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 June 30, 2005

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 August 3, 2005, the number of shares outstanding of the issuer’s Common Stock was 106,616,908.

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)

	June 30, 2005		December 31, 2004
Assets
Current assets:
Cash and cash equivalents	$	438,873	$	408,983
Short-term investments	119		109
Accounts receivable, less allowance for doubtful accounts of $11,866 at June 30, 2005 and $12,842 at December 31, 2004	615,637		614,044
Other current assets	24,431		22,724
Total current assets	1,079,060		1,045,860
Property and equipment, less accumulated depreciation and amortization of $150,591 at June 30, 2005 and $150,766 at December 31, 2004	306,177		287,379
Goodwill, less accumulated amortization of $765 at June 30, 2005 and December 31, 2004	7,774		7,774
Other intangibles, net	9,825		10,839
Other assets, net	14,413		12,201
	$	1,417,249	$	1,364,053
Liabilities and Shareholders’ Equity
Current liabilities:
Short-term debt	—		2,250
Accounts payable	422,939		410,251
Accrued expenses, primarily salaries and related costs	100,540		84,778
Deferred Federal and state income taxes	6,866		6,369
Federal, state and foreign income taxes	19,227		20,668
Total current liabilities	549,572		524,316
Deferred Federal and state income taxes	26,062		24,861
Minority interest	9,522		7,472
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 106,545,961 shares at June 30, 2005, and 106,643,953 shares at December 31, 2004	1,065		1,066
Additional paid-in capital	14,697		44,678
Retained earnings	816,307		749,974
Accumulated other comprehensive income	24		11,686
Total shareholders’ equity	832,093		807,404
Commitments and contingencies
	$	1,417,249	$	1,364,053

See accompanying notes to condensed consolidated financial statements.

2

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES

Condensed Consolidated Statements of Earnings
(In thousands, except share data)

(Unaudited)

	Three months ended June 30,						Six months ended June 30,
	2005			2004			2005			2004
Revenues:
Airfreight	$	421,213		$	368,618		$	794,098		$	693,477
Ocean freight and ocean services	336,934			290,109			634,078			523,155
Customs brokerage and other services	169,852			139,939			324,987			268,884
Total revenues	927,999			798,666			1,753,163			1,485,516
Operating expenses:
Airfreight consolidation	330,269			281,729			614,707			528,381
Ocean freight consolidation	277,259			239,313			521,229			426,132
Customs brokerage and other services	69,811			55,401			135,884			106,284
Salaries and related costs	134,841			117,931			259,395			228,972
Rent and occupancy costs	13,457			12,615			27,205			25,366
Depreciation and amortization	7,603			6,493			14,942			12,752
Selling and promotion	7,120			7,109			14,666			13,619
Other	19,334			19,829			39,273			36,956
Total operating expenses	859,694			740,420			1,627,301			1,378,462
Operating income	68,305			58,246			125,862			107,054
Interest expense	(219		)	(23		)	(248		)	(28		)
Interest income	2,725			1,258			4,872			2,264
Other, net	874			644			2,070			1,801
Other income, net	3,380			1,879			6,694			4,037
Earnings before income taxes and minority interest	71,685			60,125			132,556			111,091
Income tax expense	25,712			21,372			47,786			39,532
Net earnings before minority interest	$	45,973		$	38,753		$	84,770		$	71,559
Minority interest	(1,329		)	(1,141		)	(2,382		)	(2,103		)
Net earnings	$	44,644		$	37,612		$	82,388		$	69,456
Diluted earnings per share	$	.40		$	.34		$	.74		$	.63
Basic earnings per share	$	.42		$	.36		$	.77		$	.66
Weighted average diluted shares outstanding	111,417,781			110,656,193			111,776,854			110,188,368
Weighted average basic shares outstanding	106,776,046			105,597,413			106,752,363			105,364,264

