UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

(Mark One)
ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2003
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to
Commission File Number: 0-13468

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

(Exact name of registrant as specified in its charter)

Washington	91-1069248
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)
1015 Third Avenue, 12th Floor, Seattle, Washington	98104
(Address of principal executive offices)	(Zip Code)
(206) 674-3400
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ý     No  o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).  Yes  ý No  o

At November 5, 2003, the number of shares outstanding of the issuer’s Common Stock was 104,984,162.

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except share data)

(Unaudited)

	September 30, 2003			December 31, 2002
Assets
Current assets:
Cash and cash equivalents	$	292,995		$	211,859
Short-term investments	125			87
Accounts receivable, less allowance for doubtful accounts of $12,243 at September 30, 2003 and $12,135 at December 31, 2002	449,323			385,864
Other current assets	28,310			7,676
Total current assets	770,753			605,486
Property and equipment, less accumulated depreciation and amortization of $131,324 at September 30, 2003 and $113,683 at December 31, 2002	234,789			204,966
Goodwill, less accumulated amortization of $765 at September 30, 2003 and December 31, 2002	5,725			5,299
Deferred Federal and state income taxes	7,451			11,008
Other assets, net	22,089			53,189
	$	1,040,807		$	879,948
Liabilities and Shareholders’ Equity
Current liabilities:
Short-term debt	50			1,319
Accounts payable	314,711			248,302
Accrued expenses, primarily salaries and related costs	83,693			79,847
Deferred Federal and state income taxes	16,977			9,678
Federal, state and foreign income taxes	11,990			16,990
Total current liabilities	427,421			356,136
Shareholders’ equity:
Preferred stock, par value $.01 per share.
Authorized 2,000,000 shares; none issued	—			—
Common stock, par value $.01 per share.
Authorized 320,000,000 shares; issued and outstanding 104,961,612 shares at September 30, 2003, and 104,220,940 shares at December 31, 2002	1,050			1,042
Additional paid-in capital	26,477			21,701
Retained earnings	589,256			512,036
Accumulated other comprehensive loss	(3,397		)	(10,967		)
Total shareholders’ equity	613,386			523,812
	$	1,040,807		$	879,948

See accompanying notes to condensed consolidated financial statements.

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EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES

Condensed Consolidated Statements of Earnings

(In thousands, except share data)

(Unaudited)

	Three months ended September 30,						Nine months ended September 30,
	2003			2002			2003			2002
Revenues:
Airfreight	$	307,645		$	318,842		$	861,973		$	823,447
Ocean freight and ocean services	284,893			205,238			707,217			520,716
Customs brokerage and import services	118,931			96,314			324,338			261,527
Total revenues	711,469			620,394			1,893,528			1,605,690
Operating expenses:
Airfreight consolidation	237,657			248,999			658,735			632,206
Ocean freight consolidation	229,601			159,206			564,102			401,145
Customs brokerage and import services	47,362			34,428			125,555			91,728
Salaries and related costs	103,274			92,081			294,828			256,608
Rent and occupancy costs	12,520			10,193			34,977			30,093
Depreciation and amortization	6,090			5,655			17,792			17,067
Selling and promotion	5,784			4,858			16,423			14,154
Other	19,801			17,653			52,902			46,637
Total operating expenses	662,089			573,073			1,765,314			1,489,638
Operating income	49,380			47,321			128,214			116,052
Interest expense	(16		)	(10		)	(141		)	(142		)
Interest income	1,106			1,557			3,360			4,530
Other, net	399			(167		)	2,295			1,182
Other income, net	1,489			1,380			5,514			5,570
Earnings before income taxes	50,869			48,701			133,728			121,622
Income tax expense	18,311			18,082			48,141			45,089
Net earnings	$	32,558		$	30,619		$	85,587		$	76,533
Diluted earnings per share	$	.30		$	.28		$	.79		$	.70
Basic earnings per share	$	.31		$	.29		$	.82		$	.74
Weighted average diluted shares outstanding	109,190,930			108,565,825			108,927,724			108,783,356
Weighted average basic shares outstanding	105,042,210			104,233,184			104,636,462			103,809,654

See accompanying notes to condensed consolidated financial statements.

3

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Three months ended September 30,						Nine months ended September 30,
	2003			2002			2003			2002
Operating activities:
Net earnings	$	32,558		$	30,619		$	85,587		76,533
Adjustments to reconcile net earnings to net cash provided by operating activities:
Provision for losses on accounts receivable	426			1,447			340			1,931
Deferred income tax expense	3,555			3,547			6,841			8,436
Tax benefits from employee stock plans	1,826			313			5,071			5,296
Depreciation and amortization	6,090			5,655			17,792			17,067
Gain on sale of property and equipment	(64		)	(18		)	(146		)	(1,575		)
Other	1,049			239			2,734			731
Changes in operating assets and liabilities:
Increase in accounts receivable	(76,911		)	(18,081		)	(64,226		)	(65,411		)
Decrease (increase) in other current assets	(9,311		)	1,249			(20,059		)	(3,446		)
Increase (decrease) in accounts payable and other current liabilities	52,561			(2,071		)	61,856			50,251
Net cash provided by operating activities	11,779			22,899			95,790			89,813
Investing activities:
Increase in short-term investments	(46		)	(27		)	(43		)	(21		)
Purchase of property and equipment	(4,301		)	(7,260		)	(13,194		)	(17,331		)
Proceeds from sale of property and equipment	151			166			289			3,929
Cash paid for note receivable secured by real estate	—			(1,347		)	—			(3,961		)
Other	(380		)	347			(384		)	71
Net cash used in investing activities	(4,576		)	(8,121		)	(13,332		)	(17,313		)
Financing activities:
Borrowings (repayments) of short-term debt, net	(440		)	1,496			(1,324		)	109
Proceeds from issuance of common stock	13,165			9,723			18,222			15,144
Repurchases of common stock	(13,083		)	(9,288		)	(18,510		)	(14,426		)
Dividends paid	—			—			(8,368		)	(6,235		)
Net cash provided by (used in) financing activities	(358		)	1,931			(9,980		)	(5,408		)
Effect of exchange rate changes on cash	1,735			(2,603		)	8,658			1,563
Increase in cash and cash equivalents	8,580			14,106			81,136			68,655
Cash and cash equivalents at beginning of period	284,415			273,226			211,859			218,677
Cash and cash equivalents at end of period	$	292,995		$	287,332		$	292,995		$	287,332
Interest and taxes paid:
Interest	$	15		$	15		$	139		$	142
Income taxes	18,211			9,340			53,623			25,859

See accompanying notes to condensed consolidated financial statements.

