UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

       [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                       EXCHANGE ACT OF 1934 [FEE REQUIRED]


         For the Fiscal Year Ended May 31, 2000
         Commission File Number 0-20548

                              FRITZ COMPANIES, INC.
             (Exact name of registrant as specified in its charter)

         Delaware
         (State of other jurisdiction of incorporation or organization)

         94-3083515
         (IRS Employer Identification Number)

         706 Mission Street, Suite 900, San Francisco, California         94103
         (Address of principal executive offices)                     (Zip Code)

         Registrant's  telephone  number,  including  area code  (415) 904-8360
         Securities registered pursuant to Section 12(b) of the Act:

         Title of each class          Name on each exchange on which registered
         None                                                              None
         Securities registered pursuant to Section 12(g) of the Act:

                            Common Stock, $.01 par value
                                (Title of Class)

         Indicate by check mark whether the registrant (1) has filed all reports
         required to be filed by Section 13 or 15(d) of the Securities  Exchange
         Act of 1934 during the preceding 12 months (or for such shorter  period
         that the  registrant  was required to file such  reports),  and (2) has
         been subject to such filing requirements for the past 90 days.[ X ] Yes
         [ ] No

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
         Item 405 of Regulation S-K (S 229.405 of this chapter) is not contained
         herein,  and  will  not be  contained,  to  the  best  of  registrant's
         knowledge,  in definitive proxy or information statements  incorporated
         by  reference  in Part III of this Form 10-K or any  amendment  to this
         Form 10-K. [ X ]

         At June 28, 2000, the aggregate market value of the registrant's Common
         Stock held by non-affiliates  of the registrant was approximately  $245
         million.

         At June 28, 2000, the number of shares outstanding of registrant's
         Common Stock was 36,642,323

                       DOCUMENTS INCORPORATED BY REFERENCE
              Portions of the Proxy Statement  relating to the 2000
                  annual  meeting  of  shareholders  have been
                    incorporated by reference -- Part III of the
                        Form 10K ( Items 10, 11, 12 and 13 )












PART I
         Item 1-   Business

         General

         Fritz Companies, Inc. (the Company) is a specialist in providing global
         logistics services and related  information  services for importers and
         shippers  worldwide.  The  Company is  primarily  engaged in  providing
         logistics  management,  international air and ocean freight forwarding,
         customs brokerage,  and material management and distribution  services.
         Fritz delivers  comprehensive  supply chain  solutions to its customers
         worldwide  by  providing  flexible   door-to-door   transportation  and
         materials  management  using  sophisticated  information  systems.  The
         Company  also   provides   value-added   services   through   logistics
         information  as well as  international  and domestic  movement of goods
         customarily provided by traditional freight forwarders.  These services
         are  designed to provide  integrated  global  logistics  solutions  for
         customers to  streamline  their  operations,  improve  their  inventory
         management  information and enhance their  profitability and to provide
         customers   with   more    efficient   and   effective    international
         transportation  strategies.  The Fritz  network is  composed  of highly
         trained  professionals  working  in  more  than  400  locations  in 120
         countries.

         The Company was  incorporated  in  Delaware  in August  1988,  and is a
         successor   to  a  Company   incorporated   in   California   in  1933.
         Internationally,  the Company  operates a number of subsidiaries  under
         the names "Fritz  Transportation  International,"  "Fritz Air Freight,"
         "Fritz  Starber,"   "Fritz  Fliway,"  "Fritz   Logistics,"  and  "Fritz
         Companies,"  among  others.  Unless  the  context  otherwise  requires,
         references in this Form 10-K to the Company  include  Fritz  Companies,
         Inc., its  subsidiaries  and its  predecessor  companies.  Although the
         Company's  executive  office is  located  in the  United  States at 706
         Mission Street, Suite 900, San Francisco, California 94103, its network
         is global. The Company has offices throughout North America, Australia,
         New Zealand,  South Africa, Asia, Europe, Latin America, and the Middle
         East.

         See  Management's  Discussion  and Analysis of Financial  Condition and
         Results  of  Operations  and  the  Company's   Consolidated   Financial
         Statements,  including  the  Notes  thereto,  for data  related  to the
         Company's   revenues,   operating  profit  and  long-lived   assets  by
         geographic  regions.  Unless otherwise stated, all amounts in this Form
         10-K are in thousands, except per share amounts.

         The following  table  presents  revenue and net revenue in thousands of
         dollars and as a percentage  of total  revenue or net  revenue,  as the
         case  may  be,   attributable  to  the  Company's  principal  logistics
         services:



<PAGE>
<TABLE>

<CAPTION>


                                                                      For the Year Ended May 31,
                                           ---------------------------------------------------------------------------------
                                                   2000                       1999                            1998
                                           ---------------------- ------------------------------ ---------------------------
                                                Amount     %                Amount        %                Amount      %
                                           ------------ ---------         ------------ ---------         ----------- -------
<S>                                     <C>                 <C>        <C>                <C>         <C>              <C>

         Revenue
         Customs Brokerage              $      188,757      11.7       $      163,701      11.8       $     165,055    12.7
         Ocean Freight Forwarding              482,304      29.9              416,108      30.0             375,933    28.9
         Airfreight Forwarding                 720,439      44.7              606,526      43.7             576,643    44.4
         Material Management &
           Distribution                        221,191      13.7              201,392      14.5             182,452    14.0
                                           ------------ ---------        -------------  --------         ----------  -------

         Total Revenue                  $    1,612,691     100.0       $    1,387,727     100.0       $   1,300,083   100.0
                                           ============ =========        =============  ========         ==========  =======

         Net Revenue
         Customs Brokerage              $      188,757      30.5       $      163,701      28.3       $     165,055    29.6
         Ocean Freight Forwarding              127,224      20.5              126,060      21.8             120,497    21.6
         Airfreight Forwarding                 171,928      27.8              166,832      28.9             158,514    28.4
         Material Management &
           Distribution                        131,431      21.2              121,384      21.0             114,199    20.4
                                           ------------ ---------         ------------ ---------         ----------- -------
         Total Net Revenue              $      619,340     100.0       $      577,977     100.0       $     558,265   100.0
                                           ============ =========         ============ =========         =========== =======
</TABLE>


         Narrative Description of Business

         International Airfreight and Ocean Freight Forwarding

          The Company is among the largest  forwarders of international  air and
         ocean  freight  in  the  United  States.  The  Company's  revenue  from
         international  ocean  freight  forwarding  is  derived  from  logistics
         services  both as an indirect  ocean carrier (a  "Non-Vessel  Operating
         Common  Carrier" or NVOCC) and as an authorized  agent for shippers and
         importers.  The  Company may also  function  as an agent for  steamship
         companies.   The  Company's  revenue  from   international   airfreight
         forwarding is derived from  logistics  services both as an indirect air
         carrier  (IAC)  and as an  authorized  cargo  sales  agent  of  various
         airlines.

         The Company also provides  logistics  services  including  warehousing,
         protective  packing,  cargo  consolidation,  document  preparation  and
         electronic transmittal,  electronic purchase  order/shipment  tracking,
         inventory   management,   expedited   document   delivery  for  customs
         clearance,  priority  notification  to consignee of cargo arrival,  and
         inland transportation of freight from point of origin to a distribution
         center or the carrier's cargo terminal.

         The Company serves a broad range of freight forwarding  customers.  The
         Company's  ocean freight  forwarding  customers  include  retailers and
         industrial companies shipping automotive parts, heavy equipment, steel,
         chemicals,   forest  products,   clothing,  and  produce.  In  general,
         airfreight  has a high  value  relative  to its  weight and the cost of
         shipment  is  usually  a small  portion  of its  value.  The  Company's
         principal  airfreight  customers are shippers of medical  equipment and
         parts,  drugs  and   pharmaceuticals,   computer  and  high  technology
         equipment  and  parts,   aircraft  and  automotive  parts,   electrical
         equipment,   machinery  and  machine   parts,   measuring  and  testing
         instruments, chemicals and fashion apparel.

         As an  NVOCC  and an IAC,  the  Company  procures  customer  shipments,
         consolidates shipments bound for a particular  destination,  determines
         the routing for consolidated  shipments,  selects the direct carrier or
         charters an ocean vessel or aircraft and tenders each  consolidated lot
         as a single  shipment  to the direct  carrier for  transportation  to a
         distribution point.

         The Company's  rates are based on the shipment  weight  and/or  volume.
         Rates  charged by the  Company  are  ordinarily  less than the rate the
         shipper  would  be  charged  by a  steamship  line or an  airline.  The
         consolidation  of  customers'  shipments  allows the  Company to obtain
         lower rates from steamship lines or airlines than the rates the Company
         charges to its  customers for  individual  shipments.  In addition,  in
         certain  tradelanes the Company  controls a high volume of freight and,
         accordingly,  is able to obtain reduced rates from certain  carriers or
         charter operators.  This rate differential is the primary source of the
         Company's net ocean and airfreight revenue as an indirect carrier.

         By  accepting  goods for ocean or air  shipment as an NVOCC or IAC, the
         Company  assumes the role as a carrier and becomes  responsible  to the
         shipper for the safe delivery of the shipments.  However,  this role is
         subject  to a  legal  limitation  on  liability  as  enumerated  by The
         Carriage  of Goods by Sea Act for ocean  freight.  In  addition,  it is
         subject to the limitations  contained in the Warsaw  Convention for air
         freight.  The  steamship  line or airline  generally  assumes  the same
         responsibility to the Company as the Company assumes to its clients due
         to the Company's  relationship  with the steamship line or airline as a
         shipper.  As an authorized agent for shippers and importers,  and as an
         authorized cargo agent of various airlines and steamship companies, the
         Company arranges  transportation of individual shipments and receives a
         commission  from the direct carrier for arranging the  shipments.  When
         acting as such an agent, the Company does not consolidate shipments and
         does not have responsibility for shipments once they have been accepted
         by the direct carrier.

         As part of the Company's  freight  forwarding  activities,  the Company
         provides   project   forwarding   and  logistics   services   involving
         governmental and commercial projects, including foreign military sales,
         power plant construction,  shipbuilding,  construction of manufacturing
         assembly  facilities,  civil  infrastructures  and  other  large  scale
         installations.   The  Company's  project  forwarding  services  include
         integrated  logistics for conveying  heavy materials and equipment from
         multiple  origins to project sites.  Such services may include managing
         the   customer's   transportation,   customs   clearance  and  material
         management and  distribution.  Most of the shipments are transported by
         ocean  carrier.   The  government  portion  of  the  Company's  project
         forwarding  business requires a United States Government  Department of
         Defense security  clearance of the Company's  management team and those
         employees assigned to the project. The warehouses receiving and storing
         the cargo must have a security clearance.

         In addition to ocean and airfreight  forwarding  services,  the Company
         provides  forwarding  services and cross marketing in the United States
         for a number of its agents.  The Company is  compensated  by sharing in
         the agents' profits on their consolidation shipments.

         The  Company is  licensed by the  Federal  Maritime  Commission  of the
         United  States  and is a  member  of the  International  Air  Transport
         Association.

         Customs Brokerage

         The  Company  is  the  largest  customs  broker  in the  United  States
         according to the United States Customs Service.  The Company's  customs
         brokerage  operations  for air and ocean imports cover over 400 (not in
         thousands) ports of entry in the United States.  The Company's  customs
         brokerage  operation  is among  the most  sophisticated  in the  United
         States as a result of its size,  technology and integration  with other
         transportation   logistics  services  provided  to  its  customers.  In
         addition,  the Company provides overseas customs brokerage  services in
         countries such as Australia,  Canada,  the United  Kingdom,  Mexico and
         many Latin American countries.

         As a customs  broker in the United  States,  the  Company is engaged by
         importers   to  prepare  the   documentation   required   for  entering
         merchandise  into the United States.  In this capacity,  the Company is
         responsible for coordinating all events and communicating the status of
         shipments from the time of shipment arrival through customs  clearance.
         The  Company  receives  commercial  and  transportation  documentation,
         reviews it for completeness and accuracy,  prepares and files documents
         necessary to clear customs, obtains customs bonds, assists the importer
         in obtaining the appropriate commodity  classification and arranges for
         payment of collect  freight  charges.  In most cases,  the Company also
         deposits import duties with the United States Customs Service on behalf
         of the importer.  In addition,  the Company provides  ancillary customs
         brokerage  services to its  customers,  including  placement  of surety
         bonds, duty reduction  programs and  duty-drawback  (recovery of duties
         paid when  imported  merchandise  is  re-exported).  The  Company  also
         provides  bonded  warehouse  services  which enable  importers to defer
         payment  of customs  duties  until the cargo is  released  from bond in
         conjunction  with  their  production  or  distribution  schedules.  See
         "Material Management and Distribution".

         In  providing  customs  brokerage  services,  the Company has access to
         information  concerning a shipment's origin and value,  destination and
         mode of  transportation.  As a  result,  the  Company  has been able to
         obtain  additional  business by  identifying  opportunities  to improve
         customer  service  or  reduce  customers'   expenses  through  expanded
         utilization  of  the  Company's  other  services,  including  container
         unloading,  inventory  warehousing  and  arranging  delivery of cleared
         cargo to its final destination.

         The Company is a leader in the use of computer  technology  for customs
         brokerage  activities on behalf of its clients.  The Company was one of
         the first customs  brokerage  operations to link with the United States
         Customs  Service  through the Automated  Broker  Interface  information
         system  and  to   develop  a   comprehensive,   proprietary,   on-line,
         interactive customs brokerage system which permits customers to monitor
         the status of a shipment as it passes through the government  clearance
         process.  The  Company's  information  systems  enable  the  Company to
         electronically  prepare documents,  transmit information  necessary for
         cargo pre-clearance through customs, expedite cargo release and provide
         nationwide  control of customs clearance at multiple ports of entry for
         its customers. See "Information Systems."

         The Company's customs brokerage  services are provided by the Company's
         licensed  customs  brokers  and  support  staff  who  have  substantial
         knowledge  regarding  the  complex  tariff and  government  regulations
         applicable  to  customs  duty   payments  and  other  fees,   commodity
         classifications,  valuation and import restrictions.  In addition,  the
         Company has developed  substantial  customs brokerage  expertise within
         particular  client  industries.   The  Company  believes  its  industry
         specialization  is unique among  competitors and enables the Company to
         provide high levels of service to customers  in these  industries.  The
         Company provides ongoing training programs,  which include  preparation
         for the United States customs broker license  examination to employees,
         as well as to customers.

         During the years ended May 31, 2000, 1999 and 1998 the number of United
         States  Customs  entries  filed by the Company  were  3,116,  2,699 and
         2,652, respectively.

         As a customs  broker  operating  in the United  States,  the Company is
         licensed by the United States  Department of the Treasury and regulated
         by the United States  Customs  Service.  The Company's fees for customs
         brokerage  services are not  regulated  and the Company does not have a
         fixed fee schedule for such services.  Instead,  customs brokerage fees
         are based on the complexity of the transaction and the type of services
         required,  but are generally not related to the value of the customers'
         goods.  In addition to its fees,  the Company  bills the  importer  for
         amounts  which the Company  pays on the  importer's  behalf,  including
         duties, taxes, collect freight charges and similar payments.

         The  Company  offers  its  customs  brokerage   services  primarily  to
         purchasers of imported goods. The Company's  largest customs  brokerage
         customer in 2000 accounted for 27.1% of customs  brokerage  revenue and
         3.2% of the total consolidated revenue.

         Material Management and Distribution

         As  part of its  integrated  global  logistics  services,  the  Company
         provides an array of material  management and distribution  services to
         its customers.  The Company uses state of the art warehouse  management
         systems to deliver material management solutions to its global customer
         base.

         The Company  manages a mixture of  multi-client  facilities  as well as
         stand-alone contract logistics operations. The Company supports clients
         from a wide variety of industry  segments  with  emphasis on high-tech,
         retail, footwear, and manufacturing.

         Warehousing  services  are  available  for the  Company's  customers in
         certain of its facilities,  as well as in space leased from others. The
         Company  maintains  approximately  9.0 million square feet of owned and
         leased  warehouse  space.  The Company's  warehousing  services include
         receiving,  deconsolidation and  decontainerization,  cargo loading and
         unloading,  assembly  of freight,  customer  inventory  management  and
         protective  packing  and  storage.  For import  shipments,  the Company
         provides bonded warehouse services at certain locations to importers so
         they can defer  payment of customs  duties  until  cargo  releases  are
         required to meet customers' production or distribution  schedules.  The
         goods stored in bonded  warehouses are held until the importer is ready
         to withdraw or re-export  them. The Company is paid storage charges for
         use of its warehouses and fees for other services.

         The Company provides surface  transportation and domestic  distribution
         services  involving  the movement of shipments  for local and long-haul
         delivery to and from customers'  doors.  In this capacity,  the Company
         procures shipments from its customers, consolidates less than truckload
         quantities,  determines  the  routing,  selects the carrier and tenders
         each shipment to such carrier for transportation.  The Company provides
         this service as an indirect  carrier and as an agent.  The Company also
         provides  logistics  services by  coordinating  the most  efficient and
         cost-effective   mode  of  long-haul  surface   transportation  to  its
         customers.

         No  single  customer  accounted  for  ten  percent  or  more  of  total
         consolidated revenue in fiscal 2000.

         Insurance

         The Company provides international marine insurance to its customers in
         connection   with  its  air  freight  and  ocean   freight   forwarding
         operations.   In  addition,  the  Company  arranges  surety  bonds  for
         importers  as  part  of its  customs  brokerage  activities.  Insurance
         coverage is adapted  according to each client's  shipping  requirements
         and  arranged as an integral  part of the  Company's  global  logistics
         services.