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 June 30,						Six months ended June 30,
	2005			2004			2005			2004
Operating activities:
Net earnings	$	44,644		$	37,612		$	82,388		$	69,456
Adjustments to reconcile net earnings to net cash provided by operating activities:
Provision for losses on accounts receivable	(394		)	(438		)	(358		)	244
Deferred income tax expense	3,728			5,033			7,987			9,880
Tax benefits from employee stock plans	6,019			8,118			8,955			10,040
Depreciation and amortization	7,603			6,493			14,942			12,752
Gain on sale of property and equipment	(26		)	(61		)	(45		)	(48		)
Impairment write down of other assets	—			2,000			—			2,000
Other	1,220			819			293			1,548
Changes in operating assets and liabilities:
Increase in accounts receivable	(45,318		)	(62,034		)	(1,648		)	(74,612		)
Increase in other current assets	(4,539		)	(9,288		)	(1,746		)	(8,565		)
Increase in minority interest	833			857			1,670			1,819
Increase in accounts payable and other current liabilities	33,183			44,077			30,225			84,649
Net cash provided by operating activities	46,953			33,188			142,663			109,163
Investing activities:
Decrease (increase) in short-term investments	631			(30		)	(12		)	1
Purchase of property and equipment	(14,175		)	(11,655		)	(43,192		)	(20,293		)
Proceeds from sale of property and equipment	107			235			249			287
Other	(673		)	909			(1,339		)	228
Net cash used in investing activities	(14,110		)	(10,541		)	(44,294		)	(19,777		)
Financing activities:
Borrowings (repayments) of short-term debt, net	43			2			(2,130		)	(213		)
Proceeds from issuance of common stock	8,700			10,064			11,075			11,491
Repurchases of common stock	(35,486		)	(10,247		)	(50,013		)	(11,784		)
Dividends paid	(16,055		)	(11,642		)	(16,055		)	(11,642		)
Net cash used in financing activities	(42,798		)	(11,823		)	(57,123		)	(12,148		)
Effect of exchange rate changes on cash	(8,562		)	(2,691		)	(11,356		)	(611		)
Increase (decrease) in cash and cash equivalents	(18,517		)	8,133			29,890			76,627
Cash and cash equivalents at beginning of period	457,390			364,326			408,983			295,832
Cash and cash equivalents at end of period	$	438,873		$	372,459		$	438,873		$	372,459
Interest and taxes paid:
Interest	$	214		$	22		$	234		$	32
Income taxes	18,444			18,282			28,560			26,747

See accompanying notes to condensed consolidated financial statements.

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. 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 16, 2005.

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 June 30,					Six months ended June 30,
(in thousands, except share data)	2005			2004		2005		2004
Net earnings – as reported	$	44,644		37,612		82,388		69,456
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects	(8,982		)	(7,932	)	(15,493	)	(13,899	)
Net earnings – pro forma	$	35,662		29,680		66,895		55,557
Basic earnings per share – as reported	$	.42		.36		.77		.66
Basic earnings per share – pro forma	$	.33		.28		.63		.53
Diluted earnings per share – as reported	$	.40		.34		.74		.63
Diluted earnings per share – pro forma	$	.32		.27		.60		.51

In December 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 123 (revised 2004), “Share-Based Payment” (SFAS No. 123R), which replaces SFAS No. 123, “Accounting for Stock-Based Compensation” (SFAS No. 123) and supercedes APB Opinion No. 25, “Accounting for Stock Issued to Employees.” SFAS No. 123R requires all share-based payments to employees, including grants of employee stock options and employee stock purchase plans, to be recognized in the financial statements based on their fair values. The Company is required to adopt SFAS No. 123R in the first quarter of 2006. The Company is evaluating the requirements of SFAS No. 123R and expects the adoption of SFAS No. 123R will have a material impact on the consolidated results of operations, earnings per share and consolidated statement of cash flows.

Note 2. Comprehensive Income

Comprehensive income consists of net income and other gains and losses affecting shareholders’ equity that, under generally accepted accounting principles in the United States, are excluded from net income. For the Company, these consist of foreign currency translation gains and losses and unrealized gains and losses on securities, net of related income tax effects.

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

	Three months ended June 30,						Six months ended June 30,
(in thousands)	2005			2004			2005			2004
Net earnings	$	44,644		$	37,612		$	82,388		$	69,456
Foreign currency translation adjustments net of tax of: $4,125 and $1,448 for the 3 months ended June 30, 2005 and 2004, and $6,252 and $207 for the 6 months ended June 30, 2005 and 2004.	(7,660		)	(2,690		)	(11,611		)	(384		)
Unrealized gain (loss) on securities net of tax of $10 and $(0.4) for the 3 months ended June 30, 2005 and 2004, and $37 and $17 for the 6 months ended June 30, 2005 and 2004.	(13		)	1			(51		)	(32		)
Total comprehensive income	$	36,971		$	34,923		$	70,726		$	69,040

5

Note 3. Other Assets

During the second quarter of 2004, the Company evaluated the recoverability of an equity investment in a privately held technology company and determined that an impairment had occurred. Accordingly, a $2 million loss was recorded as an operating expense.