Non-Cash Investing Activities – Cash held in escrow of $30,954 at December 31, 2002, was applied toward the purchase of land and a building in January 2003.

4

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

Note 1.   Summary of Significant Accounting Policies

The attached condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. As a result, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted.  The Company believes that the disclosures made are adequate to make the information presented not misleading.  The condensed consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented.  Certain 2002 amounts have been reclassified to conform to the 2003 presentation. These condensed consolidated financial statements should be read in conjunction with the financial statements and related notes included in the Company’s Form 10-K as filed with the Securities and Exchange Commission on or about March 28, 2003.

The Company applies APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations in accounting for its stock option and its employee stock purchase rights plans.  Accordingly, no compensation cost has been recognized for its fixed stock option or employee stock purchase rights plans.  Had compensation cost for the Company’s three stock-based compensation and employee stock purchase rights plans been determined consistent with SFAS No. 123, the Company’s net earnings, basic earnings per share and diluted earnings per share would have been reduced to the pro forma amounts indicated below:

	Three months ended September 30,					Nine months ended September 30,
(in thousands, except share data)	2003			2002		2003		2002
Net earnings – as reported	$	32,558		30,619		85,587		76,533
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects	(5,968		)	(4,995	)	(17,579	)	(14,580	)
Net earnings – pro forma	$	26,590		25,624		68,008		61,953
Basic earnings per share – as reported	$	.31		.29		.82		.74
Basic earnings per share – pro forma	$	.25		.25		.65		.60
Diluted earnings per share – as reported	$	.30		.28		.79		.70
Diluted earnings per share – pro forma	$	.25		.24		.63		.58

Note 2.   Comprehensive Income

Comprehensive income consists of net income and other gains and losses affecting shareholders’ equity that, under generally accepted accounting principles, are excluded from net income.

The components of total comprehensive income for interim periods are presented in the following table:

	Three months ended September 30,					Nine months ended September 30,
(in thousands)	2003		2002			2003		2002
Net earnings	$	32,558	$	30,619		$	85,587	$	76,533
Foreign currency translation adjustments net of tax of: $(786) and $690 for the 3 months ended September 30, 2003 and 2002, and $(3,883) and $(924) for the 9 months ended September 30, 2003 and 2002.	1,459		(1,282		)	7,211		1,717
Unrealized gain from holding securities net of tax of: $(194) for the 3 and 9 months ended September 30, 2003.	359		––			359		––
Total comprehensive income	$	34,376	$	29,337		$	93,157	$	78,250

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Note 3.   Business Segment Information

Statement of Financial Accounting Standards (SFAS) No. 131, “Disclosure about Segments of an Enterprise and Related Information” establishes standards for the way that public companies report selected information about segments in their financial statements.

The Company is organized functionally in geographic operating segments.  Accordingly, management focuses its attention on revenues, net revenues, operating income, identifiable assets, capital expenditures, depreciation and amortization and equity generated in each of these geographical areas when evaluating the effectiveness of geographic management.  The Company charges its subsidiaries and affiliates for services rendered in the United States on a cost recovery basis.  Transactions among the Company’s various offices are conducted using the same arms-length pricing methodologies the Company uses when its offices transact business with independent agents.

6

Financial information regarding the Company’s operations by geographic area for the three and nine months ended September 30, 2003 and 2002 are as follows:

(in thousands)	UNITED STATES		OTHER NORTH AMERICA	FAR EAST	EUROPE	AUSTRALIA /NEW ZEALAND	LATIN AMERICA	MIDDLE EAST	ELIMI- NATIONS		CONSOLI- DATED
Three months ended September 30, 2003
Revenues from unaffiliated customers	$	131,237	16,061	410,668	105,459	8,624	9,702	29,718	—		711,469
Transfers between geographic areas	12,584		621	1,778	2,880	1,001	1,085	849	(20,798	)	—
Total revenues	$	143,821	16,682	412,446	108,339	9,625	10,787	30,567	(20,798	)	711,469
Net revenues	$	80,094	9,070	56,792	34,602	5,026	3,594	7,671	—		196,849
Operating income	$	16,255	1,641	24,365	4,341	1,113	342	1,323	—		49,380
Identifiable assets at quarter end	$	526,857	30,535	195,111	229,081	17,615	14,862	26,746	—		1,040,807
Capital expenditures	$	2,100	175	740	900	27	92	267	—		4,301
Depreciation and amortization	$	3,061	321	792	1,317	169	143	287	—		6,090
Equity	$	650,269	10,793	145,826	54,755	11,940	2,231	11,295	(273,723	)	613,386
Three months ended September 30, 2002
Revenues from unaffiliated customers	$	121,075	15,967	359,359	83,786	6,169	7,500	26,538	—		620,394
Transfers between geographic areas	7,925		493	1,536	2,340	1,081	793	691	(14,859	)	—
Total revenues	$	129,000	16,460	360,895	86,126	7,250	8,293	27,229	(14,859	)	620,394
Net revenues	$	73,442	8,214	53,065	28,941	4,033	3,297	6,769	—		177,761
Operating income	$	15,812	1,637	22,760	3,758	857	723	1,774	—		47,321
Identifiable assets at quarter end	$	469,670	24,944	162,221	130,043	12,506	8,393	23,438	—		831,215
Capital expenditures	$	4,498	265	692	993	311	46	455	—		7,260
Depreciation and amortization	$	3,051	324	695	1,070	155	113	247	—		5,655
Equity	$	504,059	8,398	132,079	36,467	8,782	823	8,262	(206,218	)	492,652
Nine months ended September 30, 2003
Revenues from unaffiliated customers	$	381,429	48,307	1,033,973	294,443	22,504	26,162	86,710	—		1,893,528
Transfers between geographic areas	26,221		1,405	4,842	7,662	2,864	3,019	2,354	(48,367	)	—
Total revenues	$	407,650	49,712	1,038,815	302,105	25,368	29,181	89,064	(48,367	)	1,893,528
Net revenues	$	223,358	26,067	151,886	98,473	13,577	10,057	21,718	—		545,136
Operating income	$	40,269	4,860	63,086	12,172	2,626	1,331	3,870	—		128,214
Identifiable assets at quarter end	$	526,857	30,535	195,111	229,081	17,615	14,862	26,746	—		1,040,807
Capital expenditures	$	5,646	888	2,825	2,360	179	330	966	—		13,194
Depreciation and amortization	$	9,279	944	2,289	3,685	475	400	720	—		17,792
Equity	$	650,269	10,793	145,826	54,755	11,940	2,231	11,295	(273,723	)	613,386
Nine months ended September 30, 2002
Revenues from unaffiliated customers	$	344,614	44,203	875,874	224,774	16,913	21,817	77,495	—		1,605,690
Transfers between geographic areas	19,411		1,462	4,558	6,829	3,105	2,442	2,063	(39,870	)	—
Total revenues	$	364,025	45,665	880,432	231,603	20,018	24,259	79,558	(39,870	)	1,605,690
Net revenues	$	203,036	23,394	135,492	79,313	11,043	9,148	19,185	—		480,611
Operating income	$	37,607	4,350	56,571	8,931	2,340	1,343	4,910	—		116,052
Identifiable assets at quarter end	$	469,670	24,944	162,221	130,043	12,506	8,393	23,438	—		831,215
Capital expenditures	$	8,310	747	1,831	4,201	923	108	1,211	—		17,331
Depreciation and amortization	$	9,412	1,032	2,053	2,970	402	442	756	—		17,067
Equity	$	504,059	8,398	132,079	36,467	8,782	823	8,262	(206,218	)	492,652

