UTi Worldwide Reports Fiscal 2012 Fourth Quarter Results

Thu Mar 22, 2012 8:00am EDT

* Reuters is not responsible for the content in this press release.

LONG BEACH, Calif., March 22, 2012 (GLOBE NEWSWIRE) -- UTi Worldwide Inc. (Nasdaq:UTIW) today reported financial results for its fiscal 2012 fourth quarter ended January 31, 2012.

Fiscal Fourth Quarter 2012 vs. 2011 Results:

  • Revenues were $1,153.6 million, an increase of 0.7 percent from $1,145.1 million.
  • Net revenues (revenues minus purchased transportation costs) were $406.5 million, an increase of 0.5 percent from $404.5 million.
  • Net income attributable to UTi Worldwide Inc. was $12.4 million, or $0.12 per diluted share, in the fourth quarter of fiscal 2012, compared to $14.5 million, or $0.14 per diluted share.
  • Adjusting for intangible asset impairment, severance and other charges, adjusted net income attributable to UTi Worldwide Inc. was $20.3 million, or $0.20 per diluted share in the fiscal 2012 fourth quarter.
  • All references to adjusted items in this release refer to non-GAAP results. A reconciliation of GAAP to these non-GAAP results is provided in the supplemental financial information attached to this release.

Eric W. Kirchner, chief executive officer, said, "It is encouraging that we were able to deliver a solid operating result in the fourth quarter in a difficult environment. On an adjusted basis, operating profit grew 24 percent and net income rose 39 percent compared to last year's fourth quarter. As expected, the strengthening of the U.S. dollar, particularly against the South African rand, had a negative impact on revenue growth in the period. On an organic basis (excluding currency effects), net revenues increased 5.8 percent in the quarter primarily due to increased activity in contract logistics and distribution and higher net revenue per unit of cargo in freight forwarding. Volumes in freight forwarding were weak in our fourth quarter, particularly in the month of January, due to a soft market and the timing of Chinese New Year. Despite a challenging environment last year, operating results improved, cash flow increased, and we made good progress in our transformation activities."

Revenues increased 0.7 percent in the 2012 fiscal fourth quarter compared to the prior-year fourth quarter primarily due to increased contract logistics and distribution activity, growth in ocean volumes and higher fuel surcharges. These factors were partially offset by the impact of currency and lower volumes in airfreight. Net revenues increased 0.5 percent in the fourth quarter, reflecting higher net revenue per unit of cargo in freight forwarding.

Currency fluctuations, particularly relating to the South African rand, had a significant impact on revenues and net revenues in the fourth quarter. Organic revenues increased 4.6 percent and organic net revenues were up 5.8 percent in the fiscal 2012 fourth quarter, compared to the same period last year.

Intangible asset impairment, severance and other costs totaled $10.3 million in the fiscal 2012 fourth quarter, comprising an intangible asset impairment charge of $5.2 million, severance and exit costs of $2.0 million, and an accrual of $3.1 million relating to an outstanding legal claim. The intangible asset impairment relates to substantially all of the unamortized valuation of the customer list from an acquisition in 2004. The intangible asset became impaired when the expected useful life of this customer list was shortened with the non-renewal of a contract, effective from July 2012, in which the company was not prepared to lower its returns to retain the business. The accrual for the outstanding legal claim relates to the previously reported dispute with the South African Revenue Service (SARS) over the use of "owner drivers" for the collection and delivery of cargo, and represents the company's best estimate of the total settlement value for all years under dispute based on recent formal settlement discussions with SARS. Discussions are ongoing and no formal settlement has been reached. The company has proposed to settle this claim without admitting liability in order to avoid further costs and protracted litigation.

Operating expenses less purchased transportation costs were $384.7 million in the fourth quarter of fiscal 2012. Excluding intangible asset impairment, severance and other costs described above, adjusted operating expenses less purchased transportation costs were $374.3 million, a decrease of 1.1 percent compared to the same period last year. Organic growth in adjusted operating expenses less purchased transportation costs was 4.1 percent compared to the same period last year.

