The fair value of an option is more significantly impacted by changes in the expected volatility and expected life assumptions. The pre-vesting forfeitures assumption is ultimately adjusted to the actual forfeiture rate. Therefore, changes in the forfeitures assumption would not impact the total amount of expense ultimately recognized over the vesting period. Different forfeiture assumptions would only impact the timing of expense

recognition over the vesting period. Estimated forfeitures will be reassessed in subsequent periods and may change based on new facts and circumstances.

Excluding stock compensation expense, salaries and related costs as a percentage of net revenue increased 208 basis points for 2009, as compared with 2008. This increase is largely due to the fixed nature of base salaries and management’s commitment to maintaining its people during this economic downturn. Stock compensation expense declined 13% in 2009, as compared with 2008, primarily a result of a $4 million “true up” credit recognized in the first quarter of 2009 for the difference between the higher actual pre-vesting forfeiture experience and the pre-vesting forfeiture assumptions used to calculate stock option expense. The net impact on

salaries and related costs was $3 million after consideration of the effect on bonuses. This credit relates primarily to stock option grants made in 2006, the majority of which began vesting in May 2009.

The Company’s operating income in 2009 was 19% lower than the amount reported in 2008. This was the first year since 1984 that the Company’s operating income was lower than the amount which had been reported in the previous year. Bonuses to field and corporate management in 2009 were also both down 19% as compared with 2008. The Company’s management incentive compensation programs have always been incentive-based and performance driven and there is no built-in bias that favors or enriches management in a manner inconsistent with overall corporate performance.

Other overhead expenses decreased 16% in 2009, as compared with 2008, primarily as a result of continued cost reduction measures, including cutbacks on travel and entertainment expenses. Legal and related expenses decreased approximately $11 million in 2009, as compared with 2008, primarily attributable to lower activity related to governmental regulatory agencies’ ongoing investigations of air cargo freight forwarders and related legal proceedings as described further in Part I—Item 3 in this report on Form 10-K entitled “Legal Proceedings”. Other overhead expenses as a percentage of net revenues remained constant for 2009, as compared with 2008.

~~Other income, net, decreased 32% in 2009, as compared with 2008. Interest income decreased $11 million due to lower average interest rates during 2009, as compared with 2008.~~

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 in 2009 was 40.3% as compared to 39.4% for 2008. The higher consolidated effective income tax rate for 2009, as compared 2008, is primarily the result of a lower tax benefit received for disqualifying dispositions of incentive stock options for 2009, as compared with 2008.

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. Historically, the industry has experienced consolidations into larger firms striving for stronger and more complete multinational and multi-service networks. However, regional and local broker/forwarders remain a competitive force.

The primary competitive factors in the international logistics industry continue to be price and quality of service, including reliability, responsiveness, expertise, convenience, and scope of operations. The Company emphasizes quality customer service and believes that its prices are competitive with those of others in the industry. Larger customers utilize more sophisticated and efficient procedures for the management of their logistics supply chains by embracing strategies such as just-in-time inventory management. The Company believes that this trend has resulted in customers using fewer service providers with greater technological capacity and more consistent global coverage. 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 adds 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.

~~Schedules are omitted because of the absence of conditions under which they are required or because the required information is given in the consolidated financial statements or notes thereto.~~

The following list is a subset of the list of exhibits described below and contains all compensatory plans, contracts or arrangements in which any director or executive officer of the Company is a participant, unless the method of allocation of benefits thereunder is the same for management and non-management participants:



(1)		Form of Employment Agreement executed by the Company’s Chairman and Chief Executive Officer. See Exhibit 10.23.


(2)		Form of Employment Agreement executed by the Company’s President and Chief Operating Officer and certain of the Company’s executive officers. See Exhibit 10.24.


(3)		Form of Employment Agreement executed by the Company’s Chief Financial Officer. See Exhibit 10.25.


(4)		The Company’s Amended 1985 Stock Option Plan. See Exhibit 10.4.


(5)		Form of Stock Option Agreement used in connection with options granted under the Company’s Amended 1985 Stock Option Plan. See Exhibit 10.5.


(6)		The Company’s Amended 1993 Directors’ Non-Qualified Stock Option Plan. See Exhibit 10.39.


(7)		Form of Stock Option Agreement used in connection with options granted under the Company’s 1993 Directors’ Non-Qualified Stock Option Plan. See Exhibit 10.9.


(8)		The Company’s Amended 1997 Non-Qualified and Incentive Stock Option Plan. See Exhibit 10.40.


(9)		Form of Stock Option Agreement used in connection with Non-Qualified options granted under the Company’s 1997 Non-Qualified and Incentive Stock Option Plan. See Exhibit 10.30.


(10)		Form of Stock Option Agreement used in connection with Incentive options granted under the Company’s 1997 Non-Qualified and Incentive Stock Option Plan. See Exhibit 10.31.


(11)		The Company’s 2008 Executive Incentive Compensation Plan. See Exhibit 10.35.


(12)		The Company’s 2008 Directors’ Restricted Stock Plan. See Exhibit 10.36.


(13)		The Company’s 2002 Employee Stock Purchase Plan. See Exhibit 10.42.


(14)		The Company’s 2005 Stock Option Plan. See Exhibit 10.45.


(15)		Form of Stock Option Agreement used in connection with Incentive options granted under the Company’s 2005 Incentive Stock Option Plan. See Exhibit 10.46.


(16)		The Company’s 2006 Stock Option Plan. See Exhibit 10.47.


(17)		Form of Stock Option Agreement used in connection with Incentive options granted under the Company’s 2006 Incentive Stock Option Plan. See Exhibit 10.48.


(18)		The Company’s 2007 Stock Option Plan. See Exhibit 10.49.


(19)		Form of Stock Option Agreement used in connection with Incentive options granted under the Company’s 2007 Incentive Stock Option Plan. See Exhibit 10.50.


(20)		The Company’s 2008 Stock Option Plan. See Exhibit 10.51.


(21)		Form of Stock Option Agreement used in connection with options granted under the Company’s 2008 Stock Option Plan. See Exhibit 10.52.


(22)		The Company’s 2009 Stock Option Plan. See Exhibit 10.53.


(23)		Form of Stock Option Agreement used in connection with options granted under the Company’s 2009 Stock Option Plan. See Exhibit 10.54.


(24)		The Company’s 2010 Stock Option Plan. See Exhibit 10.55.


(25)		Form of Stock Option Agreement used in connection with options granted under the Company’s 2010 Stock Option Plan. See Exhibit 10.56.


(26)	The Company’s 2011 Stock Option Plan. See Exhibit 10.57.


(27)	Form of Stock Option Agreement used in connection with options granted under the Company’s 2011 Stock Option Plan. See Exhibit 10.58.

~~40.~~
(b) EXHIBITS

26.

~~(b) EXHIBITS~~



Exhibit Number			Exhibit

3.1			The Company’s Restated Articles of Incorporation and the Articles of Amendment thereto dated December 9, 1993. (Incorporated by reference to Exhibit 3.1 to Form 10-K, filed on or about March 31, 1995.)

3.1.1			Articles of Amendment to the Restated Articles of Incorporation dated November 12, 1996. (Incorporated by reference to Exhibit 3.1.1 to Form 10-K, filed on or about March 31, 1997.)

3.1.2			Articles of Amendment to the Restated Articles of Incorporation dated May 20, 1999. (Incorporated by reference to Exhibit 3.1.2 to Form 10-K, filed on or about March 28, 2003.)

3.1.3			Articles of Amendment to the Restated Articles of Incorporation dated June 12, 2002. (Incorporated by reference to Exhibit 3.1.3 to Form 10-K, filed on or about March 28, 2003.)

3.2			The Company’s Amended and Restated Bylaws. (Incorporated by reference to Exhibit 3.2 to Form 8-K, filed on or about November 4, 2010.)

10.4			The Company’s Amended 1985 Stock Option Plan. (Incorporated by reference to Exhibit 10.14 to Form 10-K, filed on or about March 28, 1991.)

10.5			Form of Stock Option Agreement used in connection with options granted under the Company’s Amended 1985 Stock Option Plan. (Incorporated by reference to Exhibit 10.15 to Form 10-K, filed on or about March 28, 1991.)

10.9			Form of Stock Option Agreement used in connection with options granted under the Company’s 1993 Directors’ Non-Qualified Stock Option Plan. (Incorporated by reference to Exhibit 10.9 to Form 10-K, filed on or about March 28, 1994.)

10.23			Form of Employment Agreement executed by the Company’s Chairman and Chief Executive Officer dated December 31, 2008. (Incorporated by reference to Exhibit 10.23 to Form 10-K, filed on or about February 27, 2009.)

10.24			Form of Employment Agreement executed by the Company’s President and Chief Operating Officer and certain of the Company’s executive officers dated December 31, 2008. (Incorporated by reference to Exhibit 10.24 to Form 10-K, filed on or about February 27, 2009.)

10.25			Form of Employment Agreement executed by the Company’s Chief Financial Officer dated December 31, 2008. (Incorporated by reference to Exhibit 10.25 to Form 10-K, filed on or about February 27, 2009.)

10.30			Form of Stock Option Agreement used in connection with Non-Qualified options granted under the Company’s 1997 Non-Qualified and Incentive Stock Option Plan. (Incorporated by reference to Exhibit 10.30 to Form 10-K, filed on or about March 31, 1998.)

10.31			Form of Stock Option Agreement used in connection with Incentive options granted under the Company’s 1997 Non Qualified and Incentive Stock Option Plan. (Incorporated by reference to Exhibit 10.31 to ~~Form��~~Form 10-K, filed on or about March 31, 1998.)

10.35			The Company’s 2008 Executive Incentive Compensation Plan. (Incorporated by reference to Appendix C of the Company’s Notice of Annual Meeting of Shareholders and Proxy Statement pursuant to Regulation 14A filed on or about March 21, 2008.)

10.36			The Company’s 2008 Directors’ Restricted Stock Plan. (Incorporated by reference to Appendix B of the Company’s Notice of Annual Meeting of Shareholders and Proxy Statement pursuant to Regulation 14A filed on or about March 21, 2008.)

~~| 41.~~


~~Exhibit~~ ~~Number~~
10.39		~~Exhibit~~

~~10.39~~	The Company’s Amended 1993 Directors’ Non-Qualified Stock Option Plan. (Incorporated by reference to Appendix B of the Company’s Notice of Annual Meeting of Shareholders and Proxy Statement pursuant to Regulation 14A filed on or about March 28, 2001.)

10.39.1		Amendment to Amended 1993 Directors’ Non-Qualified Stock Option Plan (Incorporated by reference to Exhibit 10.39.1 to Form 10-Q filed on or about August 9, 2007.)

10.40		The Company’s Amended 1997 Non-Qualified and Incentive Stock Option Plan. (Incorporated by reference to Appendix C of the Company’s Notice of Annual Meeting of Shareholders and Proxy Statement pursuant to Regulation 14A filed on or about March 28, 2001.)

10.42		The Company’s 2002 Employee Stock Purchase Plan. (Incorporated by reference to Appendix B of the Company’s Notice of Annual Meeting of Shareholders and Proxy Statement pursuant to Regulation 14A filed on or about March 30, 2007.)

10.45		The Company’s 2005 Stock Option Plan. (Incorporated by reference to Appendix A of the Company’s Notice of Annual Meeting of Shareholders and Proxy Statement pursuant to Regulation 14A filed on or about March 31, 2005.)

10.46		Form of Stock Option Agreement used in connection with Incentive options granted under the Company’s 2005 Incentive Stock Option Plan. (Incorporated by reference to Exhibit 10.46 to Form 10-K filed on or about March 1, 2007.)

10.47		The Company’s 2006 Stock Option Plan. (Incorporated by reference to Appendix A of the Company’s Notice of Annual Meeting of Shareholders and Proxy Statement pursuant to Regulation 14A filed on or about April 4, 2006.)

10.48		Form of Stock Option Agreement used in connection with Incentive options granted under the Company’s 2006 Incentive Stock Option Plan. (Incorporated by reference to Exhibit 10.48 to Form 10-K filed on or about March 1, 2007.)

10.49		The Company’s 2007 Stock Option Plan. (Incorporated by reference to Appendix A of the Company’s Notice of Annual Meeting of Shareholders and Proxy Statement pursuant to Regulation 14A filed on or about March 30, 2007.)

10.50		Form of Stock Option Agreement used in connection with Incentive options granted under the Company’s 2007 Incentive Stock Option Plan. (Incorporated by reference to Exhibit 10.50 to Form 10-K filed on or about February 9, 2008.)

10.51		The Company’s 2008 Stock Option Plan. (Incorporated by reference to Appendix A of the Company’s Notice of Annual Meeting of Shareholders and Proxy Statement pursuant to Regulation 14A filed on or about March 21, 2008.)

10.52		Form of Stock Option Agreement used in connection with options granted under the Company’s 2008 Stock Option Plan. (Incorporated by reference to Exhibit 10.52 to Form 10-K filed on or about February 27, 2009.)

|27.



10.53			The Company’s 2009 Stock Option Plan. (Incorporated by reference to Appendix A of the Company’s Notice of Annual Meeting of Shareholders and Proxy Statement pursuant to Regulation 14A filed on or about March 20, 2009.)

10.54			Form of Stock Option Agreement used in connection with options granted under the Company’s 2009 Stock Option Plan. (Incorporated by reference to Exhibit 10.2 to Form 8-K filed on or about May 11, 2009.)

~~42. |~~


~~Exhibit~~ ~~Number~~		~~Exhibit~~
10.55
~~10.55~~	The ~~Company’s~~Company's 2010 Stock Option Plan. (Incorporated by reference to Appendix A of the ~~Company’s~~Company's Notice of Annual Meeting of Shareholders and Proxy Statement pursuant to Regulation 14A filed on or about March 19, 2010.)

~~10.56~~
10.56		Form of Stock Option Agreement used in connection with options granted under the ~~Company’s~~Company's 2010 Stock Option Plan. (Incorporated by reference to Appendix B of the ~~Company’s~~Company's Notice of Annual Meeting of Shareholders and Proxy Statement pursuant to Regulation 14A filed on or about March 19, 2010.)

~~21.1~~
10.57		The Company's 2011 Stock Option Plan. (Incorporated by reference to Appendix A of the Company's Notice of Annual Meeting of Shareholders and Proxy Statement pursuant to Regulation 14A filed on or about March 18, 2011.)

10.58		Form of Stock Option Agreement used in connection with options granted under the Company's 2011 Stock Option Plan. (Incorporated by reference to Appendix B of the Company's Notice of Annual Meeting of Shareholders and Proxy Statement pursuant to Regulation 14A filed on or about March 18, 2011.)

21.1		Subsidiaries of the registrant.

~~23.1~~
23.1		Consent of Independent Registered Public Accounting Firm.

~~31.1~~
31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~31.2~~
31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32
32		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~ 2002

~~101.INS~~	~~Instance Document.~~
101.INS
~~101.SCH~~	Instance Document.

101.SCH		XBRL Taxonomy Extension Schema Document.

~~101.CAL~~
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.

~~101.LAB~~
101.LAB		XBRL Taxonomy Extension Label Linkbase Document.

~~101.PRE~~
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.

~~101.DEF~~
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.

| ~~43.~~

28.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

Date: February 28, ~~2011~~

2012



EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

	By:	/s/ Bradley S. Powell
		~~/s/ BRADLEY~~Bradley S. ~~POWELL~~ Powell
		~~Bradley S. Powell~~
		Senior Vice President and Chief Financial Officer

~~44.~~

29.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on February 28, ~~2011.~~

2012.



