8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report:  February 17, 2006

(Date of earliest event reported)

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

(Exact name of registrant as specified in its charter)

Washington	000-13468	91-1069248
(State or other jurisdiction of	(Commission File No.)	(IRS Employer Identification Number)
incorporation or organization)
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)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02  Results of Operations and Financial Condition.

The following information is furnished pursuant to Item 2.02, “Results of Operations and Financial Condition.”

On February 14, 2006, Expeditors International of Washington, Inc., a Washington corporation, issued a press release announcing fourth quarter 2005 financial results. A copy of the press release is furnished as Exhibit 99.1 to this report.

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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.
February 17, 2006	/s/ PETER J. ROSE
	Peter J. Rose, Chairman and
	Chief Executive Officer
February 17, 2006	/s/ R. JORDAN GATES
	R. Jordan Gates, Executive Vice President-
	Chief Financial Officer

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INDEX TO EXHIBITS

Exhibit No.	Description
99.1	Press Release of Expeditors International of Washington, Inc., dated February 14, 2006, reporting fourth quarter 2005 financial results.

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EX-99.1

Exhibit 99.1

EARNINGS RELEASE

By:	Expeditors International of Washington, Inc. 1015 Third Avenue, Suite 1200 Seattle, Washington 98104
	CONTACT:	R. Jordan Gates
		Chief Financial Officer
		(206) 674-3427	FOR IMMEDIATE RELEASE

EXPEDITORS ANNOUNCES 39% OPERATING INCOME INCREASE

SEATTLE, WASHINGTON – February 14, 2006, Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced quarterly net earnings of $80,477,000 for the fourth quarter of 2005, compared with $43,563,000 for the same quarter of 2004, an increase of 85%.  Net revenues for the fourth quarter of 2005 increased 23% to $296,341,000 as compared with $241,160,000 reported for the fourth quarter of 2004.  Total revenues and operating income were $1,102,176,000 and $92,848,000 in 2005 compared with $934,795,000 and $66,571,000 for the same quarter of 2004, increases of 18% and 39%, respectively.  Diluted net earnings per share for the fourth quarter were $.72 as compared with $.39 for the same quarter in 2004, an increase of 85%.  The company also reported that same store net revenues and operating income increased 22% and 39%, respectively, for the fourth quarter of 2005 when compared with 2004.  As previously discussed in an 8-K dated January 31, 2006, the fourth quarter and full year results for 2005 include a $21,680,000 tax benefit ($.19 per share) as a result of a one-time election under section 965 of the Internal Revenue Code.

For the year ended December 31, 2005, net earnings rose to $218,634,000 from $156,126,000 in 2004, an increase of 40%. Net revenues for the year increased to $1,059,609,000 from $906,237,000 for 2004, up 17%. Total revenues and operating income for the year were $3,901,781,000 and $304,510,000 in 2005 compared with $3,317,499,000 and $241,045,000 for the same period in 2004, increases of 18% and 26%, respectively.  Diluted net earnings per share for the year 2005 were $1.96 as compared with $1.41 for the same period of 2004, an increase of 39%. Same store net revenues and operating income increased 16% and 26%, respectively, for the year ended December 31, 2005, when compared with the same period of 2004.

“This quarter has to be viewed as a fitting end to what was an outstanding year,” said Peter J. Rose, Chairman and Chief Executive Officer. “Our operating income was 27.6% of net revenue during the fourth quarter of 2004, but this expanded to an amazing 31.3% in 2005 as we were able to handle a significant increase in freight without having to add a commensurate amount of expense.  This positive leverage was a result of our ongoing process and productivity initiatives.  By every measure, our people did a superb job executing in what was really a very difficult environment: simply put, there was just a bunch of freight out there,” continued Rose.

“Air freight volumes were strong during the fourth quarter and ocean freight, which was a little subdued in November 2005 compared with October, came through very strong in December,” Rose said.  “We think that a 39% operating income increase off of our already sizeable base is extremely indicative of just how well we executed during the busiest time of the year. We just finished recording our second straight one billion dollar quarter and this put us over the top to enjoy our first year with over one billion dollars in net revenue.  More than empty talk, these are real measures of progress,” Rose concluded.