Operating income in the fiscal 2012 fourth quarter was $21.9 million. Excluding intangible asset impairment, severance and other costs described above, adjusted operating income in the fourth quarter of fiscal 2012 was $32.2 million, or 7.9 percent of net revenues. This compares to operating income in the year-ago fourth quarter of $26.0 million, or 6.4 percent of net revenues. The operating income and margin increases primarily reflect increased activity in contract logistics and distribution and higher net revenue per unit of cargo, partially offset by higher expenses, compared to the same period last year.

Kirchner concluded, "As we look ahead, it is difficult to predict how the global economy and world trade will perform this year. It is likely that volumes will remain soft in the first half of the year, with the possibility of modest growth in the second half. We have several initiatives in place intended to drive growth ahead of the market. We will continue to make process improvements such as better buying and enhanced utilization of our gateway structure. And we will remain focused on delivering margin improvement over the long-term. Our transformation is progressing; we deployed our new finance system, we have completed the development of our new freight forwarding operating system, and we continue to test the integration of these systems in the Netherlands. We expect to complete this testing in the near future and begin the rollout of the integrated system throughout the world shortly thereafter. The amount and timing of expected benefits and expenses from the transformation remain consistent with what we communicated at our investor day last June, and we still plan to achieve our operating margin goals no later than fiscal 2015."

Investor Conference Call:

UTi management will host an investor conference call today, March 22, 2012, at 8:00 a.m. PDT (11:00 a.m. EDT) to review the company's financial results for the fiscal 2012 fourth quarter. Investment professionals are invited to participate in the live call by dialing 800-762-8779 (domestic) or 480-629-9692 (international) using conference ID 4521333. The call will be open to all interested investors through a live, listen-only audio Internet broadcast at www.go2uti.com and www.earnings.com. For those who are not available to listen to the live broadcast, the call will be archived for one year at both Web sites. A telephonic playback of the conference call also will be available from approximately 11:00 a.m. PDT, today, through March 25, 2012, by calling 800-406-7325 (domestic) or 303-590-3030 (international) and using replay passcode 4521333.

About UTi Worldwide:

UTi Worldwide Inc. is an international, non-asset-based supply chain services and solutions company providing air and ocean freight forwarding, contract logistics, customs brokerage, distribution, inbound logistics, truckload brokerage and other supply chain management services. The company serves a large and diverse base of global and local companies, including clients operating in industries with unique supply chain requirements such as the pharmaceutical, retail, apparel, chemical, automotive and technology industries. The company seeks to use its global network, proprietary information technology systems, relationships with transportation providers, and expertise in outsourced logistics services to deliver competitive advantage to each of its clients' supply chains.

Use of Non-GAAP Financial Information:

This press release includes "non-GAAP financial measures" within the meaning of the Securities and Exchange Commission rules. UTi believes that meaningful analysis of its financial performance requires an understanding of the factors underlying that performance and the company's judgments about the likelihood that particular factors will repeat. Short-term patterns and long-term trends may be obscured by the impact of certain items. For this reason, the company has included information in this press release relating to organic revenue and net revenue growth, which are adjusted to exclude the impact of currency fluctuations and, where applicable, acquisitions between comparable periods. The company also has referred to operating expenses less purchased transportation costs, and included information relating to organic operating expenses less purchased transportation costs, which are adjusted to exclude the impact of currency fluctuations and, where applicable, acquisitions between comparable periods; and to organic adjusted operating expenses less purchased transportation costs, which are adjusted to exclude intangible asset impairment charges, severance and exit costs, and an accrual relating to an outstanding legal claim and the impact of currency fluctuations, and, where applicable, acquisitions between comparable periods. The company has further referred to adjusted operating profit and adjusted net income, each of which is adjusted to exclude intangible asset impairment charges, severance and other costs, and an accrual relating to an outstanding legal claim as described above. This information is among the information the company uses as a basis for evaluating company performance on a comparable basis over time, allocating resources and planning and forecasting of future periods. The company has also provided this information because such adjustments make performance information more comparable to prior disclosures for investors, and may enhance the ability of investors to analyze the company's performance. This information is not intended to be considered in isolation or as a substitute for, or superior to, the relevant measures prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the tables at the end of this press release.

