UTi Worldwide Reports Fiscal 2014 Third Quarter Results

LONG BEACH, Calif., Dec. 5, 2013 (GLOBE NEWSWIRE) -- UTi Worldwide Inc. (Nasdaq:UTIW) today reported financial results for its fiscal 2014 third quarter ended October 31, 2013.

Fiscal Third Quarter 2014 vs. 2013 Results:
  • Revenues were $1,154.4 million, a decrease of 0.2 percent from $1,156.7 million.
  • Net revenues (revenues minus purchased transportation costs) were $393.5 million, a decrease of 2.5 percent from $403.6 million.
  • On an organic basis, revenues increased 3.1 percent and net revenues increased 1.6 percent versus the comparable prior year period.
  • Net loss attributable to UTi Worldwide Inc. was $9.1 million, or $0.09 per diluted share, compared to net income of $10.5 million, or $0.10 per diluted share.
  • The GAAP net loss in the fiscal 2014 third quarter includes after-tax severance costs of $12.0 million, or $0.12 per diluted share. In addition, the company recorded additional tax expense exceeding its normalized tax rate by $5.2 million, or $0.05 per diluted share.
  • Excluding the after-tax severance costs and the additional tax expense described above, non-GAAP net income attributable to UTi Worldwide Inc. was $8.1 million, or $0.08 per diluted share.
  • All references to adjusted items and organic 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, "Our fiscal 2014 third quarter results reflect increased activity in both our freight forwarding and contract logistics and distribution segments, offset by transformation-related costs. Our sales efforts drove freight forwarding volume growth that was ahead of the market, particularly in airfreight. Rates were under pressure in the third quarter and this led to a decline in net revenue per unit of cargo that partially offset the higher volumes. We anticipate this rate pressure to continue for the foreseeable future. Improved trading conditions and our ongoing sales activities in contract logistics and distribution led to new business and increases in existing accounts. Year over year comparisons in contract logistics and distribution were negatively impacted by the conclusion in October 2012 of a high-margin account in the Americas and the impact of currency exchange rates on our global results."

Kirchner continued, "Since October 1, we have launched our 1View freight forwarding operating system in five countries, including Belgium, France and Germany. There are now 27 countries that are live on the system, representing approximately 50 percent of total freight forwarding shipments. We continue to expect approximately 70 percent of shipments to be on the new system at the end of our 2014 fiscal year. In addition, we expect to be substantially complete with the system rollout by the middle of fiscal 2015. Because of the progress made in our transformation activities, we removed approximately $30 million in pre-tax operating expenses on an annualized basis at the end of the third quarter. None of these cost reductions are reflected in our third quarter results. We anticipate an additional $10-12 million of annualized pre-tax operating expenses to be removed by the end of our 2014 fiscal year. We expect to realize cumulative gross pre-tax cost savings of approximately $75-95 million on an annualized go-forward basis by the end of fiscal 2015, beginning with the cost actions taken during the third quarter."

Operating expenses less purchased transportation costs were $386.2 million in the third quarter of fiscal 2014. Severance costs in the fiscal 2014 third quarter were $13.2 million on a pre-tax basis, compared to $3.9 million in the same period last year. In addition, the company accrued $5.2 million in the fiscal 2013 third quarter for other costs as a result of a legal judgment relating to a 2006 warehouse fire which was not covered by insurance. Excluding these items, adjusted operating expenses less purchased transportation costs were $373.1 million, compared to $371.8 million in the same period last year. On an organic basis, adjusted operating expenses less purchased transportation costs increased 4.2 percent, compared to the same period last year. The increase primarily reflects costs associated with transformation related activities.

The company recorded a tax provision of $9.3 million in the fiscal 2014 third quarter on pretax income of $2.0 million, due to valuation allowances and the mix of taxable income across the company's tax jurisdictions.

Investor Conference Call:

UTi management will host an investor conference call today, December 5, 2013, at 8:00 a.m. PST (11:00 a.m. EST) to review the company's financial results for the fiscal 2014 third quarter. Investment professionals are invited to participate in the live call by dialing 800-762-8779 (domestic) or 480-629-9771 (international) using conference ID 4652239. The call will be open to all interested investors through a live, listen-only audio Internet broadcast at www.go2uti.com. The slides that will be referenced during the call will be available on the company's website at www.go2uti.com (click on "Investor Relations" and then click on "Webcasts & Presentations"). The slides will contain disclosures of certain non-GAAP financial measures, which will be identified in the slides. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures will be included in the slides. 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. PST, today, through December 9, 2013, by calling 800-406-7325 (domestic) or 303-590-3030 (international) and using replay passcode 4652239.