Certain 2002 amounts have been reclassified to conform to the 2003 presentation.

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Note 4.   Basic and Diluted Earnings per Share

The following table reconciles the numerator and the denominator of the basic and diluted per share computations for earnings per share for the three months and nine months ended September 30, 2003 and 2002:

	Three months ended September 30,
(Amounts in thousands, except share and per share amounts)	Net Earnings		Weighted Average Shares	Earnings Per Share
2003
Basic earnings per share	$	32,558	105,042,210	.31
Effect of dilutive potential common shares	—		4,148,720	—
Diluted earnings per share	$	32,558	109,190,930	.30
2002
Basic earnings per share	$	30,619	104,233,184	$	.29
Effect of dilutive potential common shares	—		4,332,641	—
Diluted earnings per share	$	30,619	108,565,825	$	.28

	Nine months ended September 30,
(Amounts in thousands, except share and per share amounts)	Net Earnings		Weighted Average Shares	Earnings Per Share
2003
Basic earnings per share	$	85,587	104,636,462	.82
Effect of dilutive potential common shares	—		4,291,262	—
Diluted earnings per share	$	85,587	108,927,724	.79
2002
Basic earnings per share	$	76,533	103,809,654	$	.74
Effect of dilutive potential common shares	—		4,973,702	—
Diluted earnings per share	$	76,533	108,783,356	$	.70

The following shares have been excluded from the computation of diluted earnings per share because the effect would have been antidilutive:

	Three months ended September 30,		Nine months ended September 30,
	2003	2002	2003	2002
Shares	1,824,050	2,717,050	1,888,050	140,600

Note 5.   Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 143, “Accounting for Asset Retirement Obligations” which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and for the associated asset retirement costs. The standard applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction or development and/or normal use of the asset. The Company adopted the provisions of SFAS No. 143 beginning in the first quarter of 2003.  Adoption of SFAS No. 143 had no impact on the Company’s consolidated financial condition or results of operations.

In June 2002, SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” was issued which addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF)

8

94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).” The Company adopted the provisions of SFAS No. 146 beginning in the first quarter of 2003.  Adoption of SFAS No. 146 had no impact on the Company’s consolidated financial condition or results of operations.

In November 2002, the FASB issued Interpretation No. 45 (FIN 45), “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others,” which clarifies disclosure and recognition/measurement requirements related to certain guarantees. The disclosure requirements are effective for financial statements issued after December 15, 2002 and the recognition/measurement requirements are effective on a prospective basis for guarantees issued or modified after December 31, 2002.  The provisions of FIN 45 require the Company to value and record the liability for any indirect or direct guarantees of the indebtedness of others entered into after December 31, 2002.  The Company adopted the provisions of FIN 45 beginning in the first quarter 2003.  As of September 30, 2003, the Company had no potential obligations under guarantees that fall within the scope of FIN 45.

In November 2002, the EITF reached a consensus on Issue No. 00-21 (EITF 00-21), “Revenue Arrangements  with  Multiple Deliverables’’.  EITF 00-21 addresses certain aspects of the accounting by a vendor for arrangements under which the vendor will perform multiple revenue generating activities.  EITF 00-21 became effective for periods beginning after June 15, 2003.  The Company’s adoption of the provisions of EITF 00-21 beginning in the third quarter of 2003 had no impact on the Company’s consolidated financial position or results of operations.

In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure” which amends SFAS No. 123, “Accounting for Stock-Based Compensation,” to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation.  SFAS No. 148 also amends the disclosure requirements of SFAS No. 123 to require prominent disclosure in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results.  The transition guidance and annual disclosure provisions of SFAS No. 148 are effective for fiscal years ending after December 15, 2002.  The interim disclosure provisions are effective for financial reports containing financial statements for interim periods beginning after December 15, 2002.  As the Company did not make a voluntary change to the fair value based method of accounting for stock-based employee compensation in 2002, the adoption of SFAS No. 148 did not have an impact on the Company’s consolidated financial position and results of operations.  The Company adopted the annual disclosure provisions of SFAS No. 148 in its financial reports for the year ended December 31, 2002 and adopted the interim disclosure provisions for its financial reports beginning with the quarter ending March 31, 2003.