Safe Harbor Statement:

Certain statements in this news release may be deemed to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The company intends that all such statements be subject to the "safe-harbor" provisions contained in those sections. Such forward-looking statements may include, but are not limited to, statements about the global economy and world trade, volume growth, the company's ability to drive growth ahead of the market and make process improvements such as better buying and enhanced utilization of its gateway initiatives, the amount and timing of expenses and benefits from the transformation, the company's plan to make margin improvements over the long-term and achieve its operating margin goals no later than fiscal 2015, the status and timing of the completion of the freight forwarding operating and finance systems and the rollout of the integrated system throughout the world, and other statements not of an historical nature. Many important factors may cause the company's actual results to differ materially from those discussed in any such forward-looking statements, including but not limited to the recent economic and political volatility, particularly in Europe and the Middle East, that has materially impacted trade volumes, transportation capacity and pricing dynamics; the financial condition of various European countries; the financial condition of many of the company's customers; planned or unplanned consequences of the company's sales initiatives, procurement initiatives and business transformation efforts; the demand for the company's services; the impact and related costs associated with reorganization efforts and/or cost reduction measures undertaken by the company; increased competition; the impact of volatile fuel costs and changes in foreign exchange rates; changes in the company's effective tax rates; industry consolidation making it more difficult to compete against larger companies; general economic, political and market conditions, including those in Africa, Asia and EMENA; work stoppages or slowdowns or other material interruptions in transportation services; risks of international operations; risks associated with, and the potential for penalties, fines, costs and expenses the company may incur as a result of the ongoing publicly announced U.S. Department of Justice, the European Commission and other governments into the pricing practices of the international air freight and air cargo transportation industry and other similar or related investigations and lawsuits; disruptions caused by epidemics, natural disasters, conflicts, wars and terrorism; and the other risks and uncertainties described in "Risk Factors" and "Forward-looking Statements" in the company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and described in the company's other filings with the Securities and Exchange Commission. Although UTi believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, the company cannot assure the reader that the results contemplated in forward-looking statements will be realized in the timeframe anticipated or at all. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by UTi or any other person that UTi's objectives or plans will be achieved. Accordingly, investors are cautioned not to place undue reliance on the company's forward-looking statements. UTi undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

UTi Worldwide Inc.
Condensed Consolidated Statements of Income
(in thousands, except share and per share amounts)
  Three months ended January 31,  Year ended January 31,
   2012   2011   2012   2011 
         
Revenues: (Unaudited) (Unaudited) (Unaudited)  
Airfreight forwarding  $ 389,589  $ 393,303  $ 1,725,537  $ 1,608,312
Ocean freight forwarding 302,259 295,173 1,230,032 1,190,529
Customs brokerage 29,863 27,765 124,777 108,804
Contract logistics 195,911 192,289 824,962 736,376
Distribution 132,867 122,567 548,733 488,261
Other   103,133   114,026   460,180   417,491
Total revenues   1,153,622   1,145,123   4,914,221   4,549,773
         
Operating expenses:        
Purchased transportation costs:        
Airfreight forwarding  302,207  306,789  1,353,633  1,273,408
Ocean freight forwarding 247,453 243,443 1,020,138 998,234
Customs brokerage 1,337 1,068 5,159 6,102
Contract logistics 47,889 42,018 199,765 158,436
Distribution 89,267 82,341 372,930 331,654
Other  58,948  64,951  258,727  226,468
         
