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:  November 8, 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 November 7, 2006, Expeditors International of Washington, Inc., a Washington corporation, issued a press release announcing third quarter 2006 financial results.  A copy of the press release is furnished as Exhibit 99.1 to this report.

2

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 8, 2006		/s/ PETER J. ROSE
		Peter J. Rose, Chairman and
		Chief Executive Officer
November 8, 2006		/s/ R. JORDAN GATES
		R. Jordan Gates, Executive Vice President-
		Chief Financial Officer

3

INDEX TO EXHIBITS

Exhibit No.	Description
99.1	Press Release of Expeditors International of Washington, Inc., dated November 7, 2006, reporting third quarter 2006 financial results.

4

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 32% INCREASE IN THIRD QUARTER NET EARNINGS

SEATTLE, WASHINGTON – November 7, 2006, Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced quarterly net earnings of $63,803,000 for the third quarter of 2006, compared with $48,404,000 for the same quarter of 2005, an increase of 32%.  Net revenues for the third quarter of 2006 increased 20% to $339,338,000 as compared with $281,925,000 reported for the third quarter of 2005.  Total revenues and operating income were $1,229,723,000 and $101,257,000 in 2006 compared with $1,046,442,000 and $77,436,000 for the same quarter of 2005, an increase of 18% and 31%, respectively.  Diluted net earnings per share for the third quarter were $.29 as compared with $.22 for the same quarter in 2005, an increase of 32%.  The company also reported that same store net revenues and operating income increased 20% and 30%, respectively for the third quarter of 2006 when compared with 2005.  The results for the third quarter include a one-time credit of $5.0 million to minority interest, which was recorded as a result of the Company’s finalizing the increase in its relative ownership interests in various joint ventures.

For the nine months ended September 30, 2006, net earnings rose to $172,484,000 from $116,148,000 in 2005, an increase of 49%.  Net revenues for the nine months increased to $949,105,000 from $763,268,000 for 2005, up 24%. Total revenues and operating income for the nine months were $3,383,639,000 and $275,461,000 in 2006 compared with $2,799,605,000 and $186,614,000 for the same period in 2005, increases of 21% and 48%, respectively.  Diluted net earnings per share for the first three quarters of 2006 were $.78 as compared with $.53 for the same period of 2005, an increase of 47%. Same store net revenues and operating income increased 24% and 47%, respectively, for the nine months ended September 30, 2006, when compared with the same period of 2005.

“We continued to benefit from market share expansion and productivity gains during the 3rd quarter.” said Peter J. Rose, Chairman and Chief Executive Officer. “These results are more than just superficial numbers attributed to a one quarter spike. When you analyze our year over year performance within our products and across all geographic segments, these numbers have real substance. ” Rose continued.

“We have been impressed with both the magnitude and the balance of organic growth we continue to experience. We believe in our model.  In what is an increasingly competitive market, we continue to focus on providing superior customer service.  Our market share expansion would indicate that we continue to be successful in that undertaking. The efficiency gains we continue to achieve have been key in improving our operating margins, which we believe validates the financial strength of our model.  As always, we hasten to point out one other core belief we have at Expeditors: That people and culture do make a difference. All facets of our success can be traced back to these two elements.  It is the efforts of our people, who embody and perpetuate that unique Expeditors’ culture, which creates results like these.  ” Rose concluded.

Expeditors is a global logistics company headquartered in Seattle, Washington. The company employs trained professionals in 167 full-service offices, 58 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.

(1) In accordance with the provisions of FAS 123R, the Company has elected to apply the modified retrospective method to prior year’s reported numbers.  The Modified Retrospective Method calls for prior reported numbers to be adjusted to reflect the expensing of stock options, as has been required for disclosure in the company’s 10-K reports since 1996 and in the Company’s 10-Q reports since 2002.  Accordingly certain 2005 numbers which have been adjusted retrospectively to show the effect of stock compensation expense, will not agree with the figures reported in the 2005 second quarter press release dated August 2, 2005.  Diluted weighted shares outstanding for 2005 are also reported consistent with the requirements of FAS 123R.  Accordingly, the 2005 diluted weighted shares outstanding amounts shown in this press release will not agree with the amounts reported in above-referenced 2005 second quarter press release.