Expeditors is a global logistics company headquartered in Seattle, Washington.  The company employs trained professionals in 166 full-service offices, 55 satellite locations and 5 international service centers located on six continents linked into a seamless worldwide network through an integrated information management system.  Services include air and ocean freight forwarding, vendor consolidation, customs clearance, marine insurance, distribution and other value added international logistics services.

Expeditors International of Washington, Inc.

4th Quarter 2005 Earnings Release

February 14, 2006

Expeditors International of Washington, Inc.

Financial Highlights

Three months and Year ended

December 31, 2005 and 2004

Unaudited

(in 000’s of US dollars except share data)

	Three months ended December 31				Year ended December 31
	2005	2004	% Inc.		2005	2004	% Inc.
Revenues	$1,102,176	$934,795	18	%	$3,901,781	$3,317,499	18	%
Net revenues	$296,341	$241,160	23	%	$1,059,609	$906,237	17	%
Operating income	$92,848	$66,571	39	%	$304,510	$241,045	26	%
Net earnings	$80,477	$43,563	85	%	$218,634	$156,126	40	%
Diluted earnings per share	$.72	$.39	85	%	$1.96	$1.41	39	%
Basic earnings per share	$.75	$.41	83	%	$2.05	$1.47	39	%
Diluted weighted average shares outstanding	112,058,464	112,048,586			111,633,606	110,817,999
Basic weighted average shares outstanding	106,735,970	106,598,077			106,777,551	106,384,151

Offices Opened during the 4th Quarter of 2005

EUROPE	LATIN AMERICA
Zurich, Switzerland*	Lima, Peru*

*Full-service offices.

Investors may submit written questions via e-mail to:  investor@expeditors.com

Or by fax to:  (206) 674-3459

Questions received by the end of business on February 15, 2006 will be considered in management’s 8-K “Responses to Selected Questions” expected to be filed on or about February 22, 2006.

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EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except share data)

(Unaudited)

	December 31,			December 31,
	2005			2004
Assets
Current assets:
Cash and cash equivalents	$	463,894		$	408,983
Short-term investments	123			109
Accounts receivable, net	709,331			614,044
Deferred Federal and state income taxes	7,208			—
Other current assets	21,405			22,724
Total current assets	1,201,961			1,045,860
Property and equipment, net	333,787			287,379
Goodwill, net	7,774			7,774
Other intangibles, net	8,997			10,839
Other assets	13,525			12,201
	$	1,566,044		$	1,364,053
Liabilities and Shareholders’ Equity
Current liabilities:
Short-term debt	—			2,250
Accounts payable	479,546			410,251
Accrued expenses, primarily salaries and related costs	103,674			84,778
Deferred Federal and state income taxes	—			6,369
Federal, state and foreign income taxes	29,281			20,668
Total current liabilities	$	612,501		$	524,316
Deferred Federal and state income taxes	$	25,939		$	24,861
Minority interest	$	13,883		$	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 106,613,521 shares at December 31, 2005 and 106,643,953 shares at December 31, 2004	1,066			1,066
Additional paid-in capital	19,729			44,678
Retained earnings	895,565			749,974
Accumulated other comprehensive income	(2,639		)	11,686
Total shareholders’ equity	913,721			807,404
	$	1,566,044		$	1,364,053