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 organic net revenue changes, which are adjusted to exclude the impact of currency fluctuations between comparable periods. The company also has referred to operating expenses less purchased transportation costs, and to adjusted operating expenses less purchased transportation costs, which are operating expenses less purchased transportation costs that are further adjusted to exclude severance and other costs. The company has also included information relating to organic adjusted operating expenses less purchased transportation costs, which are adjusted operating expenses less purchased transportation costs that are further adjusted to exclude the impact of currency fluctuations between comparable periods. The company has further referred to non-GAAP net income attributable to UTi Worldwide Inc., which is adjusted to exclude severance costs and valuation allowances on deferred tax assets, as described above, and non-GAAP earnings per diluted share. 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. 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 rate pressure continuing for the foreseeable future, the expected implementation of the company's freight forwarding operating system, including expectations that approximately 70 percent of shipments will be on the new system at the end of fiscal 2014 and that the system rollout will be substantially complete by the middle of fiscal 2015, our anticipated removal of an additional $10-12 million of annualized pre-tax operating expenses before the end of our 2014 fiscal year, and our expectation that we will realize $75-95 million in gross annualized pre-tax operating expense reductions by the end of fiscal 2015, and any 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: volatility with respect to global trade, particularly as it relates to the global airfreight, ocean freight and contract logistics and distribution markets; global economic, political and market conditions, including those in Africa, Asia and EMENA; risks associated with the company's business transformation initiative, which include unanticipated difficulties, delays, additional costs and expenses as well as the incurrence of additional severance and other charges as a result of such initiative; changes in interest and foreign exchange rates; risks that the company might be required to record impairment charges to goodwill or additional increases in its valuation allowance on deferred tax assets; risks associated with the company's ability to satisfy financial covenants in connection with its credit facilities and note purchase agreement in the future and its ability to obtain waivers with respect to the covenants if needed and/or otherwise amend, refinance, renew or replace its credit facilities, note purchase agreement and other indebtedness on commercially reasonable terms or at all; risks associated with the profitability of certain operations and changes in statutory tax rates worldwide, changes in the geographic composition of the company's worldwide taxable income, changes in the company's unrecognized tax positions, and the impact of audit settlements with local tax authorities; volatile fuel costs; transportation capacity, pricing dynamics and the ability of the company to secure space on third party aircraft, ocean vessels and other modes of transportation; 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 governmental investigations into the international air freight and air cargo transportation industry and other related investigations and lawsuits; risks of adverse legal judgments and other liabilities not limited by contract or covered by insurance; the financial condition of the company's customers; 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 for the fiscal year ended January 31, 2013, any subsequently filed Quarterly Reports on Form 10-Q and as described in the company's other filings with the Securities and Exchange Commission. 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 in the timeframe anticipated or at all. 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.

(Tables Follow)

UTi Worldwide Inc. Condensed Consolidated Statements of Operations ( in thousands, except share and per share amounts )
  Three months ended Nine months ended
  October 31, October 31,
  2013 2012 2013 2012
  (Unaudited) (Unaudited)
         
Revenues:        
Airfreight forwarding  $ 342,447  $ 344,757  $ 1,021,396  $ 1,096,291
Ocean freight forwarding  334,622  323,247  957,087  960,369
Customs brokerage  37,948  29,655  100,074  88,335
Contract logistics  190,699  203,347  557,758  608,818
Distribution   157,301  152,767  450,257  448,169
Other  91,389  102,906  277,905  306,284
Total revenues  1,154,406  1,156,679  3,364,477  3,508,266
         
Other operating expenses:        
Purchased transportation costs:        
Airfreight forwarding  263,162  265,280  788,560  853,786
Ocean freight forwarding  279,388  271,604  801,711  806,835
Customs brokerage  7,317  1,375  12,691  4,154
Contract logistics  44,858  53,445  135,272  157,798
Distribution   110,096  104,833  314,308  304,065
Other  56,092  56,540  157,059  166,188
         