Staff costs 223,244 223,618 938,592 849,995
Depreciation 11,581 11,044 48,018 46,008
Amortization of intangible assets 3,663 4,873 15,761 14,718
Severance and other 5,145 15,132
Intangible assets impairment 5,178 5,178
Other operating expenses   135,855   139,026   552,518   522,034
Total operating expenses  1,131,767  1,119,171  4,785,551  4,427,057
Operating income 21,855 25,952 128,670 122,716
Interest expense, net (2,372) (3,588) (13,786) (16,109)
Other income/(expense), net   42   (938)   (236)   1,245
Pretax income 19,525 21,426 114,648 107,852
Provision for income taxes   6,185   6,123   35,650   33,229
Net income  13,340  15,303  78,998  74,623
Net income attributable to noncontrolling interests   959   766   6,465   4,720
Net income attributable to UTi Worldwide Inc.  $ 12,381  $ 14,537  $ 72,533  $ 69,903
Basic earnings per common share attributable to UTi Worldwide Inc. common shareholders  
$ 0.12
 
$ 0.14
 
$ 0.71
 
$ 0.70
Diluted earnings per common share attributable to UTi Worldwide Inc. common shareholders
$ 0.12
 
$ 0.14
 
$ 0.70
 
$ 0.68
         
Number of weighted-average common shares outstanding used for per share calculations        
Basic shares 102,796,633 100,843,950 102,586,527 100,577,194
Diluted shares 103,515,246 102,511,077 103,446,381 102,222,037
   
UTi Worldwide Inc.
Condensed Consolidated Balance Sheets
(in thousands)
 
   January 31, 2012   January 31, 2011 
  (Unaudited)  
Assets    
     
Cash and cash equivalents $  321,761 $  326,795
Trade receivables, net 947,480 879,842
Deferred income taxes 20,372 20,400
Other current assets   132,545   131,295
 Total current assets 1,422,158 1,358,332
     
Property, plant and equipment, net 216,299 175,700
Goodwill and other intangible assets, net 534,237 515,578
Investments 1,108 1,102
Deferred income taxes 43,272 29,526
Other non-current assets   38,575   32,467
     
 Total assets $  2,255,649 $  2,112,705
     
Liabilities & Equity    
     
Bank lines of credit $  76,240 $ 170,732
Short-term borrowings 1,019 7,238
Current portion of long-term borrowings 21,775 34,232
Current portion of capital lease obligations 13,768 16,232
Trade payables and other accrued liabilities 859,086 822,887
Income taxes payable 12,657 8,521
Deferred income taxes   1,927   3,881
 Total current liabilities 986,472 1,063,723
     
Long-term borrowings, excluding current portion 231,204 61,230
Capital lease obligations, excluding current portion 15,845 19,158
Deferred income taxes 31,845 30,487
Other non-current liabilities  38,775  37,943
     
Commitments and contingencies    
     
UTi Worldwide Inc. shareholders' equity:    
 Common stock 491,073  484,884
 Retained earnings 503,675 437,307
 Accumulated other comprehensive loss   (55,983)   (35,116)
 Total UTi Worldwide Inc. shareholders' equity  938,765  887,075
Noncontrolling interests   12,743   13,089
 Total equity   951,508   900,164
     
 Total liabilities and equity $  2,255,649 $  2,112,705
 
UTi Worldwide Inc.  
Condensed Consolidated Statements of Cash Flows
(in thousands)
 
  Year ended January 31,
  2012  2011 
  (Unaudited)
     
Operating Activities:    
Net income  $  78,998  $  74,623
Adjustments to reconcile net income to net cash provided by operating activities:    
Share-based compensation costs, net 15,413 8,746
Depreciation 48,018 46,008
Amortization of intangible assets 15,761 14,718
Amortization of debt issuance costs 2,194 3,088
Goodwill and intangible assets impairment 5,178
Deferred income taxes (15,323) (1,804)
Uncertain tax positions 335 (3,699)
Excess tax benefit from share-based compensation (462) (291)
Loss on disposal of property, plant and equipment 141 338
Provision for doubtful accounts 6,863 4,361
Other 4,777 (988)
Net changes in operating assets and liabilities  (43,965)  (72,215)
Net cash provided by operating activities 117,928 72,885
     