In January 2003, the FASB issued Interpretation No. 46 (FIN 46), “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51”.  FIN 46 addresses the consolidation by business enterprises of variable interest entities as defined in FIN 46.  FIN 46 applies immediately to variable interests in variable interest entities created or obtained after January 31, 2003.  For public companies, FASB Staff Position No. FIN 46-6, “Effective Date of FASB Interpretation No. 46, Consolidation of Variable Interest Entities”, changed the effective date of Interpretation 46 for enterprises with a variable interest in a variable interest entity created before February 1, 2003, from the beginning of the first interim or annual reporting period beginning after June 15, 2003 to the end of the first interim or annual reporting period ending after December 15, 2003.  The Company will adopt the provisions of FIN 46 beginning in the fourth quarter of 2003 and anticipates that such adoption will have no impact on the Company’s consolidated financial position or results of operations.

Note 6.Stock and Cash Dividends

On May 8, 2002, the Board of Directors declared a 2-for-1 stock split, effected in the form of a stock dividend of one share of common stock for every share outstanding, and increased the authorized common stock to 320 million shares.  The stock dividend was distributed on June 24, 2002 to shareholders of record on June 10, 2002. All share and per share information, except par value, has been adjusted for all periods to reflect the stock split.

On May 7, 2003, the Board of Directors declared a semi-annual cash dividend of $.08 per share payable on June 16, 2003 to shareholders of record as of June 2, 2003.  The dividend of  $8.4 million was paid on June 16, 2003.

On May 8, 2002, the Board of Directors declared a semi-annual cash dividend of $.06 per share payable on June 17, 2002 to shareholders of record as of June 3, 2002.  The dividend of $6.2 million was paid on June 17, 2002.

9

Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS UNDER SECURITIES LITIGATION
REFORM ACT OF 1995; CERTAIN CAUTIONARY STATEMENTS

Certain portions of this report on Form 10-Q including the section entitled “Currency and Other Risk Factors” and “Liquidity and Capital Resources” contain forward-looking statements which must be considered in connection with the discussion of the important factors that could cause actual results to differ materially from the forward-looking statements.  In addition to risk factors identified elsewhere in this report, attention should be given to the factors identified and discussed in the report on Form 10-K filed on or about March 28, 2003.

GENERAL

Expeditors International of Washington, Inc. is engaged in the business of providing global logistics services, including international freight forwarding and consolidation, for both air and ocean freight.  The Company also acts as a customs broker in all domestic offices, and in many of its overseas offices.  The Company also provides additional services for its customers including value added distribution, purchase order management, vendor consolidation and other logistics solutions.  The Company offers domestic forwarding services only in conjunction with international shipments.  The Company does not compete for overnight courier or small parcel business.  The Company does not own or operate aircraft or steamships.

International trade is influenced by many factors, including economic and political conditions in the United States and abroad, currency exchange rates, and United States and foreign laws and policies relating to tariffs, trade restrictions, foreign investments and taxation.  Periodically, governments consider a variety of changes to current tariffs and trade restrictions.  The Company cannot predict which, if any, of these proposals may be adopted, nor can the Company predict the effects adoption of any such proposal will have on the Company’s business.  Doing business in foreign locations also subjects the Company to a variety of risks and considerations not normally encountered by domestic enterprises. In addition to being affected by governmental policies concerning international trade, the Company’s business may also be affected by political developments and changes in government personnel or policies in the nations in which it does business.

The Company’s ability to provide service to its customers is highly dependent on good working relationships with a variety of entities including airlines, steamship lines, and governmental agencies.  The Company considers its current working relationships with these entities to be good.  However, changes in space allotments available from carriers, governmental deregulation efforts, “modernization” of the regulations governing customs clearance, and/or changes in governmental quota restrictions could affect the Company’s business in unpredictable ways.

Historically, the Company’s operating results have been subject to a seasonal trend when measured on a quarterly basis.  The first quarter has traditionally been the weakest and the third and fourth quarters have traditionally been the strongest.  This pattern is the result of, or is influenced by, numerous factors including climate, national holidays, consumer demand, economic conditions and a myriad of other similar and subtle forces.  In addition, this historical quarterly trend has been influenced by the growth and diversification of the Company’s international network and service offerings.  The Company cannot accurately forecast many of these factors nor can the Company estimate accurately the relative influence of any particular factor and, as a result, there can be no assurance that historical patterns, if any, will continue in future periods.

A significant portion of the Company’s revenues are derived from customers in industries whose shipping patterns are tied closely to consumer demand, and from customers in industries whose shipping patterns are dependent upon just-in-time production schedules. Therefore, the timing of the Company’s revenues are, to a large degree, impacted by factors out of the Company’s control, such as labor disruptions, shifting consumer demand for retail goods and/or manufacturing production delays. Additionally, many customers ship a significant portion of their goods at or near the end of a quarter, and therefore, the Company may not learn of a shortfall in revenues until late in a quarter.  To the extent that a shortfall in revenues or earnings was not expected by securities analysts, any such shortfall from levels predicted by securities analysts could have an immediate and adverse effect on the trading price of the Company’s stock.

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Critical Accounting Policies and Estimates

Management believes that the nature of the Company’s business is such that there are few, if any, complex challenges in accounting for operations.  Revenue recognition is considered the critical accounting policy due to the complexity of arranging and managing global logistics and supply-chain management transactions.

Revenue Recognition.     The Company derives its revenues from three principal sources: airfreight, ocean freight and customs brokerage and import services and these are the revenue categories presented in the financial statements.

As a non-asset based carrier, the Company does not own transportation assets.  Rather, the Company generates the major portion of its air and ocean freight revenues by purchasing transportation services from direct (asset-based) carriers and reselling those services to its customers.   The difference between the rate billed to customers (the sell rate), and the rate paid to the carrier (the buy rate) is termed “Net Revenue” or “yield”.  By consolidating shipments from multiple customers and concentrating its buying power, the Company is able to negotiate favorable buy rates from the direct carriers, while at the same time offering lower sell rates than customers would otherwise be able to negotiate themselves.