Expeditors International of Washington, Inc.

3rd Quarter 2006 Earnings Release

November 7, 2006

Expeditors International of Washington, Inc.

Financial Highlights

Three months and Nine months ended

September 30, 2006 and 2005

Unaudited

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

	Three months ended						Nine months ended
	September 30						September 30
	2006		2005		% Inc.		2006		2005		% Inc.
Revenues	$	1,229,723	$	1,046,442	18	%	$	3,383,639	$	2,799,605	21	%
Net revenues	$	339,338	$	281,925	20	%	$	949,105	$	763,269	24	%
Operating income	$	101,257	$	77,436	31	%	$	275,461	$	186,614	48	%
Net earnings	$	63,803	$	48,404	32	%	$	172,484	$	116,148	49	%
Diluted earnings per share	$	.29	$	.22	32	%	$	.78	$	.53	47	%
Basic earnings per share	$	.30	$	.23	30	%	$	.81	$	.54	50	%
Diluted weighted average shares outstanding	221,417,053		221,334,628				220,539,975		220,901,210
Basic weighted average shares outstanding	213,524,680		213,737,374				213,557,892		213,583,128

Offices opened during the Third Quarter of 2006
UNITED STATES	OTHER NORTH AMERICA
Omaha, NE +	Querétaro, Mexico +

+ Satellite office

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 November 9, 2006 will be considered in management’s 8-K “Responses to Selected Questions” expected to be filed on or about November 16, 2006.

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except share data)

(Unaudited)

	September 30,		December 31,
	2006		2005
Assets
Current assets:
Cash and cash equivalents	$	499,529	$	463,894
Short-term investments	386		123
Accounts receivable, net	812,224		709,331
Deferred Federal and state income taxes	8,717		7,208
Other current assets	14,161		21,405
Total current assets	1,335,017		1,201,961
Property and equipment, net	445,964		333,787
Goodwill, net	7,774		7,774
Other intangibles, net	7,957		8,997
Other assets	14,952		13,525
	$	1,811,664	$	1,566,044
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	562,592		479,546
Accrued expenses, primarily salaries and related costs	135,467		103,674
Federal, state and foreign income taxes	36,225		29,281
Total current liabilities	$	734,284	$	612,501
Deferred Federal and state income taxes	$	34,430	$	13,278
Minority interest	$	21,338	$	13,883
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 213,121,366 shares at September 30, 2006 and 213,227,042 shares at December 31, 2005	2,131		2,132
Additional paid-in capital	120,343		180,905
Retained earnings	894,893		745,984
Accumulated other comprehensive income	4,245		(2,639		)
Total shareholders’ equity	1,021,612		926,382
	$	1,811,664	$	1,566,044

Certain 2005 amounts have been restated as required by the modified retrospective method in connection with the

implementation of FAS 123R and other amounts have been reclassified to conform to the 2006 presentation.

All share and per share amounts have been adjusted for the 2-for-1 stock split effective June 2006.

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Earnings

(In thousands, except share data)

(Unaudited)

	Three months ended						Nine months ended
	September 30,						September 30,
	2006			2005			2006			2005
Revenues:
Airfreight	$	575,285		$	478,294		$	1,611,556		$	1,272,392
Ocean freight and ocean services	433,212			383,975			1,158,151			1,018,053
Customs brokerage and other services	221,226			184,173			613,932			509,160
Total revenues	1,229,723			1,046,442			3,383,639			2,799,605
Operating expenses:
Airfreight consolidation	453,246			377,758			1,263,803			992,465
Ocean freight consolidation	343,909			308,385			915,568			829,614
Customs brokerage and other services	93,230			78,374			255,163			214,258
Salaries and related costs	183,995			155,450			517,422			433,965
Rent and occupancy costs	13,877			13,993			40,972			41,197
Depreciation and amortization	9,341			7,840			26,020			22,782
Selling and promotion	8,484			7,059			25,398			21,725
Other	22,384			20,147			63,832			56,985
Total operating expenses	1,128,466			969,006			3,108,178			2,612,991
Operating income	101,257			77,436			275,461			186,614
Interest expense	(4		)	(14		)	(41		)	(262		)
Interest income	4,236			3,031			12,900			7,903
Other, net	743			1,355			2,875			3,425
Other income, net	4,975			4,372			15,734			11,066
Earnings before income taxes and minority interest	106,232			81,808			291,195			197,680
Income tax expense	47,133			31,344			119,688			77,090
Net earnings before minority interest	59,099			50,464			171,507			120,590
Minority interest	4,704			(2,060		)	977			(4,442		)
Net earnings	$	63,803		$	48,404		$	172,484		$	116,148
Diluted earnings per share	$	0.29		$	0.22		$	0.78		$	0.53
Basic earnings per share	$	0.30		$	0.23		$	0.81		$	0.54
Weighted average diluted shares outstanding	221,417,053			221,334,628			220,539,975			220,901,210
Weighted average basic shares outstanding	213,524,680			213,737,374			213,557,892			213,583,128