Staff costs  221,075  219,055  665,567  675,573
Depreciation  13,628  12,254  39,766  34,979
Amortization of intangible assets  5,730  2,974  11,276  9,376
Severance and other  13,184  9,097  19,033  12,921
Other operating expenses  132,630  137,542  397,936  403,341
Total other operating expenses  1,147,160  1,133,999  3,343,179  3,429,016
Operating income  7,246  22,680  21,298  79,250
Interest expense, net  (4,923)  (2,225)  (11,663)  (7,527)
Other expense, net  (294)  (208)  (1,256)  (508)
Pretax income  2,029  20,247  8,379  71,215
Provision for income taxes  9,334  7,378  30,054  23,899
Net (loss)/income  (7,305)  12,869  (21,675)  47,316
Net income attributable to non-controlling interests  1,770  2,321  4,262  4,999
         
Net (loss)/income attributable to UTi Worldwide Inc.  $ (9,075)  $ 10,548  $ (25,937)  $ 42,317
         
Basic (loss)/earnings per common share attributable to UTi Worldwide Inc. common shareholders  $ (0.09)  $ 0.10  $ (0.25)  $ 0.41
         
Diluted (loss)/earnings per common share attributable to UTi Worldwide Inc. common shareholders  $ (0.09)  $ 0.10  $ (0.25)  $ 0.41
         
Number of weighted average common shares outstanding used for per share calculations        
Basic shares  104,746,663  103,736,084  104,450,366  103,468,700
Diluted shares  104,746,663  103,953,783  104,450,366  103,947,047
         

UTi Worldwide Inc. Condensed Consolidated Balance Sheets (in thousands)
  October 31, 2013 January 31, 2013
  (Unaudited) (Audited)
     
ASSETS    
Cash and cash equivalents  $ 171,220  $ 237,276
Trade receivables, net  1,084,040  898,809
Deferred income taxes  14,475  19,595
Other current assets  158,816  156,385
Total current assets  1,428,551  1,312,065
     
Property, plant and equipment, net  233,738  242,898
Goodwill and other intangible assets, net  474,265  457,635
Investments  1,110  969
Deferred income taxes  19,828  25,802
Other non-current assets  37,225  34,688
Total assets  $ 2,194,717  $ 2,074,057
     
LIABILITIES & EQUITY    
Bank lines of credit  $ 174,965  $ 79,213
Short-term borrowings  2,017  1,129
Current portion of long-term borrowings  2,023  5,663
Current portion of capital lease obligations  12,209  11,377
Trade payables and other accrued liabilities  858,779  786,444
Income taxes payable  16,007  8,470
Deferred income taxes  2,112  2,775
Total current liabilities  1,068,112  895,071
     
Long-term borrowings, excluding current portion  203,219  204,434
Capital lease obligations, excluding current portion  66,142  73,538
Deferred income taxes  30,061  29,654
Other non-current liabilities  43,018  47,178
     
Commitments and contingencies    
     
UTi Worldwide Inc. shareholders' equity:    
Common stock  514,658  505,237
Retained earnings  364,727  396,946
Accumulated other comprehensive loss  (110,468)  (92,348)
Total UTi Worldwide Inc. shareholders' equity  768,917  809,835
Non-controlling interests  15,248  14,347
Total equity  784,165  824,182
Total liabilities and equity  $ 2,194,717  $ 2,074,057
     

UTi Worldwide Inc.  Condensed Consolidated Statements of Cash Flows (in thousands)
  Nine months ended October 31,
  2013 2012
  (Unaudited)
     
OPERATING ACTIVITIES:    
Net (loss)/income  $ (21,675)  $ 47,316
Adjustments to reconcile net (loss)/income to net cash used in operating activities:    
Share-based compensation costs  9,782  11,689
Depreciation  39,766  34,979
Amortization of intangible assets  11,276  9,376
Amortization of debt issuance costs  524  931
Deferred income taxes  7,102  (2,937)
Uncertain tax positions  (4)  (1,136)
Excess tax benefits from share-based compensation  --   (9)
(Gain)/loss on disposal of property, plant and equipment  (548)  25
Provision for doubtful accounts  4,220  978
Proceeds from the sale of trade receivables  20,211  -- 
Other  3,375  1,450
Net changes in operating assets and liabilities  (142,891)  (160,135)
Net cash used in operating activities  (68,862)  (57,473)
     