         Information Systems

         The Company invests substantial resources in its information systems to
         accomplish  the global  objective  of  developing  and  maintaining  an
         integrated  logistics  system.  The  information  system strategy is to
         provide accurate,  reliable, and timely access to information regarding
         logistics and internal operations through responsive and cost-effective
         information systems technologies.

         The  Company  intends to replace  several  domestic  and  international
         systems with one global,  integrated system referred to as Fritz Global
         Business  System  (GBS).  GBS is an integrated  suite of global
         business  applications  that includes  Transportation  Management (Air,
         Ocean, and Road), Cargo Management,  PO Management,  Accounting systems
         and Customs  Clearance.  GBS modules have been implemented in major
         locations such as Hong Kong, Singapore,  France and the United Kingdom.
         Implementation continues to progress in other locations.

         The Company  developed the Fritz Logistics  Expediting System (Flex)
         several  years  ago to  enable  customers  to  track  the flow of goods
         throughout  the  transportation  process via the  Internet.  Flex is
         Fritz's customer  interface,  facilitating a view into the GBS data
         warehouse.  Customers can complete queries using Flex to receive the
         current status of shipments and generate reports.

         In 1999, the Company introduced an independent module of Flex called
         Trade Cost  Modeling  (TCM).  TCM is a  web-based  system  that
         utilizes  a time / cost  model to allow  customers  to  identify  which
         country of origin will be the most cost effective location for sourcing
         their  products and  determine  the fastest or the most cost  effective
         shipment routing.  TCM takes into consideration  world wide tariffs
         (duty),  taxes,  and other charges and analyzes the various  methods of
         transportation  to quickly and accurately  calculate the lowest cost of
         shipment  (freight cost) from point A to point B. The Company  believes
         that   customers  have  found  TCM  to  be  an  easy  solution  for
         forecasting their total landed cost.

         An  important  component  of  the  Company's  business  strategy  is to
         continue to expand and  develop  the concept of the GBS system and
         the Flex Internet customer interface.  For information regarding the
         Company's  Year  2000  compliance  program,  see Item 7 -  Management's
         Discussion and Analysis of Financial Condition and Results of Operation
         - Year 2000.


         Sales

         An  important   part  of  the  Company's   business   strategy  is  its
         client-oriented  marketing  approach.  The Company's  marketing efforts
         focus on senior  transportation  and  logistics  executives,  financial
         officers  and  purchasing  directors of large and medium sized users of
         international transportation logistics services. In connection with the
         Company's   emphasis   on   developing   and   maintaining    long-term
         relationships  with such  clients,  the Company has  developed  several
         strategic sales programs, including a National Accounts Program.


         Competition and Business Conditions

         The Company's principal  businesses are directly affected by the volume
         of international  trade,  particularly  trade between the United States
         and  foreign  nations,  which  is  influenced  by many  factors.  These
         influences  include  economic and  political  conditions  in the United
         States and abroad,  major work stoppages,  exchange controls,  currency
         fluctuations,  wars and other armed  conflicts,  and United  States and
         foreign  laws  relating  to  tariffs,   trade   restrictions,   foreign
         investments and taxation.  The global  logistics  services  industry is
         intensely  competitive  and  expected to remain so for the  foreseeable
         future.  The  Company  encounters  competition  from a large  number of
         firms.  Much of this  competition is from local or regional firms which
         have only one or a small number of offices and do not offer the breadth
         of services and integrated  approach  offered by the Company.  However,
         some of the  competition is from major United States and  foreign-owned
         firms  which  have  networks  of  offices  and offer a wide  variety of
         services.   The  Company   believes   quality  of  service,   including
         information systems capability,  global network capacity,  reliability,
         responsiveness, expertise, convenience, scope of operations, customized
         program  designs  and price are  important  competitive  factors in its
         industry.

         The Company  encounters  strong  competition in the markets for each of
         its principal services, identified as: customs brokerage, air and ocean
         freight  forwarding  and  material  management  and  distribution.  The
         Company has customs brokerage offices in most major ports in the United
         States,  Canada,  United Kingdom and other selected foreign  locations.
         Although  the Company  competes  with several  large United  States and
         foreign firms in virtually all of its locations,  the principal customs
         brokerage competition comes from local and regional firms.

         As an ocean  freight  forwarder,  the  Company's  competition  includes
         steamship  companies,  large forwarders with multiple offices and local
         and regional  forwarders  with one or a small number of offices.  As an
         airfreight  forwarder,  the Company's principal  competition comes from
         other  airfreight  forwarders in the United  States and overseas.  As a
         material  management and distribution  service provider,  the Company's
         principal   competition   includes   local,   regional,   national  and
         international providers of the same or similar services.


         Regulation

         As a customs  broker  operating  in the United  States,  the Company is
         licensed by the United States  Department of the Treasury and regulated
         by the United States Customs  Service.  The Company's fees as a customs
         broker are not regulated.  The Company's airfreight forwarding business
         is subject to regulation,  as an indirect air cargo carrier,  under the
         Federal  Aviation Act by the Department of  Transportation  (DOT),  the
         successor  to the Civil  Aeronautics  Board,  although  Part 296 of the
         DOT's Economic Aviation Regulations exempts airfreight  forwarders from
         most  of the  act's  requirements.  In  its  ocean  freight  forwarding
         business,   the  Company  is   licensed  as  an  ocean   transportation
         intermediary by the Federal Maritime Commission (FMC). The FMC does not
         regulate the  Company's  fees in any material  respect.  The  Company's
         NVOCC business is subject to regulation under the FMC tariff filing and
         surety bond  requirements,  and under the  Shipping Act of 1984 and the
         Ocean Reform Shipping Act of 1998, particularly those terms proscribing
         rebating  practices.  The  Company  is  regulated  as a  direct  and an
         indirect  truck cargo  carrier by the DOT,  previously  the  Interstate
         Commerce Commission,  by which the Company is licensed as both a common
         carrier and a property broker. For dispatch purposes,  the Company also
         holds an FCC  Radio  License.  The  Company's  marine  cargo  insurance
         brokerage  business  is  licensed  by  the  California   Department  of
         Insurance.

         The Company's offshore  operations are subject to similar regulation by
         the regulatory  authorities of the  respective  foreign  jurisdictions.
         Some of the Company's  warehouse  operations are approved by the United
         States  Customs  Service as container  freight  stations,  and/or cargo
         examination stations and/or Class III bonded warehouses.

         Trademarks

         The Company holds  registered  trademarks  and/or  service marks in the
         United States and numerous foreign  countries for "Fritz Companies" and
         certain related names and the Company's logo.



         Employees

         As of May 31,  2000,  the  Company  had  approximately  10,000  (not in
         thousands)   employees  located   throughout  the  world.  The  Company
         considers its relationship with its employees to be satisfactory.

         Management

         The Company's executive officers are as follows:

                      Name                      Age
        ----------------------------------    --------
        Lynn C. Fritz                           58  Chairman of the Board
        Raymond L. Smith                        45  Chief Executive Officer
        Graham R. F. Napier                     36  Chief Operating Officer
        Ronald F. Dutt                          53  Executive Vice President
                                                    and Chief Financial Officer
        Jan H. Raymond                          51  Executive Vice President,
                                                    Secretary and General
                                                    Counsel
        Eugene E. Wojciechowski                 45  Executive Vice President
                                                    and Chief Information
                                                    Officer
        Janice J. Washburn                      51  Vice President and
                                                    Controller
        John  R.  Skidmore                      50  Vice President -
                                                    Human Resources


         Lynn C. Fritz  became  Chief  Executive  Officer of the  Company in
         1986 after  serving in numerous  positions  since
         joining the Company on a full-time basis in 1965. Mr. Fritz received
         his B.A.  degree from Georgetown  University and
         his J.D. degree from Lincoln University School of Law.

         Raymond L. Smith joined the Company in January 1999 as Chief  Operating
         Officer and was  promoted to CEO on June 1, 2000.  Prior to joining the
         Company,  he  served  six  years  as  President  of US  Fleet  Leasing.
         Previously,  Mr.  Smith  was  with GE  Capital  for 15  years  where he
         graduated  from GE's  Financial  Management  Program and held  numerous
         positions  with  progressively  higher   responsibilities.   Mr.  Smith
         received  his BA  degree,  with  distinction,  from the  University  of
         Nebraska and MBA from Emory University.

         Graham R. F. Napier joined the Company in August 1999 as Executive Vice
         President of Engineering and was promoted to COO on June 1, 2000. Prior
         to joining the  Company,  he was vice  president  and general  manager,
         strategic  business  development  and supply  chain  services at Allied
         Signal Aerospace,  Inc.  Previous  experience also included a number of
         international  assignments  with Ryder  Integrated  Logistics and Lucas
         Industries plc. Mr. Napier received his BSC, with honors in Engineering
         Product  Design,  MSC in  Engineering  Production  from  University  of
         Birmingham and MBA with distinction, from Manchester Business School.

         Ronald  F.  Dutt  joined  the  Company  in May 1999 as  Executive  Vice
         President and Chief Financial Officer. Prior to joining the Company, he
         was Senior Vice  President of  Financial  Planning and Analysis at Visa
         International.   Previously,   Mr.  Dutt  served  in  senior  financial
         positions  at  USL   Capital,   and  held   positions   of   increasing
         responsibilities in the Controller's  Office and Corporate  Treasurer's
         Office at Ford Motor  Company.  He received his MBA from the University
         of Washington and BA from the University of North Carolina.

         Jan H.  Raymond has been General  Counsel of the Company  since 1985,
         Secretary  since 1991,  Senior Vice  President
         since 1993 and Executive Vice President since 1998.  Prior to joining
         the Company,  Mr. Raymond was an associate with
         the law firm of Brobeck,  Phleger & Harrison.  Mr. Raymond,
         who is a licensed  customs  broker,  holds a B.S. degree
         from Cornell University with a J.D. degree from the University of
         California at Berkeley's Boalt Hall School of Law.

         Eugene E.  Wojciechowski  joined the Company in January  1997 as Senior
         Vice  President and Chief  Information  Officer and became an Executive
         Vice President in April 1999. Prior to joining the Company, he was Vice
         President of Information Systems at USL Capital Corporation, a division
         of Ford Motor Company, and held positions of increasing  responsibility
         at  GE  Capital,  PHH  Group  Inc.,  and  ADP  Network  Services.   Mr.
         Wojciechowski holds a MBA in Information Systems from the University of
         Maryland and a B.S. in  Mathematics  and Business  Administration  from
         Towson State University.

         Janice J. Washburn  joined the Company in September  1998 as
         Controller  and  Principal  Accounting  Officer and was
         promoted to Vice President and Controller in November of 1999.
         Previously,  Ms. Washburn held financial positions of
         increasing responsibility at CIS Consulting,  Inc., APL Limited, Inc.,
         Pacific Gas & Electric Co. and Arthur Andersen
         & Co.  Ms.  Washburn  holds a B.A.  in  accounting  from the
         University  of Puget  Sound and is a  Certified  Public
         Accountant in the State of California.

         John R.  Skidmore  joined the Company in February  2000 as Vice
         President of Human  Resources.  Prior to joining the
         Company,  he was the Director of Human Resources at Catalytica,
         Incorporated.  Previously,  Mr. Skidmore held Senior
         Human  Resources  positions at  subsidiaries  of Ford  Financial
         Services.  He received his Masters  Degree in Human
         Resources  Management from Golden Gate University in San Francisco,
         California,  and his B.A. in Psychology from the
         University of Texas at Austin, Texas.

         Item 2 - Properties   (Not in thousands)

         As of May 31, 2000, the Company operated  approximately 400 offices and
         logistics  centers   worldwide,   including  its  headquarters  in  San
         Francisco.  The Company also operated approximately 133 warehousing and
         distribution  centers,  which  range in size from  approximately  1,000
         square feet to  approximately  595,000 square feet. The warehousing and
         distribution  centers totaled  approximately 9.0 million square feet as
         of May 31, 2000 of which the Company owns approximately  647,000 square
         feet and  leases the  remaining  space.  The  leases for the  Company's
         principal  properties  generally  have terms of three years or more and
         often include options to renew.  While some of the Company's leases are
         month-to-month and others expire in the near term, the Company does not
         believe  the  expiration  of any of its  leases  will  have a  material
         adverse effect on its  operations.  See Note 6 of Notes to Consolidated
         Financial Statements in Item 8.


         Item 3 - Legal Proceedings

         The Company is party to routine  litigation  incident to its  business,
         primarily  claims for goods  lost or  damaged in transit or  improperly
         shipped.  Most of the litigations in which the Company is the defendant
         are  covered  by  insurance  and are being  defended  by the  Company's
         insurance carriers.

         In 1996, a total of six  complaints  were filed (three in federal court
         and three in state court of California) against the Company and certain
         of its then officers and directors,  purporting to be brought on behalf
         of a class of  purchasers  or holders of the  Company's  stock  between
         August  28,  1995 and July 23,  1996.  The  complaints  allege  various
         violations  of  Federal   Securities  law  and   California   Corporate
         Securities law in connection with prior disclosures made by the Company
         and seek unspecified damages.

         The three class action  suits filed  against the Company in state court
         were  dismissed  with prejudice by the Superior Court of California for
         the County of San  Francisco on grounds the claims  asserted  under the
         California  Corporate  Securities  law and  common  law fraud  were not
         legally  tenable.  One  of  the  dismissals  was  reversed  on  appeal,
         permitting  the  plaintiff to file an amended  complaint.  That amended
         complaint  was  dismissed  with  leave  to  amend.  A  further  amended
         complaint  was filed and was  dismissed  without  leave to amend.  That
         dismissal is on appeal.

         The three class action suits filed against the Company in federal court
         were  consolidated  into one suit which was dismissed  with  prejudice,
         finding that  plaintiffs  had not alleged any statement  that was false
         and misleading in violation of the federal securities laws.  Plaintiffs
         filed an appeal with the Ninth Circuit Court of Appeals. On November 2,
         1999,  the Ninth  Circuit Court of Appeals  vacated the district  court
         dismissal and remanded the case to the trial court for  reconsideration
         in light of the  Ninth  Circuit  U.S.  Court of  Appeals  ruling in The
         Silicon Graphics Case.

         The  Company  is  unable  to  predict  the  ultimate  outcome  of these
         litigations  and it is possible  the outcome  could have a  significant
         adverse  impact  on  the  Company's  future  consolidated   results  of
         operations,  although the amount is not currently  estimable.  However,
         the Company  believes  the ultimate  outcome of these  matters will not
         have  a  significant  adverse  impact  on  the  Company's  consolidated
         financial position.


         Item 4 - Submission of Matters to a Vote of Security Holders

         None.


                                     PART II

         Item 5 - Market for the Registrant's Common Stock and Related Security
         Holder Matters

         The  Company's  common  stock is traded on the NASDAQ  national  market
         system under the symbol "FRTZ".

         The following  table sets forth the high and low closing sales price in
         the over-the-counter  market for the Company's common stock as reported
         by NASDAQ national market system under the symbol "FRTZ" for the period
         from June 1, 1998 to May 31, 2000.

<TABLE>
<CAPTION>

                                                                                   Price Range
                                                                     ----------------------------------------

                                                                            High                      Low
                                                                         ----------               -----------

<S>                                                                  <C>                       <C>

                    Fiscal Period 2000
                    --------------------------
                        First Quarter                                $       12.375            $       9.375
                        Second Quarter                                       11.500                    9.500
                        Third Quarter                                        11.000                    8.375
                        Fourth Quarter                                       11.063                    7.875

                    Fiscal Period 1999
                    --------------------------
                        First Quarter                                $       13.563            $       7.625
                        Second Quarter                                       10.000                    6.063
                        Third Quarter                                        12.063                    7.438
                        Fourth Quarter                                       11.813                    6.875
</TABLE>


         There  were  approximately  535  stockholders  of record as of June 28,
         2000. No cash dividends were paid to stockholders during the year ended
         May 31, 2000.

         The  Company  intends  to retain  its  future  earnings  for use in its
         business and,  accordingly,  anticipates no cash dividends will be paid
         to holders of shares of common stock in the foreseeable future.







<TABLE>
<CAPTION>

         Item 6 - Selected Financial Data
         (In Thousands Except Per Share Data)


                                                                 For the Year Ended May 31,
                                  ------------------------------------------------------------------------------------------
                                          2000              1999              1998              1997                1996
                                      -------------    ---------------    -------------    ----------------      -----------
<S>                                    <C>                  <C>               <C>                   <C>                <C>


        Revenue                    $     1,612,691          1,387,727        1,300,083           1,156,770    $   1,043,858
        Net Revenue                        619,340            577,977          558,265             509,371          457,568
        Merger and related costs              ----               ----             ----                ----           14,555  (a)
        Income from operations              32,527             25,051           25,813               2,858  (b)      38,659
        Net income                          17,425             13,452           18,090                 308           25,001
        Net income per share -
           basic                               .48                .37              .51                 .01              .73
        Net income per share -
          diluted                              .47                .37              .50                 .01              .71



        Total  assets                      825,232            726,908          720,813             723,516          733,462
        Long-term obligations,
          net of current portion           116,891             89,606          101,346              84,884           89,505

        Stockholders' equity               274,355            264,082          250,328             234,695          230,747

</TABLE>

a)            On May 30, 1995, the Company  completed its merger with Intertrans
              Corporation  (Intertrans),  which was  accounted  as a pooling  of
              interests.  In 1996, the Company  recorded  additional  merger and
              related costs of $14.6 million which were incurred in  association
              with the Intertrans' merger.


b)            The  results  in 1997  include  a third  quarter  increase  to the
              Allowance for Doubtful Accounts of approximately $17.0 million due
              to less than satisfactory collection performance.