Signature		Title


/s/ Peter J. Rose ~~(Peter J. Rose)~~		Chairman of the Board and Chief Executive Officer
(Peter J. Rose)		(Principal Executive Officer) and Director


/s/ R. Jordan Gates ~~(R. Jordan Gates)~~		President and Chief Operating Officer and Director

(R. Jordan Gates)

/s/ James Li Kou Wang ~~(James Li Kou Wang)~~		President-Asia Pacific and Director

(James Li Kou Wang)

/s/ Bradley S. Powell		Senior Vice President and Chief Financial Officer
(Bradley S. Powell)		~~Chief Financial Officer~~ (Principal Financial and Accounting Officer)

/s/ Mark A. Emmert ~~(Mark A. Emmert)~~		Director

(Mark A. Emmert)

/s/ Dan P. Kourkoumelis ~~(Dan P. Kourkoumelis)~~		Director

(Dan P. Kourkoumelis)

/s/ Michael J. Malone ~~(Michael J. Malone)~~		Director

(Michael J. Malone)

/s/ John W. Meisenbach ~~(John W. Meisenbach)~~		Director

(John W. Meisenbach)

/s/ Robert R. Wright ~~(Robert R. Wright)~~		Director
(Robert R. Wright)

| ~~45.~~

30.

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

COMPRISING ITEM 8

ANNUAL REPORT ON FORM 10-K

TO SECURITIES AND EXCHANGE COMMISSION FOR THE

YEARS ENDED DECEMBER 31, 2011, 2010 ~~2009,~~, AND ~~2008~~

2009

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Expeditors International of Washington, Inc.:

We have audited the accompanying consolidated balance sheets of Expeditors International of Washington, Inc. and subsidiaries as of December 31, ~~2010~~2011 and ~~2009,~~2010, and the related consolidated statements of earnings, equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, ~~2010.~~2011. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Expeditors International of Washington, Inc. and subsidiaries as of December 31, ~~2010~~2011 and ~~2009,~~2010, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, ~~2010,~~2011, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Expeditors International of Washington, Inc.’s internal control over financial reporting as of December 31, ~~2010,~~2011, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 28, ~~2011~~2012 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.




/s/ KPMG LLP
Seattle, Washington
February 28, ~~2011~~ 2012

| ~~F-1.~~

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Expeditors International of Washington, Inc.:

We have audited Expeditors International of Washington, Inc.’s internal control over financial reporting as of December 31, ~~2010,~~2011, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Expeditors International of Washington, Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on Internal Control Over Financial Reporting under Item 9A. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the ~~company’s~~Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Expeditors International of Washington, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2010,~~2011, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Expeditors International of Washington, Inc. and subsidiaries as of December 31, ~~2010~~2011 and ~~2009,~~2010, and the related consolidated statements of earnings, equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, ~~2010~~2011 and our report dated February 28, ~~2011~~2012 expressed an unqualified opinion on those consolidated financial statements.




/s/ KPMG LLP
Seattle, Washington
February 28, ~~2011~~ 2012

~~F-2.~~

F-2

Consolidated Balance Sheets

In thousands except share data

December 31,    2010    2009
Current Assets:

Cash and cash equivalents
   $ 1,084,465       925,929
Short-term investments
   524       655
Accounts receivable, less allowance for doubtful
accounts of $14,636 in 2010 and $14,235 in 2009
   1,003,884       810,369
Deferred Federal and state income taxes
   8,706       8,338
Other
   42,776       42,539

Total current assets
   2,140,355       1,787,830
Property and Equipment:

Land
   163,291       165,528
Buildings and leasehold improvements
   372,788       372,470
Furniture, fixtures, equipment and purchased software
   215,054       205,817
Construction in progress
   29,166       16,258

Property and equipment, at cost
   780,299       760,073
Less: accumulated depreciation and amortization
   281,651       264,372

Property and equipment, net
   498,648       495,701
Goodwill, net
   7,927       7,927
Other intangibles, less accumulated amortization of $18,921 in 2010 and $17,143 in 2009
   3,716       4,938
Other assets, net
   28,533       27,326

Total assets
   $     2,679,179       2,323,722

~~| F-3.~~


December 31,	2010		2009		2011			2010
Current Assets:
Cash and cash equivalents					$	1,294,356		1,084,465
Short-term investments					472			524
Accounts receivable, less allowance for doubtful accounts of $10,381 in 2011 and $14,636 in 2010					934,752			1,003,884
Deferred Federal and state income taxes					10,415			8,706
Other					46,888			42,776
Total current assets					2,286,883			2,140,355
Property and Equipment:
Land					167,037			163,291
Buildings and leasehold improvements					400,487			372,788
Furniture, fixtures, equipment and purchased software					233,447			215,054
Construction in progress					34,316			29,166
Property and equipment, at cost					835,287			780,299
Less accumulated depreciation and amortization					296,481			281,651
Property and equipment, net					538,806			498,648
Goodwill, net					7,927			7,927
Other intangibles, less accumulated amortization of $20,123 in 2011 and $18,921 in 2010					2,630			3,716
Other assets, net					30,581			28,533
Total assets					$	2,866,827		2,679,179

Current Liabilities:
Accounts payable	$	652,161		546,675	$	606,628		652,161
Accrued expenses, primarily salaries and related costs		177,869		145,545	169,445			177,869
Federal, state, and foreign income taxes		31,948		16,166	20,072			31,948

Total current liabilities		861,978		708,386	796,145			861,978
Deferred Federal and state income taxes		69,047		53,989	60,613			69,047
Commitments and contingencies

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 212,047,774 shares at
December 31, 2010 and 212,025,494 shares at
December 31, 2009		2,120		2,120
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 212,003,662 shares at December 31, 2011
and 212,047,774 shares at December 31, 2010					2,120			2,120
Additional paid-in capital		13,412		18,265	13,260			13,412
Retained earnings		1,717,249		1,532,018	1,991,222			1,717,249
Accumulated other comprehensive income		8,125		604

Accumulated other comprehensive (loss) income					(2,964		)	8,125
Total shareholders’ equity		1,740,906		1,553,007	2,003,638			1,740,906
Noncontrolling interest		7,248		8,340	6,431			7,248

Total equity		1,748,154		1,561,347	2,010,069			1,748,154

Total liabilities and equity	$	2,679,179		2,323,722	$	2,866,827		2,679,179

Years ended December 31, 2011, 2010 ~~2009~~ and ~~2008~~

              Common stock
      Shares    Par Value

Balance at December 31, 2007
   212,996,776       $ 2,130

Exercise of stock options
   2,140,819       22

Issuance of shares under stock purchase plan
   732,719       7

Shares repurchased under provisions of stock repurchase plans
   (3,896,937 )    (39)

Stock compensation expense
   —       —

Tax benefits from stock plans
   —       —

Comprehensive income


Net earnings
   —       —

Foreign currency translation adjustments, net of tax of $25,018
   —       —


Total comprehensive income
   —       —


Dividends paid ($.32 per share)
   —       —


Distributions or declaration of dividends to noncontrolling interest
   —       —


Balance at December 31, 2008
   211,973,377       $ 2,120

Exercise of stock options and release of restricted shares
   2,068,603       20

Issuance of shares under stock purchase plan
   714,799       7

Shares repurchased under provisions of stock repurchase plans
   (2,731,285 )    (27)

Stock compensation expense
   —       —

Tax benefits from stock plans
   —       —

Purchase of noncontrolling interest
   —       —

Comprehensive income


Net earnings
   —       —

Foreign currency translation adjustments, net of tax of $8,672
   —       —


Total comprehensive income
   —       —


Dividends paid ($.38 per share)
   —       —

Distributions or declaration of dividends to noncontrolling interest
   —       —


Balance at December 31, 2009
   212,025,494       2,120

Exercise of stock options and release of restricted shares
   4,781,971       48

Issuance of shares under stock purchase plan
   694,329       7

Shares repurchased under provisions of stock repurchase plans
   (5,454,020 )    (55)

Stock compensation expense
   —       —

Tax benefits from stock plans
   —       —

Comprehensive income


Net earnings
   —       —

Foreign currency translation adjustments, net of tax of $4,122
   —       —


Total comprehensive income
   —       —


Dividends paid ($.40 per share)
   —       —

Distributions or declaration of dividends to noncontrolling interest
   —       —


Balance at December 31, 2010
   212,047,774       2,120

~~F-8. |~~

Additional
paid-in
capital Retained
earnings Accumulated other
comprehensive
income (loss) Total
shareholders’
equity Noncontrolling
interest
Total
equity

Balance at December 31, 2007
50,006    1,143,464    30,971    1,226,571    16,748    1,243,319
Exercise of stock options
29,322    —      —      29,344    —      29,344
Issuance of shares under stock purchase plan
22,109    —      —      22,116    —      22,116
Shares repurchased under provisions of stock repurchase plans
(150,120 ) (4,019 ) —      (154,178 ) —      (154,178)
Stock compensation expense
44,879    —      —      44,879    —      44,879
Tax benefits from stock plans
10,954    —      —      10,954    —      10,954
Comprehensive income

Net earnings
—      301,014    —      301,014    1,965    302,979
Foreign currency translation adjustments, net of tax of $25,018
—      —      (46,179 ) (46,179 ) (336 ) (46,515)

Total comprehensive income
—      —      —      254,835    1,629    256,464

Dividends paid ($.32 per share)
—      (68,103 ) —      (68,103 ) —      (68,103)

Distributions or declaration of dividends to noncontrolling interest
—      —      —      —      (879 ) (879)

Balance at December 31, 2008
7,150    1,372,356    (15,208 ) 1,366,418    17,498    1,383,916
Exercise of stock options and release of restricted shares
26,393    —      —      26,413    —      26,413
Issuance of shares under stock purchase plan
20,505    —      —      20,512    —      20,512
Shares repurchased under provisions of stock repurchase plans
(84,482 ) —      —      (84,509 ) —      (84,509)
Stock compensation expense
39,135    —      —      39,135    —      39,135
Tax benefits from stock plans
5,726    —      —      5,726    —      5,726
Purchase of noncontrolling interest
3,838    —      —      3,838    (4,306 ) (468)
Comprehensive income

Net earnings
—      240,217    —      240,217    180    240,397
Foreign currency translation adjustments, net of tax of $8,672
—      —      15,812    15,812    (634 ) 15,178

Total comprehensive income
—      —      —      256,029    (454 ) 255,575

Dividends paid ($.38 per share)
—      (80,555 ) —      (80,555 ) —      (80,555)
Distributions or declaration of dividends to noncontrolling interest
—      —      —      —      (4,398 ) (4,398)

Balance at December 31, 2009
18,265    1,532,018    604    1,553,007    8,340    1,561,347
Exercise of stock options and release of restricted shares
79,186    —      —      79,234    —      79,234
Issuance of shares under stock purchase plan
20,543    —      —      20,550    —      20,550
Shares repurchased under provisions of stock repurchase plans
(172,188 ) (74,069 ) —      (246,312 ) —      (246,312)
Stock compensation expense
43,743    —      —      43,743    —      43,743
Tax benefits from stock plans
23,863    —      —      23,863    —      23,863
Comprehensive income

Net earnings
—      344,172    —      344,172    33    344,205
Foreign currency translation adjustments, net of tax of $4,122
—      —      7,521    7,521    (74 ) 7,447

Total comprehensive income
—      —      —      351,693    (41 ) 351,652

Dividends paid ($.40 per share)
—      (84,872 ) —      (84,872 ) —      (84,872)
Distributions or declaration of dividends to noncontrolling interest
—      —      —      —      (1,051 ) (1,051)

Balance at December 31, 2010
13,412    1,717,249    8,125    1,740,906    7,248    1,748,154

~~| F-9.~~

2009

~~See~~

~~accompanying~~

~~notes to~~

~~consolidated~~

~~financial~~

~~statements.~~



	Common Stock
	Shares		Par Value
Balance at December 31, 2008	211,973,377		$	2,120
Exercise of stock options and release of restricted shares	2,068,603		20
Issuance of shares under stock purchase plan	714,799		7
Shares repurchased under provisions of stock repurchase plans	(2,731,285	)	(27		)
Stock compensation expense	—		—
Tax benefits from stock plans	—		—
Purchase of noncontrolling interest	—		—
Comprehensive income:
Net earnings	—		—
Foreign currency translation adjustments, net of tax of $8,672	—		—
Total comprehensive income	—		—
Dividends paid ($.38 per share)	—		—
Distributions or declaration of dividends to noncontrolling interest	—		—
Balance at December 31, 2009	212,025,494		2,120
Exercise of stock options and release of restricted shares	4,781,971		48
Issuance of shares under stock purchase plan	694,329		7
Shares repurchased under provisions of stock repurchase plans	(5,454,020	)	(55		)
Stock compensation expense	—		—
Tax benefits from stock plans	—		—
Comprehensive income:
Net earnings	—		—
Foreign currency translation adjustments, net of tax of $4,122	—		—
Total comprehensive income	—		—
Dividends paid ($.40 per share)	—		—
Distributions or declaration of dividends to noncontrolling interest	—		—
Balance at December 31, 2010	212,047,774		2,120
Exercise of stock options and release of restricted shares	1,632,077		16
Issuance of shares under stock purchase plan	663,386		7
Shares repurchased under provisions of stock repurchase plans	(2,339,575	)	(23		)
Stock compensation expense	—		—
Tax benefits from stock plans	—		—
Comprehensive income:
Net earnings	—		—
Foreign currency translation adjustments, net of tax of $6,471	—		—
Reclassification adjustments for foreign currency realized losses, net of tax of $393	—		—
Total comprehensive income	—		—
Dividends paid ($.50 per share)	—		—
Distributions or declaration of dividends to noncontrolling interest	—		—
Balance at December 31, 2011	212,003,662		2,120

|F-5.

~~Consolidated Statements of Cash Flows~~

~~In thousands~~

Years ended December 31,    2010    2009    2008
Operating Activities:

Net earnings
   $     344,205       240,397       302,979
Adjustments to reconcile net earnings to net cash provided by operating activities:

Provision for losses on accounts receivable
   3,414       804       1,976
Deferred income tax expense (benefit)
   10,569       (1,609 )    16,350
Excess tax benefits from stock plans
   (23,863 )    (5,726 )    (10,954)
Stock compensation expense
   43,743       39,135       44,879
Depreciation and amortization
   36,900       40,035       40,003
Gain on sale of assets
   (321 )    (42 )    (699)
Amortization of other intangible assets
   1,413       1,520       1,618
Changes in operating assets and liabilities:

(Increase) decrease in accounts receivable
   (188,823 )    (1,077 )    85,841
Increase (decrease) in accounts payable and accrued expenses
   130,138       29,910       (66,470)
Decrease (increase) in income taxes payable, net
   39,495       (12,706 )    (5,552)
(Increase) decrease in other current assets
   (1,352 )    159       (1,005)

Net cash provided by operating activities
   395,518       330,800       408,966

~~F-10. |~~

   2010    2009    2008
Investing Activities:

Decrease (increase) in short-term investments
   188       26       (72)
Purchase of property and equipment
   (42,408 )    (34,700 )    (59,726)
Proceeds from sale of property and equipment
   360       276       369
Prepayment on long-term land lease, net
   0       (5,049 )    0
Other
   (319 )    (1,901 )    204

Net cash used in investing activities
   (42,179 )    (41,348 )    (59,225)

Financing Activities:

Proceeds from issuance of common stock
   99,784       46,925       51,460
Repurchases of common stock
   (246,312 )    (84,509 )    (154,178)
Excess tax benefits from stock plans
   23,863       5,726       10,954
Dividends paid
   (84,872 )    (80,555 )    (68,103)
Distributions to noncontrolling interest
   (1,051 )    (1,084 )    (879)
Purchase of noncontrolling interest
   0       (3,851 )    0

Net cash used in financing activities
   (208,588 )    (117,348 )    (160,746)
Effect of exchange rate changes on cash and cash equivalents
   13,785       12,797       (22,566)

Increase in cash and cash equivalents
   158,536       184,901       166,429
Cash and cash equivalents at beginning of year
   925,929       741,028       574,599

Cash and cash equivalents at end of year
   $     1,084,465       925,929       741,028

Interest and Taxes Paid:

Interest
   $ 110       497       173
Income taxes
   171,618       158,745       172,146