Airfreight revenues include the charges to the Company for carrying the shipments when the Company acts as a freight consolidator.  Ocean freight revenues include the charges to the Company for carrying the shipments when the Company acts as a Non-Vessel Operating Common Carrier (NVOCC).  In each case the Company is acting as an indirect carrier.  When acting as an indirect carrier, the Company will issue a House Airway Bill (HAWB) or a House Ocean Bill of Lading (HOBL) to customers as the contract of carriage.  In turn, when the freight is physically tendered to a direct carrier, the Company receives a contract of carriage known as a Master Airway Bill for airfreight shipments and a Master Ocean Bill of Lading for ocean shipments.  At this point, the risk of loss passes to the carrier, however, in order to claim for any such loss, the customer is first obligated to pay the freight charges.

Based upon the terms in the contract of carriage, revenues related to shipments where the Company issues an HAWB or an HOBL are recognized at the time the freight is tendered to the direct carrier at origin.  Costs related to the shipments are also recognized at this same time.

Revenues realized in other capacities, for instance, when the Company acts as an agent for the shipper, and does not issue an HAWB or an HOBL, include only the commissions and fees earned for the services performed.  These revenues are recognized upon completion of the services.

Customs brokerage and import services involves providing services at destination, such as helping customers clear shipments through customs by preparing required documentation, calculating and providing for payment of duties and other taxes on behalf of the customers as well as arranging for any required inspections by governmental agencies, and arranging for delivery.   This is a complicated function requiring technical knowledge of customs rules and regulations in the multitude of countries in which the Company has offices.  Revenues related to customs brokerage and import services are recognized upon completion of the services.

Arranging international shipments is a complex task.  Each actual movement can require multiple services.  In some instances, the Company is asked to perform only one of these services.  However, in most instances, the Company may perform multiple services.  These services include destination breakbulk services and value added ancillary services such as local transportation, export customs formalities, distribution services and logistics management.  Each of these services has an associated fee, which is recognized as revenue upon completion of the service.

Typically, the fees for each of these services are quoted as separate components, however, customers on occasion will request an all-inclusive rate for a set of services known in the industry as “door-to-door service.”  This means that the customer is billed a single rate for all services from pickup at origin to delivery at destination.  In these instances, the revenue for origin and destination services, as well as revenue that will be characterized as freight charges, is allocated to branches as set by preexisting Company policy perhaps supplemented by customer specific negotiations between the offices involved.  Each of the Company’s branches are independent profit centers and the primary compensation for the branch management group comes in the form of incentive-based compensation calculated directly from the operating income of that branch.  This compensation structure ensures that the allocation of revenue and expense among components of services, when provided under an all-inclusive rate, are done in an objective manner on a fair value basis, in accordance with EITF 00-21, “Revenue Arrangements with Multiple Deliverables.”

While judgments and estimates are a necessary component of any system of accounting, the Company’s use of estimates is limited primarily to the following areas that in the aggregate are not a major component of the Company’s statement of earnings:

•accounts receivable valuation,

•the useful lives of long-term assets,

•the accrual of costs related to ancillary services the Company provides, and

•establishment of adequate insurance liabilities for the portion of the freight related exposure which the Company has self insured.

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In addition, certain undistributed earnings of the Company’s subsidiaries accumulated through December 31, 1992 would, under most circumstances, be subject to some additional United States income tax if distributed to the Company.  The Company has not provided for this additional income tax because the Company intends to reinvest such earnings to fund the expansion of its foreign activities, or to distribute them in a manner in which no significant additional taxes would be incurred.  Management believes that the methods utilized in all of these areas are non-aggressive in approach and consistent in application.  Management believes that there are limited, if any, alternative accounting principles or methods which could be applied to the Company’s transactions.  While the use of estimates means that actual future results may be different from those contemplated by the estimates, the Company believes that alternative principles and methods used for making such estimates would not produce materially different results than those reported.

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Results of Operations

The following table shows the consolidated net revenues (revenues less transportation expenses) attributable to the Company’s principal services and the Company’s expenses for the three and nine-month periods ended September 30, 2003 and 2002, expressed as percentages of net revenues.  Management believes that net revenues are a better measure than total revenues of the relative importance of the Company’s principal services since total revenues earned by the Company as a freight consolidator include the carriers’ charges to the Company for carrying the shipment whereas revenues earned by the Company in its other capacities include only the commissions and fees actually earned by the Company.

The table and the accompanying discussion and analysis should be read in conjunction with the condensed consolidated financial statements and related notes thereto which appear elsewhere in this Quarterly Report.

	Three months ended September 30,								Nine months ended September 30,
	2003				2002				2003				2002
	Amount		Percent of net revenues		Amount		Percent of net revenues		Amount		Percent of net revenues		Amount		Percent of net revenues
	(Amounts in thousands)
Net Revenues:
Airfreight	$	69,988	36	%	$	69,843	39	%	$	203,238	37	%	$	191,241	40	%
Ocean freight and ocean services	55,292		28		46,032		26		143,115		26		119,571		25
Customs brokerage and import services	71,569		36		61,886		35		198,783		37		169,799		35
Net revenues	196,849		100		177,761		100		545,136		100		480,611		100
Operating expenses:
Salaries and related costs	103,274		52		92,081		52		294,828		54		256,608		53
Other	44,195		23		38,359		22		122,094		22		107,951		23
Total operating expenses	147,469		75		130,440		74		416,922		76		364,559		76
Operating income	49,380		25		47,321		26		128,214		24		116,052		24
Other income, net	1,489		1		1,380		1		5,514		1		5,570		1
Earnings before income taxes	50,869		26		48,701		27		133,728		25		121,622		25
Income tax expense	18,311		9		18,082		10		48,141		9		45,089		9
Net earnings	$	32,558	17	%	$	30,619	17	%	$	85,587	16	%	$	76,533	16	%

Airfreight net revenues remained constant for the three-month period and increased 6% for the nine-month period ended September 30, 2003, respectively, as compared with the same periods for 2002.  The Company experienced decreases in global airfreight tonnages, despite very modest increases in airfreight yields throughout the three and nine-months ended September 30, 2003.  The decline in airfreight tonnages on a year over year basis is largely a result of record airfreight tonnage increases in the previous year related to anticipated labor disruptions in the ocean freight markets.  In the current year, much of the recurring ocean freight traffic that had been diverted to airfreight in the prior year returned to its normal ocean freight mode of transportation.  Management believes that the decrease in airfreight tonnage is a result of this return of a portion of the prior year’s airfreight to ocean freight during the current year, and does not reflect an overall loss of the Company’s market share.