         Item 7 - Management's Discussion and Analysis of Financial Condition
         and Results of Operations

         The Company operates its integrated  logistics business as two segments
         comprised of four  principal  services.  The segments are  comprised of
         United  States  Operations  and  Foreign   Operations.   The  Company's
         principal services are customs brokerage,  international airfreight and
         ocean freight forwarding and material management and distribution.

         Revenue for ocean and airfreight forwarding and surface  transportation
         consolidation  as an indirect carrier  includes the  consolidation  and
         transportation  costs (e.g., ocean freight costs).  Revenue for customs
         brokerage,  ocean and airfreight forwarding and surface  transportation
         as an agent  includes  only the fees and  commissions  related  to such
         shipments. Margin represents the ratio of net revenue to revenue.

         The  following  discussion  should  be read  in  conjunction  with  the
         consolidated financial statements and notes thereto.


         Results of Operations:

         For  comparative  purposes,  the following  tables are provided for the
         results of operations,  for the business segments,  for the years ended
         May 31, 2000, 1999 and 1998:

<TABLE>

<CAPTION>

         UNITED STATES OPERATIONS
                                                                                  For the Year Ended May 31,
                                                             --------------------------------------------------------------------
                                                                         2000                   1999                    1998
                                                             ------ ---------------        ----------------         -------------
<S>                                                             <C>                     <C>                      <C>
         Revenue
           Customs Brokerage                                     $     126,045          $          107,100       $       101,834
           Ocean Freight Forwarding                                    104,626                     107,166               112,176
           Airfreight Forwarding                                       196,599                     195,528               206,515
           Material Management and Distribution                         94,481                      97,327                87,776

                                                                    ===============        ================         =============
           Total Revenue                                         $     521,751          $          507,121       $       508,301
                                                                    ===============        ================         =============

         Net Revenue
           Customs Brokerage                                     $      126,045          $         107,100       $      101,834
           Ocean Freight Forwarding                                      52,405                     56,022               57,715
           Airfreight Forwarding                                         66,999                     66,930               63,253
           Material Management and Distribution                          77,809                     76,973               69,565
                                                                    ===============        ================         ============
           Total Net Revenue                                     $      323,258          $         307,025       $      292,367
                                                                    ===============        ================         ============

         Operating Expenses                                      $      321,599          $         294,830       $      277,856
                                                                    ---------------        ----------------         ------------

         Income From Operations                                  $        1,659          $          12,195       $       14,511
                                                                    ===============        ================         ============


         FOREIGN OPERATIONS

                                                                                 For the Year Ended May 31,
                                                             --------------------------------------------------------------------
                                                                         2000                   1999                    1998
                                                             ------ ---------------       -----------------         -------------
         Revenue
           Customs Brokerage                                     $          62,712     $            56,601       $        63,221
           Ocean Freight Forwarding                                        377,678                 308,942               263,757
           Airfreight Forwarding                                           523,840                 410,998               370,128
           Material Management and Distribution                            126,710                 104,065                94,676

                                                                    ===============       =================         =============
           Total Revenue                                         $       1,090,940     $           880,606       $       791,782
                                                                    ===============       =================         =============

         Net Revenue
           Customs Brokerage                                     $          62,712     $            56,601       $        63,221
           Ocean Freight Forwarding                                         74,819                  70,038                62,782
           Airfreight Forwarding                                           104,929                  99,902                95,261
           Material Management and Distribution                             53,622                  44,411                44,634
                                                                    ===============       =================         =============
           Total Net Revenue                                     $         296,082     $           270,952       $       265,898
                                                                    ===============       =================         =============

         Operating Expenses                                      $         265,214     $           258,096       $       254,596
                                                                    ---------------       -----------------         -------------

         Income From Operations                                  $          30,868     $            12,856       $        11,302
                                                                    ===============       =================         =============

</TABLE>





         Fiscal Year Ended May 31, 2000 Compared to Fiscal Year
         Ended May 31, 1999

         General:

         Revenue increased 16.2% to $1,612.7 million. Net revenue increased 7.2%
         to $619.3 million.  Operating expenses increased 6.1%, marginally lower
         than the net revenue increase.  The net gains on currency  transactions
         dropped  slightly to $1.6  million from $1.9 million in the prior year.
         Interest income increased $0.7 million and interest  expense  increased
         $2.8 million.

         United States Operations:

         Revenue and Net Revenue:

         Revenue increased 2.9% to $521.8 million. Net revenue increased by
         5.3%. Operating expenses increased by 9.1%.

         Customs brokerage revenue and net revenue increased 17.7%. The increase
         was largely due to the Company's  continuous effort to provide the most
         efficient and sophisticated computerized logistic services. The Company
         decided to consolidate the Customs Brokerage transaction  activities in
         Dallas,  in the new center called the "Center of  Excellence",  or COE.
         Highly skilled teams use the Company's new state of the art technology,
         Response  Tracking  Technology  (RT),  which  gives the  capability  to
         provide  the  most  effective  way of  tracking  the  status  of  every
         customer's inquiry.

         A significant portion of consistent customs brokerage growth every year
         stems  from  our  existing  client  base  reflecting  a  strong  client
         retention rate.  Fedex and Northern Border experienced revenue growth
         with 54.1% and 25.0%.  Border  operations,  which  account for almost
         one-fifth  of the total  entries  for the  period,  continue to reflect
         double-digit  growth rates driven  mostly by Canadian  imports.  Canada
         Border shows a 29.5% growth in file count.  The number of United States
         Customs entries filed by the Company increased  approximately  15.4% to
         3.1 million from 2.70 million in the prior year.

         Ocean freight  forwarding  revenue and net revenue  decreased  2.4% and
         6.5%, respectively. The decline in revenue and net revenue is primarily
         due to a decrease in combined  file  transaction  count of 20.0%, and
         as a direct reflection of the erosion of ocean container rates in all
         of the major tradelanes and regulatory constraints which restricted the
         ability of the Company to  promptly  pass  carrier  rate  increases  to
         customers. A General rate increase (GRI) was applied this year in ocean
         outbound services during regular and peak seasons.  In addition,  ocean
         export activity was down significantly due to the economic situation in
         Asia and Latin  America.  U. S.  export  orders and volume were down in
         both regions.  Inbound ocean freight demand  remained strong during the
         year.  Ocean inbound  shows a 15.3%  increase and inbound NVOCC shows a
         39.7% increase in revenue and net revenue.

         Airfreight forwarding revenue increased 0.5%, and net revenue increased
         by 0.1%.  Airfreight  forwarding  combined transactions files increased
         6.6%. The use of centralized  gateways to improve  consolidation,  cost
         control,  and increased  volume  purchasing  contributed  to the slight
         increase  in  net  revenue.   However,  during  the  year  the  Company
         experienced  upward  pressure  on pricing and  competition  holding net
         revenue flat from the prior year.

         Material  management and  distribution  revenue  decreased 2.9% but net
         revenue  increased by 1.1%. Decrease in revenue is a direct result of a
         decline in volumes.  However,  net revenue  reflects a slight  increase
         primarily  due to a 18.1%  direct  costs  decrease in  warehousing  and
         distribution. Operating Expenses:

         Operating  expenses increased 9.1% mostly due to costs incurred for the
         consolidation  of US  Customs  Brokerage  Processing  Center in Dallas,
         higher bonuses,  and hiring highly skilled  employees to handle growing
         change in the industry and annual  increases  in  compensation  levels.
         Operating  expenses as a  percentage  of net revenue rose to 99.5% from
         96.0% in the prior year.  The Company is committed to the  reduction of
         operating  expenses  through  the  continuing   implementation  of  its
         strategic  plan by focusing  resources, training personnel, and
         emphasizing customer satisfaction.

         In January  2000,  a new US  Customs  Brokerage  Processing  Center was
         opened in Dallas,  Texas.  For the year ended May 31, 2000, the Company
         incurred  consolidation  costs  of $6.3  million.  These  costs  relate
         primarily  to  job  relocation  and  general  implementation  expenses.
         Without these non-recurring  costs,  diluted earnings per share for the
         year would have been 59 cents.  The Company is  expected to  experience
         favorable impacts on future earnings beginning with fiscal year 2001 as
         a result of these investments.


         Foreign Operations:

         Revenue and Net Revenue:

         Revenue  increased by 23.9% and net revenue  increased 9.3%  reflecting
         the Company's  continuous  effort to provide high quality  service that
         primarily  focuses on customer  satisfaction  resulting in  maintaining
         existing clients.

         The effect of translation  rate changes during the period resulted in a
         decrease in net revenue during 2000 of approximately $11.9 million. The
         resultant  growth  rate was  adversely  affected by  approximately  4.4
         percentage points.

         Customs brokerage revenue and net revenue increased 10.8% primarily due
         to increases in  files  processed  from  existing  major  clients.
         Results  reflect  significant improvement in Canada and Latin America.

         Ocean freight  forwarding  revenue increased by 22.2% while net revenue
         increased by 6.8%. Ocean freight demand remained strong  throughout the
         year.  During the year the Company  continued to expand market share by
         offering  competitive  market rates to customers.  Both ocean  outbound
         services and ocean  inbound  services  showed  significant  increase in
         volume  in  shipments   generated   from  existing  and  new  customers
         particularly in Canada,  United Kingdom and Europe.  The United Kingdom
         accounted for 39.8% increase in revenue.  The minimal  growth in net
         revenue is due to ocean  export  revenue,  which  consists  of fees and
         commissions, and was negatively impacted because lower shipping  costs
         produce lower commissions.

         Air  freight  forwarding  revenue  increased  by 27.5% and net  revenue
         increased 5% primarily due to a volume  increase in shipments  from the
         Asia to North  America  and  Europe.  The United  Kingdom and Hong Kong
         accounted for 65.0% of the favorable increase in gross revenue.
         Focusing on aggressive sales with existing clients in the local market
         to the revenue growth particularly in Asia.

         Material management and distribution revenue increased by 21.8% and net
         revenue  increased  20.7%.  The opening of the Company's 400,000 plus
         square foot warehouse in South China in the first quarter of fiscal
         2000 has provided the Company significant growth in revenue and net
         revenue for these services. In addition, Europe's continuous growth
         in this area contributed  significantly  to the increase in revenue
         and net revenue. The United Kingdom  reported  a 47.2% increase
         in revenue  and 38.7% increase in net revenue. Other locations that
         had significant favorable increases in revenue were Austria,
         Switzerland and the Netherlands.

         Operating Expenses:

         Operating  expenses  increased 2.8% as a result of hiring new employees
         from  top   management  to  operational   level  to  improve   customer
         satisfaction  and  handle  growing  change in the  industry  and annual
         increases in different  compensation  levels.  Operating  expenses as a
         percentage  of net  revenue  decreased  to 89.6% in 2000 from  95.3% in
         1999.


         Fiscal Year Ended May 31, 1999 Compared to Fiscal Year Ended May 31,
         1998

         General:

         Revenue increased 6.7% to $1,387.7 million.  Net revenue increased 3.5%
         to $578.0 million. Operating expenses increased 3.8%, marginally higher
         than the net revenue increase.  The net gains on currency  transactions
         dropped  significantly  to $1.9  million from $7.3 million in the prior
         year.  This drop was  partially  offset by a $0.6  million  increase in
         interest income and a $0.8 million decrease in interest expense.

         United States Operations:

         Revenue  and Net  Revenue:  Revenue  was flat for the  current  year
         but net  revenue  increased  by 5.0%.  Operating
         expenses increased by 6.1%.

         Customs  brokerage revenue and net revenue increased 5.2%. The increase
         was largely due to growth in the retail and electronics industries from
         both new and existing  customers.  Most of this growth  involved  goods
         being  shipped  from Asia,  fueled by the robust  American  economy.  A
         significant  portion of this growth  stemmed from our  existing  client
         base reflecting a strong client retention rate. Pricing continued to be
         relatively  stable,  though  slight  erosions  occurred  in our  border
         locations.  The number of United  States  Customs  entries filed by the
         Company increased  approximately 1.8% to 2.70 million from 2.65 million
         in  the  prior  year.  Border  operations,  which  account  for  almost
         one-fifth  of the total  entries  for the  period,  continue to reflect
         double-digit growth rates driven mostly by Canadian imports.  Rescoping
         major accounts  contributed to the improvement of margin.  In addition,
         approximately    one-half   of   the   customs   brokerage   processing
         documentation  has been  centralized  to  improve  the  quality  of the
         product.

         Ocean freight  forwarding  revenue and net revenue  decreased  4.5% and
         2.9%,  respectively.  Inbound  ocean  freight  demand  remained  strong
         throughout  1999.  In  addition  the  Company  added  a  number  of new
         accounts.  Ocean freight rates from the Far East, the Company's largest
         trade lane, increased in the last half of the year.  Conversely,  ocean
         export activity was down significantly due to the economic situation in
         Asia, Latin America and Russia. U.S. export orders and volume were down
         in all three regions.  While ocean outbound NVOCC revenue from the U.S.
         increased only slightly,  net revenue  increased by more than 10%. Lack
         of growth in revenue  was a direct  reflection  of the erosion of ocean
         container rates in all of the major trade lanes.  Growth in net revenue
         was due to our ability to buy ocean  container  spaces,  either through
         service contracts, or on the spot market at favorable rate levels.

         Airfreight  forwarding  revenue decreased 5.3%, due to decreased volume
         to Asia,  Europe and Latin America and the strength of the U.S. dollar.
         However,  net revenue  increased by 5.8% due to the use of  centralized
         gateways to improve  consolidation,  cost control, and increased volume
         purchasing.

         Material management and distribution  revenue and net revenue increased
         10.9% and 10.6%,  respectively.  The  greatest  growth was in  Seattle,
         Dallas,  Atlanta,  Rochester  and Los Angeles  where new  customers and
         increased  volumes  drove the  increase in revenue.  In  addition,  the
         growth in revenue  and net  revenue  was due to  increased  demand from
         existing  integrated   logistics   customers,   expansion  of  overseas
         services,  expansion  of  warehouse  facilities  and the strong  United
         States  economy.  Rescoping of certain  customers led to an increase in
         revenue and margin.

         Operating  Expenses:  Operating expenses  increased 6.1%.  Salaries and
         related costs increased due to higher labor costs  associated with Year
         2000  compliance  and  the  Company's  new  global  transportation  and
         financial  systems,  and  higher  medical  insurance  costs.  Operating
         expenses as a percentage of net revenue rose to 96.0% from 95.0% in the
         prior year.  The Company is  committed  to the  reduction  of operating
         expenses through the continuing  implementation  of its strategic plan,
         previously discussed,  by focusing resources,  training personnel,  and
         emphasizing customer satisfaction.

         Foreign Operations:

         Revenue and Net  Revenue:  Revenue  increased  by 11.2% but net revenue
         increased  only 1.9%  reflecting the higher costs  associated  with the
         imbalance of trade with the U.S. The effect of translation rate changes
         during the period  resulted in a decrease in net revenue during 1999 of
         approximately  $12.4 million.  The resultant  growth rate was adversely
         affected by approximately 4.6 percentage points.

         Customs  brokerage  revenue and net revenue  decreased 10.5% reflecting
         the large  reduction in traffic going into the foreign  locations  from
         the U.S.

         Ocean freight  forwarding  revenue increased by 17.1% while net revenue
         increased by 11.6%.  The margin  decrease  reflected  the soft European
         market and the resultant  pressure on margins.  The Company is focusing
         on increasing  NVOCC business in an attempt to improve  margins.  Ocean
         Export revenue,  which consists of documentation  fees and commissions,
         was  negatively  impacted  because lower  shipping  costs produce lower
         commissions.

         Air freight  forwarding  revenue  increased  by 11.0% while net revenue
         increased  4.9%,  the  pressure on margins  again  reflecting  the soft
         European  markets.  The perceived  turnaround of the Asian economies in
         the third quarter of fiscal 1999 began to improve air margins.

         Material management and distribution revenue increased by 9.9%, however
         net revenue remained at prior year levels. The scheduled opening of the
         Company's 400,000 plus square foot  warehouse in South China in the
         first quarter of fiscal 2000  should  position  the  Company  for
         further  growth in revenue and net revenue for these services.

         Operating Expenses:

         Operating expenses increased 1.4%. Salaries and related costs increased
         due to higher labor costs  associated with Year 2000 compliance and the
         implementation of the Company's new global transportation and financial
         systems.  Operating  expenses as a percentage of net revenue were 95.3%
         in 1999 and 95.7% in 1998.


         Liquidity and Capital Resources

         Cash and equivalents were $55.5 million at May 31, 2000, representing a
         9.7% increase from $50.6 million at May 31,1999.  Positive  operational
         cash  flow  of  $15.0  million  was  used  to  partially  fund  capital
         expenditures  of $35.7 million  resulting in negative free cash flow of
         $20.7 million.  Capital  expenditures  consisted mostly of expenditures
         for  computer  hardware  and  software,  leasehold  improvements,   and
         warehouse  equipment.  The disappointing free cash flow performance can
         be explained by an increase in working capital  requirements during the
         year,  particularly in accounts receivable.  The size and growth of the
         company's  pass-thru  billings  is one of the  primary  reasons for the
         increase  in  accounts  receivable,  and a number  of  initiatives  are
         underway to address this issue.

         The Company paid cash of $1.6 million  relating to prior  acquisitions.
         These  payments  consisted of reductions to existing debt totaling $1.5
         million  and  $0.1million  for  contingency  payments to the sellers of
         previously  acquired  businesses  and to  purchase  all or  part of the
         remaining minority interest in previously acquired companies.