	Additional paid-in capital		Retained earnings		Accumulated other comprehensive income (loss)		Total shareholders’ equity		Noncontrolling interest		Total equity
Balance at December 31, 2008	7,150		1,372,356		(15,208	)	1,366,418		17,498		1,383,916
Exercise of stock options and release of restricted shares	26,393		—		—		26,413		—		26,413
Issuance of shares under stock purchase plan	20,505		—		—		20,512		—		20,512
Shares repurchased under provisions of stock repurchase plans	(84,482	)	—		—		(84,509	)	—		(84,509	)
Stock compensation expense	39,135		—		—		39,135		—		39,135
Tax benefits from stock plans	5,726		—		—		5,726		—		5,726
Purchase of noncontrolling interest	3,838		—		—		3,838		(4,306	)	(468	)
Comprehensive income:
Net earnings	—		240,217		—		240,217		180		240,397
Foreign currency translation adjustments, net of tax of $8,672	—		—		15,812		15,812		(634	)	15,178
Total comprehensive income	—		—		—		256,029		(454	)	255,575
Dividends paid ($.38 per share)	—		(80,555	)	—		(80,555	)	—		(80,555	)
Distributions or declaration of dividends to noncontrolling interest	—		—		—		—		(4,398	)	(4,398	)
Balance at December 31, 2009	18,265		1,532,018		604		1,553,007		8,340		1,561,347
Exercise of stock options and release of restricted shares	79,186		—		—		79,234		—		79,234
Issuance of shares under stock purchase plan	20,543		—		—		20,550		—		20,550
Shares repurchased under provisions of stock repurchase plans	(172,188	)	(74,069	)	—		(246,312	)	—		(246,312	)
Stock compensation expense	43,743		—		—		43,743		—		43,743
Tax benefits from stock plans	23,863		—		—		23,863		—		23,863
Comprehensive income:
Net earnings	—		344,172		—		344,172		33		344,205
Foreign currency translation adjustments, net of tax of $4,122	—		—		7,521		7,521		(74	)	7,447
Total comprehensive income	—		—		—		351,693		(41	)	351,652
Dividends paid ($.40 per share)	—		(84,872	)	—		(84,872	)	—		(84,872	)
Distributions or declaration of dividends to noncontrolling interest	—		—		—		—		(1,051	)	(1,051	)
Balance at December 31, 2010	13,412		1,717,249		8,125		1,740,906		7,248		1,748,154
Exercise of stock options and release of restricted shares	32,406		—		—		32,422		—		32,422
Issuance of shares under stock purchase plan	24,217		—		—		24,224		—		24,224
Shares repurchased under provisions of stock repurchase plans	(106,353	)	(5,695	)	—		(112,071	)	—		(112,071	)
Stock compensation expense	44,278		—		—		44,278		—		44,278
Tax benefits from stock plans	5,300		—		—		5,300		—		5,300
Comprehensive income:
Net earnings	—		385,679		—		385,679		564		386,243
Foreign currency translation adjustments, net of tax of $6,471	—		—		(11,705	)	(11,705	)	(426	)	(12,131	)
Reclassification adjustments for foreign currency realized losses, net of tax of $393	—		—		616		616		—		616
Total comprehensive income	—		—		—		374,590		138		374,728
Dividends paid ($.50 per share)	—		(106,011	)	—		(106,011	)	—		(106,011	)
Distributions or declaration of dividends to noncontrolling interest	—		—		—		—		(955	)	(955	)
Balance at December 31, 2011	13,260		1,991,222		(2,964	)	2,003,638		6,431		2,010,069

See accompanying notes to consolidated financial statements.

| ~~F-11.~~

F-6.

Consolidated Statements of Cash Flows

In thousands



Years ended December 31,	2011			2010		2009
Operating Activities:
Net earnings	$	386,243		344,205		240,397
Adjustments to reconcile net earnings to net cash provided by operating activities:
Provision for losses on accounts receivable	1,327			3,414		804
Deferred income tax (benefit) expense	(4,065		)	10,569		(1,609	)
Excess tax benefits from stock plans	(5,300		)	(23,863	)	(5,726	)
Stock compensation expense	44,278			43,743		39,135
Depreciation and amortization	36,776			36,900		40,035
Loss (gain) on sale of assets	360			(321	)	(42	)
Amortization of other intangible assets	1,156			1,413		1,520
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable	46,915			(188,823	)	(1,077	)
(Decrease) increase in accounts payable and accrued expenses	(40,819		)	130,138		29,910
(Decrease) increase in income taxes payable, net	(3,237		)	39,495		(12,706	)
(Increase) decrease in other current assets	(6,503		)	(1,352	)	159
Net cash provided by operating activities	457,131			395,518		330,800
Investing Activities:
Decrease in short-term investments, net	29			188		26
Purchase of property and equipment	(78,115		)	(42,408	)	(34,700	)
Proceeds from sale of property and equipment	193			360		276
Prepayment on long-term leases, net	(936		)	—		(5,049	)
Other	(1,510		)	(319	)	(1,901	)
Net cash used in investing activities	(80,339		)	(42,179	)	(41,348	)
Financing Activities:
Proceeds from issuance of common stock	56,646			99,784		46,925
Repurchases of common stock	(112,071		)	(246,312	)	(84,509	)
Excess tax benefits from stock plans	5,300			23,863		5,726
Dividends paid	(106,011		)	(84,872	)	(80,555	)
Distributions to noncontrolling interest	(955		)	(1,051	)	(1,084	)
Purchase of noncontrolling interest	—			—		(3,851	)
Net cash used in financing activities	(157,091		)	(208,588	)	(117,348	)
Effect of exchange rate changes on cash and cash equivalents	(9,810		)	13,785		12,797
Increase in cash and cash equivalents	209,891			158,536		184,901
Cash and cash equivalents at beginning of year	1,084,465			925,929		741,028
Cash and cash equivalents at end of year	1,294,356			1,084,465		925,929
Interest and Taxes Paid:
Interest	296			110		497
Income taxes	266,621			171,618		158,745

See accompanying notes to consolidated financial statements

|F-7.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. | Basis of Presentation

Expeditors International of Washington, Inc. (“the Company”) is a non-asset based provider of global logistics services operating through a worldwide network of offices ~~international service centers~~ and exclusive or non-exclusive agents. The Company’s customers include retailing and wholesaling, electronics, and manufacturing companies around the world.

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

The consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission in accordance with accounting principles generally accepted in the United States (U.S. GAAP). The consolidated financial statements include the accounts of the Company and its subsidiaries stated in U.S. dollars, the Company’s reporting currency. In addition, the consolidated financial statements also include the accounts of operating entities where the Company maintains a parent-subsidiary relationship through unilateral control over assets and operations together with responsibility for payment of all liabilities, notwithstanding a lack of technical majority ownership of the subsidiary common stock. ~~Certain 2009 and 2008 amounts have been reclassified to conform with the 2010 presentation.~~ All dollar amounts in the notes are presented in thousands except for share data.

All significant intercompany accounts and transactions have been eliminated in consolidation.

B. | Cash Equivalents

All highly liquid investments with a maturity of three months or less at date of purchase are considered to be cash equivalents.

C. | Short-term Investments

Short-term investments have a maturity date of greater than three months at date of purchase and are designated as available-for-sale. Cost approximates market at December 31, ~~2010~~2011 and ~~2009.~~

2010.

D. | Accounts Receivable

The Company maintains an allowance for doubtful accounts, which is reviewed at least monthly for estimated losses resulting from the inability of its customers to make required payments for services and advances. Additional allowances may be necessary in the future if the ability of its customers to pay deteriorates. The Company has recorded an allowance for doubtful accounts in the amounts of ~~$14,636, $14,235~~$10,381, $14,636 and ~~$14,414~~$14,235 as of December 31, 2011, 2010 ~~2009~~ and ~~2008,~~2009, respectively. Additions and write-offs have not been significant in any of these years.

~~F-12. |~~

E. | Long-Lived Assets, Depreciation and Amortization

Property and equipment are recorded at cost and are depreciated or amortized on the straight-line method over the shorter of the assets’ estimated useful lives or lease terms. Useful lives for major categories of property and equipment are as follows:



Land Improvements			50 years
Buildings			28 to 40 years
Furniture, fixtures, equipment and purchased software			3 to 5 years

Expenditures for maintenance, repairs, and replacements of minor items are charged to earnings as incurred. Major upgrades and improvements that extend the life of the asset are capitalized. Upon disposition, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is included in income for the period.

For the years ended December 31, ~~2010~~2011 and ~~2009,~~2010, the Company performed the required goodwill annual impairment test during the fourth quarter and determined that no impairment had occurred.

Other intangibles consist principally of payments made to purchase customer lists of agents in countries where the Company established its own presence by opening offices. Other intangibles assets are amortized over their estimated useful lives for periods up to 15 years and are reviewed for impairment if an event or circumstance indicates that an impairment loss may behave been incurred. The estimated annual amortization expense for each of the next five years is not significant.

F. | Revenues and Revenue Recognition

The Company derives its revenues from three principal sources: 1) airfreight services, 2) ocean freight and ocean services, and 3) customs brokerage and other services. 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

|F-8.

rate) is termed “net revenue” or “yield”. By consolidating shipments from multiple customers and concentrating its buying power, the Company is able to negotiate favorable buy rates from the direct carriers, while at the same time offering lower sell rates than customers would otherwise be able to negotiate themselves.

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

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

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

~~| F-13.~~

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

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

The Company presents revenues net of sales and value-added taxes.

G. | Income Taxes

Income taxes are accounted for under the asset and liability method of accounting. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, the tax effect of loss carryforwards and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Earnings of the Company's foreign subsidiaries are not considered to be indefinitely reinvested outside of the United States and, accordingly, U.S. Federal and State income taxes have been provided for all undistributed earnings net of related foreign tax credits. A valuation allowance is established when necessary to reduce deferred tax assets to amounts expected to be realized. The Company recognizes interest expense related to unrecognized tax benefits or underpayment of income taxes in interest expense and recognizes penalties in operating expenses.

H. | Net Earnings Attributable to Shareholders per Common Share

Diluted earnings attributable to shareholders per share is computed using the weighted average number of common shares and dilutive potential common shares outstanding. Dilutive potential common shares represent outstanding stock options and stock purchase rights. Basic earnings attributable to shareholders per share is calculated using the weighted average number of common shares outstanding without taking into consideration dilutive potential common shares outstanding.

I. | Stock Plans

The Company recognizes stock compensation expense based on an estimate of the fair value of awards granted to employees and directors under the Company’s stock option, director restricted stock and employee stock purchase rights plans. This expense, adjusted for expected forfeitures, is recognized on a straight-line basis over the stock ~~awards~~awards' vesting periods.

~~F-14. |~~

J. | Foreign Currency

Foreign currency amounts attributable to foreign operations have been translated into U.S. dollars using year-end exchange rates for assets and liabilities, historical rates for equity, and weighted average rates for revenues and expenses. Translation adjustments resulting from this process are recorded as components of other comprehensive ~~income.~~income until complete or substantially complete

|F-9.

liquidation by the Company of its investment in a foreign entity. Currency fluctuations are a normal operating factor in the conduct of the Company’s business and foreign exchange transaction gains and losses are included in revenues and operating expenses. Also, the Company is exposed to foreign currency exchange fluctuations on monetary assets and liabilities denominated in currencies that are not the local functional currency. Foreign exchange gains and losses on such balances are recognized in net earnings as other income.

Net foreign currency gains in 2011, 2010 and 2009 were $1,930, $2,026 and $1,418, respectively.

The Company follows a policy of accelerating international currency settlements to manage its foreign exchange exposure. Accordingly, the Company enters into foreign currency hedging transactions only in limited locations where there are regulatory or commercial limitations on the Company’s ability to move money ~~freely around the world.~~freely. Such hedging activity during 2011, 2010 ~~2009,~~, and ~~2008~~2009 was insignificant. ~~Net foreign currency gains in 2010 and 2009 were $2,026 and $1,418, respectively. Net foreign currency losses in 2008 were $191.~~ The Company had no foreign currency derivatives outstanding at December 31, ~~2010~~2011 and ~~2009.~~

2010.

K. | Comprehensive Income

Comprehensive income consists of net earnings and other gains and losses affecting equity that, under U.S. GAAP, are excluded from net earnings. For the Company, these consist of foreign currency translation gains and losses, net of related income tax effects and comprehensive income or loss attributable to the noncontrolling ~~interest.~~

interests.

Accumulated other comprehensive income consisted entirely of foreign currency translation adjustments, net of related income tax effects, as of December 31, ~~2010~~2011 and ~~2009.~~

2010.

L. | Segment Reporting

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 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.

M. | Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of the assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. The Company uses estimates primarily in the following areas: accounts receivable valuation, accrual of costs related to ancillary services the Company provides, accrual of insurance liabilities for the portion of the freight related exposure which the Company has self-insured, accrual of various tax liabilities, accrual of loss contingencies and calculation of share-based compensation expense. Actual results could differ from those estimates.

N. | Recent Accounting Pronouncements

In ~~October 2009,~~June 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) ~~2009–No.~~2011-No. 05 “Presentation of Comprehensive Income”, which amends Accounting Standards Codification (ASC) Topic 220 -”Comprehensive Income”. This update is intended to increase the prominence of items reported in other comprehensive income by giving the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The Company is required to and plans to adopt the provisions of ASU 2011-No. 05, as amended by ASU 2011-No. 12, beginning in the first quarter of 2012. The adoption is only expected to have a presentation impact on the Company's consolidated statements of earnings and consolidated statements of equity and comprehensive income.

In October 2009, the FASB issued ASU 2009-No. 13 “Multiple-Deliverable Revenue Arrangements”, which amends ~~Accounting Standards Codification~~ASC Topic

~~| F-15.~~

605 –“-”Revenue Recognition”. This update ~~provides~~provided amendments to the criteria for separating deliverables, measuring and allocating arrangement consideration to one or more units of accounting. This update ~~establishes~~established a selling price hierarchy for determining the selling price of a deliverable. ASU ~~2009–No.~~2009-No. 13 iswas effective for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. The Company ~~is required to and plans to adopt~~adopted the provisions of ~~this update~~ASU 2009-No. 13 beginning in the first quarter of 2011. The ~~Company has assessed the~~adoption had no material impact ~~of the adoption of ASU 2009–No. 13 it is not expecting this update will have a material effect~~ on the ~~Company’s~~Company's consolidated financial condition or results of operations.



NOTE 2.	SHAREHOLDERS’ EQUITY

A. | Stock Repurchase Plans

The Company has a Non-Discretionary Stock Repurchase Plan, originally approved by the Board of Directors in November 1993, under which management is authorized to repurchase up to 40,000,000 shares of the Company’s common stock in the open market with the proceeds received from the exercise of employee and director stock options.

In November 2001, ~~the Board of Directors expanded~~under the Company’s Discretionary Stock Repurchase Plan, ~~to allow for~~the Board of Directors authorized the repurchase of such shares as may be necessary to reduce the issued and outstanding stock to 200,000,000 shares of common stock.

The following table summarizes by repurchase plan the Company’s repurchasing activity:

   Cumulative shares
repurchased    Average price
per share
Non-Discretionary Plan
(1994 through 2010)
   21,870,052       $     21.24
Discretionary Plan
(2001 through 2010)
   20,067,005       $ 34.37



	Cumulative shares repurchased	Average price per share
Non-Discretionary Plan (1994 through 2011)	23,120,426	$	22.61
Discretionary Plan (2001 through 2011)	21,156,206	$	35.15

|F-10.

B. | Stock Option Plans

At December 31, ~~2010,~~2011, the Company has two stock option plans (the “1985 Plan” and the ~~“2010~~“2011 Plan”) under which the Board of Directors may grant officers and employees options to purchase common stock at prices equal to or greater than market value on the date of grant. On May ~~5, 2010,~~4, 2011, the shareholders approved the Company’s ~~2010~~2011 Plan, which made available a total of 3,000,000 shares of the Company’s common stock for purchase upon exercise of options granted under the ~~2010~~2011 Plan. The 1985 Plan provides for non-qualified grants. The ~~2010~~2011 Plan provides for qualified and non-qualified grants. Grants under the ~~2010~~2011 Plan are limited to not more than 100,000 shares per person. No additional shares can be granted under the ~~2010~~2011 Plan after April 30, ~~2011.~~2012. Outstanding options generally vest and become exercisable over periods up to five years from the date of grant and expire no more than 10 years from the date of grant.