Note 4. 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 six months ended June 30, 2005 and 2004 are as follows:

(in thousands)	UNITED STATES		OTHER NORTH AMERICA	FAR EAST	EUROPE	AUSTRALIA/ NEW ZEALAND	LATIN AMERICA	MIDDLE EAST	ELIMI- NATIONS		CONSOLIDATED
Three months ended June 30, 2005:
Revenues from unaffiliated customers	$	182,105	23,405	519,774	133,903	11,745	15,561	41,506	—		927,999
Transfers between geographic areas	19,232		1,178	3,126	5,583	1,425	1,879	1,926	(34,349	)	—
Total revenues	$	201,337	24,583	522,900	139,486	13,170	17,440	43,432	(34,349	)	927,999
Net revenues	$	101,950	12,839	66,894	44,724	7,054	6,885	10,314	—		250,660
Operating income	$	22,748	3,055	30,193	7,391	1,632	1,488	1,798	—		68,305
Identifiable assets at quarter end	$	666,572	47,503	317,473	289,708	23,903	23,256	43,215	5,619		1,417,249
Capital expenditures	$	10,465	207	1,074	1,309	469	361	290	—		14,175
Depreciation and amortization	$	3,713	362	1,216	1,499	172	286	355	—		7,603
Equity	$	898,526	20,124	246,388	85,900	15,148	8,731	20,888	(463,612	)	832,093
Three months ended June 30, 2004:
Revenues from unaffiliated customers	$	152,226	18,954	453,309	118,685	10,673	12,365	32,454	—		798,666
Transfers between geographic areas	16,781		942	2,834	4,313	1,325	1,519	1,505	(29,219	)	—
Total revenues	$	169,007	19,896	456,143	122,998	11,998	13,884	33,959	(29,219	)	798,666
Net revenues	$	88,846	10,411	63,841	39,334	5,984	5,013	8,794	—		222,223
Operating income	$	14,913	2,311	30,357	7,032	1,389	595	1,649	—		58,246
Identifiable assets at quarter end	$	613,064	39,078	218,148	256,567	19,507	19,532	32,791	7,895		1,206,582
Capital expenditures	$	4,372	546	2,657	2,165	466	559	890	—		11,655
Depreciation and amortization	$	3,363	285	946	1,234	152	160	353	—		6,493
Equity	$	757,654	14,545	161,949	70,674	12,949	4,065	14,660	(323,849	)	712,647
Six months ended June 30, 2005:
Revenues from unaffiliated customers	$	350,776	43,614	961,787	260,743	23,485	28,665	84,093	—		1,753,163
Transfers between geographic areas	35,626		2,347	5,848	10,998	2,647	3,438	3,783	(64,687	)	—
Total revenues	$	386,402	45,961	967,635	271,741	26,132	32,103	87,876	(64,687	)	1,753,163
Net revenues	$	196,019	24,195	127,551	86,894	13,769	12,543	20,372	—		481,343
Operating income	$	41,036	5,291	57,828	12,778	3,290	2,441	3,198	—		125,862
Identifiable assets at period end	$	666,572	47,503	317,473	289,708	23,903	23,256	43,215	5,619		1,417,249
Capital expenditures	$	36,437	512	2,150	2,519	537	552	485	—		43,192
Depreciation and amortization	$	7,222	729	2,386	3,012	326	547	720	—		14,942
Equity	$	898,526	20,124	246,388	85,900	15,148	8,731	20,888	(463,612	)	832,093
Six months ended June 30, 2004:
Revenues from unaffiliated customers	$	288,783	36,087	820,967	230,915	20,489	23,943	64,332	—		1,485,516
Transfers between geographic areas	31,277		1,747	5,190	8,321	2,434	3,099	2,842	(54,910	)	—
Total revenues	$	320,060	37,834	826,157	239,236	22,923	27,042	67,174	(54,910	)	1,485,516
Net revenues	$	169,709	19,966	119,550	77,043	11,639	9,897	16,915	—		424,719
Operating income	$	28,106	4,303	55,019	12,599	2,624	1,268	3,135	—		107,054
Identifiable assets at period end	$	613,064	39,078	218,148	256,567	19,507	19,532	32,791	7,895		1,206,582
Capital expenditures	$	7,497	1,052	4,641	4,321	576	725	1,481	—		20,293
Depreciation and amortization	$	6,672	569	1,793	2,447	301	335	635	—		12,752
Equity	$	757,654	14,545	161,949	70,674	12,949	4,065	14,660	(323,849	)	712,647