         On March 27, 1998, the Company  entered into a $100 million  syndicated
         multi-currency credit facility (Credit Facility),  maturing March 2001.
         In March 1999,  this facility was extended to expire in March 2002. The
         purpose of the  Credit  Facility  is to  provide  letters of credit and
         working capital not covered by internally  generated funds. The Company
         must maintain  compliance with certain financial  covenants such as: 1)
         minimum  working  capital,  2) minimum net worth,  3) maximum  leverage
         ratio, 4) minimum fixed charge  coverage ratio,  and 5) maximum capital
         expenditures.  As of May 31, 2000,  the balance  outstanding  under the
         Credit  Facility was $33.6  million and the weighted  average  floating
         interest  rate as of that date was 7.2%.  At May 31, 2000,  the Company
         was  contingently  liable for letters of credit of $15.4  million which
         reduces the  Company's  borrowing  capacity  under the  current  credit
         facility.  Therefore,  the Company's total available capacity under the
         credit facility as of May 31, 2000 was approximately $51.0 million. The
         Company had $10.7 million in similar  letters of credit  outstanding at
         May 31, 1999 under the Company's credit facility then in effect.

         On May 26, 2000, the Company entered into a $25 million credit facility
         with the Bank of America  maturing  on August 15,  2000.  The  facility
         bears interest based on LIBOR and 1.375% and requires  compliance  with
         the covenants  contained in the existing $100 million  syndicated  bank
         credit facility. This facility is intended to temporarily add borrowing
         capacity  during the early part of the Company's  peak season while the
         Company negotiates a new expanded syndicated bank credit facility.  The
         Company has engaged Bank of America to lead this syndication process.

         The Company makes significant  disbursements on behalf of its customers
         for items such as customs duty and taxes and carrier payments. Billings
         to customers  for these  disbursements,  which can be several times the
         amount of the revenue derived from these transactions, are not recorded
         as revenue  and  expenses  in the  Company's  income  statement.  These
         obligations,  which greatly exceed reported  revenues,  are recorded as
         amounts due from customers and trade accounts payable.

         "Safe Harbor" Statement Under the Private Securities Litigation Reform
         Act of 1995:

         In this filing, the Company makes  forward-looking  statements that are
         subject to risks and uncertainties.  These  forward-looking  statements
         include  information  about  possible or assumed  future results of our
         operations,  plans, events, expectations or objectives.  Also, when any
         of  the  words   "believes",   "expects",   "anticipates"   or  similar
         expressions are used the Company is making forward-looking  statements.
         Many  possible  events or factors  could  affect  the future  financial
         results and performance of the Company.  Any of these events or factors
         could cause  results or  performance  to differ  materially  from those
         expressed in our forward-looking  statements.  These possible events or
         factors include the following:


         Year 2000

         Many computer systems,  including some utilized by the Company, use
         only two digits to  represent  the year in date  fields.  These
         systems  may be unable to accurately process certain data before,
         during, or after the year 2000. Business and governmental  entities
         are at risk for possible miscalculations  or systems failures,
         possibly causing  disruptions in their  business  operations.
         This is  commonly  known as the Year 2000 (Y2K) problem.

         Fritz Companies  successfully  entered Year 2000 without  disruption to
         its  services  from  the  Y2K  problem.   The  Company  monitored  each
         significant  office  located  globally  on  January  1,  2000 to ensure
         offices had power,  telecommunications,  and access to systems. Various
         operational, financial,  administrative, and telecommunication systems;
         PCs; and  facilities  are  reported to be  functioning  correctly  with
         regard to dates.  While the  Company  is  reasonably  certain  that all
         systems are  functioning and  calculating  correctly,  the Company will
         continue to monitor its systems, as date-related  problems may possibly
         appear in the  future.  While  the  Company  has  tested  all  critical
         systems,  they cannot  guarantee  that all  date-related  processing or
         calculation errors have been located and corrected.


         The Company's business may be materially affected if its systems or the
         systems of critical  third  parties have  date-related  problems in the
         future. The possible consequences of noncompliance include, among other
         things,  the  inability  to provide  services  to certain  areas of the
         world,  delays in product  delivery,  invoicing  errors,  and  possible
         collection difficulties.  The Company may be required to shift portions
         of its daily  operations to manual  processes and thus face time delays
         in its operations as well as increased  processing  costs. In addition,
         the  Company  may not be able to  provide  customers  with  timely  and
         pertinent  information  regarding  their orders or shipments.  This may
         negatively  affect customer  relations and potentially lead to the loss
         of customers. The Company is unable to estimate the potential financial
         impact of these scenarios.  However,  the Company believes that its Y2K
         contingency  plans should help to reduce material  adverse effects that
         such disruptions may create.


         The total cost to replace or modify the Company's  business systems for
         Year 2000 compliance was $6.1 million.  However, if future date-related
         problems  occur,  the total  cost may  increase.  The  funding  for Y2K
         compliance has been paid through  internally  generated cash flows from
         operations or borrowed funds.


         New Accounting Standards

         In June 1998, the Financial Accounting Standards Board issued Statement
         of  Financial  Accounting  Standards  (SFAS) No. 133,  "Accounting  for
         Derivative   Instruments   and  Hedging   Activities".   SFAS  No.  133
         establishes   accounting   and  reporting   standards  for   derivative
         instruments, including certain derivative instruments embedded in other
         contracts  and for  hedging  activities.  It  requires  that an  entity
         recognize  all  derivatives  as  either  assets or  liabilities  in the
         statement of financial  position and measure those  instruments at fair
         value. The Company is currently  evaluating the impact, if any, of SFAS
         no.  133,  as  amended  by SFAS  No.  137 and SFAS  No.  138,  which is
         effective  for all  quarters of fiscal years  beginning  after June 15,
         2000.

         In December 1999, the Securities and Exchange  Commission  (SEC) issued
         Staff  Accounting  Bulletin No. 101 (SAB 101),  Revenue  Recognition in
         Financial Statements as amended by SAB 101A, which provides guidance on
         the recognition,  presentation,  and disclosure of revenue in financial
         statements filed with the SEC. SAB 101 outlines the basis criteria that
         must be met to recognize  revenue and provides guidance for disclosures
         related to revenue recognition  policies.  In June 2000, the SEC issued
         SAB 101B which  deferred the  effective  date of SAB 101 until the last
         quarter of fiscal years  beginning after December 15, 1999. The Company
         does not expect the  adoption  of SAB 101 to have a material  effect on
         its consolidated financial position or results of operations.


         In March 2000, the FASB issued  Interpretation  No. 44,  Accounting for
         Certain Transactions involving Stock Compensation, an interpretation of
         APB Opinion No. 25. This  Interpretation  clarifies the  application of
         Opinion 25 for certain  issues:  (a) the  definition  of  employee  for
         purposes  of  applying  Opinion 25, (b) the  criteria  for  determining
         whether a plan qualifies as a non-compensatory plan, (c) the accounting
         consequence of various modifications to the terms of a previously fixed
         stock option or award,  and (d) the accounting for an exchange of stock
         compensation  awards  in  a  business  combination.   Generally,   this
         Interpretation  is effective  July 1, 2000. The Company does not expect
         the adoption of Interpretation  No. 44 to have a material effect on its
         consolidated financial position or results of operations.


         Currency and Other Risk Factors

         The Company's  worldwide  operations are transacted in many  currencies
         other  than the U.S.  dollar.  Accordingly,  the  Company is exposed to
         inherent  risks of  international  currency  markets  and  governmental
         regulations.  The Company  manages these currency  exposures  through a
         variety  of means  such as  hedging,  conversion  of local cash to U.S.
         dollars, and accelerating and decelerating international payments among
         the Company's offices and agents.

         The Company's  translation  adjustment and foreign  exchange losses for
         fiscal year 2000 increased due to the  strengthening of the U.S. dollar
         relative to certain  currencies of Asia, Europe and Latin America.  The
         charge to equity in the currency translation adjustment during 2000 was
         $7.7 million while net foreign  currency gains  realized  during fiscal
         year 2000 were  approximately  $1.6  million.  Devaluation  of  foreign
         currencies could adversely  impact the financial  results of operations
         in future periods.

         The  Company's  ability to provide  service to its  customers is highly
         dependent on good working relationships with a variety of entities such
         as airlines,  steamship carriers and governmental agencies.  Changes in
         space  allotments  available from carriers,  governmental  deregulation
         efforts,  regulations  governing  the  Company's  products,  and/or the
         international  trade and tariff  environment could affect the Company's
         business in unpredictable ways.

         Management  believes the Company's  business has not been significantly
         or  adversely  affected by  inflation  in the past.  Historically,  the
         Company has generally been  successful in passing cost increases to its
         customers by means of price increases. However, competitive marketplace
         conditions  could impede the  Company's  ability to pass on future cost
         increases to customers and could erode the Company's operating margins.

         Additional risks and uncertainties include:

                  (i) The  Company's  ability to continue its program to improve
                      operating  results  and cash  flows,
                 (ii)  Dependence  of the Company  on  international   trade
                       resulting from favorable worldwide economic conditions,
                (iii)  Dependence of the Company on continued services of key
                       executives and managers,
                 (vi)  The  possible  inability of the  Company's  information
                       systems to keep pace with the increasing complexity and
                       growth of the Company's business.
                  (v)  The  increasing  level of  investment  required  by the
                       transition  of the Company from prior  predominance  of
                       customs brokerage revenue to an increasing  emphasis on
                       integrated  logistics  and  providing  a full  range of
                       international    transportation    and   supply   chain
                       management services,
                 (vi)  Other risks disclosed elsewhere in this Form 10-K or in
                       the  Company's  other filings with the  Securities  and
                       Exchange Commission.


         Item 7a- Quantitative and Qualitative Market Risk Disclosure

         The  Company  is  exposed  to market  risks in the  ordinary  course of
         business.  These risks  relate  primarily  to  fluctuations  in foreign
         currency  exchange  rates  and short  term  interest  rates.  Financial
         derivatives  are  employed to manage  these risks in certain  countries
         under  certain  circumstances.  Under no  circumstances  are  financial
         derivatives utilized for trading or speculative purposes.


         Foreign Exchange Sensitivity

         The Company maintains  worldwide  operations and transacts  business in
         many  currencies  other than the U.S.  dollar.  Because  the  Company's
         foreign subsidiaries are typically local-currency  functional entities,
         the Company is exposed to  transactional  and  translational  gains and
         losses  as  relative  currency  values  fluctuate.  As  a  result,  the
         Company's  consolidated  cash  flow  and  net  income  are  subject  to
         variations due to changes in exchange rates.

         The Company utilizes derivative financial instruments to reduce foreign
         currency exchange and interest rate risks.  The Company does not enter
         into financial instruments for trading or speculative purposes.  Gains
         and losses on forward exchange contracts used to hedge the currency
         fluctuations on transactions denominated in foreign currencies and the
         offsetting losses and gains on hedged transactions are recorded in the
         "Other income (expenses)" caption in the income statement.

         The Company manages its currency risks through a variety of means, such
         as  employing  financial  derivatives,  converting  local  cash  to  US
         dollars, and accelerating and decelerating payments among the Company's
         offices and agents.  Financial  derivatives  typically take the form of
         forward foreign  exchange  contracts,  though options are  occasionally
         purchased  to  hedge  certain  transactions.

         As of May 31,  2000,  the Company had forward contracts  outstanding
         of $28.6 million  equivalent value  and had no  option  contracts
         maturities ranging from June 1, 2000 to July 3, 2000, with weighted
         average maturity of one day. The estimated fair value of foreign
         currency contracts represent the amount required ot enter into
         offsetting contracts with similar remaining maturities based on quoted
         market prices.  At May 31, 2000, the difference between the contract
         amounts and the fair values was immaterial. A 10.0% change in value of
         the functional currency relative to the underlying  currency  of
         these forward  contracts would negatively  impact the Company's
         earnings by $2.9  million.  However, these  forwards  contracts  hedge
         underlying payables or  receivables and therefore the net impact of
         the change in currency values would be negligible.

         The  Company's  earnings are  sensitive to changes in foreign  exchange
         rates due to the revaluation of monetary assets and liabilities.  These
         balance sheet items,  denominated in  non-functional  currency  include
         cash, accounts receivable, accounts payable and debt.

         The table below provides the U.S.  dollar  equivalent of these balances
         summarized as assets and  liabilities  and shows the sensitivity of the
         net  exposure  to a 10.0%  change in value of the  functional  currency
         relative to the non-functional currency.


<PAGE>
<TABLE>

<CAPTION>



         ($ amounts in millions)
                                                                                            Gain/ (Loss) if
                                                                                          Functional Currency
         Non-Functional         Cash             A/P &                                Appreciates       Depreciates
         Currency               & A/R            Debt            Net Exposure               10%              10%

<S>                             <C>              <C>               <C>                     <C>              <C>

         U.S. Dollar            137.5            (42.5)             94.9                   (9.5)             9.5

         All Other               23.9            (42.6)            (18.7)                   1.9             (1.9)

</TABLE>

         Interest Rate Sensitivity

         The Company's  exposure to interest rate risk relates  primarily to its
         cash and short-term  investments and its debt obligations.  The Company
         currently does not employ any financial  derivatives to manage the risk
         associated with its cash investments. It does however, currently employ
         a swap to convert a portion of its variable rate debt to a fixed rate.

         The Company uses an interest rate swap to manage the interest cost and
         the risk associated with changing interest rates.  As interest rates
         change, the differential paid or received is recognized in interest
         expense of the period.

         As of May 31, 2000, the Company had an interest rate swap outstanding
         with notional value of SGD 7,000.  This swap mitigates the interest
         exposure of a subsidiary's long-term debt.  The interest swap will
         mature in the year 2002.  It requires the Company to pay interest at a
         fixed rate of 6.5%, and receive interest at the floating rate based on
         the Singapore Interbank Offered Rate, which was 2.6% on May 31, 2000.
         The fair value of this instrument represents the estimated receipts or
         payments that would be made to terminate the agreement.
         At May 31, 2000, the Company would have paid $348 to terminate the
         agreement.

         At May 31,  2000  the  Company  had  $55.5  million  of cash  and  cash
         equivalents,  subject to variable,  short-term  interest  rates. On the
         same date, the Company had debt obligations of $119.4 million, of which
         $36.3 million was subject to variable,  short-term  interest rate risk.
         In  addition,  the  Company  had $13.7  million  of  off-balance  sheet
         transactions which were subject to variable interest rate risk. The net
         exposure of the Company to variable,  short-term  interest rate risk is
         therefore  $5.5  million.  A  hypothetical   increase  or  decrease  in
         variable,  short-term  interest  rates of 1% would  have an  immaterial
         effect on the Company's earnings.


         Item 8 - Financial Statements and Supplementary Data

         The  information  required  by this  item  is set  forth  at the  pages
         indicated in Item 14(a) of this Annual Report.



         Item 9 - Changes in and Disagreements with Accountants on Accounting
         and Financial Disclosure

         None.

                                    PART III


         Item 10 - Directors and Executive Officers of the Registrant

         The  information  required  by this  item  is  incorporated  herein  by
         reference  from the  sections  entitled  "Election  of  Directors"  and
         "Section  16(a)  Beneficial  Ownership  Reporting  Compliance"  of  the
         Company's  definitive  proxy  statement to be filed with the Securities
         and Exchange Commission no later than 120 days after the Company's year
         end  and  to be  delivered  by  the  Company  to  its  shareholders  in
         conjunction with the 2000 Annual Meeting of Shareholders. See also Item
         1 above.


         Item 11    -   Executive Compensation

         The  information  required  by this  item  is  incorporated  herein  by
         reference  from  the  sections  entitled   "Compensation  of  Executive
         Officers,"  "Options  Granted to Executive  Officers"  and  "Employment
         Agreements"  of the Company's  definitive  proxy  statement to be filed
         with the  Securities  and  Exchange  Commission  no later than 120 days
         after the Company's  year end and to be delivered by the Company to its
         shareholders   in   conjunction   with  the  2000  Annual   Meeting  of
         Shareholders.


         Item 12  -   Security Ownership of Certain Beneficial Owners and
         Management

         The  information  required  by this  item  is  incorporated  herein  by
         reference  from the  section  entitled  "Ownership  of  Management  and
         Principal  Stockholders" of the Company's definitive proxy statement to
         be filed with the Securities and Exchange  Commission no later than 120
         days after the Company's year end and to be delivered by the Company to
         its  shareholders  in  conjunction  with the  2000  Annual  Meeting  of
         Shareholders.


         Item 13    -   Certain Relationships and Related Transactions

         The  information  required  by this  item  is  incorporated  herein  by
         reference from the section entitled  "Transactions with the Company" of
         the  Company's   definitive  proxy  statement  to  be  filed  with  the
         Securities  and  Exchange  Commission  no later than 120 days after the
         Company's  year  end  and  to  be  delivered  by  the  Company  to  its
         shareholders   in   conjunction   with  the  2000  Annual   Meeting  of
         Shareholders.


<PAGE>



                                     PART IV

         Item 14    -   Exhibits, Financial Statement Schedules and Reports on
                        Form 8-K

         (a)    The following documents are filed as part of this report on
                Form 10-K:                                              Page No.

                (1)   Consolidated Financial Statements of the Company:
                           Consolidated Balance Sheets                      F-1
                           Consolidated Statements of Operations            F-2
                           Consolidated Statements of Stockholders' Equity
                           And Comprehensive Income                         F-3
                           Consolidated Statements of Cash Flows            F-4
                           Notes to Consolidated Financial Statements       F-5
                           Independent Auditors' Report                     F-22

                (2)   Financial Statement Schedules:

                           Schedule II - Valuation and Qualifying Accounts  F-23

                           All  other   schedules  are  omitted  by  absence  of
                           conditions  under  which  they would be  required  or
                           because the required  information  is included in the
                           consolidated financial statements or notes thereto.

                (3) Exhibits:

                           See attached Exhibit Index                    F-24

         (b)      The Company filed the following reports on Form 8-K from
                  March 1, 2000 through the date hereof in 2000:

                  1. On August 20,  1999,  the Company  entered into an
                     agreement with Federal Express  Corporation to amend the
                     existing U.S. Customs Brokerage Service Agreement dated
                     August 25, 1998.