Certain 2005 amounts have been restated as required by the modified retrospective method in connection with the

implementation of FAS 123R and other amounts have been reclassified to conform to the 2006 presentation.

All share and per share amounts have been adjusted for the 2-for-1 stock split effective June 2006.

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Three months ended						Nine months ended
	September 30,						September 30,
	2006			2005			2006			2005
Operating Activities:
Net earnings	$	63,803		$	48,404		$	172,484		$	116,148
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Provision for losses on accounts receivable	259			782			752			424
Deferred income tax expense	4,572			6,111			38,169			21,013
Excess tax benefits from employee stock plans	(1,194		)	(1,919		)	(22,202		)	(8,241		)
Stock compensation expense	11,813			8,364			29,629			25,048
Depreciation and amortization	9,341			7,840			26,020			22,782
Gain on sale of property and equipment	—			(811		)	(214		)	(856		)
Minority interest in earnings of consolidated entities	(4,768		)	2,087			(757		)	3,890
Other	1,704			775			3,280			1,068
Changes in operating assets and liabilities:
Increase in accounts receivable	(66,758		)	(97,236		)	(95,757		)	(98,884		)
Increase in other current assets	14,011			9,015			7,711			7,269
Increase in accounts payable and other current liabilities	51,895			67,580			119,274			97,805
Net cash provided by operating activities	84,678			50,992			278,389			187,466
Investing Activities:
(Increase) decrease in short-term investments	30			25			(253		)	13
Purchase of property and equipment	(9,668		)	(22,967		)	(131,501		)	(66,159		)
Proceeds from sale of property and equipment	52			1,082			317			1,331
Other	(1,999		)	77			(1,513		)	(1,262		)
Net cash used in investing activities	(11,585		)	(21,783		)	(132,950		)	(66,077		)
Financing Activities:
Proceeds (repayments) of short-term debt, net	—			37			—			(2,093		)
Proceeds from issuance of common stock	19,353			21,153			45,373			32,228
Repurchases of common stock	(44,139		)	(30,153		)	(157,767		)	(80,166		)
Excess tax benefits from employee stock plans	1,194			1,919			22,202			8,241
Net distributions to minority interests	(4,053		)	—			(4,053		)	(133		)
Dividends paid	—			—			(23,576		)	(16,055		)
Net cash used in financing activities	(27,645		)	(7,044		)	(117,821		)	(57,978		)
Effect of exchange rate changes on cash	(613		)	405			8,017			(10,951		)
Increase in cash and cash equivalents	44,835			22,570			35,635			52,460
Cash and cash equivalents at beginning of period	454,694			438,873			463,894			408,983
Cash and cash equivalents at end of period	499,529			461,443			499,529			461,443
Interest and taxes paid:
Interest	22			6			54			240
Income tax	17,713			10,297			60,764			38,857

Certain 2005 amounts have been restated as required by the modified retrospective method in connection with the implementation of FAS 123R and other amounts have been reclassified to conform to the 2006 presentation.