INVESTING ACTIVITIES:    
Purchases of property, plant and equipment, excluding software  (36,545)  (31,371)
Proceeds from disposals of property, plant and equipment  3,583  2,484
Purchases of software and other intangible assets  (27,484)  (26,792)
Net increase in other non-current assets  (3,292)  (406)
Other  --   99
Net cash used in investing activities  (63,738)  (55,986)
     
FINANCING ACTIVITIES:    
Net borrowings under bank lines of credit  98,970  75,544
Net increase in short-term borrowings  1,031  10
Proceeds from issuances of long-term borrowings  639  3,629
Repayments of long-term borrowings  (5,514)  (21,180)
Debt issuance costs  --   (999)
Repayments of capital lease obligations  (10,168)  (13,757)
Distributions to non-controlling interests and other  (2,180)  (2,433)
Ordinary shares settled under share-based compensation plans  (2,487)  (3,042)
Proceeds from issuance of ordinary shares  3,345  1,671
Excess tax benefits from share-based compensation  --   9
Dividends paid  (6,282)  (6,223)
Net cash provided by financing activities  77,354  33,229
     
Effect of foreign exchange rate changes on cash and cash equivalents  (10,810)  (14,538)
Net decrease in cash and cash equivalents  (66,056)  (94,768)
     
Cash and cash equivalents at beginning of period  237,276  321,761
     
Cash and cash equivalents at end of period  $ 171,220  $ 226,993
     

UTi Worldwide Inc. Segment Reporting (in thousands) (Unaudited)
  Three months ended October 31, 2013
  Freight Forwarding Contract Logistics and Distribution Corporate Total
         
Revenues  $ 778,446  $ 375,960  $ --   $ 1,154,406
         
Purchased transportation costs  596,663  164,250  --   760,913
Staff costs  108,985  103,582  8,508  221,075
Depreciation  4,269  7,994  1,365  13,628
Amortization of intangible assets  4,404  1,205  121  5,730
Severance and other  6,083  7,004  97  13,184
Other operating expenses  44,390  79,485  8,755  132,630
Total operating expenses  764,794  363,520  18,846  1,147,160
Operating income/(loss)  $ 13,652  $ 12,440  $ (18,846)  7,246
Interest expense, net        (4,923)
Other expense, net        (294)
Pretax income        2,029
Provision for income taxes        9,334
Net loss        (7,305)
Net income attributable to non-controlling interests        1,770
Net loss attributable to UTi Worldwide Inc.        $ (9,075)
         

UTi Worldwide Inc. Segment Reporting (in thousands) (Unaudited)
  Three months ended October 31, 2012
  Freight Forwarding Contract Logistics and Distribution Corporate Total
         
Revenues  $ 765,949  $ 390,730  $ --   $ 1,156,679
         
Purchased transportation costs  586,356  166,721  --   753,077
Staff costs  102,476  109,166  7,413  219,055
Depreciation  3,858  7,463  933  12,254
Amortization of intangible assets  1,006  1,428  540  2,974
Severance and other  833  6,547  1,717  9,097
Other operating expenses  46,302  86,321  4,919  137,542
Total operating expenses  740,831  377,646  15,522  1,133,999
Operating income/(loss)  $ 25,118  $ 13,084  $ (15,522)  22,680
Interest expense, net        (2,225)
Other expense, net        (208)
Pretax income        20,247
Provision for income taxes        7,378
Net income        12,869
Net income attributable to non-controlling interests        2,321
Net income attributable to UTi Worldwide Inc.        $ 10,548
         

UTi Worldwide Inc. Segment Reporting (in thousands) (Unaudited)
  Nine months ended October 31, 2013
  Freight Forwarding Contract Logistics and Distribution Corporate Total
         