<PAGE>




                                   Signatures

         Pursuant  to  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:    August 8, 2000

                                                      FRITZ COMPANIES, INC.

                                                      By     /s/ Lynn C. Fritz
                                                                 Lynn C. Fritz
                                                         Chairman of the Board

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
         this  report has been signed  below on August 8, 2000 by the  following
         persons on behalf of the registrant and in the capacities indicated.

         Signature                Title                          Date

         /s/ Lynn C. Fritz        Chairman of the Board          August 8, 2000
         Lynn C. Fritz

         /s/ Raymond L. Smith     Chief Executive Officer        August 8, 2000
         Raymond L. Smith

         /s/ Graham R. F. Napier  Chief Operating Officer        August 8, 2000
         Graham F. R. Napier


         /s/ Ronald F. Dutt       Executive Vice President       August 8, 2000
         Ronald F. Dutt           and Chief Financial Officer
                                  and Principal Financial Officer

         /s/ Janice J. Washburn   Vice President and Controller  August 8, 2000
         Janice J. Washburn

         /s/ James E. Gilleran    Director                       August 8, 2000
         James E. Gilleran

         /s/ Preston Martin       Director                       August 8, 2000
         Preston Martin

         /s/ Paul Otellini        Director                       August 8, 2000
         Paul Otellini

         /s/ William J. Razzouk   Director                       August 8, 2000
         William J. Razzouk


<PAGE>


FRITZ COMPANIES, INC.                                                FORM 10-K
         F-45

<TABLE>



                           CONSOLIDATED BALANCE SHEETS
                    (In thousands, except per share amounts)

<CAPTION>

                                                                                             May 31,             May 31,
                                                                                              2000                1999
                                                                                           ------------         ----------

                                                                       ASSETS

<S>                                                                                     <C>                  <C>

    CURRENT ASSETS:
        Cash and equivalents                                                            $       55,481       $     50,599
        Accounts receivable, net of allowance for
            doubtful accounts of $19,381 in 2000 and $20,466 in 1999                           485,679            396,640
        Deferred income taxes                                                                   14,468             16,461
        Prepaids and other current assets                                                       13,132             17,860
                                                                                           ------------         ----------
        Total current assets                                                                   568,760            481,560
                                                                                           ------------         ----------

    PROPERTY AND EQUIPMENT - NET                                                               110,208            103,535
                                                                                           ------------         ----------
    OTHER ASSETS:
        Intangibles, net of accumulated amortization of $25,348
            in 2000 and $21,362 in 1999                                                        107,148            112,666
        Deferred income taxes                                                                   24,903             13,395
        Other assets                                                                            14,213             15,752
                                                                                           ------------         ----------
        Total other assets                                                                     146,264            141,813
                                                                                           ------------         ----------

             TOTAL ASSETS                                                               $      825,232       $    726,908
                                                                                           ============         ==========

                                            LIABILITIES AND STOCKHOLDERS' EQUITY

    CURRENT LIABILITIES:
         Current portion of long-term obligations and short-term
           borrowings                                                                   $        2,479       $      4,333
         Accounts payable                                                                      291,576            255,706
         Accrued liabilities                                                                   113,370             87,562
         Income tax payable                                                                     18,089             15,348
                                                                                           ------------         ----------
         Total current liabilities                                                             425,514            362,949
                                                                                           ------------         ----------

    LONG-TERM OBLIGATIONS                                                                      116,891             89,606
    OTHER LIABILITIES                                                                            8,472             10,271
                                                                                           ------------         ----------
             TOTAL LIABILITIES                                                                 550,877            462,826
                                                                                           ------------         ----------

    COMMITMENTS AND CONTINGENCIES

    STOCKHOLDERS' EQUITY
    Common stock: par value $.01 per share;
              60,000 shares authorized, 36,702 shares
              issued and outstanding, (36,420 shares
              issued and outstanding in 1999)                                                      366                364
    Additional paid-in capital                                                                 139,474            138,369
    Treasury stock - at cost                                                                      (706)              (174)
    Retained earnings                                                                          161,862            144,437
    Accumulated other comprehensive loss                                                       (26,641)           (18,914)
                                                                                           ------------         ----------
         Total stockholders' equity                                                            274,355            264,082
                                                                                                                ----------
                                                                                           ============
             TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                 $      825,232       $    726,908
                                                                                           ============         ==========






      See   accompanying    notes   to   consolidated financial statements.

</TABLE>
<PAGE>
<TABLE>

<CAPTION>

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share amounts)


                                                                                  Year Ended May 31,
                                                             ----------------- --- ---------------- -- -----------------
                                                                         2000                 1999                 1998
                                                             -----------------     ----------------    -----------------

<S>                                                       <C>                   <C>                 <C>

REVENUE                                                   $         1,612,691   $        1,387,727  $         1,300,083
FREIGHT CONSOLIDATION COSTS                                           993,351              809,750              741,818
                                                             -----------------     ----------------    -----------------
NET REVENUE                                                           619,340              577,977              558,265
                                                             -----------------     ----------------    -----------------

OPERATING EXPENSES
   Salaries and related costs                                         354,749              342,211              326,025
   CHB consolidation costs                                              6,253                    0                    0
   General and administrative                                         225,811              210,715              206,427
                                                             -----------------     ----------------    -----------------
     Total operating expenses                                         586,813              552,926              532,452
                                                             -----------------     ----------------    -----------------

INCOME FROM OPERATIONS                                                 32,527               25,051               25,813
OTHER INCOME (EXPENSE)                                                 (6,347)              (5,268)                789
                                                             -----------------     ----------------    -----------------
INCOME BEFORE  INCOME TAX EXPENSE                                      26,180               19,783               26,602
INCOME TAX EXPENSE                                                      8,755                6,331                8,512
                                                             -----------------     ----------------    -----------------

NET INCOME                                                $            17,425   $           13,452  $            18,090
                                                             =================     ================    =================


Weighted average shares outstanding - Basic                            36,572               36,203               35,744
                                                             =================     ================    =================

Net income per share - Basic                              $               .48   $              .37  $               .51
                                                             =================     ================    =================

Weighted average shares outstanding - Diluted                          36,729               36,290               36,128
                                                             =================     ================    =================

Net income per share - Diluted                            $               .47   $              .37  $               .50
                                                             =================     ================    =================


























       See   accompanying    notes   to   consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>


       CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
                                 (In Thousands)

<CAPTION>

                                                                                                        Accumulated
                                                         Additional                                        Other           Total
                                                          Paid-In      Retained       Treasury Stock   Comprehensive   Stockholders'
                                                                                  -------------------
                                      Shares    Amount    Capital      Earnings    Shares     Amount      Loss            Equity
                                    ---------   -------  -----------  ----------- --------  ---------  ------------   --------------
<S>                                 <C>         <C>       <C>         <C>         <C>       <C>         <C>           <C>

Balance, May 31, 1997               35,445      $  354    $ 124,424   $  112,895        0   $       0   $  (2,978)    $     234,695

Net income                                                                18,090                                             18,090
Foreign currency translation
   adjustment                                                                                              (9,835)           (9,835)
                                                                                                                        ------------
Comprehensive loss                                                                                                            8,255
Common stock issued in acquisition
   of companies                          161         2        2,155                                                           2,157
Stock grants and options exercised       251         3        4,796                                                           4,799
Employee Stock Purchase Plan              39                    422                                                             422

                                    ---------     -----     --------    --------- --------  ----------  -----------    -------------
Balance, May 31, 1998                 35,896    $  359    $ 131,797   $  130,985        0   $       0   $  (12,813)    $    250,328

Net income                                                                13,452                                             13,452
Foreign currency translation
   adjustment                                                                                               (6,101)          (6,101)
                                                                                                                       -------------
Comprehensive income                                                                                                          7,351
Common stock issued in acquisition
   of companies                           90         1          699                                                             700
Stock grants and options exercised       388         4        5,484                                                           5,488

Employee stock purchase plan              46                    389                                                             389

Treasury stock purchases                                                              (27)       (174)                         (174)
                                    ---------     -----     --------    --------- ---------   ---------  -----------     -----------
Balance, May 31, 1999                 36,420    $  364    $ 138,369   $  144,437      (27)    $  (174)   $ (18,914)    $    264,082
                                    ---------     -----     --------    --------- ---------   ---------  -----------     -----------

Net income                                                                17,425                                             17,425
Foreign currency translation
   adjustment                                                                                               (7,727)          (7,727)
                                                                                                                         -----------
Comprehensive income                                                                                                          9,698
Stock grants and options exercised       254         2          749                                                             751
Employee stock purchase plan              28                    356                                                             356

Treasury stock purchases                                                              (60)        (532)                        (532)
                                    =========     =====     ========    ========= =========   ==========  ===========    ===========
Balance, May 31, 2000                 36,702    $  366    $ 139,474   $  161,862      (87)    $   (706)   $ (26,641)    $   274,355
                                    =========     =====     ========    ========= =========   ==========  ===========    ===========






















         See   accompanying    notes   to   consolidated financial statements.

</TABLE>
<PAGE>
<TABLE>

                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

<CAPTION>

                                                                                      Year Ended May 31,
                                                                       -------------- --- ---------------- --- ----------------
                                                                           2000                1999                 1998
                                                                       --------------     ----------------     ----------------
<S>                                                                 <C>                <C>                  <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
      Net income                                                    $        17,425    $          13,452    $          18,090
      Adjustments to reconcile net income to net cash
          provided by (used in) operating activities:
          Depreciation and amortization                                      28,373               27,508               26,385
          Deferred income taxes                                              (9,515)              (9,479)              (6,358)

          Stock compensation                                                   ----                1,922                4,412
          Other                                                               1,591                  485               (1,073)
          Effect of changes in:
            Receivables, net                                                (89,039)               9,741               14,253
            Prepaids and other current assets                                 4,728                5,282                4,954
            Payables and accrued liabilities                                 61,406                8,441               (5,605)
                                                                       --------------     ----------------     ----------------
      Net cash provided by operating activities                              14,969               57,352               55,058
                                                                       --------------     ----------------     ----------------






 CASH FLOWS FROM INVESTING ACTIVITIES:
      Capital expenditures                                                  (35,679)             (35,749)             (21,797)
      Acquisitions, net of cash acquired                                        (71)              (4,701)              (6,621)
      Payment of acquisition related debt                                    (1,508)              (4,313)              (8,758)
      Proceeds from sale of fixed assets                                      1,842                3,802                3,485
      Investment in foreign affiliates                                          403                 ----                 ----
      Acquisition of long term lease                                           ----               (5,160)                ----
      Other                                                                   2,050                 (717)              (2,806)
                                                                       --------------     ----------------     ----------------
      Net cash used in investing activities                                 (32,963)             (46,838)             (36,497)
                                                                       --------------     ----------------     ----------------

 CASH FLOWS FROM FINANCING ACTIVITIES:
      Net increase (decrease) in short-term borrowings                         ----                 ----              (11,991)
      Proceeds from issuance of long-term obligations                        30,619                1,180               11,695
      Re-payments of long-term obligations                                   (3,259)              (9,197)              (4,378)
      Proceeds from stock options exercised                                   1,417                  925                  389
      Employee stock purchases                                                  356                  388                  422
      Purchase of treasury stock                                               (532)                (174)                ----
      Other                                                                    ----                 ----                 (303)
                                                                       --------------     ----------------     ----------------
      Net cash provided by (used in)   financing activities                  28,601               (6,878)              (4,166)

                                                                       --------------     ----------------     ----------------
 Foreign currency translation effect on cash                                 (5,725)              (6,972)              (3,828)
                                                                       --------------     ----------------     ----------------
 INCREASE (DECREASE) IN CASH AND EQUIVALENTS                                   4,882              (3,336)              10,567

 CASH AND EQUIVALENTS AT BEGINNING OF PERIOD                                  50,599              53,935               43,368
                                                                       --------------     ----------------     ----------------

 CASH AND EQUIVALENTS AT END OF PERIOD                              $         55,481    $         50,599    $          53,935
                                                                       ==============     ================     ================

 OTHER CASH FLOW INFORMATION:
      Income taxes paid                                             $        20,593    $          13,940    $           9,640

                                                                       ==============     ================     ================
      Interest paid                                                 $        10,019    $           7,222    $           8,471
                                                                       ==============     ================     ================
      Noncash   investing   and  financing   activities   in   connection   with
      acquisitions:
         Receivables assumed                                        $          ----    $            ----    $          (6,084)
                                                                       ==============     ================     ================
         Payables and accrued liabilities assumed                   $          ----    $            ----    $           6,557
                                                                       ==============     ================     ================
         Capital stock issued                                       $          ----    $             700    $           2,155
                                                                       ==============     ================     ================
         Other                                                      $          ----    $            ----    $          (2,628)
                                                                       ==============     ================     ================







         See   accompanying   notes  to  consolidated financial statements.
</TABLE>


         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (In Thousands, Except Per Share Amounts)

         Note 1.     BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
                     POLICIES


         Fritz Companies, Inc. (the Company) is a specialist in providing global
         logistics services and related  information  services for importers and
         shippers  worldwide.  The  Company is  primarily  engaged in  providing
         logistics  management,  international air and ocean freight forwarding,
         customs brokerage,  and material management and distribution  services.
         Fritz delivers  comprehensive  supply chain  solutions to its customers
         worldwide  by  providing  flexible   door-to-door   transportation  and
         material  management  using  sophisticated  information  systems.  The
         Company  also   provides   value-added   services   through   logistics
         information  as well as  international  and domestic  movement of goods
         customarily provided by traditional freight forwarders.  These services
         are  designed to provide  integrated  global  logistics  solutions  for
         customers to  streamline  their  operations,  improve  their  inventory
         management  information and enhance their  profitability and to provide
         customers   with   more    efficient   and   effective    international
         transportation  strategies.  The Fritz  network is  composed  of highly
         trained  professionals  working  in  more  than  400  locations  in 120
         countries.

A.       Basis of Presentation:

              The  consolidated  financial  statements  include the  accounts of
              Fritz Companies,  Inc. (the Company) and all significant  domestic
              and  international  companies  wherein the Company has more than a
              50% equity ownership or otherwise exercises control. The Company's
              interest  in 20% to 50% owned  companies  are  recorded  using the
              equity  method.   All   significant   intercompany   balances  and
              transactions have been eliminated in consolidation.  Certain prior
              year  amounts have been  reclassified  to conform with the current
              year's financial statement presentation.

              All significant  intercompany  accounts and transactions have been
              eliminated in  consolidation.  All dollar amounts are presented in
              thousands except for share data.

B.       Cash and Equivalents:

              Cash  and  equivalents  include  demand  deposits  and  short-term
              investments with original maturities of three months or less.

C.       Property and Equipment:

              Property  and  equipment  are  stated at cost.  Depreciation  and
              amortization  are  determined  using  the  straight-line   method.
              Estimated  useful  lives  of  major  categories  of  property  and
              equipment are as follows:

                     Buildings                                     40   years
                     Furniture and equipment                   5 - 10   years
                     Computer hardware and software            3 -  5   years

                  Leasehold  improvements  are  amortized  over their  estimated
                  useful  lives or  terms of the  related  lease,  whichever  is
                  shorter.   Certain  costs  related  to  internally   developed
                  software are  capitalized  and  amortized  on a  straight-line
                  basis  over their  expected  useful  life (not to exceed  five
                  years), commencing when the asset is placed in service.

                  Maintenance and repair expenditures and renewal of minor items
                  are charged to expense when incurred.

D.       Intangibles:

              Intangibles,    including    goodwill,    customers'   lists   and
              covenants-not-to-compete,   result  from  business   acquisitions.
              Amortization is determined using the straight-line method over the
              estimated useful lives of the intangible assets as follows:

                     Goodwill and customers' lists                 40   Years
                     Covenants-not-to-compete                   2 - 5   Years


              Net intangibles as of May 31, 2000 include goodwill,  customers'
              lists of $ 107,045 and covenants-not-to-compete of $103.

              In accordance  with  Statement of Financial  Accounting  Standards
              (SFAS) No.  121,  "Accounting  for the  Impairment  of  Long-lived
              Assets  and for  Assets to be  Disposed  of,"  long-lived  assets,
              including  certain   identifiable   goodwill,   are  reviewed  for
              impairment  whenever events or changes in  circumstances  indicate
              that  the  carrying  amount  of an asset  may not be  recoverable.
              Recoverability of long-lived assets is measured by a comparison of
              the carrying amount of such assets against the undiscounted future
              cash flows expected to be generated by the assets.  If such assets
              are determined to be impaired,  the impairment to be recognized is
              measured  by the  amount by which  the  assets'  carrying  amounts
              exceed the assets' discounted future cash flows.

E.       Foreign Currency Translation:

              Foreign currency amounts attributable to foreign operations assets
              and  liabilities  have  been  translated  to  U.S.  Dollars  using
              year-end  exchange rates,  and related  revenues and expenses have
              been  translated  at average  annual  rates of  exchange in effect
              during  the  year.   Unrealized   gains  or  losses  arising  from
              fluctuations in the year-end exchange rates are generally recorded
              as  "Accumulated  Other  Comprehensive  Income"  in  stockholders'
              equity.   Transaction  gains  and  losses  from  foreign  exchange
              transactions are included in results of operations.


F.       Comprehensive Income:

              Effective June 1, 1998, the Company adopted Statement of Financial
              Accounting  Standards  (SFAS) No.  130,  "Reporting  Comprehensive
              Income,"  which   establishes   standards  for  the  reporting  of
              comprehensive  income and its components in financial  statements.
              Comprehensive  income  consists  of net income and other gains and
              losses  affecting   shareholders'  equity  that,  under  generally
              accepted accounting principles,  are excluded from net income. For
              the Company, the components of comprehensive income consist of net
              income and foreign currency translation gains and losses.