Investing Activities:    
Purchases of property, plant and equipment (45,682) (39,228)
Proceeds from disposal of property, plant and equipment 5,020 2,480
Purchases of software and other intangible assets (39,003) (19,645)
Net increase in other non-current assets (5,975) (1,811)
Acquisitions and related payments (3,449)
Other   (29)   (570)
Net cash used in investing activities (85,669) (62,223)
     
Financing Activities:    
Net (repayments)/borrowings under bank lines of credit (94,872) 65,115
Net decrease in short-term borrowings (6,353) (9,901)
Proceeds from issuance of long-term borrowings 154,744 84
Repayment of long-term borrowings (36,133) (68,169)
Debt issuance cost (2,153)
Repayment of capital lease obligations (18,824) (19,202)
Contingent consideration paid (26) (3,734)
Acquisitions of noncontrolling interests (13,196) (8,323)
Distribution to noncontrolling interests and other (2,443) (1,719)
Ordinary shares settled under share-based compensation plans  (2,035)
Proceeds from issuance of ordinary shares 2,091 5,456
Excess tax benefit from share-based compensation 462 291
Dividends paid  (6,165)  (6,144) 
 Net cash used in financing activities  (24,903)  (46,246)
Effect of foreign exchange rate changes on cash and cash equivalents  
 (12,390)
 
 11,595
Net decrease in cash and cash equivalents (5,034) (23,989)
Cash and cash equivalents at beginning of period  326,795  350,784
     
Cash and cash equivalents at end of period $ 321,761 $ 326,795
 
UTi Worldwide Inc.
Segment Reporting
(in thousands)
(Unaudited)
 
  Three months ended January 31, 2012
  Freight Forwarding Contract Logistics and Distribution Corporate Total
         
Revenues  
$  792,975
 
$ 360,647  
 
$  —
 
$  1,153,622
         
Purchased transportation costs  601,339  145,762  —  747,101
Staff costs  109,084  106,105  8,055  223,244
Depreciation  4,185  6,906  490   11,581
Amortization of intangible assets  1,136  1,987  540  3,663
Severance and other  549  1,490  3,106  5,145
Intangible assets impairment  —  5,178  —  5,178
Other operating expenses   49,885    81,111   4,859     135,855
Total operating expenses   766,178   348,539   17,050     1,131,767
         
Operating income/(loss) $  26,797 $  12,108 $  (17,050)  21,855
Interest expense, net        (2,372)
Other income, net         42
Pretax income        19,525
Provision for income taxes         6,185
Net income        13,340
Net income attributable to noncontrolling interests         959
Net income attributable to UTi Worldwide Inc.       $   12,381
 
UTi Worldwide Inc.
Segment Reporting
(in thousands)
(Unaudited)
 
  Three months ended January 31, 2011
  Freight Forwarding  Contract Logistics and Distribution Corporate Total
         
Revenues  
$  789,735
 
$   355,388
 
$  —
 
$  1,145,123
         
Purchased transportation costs  604,426  136,184  —  740,610
Staff costs  104,189  111,977  7,452  223,618
Depreciation  4,775  6,863  (594)  11,044
Amortization of intangible assets  1,059  3,015  799  4,873
Other operating expenses   51,971   81,151   5,904   139,026
Total operating expenses   766,420   339,190   13,561   1,119,171
         
Operating income/(loss) $  23,315 $  16,198 $  (13,561)  25,952
Interest expense, net        (3,588)
Other expense, net         (938)
Pretax income        21,426
Provision for income taxes         6,123
Net income        15,303
Net income attributable to noncontrolling interests         766
Net income attributable to UTi Worldwide Inc.       $  14,537
 
