That was the year that was! One could not think of any phrase more fitting to describe 2002.

The year started slowly and began to heat up as a rumoured slowdown strike/walkout of the I.L.W.U. on the West Coast began to circulate. Many shippers began the switch to airfreight as the rumours intensified; and then became reality.

This debacle led to rate increases by the air carriers, diversions of vessels by the ocean carriers, huge backups at the port facilities, tie up of containers, and mass confusion throughout. All of this was exacerbated by a soft economy, major Chapter 11 filings by airlines and shippers alike. Then, there was political turmoil on a global basis.

As if this wasn’t bad enough, we then witnessed the accounting debacle of the millennium which destroyed companies, peoples lives, savings, pensions, livelihoods and respect for honesty which hurt so many by the damage caused by a few.

This resulted in an immediate call for reform by the Sarbanes-Oxley initiative mandating honesty and corporate governance, something which most people just took for granted was already in place.

How does a bad company extricate itself from this mess? One has only to plea bargain, give up other employees, and then state that one will expense their employee stock options. It’s easy, it’s over, and soon to be forgotten.

We wish to reaffirm to our shareholders that corporate governance has always been in place at Expeditors and always will be.

So, how did we fare through all of this confusion? Quite well, we must say because of the performance, through dedication, hard work, and loyalty, of the members of our small family. Did we say loyalty, that much maligned word? When everyone feels that loyalty is on the wane, we feel it is alive and well at Expeditors. If we get a 90-95% buyoff on people believing in our mission and our culture, which has not changed from day one, we are quite satisfied.

We continue to make great strides on the technology front with over 250 people in Seattle for programming, maintenance, and support and another 150 people globally for maintenance and support. Because of their dedication, we are a leader in our field.

Capital expenditures for last year and next will go toward continual upgrade of hardware and facilities. We will remain non-asset based, as always, and maintain our independence.

It was a tough year, and since our inception they all have been. It was rough but extremely gratifying. As always we thank our loyal customers, carriers, vendors, shareholders and above all else the people who work here and continue to strive for excellence. Thank you one and all.

Peter J. Rose, Chairman and Chief Executive Officer