Ocean freight and ocean services net revenues increased 20% for the three and nine-month periods ended September 30, 2003, as compared with the same periods for 2002.  Airfreight  and ocean freight shipments have different profitability dynamics.  Accordingly, shifts in freight volumes between these modes of transportation  typically do not have a reciprocal impact on their respective net revenues.  It is the Company’s experience that airfreight net revenues tend to be impacted more by these shifts than are ocean freight net revenues. As noted above, the shift of airfreight volumes to ocean freight in the third quarter of 2003, as compared with the third quarter of 2002, did not have a corresponding positive impact on ocean freight net revenues.  The Company continued to aggressively market competitive ocean freight rates primarily on freight moving eastbound from the Far East. Management has continued to focus on market share for trade lanes other than eastbound from the Far East.  The ocean forwarding business and ECMS (Expeditors Cargo Management Systems), the Company’s ocean freight consolidation management and purchase order tracking service, were again instrumental in helping the Company to expand market share.

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Customs brokerage and import services net revenues increased 16% and 17% for the three and nine-month periods ended September 30, 2003, as compared with the same periods for 2002. Management estimates that the Company performs customs clearance services for approximately 70-75% of the freight that it carries.  These increases in customs brokerage and import services were consistent with the Company’s focus on profitable business, as opposed to high volume, no margin business.

Salaries and related costs increased 12% and 15% for the three and nine-month periods ended September 30, 2003 compared with the same periods in 2002 as a result of (1) the Company’s increased, albeit limited, hiring of sales, operations, and administrative personnel in existing and new offices to accommodate increases in business activity, and (2) increased compensation levels.  Salaries and related costs as a percentage of net revenues remained relatively constant for the three-month period and increased 1% for the nine-month period ended September 30, 2003, respectively, as compared with the same periods in 2002.  The 1% increase is a result of (1) higher health insurance costs in the United States; (2) additional investments in information technology personnel to support systems migration initiatives; and (3) redundancy payments made to employees who were displaced as a result of the Company’s continued efforts to streamline and consolidate its European operations.  During the second quarter of 2003, one branch was closed (Luton, U.K.), one branch was restructured (Bristol, U.K.) and a distribution center associated with the Rotterdam, Netherlands office was closed.  The relatively consistent relationship between salaries and net revenues is the result of a compensation philosophy that has been maintained since the inception of the Company: offer a modest base salary and the opportunity to share in a fixed and determinable percentage of the operating profit of the business unit controlled by each key employee.  Using this compensation model, changes in individual compensation will occur in proportion to changes in Company profits.  Management believes that the Company’s historical growth in revenues, net revenues and net earnings for the three and nine-month periods ended September 30, 2003 and 2002 are a result of the incentives inherent in the Company’s compensation program.

Other operating expenses increased 15% and 13% for the three and nine-month periods ended September 30, 2003, as compared with the same periods in 2002.  Other operating expenses as a percentage of net revenues increased 1% and decreased 1% for the three and nine-month periods ended September 30, 2003, respectively, as compared with the same periods in 2002.  The 1% increase realized in the third quarter of 2003 was largely attributable to the costs incurred as a result of the closure of the Rotterdam distribution center and the consolidation of those activities into the existing Rotterdam, Netherlands office.

Other income, net, increased for the three-month period and decreased for the nine-month period ended September 30, 2003, as compared with the same periods in 2002.  Due to much lower interest rates on higher average cash balances and short-term investments during 2003, interest income decreased by $0.45 million and $1.17 million for the three and nine months ended September 30, 2003, respectively.   Rental income, net of applicable depreciation, of $515 and $1,685, respectively, for the three and nine month periods ended September 30, 2003, is included in other income.  The rental income is derived from the Company’s property located near Heathrow airport in London, England.  Other income in the nine months ended September 30, 2002 includes the $1,447 gain on the sale of the Company’s former Dublin, Ireland facility, which occurred in the first quarter of 2002.

The Company pays income taxes in the United States and other jurisdictions, as well as other taxes which are typically included in costs of operations. The Company’s consolidated effective income tax rate during both the three and nine-month periods ended September 30, 2003, decreased slightly from 37.1% to 36%, respectively, as compared with the same periods in 2002.  The decreases were caused primarily by a reduction in state tax expense required to be paid by the Company.

Currency and Other Risk Factors

International air/ocean freight forwarding and customs brokerage are intensively competitive and are expected to remain so for the foreseeable future. There are a large number of entities competing in the international logistics industry; however, the Company’s primary competition is confined to a relatively small number of companies within this group. While there is currently a marked trend within the industry toward consolidation into large firms with multinational offices and agency networks, regional and local broker/forwarders remain a competitive force.

Historically, the primary competitive factors in the international logistics industry have been price and quality of service, including reliability, responsiveness, expertise, convenience, and scope of operations.  The Company emphasizes quality service and believes that its prices are competitive with those of others in the industry.  Recently, customers have exhibited a trend towards more sophisticated and efficient procedures for the management of the logistics supply chain by embracing strategies such as just-in-time inventory management.  Accordingly, sophisticated computerized customer service capabilities and a stable worldwide network have become significant factors in attracting and retaining customers.

Developing these systems and a worldwide network has added a considerable indirect cost to the services provided to customers.  Smaller and middle-tier competitors, in general, do not have the resources available to develop customized systems and a worldwide network.  As a result, there is a significant amount of consolidation currently taking place in the industry.  Management expects that this trend toward consolidation will continue for the short- to medium-term.