7

Note 5. 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 six months ended June 30, 2005 and 2004:

	Three months ended June 30,
(Amounts in thousands, except share and per share amounts)	Net Earnings		Weighted Average Shares	Earnings Per Share
2005
Basic earnings per share	$	44,644	106,776,046	$	.42
Effect of dilutive potential common shares	—		4,641,735	—
Diluted earnings per share	$	44,644	111,417,781	$	.40
2004
Basic earnings per share	$	37,612	105,597,413	$	.36
Effect of dilutive potential common shares	—		5,058,780	—
Diluted earnings per share	$	37,612	110,656,193	$		.34
	Six months ended June 30,
(Amounts in thousands, except share and per share amounts)	Net Earnings		Weighted Average Shares	Earnings Per Share
2005
Basic earnings per share	$	82,388	106,752,363	$	.77
Effect of dilutive potential common shares	—		5,024,491	—
Diluted earnings per share	$	82,388	111,776,854	$	.74
2004
Basic earnings per share	$	69,456	105,364,264	$	.66
Effect of dilutive potential common shares	—		4,824,104	—
Diluted earnings per share	$	69,456	110,188,368	$	.63

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

	Three months ended June 30,		Six months ended June 30,
	2005	2004	2005	2004
Shares	64,000	64,000	—	64,000

8

Note 6. Recent Accounting Pronouncements

In December 2004, the FASB issued SFAS No. 123 (revised 2004), “Share-Based Payment” (SFAS No. 123R), which replaces SFAS No. 123, “Accounting for Stock-Based Compensation” (SFAS No. 123) and supercedes APB Opinion No. 25, “Accounting for Stock Issued to Employees.” SFAS No. 123R requires all share-based payments to employees, including grants of employee stock options and employee stock purchase plans to be recognized in the financial statements based on their fair values, beginning with the first interim or annual period of the Company’s first fiscal year beginning after June 15, 2005, with early adoption encouraged. In addition, SFAS No. 123R will cause unrecognized expense related to unvested options granted prior to the date of initial adoption to be recognized as a charge to results of operations over the remaining vesting period. The Company is required to adopt SFAS No. 123R in the first quarter of 2006, beginning January 1, 2006. Under SFAS No. 123R, the Company must determine the appropriate fair value model to be used for valuing share-based payments, the amortization method for compensation cost and the transition method to be used at the date of adoption. The transition alternatives include prospective and retrospective adoption methods. Under the retrospective methods, prior periods may be restated either as of the beginning of the year of adoption or for all periods presented. The prospective method requires that compensation expense be recorded for all unvested stock options and share awards as of the beginning of the first quarter of adoption of SFAS No. 123R, while the retrospective methods would record compensation expense for all unvested stock options and share awards beginning with the first period restated. The Company is evaluating the requirements of SFAS No. 123R and expects the adoption of SFAS No. 123R will have a material impact on the consolidated results of operations, earnings per share and consolidated statement of cash flows. The Company has not determined the method of adoption or the effect of adopting SFAS No. 123R.

In December 2004, the FASB issued FASB Staff Position (FSP) No. 109-2, “Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004”, which provides guidance under SFAS No. 109, “Accounting for Income Taxes,” with respect to recording the potential impact of the repatriation provisions of the American Jobs Creation Act of 2004 (the Jobs Act) on enterprises’ income tax expense and deferred tax liability. The Jobs Act creates a temporary incentive for U.S. corporations to repatriate accumulated income earned abroad by providing an 85% dividends received deduction for certain dividends from controlled foreign corporations. FSP No. 109-2 states that an enterprise is allowed time beyond the financial reporting period of enactment to evaluate the effect of the Jobs Act on its plan for reinvestment or repatriation of foreign earnings for purposes of applying SFAS No. 109. The deduction is subject to a number of limitations and uncertainty remains as to how to interpret certain provisions in the Act. As such, the Company is not yet in a position to determine to what extent the Company will repatriate foreign earnings that have not yet been remitted to the U.S. and, as provided for in FSP No. 109-2, the Company has not adjusted its tax expense or deferred tax liability to reflect the repatriation provisions of the Jobs Act. The Company will complete its evaluation and quantification in 2005. Since the Company has provided U.S. taxes on all unremitted foreign earnings, the repatriation of foreign earnings in accordance with the repatriation provisions of the Jobs Act would result in a reduction of the Company’s tax expense and deferred tax liability.