              During  the  years  ended  May 31,  2000  and  1999,  the  Company
              maintained  its policy to reinvest the earnings of the  non-United
              States subsidiaries as a long-term  commitment.  Accordingly,  the
              "foreign currency translation  adjustments" have not been adjusted
              for United States taxes.



G.       Off-Balance Sheet Risk and Concentration of Credit Risk:

              Financial  instruments which  potentially  subject the Company to
              concentrations  of  credit  risk are  principally  represented  by
              temporary cash  investments and accounts  receivable.  The Company
              places its temporary cash investments with financial  institutions
              to limit its risk of loss.

              The Company's  customer base is  representative of a wide range of
              industries and includes  customers  located  throughout the world.
              The Company had no significant  concentration of credit risk as of
              May 31, 2000 or 1999.


H.       Derivative Financial Instruments

              The Company utilizes derivative financial instruments to reduce
              foreign currency exchange and interest rate risks.  The Company
              does not enter into financial instruments for trading or
              speculative purposes.  Gains and losses on forward exhange
              contracts used to hedge the currency fluctuations on transactions
              denominated in foreign currencies and the offsetting losses and
              gains on hedged transactions are recorded in the "Other income
              (expenses)" caption in the income statement.

              The Company uses an interest rate swap to manage the interest
              cost and the risk associated with changing interest rates.  As
              interest rates change, the differential paid or received is
              recognized in interest expense of the period.

I.       Revenue Recognition:

              Revenues  and  expenses  related  to  the transportation  of
              freight are  recognized at the time the freight departs  the
              terminal  of  origin.   This  method   approximates recognizing
              revenues and expenses when the shipment is completed.
              Customs   brokerage   revenues  are  recognized   upon  completing
              documents   necessary   for  customs  entry   purposes.   Material
              management and  distribution  revenue is recognized upon execution
              of the service provided.

              Revenue  realized by the Company as an indirect  carrier  includes
              the direct  carrier's  charges to the Company for transporting the
              shipment.  Revenue realized in other capacities  includes only the
              commissions and fees charged for applicable services rendered.

              Net Revenue for air and ocean freight forwarding and consolidation
              of surface  transportation as an indirect carrier is determined by
              deducting freight consolidation and transportation costs from such
              revenue.

J.       Net Income Per Share:

              The Company  adopted the  provisions  of  Statement  of  Financial
              Accounting   Standards  (SFAS)  No.  128,  "Earnings  Per  Share,"
              effective  December 1, 1997.  Basic and diluted earnings per share
              are presented below:

<TABLE>
<CAPTION>

                                                                                                Year Ended May 31,
                                                                                       2000            1999            1998
                                                                                    -----------     -----------     -----------
<S>                                                                             <C>              <C>             <C>

       Basic:
           Net income                                                            $      17,425   $      13,452   $      18,090
           Weighted-average number of common shares outstanding                         36,572          36,203          35,744
              Basic earnings per common share                                    $        0.48            0.37   $        0.51
                                                                                    ===========     ===========     ===========

         Diluted:
           Net income                                                            $      17,425   $      13,452   $      18,090
         Shares:
           Weighted-average number of common shares outstanding                         36,572          36,203          35,744
           Potentially dilutive common shares                                              157              87             384
                                                                                    -----------     -----------     -----------
              Total shares                                                              36,729          36,290          36,128
              Diluted earnings per common share                                  $        0.47   $        0.37   $        0.50
                                                                                    ===========     ===========     ===========

</TABLE>

         Options  totaling  1,306,806 shares with an exercise price ranging from
         $10.875 to $28.625  (greater  than the average  market  price of common
         shares) were not included in the  computation  of diluted  earnings per
         share, as they were anti-dilutive.

K.       Income Taxes:

              The Company uses the asset and liability  method of accounting for
              income  taxes as  prescribed  by SFAS No.  109, "  Accounting  for
              Income  Taxes".  Under this method,  the net deferred tax asset or
              liability is  determined  based on the tax effects of  differences
              between  book and tax bases of various  balance  sheet  assets and
              liabilities  and gives  current  recognition  to the effect of any
              change in tax rates and laws.

L.       Stock Options:

              The Company  adopted  SFAS  No.123,  "Accounting  for  Stock-Based
              Compensation,"  established accounting and reporting standards for
              stock-based  compensation plans. The statement allows companies to
              choose, for employee  compensation plans,  between the "fair value
              based method of  accounting"  as defined in this statement and the
              "intrinsic" method based on accounting as prescribed by Accounting
              Principles  Board  (APB)  Opinion  No. 25,  "Accounting  for Stock
              Issued to Employees".  The Company has chosen to continue to apply
              the  provisions of APB No. 25 to its employee  stock option plans.
              Accordingly,  compensation expense has only been recognized in the
              Consolidated Statements of Operations when the quoted market price
              of the Company's stock at the date of the grant exceeds the option
              exercise price.

M.       Use of Estimates:

              In conformity with generally accepted accounting  principles,  the
              Company uses  assumptions  and estimates  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 revenue and expenses during the period.
              Actual results could differ from those estimates.


         Note 2.     PROPERTY AND EQUIPMENT
<TABLE>

         Property and equipment consist of the following:

<CAPTION>

                                                                                                 May 31,
                                                                               --------------------------------------------
                                                                                       2000                      1999
                                                                               --- -------------             --------------
<S>                                                                             <C>                       <C>

         Land                                                                   $          1,172          $             950
         Buildings and leasehold improvements                                             51,714                     40,479
         Furniture and equipment                                                          64,624                     72,836
         Computer hardware and software                                                  102,828                     82,414
         Software development in progress                                                    680                      3,482
                                                                                   -------------             --------------
              Total                                                                      221,018                    200,161
         Less accumulated depreciation and amortization                                 (110,810)                   (96,626)
                                                                                   -------------             --------------
              Total                                                             $        110,208          $         103,535
                                                                                   =============             ==============

</TABLE>

         Depreciation  and  amortization  of property and equipment  amounted to
         $23,998  in  2000,  $22,611  in 1999,  and  $21,125  in 1998.  Software
         development  in progress  includes  external  costs incurred to develop
         software which has not been completed as of balance sheet date.  During
         the years ended May 31, 2000 and 1999,  $3,693 and $444,  respectively,
         represented  software  development  costs  completed and transferred to
         "Computer hardware and software."


<PAGE>


<TABLE>

         Note 3. OBLIGATIONS AND BORROWINGS

         Short-term   borrowings  and  long-term   obligations  consist  of  the
         following:
<CAPTION>

                                                                                                       May 31,
                                                                                          ----------------------------------
                                                                                             2000                  1999
                                                                                          ------------          ------------

<S>                                                                                   <C>                    <C>

         Long-term obligations:
              6.43% Senior Notes due on April 15, 2003, interest payable
              semi-annually                                                            $       75,000        $       75,000

         Bank credit agreement providing a $100 million
              credit  facility  maturing  March 27, 2002 with  interest at LIBOR
              (6.7% as of May 31, 2000) plus 0.325% to 0.750% as  determined  by
              fixed charge coverage ratio                                                      33,600                 4,500


         Installment obligations related to acquisitions,
              non-interest  bearing, due 2001 - 2002 (less unamortized discount,
              based on imputed  interest rate of 7.0% -  approximately  $150 and
              $117 in 2000 and 1999, respectively)                                              2,068                 3,888


         Term note  payable to a bank dated June 18, 1997,  bearing  interest at
              SIBOR (2.6% as of May 31, 2000) plus a margin ranging from 0.5% to
              0.7% with seven quarterly  payments of $250 beginning October 2000
              remaining balance in June 2002                                                    6,784                 7,245


         Other obligations                                                                      1,918                 3,306
                                                                                          ------------          ------------
              Total long-term obligations                                                     119,370                93,939

                 Less current portion                                                          (2,479)               (4,333)
                                                                                          ------------          ------------

              Net long-term obligations                                                $      116,891         $      89,606
                                                                                          ============          ============

</TABLE>

         At May 31, 2000, the Company's aggregate maturing long-term obligations
         and  short-term  borrowings for the fiscal years 2001 through 2005 were
         $2,479;   $35,397;   $81,385;  $86  and  $23,   respectively  and  none
         thereafter.  The carrying value of the Company's long-term  obligations
         approximates their fair value.

         On March 27, 1998, the Company  entered into a $100 million  syndicated
         multi-currency credit facility (Credit Facility),  maturing March 2002.
         The purpose of the Credit  Facility is to provide letters of credit and
         working capital not covered by internally  generated funds. The Company
         must maintain  compliance with certain financial  covenants such as: 1)
         minimum  working  capital,  2) minimum net worth,  3) maximum  leverage
         ratio, 4) minimum fixed charge  coverage ratio,  and 5) maximum capital
         expenditures.  As of May 31, 2000,  the balance  outstanding  under the
         Credit  Facility was $33.6  million and the weighted  average  floating
         interest  rate as of that date was 7.2%.  At May 31, 2000,  the Company
         was  contingently  liable for letters of credit of $15.4  million which
         reduces the  Company's  borrowing  capacity  under the  current  credit
         facility.  The Company had $10.7  million in similar  letters of credit
         outstanding at May 31, 1999 under the Company's credit facility then in
         effect.


         As of May 31, 2000, the Company had forward contracts outstanding
         of $28.6 million equivalent value and had no option contracts
         maturities ranging from June 1, 2000 to July 3, 2000, with weighted
         average maturity of one day.  The estimated fair value of foreign
         currency contracts represent the amount required to enter into
         offsetting contracts with similar remaining maturities based on
         quoted market prices.  At May 31, 2000, the difference between the
         contract amounts and the fair values was immaterial.

         As of May 31, 2000, the Company had an interest rate swap outstanding
         with a notional value of SGD 7,000.  This swap mitigates the interest
         exposure of a subsidiary's long-term debt.  The interest swap will
         mature in the year 2002.  It requires the Company to pay interest at a
         fixed rate of 6.5%, and receive interest at the floating rate based
         on the Singapore Interbank Offered Rate, which was 2.6% on
         May 31, 2000.  The fair value of this instrument represents the
         estimated receipts or payments that would be made to terminate the
         agreement.  At May 31, 2000, the Company would have paid $348
         to terminate the agreement.

         At May 31, 2000, the Company had $55.5 million of cash and cash
         equivalents, subject to variable, short-term interest rates.  On the
         same date, the Company had debt obligations of $119.4 million, of
         which $36.3 million was subject to variable, short-term interest rate
         risk.  In addition, the Company had $13.7 million of off-balance sheet
         transactions, which were subject to variable interest rate risk.  The
         net exposure of the Company to variable, short-term interest rate risk
         is therefore $5.5 million.  A hypothetical increase or decrease in
         variable, short-term interest rates of 1% would have an immaterial
         effect on the Company's earnings.




         The Company is in compliance with its various financial  covenants such
         as leverage,  fixed charge coverage and current ratios within its other
         credit agreements,  many of which include cross default provisions tied
         to the Credit Facility.

         Information  regarding the Company's activity in the Credit Facility is
         as follows:
<TABLE>

<CAPTION>

                                                                                    For the Year Ended May 31,
                                                                        ----------------------------------------------------

                                                                               2000             1999                 1998
                                                                        -- -----------     -------------         -----------
<S>                                                                     <C>               <C>                   <C>

          Maximum amount outstanding during period                      $      87,100     $         25,500      $       41,000
          Average amount outstanding during period                      $      51,938     $          7,316      $       20,184
          Weighted average interest rate during period                           6.7%                 6.0%                6.7%


</TABLE>

         Note 4. - INCOME TAXES

         The current and deferred components of income tax expense (benefit) are
         as follows:

<TABLE>

<CAPTION>

                                                                                   For the Year Ended May 31,
                                                                       -----------------------------------------------------
                                                                         2000                  1999               1998
                                                                       ------------         -------------       ------------
<S>                                                                <C>                  <C>                 <C>

        Current
           Federal                                                 $          ---       $           ---     $        2,022
           State                                                              ---                   ---              2,334
           Foreign                                                         18,270                15,810             10,514
                                                                       ------------         -------------       ------------
              Total current                                                18,270                15,810             14,870
                                                                       ------------         -------------       ------------
         Deferred
           Federal                                                         (8,229)               (9,231)            (4,237)
           State                                                           (1,281)               (1,438)            (2,662)
           Foreign                                                             (5)                1,190                541
                                                                       ------------         -------------       ------------
             Total deferred                                                (9,515)               (9,479)            (6,358)
                                                                       ============         =============       ============
         Total                                                     $        8,755       $         6,331     $        8,512
                                                                       ============         =============       ============
</TABLE>

         Sources of income (loss) before income taxes are as follows:

<TABLE>
<CAPTION>

                                                                    For the Year Ended May 31,
                                                  -----------------------------------------------------------------
                                                         2000                   1999                     1998
                                                      -------------         ---------------          --------------
<S>                                               <C>                   <C>                      <C>

                   United States                  $       (28,364)      $         (28,839)       $         (7,944)
                   Foreign                                 54,544                  48,622                  34,546
                                                      =============         ===============          ==============
                     Total                        $        26,180       $          19,783        $         26,602
                                                      =============         ===============          ==============

</TABLE>









The following provides a reconciliation of the statutory federal income tax rate
and provision to the effective income tax rate and provision:

<TABLE>

<CAPTION>

                                                                            For the Year Ended May 31,
                                                 ---------------------------------------------------------------------------------
                                                  2000           %             1999          %               1998           %
                                                 --------     --------       ---------    ---------        ----------    ---------
<S>                                           <C>              <C>        <C>              <C>          <C>               <C>

   Statutory federal income tax expense        $    9,163        35.0    $     6,924         35.0     $      9,311         35.0

   Increases (decreases) resulted from:

   Difference  between foreign tax rate and
       federal rate                                (1,247)       (4.8)            60          0.3           (1,147)        (4.3)
   State taxes benefit,  net of federal
       income tax effect                           (1,281)       (4.9)        (1,516)        (7.7)            (328)        (1.2)
   Amortization of goodwill                           313         1.2            309          1.6              280          1.1
   Meals and entertainment                            188         0.7            219          1.1              197          0.7
   Compensation                                       779         3.0              0          0.0                0          0.0
   Interest                                           231         0.9            148          0.7              171          0.6
   Others                                             609         2.3            187          1.0               28          0.1
                                                  --------    --------     ----------    ---------        ----------    ---------

   Total                                      $     8,755        33.4    $     6,331         32.0     $      8,512         32.0
                                                  ========    ========      =========    =========        ==========    =========

</TABLE>

         The  significant  components  of net deferred  income tax assets are as
         follows:

<TABLE>
<CAPTION>

                                                                                             May 31,
                                                                              -------------------------------------
                                                                                    2000                  1999
                                                                              -- -------------      --- -----------
<S>                                                                              <C>                   <C>

                  Deferred income tax assets:
                  Current:
                       Compensated absences                                       $   2,478           $    2,361
                       Foreign tax credits and other tax  credits                     2,349                2,201
                       Capital loss carryforward                                        850                  595
                       Allowance for doubtful accounts                                3,501                6,354
                       Write-off of duplicate information
                               systems and facilities                                    52                   53
                       Other reserves and accruals                                    6,282                5,841
                                                                              -- -------------      --- -----------
                       Subtotal                                                      15,512               17,405
                  Less: valuation allowance                                          (1,044)                (944)
                                                                              -- -------------      --- -----------

                          Total current deferred income tax assets                   14,468               16,461
                                                                              -- -------------      --- -----------

                  Noncurrent:
                       Net operating loss carryforward                               21,900                9,735
                       Deferred compensation                                          2,325                2,866
                       Other reserves and accruals                                    3,759                3,143
                                                                              -- -------------      --- -----------
                           Subtotal                                                  27,984               15,744
                                                                              -- -------------      --- -----------
                           Total deferred income tax assets                          42,452               32,205
                                                                              -- -------------      --- -----------

                  Deferred noncurrent income tax liabilities:
                       Depreciation and amortization                                 (2,008)              (1,234)
                       Other deferred tax liabilities                                (1,073)              (1,115)
                                                                              -- -------------      --- -----------
                           Subtotal                                                  (3,081)              (2,349)
                                                                              == =============      === ===========
                       Net deferred income tax assets                            $   39,371            $  29,856
                                                                              == =============      === ===========

</TABLE>

         The valuation  allowance for current  deferred  income tax assets as of
         May 31, 2000 and 1999  results  from  capital  loss  carryforwards  and
         foreign tax  credits.  The Company has  evaluated  the other  long-term
         deferred tax assets and  determined no valuation  allowance is required
         as management  believes it is more likely than not the other  long-term
         deferred income tax assets will be realized in the future.

         During  the  years  ended May 31,  2000,  1999 and  1998,  the  Company
         maintained its policy to reinvest the earnings of the non-United States
         subsidiaries as a long-term commitment.  Accordingly,  the "Accumulated
         other  comprehensive  income"  included  in the  equity  section of the
         balance  sheets have not been  adjusted  for the effect of U.S.  taxes.
         Undistributed  earnings of the Company's foreign subsidiaries  amounted
         to approximately $243 million at May 31, 2000. Additional United States
         income  taxes  may be due upon  remittance  of those  earnings  (net of
         foreign  tax).  If all earnings  were  distributed,  approximately  $34
         million would be payable at May 31, 2000.


