Expeditors International of Washington (EXPD)

From a business standpoint, whether you look at profitability or freight volumes, neither Lebanon nor Israel represent a great deal of our global business.   The real ongoing concern for us here, is not financial, it is more basic than that.  It is the deep concern we have for our friends and colleagues.

Most recently, the logistics expertise of our Beirut office has been applied to moving our employees to other venues.  This was no small feat as many of our people did not have the paperwork required to be admitted for temporary work assignments in other countries.  We went to work on this and many of our people, and their families, have now relocated temporarily to other Expeditors offices in the Middle East.  A small group of our Beirut employees declined all relocation offers and have chosen to remain in Beirut.  Amid the turmoil, chaos, and confusion of war, they are managing to keep the

office open.  This means they are able to safeguard our computer systems and other assets and continue to look after those customer service and security needs that require attention.  Our hats are off to this intrepid band.  We think of them every day as we get the latest reports on the conflict.  May they remain safe and so far, so good.

2.             I have reviewed Income Statements downloaded from news.moneycentral.msn.com and had some particular questions about figures on your income statement. How do you come up with the figures for:

·              Revenues and Net Revenues - Do revenues include the total fees and charges billed including pass through items such as customs duty and other items advanced on behalf of customers?  With respect to net revenues can I assume these are gross billings less certain items such as customs cuties, ocean or airfreight charges advanced that are not part of your services?  If not, explain how you arrive at the net revenue figure?

To start with, we would suggest that the best source for our financial information is the public filings on Forms 10-K and 10-Q available on the SEC website.  The “Investor Relations” page of our website, found at www.investor.expeditors.com, has a link to this source material at the very bottom of the page.   Click on this link and when you arrive at the SEC website put “10-K” or “10-Q” into the box asking for the form type.   When we do this, every 10-Q or 10-K Expeditors has filed since the first quarter of 1995 shows up.   For those who don’t speak the “plain English” used by the SEC, the 10-K is an annual filing containing the year end financial statements.  The Form 10-Q is filed with quarterly results for the first, second and third quarters.

Not surprisingly, the annual filings are longer and generally more comprehensive.    The quarterly filings are more abbreviated and are written assuming that the reader has looked at the most recent annual filing.  Accordingly, we would recommend you look at the most recent Form 10-Q, currently the one dated August 9, 2006 and the 10-K filed March 16, 2006.  Each filing contains financial statements and a section called “Management’s Discussion and Analysis” (MD&A for short).  The MD&A contains, not surprisingly, a discussion and analysis of the major trends behind the numbers in the associated financial statements.