Note 7. Stock and Cash Dividends

On May 9, 2005, the Board of Directors declared a semi-annual cash dividend of $.15 per share payable on June 15, 2005 to shareholders of record as of June 1, 2005. The dividend of $16 million was paid on June 15, 2005.

On May 6, 2004, the Board of Directors declared a semi-annual cash dividend of $.11 per share payable on June 15, 2004 to shareholders of record as of June 1, 2004. The dividend of $12 million was paid on June 15, 2004.

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 16, 2005.

EXECUTIVE SUMMARY

Expeditors International of Washington, Inc. is engaged in the business of global logistics management, including international freight forwarding and consolidation, for both air and ocean freight.  The Company acts as a customs broker in all domestic offices, and in many of its international 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 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 affects 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 influenced 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 derives its revenues from three principal sources: airfreight, ocean freight and customs brokerage and other 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.

Customs brokerage and other 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.

The Company’s ability to provide services to its customers is highly dependent on good working relationships with a variety of entities including airlines, ocean steamship lines, and governmental agencies.  The significance of maintaining acceptable working relationships with governmental agencies and asset-based providers involved in global trade has gained increased importance as a result of ongoing concern over terrorism.  As each carrier labors to comply with governmental regulations implementing security policies and procedures, inherent conflicts emerge which can and do affect global trade to some degree.  A good reputation helps to develop, to the degree possible, practical working understandings that will effectively meet security requirements while minimizing potential international trade obstacles.  The Company considers its current working relationships with these entities to be satisfactory.  However, changes in space allotments available from carriers, governmental deregulation efforts, “modernization” of the regulations governing customs brokerage, 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

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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 retail 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 a sudden change in 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.

As further discussed under liquidity and capital resources, total capital expenditures in 2005 are expected to exceed $100 million.

In terms of the opportunities, challenges and risks that management is focused on in 2005, the Company operates in 57 countries throughout the world in the competitive global logistics industry and Company activities are tied directly to the global economy.  From the inception of the Company, management has believed that the elements required for a successful global service organization can only be assured through recruiting, training, and ultimately retaining superior personnel.  The Company’s greatest challenge is now and always has been perpetuating a consistent global culture which demands:

•Total dedication, first and foremost, to providing superior customer service;

•Aggressive marketing of all of the Company’s service offerings;

•Ongoing development of key employees and management personnel via formal and informal means;

•Creation of unlimited advancement opportunities for employees dedicated to hard work, personal growth and continuous improvement;

•Individual commitment to the identification and mentoring of successors for every key position so that when inevitable change is required, a qualified and well-trained internal candidate is ready to step forward; and

•Continuous identification, design and implementation of system solutions, both technological and otherwise, to meet and exceed the needs of our customers while simultaneously delivering tools to make our employees more efficient and more effective.

The Company has reinforced these values with a compensation system that rewards employees for profitably managing the things they can control.  There is no limit to how much a key manager can be compensated for success.   The Company believes in a “real world” environment in every operating unit where individuals are not sheltered from the profit implications of their decisions.  At the same time, the Company insists on continued focus on such things as accounts receivable collection, cash flow management and credit soundness in an attempt to insulate managers from the sort of catastrophic errors that might end a career.

Any failure to perpetuate this unique culture on a self-sustained basis throughout the Company, provides a greater threat to the Company’s continued success than any external force, which would be largely beyond our control.  Consequently, management spends the majority of its time focused on creating an environment where employees can learn and develop while also building systems and taking preventative action to reduce exposure to negative events.   The Company strongly believes that it is nearly impossible to predict events that, in the aggregate, could have a positive or a negative impact on future operations.  As a result our focus is on building and maintaining a global culture of well-trained employees and managers that are prepared to identify and react to subtle changes as they develop and thereby help the Company adapt and thrive as major trends emerge.

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. 

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;

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

•accrual of tax expense on an interim basis.

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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.

