Expeditors International of Washington EXPD · USD

NOTE 10.

NOTE 8. COMMITMENTSA. | Unconditional Purchase ObligationsThe Company enters into short-term unconditional purchase obligations with asset-based providers reserving space on a guaranteed basis. The pricing of these obligations varies to some degree with market conditions. Historically, the Company has met these obligations in the normal course of business within one year. In the regular course of business, the Company also enters into agreements with service providers to maintain or operate equipment, facilities or software that can be longer than one year. We also regularly have contractual obligations for specific projects related to improvements of our owned or leased facilities and information technology infrastructure. Purchase obligations outstanding as of December 31, 2025 totaled $192 million. B. | Employee BenefitsThe Company has employee savings plans under which the Company provides a discretionary matching contribution. In 2025, 2024 and 2023, the Company’s contributions under the plans were $24,572, $23,507 and $24,241, respectively.C. | Credit ArrangementsCertain of the Company’s foreign subsidiaries maintain bank lines of credit for short-term working capital purposes. A few of these credit lines are supported by standby letters of credit issued by a United States bank or guarantees issued by the Company to the foreign banks issuing the credit line. At December 31, 2025, and 2024 borrowings under these credit lines were $30,263 and $30,660, respectively. At December 31, 2025, the Company was contingently liable for approximately $80,719 under outstanding standby letters of credit and guarantees. At December 31, 2025, the Company was in compliance with all restrictive covenants of these credit lines and the associated credit facilities.The standby letters of credit and guarantees relate to obligations of the Company’s foreign subsidiaries for credit extended in the ordinary course of business by direct carriers, primarily airlines, and for duty and tax deferrals available from governmental entities responsible for customs and value-added-tax (VAT) taxation. The total underlying amounts due and payable for transportation and governmental excise taxes are properly recorded as obligations in the books of the respective foreign subsidiaries, and there would be no need to record additional expense in the unlikely event the parent company were to be required to perform.

NOTE 4. LEASES The Company enters into lease agreements primarily for office and warehouse space in all districts where it conducts business. As of December 31, 2025, all of the Company's leases are operating leases. Lease terms are either on a month-to-month basis or terminate at various times through 2040. The Company also has two long-term operating lease arrangements to use land, for which the usage rights were entirely prepaid. Usage rights for those arrangements are recognized in rent expense over the lease terms up to 2057.Lease cost is recorded under rent and occupancy expenses in the consolidated statements of earnings and is comprised of the following for the year-ended December 31: 2025 2024 2023 Operating lease cost $ 145,772 $ 131,970 $ 123,411 Variable lease cost 54,074 50,614 50,508 Total lease cost $ 199,846 $ 182,584 $ 173,919 Variable lease cost includes short-term lease expenses, which are insignificant. Maturities of lease liabilities as of December 31, 2025 are as follows: 2026 $ 138,158 2027 118,846 2028 99,454 2029 81,613 2030 66,704 Thereafter 178,115 Total minimum lease payments 682,890 Less imputed interest 112,301 Lease liability $ 570,589 As of December 31, 2025, the Company had $51 million in operating lease obligations with maturities through 2036 for several office and warehouse locations not included in the lease liabilities, as the lease had not yet commenced.The weighted-average remaining lease term and weighted-average discount rate are as follows: 2025 2024 Weighted-average remaining lease term (in years) 6.56 6.79 Weighted-average discount rate 5.67 % 5.

Risk Management and StrategyWe and our customers and suppliers have an increasing reliance on our technology systems and infrastructure. We aim to safeguard the digital infrastructure of Expeditors, enabling the highest levels of customer service while managing and minimizing risk and maintaining global compliance. The cybersecurity and risk management program within Expeditors is defined through strategy, execution, management, and oversight, with continual assessments to verify the program’s overall effectiveness.Identifying and assessing cybersecurity risks and threats is integrated into our overall enterprise risk management program. Our Enterprise Cybersecurity Committee defines the strategy, prioritizes, and sets the expectations for execution of the cybersecurity program, leveraging industry-standard cybersecurity frameworks, including the National Institute of Standards and Technology cybersecurity framework (NIST CSF). Our Cybersecurity and Risk Management program (CSRM) is designed around but not limited to five key pillars: (i)strategic development and continuous iteration of a risk strategy in line with our information services and business goals;(ii)engineering and architecture of cybersecurity preventative and response solutions and capabilities;(iii)governance, risk, and compliance defining policies, standards, and systems of control and measurement in line with industry best practices and regulatory requirements;(iv)cybersecurity operations designed to prepare, identify, contain, eradicate, and recover from cyber-related incidents; and (v)identity and access management defining global practices for access, authentication, and authorization to technology systems.Our Cybersecurity and Global Technology department executes and measures the delivery of the cybersecurity program and incorporates the program into the governance and internal controls framework for our Company. We engage third parties such as consultants, auditors and specialists to support, evaluate, and improve the program, and utilize cybersecurity technologies and services to prevent, identify, detect, respond, and recover from cybersecurity threats and incidents. We also maintain a third party continuous monitoring security program to identify, prioritize, assess, mitigate and remediate third party risks, which is part of our overall cybersecurity risk management framework.