Revenues  $ 2,266,765  $ 1,097,712  $ --   $ 3,364,477
         
Purchased transportation costs  1,732,000  477,601  --   2,209,601
Staff costs  322,856  314,999  27,712  665,567
Depreciation  12,491  23,356  3,919  39,766
Amortization of intangible assets  6,645  3,648  983  11,276
Severance and other  8,512  8,313  2,208  19,033
Other operating expenses  136,969  237,205  23,762  397,936
Total operating expenses  2,219,473  1,065,122  58,584  3,343,179
Operating income/(loss)  $ 47,292  $ 32,590  $ (58,584)  21,298
Interest expense, net        (11,663)
Other expense, net        (1,256)
Pretax income        8,379
Provision for income taxes        30,054
Net loss        (21,675)
Net income attributable to non-controlling interests        4,262
Net loss attributable to UTi Worldwide Inc.        $ (25,937)
         

UTi Worldwide Inc. Segment Reporting (in thousands) (Unaudited)
  Nine months ended October 31, 2012
  Freight Forwarding Contract Logistics and Distribution Corporate Total
         
Revenues  $ 2,345,246  $ 1,163,020  $ --   $ 3,508,266
         
Purchased transportation costs  1,802,610  490,216  --   2,292,826
Staff costs  316,510  333,858  25,205  675,573
Depreciation  12,108  20,863  2,008  34,979
Amortization of intangible assets  3,077  4,679  1,620  9,376
Severance and other  3,009  7,656  2,256  12,921
Other operating expenses  137,327  252,356  13,658  403,341
Total operating expenses  2,274,641  1,109,628  44,747  3,429,016
Operating income/(loss)  $ 70,605  $ 53,392  $ (44,747)  79,250
Interest expense, net        (7,527)
Other expense, net        (508)
Pretax income        71,215
Provision for income taxes        23,899
Net income        47,316
Net income attributable to non-controlling interests        4,999
Net income attributable to UTi Worldwide Inc.        $ 42,317
         

UTi Worldwide Inc. Geographic Reporting (in thousands) (Unaudited)
  Three months ended October 31, 2013
  Freight Forwarding Revenues Contract Logistics and Distribution Revenues Freight Forwarding Net Revenues Contract Logistics and Distribution Net Revenues Operating (Loss)/Income Severance and Other
EMENA  $ 220,317  $ 58,031  $ 57,698  $ 33,883  $ (6,682)  $ 4,855
Americas  164,113  206,693  47,938  90,803  3,854  2,627
Asia Pacific  262,281  22,567  50,957  15,791  15,374  1,431
Africa  131,735  88,669  25,190  71,233  13,546  4,174
Corporate  --   --   --   --   (18,846)  97
Total  $ 778,446  $ 375,960  $ 181,783  $ 211,710  $ 7,246  $ 13,184
             
   
  Three months ended October 31, 2012
  Freight Forwarding Revenues Contract Logistics and Distribution Revenues Freight Forwarding Net Revenues Contract Logistics and Distribution Net Revenues Operating (Loss)/Income Severance and Other
EMENA  $ 214,715  $ 55,467  $ 57,300  $ 31,818  $ (1,363)  $ 983
Americas  189,119  213,631  46,239  95,605  10,435  1,083
Asia Pacific  244,911  18,928  47,350  12,564  7,200  5,238
Africa   117,204  102,704  28,704  84,022  21,930  76
Corporate  --   --   --   --   (15,522)  1,717
Total  $ 765,949  $ 390,730  $ 179,593  $ 224,009  $ 22,680  $ 9,097
             

UTi Worldwide Inc. Geographic Reporting (in thousands) (Unaudited)
  Nine months ended October 31, 2013
  Freight Forwarding Revenues Contract Logistics and Distribution Revenues Freight Forwarding Net Revenues Contract Logistics and Distribution Net Revenues Operating (Loss)/Income Severance and Other
EMENA  $ 648,940  $ 167,898  $ 174,721  $ 98,641  $ (10,088)  $ 6,774
Americas  519,652  600,134  140,404  264,668  8,837  3,520
Asia Pacific  745,549  61,413  146,528  41,272  39,016  2,035
Africa  352,624  268,267  73,112  215,530  42,117  4,496
Corporate  --   --   --   --   (58,584)  2,208
Total  $ 2,266,765  $ 1,097,712  $ 534,765  $ 620,111  $ 21,298  $ 19,033
             