UTi Worldwide Inc.
Segment Reporting
(in thousands)
(Unaudited)
 
  Year ended January 31, 2012
  Freight Forwarding  Contract Logistics and Distribution Corporate Total
         
Revenues  
$  3,384,335
 
$  1,529,886
 
$  —
 
$  4,914,221
         
Purchased transportation costs  2,599,687  610,665  —  3,210,352
Staff costs  443,960  465,669  28,963  938,592
Depreciation  17,300  28,417  2,301  48,018
Amortization of intangible assets  4,398  8,943  2,420  15,761
Severance and other  5,555  5,653  3,924  15,132
Intangible assets impairment  —  5,178  —  5,178
Other operating expenses   196,885   336,431   19,202     552,518
Total operating expenses   3,267,785   1,460,956   56,810     4,785,551
         
Operating income/(loss) $  116,550 $   68,930 $  (56,810)  128,670
Interest expense, net        (13,786)
Other expense, net        (236)
Pretax income        114,648
Provision for income taxes         35,650
Net income        78,998
Net income attributable to noncontrolling interests         6,465
Net income attributable to UTi Worldwide Inc.       $  72,533
 
UTi Worldwide Inc.
Segment Reporting
(in thousands)
 
  Year ended January 31, 2011
  Freight Forwarding  Contract Logistics and Distribution Corporate Total
         
Revenues  
$  3,162,238
 
$  1,387,535
 
$  —
 
$  4,549,773
         
Purchased transportation costs  2,456,000  538,302  —  2,994,302
Staff costs  391,060  433,641  25,294  849,995
Depreciation  16,868  29,192  (52)  46,008
Amortization of intangible assets  4,238  9,681  799  14,718
Other operating expenses    195,014   305,619   21,401   522,034
Total operating expenses   3,063,180   1,316,435   47,442   4,427,057
         
Operating income/(loss) $  99,058 $  71,100 $  (47,442)  122,716
Interest expense, net        (16,109)
Other income, net         1,245
Pretax income        107,852
Provision for income taxes         33,229
Net income        74,623
Net income attributable to noncontrolling interests         4,720
Net income attributable to UTi Worldwide Inc.       $  69,903
               
UTi Worldwide Inc.              
Geographic Reporting              
(in thousands)              
(Unaudited)              
   Three months ended January 31, 2012
  Freight Forwarding Revenue Contract Logistics and Distribution Revenue Freight Forwarding Net Revenue Contract Logistics and Distribution Net Revenue Operating Income/(Loss) Severance and Other Intangible Assets Impairment
               
EMENA  $ 233,076 $  52,802 $  66,713 $  37,055 $  3,174 $  2,039 $ —
Americas   179,122  196,931  46,493  88,647  1,150  —  5,178
Asia Pacific   258,559  15,503  50,348  10,116  13,411  —
Africa   122,218  95,411  28,082  79,067  21,170  —  —
Corporate   —  —  —  —  (17,050)  3,106  —
Total  $ 792,975 $  360,647 $  191,636 $214,885 $  21,855 $  5,145 $  5,178
               
  Three months ended January 31, 2011     
  Freight Forwarding Revenue Contract Logistics and Distribution Revenue Freight Forwarding Net Revenue Contract Logistics and Distribution Net Revenue Operating Income/(Loss)    
               
EMENA  $ 240,847 $  66,323 $  63,946 $  38,918 $ 1,688    
Americas   159,565  180,615  43,496  95,302  4,873    
Asia Pacific   271,408  11,952  51,732  7,798  15,411    
Africa   117,915  96,498  26,135  77,186  17,541    
Corporate   —  —  —  —  (13,561)    
Total  $ 789,735 $  355,388 $  185,309 $  219,204 $ 25,952    
             
UTi Worldwide Inc.            
Geographic Reporting            
(in thousands)            
(Unaudited)            
               
