a non-GAAP measure which
excludes certain
"directly related" operating expenses which appear to mainly related to
purchased
transportation expense. We note from your disclosures on F-10 that
revenue and
purchased transportation expenses are reported on a gross basis for
certain shipments and
services where you utilize a third-party carrier but you remain primarily
responsible for
fulfilling the promise to provide the services, assume the risk of loss,
maintain discretion
in setting the price for the services, and have the ability to direct the
use of the services
provided by the third party. Therefore, it appears your presentation of
these non-GAAP
measures substitutes individually tailored recognition and measurement
methods for those
of GAAP and may violate Rule 100(b) of Regulation G. Net revenue is not a
measure of
revenue as it reduces revenue by a non-revenue line item and if intended
to be presented
Bradley S. Powell
FirstName LastNameBradley S. Powell Inc.
Expeditors International of Washington,
Comapany NameExpeditors International of Washington, Inc.
August 29, 2019
August 29, 2019 Page 2
Page 2
FirstName LastName
as a measure of gross profit, it does not contemplate all direct
costs. Please discontinue
your presentation of net revenue. Also, refer to Question 100.04 of
the Non-GAAP
Financial Measures Compliance and Disclosure Interpretations.
Financial Statements
Notes to Consolidated Financial Statements
Note 10. Business Segment Information , page F-21
2. We note from your disclosure on page 11 that you are organized
functionally in
geographic operating segments. However, we also note that you discuss
your MD&A in
terms of your three principal services: Airfreight services; Ocean
freight and ocean
services; and Customs brokerage and other services. In light of the
fact that it appears you
may monitor the business in more than one way, please tell us how you
apply the
guidance in ASC 280-10-50-6, and 9. Also please provide us the
following information:
Please tell us the title and describe the role of the CODM and each
of the individuals
who report to the CODM.
Please identify and describe the role of each of your segment
managers. Specifically,
please tell us if there are managers for your service lines as
well as your geographic
areas.
Tell us how often the CODM meets with his/her direct reports, the
financial
information the CODM reviews to prepare for those meetings, the
financial
information discussed in those meetings, and who else attends
those meetings.
Tell us if anyone is held accountable for the Airfreight Services,
Ocean freight and
ocean services, and customs brokerage and other services service
lines, and if so, who
they report to.
Describe the information regularly provided to the CODM and how
frequently it is
prepared.
Describe the information regularly provided to the Board of
Directors and how
frequently it is prepared.
Describe the basis for determining the compensation for each of the
individuals that
report to the CODM.
3. We note that although it appears that operating income is your primary
measure of
segment profitability, you also present net revenues in your segment
disclosure and you
provide footnote disclosure that the net revenue measure is a non-GAAP
measure. Please
note that under Rule 10(e)(1)(ii)(c) of Regulation S-K, it is not
appropriate to include a
non-GAAP measure in the notes to your financial statements. Please
revise to remove this
non-GAAP measure accordingly.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Bradley S. Powell
Expeditors International of Washington, Inc.
August 29, 2019
Page 3
You may contact Heather Clark at 202-551-3624 or Claire Erlanger at
202-551-3301 with
any questions.
FirstName LastNameBradley S. Powell Sincerely,
Comapany NameExpeditors International of Washington, Inc.
Division of Corporation
Finance
August 29, 2019 Page 3 Office of Transportation
and Leisure
FirstName LastName