         Note 5. - RELATED PARTY TRANSACTIONS

         The Company paid premiums until 1992 on life insurance  policies on the
         Chairman  though the Company is not the  beneficiary.  Such  cumulative
         premium payments, which approximate surrender value, of $548 in May 31,
         2000 and $428 in 1999, are included in other assets.  The premiums will
         be  refunded  by  the   beneficiary   upon  death  of  the  insured  or
         cancellation of the policies, whichever comes first. The Company has no
         future obligation to pay premiums on these policies.

         Note 6. - COMMITMENTS

         The Company  leases office and  warehouse  space and computer and other
         office equipment from third parties,  including certain  non-cancelable
         operating leases financed by special purpose entities,  under operating
         leases  expiring  through 2013.  Minimum future rental  payments by the
         Company as of May 31, 2000 are as follows:
<TABLE>
<CAPTION>


                                                                 Rental                 Sublease                Net Rental
                                                               Payments                   Income                  Payments
                                                          ---------------           --------------           ---------------
<S>                                                          <C>                      <C>                       <C>

             Year ending May 31,
         --------------------------------------------
             2001                                          $     33,304            $         887             $      32,417
             2002                                                21,438                      282                    21,156
             2003                                                16,651                      222                    16,429
             2004                                                13,078                      169                    12,909
             2005                                                10,777                       63                    10,714
             2006 and thereafter                                 30,750                       63                    30,687
                                                          ===============           ==============           ===============
               Total                                       $    125,998            $       1,686             $     124,312

</TABLE>

         Net rental expense from these leases was as follows:

<TABLE>
<CAPTION>

                                                                              For the Year Ended May 31,
                                                                 -----------------------------------------------------
                                                                      2000                 1999               1998
                                                                 -- ----------          -----------        -----------
<S>                                                                <C>              <C>                <C>

                   Gross lease expense                             $   60,424       $       59,226     $       54,453
                   Less sublease rental income                         (3,909)              (4,083)            (2,603)
                                                                    ==========          ===========        ===========
                   Net rental expense                              $   56,515       $       55,143     $       51,850
                                                                    ==========          ===========        ===========


</TABLE>

         Note 7. - ACQUISITIONS

         Purchases:

         In 2000,  the  Company  acquired  the  remaining  interest of a freight
         forwarding  company  for $300 in cash.  Intangible  assets  of $176 was
         recorded in connection with the acquisition.

         In 1999, the Company  acquired the remaining  interests in five freight
         forwarding companies and one third of the remaining interest in another
         for $2,593 in cash and $74 in debt.  Intangible  assets of $1,307  were
         recorded in connection with the acquisitions.

         In  1998,  the  Company  acquired  the  equity  interest  of a  freight
         forwarding  Company for an aggregate  purchase  price of  approximately
         $1,552 through the issuance of 120 shares of the Company's  stock.  The
         acquired Company included current assets of approximately $6,413; fixed
         assets  of  approximately  $342;  and  assumed  liabilities,  which are
         primarily  current in nature,  of approximately  $6,659.  An intangible
         asset  of  approximately  $526  was  recorded  in  connection  with the
         acquisition.

         The Company  entered into  certain  acquisition  agreements  which have
         provisions  regarding  contingent future payments.  As of May 31, 2000,
         approximately $452 of such future contingent  payments exist which have
         not  been  recorded  by  the  Company  and  are  dependent   upon  full
         achievement of specified net revenue or pretax income levels.

         Intangible  assets,  including  goodwill and  covenants not to compete,
         totaling  approximately $272 and $4,130 were recorded in 2000 and 1999,
         respectively,  in  connection  with current and previous  acquisitions.
         Cash payments made during 2000 of $1,508  represent  payments to reduce
         acquisition  debt payable and payments  related to contingent  purchase
         price.  Amortization  expense for intangible  assets was  approximately
         $4,375, $4,331 and $4,474 in 2000, 1999, and 1998, respectively.

         The purchase method of accounting was used for all acquisitions made in
         fiscal years presented herein. The operations of acquired companies are
         reflected in the Company's consolidated financial statements from their
         respective dates of acquisition.


         Note 8. - CONTINGENCIES

         The Company is party to routine  litigation  incident to its  business,
         primarily  claims for goods  lost or  damaged in transit or  improperly
         shipped.  Most of the litigations in which the Company is the defendant
         are  covered  by  insurance  and are being  defended  by the  Company's
         insurance carriers.

         In 1996, a total of six  complaints  were filed (three in federal court
         and three in state court of California) against the Company and certain
         of its then officers and directors,  purporting to be brought on behalf
         of a class of  purchasers  or holders of the  Company's  stock  between
         August  28,  1995 and July 23,  1996.  The  complaints  allege  various
         violations  of  Federal   Securities  law  and   California   Corporate
         Securities law in connection with prior disclosures made by the Company
         and seek unspecified damages.

         The three class action  suits filed  against the Company in state court
         were  dismissed  with prejudice by the Superior Court of California for
         the County of San  Francisco on grounds the claims  asserted  under the
         California  Corporate  Securities  law and  common  law fraud  were not
         legally  tenable.  One  of  the  dismissals  was  reversed  on  appeal,
         permitting  the  plaintiff to file an amended  complaint.  That amended
         complaint  was  dismissed  with  leave  to  amend.  A  further  amended
         complaint  was filed and was  dismissed  without  leave to amend.  That
         dismissal is on appeal.

         The three class action suits filed against the Company in federal court
         were  consolidated  into one suit which was dismissed  with  prejudice,
         finding that  plaintiffs  had not alleged any statement  that was false
         and misleading in violation of the federal securities laws.  Plaintiffs
         filed an appeal with the Ninth Circuit Court of Appeals. On November 2,
         1999,  the Ninth  Circuit Court of Appeals  vacated the district  court
         dismissal and remanded the case to the trial court for  reconsideration
         in light of the  Ninth  Circuit  U.S.  Court of  Appeals  ruling in The
         Silicon Graphics Case.

         The  Company  is  unable  to  predict  the  ultimate  outcome  of these
         litigations  and it is possible  the outcome  could have a  significant
         adverse  impact  on  the  Company's  future  consolidated   results  of
         operations,  although  the amount if any, is not  currently  estimable.
         However,  the Company  believes the ultimate  outcome of these  matters
         will  not  have  a   significant   adverse   impact  on  the  Company's
         consolidated financial position, results of operations and liquidity.

         Note 9. - SEGMENT DISCLOSURE AND GEOGRAPHIC AREA INFORMATION

         The Company operates in the international  freight forwarding industry,
         which  encompasses  customs  brokerage,  airfreight  and ocean  freight
         forwarding,  and  material  management  and  distribution.   No  single
         customer accounted for ten percent or more of consolidated revenue.

         The Company  manages its operations in two segments,  United States and
         Foreign.  The  Company's  Chief  Executive  Officer  reviews  operating
         results and creates  operating  plans based on these two segments.  The
         Company's  two key  operations  executives  represent  these  segments.
         Bonuses  and other  incentives  are  distributed  based on the  segment
         results.

         Certain   information   regarding  the  Company's  principal  logistics
         services and operations by geographic areas is summarized below:


<PAGE>
<TABLE>
<CAPTION>



                                                                                       Year Ended May 31,
                                                                     -------------- ---- --------------- --- ---------------
                                                                         2000                 1999                1998
                                                                     --------------      ---------------     ---------------
<S>                                                               <C>                 <C>                 <C>

       Net revenue:
             Customs Brokerage                                    $        188,757    $         163,701   $         165,055
             Ocean Freight Forwarding                                      127,224              126,060             120,497
             Airfreight Forwarding                                         171,928              166,832             158,514
             Material Management & Distribution                            131,431              121,384             114,199
                                                                     ==============      ===============     ===============
             Total net revenue                                    $        619,340    $         577,977   $         558,265
                                                                     ==============      ===============     ===============

        Net revenue
             United States                                        $        323,258    $         307,025   $         292,367
                                                                     --------------      ---------------     ---------------
             Canada                                                         52,741               45,349              42,939
             Europe                                                        102,013               96,755              96,157
             China                                                          42,629               37,071              34,431
             Singapore                                                      10,965               10,199              10,888
             Other Asia                                                     47,814               38,579              39,282
             Latin America                                                  39,920               42,999              42,201
                                                                     --------------      ---------------     ---------------
                Total foreign                                              296,082              270,952             265,898
                                                                     --------------      ---------------     ---------------
             Total net revenue                                    $        619,340    $         577,977   $         558,265
                                                                     ==============      ===============     ===============

        Income  (loss) from operations
             United States                                        $          1,659    $          12,195   $          14,511
                                                                     --------------      ---------------     ---------------
             Canada                                                          2,695                1,180                (489)
             Europe                                                          8,502                  562               5,028
             China                                                          13,354                8,007               4,436
             Singapore                                                       1,596                1,349                 617
             Other Asia                                                      8,190                2,582               2,835
             Latin America                                                  (3,469)                (824)             (1,125)
                                                                     --------------      ---------------     ---------------
                Total foreign                                               30,868               12,856              11,302
                                                                     ==============      ===============     ===============
             Total income from operations                         $         32,527    $          25,051   $          25,813
                                                                     ==============      ===============     ===============

        Long-lived Assets
               United States                                      $        102,946    $          98,341   $          90,895
               Canada                                                       19,899               20,514              21,492
               Europe                                                       26,750               31,459              30,770
               China                                                        48,764               46,877              37,514
               Singapore                                                    14,771               15,472              15,401
               Other Asia                                                    4,972                5,031               4,559
               Latin America                                                13,331               14,259              16,346
                                                                     --------------      ---------------     ---------------
                      Total foreign                                        128,487              133,612             126,082
                                                                     ==============      ===============     ===============
               Total long-lived assets                            $        231,433    $         231,953   $        216,977
                                                                     ==============      ===============     ===============

        Depreciation and amortization
               United States                                      $         15,925    $          15,040   $          14,079
               Canada                                                        2,034                2,027               2,512
               Europe                                                        3,576                3,948               3,371
               China                                                         2,316                2,229               2,429
               Singapore                                                     1,443                1,208               1,171
               Other Asia                                                    1,169                1,285               1,359
               Latin America                                                 1,910                1,771               1,464

                                                                     --------------      ---------------     ---------------
                      Total foreign                                         12,448               12,468              12,306
                                                                     ==============      ===============     ===============
               Total depreciation and amortization                 $        28,373    $          27,508   $          26,385
                                                                     ==============      ===============     ===============

</TABLE>


<PAGE>
<TABLE>
<CAPTION>


<S>                                                                      <C>                    <C>                <C>


        Assets
               United States                                         $     397,954       $      354,751      $      379,605
               Canada                                                      113,585               96,015              84,168
               Europe                                                      121,382              114,990             113,454
               China                                                        74,266               69,239              64,798
               Singapore                                                    42,234               36,065              32,792
               Other Asia                                                   38,467               35,810              28,096
               Latin America                                                37,344               20,038              17,900
                      Total foreign                                        427,278              372,157             341,208
                                                                     --------------      ---------------     ---------------
               Total assets                                          $     825,232       $      726,908      $      720,813
                                                                     ==============      ===============     ===============

        Capital expenditures
               United States                                         $      21,908       $       18,100      $        9,717
               Canada                                                        1,392                  979               2,018
               Europe                                                        4,160                7,016               4,725
               China                                                         3,569                5,055                 896
               Singapore                                                       623                1,243                 891
               Other Asia                                                    1,824                1,299               1,618
               Latin America                                                 2,203                2,057               1,932
                      Total foreign                                         13,771               17,649              12,080
                                                                     --------------      ---------------     ---------------
                Total capital expenditures                           $      35,679       $       35,749      $       21,797
                                                                     ==============      ===============     ===============

</TABLE>


         Note 10.    COMMON STOCK (In thousands, except share and per share
                     amounts)

         In October  1992,  the  Company  established  the 1992  Omnibus  Equity
         Incentive  Plan  ("1992  Plan"),  pursuant  to  which an  aggregate  of
         1,520,000  shares of common  stock was  reserved  for  issuance  to key
         employees  of the  Company.  The 1992 Plan was amended to increase  the
         number of shares of common stock  available  for award by an additional
         1,520,000  shares in May 1994,  1,500,000  shares in  October  1996 and
         1,500,000  shares in September  1998.  The 1992 Plan permits  awards of
         non-qualified  stock  options and incentive  stock  options  within the
         meaning of Section 422 of the Internal  Revenue  Code, as well as stock
         appreciation rights, restricted stock, and performance awards entitling
         the  recipient to receive cash or common stock in the future  following
         attainment   of   performance   goals   determined   by  the  committee
         administering the 1992 Plan.

         The  majority  of options  granted  under the  Company's  1992 Plan are
         exercisable one-third each on the day after the first, second and third
         anniversary  of the original  grant.  The majority of restricted  stock
         vests  100% on the day  after  the fifth  anniversary  of the  original
         grant.  Both  options  and stock were  granted at a price equal to fair
         market value on the respective dates of grant except for 240,000 shares
         of options  which were  granted at 90% of fair market  value at date of
         grant. Total stock-based  compensation expense of approximately $2,204,
         $2,590 and $3,520 was recorded in 2000, 1999, and 1998, respectively.

         Each  employee  stock  option  assumed by the Company  under a previous
         merger  agreement  will  continue  to have and be subject  to, the same
         terms and conditions set forth in the relevant stock option plans.  The
         plans required stock options granted to key employees be at a price not
         less than the stock's  fair  market  value on the  respective  dates of
         grant. The majority of options granted are exercisable  one-third after
         the first anniversary date of the grant, two-thirds after two years and
         are fully  exercisable  three years from date of grant. No options have
         been granted under this plan since May 30, 1995.

         Effective February 1993, the Company adopted the Non-Employee  Director
         Restricted  Stock  Plan  (Director  Plan) with an  aggregate  of 50,000
         shares of common stock for  issuance to outside  directors as a portion
         of their annual compensation, which vest six months from date of grant.
         Shares issued to outside  directors under the Director Plan were 5,384,
         4,844 and 4,468 during 2000, 1999 and 1998,  respectively.  Separately,
         1,200 restricted shares were granted in 1996 to non-employee  directors
         under the 1992 Plan and vest three years from the date of grant.

         The  Company   adopted  SFAS  No.123,   "Accounting   for   Stock-Based
         Compensation,"  and  exercised  the  election  to continue to apply the
         provisions of APB No. 25,  "Accounting  for Stock Issued to Employees,"
         to its stock option plans.  Accordingly,  compensation expense has only
         been  recognized  in  the  Consolidated  Statements  of  Operations  in
         connection  with the shares  related to options  granted at 90% of fair
         market value on the respective dates of grant. Compensation expense was
         zero,  $134  and  $161  in  2000,  1999,  and  1998  respectively.  Had
         compensation  expense of the Company's  stock-based  compensation plans
         been determined using the fair value based method described in SFAS 123
         in 2000, 1999 and 1998, the Company's pro forma net income and earnings
         per share would have been:


<TABLE>
<CAPTION>

                                                                                           Year Ended May 31,
                                                                         -------------- --- --------------- --- ---------------
                                                                             2000               1999                1998
                                                                         --------------     ---------------     ---------------
<S>                                                                   <C>                     <C>            <C>
                     Net Income:
                           As reported                                $        17,425        $     13,452    $         18,090
                           Pro forma                                  $        16,113        $     12,231    $         17,180

                      Earnings per share:
                         Basic-
                           As reported                                $           .48        $        .37    $            .51
                           Pro forma                                  $           .44        $        .34    $            .48

                         Diluted-
                           As reported                                $           .47        $        .37    $            .50
                           Pro forma                                  $           .44        $        .34    $            .48
</TABLE>


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

<TABLE>
<CAPTION>

                                                                       Year Ended May 31,
                                                      ------------------------------------------------------
                                                                            2000                1999               1998
                                                                        --------------      --------------     --------------
<S>                                                                        <C>                <C>                <C>

                    Expected volatility                                       56.56%              40.00%             40.00%
                    Risk-free interest rates for terms of:
                       2 years                                                 6.67%               5.64%              5.71%
                       3 years                                                 6.62%               5.72%              5.81%
                       4 years                                                 6.57%               5.79%              5.86%
                    Expected dividend yield                                       0 %                  0%                 0%
                    Expected option life in years                                   4                   4                  4


</TABLE>

<PAGE>



         Stock option activity was as follows:
<TABLE>
<CAPTION>

                                                                                            Year  Ended May 31,
                                                                           -------------- --- -------------- ---- --------------
                                                                               2000               1999                1998
                                                                           --------------     --------------      --------------

<S>                                                                          <C>               <C>                 <C>

                    Outstanding, beginning of period                            2,409,000         1,960,000           1,509,000

                    Granted                                                     491,000            496,000              660,000
                    Canceled                                                   (203,000)           (31,000)            (158,000)
                    Exercised                                                   (83,000)           (16,000)             (51,000)
                                                                           ===============     ==============     ===============
                    Outstanding, end of period                                 2,614,000          2,409,000            1,960,000
                                                                           ===============     ==============     ===============

                    Options exercisable                                        1,735,000          1,447,000            1,115,000
                                                                           ===============     ==============     ===============

                    Restricted stock activity
                    Outstanding, beginning of period                            768,000            539,000              372,000

                    Granted                                                     184,000            263,000              187,000
                    Canceled                                                   (179,000)           (34,000)             (20,000)
                                                                           --------------     --------------      --------------
                    Outstanding, end of period                                  773,000            768,000              539,000
                                                                           ==============     ==============      ==============

                    Restricted stock exercisable                                 271,000            222,000             184,000
                                                                           ==============     ==============      ==============

                    Weighted Average Exercise Price:
                        Outstanding, beginning of period              $            11.47              12.04    $          13.25
                        Granted                                                    11.46               9.62               10.39
                        Canceled                                                   11.10              12.65               14.74
                        Exercised                                                   9.01               7.80                7.90
                        Outstanding, end of period                                 11.58              11.47               12.04

                    Weighted average fair value of options granted    $             4.85               3.31    $           3.60
                                                                           ==============     ==============      ==============
</TABLE>


         The relevant information regarding stock options outstanding at May 31,
         2000:

<TABLE>
<CAPTION>

                                                      Options Outstanding                          Options Exercisable
        ---------------------------- ------------------------------------------------------ -----------------------------------
                                         Number        Weighted Average        Weighted         Number       Weighted Average
                 Range of              Outstanding        Remaining            Average     Exercisable        Exercise Price
              Exercise Price          May 31, 2000     Contractual Life        Exercise     May 31, 2000
                                                                                Price
        ---------------------------- ---------------- -------------------    ------------- ----------------- ------------------

<S>       <C>                         <C>                <C>                  <C>              <C>              <C>


          $        6.0625 -  9.3125          813,862      6.35     years           8.5547           559,421              8.2358
                   9.5625 - 10.9380          525,579      7.22     years          10.1686           335,522             10.1256
                  11.0000 - 12.0375          876,433      6.18     years          11.7428           469,701             11.9569
                  12.3750 - 23.4375          289,540      4.35     years          15.7582           261,865             15.8830
                  28.6250 - 28.6250          108,333      4.75     years          28.6250           108,333             28.6250

          $        6.0625 - 28.6250        2,613,747      6.18     years          11.5781         1,734,842             12.0363
             =======================   ==============   =================    =============     =============    ================
</TABLE>

         The number of shares  available for grant under the 1992 Plan as of May
         31, 2000 was 1,379,539 shares.