Upon the exercise of non-qualified stock options and disqualifying dispositions of incentive stock options, the Company derives a tax deduction measured by the excess of the market value over the option price at the date of exercise or disqualifying disposition. The portion of the benefit from the deduction which equals the estimated fair value of the options (previously recognized as compensation expense) is recorded as a credit to the deferred tax asset for non-qualified stock options and is recorded as a credit to current tax expense for any disqualified dispositions of incentive stock options. All of the tax benefit received upon option exercise for the tax deduction in excess of the estimated fair value of the options is credited to additional paid-in capital.

~~F-16. |~~

The following table summarizes by plan stock option activity and shares available for granting of options:

   1985
Plan
2007
Plan

2008
Plan

2009
Plan

2010
Plan

Balance at December 31, 2007
   6,912       1,196,740       —       —       —
Options authorized
   —       —       3,000,000       —       —
Options granted
   0       0       (2,088,415 )    —       —
Options not granted
   —       (1,196,740 )    —       —       —

Balance at December 31, 2008
   6,912       —       911,585       —       —

Options authorized
   —       —       —       3,000,000       —
Options granted
   0       —       0       (2,449,200 )
Options not granted
   —       —       (911,585 )    —

Balance at December 31, 2009
   6,912       —       —       550,800

Options authorized
   —       —       —       —       3,000,000
Options granted
   0       —       —       0       (2,634,885)
Options not granted
   —       —       —       (550,800 )    —

Balance at December 31, 2010
   6,912       —       —       —       365,115



	1985 Plan	2008 Plan		2009 Plan		2010 Plan		2011 Plan
Balance at December 31, 2008	6,912	911,585		—		—		—
Options authorized	—	—		3,000,000		—		—
Options granted	—	—		(2,449,200	)	—		—
Options not granted	—	(911,585	)	—		—		—
Balance at December 31, 2009	6,912	—		550,800		—		—
Options authorized	—	—		—		3,000,000		—
Options granted	—	—		—		(2,634,885	)	—
Options not granted	—	—		(550,800	)	—		—
Balance at December 31, 2010	6,912	—		—		365,115		—
Options authorized	—	—		—		—		3,000,000
Options granted	—	—		—		—		(2,998,390	)
Options not granted	—	—		—		(365,115	)	—
Balance at December 31, 2011	6,912	—		—		—		1,610

C. | Stock Purchase Plan

In May 2002, the shareholders approved the Company’s 2002 Employee Stock Purchase Plan (“2002 Plan”), which became effective August 1, 2002. The Company’s amended 2002 Plan provides for 9,305,452 shares of the Company’s common stock to be reserved for issuance upon exercise of purchase rights granted to employees who elect to participate through regular payroll deductions beginning August 1 of each year. The purchase rights are exercisable on July 31 of the following year at a price equal to the lesser of (1) 85% of the fair market value of the Company’s stock on the last trading day in July or (2) 85% of the fair market value of the Company’s stock on the first trading day in August of the preceding year. A total of ~~5,901,973~~6,565,359 shares have been issued under the 2002 Plan and ~~$12,080~~$13,419 have been withheld from employees at December 31, ~~2010~~2011 in connection with the plan year ending July 31, ~~2011.~~

2012.

D. | Director Restricted Stock Plan

In May 2008, the shareholders approved the Company’s 2008 Directors’ Restricted Stock Plan (the 2008 Directors’ Plan), which provides for annual awards of restricted stock to non-employee directors and makes 200,000 shares of the Company’s common stock available for grant. The 2008 Directors’ Plan replaced the 1993 Directors’ Non-qualified Stock Option Plan. The plan provides for an annual grant of restricted stock awards with a fair market value equal to ~~$200,000~~$200 to each participant on June 1^st of each year. There are ~~118,902~~99,402 shares available for grant under the 2008 Directors’ Plan as of December 31, ~~2010.~~2011. Each restricted stock award under the 2008 Directors’ Plan vests in equal amounts monthly over one year. Restricted shares entitle the grantees to all shareholder rights once vested, except for cash dividends and transfer rights which are forfeited until the final vesting date of the award. If a non-employee director’s service is terminated, any unvested portion of an award will be forfeited unless the Compensation Committee of the Board of Directors determines otherwise.

| ~~F-17.~~

F-11.

E. | Stock Option Activity

The following table summarizes information about stock options:

   Number of
shares    Weighted
average
exercise price
per share    Weighted
average
remaining
contractual life
Aggregate
intrinsic value
(in thousands)

Outstanding at December 31, 2009
   18,834,620       $     28.96
Options granted
   2,634,885       $ 40.64
Options exercised
   (4,752,741 )    $ 16.67
Options forfeited
   (347,031 )    $ 41.50
Options cancelled
   (76,062 )    $ 41.55

Outstanding at December 31, 2010
   16,293,671       $ 34.11       5.79 years       $     333,824

Exercisable at December 31, 2010
   8,195,427       $ 26.78       3.58 years       $ 227,981



	Number of shares		Weighted average exercise price per share		Weighted average remaining contractual life	Aggregate intrinsic value (in thousands)
Outstanding at December 31, 2010	16,293,671		$	34.11
Options granted	2,998,390		$	52.80
Options exercised	(1,605,342	)	$	20.20
Options forfeited	(409,163	)	$	42.59
Options cancelled	(25,327	)	$	38.76
Outstanding at December 31, 2011	17,252,229		$	38.45	5.85	$	98,668
Exercisable at December 31, 2011	8,422,318		$	32.07	3.48	$	89,452

F. | Share-Based Compensation Expense

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

   For the years ended December 31,
   2010 2009 2008
Dividend yield
   1.07 – 1.08 % 1.22 – 1.25 % .72 – .76 %
Volatility – stock option plans
   38 – 40 % 38 – 39 % 34 – 37 %
Volatility – stock purchase rights plans
   29 % 59 % 45 %
Risk-free interest rates
   .29 – 2.86 % 0.48 – 3.37 % 2.28 – 3.46 %
Expected life (years) – stock option plans
   5.44 – 6.90    6.09 – 7.86    6.37 – 7.99
Expected life (years) – stock purchase rights plans
   1    1    1
Weighted average fair value of stock options granted during the period
   $    14.51    $    13.84    $    17.84
Weighted average fair value of stock purchase rights granted during the period
   $    11.16    $    12.78    $    11.12



	For the years ended December 31,
	2011			2010			2009
Dividend yield	.97 - .98%			1.07 - 1.08%			1.22 - 1.25%
Volatility – stock option plans	38 - 40%			38 - 40%			38 - 39%
Volatility – stock purchase rights plans	26		%	29		%	59		%
Risk-free interest rates	.19 - 2.84%			.29 - 2.86%			.48 - 3.37%
Expected life (years) – stock option plans	5.50 - 7.11			5.44 - 6.90			6.09 - 7.86
Expected life (years) – stock purchase rights plans	1			1			1
Weighted average fair value of stock options granted during the period	$	19.35		$	14.51		$	13.84
Weighted average fair value of stock purchase rights granted during the period	$	11.70		$	11.16		$	12.78

The Company’s expected volatility assumptions are based on the historical volatility of the Company’s ~~stock.~~stock over a period of time commensurate to the expected life. The expected life assumption is primarily based on historical employee exercise patterns and employee post-vesting termination behavior. The risk-free interest rate for the expected term of the option is based on the corresponding yield curve in effect at the time of grant for U.S. Treasury bonds having the same term as the expected life of the option, i.e. a ten year bond rate is used for valuing an option with a ten year expected life. The expected dividend yield is based on the Company’s historical experience. The forfeiture assumption used to calculate compensation expense is primarily based on historical pre-vesting employee forfeiture patterns.

The compensation for restricted stock awards is based on the fair market value of the Company’s share of common stock on the date of grant. In ~~2010, 26,735~~2011, restricted shares totaling 19,500 were granted with a fair value per share of ~~$37.40.~~

$51.27.

The total intrinsic value of options exercised during the years ended December 31, 2011, 2010 ~~2009~~ and ~~2008~~2009 was approximately ~~$135~~$47 million ~~$38~~, $135 million and ~~$61~~$38 million, respectively.

As of December 31, ~~2010,~~2011, the total unrecognized compensation cost related to unvested stock options, unvested restricted stock awards and stock purchase rights is ~~$78~~$92 million and the weighted average period over which that cost is expected to be recognized is ~~3.0~~3.2 years.

~~F-18. |~~

Total stock compensation expense and the total related tax benefit recognized are as follows:

   For the years ended December 31,
   2010    2009    2008
Stock compensation expense
   $     43,743       $     39,135       $     44,879
Recognized tax benefit
   $ 187       $ 258       $ 1,283



	For the years ended December 31,
	2011		2010		2009
Stock compensation expense	$	44,278	$	43,743	$	39,135
Recognized tax benefit	$	156	$	187	$	258

Shares issued as a result of stock option exercises, restricted stock awards and employee stock plan purchases are issued as new shares outstanding by the Company’s transfer agent.

|F-12.



NOTE 3.	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 attributable to shareholders per share.

   Net earnings
attributable to
shareholders    Weighted
average
shares
Earnings
per share

2010

Basic earnings attributable to shareholders
   $     344,172       212,283,966       $     1.62
Effect of dilutive potential common shares
   —       4,162,690       —

Diluted earnings attributable to shareholders
   $ 344,172       216,446,656       $ 1.59

2009

Basic earnings attributable to shareholders
   $ 240,217       212,112,744       $ 1.13
Effect of dilutive potential common shares
   —       4,420,496       —

Diluted earnings attributable to shareholders
   $ 240,217       216,533,240       $ 1.11

2008

Basic earnings attributable to shareholders
   $ 301,014       212,755,946       $ 1.41
Effect of dilutive potential common shares
   —       6,414,057       —

Diluted earnings attributable to shareholders
   $ 301,014       219,170,003       $ 1.37



	Net earnings attributable to shareholders		Weighted average shares	Earnings per share
2011
Basic earnings attributable to shareholders	$	385,679	212,117,511	$	1.82
Effect of dilutive potential common shares	—		2,916,069	—
Diluted earnings attributable to shareholders	$	385,679	215,033,580	$	1.79
2010
Basic earnings attributable to shareholders	$	344,172	212,283,966	$	1.62
Effect of dilutive potential common shares	—		4,162,690	—
Diluted earnings attributable to shareholders	$	344,172	216,446,656	$	1.59
2009
Basic earnings attributable to shareholders	$	240,217	212,112,744	$	1.13
Effect of dilutive potential common shares	—		4,420,496	—
Diluted earnings attributable to shareholders	$	240,217	216,533,240	$	1.11

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

Years ended December 31, 2010 2009 2008
Shares
10,675,403 8,698,730 6,604,623

~~| F-19.~~



Years ended December 31,	2011	2010	2009
Shares	7,321,670	10,675,403	8,698,730



NOTE 4.	INCOME TAXES

Income tax expense (benefit) includes the following components:

   Federal    State    Foreign    Total
2010

Current
   $     76,745       13,558       118,991       209,294
Deferred
   10,197       372       —       10,569

   $ 86,942       13,930       118,991       219,863

2009

Current
   $ 62,865       10,908       90,311       164,084
Deferred
   (1,388 )    (221 )    —       (1,609)

   $ 61,477       10,687       90,311       162,475

2008

Current
   $ 65,867       12,489       101,887       180,243
Deferred
   15,996       354       —       16,350

   $ 81,863       12,843       101,887       196,593



	Federal			State		Foreign	Total
2011
Current	$	100,479		20,219		135,152	255,850
Deferred	(4,335		)	270		—	(4,065	)
	$	96,144		20,489		135,152	251,785
2010
Current	$	76,745		13,558		118,991	209,294
Deferred	10,197			372		—	10,569
	$	86,942		13,930		118,991	219,863
2009
Current	$	62,865		10,908		90,311	164,084
Deferred	(1,388		)	(221	)	—	(1,609	)
	$	61,477		10,687		90,311	162,475

Income tax expense differs from amounts computed by applying the United States Federal income tax rate of 35% to earnings before income taxes as a result of the following:

   2010    2009    2008
Computed “expected” tax expense
   $     197,424       141,005       174,850
Increase in income taxes resulting from:

State income taxes, net of Federal income tax benefit
   9,054       6,947       8,347
Nondeductible stock compensation expense, net
   10,254       11,586       12,768
Other, net
   3,131       2,937       628

   $ 219,863       162,475       196,593



	2011		2010	2009
Computed “expected” tax expense	$	223,310	197,424	141,005
Increase in income taxes resulting from:
State income taxes, net of Federal income tax benefit	13,318		9,054	6,947
Nondeductible stock compensation expense, net	12,877		10,254	11,586
Other, net	2,280		3,131	2,937
	$	251,785	219,863	162,475

The components of earnings before income taxes are as follows:

   2010    2009    2008
United States
   $     196,382       117,889       126,659
Foreign
   367,686       284,983       372,913

   $ 564,068       402,872       499,572

~~F-20.~~



	2011		2010	2009
United States	$	212,308	196,382	117,889
Foreign	425,720		367,686	284,983
	$	638,028	564,068	402,872

F-13.

The tax effects of temporary differences and tax credits that give rise to significant portions of deferred tax assets and deferred tax liabilities ~~at December 31, 2010 and 2009~~ are as follows:

Years ended December 31,    2010    2009
Deferred Tax Assets:

Accrued third party charges, deductible for taxes upon economic performance
(i.e. actual payment)
   $ 6,503       4,853
Provision for doubtful accounts receivable
   1,561       2,301
Excess of financial statement over tax depreciation
   8,079       7,550
Retained liability for cargo claims
   713       1,286
Capital loss
   0       598
Deductible stock compensation expense, net
   5,450       9,870

Total gross deferred tax assets
   22,306       26,458
Deferred Tax Liabilities:

Unremitted foreign earnings, net of related foreign tax credits
   (78,112 )    (71,675)
Foreign currency translation adjustment
   (4,453 )    (331)
Other
   (82 )    (103)

Total gross deferred tax liabilities
   $     (82,647 )    (72,109)

Net deferred tax liabilities
   $ (60,341 )    (45,651)

Current deferred tax assets
   $ (8,706 )    (8,338)

Noncurrent deferred tax liabilities
   $ (69,047 )    (53,989)



Years ended December 31,	2011			2010
Deferred Tax Assets:
Accrued third party charges, deductible for taxes upon economic performance	$	9,220		6,503
Provision for doubtful accounts receivable	1,074			1,561
Excess of financial statement over tax depreciation	8,138			8,079
Deductible stock compensation expense, net	4,651			5,450
Foreign currency translation adjustment	1,625			—
Partnership basis difference	1,043			—
Retained liability for cargo claims	192			713
Total gross deferred tax assets	25,943			22,306
Deferred Tax Liabilities:
Unremitted foreign earnings, net of related foreign tax credits	(76,070		)	(78,112	)
Foreign currency translation adjustment	—			(4,453	)
Other	(71		)	(82	)
Total gross deferred tax liabilities	$	(76,141	)	(82,647	)
Net deferred tax liabilities	$	(50,198	)	(60,341	)
Current deferred tax assets	$	(10,415	)	(8,706	)
Noncurrent deferred tax liabilities	$	(60,613	)	(69,047	)

Based on management’s review of the Company’s tax positions, the Company had no significant unrecognized tax benefits as of December 31, ~~2010~~2011 and ~~2009.~~

2010.

