Notes to Consolidated Financial Statements A.Basis of Presentation Expeditors International of Washington, Inc. (“the Company”) is a global logistics company 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. The Company grants credit upon approval to customers. International trade is influenced by many factors, including economic and political conditions in the United States and abroad, currency exchange rates, and United States and foreign laws and policies relating to tariffs, trade restrictions, foreign investments and taxation. Periodically, governments consider a variety of changes to current tar- iffs 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 affected by governmental policies concern- ing international trade, the Company’s business may also be affected by political developments and changes in government personnel or policies in the nations in which it does business. The consolidated financial statements include the accounts of the Company and its subsidiaries. In addition, the accounts of exclusive agents have been consolidated in those circumstances where the Company maintains unilateral control over the agents’ assets and operations, notwithstanding a lack of technical majority ownership of the agents’ common stock. All significant intercompany accounts and transactions have been eliminated in con- solidation. All dollar amounts in the notes are presented in thousands except for share data. All highly liquid investments with a maturity of three months or less at date of pur- chase are considered to be cash equivalents. Short-term investments are designated as available-for-sale and cost approximates market at December 31, 2002 and 2001. 44 expd 02 Note 1 B. Cash Equivalents C. Short-term Investments Note 1. Summary of Significant Accounting Policies