UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K/A

Amendment No. 1

þ		Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended January 31, 2006

o		Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                 to                  

UTi Worldwide Inc.

(Exact Name of Registrant as Specified in its Charter)

British Virgin Islands		N/A
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification Number)

9 Columbus Centre, Pelican Drive		c/o UTi, Services, Inc.
Road Town, Tortola		19500 Rancho Way, Suite 116
British Virgin Islands		Rancho Dominguez, CA 90220 USA

(Addresses of Principal Executive Offices and Zip Code)

310.604.3311
(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Ordinary shares, no par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes      þ		No     o

Indicate by check mark if the registrant is not required to file report pursuant to Section 13 or Section 15(d) of the Act.

Yes     o		No     þ

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.

Yes      þ		No     o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the 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. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated file. See definition of “accelerate filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer   þ      Accelerated filer  o      Non-accelerated filer  o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes     o		No     þ

The aggregate market value of the voting common equity held by non-affiliates of the registrant as of the last business day of the registrant’s most recently completed second fiscal quarter, or July 31, 2005, was $1.3 billion computed by reference to the closing price of the registrant’s ordinary shares on such date, as quoted on the Nasdaq National Stock Market.

At April 7, 2006, the number of shares outstanding of the registrant’s ordinary shares was 96,125,012.

DOCUMENTS INCORPORATED BY REFERENCE

Certain portions of the registrant’s definitive Proxy Statement for the 2006 Annual Meeting of Shareholders, which is expected to be filed on or before May 31, 2006 are incorporated by reference in Items 10, 11, 12, 13 and 14 of Part III of this Form 10-K.

 

 

UTi Worldwide Inc.

Annual Report on Form 10-K/A
For the Year Ended January 31, 2006

Table of Contents

				Page
EXPLANATORY NOTE REGARDING RESTATEMENT					1
		PART I
Item 1.		Business			3
		PART II
Item 6.		Selected Financial Data			14
Item 7.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			15
Item 8.		Financial Statements and Supplementary Data			38
Item 9A.		Controls and Procedures			38
		PART IV
Item 15.		Exhibits and Financial Statement Schedules			39
Signatures					40
Certifications
EXHIBIT 12.1
EXHIBIT 23
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2

EXPLANATORY NOTE REGARDING RESTATEMENT

UTi Worldwide Inc. is filing this Annual Report on Form 10-K/A for the year ended January 31, 2006, which we refer to as the Amendment, to amend our Annual Report on Form 10-K for the year ended January 31, 2006, which we refer to as the Original Filing, that was filed with the U.S. Securities and Exchange Commission, which we refer to as the SEC, on April 17, 2006. The Amendment includes restated amounts and revised disclosure of the company’s Consolidated Financial Statements for fiscal years ended January 31, 2006, 2005 and 2004.

We have reviewed our accounting for an earn-out arrangement arising from our January 25, 2002 acquisition of Grupo SLi and Union S.L., which we collectively refer to as SLi. Specifically, we reviewed the application of Financial Accounting Standards Board (FASB) Statement No. 141, Business Combinations (SFAS No. 141), and Emerging Issues Task Force Issue No. 95-8, Accounting for Contingent Consideration Paid to the Shareholders of an Acquired Enterprise in a Purchase Business Combination (EITF No. 95-8) to the SLi transaction, including the earn-out arrangement. We have concluded a revision to our prior accounting for the earn-out arrangement is necessary, which we refer to as the Earn-out Arrangement Adjustment.

We have concluded that a portion of the earn-out arrangement represents costs of the acquisition while a portion of the earn-out arrangement represents a compensatory arrangement for the services of certain of the selling shareholders of SLi, performed subsequent to the acquisition date. For fiscal years through January 31, 2006 the resulting compensation arrangement is accounted for under Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB No. 25), and FASB Interpretation No. 28, Accounting for Stock Appreciation Rights and Other Variable Stock Option or Award Plans, an interpretation of APB Opinions No. 15 and 25 (FIN No. 28). Beginning with our 2007 fiscal year and the adoption of FASB Statement No. 123R, Share-Based Payment (SFAS No. 123R) the resulting compensation arrangement was accounted for under SFAS No. 123R through the quarter ended October 31, 2006 wherein the final contingent payment was made.

As a result of the foregoing, we are restating herein our historical consolidated balance sheets as of January 31, 2006 and January 31, 2005; our consolidated income statements, cash flows and shareholders’ equity for the years ended January 31, 2006, 2005, and 2004; and our selected financial data as of and for the years ended January 31, 2006, 2005, 2004, 2003, and 2002.

The Earn-out Arrangement Adjustment generally reflects the recognition of compensation expense during the periods in which services were rendered by certain of the SLi selling shareholders. In connection with the recording of compensation expense we recorded an offsetting entry to accrued liabilities. Accordingly, we reduced pretax income by $32.5 million, $32.3 million, and $18.0 million for the years ended January 31, 2006, 2005 and 2004, respectively. The Earn-out Arrangement Adjustment had no impact on cash and cash equivalents but resulted in reclassification of a portion of the earn-out arrangement from cash flows used in investing activities to cash flows provided by operating activities.