The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various state, local and foreign jurisdictions. The Company is no longer subject to U.S. federal income tax examinations by tax authorities for years prior to ~~2007.~~2008. With respect to state and local jurisdictions and countries outside of the United States, with limited exceptions, the Company and its subsidiaries are no longer subject to income tax audits for years prior to 2001. In the normal course of business, the Company is subject to examination by taxing authorities throughout the world. Although the outcome of tax audits is always uncertain, the Company believes that adequate amounts of tax, interest and penalties have been provided for any adjustments that may result from these open tax years. Any interest and penalties expensed in relation to the underpayment of income taxes were insignificant for the years ended December 31, 2011, 2010 ~~2009~~ and ~~2008.~~

~~| F-21.~~

2009.



NOTE 5.	FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s financial instruments, other than cash, consist primarily of cash equivalents, short-term investments, accounts receivable, accounts payable and accrued expenses. The carrying value of these financial instruments approximates their fair value. Cash equivalents consist of highly liquid investments with a maturity of three months or less at date of purchase. Short term investments have a maturity of greater than three months at date of purchase. Cash, cash equivalents and short-term investments consist of the following:

   December 31, 2010    December 31, 2009
   Cost    Fair Value    Cost    Fair Value
Cash and cash equivalents:

Cash and overnight deposits
   $ 443,716       $ 443,716       $ 387,612       $ 387,612
Corporate commercial paper
   571,260       571,373       489,557       489,626
Time deposits
   69,489       69,489       48,760       48,760

Total cash and cash equivalents
   1,084,465       1,084,578       925,929       925,998

Short-term investments:

Time deposits
   524       524       655       655

Total
   $     1,084,989       $     1,085,102       $     926,584       $     926,653



	December 31, 2011				December 31, 2010
	Cost		Fair Value		Cost		Fair Value
Cash and cash equivalents:
Cash and overnight deposits	$	445,586	$	445,586	$	443,716	$	443,716
Corporate commercial paper	791,729		791,902		571,260		571,373
Time deposits	57,041		57,041		69,489		69,489
Total cash and cash equivalents	1,294,356		1,294,529		1,084,465		1,084,578
Short-term investments:
Time deposits	472		472		524		524
Total	$	1,294,828	$	1,295,001	$	1,084,989	$	1,085,102

The fair value of corporate commercial paper is based on the use of market interest rates for identical or similar assets.



NOTE 6.	CREDIT ARRANGEMENTS

Certain of the Company’s foreign subsidiaries maintain bank lines of credit for short-term working capital purposes. These credit lines are supported by standby letters of credit issued by a United States bank, or guarantees issued by the Company to the foreign banks issuing the credit line. Amounts available for borrowing under lines of credit totaled ~~$21,857~~$15,128 and ~~$25,839~~$21,857 at December 31, ~~2010~~2011 and ~~2009,~~2010, respectively. At December 31, ~~2010,~~2011, the Company had no amounts outstanding under these lines and was contingently liable for approximately ~~$91,495~~$103,813 under outstanding standby letters of credit and guarantees.

At December 31, 2011, the Company was in compliance with all restrictive covenants of these credit lines and the associated credit facilities.

The standby letters of credit and 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

|F-14.

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.

~~At December 31, 2010, the Company was in compliance with all restrictive covenants of these credit lines and the associated credit facilities.~~

~~F-22. |~~



NOTE 7.	COMMITMENTS

A. | Leases

The Company occupies office and warehouse facilities under terms of operating leases expiring up to ~~2020.~~2021. The Company also has two long term operating lease arrangements to use land, for which the usage rights were entirely prepaid in 2009 and 2007. Usage rights for those arrangements are recognized in rent expense over the lease terms up to ~~2057.~~2057. Total rent expense for all operating leases in 2011, 2010 ~~2009~~ and ~~2008~~2009 was ~~$54,024, $52,581~~$58,978, $54,024 and ~~$54,059,~~$52,581, respectively.

At December 31, ~~2010,~~2011, future minimum annual lease payments under all noncancelable leases are as follows:

2011
   $ 39,244
2012
   30,740
2013
   23,282
2014
   15,414
2015
   8,031
Thereafter
   11,443

   $     128,154



2012	$	44,971
2013	31,917
2014	18,436
2015	9,450
2016	6,605
Thereafter	7,206
	$	118,585

B. | Unconditional Purchase Obligations

The Company enters into short-term ~~agreements~~unconditional purchase obligations with asset-based providers reserving space on a guaranteed basis. The pricing of these obligations varies to some degree with market conditions. The Company only enters into agreements that management believes the Company can fulfill with relative ease. Historically, the Company has ~~not paid for guaranteed space that it has not used.~~met these obligations in the normal course of business. Management believes, in line with historical experience, committed purchase obligations outstanding as of December 31, ~~2010~~2011 of ~~$180,202,~~$377,345, will be fulfilled during ~~2011~~2012 in the Company’s ordinary course of business.

C. | Employee Benefits

The Company has employee savings plans under which the Company provides a discretionary matching contribution. In 2011, 2010 ~~2009~~ and ~~2008,~~2009, the Company’s contributions under the plans were ~~$6,127, $6,100,~~$6,312, $6,127, and ~~$6,196,~~$6,100, respectively.



NOTE 8.	CONTINGENCIES

On October 10, 2007, the U. S. Department of Justice (DOJ) issued a subpoena ordering the Company to produce certain information and records relating to an investigation of alleged anti-competitive behavior amongst air cargo freight forwarders. ~~The Company has retained the services of a law firm to assist in complying with the DOJ’s subpoena.~~ As part of this process, the Company has met with and continues to co-operate with the DOJ. The Company ~~expects to~~may incur additional costs during the course of this ongoing investigation, which could include fines and/or penalties if the DOJ concludes that the Company has engaged in anti-competitive behavior and such fines and/or penalties could have a material impact on the ~~Company’s financial position,~~Company's results of operations and operating cash ~~flows.~~

flows for any particular quarter or year. At this time the Company is unable to estimate the range of reasonably possible fines and/or penalties, if any, that might result from this investigation.

On January 3, 2008, the Company was named as a defendant, with seven other European and North American-based global logistics providers, in a Federal antitrust class action lawsuit filed in the United States District Court of the Eastern District of New York, Precision Associates, Inc. et al v. Panalpina World Transport,

~~| F-23.~~

No. 08-CV0042. On July 21, 2009, the plaintiffs filed an amended complaint adding a number of new third party defendants and various claims which they assert to violate the Sherman Act. The ~~plaintiffs’~~plaintiffs' amended complaint, which purports to be brought on behalf of a class of customers (and has not yet been certified), asserts claims that the defendants engaged in price fixing regarding eight discrete surcharges in violation of the Sherman Act. The allegations concerning the Company relate to two of these surcharges. The amended complaint seeks unspecified damages and injunctive relief. The Company believes that these allegations are without merit and intends to vigorously defend ~~itself.~~itself against these allegations. On August 13, 2009, the Company filed a motion to dismiss the amended complaint for failure to state a ~~claim, which is currently pending before the Court.~~claim. Plaintiffs filed their opposition to the ~~Company’s~~Company's motion on January 30, ~~2010~~2010. On January 4, 2011, the Magistrate Judge issued a Report and Recommendation to dismiss the ~~motion~~claims against the Company and others, but allowed the plaintiffs' the opportunity to further amend the complaint. The Report and Recommendation is ~~currently~~now pending before the ~~Court.~~

Court for resolution. On February 28, 2012, the Company entered into an agreement, which is subject to preliminary approval by the Court, notice to the putative class and final approval, with the plaintiffs individually and on behalf of a class of direct purchasers of freight forwarding services, to resolve this lawsuit. The Company has not made, and continues to make no admission of liability by entering into this agreement. The agreement, if approved by the Court, will dismiss all allegations that the Company violated the Sherman Act. Under the terms of the agreement, the Company will be dismissed from this lawsuit. In exchange for being dismissed from this lawsuit, the Company has agreed to assign to the plaintiffs 70% of the proceeds (Air Cargo proceeds) it may receive as one of the members in a separate class action litigation brought against many of the largest international air cargo carriers. The agreement provides for no other sources of consideration from the Company. Based on the terms of the agreement, and the Company's previously publicly-expressed intent not to profit and thereby effectively distribute any Air Cargo proceeds it may receive, management does not expect there to be any material impact on the Company's consolidated financial statements. Management believes that the amounts assigned to the plaintiffs and the class it seeks to represent, which includes the Company's customers, net of attorneys' fees and other administrative costs allowed by the Court, will be allocated by the Court to members of this class action lawsuit in an equitable manner consistent with their participation in the international airfreight markets over the relevant time periods.

|F-15.

On June 18, 2008, the European Commission (EC) issued a request for information to the ~~Company’s~~Company's UK subsidiary, Expeditors International (UK) Ltd., requesting certain information relating to an ongoing investigation of freight forwarders. The Company replied to the request. On February 18, 2009, the EC issued another request for information to the same subsidiary requesting certain additional information in connection with the ~~EC’s~~EC's ongoing investigation of freight forwarders. The Company replied to the request. On February 10, 2010, the Company and its Hong Kong subsidiary, Expeditors Hong Kong Limited, received a Statement of Objections (SO) from the EC. The SO initiates a proceeding against the Company alleging anti-competitive behavior contrary to European Union rules on competition. Specific to the Company, the allegations in the SO are limited to the period from August 2005 to June 2006 and only concern airfreight trade lanes between South China/Hong Kong and the European Economic Area. The Company filed a response to the allegations in the SO on April 12, 2010 and participated in an oral hearing on July 6, 2010. On January 20, 2011, the EC issued another request for information to the Company and its Hong Kong subsidiary requesting certain additional information in connection with its on-going investigation of freight forwarders. The Company replied to the request. On October 25, 2011, the Company and its Hong Kong subsidiary received a standard letter from the EC regarding its ongoing investigation of freight forwarders. The letter (i) invited comment on the EC's January 20, 2011 request for information and (ii) indicated potential revenue data it may take into account for the calculation of any fine it may impose. The Company ~~continues~~replied to ~~vigorously defend itself~~the letter. On February 24, 2012, the Company received notice from the EC that it plans to hold additional meetings, known as State of Play meetings, related to its on-going investigation of freight forwarders on or about March 15, 2012. The Company expects to participate in the meetings to continue its vigorous defense against the allegations. The Company expects to incur ~~additional~~ongoing attorneys' fees and other defense costs during the course of this ongoing ~~proceeding, which could include administrative~~proceeding. Administrative fines, if the EC concludes that the Company has engaged in anti-competitive behavior, ~~and such fines~~ could have a material impact on the ~~Company’s financial position,~~Company's results of operations and operating cash ~~flows.~~

flows for any particular quarter or year. The Company continues to vigorously defend itself against the allegations, and at this time, the Company has no way of predicting the ultimate outcome of this proceeding. Further, the Company is unable to estimate the range of a reasonably possible fine, if any, that might result from this proceeding.

On August 17, 2010, the Company and its Brazilian subsidiary, Expeditors Internacional do Brasil Ltda received an Administrative Proceeding (AP) from the Brazilian Ministry of Justice (MOJ). The AP initiates a proceeding against the Company and one of its employees, alleging possible anti-competitive behavior. The Company intends to vigorously defend itself against the allegations. The Company expects to incur additional costs during the course of this proceeding, which could include administrative fines if the MOJ concludes that the Company has engaged in anti-competitive ~~behavior~~behavior. Based on recent changes in Brazilian anti-competition laws that reduce the maximum amount of fines that can be assessed, and further investigation of this matter, management believes that such fines, ~~could~~if any, will not have a material impact on the ~~Company’s financial position,~~Company's results of operations and operating cash ~~flows.~~

~~The~~flows for any particular quarter or year.

No amounts have been accrued for any of the contingencies described above. Legal and associated costs incurred by the Company ~~has incurred approximately $1 million, less than $1 million and $10 million~~on the above matters were not significant for the years ended December 31, 2011, 2010 and 2009, and 2008, respectively, in legal and associated costs on the above matters. Since the beginning of the proceedings in 2007, the Company has incurred approximately $15 million in legal and associated costs on the above matters. At this time the Company is unable to estimate the range of loss or damages, if any, that might result as an outcome of any of these proceedings.respectively. These government investigations and the related litigation matters are subject to inherent uncertainties, and unfavorable rulings could occur. An unfavorable ruling could include substantial monetary damages and, in matters in which injunctive relief or other conduct remedies are sought, an injunction or other order relating to business conduct. Were unfavorable final outcomes to occur, the ~~Company’s business, financial position,~~Company's results of operations and operating cash flows for the particular quarter or year could be materially harmed.

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

~~F-24.~~

F-16.

~~[THIS PAGE INTENTIONALLY LEFT BLANK]~~

~~| F-25.~~



NOTE 9.	BUSINESS SEGMENT INFORMATION

Financial information regarding 2011, 2010 ~~2009~~ and ~~2008~~2009 operations by the Company’s designated geographic areas are as follows:

   United States      Other
North
America
2010

Revenues from unaffiliated customers
   $     1,348,259         163,750
Transfers between geographic areas
   99,547         10,836

Total revenues
   $ 1,447,806         174,586

Net revenues
   $ 666,669         77,079
Operating income
   $ 198,393         23,521
Identifiable assets at year end
   $ 1,343,098         95,298
Capital expenditures
   $ 18,128         574
Depreciation and amortization
   $ 20,125         1,344
Equity
   $ 1,089,053         46,601

2009

Revenues from unaffiliated customers
   $ 982,103         129,272
Transfers between geographic areas
   75,964         7,344

Total revenues
   $ 1,058,067         136,616

Net revenues
   $ 547,879         65,331
Operating income
   $ 117,908         20,253
Identifiable assets at year end
   $ 1,188,111         82,166
Capital expenditures
   $ 24,908         724
Depreciation and amortization
   $ 21,010         1,391
Equity
   $ 965,620         40,421

2008

Revenues from unaffiliated customers
   $ 1,269,858         162,730
Transfers between geographic areas
   108,864         10,205

Total revenues
   $ 1,378,722         172,935

Net revenues
   $ 622,367         75,376
Operating income
   $ 119,115         20,094
Identifiable assets at year end
   $ 978,189         64,652
Capital expenditures
   $ 25,640         2,149
Depreciation and amortization
   $ 21,558         1,347
Equity
   $ 773,565         32,530

~~F-26.~~



	United States		Other North America
2011
Revenues from unaffiliated customers	$	1,540,477	189,843
Transfers between geographic areas	101,738		11,095
Total revenues	$	1,642,215	200,938
Net revenues	$	732,299	90,432
Operating income	$	210,702	29,209
Identifiable assets at year end	$	1,521,657	86,020
Capital expenditures	$	23,219	1,122
Depreciation and amortization	$	20,037	1,038
Equity	$	1,285,812	49,571
2010
Revenues from unaffiliated customers	$	1,348,259	163,750
Transfers between geographic areas	99,547		10,836
Total revenues	$	1,447,806	174,586
Net revenues	$	666,669	77,079
Operating income	$	198,393	23,521
Identifiable assets at year end	$	1,343,098	95,298
Capital expenditures	$	18,128	574
Depreciation and amortization	$	20,125	1,344
Equity	$	1,089,053	46,601
2009
Revenues from unaffiliated customers	$	982,103	129,272
Transfers between geographic areas	75,964		7,344
Total revenues	$	1,058,067	136,616
Net revenues	$	547,879	65,331
Operating income	$	117,908	20,253
Identifiable assets at year end	$	1,188,111	82,166
Capital expenditures	$	24,908	724
Depreciation and amortization	$	21,010	1,391
Equity	$	965,620	40,421

F-17.