NOTE 7. TAXESIncome TaxesIncome tax expense (benefit) includes the following components: Federal State Foreign Total 2025 Current $ 73,566 $ 25,520 $ 196,641 $ 295,727 Deferred (11,069 ) 360 (3,003 ) (13,712 ) $ 62,497 $ 25,880 $ 193,638 $ 282,015 2024 Current $ 64,040 $ 35,032 $ 189,233 $ 288,305 Deferred (2,746 ) (2,392 ) — (5,138 ) $ 61,294 $ 32,640 $ 189,233 $ 283,167 2023 Current $ 87,461 $ 24,481 $ 174,223 $ 286,165 Deferred (20,795 ) (2,121 ) — (22,916 ) $ 66,666 $ 22,360 $ 174,223 $ 263,249 The components of earnings before income taxes are as follows: 2025 2024 2023 United States $ 543,918 $ 514,125 $ 512,682 Foreign 550,145 580,675 502,346 $ 1,094,063 $ 1,094,800 $ 1,015,028 On January 1, 2025, the Company prospectively adopted ASU 2023-09. Following the new ASU required disclosures for the year ended December 31, 2025, the reconciling items between the income tax expense computed by applying the U.S. Federal income tax rate of 21% and reported income tax expense are as follows: 2025 Amount Percent US federal statutory income tax rate $ 229,753 21% Domestic state and local income taxes, net of federal effect1 20,446 1.9% Foreign tax effects: People's Republic of China Statutory tax rate difference between China and United States 3,781 0.3% Chinese withholding taxes on income to non-residents 12,184 1.0% Other foreign jurisdictions 65,241 6.0% Effect of changes in tax laws or rates enacted in the current period — — Effect of cross-border tax laws: Foreign-derived intangible income (21,107 ) (1.9)% Other 1,429 0.1% Tax credits: Foreign tax credits (30,056 ) (2.7)% Other (989 ) (0.1)% Changes in valuation allowances (96 ) — Nontaxable or nondeductible items 2,858 0.3% Worldwide changes in unrecognized tax benefits — — Other adjustments (1,429 ) (0.1)% Effective Tax Rate $ 282,015 25.8% 1State taxes in California, Illinois, New York and Pennsylvania made up the majority (greater than 50 percent) of the tax effect in this category.The components of income taxes paid are as follows:Income taxes paid (net of refunds) exceeded 5 percent of total income taxes paid (net of refunds) in the following jurisdictions: 2025 Federal $ 45,347 State 30,977 Foreign: People's Republic of China 52,495 Taiwan 17,391 Mexico 15,637 Vietnam 14,431 Other foreign 88,757 Total $ 265,035 Prior to the adoption of ASU 2023-09, for the years ending December 2024 and 2023, income tax expense differs from amounts computed by applying the U.S.

NOTE 9. CONTINGENCIESThe Company is involved in claims, lawsuits, government investigations, income, transfer pricing and indirect tax audits and other legal matters that arise in the ordinary course of business and are subject to inherent uncertainties. Currently, in management's opinion and based upon advice from legal advisors, none of these matters are expected to have a material effect on the Company's operations, cash flows or financial position. As of December 31, 2025, amounts recorded for claims, lawsuits, government investigations and other legal matters are not significant to the Company's operations, cash flows or financial position. At this time, the Company is unable to estimate any additional loss or range of reasonably possible losses, if any, beyond the amounts recorded, that might result from the resolution of these matters.

NOTE 5. SHAREHOLDERS’ EQUITYA. | Stock Repurchase PlanThe Company has a Discretionary Stock Repurchase Plan, originally approved by the Board of Directors in November 2001 and amended from time to time, under which management as of December 31, 2025 is authorized to repurchase shares down to 130,000 shares of common stock outstanding. On February 23, 2026, the Board of Directors authorized a new share repurchase program that permits the repurchase of up to $3 billion of the Company's common stock, effective upon the expiration of the current program, which will occur when the outstanding shares of common stock reach 130,000.Cumulative shares of common stock repurchased since inception of the above plan and a previous now expired plan were 162,309.B. | Omnibus Incentive PlanOn May 5, 2020, the shareholders approved the Company's Amended and Restated 2017 Omnibus Incentive Plan (Amended 2017 Plan), which made available 5,500 shares of the Company's common stock in aggregate to be issued under any award type allowed by the Amended 2017 Plan. The RSUs granted in 2025, 2024 and 2023 generally vest annually over three years based on continued employment and are settled upon vesting in shares of the Company's common stock on a one-for-one basis.The Amended 2017 Plan also provides for annual equity awards to non-employee directors. The Amended 2017 Plan provides for an annual grant of equity awards to each participant with a fair market value that may not exceed $600, or $800 with respect to the Chairman of the Board. Restricted shares granted to non-employee directors in 2025, 2024 and 2023 vested at the time of grant and there were no unvested restricted shares as of December 31, 2025. In 2025, 15 fully vested restricted shares with a weighted average grant date fair value per share of $106.18 were granted to non-employee directors.The following table summarizes information about RSUs and restricted shares: Number ofshares Weighted averagegrant date fair value Nonvested at December 31, 2024 654 $ 112.36 RSUs granted 400 $ 106.24 RSUs vested (368 ) $ 110.27 RSUs forfeited (18 ) $ 112.10 Nonvested at December 31, 2025 668 $ 110.03 In 2025, 2024 and 2023, the Company also awarded 94, 78 and 78 PSUs, respectively, under the Amended 2017 Plan. Nonvested PSUs include performance conditions to be finally measured based on financial results at December 31, 2026 and 2027.

NOTE 3.