         On April 25,  1997,  the Company  conducted a  discretionary  repricing
         exchange  program for all options  issued under the 1992 Omnibus Equity
         Incentive  Plan,  other than those issued to certain  senior  officers.
         Under the terms of the program,  option holders could elect to exchange
         outstanding  options  for half of that  number of  options at an option
         price equal to fair market value on April 25,  1997.  Fair market value
         as of that date was  $8.125 per  share.  A total of 482,000  previously
         issued  options  were  exchanged  for  241,000  new  options  issued in
         connection with the program.

         The Company initiated a three-year  employee  retention program whereby
         selected managers and administrative  personnel were awarded a total of
         33,192 shares effective September 1, 1996, 27,036 shares effective July
         31, 1997, and 24,226 shares  effective July 31, 1998, at no cost to the
         employee.

         Effective July 1, 1996, the Company  adopted an Employee Stock Purchase
         Plan (ESPP).  A maximum of 200,000  shares of common stock is available
         for issuance pursuant to the ESPP. To be eligible to participate in the
         Plan an employee must have  completed one year of service and have been
         scheduled  to work more than  twenty  hours  per week.  Certain  highly
         compensated  employees  may  be  excluded  from  participation  at  the
         discretion of the Compensation Committee of the Board of Directors.

         The ESPP purchases  stock based on the lower of 100% of market value on
         the  business day  preceding  the first day of the quarter in which the
         stock is purchased or 90% of the average  closing price on the pre-set,
         quarterly purchase date.  Approximately 6.3% of eligible employees have
         participated  in the Plan in the past year.  During  2000,  the Company
         sold shares at a weighted average issue price of $9.52.

         Under SFAS 123,  compensation  expense is recognized for the fair value
         of the employees'  purchase rights if the discount from market price is
         greater   than  5%.  This  was   estimated   using  the   Black-Scholes
         option-pricing model with the following  assumptions for 2000: expected
         volatility - 56.56%;  weighted average risk-free interest rate - 6.62%;
         dividend  yield -- zero;  and purchase  term -- 3 months.  The weighted
         average fair value of those  purchase  rights  granted in 2000 was $48.
         This  compensation  cost has been included in calculating the pro forma
         net income and earnings per share.

         On  September  16,  1998,  the  Company  announced  that  its  Board of
         Directors  authorized  the  purchase  of up to $5,000 of the  Company's
         common stock.

         On March 1, 2000,  the Company  announced  that its Board of  Directors
         authorized the purchase of up to $20,000 of the Company's common stock,
         at the  prevailing  market price,  but in no event to exceed $12.00 per
         share.

         As of May 31, 2000, the Company has made purchases totaling $706, at an
         average price of $8.11 per share.


         NOTE 11.     RETIREMENT PLAN

         The Company has a 401(k)  retirement  plan covering  substantially  all
         U.S. employees.  The Company has recorded matching contributions in the
         amount of $1,485, $577 and $689 in 2000, 1999, and 1998 respectively.

         In  June 1,  2000,  the  Company  filed  Form  S-8  (the  "Registration
         Statement")  relating to the shares of Common Stock, $.01 par value, of
         Fritz  Companies,  Inc. to be issued  under the Fritz  Companies,  Inc.
         Salary  Investment &  Retirement  Plan "the  "Plan").  The amended Plan
         enhanced the benefits that affect all employees.


         NOTE 12.     QUARTERLY FINANCIAL DATA (Unaudited)

         The following  table sets forth selected  quarterly  financial data for
         the fiscal years ended May 31, 2000 and 1999:
<TABLE>
<CAPTION>

                                                                                Three Months Ended
                                                  --------------------------------------------------------------------------------
                                                       August 31,          November 30,         February 29,            May 31,
                                                          1999                 1999                 2000                 2000
                                                      --------------    -----------------    ----------------     ----------------

<S>                                                <C>                   <C>                  <C>                  <C>

     Revenue                                       $        391,651      $        426,503     $      382,042       $      412,495
     Net revenue                                            150,650               160,724            148,485              159,481
     Income (loss) from operations                           10,694                15,385               (295)               6,743
     Net income (loss)                                        5,979                 9,124             (1,434)               3,756
     Net income (loss)  per share - Basic                       .16                   .25               (.04)                0.10
     Net income (loss)  per share - Diluted                     .16                   .25               (.04)                0.10


</TABLE>

<TABLE>
<CAPTION>

                                                                                Three Months Ended
                                                  --------------------------------------------------------------------------------
                                                       August 31,          November 30,         February 28,            May 31,
                                                          1998                 1998                 1999                 1999
                                                      --------------     -----------------     ----------------     --------------

<S>                                                <C>                <C>                   <C>                  <C>

     Revenue                                       $        342,329   $           381,946   $        317,553   $          345,899
     Net Revenue                                            145,146               153,716            134,914              144,201
     Income from operations                                   9,831                15,003             (2,993)               3,210
     Net income (loss)                                        6,676                 8,552             (2,958)               1,182
     Net income (loss) per share - Basic                        .19                   .24               (.08)                 .03
     Net income (loss) per share - Diluted                      .19                   .24               (.08)                 .03

</TABLE>


         Note 13.  New Accounting Standards

              In June 1998,  the  Financial  Accounting  Standards  Board issued
              Statement  of  Financial  Accounting  Standards  (SFAS)  No.  133,
              "Accounting for Derivative  Instruments  and Hedging  Activities".
              SFAS No. 133  establishes  accounting and reporting  standards for
              derivative  instruments,  including certain derivative instruments
              embedded  in  other  contracts  and  for  hedging  activities.  It
              requires that an entity recognize all derivatives as either assets
              or liabilities in the statement of financial  position and measure
              those   instruments  at  fair  value.  The  Company  is  currently
              evaluating the impact, if any, of SFAS No. 133, as amended by SFAS
              No. 137 and SFAS No. 138,  which is effective  for all quarters of
              fiscal years beginning after June 15, 2000.

              In December 1999, the  Securities  and Exchange  Commission  (SEC)
              issued  Staff  Accounting  Bulletin  No.  101 (SAB  101),  Revenue
              Recognition in Financial  Statements as amended by SAB 101A, which
              provides guidance on the recognition, presentation, and disclosure
              of revenue in  financial  statements  filed with the SEC.  SAB 101
              outlines the basis criteria that must be met to recognize  revenue
              and  provides   guidance  for   disclosures   related  to  revenue
              recognition  policies. In June 2000, the SEC issued SAB 101B which
              deferred the  effective  date of SAB 101 until the last quarter of
              fiscal years  beginning  after December 15, 1999. The Company does
              not expect the  adoption  of SAB 101 to have a material  effect on
              its consolidated financial position or results of operations.

              In March 2000, the FASB issued  Interpretation  No. 44, Accounting
              for  Certain   Transactions   involving  Stock  Compensation,   an
              interpretation   of  APB  Opinion  No.  25.  This   Interpretation
              clarifies the  application of Opinion 25 for certain  issues:  (a)
              the  definition  of employee for purposes of applying  Opinion 25,
              (b) the criteria  for  determining  whether a plan  qualifies as a
              non-compensatory  plan, (c) the accounting  consequence of various
              modifications  to the terms of a previously  fixed stock option or
              award,   and  (d)  the   accounting   for  an  exchange  of  stock
              compensation  awards in a business  combination.  Generally,  this
              Interpretation  is  effective  July 1, 2000.  The Company does not
              expect the  adoption of  Interpretation  No. 44 to have a material
              effect  on its  consolidated  financial  position  or  results  of
              operations.




<PAGE>



                          INDEPENDENT AUDITORS' REPORT

         Board of Directors and Stockholders
         Fritz Companies, Inc.:


              We have audited the  accompanying  consolidated  balance sheets of
         Fritz Companies, Inc. and subsidiaries as of May 31, 2000 and 1999, and
         the related consolidated statements of operations, stockholders' equity
         and  comprehensive  income  and cash flows for each of the years in the
         three-year  period ended May 31, 2000. In connection with our audits of
         the  consolidated  financial  statements,  we also  audited the related
         consolidated financial statement schedule as of and for the years ended
         May 31, 2000, 1999 and 1998. These  consolidated  financial  statements
         and  financial  statement  schedules  are  the  responsibility  of  the
         Company's  management.  Our  responsibility is to express an opinion on
         these  consolidated   financial   statements  and  financial  statement
         schedule based on our audits.

              We conducted  our audits in  accordance  with  auditing  standards
         generally  accepted in the United  States of America.  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, such consolidated financial statements referred to
         above present fairly, in all material respects,  the financial position
         of Fritz  Companies,  Inc. and subsidiaries as of May 31, 2000 and 1999
         and the  results of their  operations  and their cash flows for each of
         the years in the  three-year  period ended May 31, 2000,  in conformity
         with accounting  principles  generally accepted in the United States of
         America Also in our opinion,  the related financial statement schedule,
         when  considered  in  relation  to  the  basic  consolidated  financial
         statements taken as a whole, presents fairly, in all material respects,
         the information set forth therein.




                                                                 /s/ KPMG LLP
         San Francisco, California
         June 28, 2000

<PAGE>

<TABLE>

<CAPTION>


                                                                    Schedule II - Valuation and Qualifying Accounts
                                                                          For the Years Ended May 31, 2000, 1999 and 1998
                                                                                       (In thousands)




                                                                                                     Net
                                                                                                 Write-Offs
                                                                                                  Charged
                                                             Balance                             to Reserves        Balance At
                                                            Beginning          Charges            and Other       End of Period
                                                            Of Period         To Income
                                                         ---------------    --------------     ---------------    --------------
<S>                                                              <C>                <C>               <C>               <C>



       For the Year Ended May 31, 2000
       Allowance for doubtful accounts                    $      20,466     $       8,122       $     (9,207)     $       19,381
                                                          ==============    ==============     ===============    ===============


       For the Year Ended May 31, 1999
       Allowance for doubtful accounts                    $      23,232     $       4,005       $     (6,771)     $       20,466
                                                          ==============    ==============     ===============    ===============


       For the Year Ended May 31, 1998
       Allowance for doubtful accounts                    $      22,292     $       8,740       $     (7,800)     $       23,232
                                                          ==============    ==============     ===============    ===============

</TABLE>





















<PAGE>




                                  EXHIBIT INDEX

         EXHIBIT                                                          PAGE
         2.1              Agreement and Plan of Reorganization entered by and
                          among the Registrant, Fritz Air
                          Freight and Intertrans Corporation and Amendment No. 1
                          thereto dated as of April 12, 1995.  (Incorporated  by
                          reference  to Exhibit  2.1 to Form 8-K dated  February
                          14,  1995 filed on or about  February  21, 1995 and to
                          Appendix  A to the  Joint  Proxy  Statement/Prospectus
                          filed on or about April 13, 1995, respectively.).
         3.1              Registrant's Restated Certificate of Incorporation.
                          (Incorporated by reference to
                          Exhibit 3.1 to Registration Statement No. 33-50808,
                          filed on August 17, 1992.)
         3.2              Registrant's Restated Bylaws.
         4.1              Specimen  certificate  of  Registrant's  Common Stock.
                          (Incorporated   by   reference   to  Exhibit   4.1  to
                          Registration  Statement No. 33-50808,  filed on August
                          17, 1992.)
         10.1             Fritz Companies, Inc. Salary Investment and Retirement
                          Plan,  and  amendments   thereto.   (Incorporated   by
                          reference  to Exhibit 10.8 to  Registration  Statement
                          No.
                          33-50808, filed on August 17, 1992.)*
         10.2             1992 Omnibus Equity Incentive Plan, as amended.
                          (Incorporated by reference to
                          Exhibit 10.9 to Registration Statement No. 33-50808,
                          filed on August 17, 1992.)*
         10.3             Nonemployee Director Restricted Stock Plan.
                          (Incorporated by reference to Exhibit A
                          to the definitive proxy materials of Registrant,
                          filed on or about April 10, 1993.)*
         10.4             Employment Agreement between Registrant and Dennis
                          Pelino dated June 1, 1995.
                          (Incorporated by reference to Exhibit 10.21 to
                          Form 10-Q for the quarter ended
                          August 31, 1995.)
         10.5             Purchase  Agreement  between  Registrant  and  Gestion
                          J.L.G., Inc. dated as of April 29, 1994. (Incorporated
                          by  reference  to Exhibit 1.2 to Form 8-K dated May 2,
                          1994 filed on or about May 16, 1994.)
         10.6             Addendum to the purchase agreements between the
                          Registrant and Gestion J.L.G., Inc.
                          dated as of April 26, 1994. (Incorporated by
                          reference to Exhibit 10.23 to Form
                          10-Q for the quarter ended September 30, 1994.)
         10.7             Note Purchase Agreement between the Registrant and
                          various other parties dated
                          April 15, 1996 for $75,000,000 of 6.43% notes due
                          April 15, 2003. (Incorporated by
                          reference to Exhibit 10.24 to Form 10-K for the year
                          ended May 31, 1996.)
         10.8             Fritz Companies, Inc. Employee Stock Purchase Plan.
                          (Incorporated by reference to
                          Exhibit 10.26 to the Registration Statement on
                          Form S-8 No. 33-07639 filed on July
                          3, 1996.)
         10.9             Employment  and   Performance   Based  Retention  Plan
                          between the  Registrant  and Dennis L. Pelino dated as
                          of October 31,  1996.  (Incorporated  by  reference to
                          Exhibit  10.28  to Form  10-Q  for the  quarter  ended
                          November 30, 1996.)**
         10.10            Term  Loan  Facility  agreement  dated  June 18,  1997
                          between  Standard  Chartered  Bank and the  Registrant
                          totaling  $13.9  million   (denominated  in  Singapore
                          dollars),   maturity   is  five  years  from  date  of
                          agreement,  payments are scheduled quarterly beginning
                          thirty-nine  months  from the  date of the  agreement,
                          interest rate  equivalent  to the Singapore  Interbank
                          Offer  Rate   (SIBOR)  plus  50  to  70  basis  points
                          depending   on   the   amount    borrowed,    and   is
                          collateralized   by  certain  property  owned  by  the
                          Company
         10.11            Syndicated multi-currency credit facility agreement
                          dated March 27, 1998  for $100
                          million maturing on March 27, 2001
         10.12            Extension of syndicated multi-currency credit
                          facility agreement dated March
                          27,1998 for $100 million changing the maturing date
                          to March 27, 2002, Dated  March
                          30, 1999


<PAGE>



         EXHIBIT                                                           PAGE
         10.13            First Amendment Agreement dated March 1, 1998 to the
                          Note Purchase Agreement dated
                          April 15, 1996 for $75 million of 6.43% senior notes
                          due April 15, 2003
         10.14            U.S. Customs Brokerage service agreement between the
                          Registrant and Federal Express
                          Corporation dated August 25, 1998
         10.15            Employment and Non-Compete Agreement between
                          Registrant and Brad Lee Skinner dated
                          December 1, 1998. *
         10.16            Employment Offer Letter from the Registrant to
                          Raymond L. Smith dated December 7,
                          1998. *
         10.17            Guarantee Agreement between the Registrant and
                          Joseph L. Carnes dated December 16, 1998.
         10.18            Employment and Non-Compete Agreement between
                          Registrant and Jan H. Raymond dated
                          January 1, 1999. *
         10.19            Employment and Non-Compete Agreement between
                          Registrant and Ronald F. Dutt dated
                          April 30, 1999. *
         10.20            Amendment # 3 to Registrants Salary Investment and
                          Retirement Plan dated May 12, 1998
         10.21            Restated Certificate of Incorporation of Fritz
                          Companies, Inc                                   F-26
         10.22            Employment and Non-Compete Agreement between
                          Registrant and Graham Napier dated July 17, 1999.F-29
         10.23            Employment and Non-Compete Agreement between
                          Registrant and Eugene Wojciechowski
                          dated May 1, 2000                                F-34
         21.1             Subsidiaries of the Registrant                   F-38
         23.1             Consent of KPMG  LLP                             F-44
         27               Financial Data Schedule                          F-45


         *  Indicates,  as required by Item 14(a)(3),  a management  contract of
            compensatory  plan  required  to be filed as an exhibit to this Form
            10-K.

         ** Confidential Treatment has been requested for portions of this
            Exhibit.



<PAGE>