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 six-month periods ended June 30, 2005 and 2004, 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 June 30,										Six months ended June 30,
	2005					2004					2005					2004
	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	$	90,944		36	%	$	86,889		39	%	$	179,391		37	%	$	165,096		39	%
Ocean freight and ocean services	59,675			24		50,796			23		112,849			24		97,023			23
Customs brokerage and other services	100,041			40		84,538			38		189,103			39		162,600			38
Net revenues	250,660			100		222,223			100		481,343			100		424,719			100
Operating expenses:
Salaries and related costs	134,841			54		117,931			53		259,395			54		228,972			54
Other	47,514			19		46,046			21		96,086			20		88,693			21
Total operating expenses	182,355			73		163,977			74		355,481			74		317,665			75
Operating income	68,305			27		58,246			26		125,862			26		107,054			25
Other income, net	3,380			1		1,879			1		6,694			2		4,037			1
Earnings before income taxes and minority interest	71,685			28		60,125			27		132,556			28		111,091			26
Income tax expense	25,712			10		21,372			10		47,786			10		39,532			9
Net earnings before minority interest	45,973			18		38,753			17		84,770			18		71,559			17
Minority interest	(1,329		)	—		(1,141		)	—		(2,382		)	(1	)	(2,103		)	(1	)
Net earnings	$	44,644		18	%	$	37,612		17	%	$	82,388		17	%	$	69,456		16	%

Airfreight net revenues increased 5% and 9% for the three and six-month periods ended June 30, 2005, respectively, as compared with the same periods for 2004. These increases are primarily the result of increases in airfreight tonnage of 6% for both the three and six-month periods ended June 30, 2005 as compared with the same periods for 2004.

Ocean freight volumes, measured in terms of forty-foot container equivalent units (FEUs), increased 19% for the three-month period ended June 30, 2005 as compared with the same period for 2004 while ocean freight and ocean services net revenues increased 17% during the same period. The slight difference in these two growth rates is a result of a modest decline in ocean freight yields. For

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the six-month period ended June 30, 2005 as compared with the same period for 2004, FEU count increased 23% while ocean freight and ocean services net revenues increased 16% during the same period. The difference in these two growth rates is a result of pricing pressures during the first quarter which reduced yields.

The Company continued its focus of offering competitive rates to customers at the retail level, while leveraging freight volumes to obtain favorable rates from carriers at the wholesale level. The Company’s North American ocean freight net revenues increased approximately 20% and 18% for the three and six-month periods ended June 30, 2005, respectively, as compared with the same periods for 2004. This was due to an increase in container traffic, primarily from the Far East, which was a result of continued marketing efforts. Ocean freight net revenues for the Far East and for Europe increased 16% and 13%, respectively, for the three months ended June 30, 2005, and 14% and 17%, respectively, for the six months ended June 30, 2005, as compared with the same periods for 2004. This increase was also a result of growth in ocean freight container volumes.

Customs brokerage and other services net revenues increased 18% and 16% for the three and six-month periods ended June 30, 2005, respectively, as compared with the same periods for 2004 as a result of the Company’s continuing reputation for providing high quality service and consolidation within the customs brokerage market as customers seek out customs brokers with more sophisticated computerized capabilities critical to an overall logistics management program. In addition, increased emphasis on regulatory compliance has benefited the Company’s customs brokerage offerings.

Salaries and related costs increased 14% and 13% during the three and six-month periods ended June 30, 2005, as compared with the same periods in 2004 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 increased 72 basis points for the three-month period ended June 30, 2005 and decreased 2 basis points for the six-month period ended June 30, 2005 as compared with the same periods in 2004. 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 growth in revenues, net revenues and net earnings for the three and six-month periods ended June 30, 2005 are a result of the incentives inherent in the Company’s compensation program.

This trend may not continue in future years with the adoption of SFAS 123R, which requires the expensing of the fair value of employee stock options, effective in the first quarter of 2006. When SFAS No. 123R becomes effective, a significant non-cash fixed compensation expense will be added to salaries and related costs. The inclusion of this fixed expense will increase salaries and related costs as a percentage of net revenue above historical levels.

Other operating expenses increased 3% and 8% for the three and six-month periods ended June 30, 2005, as compared with the same periods in 2004 as rent expense, communications expense, quality and training expenses, and other costs expanded to accommodate the Company’s growing operations. The second quarter of 2004 included a $2 million expense for an impairment write-down. Other operating expenses as a percentage of net revenues decreased 176 basis points and 92 basis points for the three and six-month periods ended June 30, 2005, respectively, as compared with the same periods in 2004. This was partially due to the continued achievement of cost containment objectives and the non-recurring nature of the 2004 impairment write-down.