The nature of the Company’s worldwide operations necessitates the Company dealing with a multitude of currencies other than the U.S. Dollar.  This results in the Company being exposed to the inherent risks of the international currency markets and governmental interference.  Some of the countries where the Company maintains offices and/or agency relationships have strict

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currency control regulations which influence the Company’s ability to hedge foreign currency exposure.  The Company tries to compensate for these exposures by accelerating international currency settlements among its offices or agents.  The Company enters into foreign currency hedging transactions only in limited locations where there are regulatory or commercial limitations on the Company’s ability to move money freely around the world or the short-term financial outlook in any country is such that hedging is the most time-sensitive way to avoid short-term exchange losses.  Any such hedging activity during the three and nine months ended September 30, 2003 and 2002 was insignificant.  The Company had an approximate $89 net foreign exchange loss for the three months ended September 30, 2003.  For the nine months ended September 30, 2003, the Company had an approximate $506 net foreign exchange gain.  In the same periods of 2002, the Company had a net foreign currency gain of approximately $52 and a net foreign currency loss of approximately $62, respectively.

The Company has traditionally generated revenues from airfreight, ocean freight and customs brokerage and import services.  In light of the customer-driven trend to provide customer rates on a door-to-door basis, management foresees the potential, in the medium to long-term, for fees normally associated with customs house brokerage to be de-emphasized and included as a component of other services offered by the Company.

Sources of Growth

Acquisitions - Historically, growth through aggressive acquisition has proven to be a challenge for many of the Company’s competitors and typically involves the purchase of significant “goodwill”, the value of which can be realized in large measure only by retaining the customers and profit margins of the acquired business. As a result, the Company has pursued a strategy emphasizing organic growth supplemented by certain strategic acquisitions, where future economic benefit significantly exceeds the “goodwill” recorded in the transaction.

Office Openings - The Company opened two start-up offices during the third quarter of 2003.

NORTH AMERICA

Orlando, Florida

Tampa, Florida

Internal Growth - Management believes that a comparison of “same store” growth is critical in the evaluation of the quality and extent of the Company’s internally generated growth. This “same store” analysis isolates the financial contributions from offices that have been included in the Company’s operating results for at least one full year.   The table below presents “same store” comparisons for the three and nine months ended September 30, 2003 (which is the measure of any increase from the same period of 2002) and for the three and nine months ended September 30, 2002 (which measures growth over 2001).

	For the three months ended September 30,				For the nine months ended September 30,
	2003		2002		2003		2002
Net revenue	11	%	12	%	13	%	6	%
Operating income	5	%	12	%	11	%	9	%

Liquidity and Capital Resources

The Company’s principal source of liquidity is cash generated from operating activities.  Net cash provided by operating activities for the three and nine months ended September 30, 2003, was approximately $11.8 million and $95.8 million, as compared with $22.9 million and $89.8 million for the same periods of 2002.  The $11.1 million decrease for the three month period is principally due to a $9.3 million increase in other current assets for the three months ended September 30, 2003, as compared to a $1.2 million decrease in other current assets for the same period in 2002.  The $6 million increase for the nine month period is principally due to a $64.2 million increase in accounts receivable and a $61.9 million increase in accounts payable for the nine months ended September 30, 2003, as compared to a $65.4 million increase in accounts receivable and a $50.3 million increase in accounts payable for the same period in 2002 and increased net earnings in 2003, offset by a $20.1 million increase in other current assets for the nine months ended September 30, 2003, as compared to a $3.4 million increase in other current assets for the same period in 2002.

The increase in other current assets for both the three and nine-month periods ended September 30, 2003, was the result of higher estimated tax payments in the third quarter of 2003 as compared to the same period in 2002.  The Company attempts to manage cash flows by matching the timing of cash outflows for payments to vendors with cash inflows from collections of customer billings.  During the nine months ended September 30, 2003, as compared to the same period of 2002, the increase in accounts payable was due to the timing of the Company’s disbursements to vendors. Relative increases in accounts receivable in 2003 remained roughly constant with those of the same period of 2002.

The Company’s business is subject to seasonal fluctuations.  Cash flow fluctuates as a result of this seasonality.  Historically, the first quarter shows an excess of customer collections over customer billings.  This results in positive cash flow.  The increased activity associated with peak season (typically commencing late second or early third quarter) causes an excess of customer billings over customer collections.  This cyclical growth in customer receivables consumes available cash.  In the past, the Company has utilized short-term borrowings to satisfy normal operating expenditures when temporary cash outflows exceed cash inflows.  These short-term borrowings have been repaid when the trend reverses and customer collections exceed customer billings.

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As a customs broker, the Company makes significant 5-10 business day cash advances for its customers’ obligations such as the payment of duties to the Bureau of Customs and Border Protection.  These advances are made as an accommodation for a select group of credit-worthy customers.  Cash advances are a “pass through” and are not recorded as a component of revenue and expense.  The billings of such advances to customers are accounted for as a direct increase in accounts receivable to the customer and a corresponding increase in accounts payable to governmental customs authorities.  As a result of these “pass through” billings, the conventional Days Sales Outstanding or DSO calculation does not directly measure collection efficiency.

Cash used in investing activities for the three and nine months ended September 30, 2003, was $4.6 million and $13.3 million, as compared with $8.1 million and $17.3 million during the same periods of 2002.  The largest use of cash in investing activities is cash paid for capital expenditures.  As a non-asset based provider of integrated logistics services, the Company does not own any physical means of transportation (i.e., airplanes, ships, trucks, etc.).  However, the Company does have need, on occasion, to purchase buildings to house staff and to facilitate the staging of customers’ freight.  The Company routinely invests in technology, office furniture and equipment and leasehold improvements.  In the third quarter of 2003, the Company made capital expenditures of  $4.3 million as compared with $7.3 million for the same period in 2002.  Capital expenditures in the third quarter of 2003 and 2002 related primarily to investments in technology and office furniture and equipment.  Capital expenditures for the nine months ended September 30, 2002 were offset by proceeds from the sale of property and equipment of $3.9 million.  The higher proceeds for this period in 2002 were substantially due to the Company’s sale of its former Dublin, Ireland facility.  Cash of $31.3 million was paid into escrow during the fourth quarter of 2002 to acquire an office and warehouse facility near the San Francisco, California International Airport; the transaction closed on January 7, 2003.