     Latin
America      Asia Pacific      Europe and
Africa      Middle
East and
India      Eliminations    Consolidated
2010

Revenues from unaffiliated customers
     74,327         3,349,960         729,022         302,255         —       5,967,573
Transfers between geographic areas
     16,932         32,837         40,778         16,184         (217,114 )    —

Total revenues
     91,259         3,382,797         769,800         318,439         (217,114 )    5,967,573

Net revenues
     50,937         543,869         264,663         89,569         —       1,692,786
Operating income
     15,985         222,944         63,115         23,272         —       547,230
Identifiable assets at year end
     51,326         612,085         432,019         144,043         1,310       2,679,179
Capital expenditures
     1,320         5,743         14,383         2,260         —       42,408
Depreciation and amortization
     880         7,511         4,661         2,379         —       36,900
Equity
     27,462         371,610         160,428         84,456         (31,456 )    1,748,154

2009

Revenues from unaffiliated customers
     64,060         2,101,323         582,759         232,766         —       4,092,283
Transfers between geographic areas
     13,520         26,771         27,699         14,602         (165,900 )    —

Total revenues
     77,580         2,128,094         610,458         247,368         (165,900 )    4,092,283

Net revenues
     44,182         413,627         229,432         82,335         —       1,382,786
Operating income
     12,538         167,299         43,953         23,050         —       385,001
Identifiable assets at year end
     42,478         493,338         387,494         128,690         1,445       2,323,722
Capital expenditures
     688         2,772         3,407         2,201         —       34,700
Depreciation and amortization
     1,087         8,106         5,968         2,473         —       40,035
Equity
     17,809         341,991         148,592         77,566         (30,652 )    1,561,347

2008

Revenues from unaffiliated customers
     81,586         3,056,168         789,442         274,094         —       5,633,878
Transfers between geographic areas
     15,742         30,044         44,721         17,598         (227,174 )    —

Total revenues
     97,328         3,086,212         834,163         291,692         (227,174 )    5,633,878

Net revenues
     52,334         486,243         280,229         86,712         —       1,603,261
Operating income
     15,059         229,917         63,156         25,795         —       473,136
Identifiable assets at year end
     44,377         500,183         392,820         116,167         4,451       2,100,839
Capital expenditures
     1,158         20,869         7,074         2,836         —       59,726
Depreciation and amortization
     1,177         7,177         6,470         2,274         —       40,003
Equity
     26,030         376,448         138,710         60,504         (23,871 )    1,383,916

~~| F-27.~~

In 2010, the Company changed its geographical area organization by incorporating the management of its Australasia region with its Asia region. Accordingly, the financial information of the Company’s Asia and Australasia segments, previously reported separately, have been combined in the Asia Pacific operating segment for all periods presented.



	Latin America	Asia Pacific	Europe and Africa	Middle East and India	Eliminations		Consolidated
2011
Revenues from unaffiliated customers	82,312	3,144,641	891,185	302,040	—		6,150,498
Transfers between geographic areas	21,222	40,012	43,359	17,897	(235,323	)	—
Total revenues	103,534	3,184,653	934,544	319,937	(235,323	)	6,150,498
Net revenues	59,968	605,151	307,471	101,156	—		1,896,477
Operating income	19,151	258,952	72,248	28,065	—		618,327
Identifiable assets at year end	48,221	667,171	401,518	141,379	861		2,866,827
Capital expenditures	628	25,295	25,856	1,995	—		78,115
Depreciation and amortization	999	7,243	5,414	2,045	—		36,776
Equity	27,346	448,613	145,998	85,605	(32,876	)	2,010,069
2010
Revenues from unaffiliated customers	74,327	3,349,960	729,022	302,255	—		5,967,573
Transfers between geographic areas	16,932	32,837	40,778	16,184	(217,114	)	—
Total revenues	91,259	3,382,797	769,800	318,439	(217,114	)	5,967,573
Net revenues	50,937	543,869	264,663	89,569	—		1,692,786
Operating income	15,985	222,944	63,115	23,272	—		547,230
Identifiable assets at year end	51,326	612,085	432,019	144,043	1,310		2,679,179
Capital expenditures	1,320	5,743	14,383	2,260	—		42,408
Depreciation and amortization	880	7,511	4,661	2,379	—		36,900
Equity	27,462	371,610	160,428	84,456	(31,456	)	1,748,154
2009
Revenues from unaffiliated customers	64,060	2,101,323	582,759	232,766	—		4,092,283
Transfers between geographic areas	13,520	26,771	27,699	14,602	(165,900	)	—
Total revenues	77,580	2,128,094	610,458	247,368	(165,900	)	4,092,283
Net revenues	44,182	413,627	229,432	82,335	—		1,382,786
Operating income	12,538	167,299	43,953	23,050	—		385,001
Identifiable assets at year end	42,478	493,338	387,494	128,690	1,445		2,323,722
Capital expenditures	688	2,772	3,407	2,201	—		34,700
Depreciation and amortization	1,087	8,106	5,968	2,473	—		40,035
Equity	17,809	341,991	148,592	77,566	(30,652	)	1,561,347

Other than the United States, only the People’s Republic of China, including Hong Kong, represented more than 10% of the Company’s total revenue, net revenue, or total identifiable assets or equity in any period presented as noted in the table below.

   2010 2009 2008
Total revenues
   37 % 34 % 36 %
Net revenues
   19 % 17 % 16 %
Identifiable assets at year end
   13 % 13 % 14 %



	2011		2010		2009
Total revenues	34	%	37	%	34	%
Net revenues	19	%	19	%	17	%
Identifiable assets at year end	14	%	13	%	13	%
Equity	13	%	10	%	10	%

|F-18.



NOTE 10.	QUARTERLY RESULTS (UNAUDITED)

   1st    2nd    3rd    4th
2010

Revenues
   $     1,201,109       1,516,770       1,667,559       1,582,135
Net revenues
   361,823       418,858       458,743       453,362
Net earnings
   61,310       90,409       96,038       96,448
Net earnings attributable to shareholders
   61,247       90,318       96,105       96,502
Diluted earnings attributable to shareholders per share
   .28       .42       .44       .45
Basic earnings attributable to shareholder per share
   .29       .43       .45       .45
2009

Revenues
   $ 912,685       895,360       1,037,327       1,246,911
Net revenues
   336,515       330,047       346,512       369,712
Net earnings
   59,369       53,814       57,564       69,650
Net earnings attributable to shareholders
   59,260       54,070       57,752       69,135
Diluted earnings attributable to shareholder per share
   .27       .25       .27       .32
Basic earnings attributable to shareholder per share
   .28       .25       .27       .33



	1st		2nd	3rd	4th
2011
Revenues	$	1,460,848	1,581,368	1,606,368	1,501,914
Net revenues	453,915		472,561	493,846	476,155
Net earnings	91,207		95,020	106,876	93,140
Net earnings attributable to shareholders	91,232		95,000	106,604	92,843
Diluted earnings attributable to shareholders per share	.42		.44	.50	.43
Basic earnings attributable to shareholders per share	.43		.45	.50	.44
2010
Revenues	$	1,201,109	1,516,770	1,667,559	1,582,135
Net revenues	361,823		418,858	458,743	453,362
Net earnings	61,310		90,409	96,038	96,448
Net earnings attributable to shareholders	61,247		90,318	96,105	96,502
Diluted earnings attributable to shareholders per share	.28		.42	.44	.45
Basic earnings attributable to shareholders per share	.29		.43	.45	.45

Net revenues are determined by deducting transportation expenses from total revenues. The sum of quarterly per share data may not equal the per share total reported for the year.

~~F-28.~~

F-19.

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.

ANNUAL REPORT

FORM 10-K

FOR FISCAL YEAR ENDED

~~DECEMBER~~

December 31, ~~2010~~

2011

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

EXHIBITS

~~INDEX TO EXHIBITS FILED HEREWITH~~



Exhibit Number		Description

21.1		Subsidiaries of the Registrant.

23.1		Consent of Independent Registered Public Accounting Firm.

31.1		Certification of Chief Executive Officer ~~Pursuant~~pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer ~~Pursuant~~pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32		Certification ~~Pursuant~~pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Instance ~~Document.~~Document

101.SCH		XBRL Taxonomy Extension Schema ~~Document.~~Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase ~~Document.~~Document

101.LAB		XBRL Taxonomy Extension Label Linkbase ~~Document.~~Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase ~~Document.~~Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase ~~Document.~~Document



Washington		91-1069248
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
		~~(I.R.S. Employer~~ ~~Identification Number)~~

1015 Third Avenue, 12^thFloor, Seattle, Washington		98104
(Address of principal executive offices)		(Zip Code)



Title of each class		Name of each exchange on which registered
Common Stock, par value $.01 per share		NASDAQ Global Select Market


~~Large accelerated filer~~ x		Large accelerated filer ýAccelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ¨
~~Non-accelerated filer~~ ¨ ~~(Do not check if a smaller reporting company)~~		~~Smaller reporting company~~ ¨



UNITED STATES AND OTHER NORTH AMERICA
UNITED STATES	• Dallas (5/92)	• Milwaukee (7/00)	• Calgary (9/04)
~~UNITED STATES~~ • Seattle (5/79)	• Columbus (6/92)	• Kansas City (8/00)
• Chicago (7/81)	• Charlotte (7/92)	• Washington, D.C. (9/00)	MEXICO
• San Francisco (7/81)	• Newark (9/94)	• Nashville (10/01)	• Mexico City (6/95)
• New York (11/81)	• Philadelphia (3/95)	+ Huntsville (12/02)	• Nuevo Laredo (4/97)
• Los Angeles (5/82)	• Charleston (6/95)	• Austin (2/03)	• Guadalajara (9/97)
• Atlanta (8/83)	• Memphis (8/95)	• Orlando (8/03)	+ Veracruz (9/97)
• Boston (11/85) ~~• Miami (3/86)~~ ~~• Minneapolis (7/86)~~ ~~• Denver (2/88)~~	~~• Baltimore (4/92)~~ ~~• Dallas (5/92)~~ ~~• Columbus (6/92)~~ ~~• Charlotte (7/92)~~ ~~• Newark (9/94)~~ ~~• Philadelphia (3/95)~~ ~~• Charleston (6/95)~~ ~~• Memphis (8/95)~~ • Salt Lake City (11/95)	• Tampa (9/03)	+ Manzanillo (1/99)
• Miami (3/86)	• Norfolk (9/96)	• New Orleans (9/04)	• Nogales (1/99)
• Minneapolis (7/86)	• Indianapolis (11/96)	~~• McAllen (4/98)~~ ~~• Pittsburgh (6/99)~~ ~~• Savannah (3/00)~~ ~~• Milwaukee~~+ Omaha (7/~~00)~~ ~~• Kansas City (8/00)~~ ~~• Washington, D.C. (9/00)~~ ~~• Nashville (10/01)~~ ~~+ Huntsville (12/02)~~ ~~• Austin (2/03)~~ ~~• Orlando (8/03)~~ ~~• Tampa (9/03)~~ 06)	~~• Vancouver (9/95)~~ ~~+ Windsor (6/98)~~ ~~• Montreal (4/99)~~ ~~• Calgary (9/04)~~ ~~MEXICO~~ ~~• Mexico City (6/95)~~ ~~• Nuevo Laredo (4/97)~~ ~~• Guadalajara (9/97)~~ ~~• Nogales (1/99)~~ • Ciudad Juarez (5/00)
• Denver (2/88)	+ Port Huron-Blue Water Bridge (12/96)	+ Calexico (6/06)	• Monterrey (1/05)
• Detroit (7/88)	• Buffalo (1/97)	+ Knoxville (5/07)	+ Reynosa (6/06)
• Portland (7/88)	• El Paso (1/97)	• Raleigh Durham (1/08)	+ Querétaro (9/06)
• Cincinnati (8/89)	• Laredo (2/97)	• Tulsa (1/09)	+ Lázaro Cárdenas (7/08)
• Cleveland (7/90)	• Nogales (2/97)
• Phoenix (7/91)	• San Diego (7/97)	CANADA	PUERTO RICO
• Louisville (10/91)	+ Rochester (10/97)	• Toronto (5/84)	• San Juan (5/95)
• St. Louis (4/92)	• McAllen (4/98)	• Vancouver (9/95)
• Houston (4/92)	• Pittsburgh (6/99)	+ Windsor (6/98)
• Baltimore (4/92)
• Savannah (3/00)




• Montreal (4/99)



~~UNITED STATES AND OTHER NORTH~~LATIN AMERICA

~~• Detroit (7/88)~~ ~~• Portland (7/88)~~ ~~• Cincinnati (8/89)~~ ~~• Cleveland (7/90)~~ ~~• Phoenix (7/91)~~ ~~• Louisville (10/91)~~ ~~• St. Louis (4/92)~~ ~~• Houston (4/92)~~ ARGENTINA		~~+ Port Huron-Blue Water Bridge (12/96)~~ ~~+ Detroit-Ambassador Bridge (12/96)~~ • ~~Buffalo-Peace Bridge (1/97)~~ ~~• El Paso (1/97)~~ ~~• Laredo (2/97)~~ ~~• Nogales (2/97)~~ ~~• San Diego~~Manaus (7/~~97)~~ ~~+ Rochester (10/97)~~ 00)		~~• New Orleans (9/04)~~ ~~+ Omaha (7/06)~~ ~~+ Calexico (6/06)~~ ~~+ Knoxville (5/07)~~ ~~• Raleigh Durham (1/08)~~ ~~+ Tulsa (1/09)~~ ~~CANADA~~ ~~• Toronto (5/84)~~ COLOMBIA		GUATEMALA
	• ~~Reynosa (6/06)~~ ~~+ Querétaro (9/06)~~ ~~+ Lázaro Cárdenas (7/08)~~ ~~PUERTO RICO~~ Buenos Aires (1/98)		• ~~San Juan (5/95)~~ Porto Alegre (1/05)		• Bogota (12/98)		• Guatemala City (1/07)
			• Curitiba (10/10)
		+ Cali (12/98)
	BRAZIL		+ Belo Horizonte (10/10)		+ Medellin (7/00)		PERU
	• Sao Paulo (9/95)						• Lima (12/05)
	• Rio de Janeiro (9/95)		CHILE		COSTA RICA
	• Campinas (9/95)		• Santiago (2/95)		• San Jose (10/03)
+ Santos (10/97)



~~LATIN AMERICA~~

~~ARGENTINA~~ ~~• Buenos Aires (1/98)~~ ~~BRAZIL~~ ~~• Sao Paulo (9/95)~~ ~~• Rio de Janeiro (9/95)~~ ~~• Campinas (9/95)~~ ~~+ Santos (10/97)~~ ~~• Manaus (7/00)~~ ~~• Porto Alegre (1/05)~~		~~• Curitiba (10/10)~~ ~~+ Belo Horizonte (10/10)~~ ~~CHILE~~ ~~• Santiago (2/95)~~ ~~COLOMBIA~~ ~~• Bogota (12/98)~~ ~~+ Cali (12/98)~~ ~~+ Medellin (7/00)~~		~~COSTA RICA~~ ~~• San Jose (10/03)~~ ~~GUATEMALA~~ ~~• Guatemala City (1/07)~~ ~~PERU~~ ~~• Lima (12/05)~~