             
  Nine months ended October 31, 2012
  Freight Forwarding Revenues Contract Logistics and Distribution Revenues Freight Forwarding Net Revenues Contract Logistics and Distribution Net Revenues Operating (Loss)/Income Severance and Other
EMENA  $ 695,566  $ 178,503  $ 176,485  $ 103,495  $ 567  $ 3,212
Americas  570,992  615,362  141,270  274,479  26,704  2,007
Asia Pacific  729,538  54,436  143,086  35,718  31,358  5,313
Africa   349,150  314,719  81,795  259,112  65,368  133
Corporate  --   --   --   --   (44,747)  2,256
Total  $ 2,345,246  $ 1,163,020  $ 542,636  $ 672,804  $ 79,250  $ 12,921
             

UTi Worldwide Inc.  Supplemental Financial Information – Reconciliation to US GAAP (in thousands, except per share amounts) (Unaudited)
  Three months ended October 31, 2013 Three months ended October 31, 2012
GAAP Revenues  $ 1,154,406  $ 1,156,679
Less: Purchased transportation costs  (760,913)  (753,077)
Net revenues  $ 393,493  $ 403,602
     
GAAP Operating expenses  $ 1,147,160  $ 1,133,999
Less: Purchased transportation costs  (760,913)  (753,077)
Operating expenses less purchased transportation costs  386,247  380,922
Less: Adjustment for severance and other(1)(2)  (13,184)  (9,097)
Non-GAAP Operating expenses  $ 373,063  $ 371,825
     
GAAP Operating income  $ 7,246  $ 22,680
Add: Adjustment for severance and other(1)(2)  13,184  9,097
Non-GAAP Operating income  $ 20,430  $ 31,777
     
Non-GAAP operating income as a percentage of net revenues 5.2% 7.9%
     
GAAP Pretax income  $ 2,029  $ 20,247
Add: Adjustment for severance and other(1)(2)  13,184  9,097
Non-GAAP Pretax income  $ 15,213  $ 29,344
     
GAAP Provision for income taxes  $ 9,334  $ 7,378
Add: Adjustment for severance and other(3)  1,220  3,315
Less: Adjustment for deferred tax asset valuation allowance and other(4)  (5,229)  (716)
Non-GAAP Provision for income taxes  $ 5,325  $ 9,977
     
GAAP Net (loss)/income attributable to UTi Worldwide Inc.  $ (9,075)  $ 10,548
Adjustment for:    
Severance and other(1)(2)  13,184  9,097
Income tax effect severance and other(3)  (1,220)  (3,315)
Adjustment for deferred tax asset valuation allowance and other(4)  5,229  716
Non-GAAP Net income attributable to UTi Worldwide Inc.  $ 8,118  $ 17,046
     
GAAP Diluted (loss)/earnings per common share  $ (0.09)  $ 0.10
Adjustment for:    
Severance and other(1)(2)  0.13  0.09
Income tax effect severance and other(3)  (0.01)  (0.03)
Adjustment for deferred tax asset valuation allowance and other(4)  0.05  -- 
Non-GAAP Diluted earnings per common share  $ 0.08  $ 0.16
 
(1) During the three months ended October 31, 2013 the company recorded pre-tax severance of $13,184 primarily related to transformation activities.
(2) During the three months ended October 31, 2012, the company recorded pre-tax severance of $3,884 primarily related to transformation activities and accrued pre-tax expenses of $5,213 for a legal judgment relating to a 2006 warehouse fire. 
(3) The provision for income tax adjustment related to the severance and other costs were calculated based on the prevailing tax rate in each jurisdiction.
(4) The company recorded additional tax expense exceeding its normalized tax rates. This is due to valuation allowances and the mix of taxable income across the company's tax jurisdictions. The company's estimated normalized tax rates on an adjusted basis is estimated to be 35%, and 34%, respectively, for the three months ended October 31, 2013, and 2012.   
 