Cash used in financing activities during the three and nine months ended September 30, 2003, were $0.4 million and $10 million as compared with cash provided by and used in financing activities of $1.9 million and $5.4 million for the same periods in 2002. The Company uses the proceeds from stock option exercises to repurchase the Company’s stock on the open market.  The differences shown at the end of the third quarter of 2003 and 2002 between proceeds from the issuance of common stock and the amounts paid to repurchase common stock represent a timing difference in the receipt of proceeds and the subsequent repurchase of outstanding shares.

At September 30, 2003, working capital was $343.3 million, including cash and short-term investments of $293.1 million.  The Company had no long-term debt at September 30, 2003.  While the nature of its business does not require an extensive investment in property and equipment, the Company cannot eliminate the possibility that it could acquire an equity interest in property in certain geographic locations.  Excluding the acquisition of the office and warehouse facility near the San Francisco, California International Airport, described earlier, the Company currently expects to spend approximately $20 million for normal capital expenditures in 2003. In addition to property and equipment,normal capital expenditures includeleasehold improvements, warehouse equipment, computer hardware and furniture and fixtures.  The Company expects to financecapital expenditures in 2003, with cash.

The Company, on occasion, borrows internationally and domestically under unsecured bank lines of credit.  At September 30, 2003, the U.S. facility totaled $50 million and international bank lines of credit totaled $12.7 million.  In addition, the Company maintains a bank facility with its U.K. bank for $8.3 million.  At September 30, 2003, the Company was directly liable for $0.05 million drawn on these lines of credit and was contingently liable for an additional $49.4 million from standby letters of credit and guarantees related to these lines of credit and other obligations.

Management believes that the Company’s current cash position, bank financing arrangements, and operating cash flows will be sufficient to meet its capital and liquidity requirements for the foreseeable future, including meeting any contingent liabilities related to standby letters of credit and guarantees noted above.

In some cases, the Company’s ability to repatriate funds from foreign operations may be subject to foreign exchange controls.  At September 30, 2003, cash and cash equivalent balances of $177.4 million were held by the Company’s non-U.S. subsidiaries, of which $85.6 million was held in banks in the United States.  In addition, certain undistributed earnings of the Company’s subsidiaries accumulated through December 31, 1992 would, under most circumstances, be subject to some additional United States income tax if distributed to the Company.  Such undistributed earnings are approximately $41.9 million and the additional Federal and state taxes payable in a hypothetical distribution of such accumulated earnings would approximate $10.1 million.  The Company has not provided for this additional tax because the Company intends to reinvest such earnings to fund the expansion of its foreign activities, or to distribute them in a manner in which no significant additional taxes would be incurred.

Item 3.      Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to market risks in the ordinary course of its business. These risks are primarily related to foreign exchange risk and changes in short-term interest rates. The potential impact of the Company’s exposure to these risks is presented below:

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Foreign Exchange Risk

The Company conducts business in many different countries and currencies. The Company’s business often results in revenue billings issued in a country and currency which differs from that where the expenses related to the service are incurred. In the ordinary course of business, the Company creates numerous intercompany transactions.  This brings a market risk to the Company’s earnings.

Foreign exchange rate sensitivity analysis can be quantified by estimating the impact on the Company’s earnings as a result of hypothetical changes in the value of the U.S. Dollar, the Company’s functional currency, relative to the other currencies in which the Company transacts business.  All other things being equal, an average 10% weakening of the U.S. Dollar, throughout the nine months ended September 30, 2003, would have had the effect of raising operating income approximately $8.5 million.  An average 10% strengthening of the U.S. Dollar, for the same period, would have had the effect of reducing operating income approximately $7 million.

The Company has approximately $6.7 million of intercompany transactions unsettled at any one point in time.  The Company currently does not use derivative financial instruments to manage foreign currency risk.  The Company instead follows a policy of accelerating international currency settlements to manage foreign exchange risk relative to intercompany billings.  The majority of intercompany billings are resolved within 30 days and intercompany billings arising in the normal course of business are fully settled within 90 days.

Interest Rate Risk

At September 30, 2003, the Company had cash and cash equivalents and short-term investments of $293.1 million and short-term borrowings of $0.05 million, all subject to variable short-term interest rates.  A hypothetical change in the interest rate of 10% would have no material impact on the Company’s earnings.

In management’s opinion, there has been no material change in the Company’s market risk exposure in the third quarter of 2003.

Item 4.Controls and Procedures

Evaluation of Controls and Procedures

As of September 30, 2003, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO), an evaluation of the effectiveness of the Company’s disclosure controls and procedures was performed.  Based on this evaluation, the CEO and CFO have concluded that the Company’s disclosure controls and procedures are effective to ensure that material information is recorded, processed, summarized and reported by management of the Company on a timely basis in order to comply with the Company’s disclosure obligations under the Securities Exchange Act of 1934 and the SEC rules thereunder.

Changes in Internal Controls

There were no significant changes in the Company’s internal controls or in other factors that could significantly affect these controls subsequent to September 30, 2003.

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EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES

PART II.      OTHER INFORMATION

Item 1.  Legal Proceedings

The Company is ordinarily involved in claims and lawsuits which arise in the normal course of business, none of which currently, in management’s opinion, will have a significant effect on the Company’s financial position or results of operations.

Item 6.  Exhibits and Reports on Form 8-K

(a)Exhibits required by Item 601 of Regulation S-K.

Exhibit Number	Description
Exhibit 10.43	Amendment to Credit Agreement between the Company and Wells Fargo Bank, National Association.
Exhibit 31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 32	Certification pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b)Reports on Form 8-K

None.

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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 7, 2003	/s/ PETER J. ROSE
	Peter J. Rose, Chairman and Chief Executive Officer
	(Principal Executive Officer)
November 7, 2003	/s/ R. JORDAN GATES
	R. Jordan Gates, Executive Vice President — Chief Financial Officer and Treasurer
	(Principal Financial and Accounting Officer)

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EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES

Form 10-Q Index and Exhibits

September 30, 2003

Exhibit Number	Description
10.43	Amendment to Credit Agreement between the Company and Wells Fargo Bank, National Association dated July 1, 2003 with respect to the Company’s $50,000,000 unsecured line of credit together with a Revolving Line of Credit Note due July 1, 2004.
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Certification pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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