Other income, net, increased 80% and 66% for the three and six-month periods ended June 30, 2005, as compared with the same periods in 2004. This increase is the result of higher interest rates on higher average cash balances and short-term investments.

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 the three and six-month periods ended June 30, 2005 and 2004 was 36%. If the Company adopts a plan under Internal Revenue Code (IRC) 965 the Company’s 2005 tax rate will be lower than prior years. This lower tax rate will only affect 2005.

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

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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 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 or the short-term financial outlook is such that hedging is the way to avoid short-term exchange losses. Any such hedging activity during the three and six months ended June 30, 2005 and 2004 was insignificant. For the three and six months ended June 30, 2005, the Company had approximately $213 and $671 in foreign exchange gains, respectively, on a net basis. For the same periods of 2004, respectively, the Company had foreign exchange losses of approximately $22 and foreign exchange gains of approximately $189, respectively, on a net basis. The Company had no foreign currency derivatives outstanding at June 30, 2005 and 2004.

Sources of Growth

During the second quarter of 2005, the Company opened 1 full-service office (*) and 1 satellite office (+), as follows:

Far East	Europe
Macau, PRC*	Turin, Italy+

Both office openings were startups.

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.

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 six months ended June 30, 2005 (which is the measure of any increase from the same period of 2004) and for the three and six months ended June 30, 2004 (which measures growth over 2003).

	For the three months ended June 30,				For the six months ended June 30,
	2005		2004		2005		2004
Net revenue	12	%	24	%	13	%	21	%
Operating income	17	%	41	%	17	%	36	%

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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 six months ended June 30, 2005, was $47 million and $143 million, as compared with $33 million and $109 million for the same periods of 2004. The $14 million increase for the three months and the $34 million increase for the six months ended June 30, 2005, is principally due to increased net earnings and a favorable swing in the timing of receipts and disbursements represented by the accounts receivable and accounts payable balances.

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. Due to the Company’s management of accounts payable and accrued expenses as described in the preceding paragraph, cash flow from operating activities remained positive. 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. During both the three and six-month periods ended June 30, 2005, short-term borrowings were not required in the United States.

As a customs broker, the Company makes significant 5-10 business day cash advances for its customers’ obligations such asthe 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 six months ended June 30, 2005, was $14 million and $44 million, as compared with $11 million and $20 million during the same periods of 2004. 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 second quarter of 2005, the Company made capital expenditures of $14 million as compared with $12 million for the same period in 2004. Capital expenditures in the second quarter of 2005 and 2004 related primarily to investments in technology and office furniture and equipment. The Company currently expects to spend approximately $30 million for normal capital expenditures in 2005. In addition to property and equipment,normal capital expenditures includeleasehold improvements, warehouse equipment, computer hardware and furniture and fixtures. Total capital expenditures in 2005 are expected to exceed $100 million if the Company adopts a plan calling for capital expenditures to meet the investment requirements of IRC 965. The Company expects to financecapital expenditures in 2005 with cash.

Cash used in financing activities during the three and six months ended June 30, 2005 were $43 million and $57 million as compared with $12 million for each of the same periods in 2004. The Company uses the proceeds from stock option exercises to repurchase the Company’s stock on the open market. In 2005, the Company established a policy of repurchasing stock to prevent growth in issued and outstanding shares as a result of stock option exercises. The increase in cash used in financing activities during the three and six months ended June 30, 2005 compared with the same periods in 2004 is primarily the result of this new policy. During the three months ended June 30, 2005 and 2004 the net use of cash in financing activities included the payment of dividends of $.15 per share and $.11 per share, respectively.

At June 30, 2005, working capital was $529 million, including cash and short-term investments of $439 million. The Company had no long-term debt at June 30, 2005. 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.

The Company maintains international and domestic unsecured bank lines of credit. At June 30, 2005, the U.S. facility totaled $50 million and international bank lines of credit totaled $10 million. In addition, the Company maintains bank facilities with its U.K. banks for $22 million. At June 30, 2005 the Company had no amounts outstanding on these lines of credit but was contingently liable for $61 million from standby letters of credit and guarantees related to these lines of credit and other obligations. The 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 excises 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.