UTi Worldwide Inc. Supplemental Financial Information – Reconciliation to US GAAP (in thousands, except per share amounts) (Unaudited)
  Nine months ended October 31, 2013 Nine months ended October 31, 2012
GAAP Revenues  $ 3,364,477  $ 3,508,266
Less: Purchased transportation costs  (2,209,601)  (2,292,826)
Net revenues  $ 1,154,876  $ 1,215,440
     
GAAP Operating expenses  $ 3,343,179  $ 3,429,016
Less: Purchased transportation costs  (2,209,601)  (2,292,826)
Operating expenses less purchased transportation costs  1,133,578  1,136,190
Less: Adjustment for severance and other(5)(6)  (19,033)  (12,921)
Non-GAAP Operating expenses  $ 1,114,545  $ 1,123,269
     
GAAP Operating income  $ 21,298  $ 79,250
Add: Adjustment for severance and other(5)(6)  19,033  12,921
Non-GAAP Operating income  $ 40,331  $ 92,171
     
Non-GAAP operating income as a percentage of net revenues 3.5% 7.6%
     
GAAP Pretax income  $ 8,379  $ 71,215
Add: Adjustment for severance and other(5)(6)  19,033  12,921
Non-GAAP Pretax income  $ 27,412  $ 84,136
     
GAAP Provision for income taxes  $ 30,054  $ 23,899
Add: Adjustment for severance and other(7)  1,582  4,336
Less: Adjustment for deferred tax asset valuation allowance and other(8)  (22,042)  371
Non-GAAP Provision for income taxes  $ 9,594  $ 28,606
     
GAAP Net (loss)/income attributable to UTi Worldwide Inc.  $ (25,937)  $ 42,317
Adjustment for:    
Severance and other(5)(6)  19,033  12,921
Income tax effect severance and other(7)  (1,582)  (4,336)
Adjustment for deferred tax asset valuation allowance and other(8)  22,042  (371)
Non-GAAP Net income attributable to UTi Worldwide Inc.  $ 13,556  $ 50,531
     
GAAP Diluted (loss)/earnings per common share  $ (0.25)  $ 0.41
Adjustment for:    
Severance and other(5)(6)  0.18  0.12
Income tax effect severance and other(7)  (0.02)  (0.04)
Adjustment for deferred tax asset valuation allowance and other(8)  0.22  -- 
Non-GAAP Diluted earnings per common share  $ 0.13  $ 0.49
 
(5) During the nine months ended October 31, 2013, the company recorded pre-tax severance of $19,033 primarily related to transformation activities.
(6) During the nine months ended October 31, 2012, the company recorded pre-tax severance of $7,708 primarily related to transformation activities and pre-tax accrued expenses of $5,213 for a legal judgment relating to a 2006 warehouse fire.
(7) The provision for income tax adjustment related to the severance and other costs were calculated based on the prevailing tax rate in each jurisdiction.
(8) The company recorded additional tax expense exceeding its normalized tax rates. This is due to valuation allowances and the mix of taxable income across the company's tax jurisdictions. The company's estimated normalized tax rates on an adjusted basis is estimated to be 35%, and 34%, respectively, for the nine months ended October 31, 2013, and 2012. 
 

UTi Worldwide Inc. Organic Growth Reconciliation (Unaudited)
  Three months ended October 31, 2013
  Total Net Change +/(-) Currency Impact Organic Growth +/(-) Non-GAAP Items(9) Adjusted Organic Growth
Revenues  --%   3%  3%  --%   3%
Net revenues  (3)%  5%  2%  --%   2%
Operating expenses less purchased transportation costs  1%  4%  5%  (1)%  4%
           
  Nine months ended October 31, 2013
  Total Net Change +/(-) Currency Impact Organic Growth +/(-) Non-GAAP Items(10) Adjusted Organic Growth
Revenues  (4)%  3%  (1)%  --%   (1)%
Net revenues  (5)%  4%  (1)%  --%   (1)%
Operating expenses less purchased transportation costs  --%  4%  4%  (1)%  3%
           
(9) During the three months ended October 31, 2012, the company recorded pre-tax severance of $3,884 primarily related to transformation activities and accrued pre-tax expenses of $5,213 for a legal judgment relating to a 2006 warehouse fire. 
(10) During the nine months ended October 31, 2012, the company recorded pre-tax severance of $7,708 primarily related to transformation activities and pre-tax accrued expenses of $5,213 for a legal judgment relating to a 2006 warehouse fire.

Set forth above 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 nine months ended October 31, 2013. Organic growth is a non-GAAP measure that excludes the impact of foreign currency translation.
CONTACT: Jeff Misakian         Global Vice President, Investor Relations         (562) 552-9417         jmisakian@go2uti.com

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