Management’s Discussion and Analysis of Financial Condition and Results of Operations General Expeditors International of Washington, Inc. is engaged in the business of global logistics management, including international freight forwarding and consolida- tion, for both air and ocean freight. The Company acts as a customs broker in all domestic offices, and in many of its international offices. The Company also pro- vides additional services for its customers including value added distribution, purchase order management, vendor consolidation and other logistics solutions. The Company offers domestic forwarding services only in conjunction with international shipments. The Company does not compete for overnight courier or small parcel business. The Company does not own or operate aircraft or steamships. International trade is influenced by many factors, including economic and politi- cal 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 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 for- eign locations also subjects the Company to a variety of risks and considerations not normally encountered by domestic enterprises. In addition to being affected by gov- ernmental policies concerning international trade, the Company’s business may also be affected by political developments and changes in government personnel or poli- cies in the nations in which it does business. The Company’s ability to provide services to its customers is highly dependent on good working relationships with a variety of entities including airlines, ocean steam- ship lines, and governmental agencies. The Company considers its current working relationships with these entities to be satisfactory. However, changes in space allot- ments available from carriers, governmental deregulation efforts, “modernization” of the regulations governing customs brokerage, and/or changes in governmental quota restrictions could affect the Company’s business in unpredictable ways. Historically, the Company’s operating results have been subject to a seasonal trend when measured on a quarterly basis. The first quarter has traditionally been the weakest and the third and fourth quarters have traditionally been the strongest. This pattern is the result of, or is influenced by, numerous factors including climate, national holidays, consumer demand, economic conditions and a myriad of other similar and subtle forces. In addition, this historical quarterly trend has been influ- enced by the growth and diversification of the Company’s international network and service offerings. The Company cannot accurately forecast many of these factors nor can the Company estimate accurately the relative influence of any particular 68 expd 02 MD&A