  Year ended January 31, 2012
  Freight Forwarding Revenue Contract Logistics and Distribution Revenue Freight Forwarding Net Revenue Contract Logistics and Distribution Net Revenue Operating Income/(Loss) Severance and Other Intangible Assets Impairment
               
EMENA  $ 1,041,126 $  222,558 $  268,205 $  152,107 $  4,770 $  9,255 $ —
Americas   753,999  844,244  191,405  395,428  31,327  1,558  5,178
Asia Pacific   1,083,718  61,509  212,943  39,446  66,176  248  —
Africa   505,492  401,575  112,095  332,240  83,207  147  —
Corporate   —  —  —  —  (56,810)  3,924  —
Total  $ 3,384,335 $1,529,886 $  784,648 $  919,221 $  128,670 $  15,132 $  5,178
               
  Year ended January 31, 2011    
  Freight Forwarding Revenue Contract Logistics and Distribution Revenue Freight Forwarding Net Revenue Contract Logistics and Distribution Net Revenue Operating Income/(Loss)    
               
EMENA  $ 941,176 $  257,949 $  242,717 $  150,620 $ 9,739    
Americas   648,451  726,176  177,113  379,614  35,395    
Asia Pacific   1,158,101  44,427  188,467  29,701  57,600    
Africa   414,510  358,983  97,941  289,298  67,424    
Corporate   —  —  —  —  (47,442)    
 Total  $ 3,162,238 $1,387,535 $  706,238 $  849,233 $ 122,716    
 
UTi Worldwide Inc.
Supplemental Financial Information – Reconciliation to US GAAP
(in thousands, except per share amounts)
(Unaudited)
 
  Three months ended January 31, 2012   Year ended  January 31, 2012 
     
GAAP Revenues $ 1,153,622 $ 4,914,221
Less: Purchased transportation costs    (747,101)    (3,210,352)
Net Revenues  $ 406,521  $ 1,703,869
     
GAAP Operating expenses $ 1,131,767 $ 4,785,551
Less: Purchased transportation costs    (747,101)    (3,210,352)
Operating expenses less purchased transportation costs   384,666   1,575,199
Adjustment for severance and other (1),(2)   (5,145)   (15,132)
Adjustment for intangible assets impairment (3)    (5,178)     (5,178)
Non-GAAP Operating expenses  $ 374,343  $  1,554,889
     
GAAP Operating income $ 21,855 $ 128,670
Adjustment for severance and other (1),(2)   5,145   15,132
Adjustment for intangible assets impairment (3)    5,178    5,178
Non-GAAP Operating income  $ 32,178  $ 148,980
     
Percent of Net Revenues   7.9%   8.7%
     
GAAP Pretax income $ 19,525 $ 114,648
Adjustment for severance and other (1),(2)   5,145   15,132
Adjustment for intangible assets impairment (3)    5,178    5,178
Non-GAAP Pretax income  $ 29,848  $ 134,958
     
GAAP Provision for income taxes $ 6,185 $ 35,650
Adjustment for severance and other (4)   646   3,740
Adjustment for intangible assets impairment (4)    1,791    1,791
Non-GAAP Provision for income taxes  $ 8,622  $ 41,181
     
GAAP Net income attributable UTi Worldwide Inc. $ 12,381 $ 72,533
Adjustment for:    
Severance and other (1),(2)   5,145   15,132
Intangible assets impairment (3)   5,178   5,178
Income tax effect severance and other (4)   (646)   (3,740)
Income tax effect intangible assets impairment (4)    (1,791)    (1,791)
Non-GAAP Net income attributable UTi Worldwide Inc.  $ 20,267  $ 87,312
     
GAAP Diluted earnings per common share $ 0.12 $ 0.70
Adjustment for:    
Severance and other (1),(2)   0.05   0.15
Intangible assets impairment (3)   0.05   0.05
Income tax effect severance and other (4)   (0.01)   (0.04)
Income tax effect intangible assets impairment (4)    (0.01)    (0.02)
Non-GAAP Diluted earnings per common share  $ 0.20  $ 0.84
 