15

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 other obligations.

In some cases, the Company’s ability to repatriate funds from foreign operations may be subject to foreign exchange controls. At June 30, 2005, cash and cash equivalent balances of $290 million were held by the Company’s non-U.S. subsidiaries, of which $30 million was held in banks in the United States.

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:

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 six months ended June 30, 2005, would have had the effect of raising operating income approximately $14 million. An average 10% strengthening of the U.S. Dollar, for the same period, would have had the effect of reducing operating income approximately $11 million.

The Company has approximately $7 million of net unsettled intercompany transactions at any one point in time. The Company currently does not use derivative financial instruments to manage foreign currency risk and only enters into foreign currency hedging transactions in limited locations where regulatory or commercial limitations restrict the Company’s ability to move money freely. Any such hedging activity during the three and six-months ended June 30, 2005, was insignificant. The Company had no foreign currency derivatives outstanding at June 30, 2005 and 2004. The Company 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 June 30, 2005, the Company had cash and cash equivalents and short-term investments of $439 million, the vast majority of which is subject to variable short-term interest rates. The Company had no short-term borrowings at June 30, 2005. 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 second quarter of 2005.

Item 4. Controls and Procedures

Evaluation of Controls and Procedures

As of June 30, 2005, 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 changes in the Company’s internal control over financial reporting that occurred during the most recent fiscal quarter that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

16

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 2. Unregistered Sales of Equity Securities and Use of Proceeds

ISSUER PURCHASES OF EQUITY SECURITIES

Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
April 1-30, 2005	455	$	48.88	455	7,927,816
May 1-31, 2005	174,826	51.84		174,826	8,259,334
June 1-30, 2005	511,921	51.57		511,921	7,664,699
Total	687,202	$	51.64	687,202	7,664,699

In November 1993, the Company’s Board of Directors authorized a Non-Discretionary Stock Repurchase Plan. This plan was amended in February 2001 to increase the authorization to repurchase up to 10 million shares of the Company’s common stock. This authorization has no expiration date. This plan was disclosed in the Company’s report on Form 10-K filed March 31, 1995. In the second quarter of 2005, 157,107 shares were repurchased under the Non-Discretionary Stock Repurchase Plan.

In November 2001, under a Discretionary Stock Repurchase Plan, the Company’s Board of Directors authorized the repurchase of such shares as may be necessary to reduce the issued and outstanding stock to 100,000,000 shares of common stock. The maximum number of shares available for repurchase under this plan will increase as the total number of outstanding shares increase. This authorization has no expiration date. This plan was announced on November 13, 2001. In the second quarter of 2005, 530,095 shares were repurchased under the Discretionary Stock Repurchase Plan. These discretionary repurchases were made to keep the number of issued and outstanding shares from growing as a result of stock option exercises.

Item 4. Submission of Matters to a Vote of Security Holders

(a)           The annual meeting of the Shareholders was held on May 4, 2005.

(b)           The following directors were elected to the Board of Directors to serve a term of one year and until their successors are elected and qualified:

	For	Withheld
P.J. Rose	90,195,389	4,381,958
J.L.K. Wang	90,113,892	4,463,455
R.J. Gates	88,801,019	5,776,328
J.J. Casey	89,371,609	5,205,738
D.P. Kourkoumelis	90,845,191	3,732,156
M.J. Malone	90,832,003	3,745,344
J.W. Meisenbach	90,837,282	3,740,065

		For	Against	Abstain	Non-Vote
(c)	Adoption of the 2005 Stock Option Plan	73,628,505	7,492,523	592,267	12,864,052
		For	Against	Abstain	Non-Vote
(d)	Shareholder Proposal Ratification Concerning the Independent Auditor Selection	47,136,114	34,412,666	164,515	12,864,052

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Item 5. Other Information

(a)           Not applicable.

(b)           Not applicable.

18

Item 6. Exhibits and Reports on Form 8-K

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

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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.
August 8, 2005	/s/ PETER J. ROSE
	Peter J. Rose, Chairman and Chief Executive Officer
	(Principal Executive Officer)
August 8, 2005	/s/ R. JORDAN GATES
	R. Jordan Gates, Executive Vice President-Chief Financial Officer
	(Principal Financial and Accounting Officer)

20

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES

Form 10-Q Index and Exhibits

June 30, 2005

Exhibit Number	Description
31.1	Certificate of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certificate 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

21