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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						Twelve months ended
	December 31,						December 31,
	2005			2004			2005			2004
Revenues:
Airfreight	$	554,617		$	453,650		$	1,827,009		$	1,553,881
Ocean freight and ocean services	356,144			319,912			1,374,197			1,178,975
Customs brokerage and other services	191,415			161,233			700,575			584,643
Total revenues	1,102,176			934,795			3,901,781			3,317,499
Operating expenses:
Airfreight consolidation	442,771			360,857			1,435,236			1,204,932
Ocean freight consolidation	284,322			264,990			1,113,936			968,008
Customs brokerage and other services	78,742			67,788			293,000			238,322
Salaries and related costs	152,706			125,648			557,730			479,364
Rent and occupancy costs	13,227			13,543			54,425			51,620
Depreciation and amortization	8,106			7,145			30,888			26,703
Selling and promotion	8,167			7,860			29,892			28,248
Other	21,287			20,393			82,164			79,257
Total operating expenses	1,009,328			868,224			3,597,271			3,076,454
Operating income	92,848			66,571			304,510			241,045
Interest expense	(51		)	(8		)	(313		)	(42		)
Interest income	3,512			1,967			11,415			5,667
Other, net	1,117			585			4,542			2,910
Other income, net	4,578			2,544			15,644			8,535
Earnings before income taxes and minority interest	97,426			69,115			320,154			249,580
Income tax expense	14,495			24,195			94,624			88,415
Net earnings before minority interest	82,931			44,920			225,530			161,165
Minority interest	(2,454		)	(1,357		)	(6,896		)	(5,039		)
Net earnings	$	80,477		$	43,563		$	218,634		$	156,126
Diluted earnings per share	$	0.72		$	0.39		$	1.96		$	1.41
Basic earnings per share	$	0.75		$	0.41		$	2.05		$	1.47
Weighted average diluted shares outstanding	112,058,464			112,048,586			111,633,606			110,817,999
Weighted average basic shares outstanding	106,735,970			106,598,077			106,777,551			106,384,151

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EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Three months ended						Twelve months ended
	December 31,						December 31,
	2005			2004			2005			2004
Operating Activities:
Net earnings	$	80,477		$	43,563		$	218,634		$	156,126
Adjustments to reconcile net earnings to net cash provided by operating activities:
Provision for losses on accounts receivable	889			48			1,313			2,355
Deferred income tax expense (benefit)	(17,024		)	1,476			(4,779		)	19,511
Tax benefits from employee stock plans	7,898			4,822			19,705			19,459
Depreciation and amortization	8,106			7,145			30,888			26,703
Loss (gain) on sale of property and equipment	(41		)	47			(897		)	(19		)
Impairment write down of other assets	—			—			—			2,000
Other	(2,178		)	798			(1,110		)	3,206
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable	3,869			(2,804		)	(95,015		)	(150,213		)
Decrease (increase) in other current assets	(6,100		)	4,498			1,169			(4,476		)
Increase in minority interest	2,244			1,353			6,001			4,103
Increase (decrease) in accounts payable and other current liabilities	5,834			(10,786		)	103,639			113,904
Net cash provided by operating activities	83,974			50,160			279,548			192,659
Investing Activities:
Decrease in short-term investments	(25		)	(31		)	(12		)	(23		)
Purchase of property and equipment	(24,622		)	(16,719		)	(90,781		)	(66,244		)
Proceeds from sale of property and equipment	97			125			1,428			565
Other	(140		)	495			(1,402		)	722
Net cash used in investing activities	(24,690		)	(16,130		)	(90,767		)	(64,980		)
Financing Activities:
Borrowings (repayments) of short-term debt, net	36			2,073			(2,057		)	1,863
Proceeds from issuance of common stock	8,982			2,543			41,210			28,983
Repurchases of common stock	(46,686		)	(2,472		)	(126,852		)	(29,240		)
Dividends Paid	(16,000		)	(11,726		)	(32,055		)	(23,368		)
Net cash used in financing activities	(53,668		)	(9,582		)	(119,754		)	(21,762		)
Effect of exchange rate changes on cash	(3,165		)	6,914			(14,116		)	7,234
Increase in cash and cash equivalents	2,451			31,362			54,911			113,151
Cash and cash equivalents at beginning of period	461,443			377,621			408,983			295,832
Cash and cash equivalents at end of period	463,894			408,983			463,894			408,983
Interest and taxes paid:
Interest	13			4			253			41
Income tax	23,319			9,740			62,176			43,946

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EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES

Business Segment Information

(In thousands)

(Unaudited)