~~ASIA PACIFIC~~

~~AUSTRALIA~~ ~~• Sydney (8/88)~~ ~~• Melbourne (8/88)~~ ~~• Brisbane (10/93)~~ ~~• Perth (12/94)~~ ~~• Adelaide (10/97)~~ ~~BANGLADESH~~ ~~• Dhaka (6/89)~~ ~~+ Chittagong (8/93)~~ ~~CAMBODIA~~ ~~• Phnom Penh (4/00)~~ ~~PEOPLE’S REPUBLIC OF CHINA~~ ~~• Guangzhou (4/94)~~ ~~• Beijing (7/94)~~ ~~• Dalian (7/94)~~ ~~• Shanghai (7/94)~~ ~~• Shenzhen (7/94)~~ ~~• Qingdao (7/94)~~ ~~• Tianjin (7/94)~~ ~~• Xi’an (7/94)~~ ~~• Xiamen (7/94)~~ ~~+ Chengdu (9/00)~~ ~~• Ningbo (7/01)~~		~~• Suzhou (9/01)~~ ~~• Zhongshan (9/01)~~ ~~• Hangzhou (10/01)~~ ~~+ Kunshan (12/01)~~ ~~• Fuzhou (6/02)~~ ~~• Yantai (11/02)~~ ~~+ Shenyang (12/02)~~ ~~• Wuhan (1/03)~~ ~~+ Huizhou (12/03)~~ ~~+ Zhuhai (12/03)~~ ~~+ Foshan (1/04)~~ ~~• Chongqing (7/04)~~ ~~• Dongguan (2/05)~~ ~~• Nanjing (3/05)~~ ~~+ Macau (5/05)~~ ~~+ Shantou (12/06)~~ ~~+ Changzhou (10/07)~~ ~~FIJI~~ * Nadi (7/96) * Suva (5/97) ~~HONG KONG~~ ~~• Kowloon (6/81)~~		~~INDONESIA~~ ~~• Jakarta (12/90)~~ ~~• Surabaya (2/92)~~ ~~+ Batam (3/07)~~ ~~JAPAN~~ ~~• Tokyo (1/01)~~ ~~• Osaka (1/01)~~ ~~+ Nagoya (8/03)~~ ~~MALAYSIA~~ ~~• Penang (11/87)~~ ~~• Kuala Lumpur (6/90)~~ ~~• Johor Bahru (11/94)~~ ~~NEW ZEALAND~~ ~~• Auckland (8/88)~~ ~~+ Christchurch (10/07)~~ ~~PHILIPPINES~~ ~~• Manila (8/98)~~ ~~+ Olongapo City (8/98)~~ ~~+ Cebu City (9/99)~~ ~~SINGAPORE~~ ~~• Singapore (9/81)~~ ~~SRI LANKA~~ ~~• Colombo (3/95)~~		~~SOUTH KOREA~~ ~~• Seoul (10/94)~~ ~~+ Pusan (10/94)~~ ~~+ Chonan (6/96)~~ ~~+ Kwangju (6/96)~~ ~~+ Masan (6/96)~~ ~~+ Taegu (6/96)~~ ~~TAIWAN~~ ~~• Taipei (7/81)~~ ~~+ Kaohsiung (9/81)~~ ~~+ Taichung (9/81)~~ ~~+ Hsin-Chu (9/89)~~ ~~THAILAND~~ ~~• Bangkok (9/94)~~ ~~+ Laem Chabang (8/05)~~ ~~VIETNAM~~ ~~• Ho Chi Minh City (5/00)~~ ~~• Hanoi (3/04)~~ ~~+ Da Nang (9/05)~~

x

Q	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

¨

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



~~EUROPE AND AFRICA~~ASIA PACIFIC

~~AUSTRIA~~ ~~• Vienna (11/95)~~ ~~BELGIUM~~ ~~• Brussels (7/90)~~ ~~+Antwerp(4/91)~~ ~~THE CZECH REPUBLIC~~ ~~• Prague (6/98)~~ ~~FINLAND~~ ~~• Helsinki (4/94)~~ ~~FRANCE~~ ~~• Paris (1/97)~~ ~~• Mulhouse (1/97)~~ ~~• Lyon (1/97)~~ ~~• Lille (3/97)~~ ~~• Bordeaux (7/00)~~ ~~GERMANY~~ ~~• Frankfurt (4/92)~~ ~~• Munich (4/92)~~ ~~• Dusseldorf (4/92)~~ AUSTRALIA		• ~~Stuttgart (4/92)~~ ~~• Hamburg (1/93)~~ ~~• Nuremberg (1/~~Suzhou (9/01) ~~+ Hannover (1/05)~~ ~~HUNGARY~~ ~~• Budapest (4/00)~~ ~~IRELAND~~ ~~• Dublin (3/97)~~ ~~• Cork (3/97)~~ ~~• Shannon (3/97)~~ ~~ITALY~~ ~~• Milan (4/93)~~ ~~• Verona (4/93)~~ ~~• Florence (3/98)~~ ~~+ Turin (4/05)~~ ~~+ Rome (1/10)~~ ~~THE NETHERLANDS~~ ~~• Amsterdam (6/94)~~ ~~• Rotterdam (3/95)~~		~~+ Maastricht (9/07)~~ ~~NORWAY~~ ~~• Oslo (6/10)~~ ~~POLAND~~ ~~• Warsaw (2/05)~~ ~~+ Krakow (8/07)~~ ~~PORTUGAL~~ ~~• Lisbon (10/91)~~ ~~• Oporto (10/91)~~ ~~ROMANIA~~ ~~• Bucharest (9/08)~~ ~~SPAIN~~ ~~• Barcelona (1/94)~~ ~~• Madrid (1/94)~~ ~~• Alicante (4/96)~~ ~~SWEDEN~~ ~~• Stockholm (1/94)~~ ~~• Goteborg (1/94)~~ ~~+ Malmoe (3/05)~~ JAPAN		~~SWITZERLAND~~ ~~• Chiasso (2/01)~~ ~~• Zurich (10/05)~~ ~~UNITED KINGDOM~~ ~~• London (4/86)~~ ~~• Manchester (11/88)~~ ~~• Birmingham (3/90)~~ ~~• Glasgow (4/92)~~ ~~• Bristol (3/97)~~ ~~• East Midlands (1/99)~~ ~~+ Hull (1/00)~~ ~~• Belfast (9/01)~~ ~~• Aberdeen (9/05)~~ SOUTH ~~AFRICA~~ ~~• Johannesburg (3/94)~~ ~~• Durban (3/94)~~ ~~• Capetown (1/97)~~ ~~MADAGASCAR~~ ~~• Antananarivo (11/01)~~ KOREA
	• Sydney (8/88)		• Zhongshan (9/01)		• Tokyo (1/01)		• Seoul (10/94)
	• Melbourne (8/88)		• Hangzhou (10/01)		• Osaka (1/01)		• Pusan (10/94)
	• Brisbane (10/93)		+ Kunshan (12/01)		+ Nagoya (8/03)		+ Chonan (6/96)
	• Perth (12/94)		• Fuzhou (6/02)				+ Kwangju (6/96)
	• Adelaide (10/97)		• Yantai (11/02)		MALAYSIA		+ Masan (6/96)
			+ Shenyang (12/02)		• Penang (11/87)		+ Taegu (6/96)
	BANGLADESH		• Wuhan (1/03)		• Kuala Lumpur (6/90)
	• Dhaka (6/89)		+ Huizhou (12/03)		• Johor Bahru (11/94)		TAIWAN
	+ Chittagong (8/93)		+ Zhuhai (12/03)				• Taipei (7/81)
			+ Foshan (1/04)		NEW ZEALAND		+ Kaohsiung (9/81)
	CAMBODIA		• Chongqing (7/04)		• Auckland (8/88)		+ Taichung (9/81)
	• Phnom Penh (4/00)		• Dongguan (2/05)		+ Christchurch (10/07)		+ Hsin-Chu (9/89)
			• Nanjing (3/05)
	PEOPLE’S REPUBLIC OF CHINA		+ Macau (5/05)		PHILIPPINES		THAILAND
	• Guangzhou (4/94)		+ Shantou (12/06)		• Manila (8/98)		• Bangkok (9/94)
	• Beijing (7/94)		+ Changzhou (10/07)		+ Olongapo City (8/98)		+ Laem Chabang (8/05)
	• Dalian (7/94)				+ Cebu City (9/99)
	• Shanghai (7/94)		HONG KONG				VIETNAM
• Shenzhen (7/94)		• Kowloon (6/81)		SINGAPORE		• Ho Chi Minh City (5/00)
• Qingdao (7/94)				• Singapore (9/81)		• Hanoi (3/04)
• Tianjin (7/94)		INDONESIA				+ Da Nang (9/05)
• Xi’an (7/94)		• Jakarta (12/90)		SRI LANKA
• Xiamen (7/94)		• Surabaya (2/92)		• Colombo (3/95)
• Chengdu (9/00)		+ Batam (3/07)
• Ningbo (7/01)



~~MIDDLE EAST~~EUROPE AND ~~INDIA~~AFRICA

~~BAHRAIN~~ ~~• Manama (1/08)~~ ~~EGYPT~~ ~~• Cairo (2/95)~~ ~~+ Alexandria (2/95)~~ ~~GREECE~~ ~~• Athens (2/99)~~ ~~+ Thessaloniki (2/99)~~ ~~INDIA~~ ~~• New Delhi (7/96)~~ ~~• Mumbai (Bombay) (1/97)~~ ~~• Bangalore (6/97)~~ ~~• Chennai (Madras) (6/97)~~ ~~+ Jaipur (6/99)~~ ~~+ Cochin (4/01)~~ ~~+ Hyderabad (9/01)~~ AUSTRIA		~~+ Tuticorin (11/03)~~ ~~+ Ahmedabad~~• Hamburg (1/~~05)~~ ~~+ Tiruppur (3/05)~~ ~~+ Ludhiana (6/05)~~ ~~+ Pune (10/06)~~ ~~+ Kolkata (1/08)~~ ~~+ Coimbatore (1/08)~~ ~~+ Mundra (4/08)~~ ~~JORDAN~~ ~~• Amman (9/07)~~ ~~KUWAIT~~ ~~# Kuwait City (7/97)~~ ~~LEBANON~~ ~~• Beirut (8/99)~~ ~~OMAN~~ ~~• Muscat (4/09)~~ 93)		~~PAKISTAN~~ ~~• Karachi (9/96)~~ ~~• Lahore (9/96)~~ ~~+ Sialkot (6/03)~~ ~~+ Faisalabad (5/06)~~ ~~+ Islamabad (10/06)~~ ~~QATAR~~ ~~• Doha (1/07)~~ ~~SAUDI ARABIA~~ ~~# Riyadh (7/92)~~ ~~# Jeddah (7/92)~~ ~~# Dammam (6/05)~~ NORWAY		~~TURKEY~~ SWITZERLAND
	• ~~Ankara~~Vienna (11/95)		• Nuremberg (1/~~99)~~ 01)		•��Oslo (6/10)		• ~~Istanbul~~Chiasso (2/01)
			+ Hannover (1/~~99)~~ 05)		+ Kristiansand (1/11)		• ~~Izmir~~Zurich (10/05)
	BELGIUM		+ Bad Mergentheim (6/05)
	• Brussels (7/90)				POLAND		UNITED KINGDOM
	+ Antwerp(4/91)		HUNGARY		• Warsaw (2/05)		• London (4/86)
			• Budapest (4/00)		+ Krakow (8/07)		• Manchester (11/88)
	THE CZECH REPUBLIC						• Birmingham (3/90)
	• Prague (6/98)		IRELAND		PORTUGAL		• Glasgow (4/92)
			• Dublin (3/97)		• Lisbon (10/91)		• Bristol (3/97)
	FINLAND		• Cork (3/97)		• Oporto (10/91)		• East Midlands (1/99)
	• ~~Mersin~~Helsinki (4/94)		• Shannon (3/97)				+ Hull (1/~~99)~~ ~~+ Adana (1/99)~~ ~~U.A.E.~~ ~~• Abu Dhabi (1/94)~~ ~~• Dubai (10/98)~~ 00)
					ROMANIA		• Belfast (9/01)
	FRANCE		ITALY		• Bucharest (9/08)		• Aberdeen (9/05)
	• Paris (1/97)		• Milan (4/93)
	• Mulhouse (1/97)		• Verona (4/93)		SPAIN		SOUTH AFRICA
• Lyon (1/97)		• Florence (3/98)		• Barcelona (1/94)		• Johannesburg (3/94)
• Lille (3/97)		+ Turin (4/05)		• Madrid (1/94)		• Durban (3/94)
• Bordeaux (7/00)		+ Rome (1/10)		• Alicante (4/96)		• Capetown (1/97)


GERMANY		THE NETHERLANDS		SWEDEN		MADAGASCAR
• Frankfurt (4/92)		• Amsterdam (6/94)		• Stockholm (1/94)		• Antananarivo (11/01)
• Munich (4/92)		• Rotterdam (3/95)		• Goteborg (1/94)
• Dusseldorf (4/92)		+ Maastricht (9/07)
• Stuttgart (4/92)



MIDDLE EAST AND INDIA
BAHRAIN	+ Cochin (4/01)	LEBANON		SAUDI ARABIA
• Manama (1/08)	+ Hyderabad (9/01)	• Beirut (8/99)		# Riyadh (7/92)
	+ Tuticorin (11/03)			# Jeddah (7/92)
EGYPT	+ Ahmedabad (1/05)	OMAN		# Dammam (6/05)
• Cairo (2/95)	+ Ludhiana (6/05)	• Muscat (4/09)
+ Alexandria (2/95)	+ Pune (10/06)			TURKEY
	+ Kolkata (1/08)	PAKISTAN		• Ankara (1/99)
GREECE	+ Coimbatore (1/08)	• Karachi (9/96)		• Istanbul (1/99)
• Athens (2/99)	+ Mundra (4/08)	• Lahore (9/96)		• Izmir (1/99)
		+ Sialkot (6/03)		• Mersin (1/99)
INDIA	JORDAN	+ Faisalabad (5/06)		+ Adana (1/99)
• New Delhi (7/96)	• Amman (9/07)	+ Islamabad (10/06)
• Mumbai (Bombay) (1/97)
			UNITED ARAB EMIRATES
• Bangalore (6/97)	KUWAIT	QATAR		• Abu Dhabi (1/94)
• Chennai (Madras) (6/97)	# Kuwait City (7/97)	• Doha (1/07)		• Dubai (10/98)
+ Jaipur (6/99)



Name	Age			Position

Peter J. Rose		67	68		Chairman and Chief Executive Officer and director
James L.K. Wang		63	64		President-Asia Pacific and director
R. Jordan Gates		55	56		President and Chief Operating Officer and director
Rommel C. Saber		53	54		President-Europe, Africa, Near/Middle East and Indian Subcontinent
Robert L. Villanueva		58	59		President-The Americas
Timothy C. Barber		51	52		President-Global Sales and Marketing
Rosanne Esposito		59	60		Executive Vice President-Global Customs
Eugene K. Alger		50	51		Executive Vice President-North America
Philip M. Coughlin		50	51		Executive Vice President-North America
Jeffrey S. Musser		45	46		Executive Vice President and Chief Information Officer
Charles J. Lynch		50	51		Senior Vice President-Corporate Controller
Daniel R. Wall		42	43		Senior Vice President-Ocean Services
Jose A. Ubeda		44	45		Senior Vice President-Air Cargo
Amy J. Tangeman		4243			Senior Vice President-General Counsel and Secretary
Bradley S. Powell		5051			Senior Vice President and Chief Financial Officer




RISK FACTORS		DISCUSSION AND POTENTIAL SIGNIFICANCE

International Trade		The Company primarily provides services to customers engaged in international commerce. Everything that affects international trade has the potential to expand or contract the Company’s primary market and impact its operating results. For example, international trade is influenced by:

		• currency exchange rate and currency control regulations;

		• interest rate fluctuations;

		• changes in governmental policies, such as taxation, quota restrictions, other forms of trade barriers and/or restrictions and trade accords;

		• changes in and application of international and domestic customs, trade and security regulations;

		• wars, strikes, civil unrest, acts of terrorism, and other conflicts;

		• natural disasters and pandemics;

		• changes in consumer attitudes regarding goods made in countries other than their own;

		• changes in availability of credit;

		• changes in the price and readily available quantities of oil and other petroleum-related products; and

		• increased global concerns regarding environmental sustainability.

Third Party Suppliers		The Company is a non-asset based provider of global logistics services. As a result, the Company depends on a variety of asset-based third party suppliers. The quality and profitability of the Company’s services depend upon effective selection, management and discipline of third party ~~suppliers, while operations have~~suppliers. While operating results improved in 2010 over 2009, many of the Company’s third party suppliers have incurred significant operating losses in ~~2009~~2011 and are highly leveraged with debt. Changes in the financial stability, operating capabilities and capacity of asset-based carriers and space allotment made available to the Company by asset-based carriers could affect the Company in unpredictable ways, including volatility of pricing, and challenge the Company’s ability to maintain historical unitary profitability.

Predictability of Results		The Company is not aware of any accurate means of forecasting short-term customer requirements. However, long-term customer satisfaction depends upon the Company’s ability to meet these unpredictable short-term customer requirements. Personnel costs, the Company’s single largest variable expense, are always less flexible in the very near term as the Company must staff to meet uncertain demand. As a result, short-term operating results could be disproportionately affected.