UTi Worldwide Inc.
Supplemental Financial Information – Reconciliation to US GAAP (continued)
(in thousands, except per share amounts)
(Unaudited)

(1) During the three months ended January 31, 2012, the company recorded pre-tax severance of $1,572 and facility exit costs of $467 primarily related to transformation activities. The company recorded a charge of $3,106 representing an estimated settlement value for all years under review relating to a dispute with the South African Revenue Service with respect to the company's use of "owner drivers" for the collection and delivery of cargo in South Africa. 

(2) During the year ended January 31, 2012, the company recorded pre-tax severance of $9,645 and facility exit costs of $2,381 primarily related to transformation activities. The company recorded a charge of $3,106 representing an estimated settlement value for all years under review relating to a dispute with the South African Revenue Service with respect to the company's use of "owner drivers" for the collection and delivery of cargo in South Africa. 

(3) During the three months and year ended January 31, 2012, the company recorded a pre-tax intangible asset impairment totaling $5,178, relating to substantially all of the unamortized valuation of the customer list from an acquisition in 2004. The intangible asset became impaired because of the recently advised non-renewal of one contract beginning in July 2012 where the company was not prepared to lower its returns to retain the business.

(4) The provisions for income tax adjustment related to the severance and facility exit costs and the intangible asset impairment were calculated based on the prevailing rate in each jurisdiction. The settlement charge was not deductible for tax purposes in South Africa.

UTi Worldwide Inc.
Organic Growth Reconciliation
(Unaudited)

Set forth below is a reconciliation of the company's organic growth rates and the growth rates based on the company's GAAP reported results in the company's revenues, net revenues and operating expenses less purchased transportation costs for the three and twelve months ended January 31, 2012, respectively. Organic growth is a non-GAAP measure that excludes the impact of foreign currency translation and acquisitions, where applicable.

Three months ended January 31, 2012:          
  Total Net
Change
+/(-)
Currency Impact
Organic
Growth
+/(-)
Non-GAAP Items (5)(6)(7)
Adjusted Organic
Growth
           
Revenues  1% 4% 5% —% 5%
Net revenues  1% 5% 6% —% 6%
Operating expenses less purchased transportation costs 2% 5% 7% (3)% 4%
         
Year ended January 31, 2012:          
  Total Net
Change
+/(-)
Currency Impact
Organic
Growth
+/(-)
Non-GAAP Items (5)(6)(7)
Adjusted Organic
Growth
       
Revenues  8% (2)% 6% —% 6%
Net revenues  10% (2)% 8% —% 8%
Operating expenses less purchased transportation costs 10% (2)% 8% (1)% 7%

(5) During the three months ended January 31, 2012, the company recorded pre-tax severance of $1,572 and facility exit costs of $467 primarily related to transformation activities. The company recorded a charge of $3,106 representing an estimated settlement value for all years under review relating to a dispute with the South African Revenue Service with respect to the company's use of "owner drivers" for the collection and delivery of cargo in South Africa. 

(6) During the year ended January 31, 2012, the company recorded pre-tax severance of $9,645 and facility exit costs of $2,381 primarily related to transformation activities. The company recorded a charge of $3,106 representing an estimated settlement value for all years under review relating to a dispute with the South African Revenue Service with respect to the company's use of "owner drivers" for the collection and delivery of cargo in South Africa. 

(7) During the three months and year ended January 31, 2012, the company recorded a pre-tax intangible asset impairment totaling $5,178, relating to substantially all of the unamortized valuation of the customer list from an acquisition in 2004. The intangible asset became impaired because of the recently advised non-renewal of one contract beginning in July 2012 where the company was not prepared to lower its returns to retain the business.

CONTACT: Jeff Misakian
         Global Vice President, Investor Relations
         (562) 552-9417
         jmisakian@go2uti.com