	United		Other			Australia/	Latin	Middle
	States		N. America	Asia	Europe	New Zealand	America	East	Eliminations		Consolidated
Three months ended December 31, 2005
Revenues from unaffiliated customers	$	212,920	29,401	646,221	140,857	12,377	15,811	44,589			1,102,176
Transfers between geographic areas	$	26,839	1,694	3,921	7,557	1,781	1,979	2,450	(46,221	)	—
Total revenues	$	239,759	31,095	650,142	148,414	14,158	17,790	47,039	(46,221	)	1,102,176
Net revenues	$	121,269	14,592	85,148	47,507	8,807	7,134	11,884			296,341
Operating income	$	19,542	5,280	47,334	11,639	2,751	2,175	4,127			92,848
Identifiable assets at quarter end	$	805,273	51,312	322,391	294,555	21,681	26,639	47,009	(2,816	)	1,566,044
Capital expenditures	$	21,898	166	457	1,102	412	408	179			24,622
Depreciation and amortization	$	3,980	378	1,181	1,566	313	339	349			8,106
Equity	$	1,004,726	18,057	206,090	76,625	11,218	10,998	22,705	(436,698	)	913,721
Three months ended December 31, 2004
Revenues from unaffiliated customers	$	172,871	21,773	536,892	137,994	12,050	13,322	39,893			934,795
Transfers between geographic areas	$	19,159	1,274	2,909	5,823	1,463	1,520	1,778	(33,926	)	—
Total revenues	$	192,030	23,047	539,801	143,817	13,513	14,842	41,671	(33,926	)	934,795
Net revenues	$	96,756	11,775	63,715	45,800	7,307	5,704	10,103			241,160
Operating income	$	14,588	4,572	31,054	9,458	1,814	1,866	3,219			66,571
Identifiable assets at quarter end	$	642,930	47,594	279,840	304,701	22,361	21,711	40,667	4,249		1,364,053
Capital expenditures	$	3,844	745	2,942	8,269	104	539	276			16,719
Depreciation and amortization	$	3,487	334	1,168	1,361	191	239	365			7,145
Equity	$	873,767	20,035	205,387	90,053	13,131	6,647	19,049	(420,665	)	807,404
Twelve months ended December 31, 2005
Revenues from unaffiliated customers	$	762,835	98,369	2,224,313	534,897	48,234	58,976	174,157			3,901,781
Transfers between geographic areas	$	87,778	5,588	13,280	24,923	5,920	7,416	8,406	(153,311	)	—
Total revenues	$	850,613	103,957	2,237,593	559,820	54,154	66,392	182,563	(153,311	)	3,901,781
Net revenues	$	432,530	50,823	296,925	179,238	30,135	26,772	43,186			1,059,609
Operating income	$	88,347	12,330	148,675	32,328	8,116	6,162	8,552			304,510
Identifiable assets at quarter end	$	805,273	51,312	322,391	294,555	21,681	26,639	47,009	(2,816	)	1,566,044
Capital expenditures	$	78,668	882	3,374	4,534	1,084	1,290	949			90,781
Depreciation and amortization	$	15,077	1,484	4,759	6,107	830	1,198	1,433			30,888
Equity	$	1,004,726	18,057	206,090	76,625	11,218	10,998	22,705	(436,698	)	913,721
Twelve months ended December 31, 2004
Revenues from unaffiliated customers	$	628,093	77,696	1,880,135	492,651	44,042	52,347	142,535			3,317,499
Transfers between geographic areas	$	69,695	4,288	11,096	18,921	5,262	6,188	6,373	(121,823	)	—
Total revenues	$	697,788	81,984	1,891,231	511,572	49,304	58,535	148,908	(121,823	)	3,317,499
Net revenues	$	362,961	42,954	252,189	164,132	25,583	21,274	37,144			906,237
Operating income	$	63,589	10,828	118,395	29,026	6,242	4,298	8,667			241,045
Identifiable assets at quarter end	$	642,930	47,594	279,840	304,701	22,361	21,711	40,667	4,249		1,364,053
Capital expenditures	$	34,856	2,150	11,153	13,445	845	1,744	2,051			66,244
Depreciation and amortization	$	13,539	1,211	4,044	5,099	665	770	1,375			26,703
Equity	$	873,767	20,035	205,387	90,053	13,131	6,647	19,049	(420,665	)	807,404

Certain 2004 amounts have been reclassified to conform to the 2005 presentation.

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