~~RISK FACTORS~~		~~DISCUSSION AND POTENTIAL SIGNIFICANCE~~

		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.

Foreign Operations		The majority of the Company’s revenues and operating income comes from operations conducted outside the United States. To maintain a global service network, the Company may be required to operate in hostile locations and in dangerous situations. In addition, the Company operates in parts of the world where common business practices could constitute violations of the anti-corruption laws, rules, regulations and decrees of the United States, including the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and of all other countries in which the Company conducts business; as well as trade control laws, or laws, regulations and Executive Orders imposing embargoes and sanctions; and anti-boycott laws and regulations. Compliance with these laws, rules, regulations and decrees is dependent on the Company’s employees, subcontractors, agents, third party brokers and customers, whose individual actions could violate these laws, rules, regulations and decrees. Failure to comply could result in substantial penalties and additional expenses, damages to the Company’s reputation and restrictions on its ability to conduct business.



~~Key Personnel~~ RISK FACTORS		DISCUSSION AND POTENTIAL SIGNIFICANCE

Key Personnel		The Company is a service business. The quality of this service is directly related to the quality of the Company’s employees. Identifying, training and retaining key employees is essential to continued growth and future profitability. Continued loyalty to the Company will not be assured by contract. The Company believes that its compensation programs, which have been in place since the Company became a publicly traded entity, are one of the unique characteristics responsible for differentiating its performance from that of many of its competitors. Significant changes to its compensation programs could affect the Company’s performance.

Technology		Increasingly, the Company must compete based upon the flexibility and sophistication of the technologies utilized in performing its core businesses. Future results depend upon the Company’s success in the cost effective development, maintenance and integration of secure communication and information systems technologies, including those ofacquired from and maintained by third ~~party suppliers.~~parties. Any significant disruptions to these systems ~~could negatively affect~~due to failures, attacks or other security breaches would have a material negative effect on the Company’s ~~results.~~

		results and could include loss of revenue, significant remediation costs, an increase in costs to protect the Company's systems and technology and damage to its reputation.

~~RISK FACTORS~~Growth		~~DISCUSSION AND POTENTIAL SIGNIFICANCE~~

~~Growth~~		To date, the Company has relied primarily upon organic growth and has tended to avoid growth through acquisition. Future results will depend upon the Company’s ability to continue to grow internally or to demonstrate the ability to successfully identify and integrate non-dilutive acquisitions.

Regulatory Environment		The Company is affected by ever increasing regulations from a number of sources. The current business environment tends to stress the avoidance of risk through regulation and oversight, the effect of which is likely to be unforeseen costs and potentially unforeseen consequences. In reaction to the global war on terror, governments around the world are continuously enacting or updating security regulations. These regulations are multi-layered, increasingly technical in nature and characterized by a lack of harmonization of substantive requirements amongst various governmental authorities. Furthermore, the implementation of these regulations, including deadlines and substantive requirements, is driven by political urgencies rather than the industries’ realistic ability to comply. Failure to consistently and timely comply with these regulations, or the failure, breach or compromise of the Company’s security procedures or those of its subcontractors or agents, may result in increased operating costs, damage to the Company’s reputation, restrictions on operations and/or fines and penalties.

Competition		The global logistics services industry is intensely competitive and is expected to remain so for the foreseeable future. There are a large number of companies competing in one or more segments of the industry, but the number of firms with a global network that offer a full complement of logistics services is more limited. Depending on the location of the shipper and the importer, the Company must compete against both the niche players and larger entities.

Taxes		The Company is subject to many taxes in the United States and foreign jurisdictions. In many of these jurisdictions, the tax laws are very complex and are open to different interpretations and application. Tax authorities frequently implement new taxes and change their tax rates and rules, ~~reconciliations and rates.~~including interpretations of those rules. The Company is regularly under audit by tax authorities. Although the Company believes its tax estimates are reasonable, the final determination of tax audits could be materially different from the Company’s tax provisions and accruals and negatively impact its financial results.

Litigation/Investigations		As a multinational corporation, the Company is subject to formal or informal investigations or litigation from governmental authorities or others in the countries in which it does business. ~~The~~Included among these investigations, the Company is currently subject to, and is cooperating fully with, an investigation by the U.S. Department of Justice (DOJ) of air cargo freight forwarders. In addition, the Company and its Hong Kong subsidiary received a Statement of Objections from the European Commission (EC) relating to an ongoing investigation of freight forwarders. ~~The Company~~These investigations and ~~its Brazilian subsidiary also received an Administrative Proceeding from the Brazilian Ministry of Justice (MOJ) relating to an on-going investigation of freight forwarders. These~~other periodic investigations will require further management time and could cause the Company to incur substantial additional legal and related costs, which ~~could~~may include fines and/or penalties ~~if the DOJ, EC and/or MOJ concludes~~ that ~~the Company has engaged in anti-competitive behavior and such fines and/or penalties~~ could have a material impact on the Company’s ~~financial position,~~ results of operations and operating cash flows.




Location		Nature of Property

United States:
Seattle, Washington		Office buildings
~~Near Seattle-Tacoma International Airport (in Washington)~~ SeaTac, Washington		Office building
~~Houston,~~Humble, Texas		Office and warehouse
~~Nassau County,~~Inwood, New York		Office and warehouse
~~Middlesex County,~~Edison, New Jersey		Office and warehouse
~~Near San Francisco International Airport (in California)~~ Brisbane, California		Office and warehouse
~~Near Los Angeles International Airport (in California)~~ Hawthorne, California		Office and warehouse
~~Near O’Hare International Airport (in Illinois)~~ Bensenville, llinois		Office and warehouse
Miami, Florida		Office, warehouse and free trade zone*
~~Spokane, Washington~~		~~Office building~~

~~Asia:~~
~~Kowloon, Hong Kong~~		~~Offices~~
~~Taipei, Taiwan~~		~~Office~~
~~Seoul, Korea~~		~~Office~~
~~Shanghai, China~~		~~Office building~~

~~Europe:~~
~~Brussels, Belgium~~		Office and warehouse
~~Dublin, Ireland~~ Spokane, Washington		Office building

Asia:
Kowloon, Hong Kong		Offices
Taipei, Taiwan		Offices
Seoul, Korea		Office and warehouse
~~Cork, Ireland~~ Shanghai, China		Office building
Beijing, China		Office and warehouse
~~Near Heathrow Airport (in London, England)~~
Europe:		~~Acreage~~

~~Latin America:~~ Brussels, Belgium		Office and warehouse
Dublin, Ireland		Office and warehouse
Cork, Ireland		Office and warehouse
London, England		Office and warehouse


	Common Stock					Common Stock
Quarter	High		Low		Quarter	High		Low

2010					2009
First	$	38.93	$	32.36	First	$	34.59	$	23.86
Second	$	42.39	$	34.46	Second	$	38.10	$	27.26
Third	$	47.58	$	33.65	Third	$	37.04	$	24.50
Fourth	$	57.15	$	45.23	Fourth	$	35.83	$	31.27



	Common Stock					Common Stock
Quarter	High		Low		Quarter	High		Low
2011					2010
First	$	56.19	$	45.91	First	$	38.93	$	32.36
Second	$	55.30	$	46.53	Second	$	42.39	$	34.46
Third	$	53.22	$	39.28	Third	$	47.58	$	33.65
Fourth	$	47.73	$	38.25	Fourth	$	57.15	$	45.23


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

October 1-31, 2010		64	$	48.09		64		31,241,990
November 1-30, 2010		1,244,011	$	51.33		1,244,011		30,637,955
December 1-31, 2010		763,818	$	56.30		763,818		30,177,722

Total		2,007,893	$	53.22		2,007,893		30,177,722



~~RISK FACTORS~~		~~DISCUSSION AND POTENTIAL SIGNIFICANCE~~

		The Company ~~is currently subject to and~~ may also become subject to other civil litigation arising from ~~these~~such investigations or litigations, including but not limited to shareholder class action lawsuits and derivative claims made on behalf of the ~~Company. The Company has been named as a defendant in a Federal anti-trust class action lawsuit filed in New York and will incur additional costs related to defending itself in these proceedings.~~ plaintiffs.

~~Economic Conditions~~
Economic Conditions		The global economy and capital and credit markets continue to experience uncertainty and volatility. Unfavorable changes in economic conditions may result in lower freight volumes and adversely affect the Company’s revenues and operating results, as experienced in 2009. These conditions may adversely affect certain of the Company’s customers and third party suppliers. Were that to occur, the Company’s revenues and net earnings could also be adversely affected. Should customers’ ability to pay deteriorate, additional bad debts may be incurred. These unfavorable conditions can create situations where rate increases charged by carriers and other suppliers are implemented with little or no advanced notice. The Company often times cannot pass these rate increases on to its customers in the same time frame, if at all. As a result, the Company’s yields and margins can be negatively impacted.

~~Catastrophic Events~~
Catastrophic Events		A disruption or failure of the Company’s systems or operations in the event of a major earthquake, weather event, cyber-attack, terrorist attack, strike, civil unrest, pandemic or other catastrophic event could cause delays in providing services or performing other mission-critical functions. The Company’s corporate headquarters, and certain other critical business operations are in the Seattle, Washington area, which is near major earthquake faults. A catastrophic event that results in the destruction or disruption of any of the Company’s critical business or information technology systems could harm the Company’s ability to conduct normal business operations and its operating results.



June 15, 2011	$	.25
December 15, 2011	$	.25
June 15, 2010		$	~~.20~~
~~December 15, 2010~~		$	.20

~~June~~December 15, ~~2009~~	2010	$	~~.19~~.20
~~December 15, 2009~~		$	~~.19~~


	12/05		12/06		12/07		12/08		12/09		12/10

Expeditors International of Washington		100.00		120.54		133.83		100.47		106.24		168.33
NASDAQ Composite		100.00		111.74		124.67		73.77		107.12		125.93
NASDAQ Transportation		100.00		111.57		117.39		88.90		91.15		117.01


	2010		2009		2008		2007		2006

Revenues	$	5,967,573		4,092,283		5,633,878		5,235,171		4,633,987
Net revenues		1,692,786		1,382,786		1,603,261		1,452,961		1,290,960
Net earnings attributable to shareholders		344,172		240,217		301,014		269,154		235,094
Diluted earnings attributable to shareholders per share		1.59		1.11		1.37		1.21		1.06
Basic earnings attributable to shareholders per share		1.62		1.13		1.41		1.26		1.10
Dividends declared and paid per common share		.40		.38		.32		.28		.22
Working capital		1,278,377		1,079,444		903,010		764,944		632,691
Total assets		2,679,179		2,323,722		2,100,839		2,068,605		1,821,878
Shareholders’ equity		1,740,906		1,553,007		1,366,418		1,226,571		1,070,091
Weighted average diluted shares outstanding		216,446,656		216,533,240		219,170,003		221,799,868		222,223,312
Weighted average basic shares outstanding		212,283,966		212,112,744		212,755,946		213,314,761		213,454,579


~~Assumption~~	~~Change in~~ ~~assumption~~		~~Impact of fair~~ ~~value of options~~

~~Expected volatility~~		~~Higher~~		~~Higher~~
~~Expected life of option~~		~~Higher~~		~~Higher~~
~~Risk-free interest rate~~		~~Higher~~		~~Higher~~
~~Expected dividend yield~~		~~Higher~~		~~Lower~~


			Amount of Commitment Expiration Per Period
In thousands	Total amounts committed		Less than 1 year		1 - 3 years		3 - 5 years		After 5 years

Standby letters of credit	$	91,495	$	85,342	$	3,867	$	227	$	2,059



			Amount of commitment expiration per period
In thousands	Total amounts committed		Less than 1 year		1 - 3 years		3 - 5 years		After 5 years
Standby letters of credit and guarantees	$	103,813	$	97,661	$	3,744	$	352	$	2,056


			Payments Due by Period
In thousands	Total		Less than 1 year		1 - 3 years		3 - 5 years		After 5 years

Contractual Obligations:
Operating leases	$	128,154	$	39,244	$	54,022	$	23,445	$	11,443
Unconditional purchase obligations		180,202		180,202		—		—		—
Construction and equipment purchase obligations		37,266		35,923		1,343		—		—


Total contractual cash obligations	$	345,622	$	255,369	$	55,365	$	23,445	$	11,443



Document		Page

1. 1	Financial Statements and Reports of Independent Registered Public Accounting Firm:

	Reports of Independent Registered Public Accounting Firm	F-1 and F-2

	Consolidated Financial Statements:

	Balance Sheets as of December 31, ~~2010~~2011 and ~~2009~~2010	F-3

	Statements of Earnings for the Years Ended December 31, 2011, 2010, ~~2009~~ and ~~2008~~2009	~~F-5~~F-4

	Statements of Equity and Comprehensive Income for the Years Ended December 31, 2011, 2010 ~~2009~~ and ~~2008~~2009	~~F-8~~F-5 and F-6

	Statements of Cash Flows for the Years Ended December 31, 2011, 2010 ~~2009~~ and ~~2008~~2009	~~F-10~~F-7

	Notes to Consolidated Financial Statements	~~F-12~~F-8 through ~~F-28~~F-19


Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (1)		Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (2)		Number of Securities Available for Future Issuance, Other Than Securities to be Issued Upon Exercise of All Outstanding Options, Warrants and Rights (3)

Equity Compensation Plans Approved by Security Holders		16,293,671	$	34.11		3,894,408
Equity Compensation Plans Not Approved by Security Holders		—		—		—


Total		16,293,671	$	34.11		3,894,408


(1)	Does not include ~~26,735~~19,500 restricted stock awards that were not fully vested as of December 31, ~~2010.~~ 2011.


(2)	The weighted-average exercise price does not take into account the shares issuable upon vesting of outstanding restricted stock awards which have no exercise price.


(3)	Includes ~~3,403,479~~2,740,093 available for issuance under the employee stock purchase plans, ~~372,027~~8,522 available for future grants of stock options and ~~118,902~~99,402 available for issuance of restricted stock awards.



			~~Page~~	Page
(a) 1.	1		FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firm			F-1 and F-2


Consolidated Balance Sheets as of December 31, ~~2010~~2011 and ~~2009~~2010		F-3
			~~F-3~~

Consolidated Statements of Earnings for the Years Ended December 31, 2011, 2010 ~~2009~~ and ~~2008~~2009		F-4
			~~F-5~~

Consolidated Statements of Equity and Comprehensive Income for the Years Ended December 31, 2011, 2010 ~~2009~~ and ~~2008~~2009		F-5 and F-6
			~~F-8~~

Consolidated Statements of Cash Flows for the Years Ended December 31, 2011, 2010 ~~2009~~ and ~~2008~~2009		F-7
			~~F-10~~

Notes to Consolidated Financial Statements		F-8 through F-19
	2		FINANCIAL STATEMENT SCHEDULES
~~F-12 through F-28~~			Schedules are omitted because of the absence of conditions under which they are required or because the required information is given in the consolidated financial statements or notes thereto.
	3
~~2. FINANCIAL STATEMENT SCHEDULES~~	EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS


	Cumulative shares repurchased		Average price per share

Non-Discretionary Plan (1994 through 2010)		21,870,052	$	21.24

Discretionary Plan (2001 through 2010)		20,067,005	$	34.37


	1985 Plan		2007 Plan			2008 Plan			2009 Plan			2010 Plan

Balance at December 31, 2007		6,912		1,196,740			—			—			—

Options authorized		—		—			3,000,000			—			—
Options granted		0		0			(2,088,415	)		—			—
Options not granted		—		(1,196,740	)		—			—			—

Balance at December 31, 2008		6,912		—			911,585			—			—


Options authorized		—		—			—			3,000,000			—
Options granted		0		—			0			(2,449,200	)
Options not granted		—		—			(911,585	)		—

Balance at December 31, 2009		6,912		—			—			550,800


Options authorized		—		—			—			—			3,000,000
Options granted		0		—			—			0			(2,634,885)
Options not granted		—		—			—			(550,800	)		—

Balance at December 31, 2010		6,912		—			—			—			365,115