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES

Business Segment Information

(In thousands)

(Unaudited)

	United		Other	Far		Australia/	Latin	Middle
	States		N. America	East	Europe	New Zealand	America	East	Eliminations		Consolidated
Three months ended September 30, 2006
Revenues from unaffiliated customers	$	240,300	30,085	709,222	160,565	14,595	17,305	57,651			1,229,723
Transfers between geographic areas	$	29,516	2,136	4,266	8,335	1,573	2,092	3,082	(51,000	)	—
Total revenues	$	269,816	32,221	713,488	168,900	16,168	19,397	60,733	(51,000	)	1,229,723
Net revenues	$	136,810	15,251	101,202	54,412	8,403	8,388	14,872			339,338
Operating income	$	27,313	3,718	50,380	11,998	2,311	1,546	3,991			101,257
Identifiable assets at quarter end	$	854,409	67,458	415,273	349,654	27,506	33,518	63,802	44		1,811,664
Capital expenditures	$	6,378	226	799	1,430	29	269	537			9,668
Depreciation and amortization	$	4,976	318	1,369	1,738	197	406	337			9,341
Equity	$	1,165,850	27,797	307,047	102,363	16,065	13,533	27,779	(638,822	)	1,021,612
Three months ended September 30, 2005
Revenues from unaffiliated customers	$	199,139	25,354	616,305	133,297	12,372	14,500	45,475			1,046,442
Transfers between geographic areas	$	25,313	1,547	3,511	6,368	1,492	1,999	2,173	(42,403	)	—
Total revenues	$	224,452	26,901	619,816	139,665	13,864	16,499	47,648	(42,403	)	1,046,442
Net revenues	$	115,242	12,036	84,226	44,837	7,559	7,095	10,930			281,925
Operating income	$	21,127	1,475	43,083	7,344	2,030	1,419	958			77,436
Identifiable assets at quarter end	$	705,474	55,849	372,276	304,809	25,636	26,573	43,848	7,408		1,541,873
Capital expenditures	$	20,333	204	767	913	135	330	285				22,967
Depreciation and amortization	$	3,875	377	1,192	1,529	191	312	364				7,840
Equity	$	950,642	21,120	279,106	89,116	16,713	9,593	20,202	(504,752	)	881,740
Nine months ended September 30, 2006
Revenues from unaffiliated customers	$	689,680	88,720	1,894,933	457,198	40,383	50,215	162,510			3,383,639
Transfers between geographic areas	$	82,443	5,828	12,120	23,560	4,603	6,096	8,144	(142,794	)	—
Total revenues	$	772,123	94,548	1,907,053	480,758	44,986	56,311	170,654	(142,794	)	3,383,639
Net revenues	$	388,670	45,804	270,896	156,345	23,827	23,862	39,701			949,105
Operating income	$	80,059	10,921	132,519	32,622	6,419	4,485	8,436			275,461
Identifiable assets at quarter end	$	854,409	67,458	415,273	349,654	27,506	33,518	63,802	44		1,811,664
Capital expenditures	$	115,142	521	8,020	5,240	375	1,060	1,143			131,501
Depreciation and amortization	$	13,461	1,014	3,769	5,003	584	1,153	1,036			26,020
Equity	$	1,165,850	27,797	307,047	102,363	16,065	13,533	27,779	(638,822	)	1,021,612
Nine months ended September 30, 2005
Revenues from unaffiliated customers	$	549,915	68,968	1,578,092	394,040	35,857	43,165	129,568			2,799,605
Transfers between geographic areas	$	60,939	3,894	9,359	17,366	4,139	5,437	5,956	(107,090	)	—
Total revenues	$	610,854	72,862	1,587,451	411,406	39,996	48,602	135,524	(107,090	)	2,799,605
Net revenues	$	311,261	36,231	211,777	131,731	21,328	19,638	31,302			763,268
Operating income	$	48,391	6,276	100,227	19,107	5,250	3,650	3,713			186,614
Identifiable assets at quarter end	$	705,474	55,849	372,276	304,809	25,636	26,573	43,848	7,408		1,541,873
Capital expenditures	$	56,770	716	2,917	3,432	672	882	770			66,159
Depreciation and amortization	$	11,097	1,106	3,578	4,541	517	859	1,084			22,782
Equity	$	950,642	21,120	279,106	89,116	16,713	9,593	20,202	(504,752	)	881,740

Certain 2005 amounts have been restated as required by the modified retrospective method in connection with the implementation of FAS 123R and other amounts have been reclassified to conform to the 2006 presentation.