The accounting error giving rise to the restatements described above will not result in additional or different payments being made to certain of the selling shareholders of SLi. As of the date of this filing, we have satisfied all payment obligations under the SLi acquisition agreement, a copy of which was previously filed as an exhibit to the company’s Form 10-Q for the quarter ended April 30, 2005.

In addition to the Earn-out Arrangement Adjustment discussed above, the restatement includes adjustments for the correction of errors previously identified, which we refer to as the Other Adjustments, which were immaterial, individually and in the aggregate, to previously issued financial statements. As the Earn-out Arrangement Adjustment required restatement, the company is also correcting these Other Adjustments and recording them in the proper periods.

Management has determined that a control deficiency relating to the design and implementation of controls regarding the review and analysis of complex business combinations, constituted a material weakness in our internal control over financial reporting. Specifically, with respect to the SLi acquisition, such analysis and related timely documentation of the company’s accounting determination was not performed by personnel with adequate knowledge of SFAS No. 141, and EITF Issue No. 95-8.

Accordingly, management has determined that the company’s internal control over financial reporting was ineffective as of January 31, 2006. The company performed additional procedures with respect to prior complex business combinations in order to prepare the consolidated financial statements in accordance with generally accepted accounting principles in the United States of America. These additional procedures included a review of the transaction documentation associated with prior acquisitions containing earn-out arrangements by personnel with adequate accounting knowledge. Management is in the process of improving and strengthening the design and implementation of controls regarding the review and analysis of complex business combinations, and this will be completed in the near future. See Part II, Item 9A, “Controls and Procedures” of this report for additional information.

The Amendment does not set forth the Original Filing in its entirety and includes only the Items affected by the Earn-out Arrangement Adjustment and the Other Adjustments. The following portions of the Original Filing are being amended by the Amendment.

Part I, Item 1		Business
Part II, Item 6		Selected Financial Data
Part II, Item 7		Management’s Discussion and Analysis of Financial Condition and Results of Operations
Part II, Item 8		Financial Statements and Supplementary Data
Part II, Item 9A		Controls and Procedures
Part IV, Item 15		Exhibits and Financial Statement Schedules

The Amendment includes currently dated certifications from the company’s Chief Executive Officer and Chief Financial Officer, as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, as well as the currently dated consent of our independent registered public accounting firm. The certifications of the company’s Chief Executive Officer and Chief Financial Officer are attached to the Amendment as Exhibits 31.1, 31.2, 32.1 and 32.2. The consent of our independent public accounting firm is attached to the Amendment as Exhibit 23. The Amendment also includes a restated computation of Ratio of Earnings to Fixed Charges as Exhibit 12.1. The changes we have made are a result of and reflect the restatement described herein.

Except for the amended or restated information described above, this Amendment has not been updated since the date of the Original Filing. Events occurring after the date of the Original Filing or other disclosures necessary to reflect subsequent events have been or will be addressed in other reports filed with the SEC subsequent to the date of the Original Filing.

As used in this Amendment the terms “we,” “us,” “our” and the “company” refer to UTi Worldwide Inc. and its subsidiaries as a combined entity, except where it is noted or the context makes clear the reference is only to UTi Worldwide Inc.

Forward-Looking Statements

Except for historical information contained herein, this annual report on Form 10-K/A contains 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, as amended, which involve certain risks and uncertainties. Forward-looking statements may include, among other things, the reaction to the accounting errors related to the acquisition of SLi on the company’s results of operations and financial condition, the effect of the company’s restatement on its compliance with the covenants in its debt agreements, the company’s discussion of its NextLeap goals and journey and the growth strategies and plans which the company is developing for the next phase of its evolution. Forward-looking statements are generally identified by the use of such terms and phrases as “intends,” “intend,” “intended,” “goal,” “estimate,” “estimates,” “expects,” “expect,” “expected,” “project,” “projected,” “projections,” “plans,” “anticipates,” “anticipated,” “should,” “designed to,” “foreseeable future,” “believe,” “believes” and “scheduled” and similar expressions which generally identify forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying our forward-looking statements. 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 integration risks associated with acquisitions, the ability to retain customers and management of acquisition targets; a challenging operating environment; increased competition; the impact of higher fuel costs; the effects of 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 Europe; work stoppages or slowdowns or other material interruptions in transportation services; risks of international operations; the success and effects of new strategies; disruptions caused by epidemics, conflicts, wars and terrorism; and the other risks and uncertainties described in the company’s filings with the Securities and Exchange Commission. Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, we cannot assure you 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 us or any other person that our objectives or plans will be achieved. Accordingly, investors are cautioned not to place undue reliance on our forward-looking statements. We undertake 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.

In assessing forward-looking statements contained herein, readers are urged to read carefully all cautionary statements contained in this Form 10-K/A, including, without limitation, those contained under the heading, “Risk Factors,” contained in Item 1A of the company’s Annual Report on Form 10-K for the year ended January 31, 2006 which was originally filed with the Securities and Exchange Commission (SEC) on April 17, 2006 (together with any additions and changes thereto contained in our Form 10-Q for the quarters ended April 30, 2006 and July 31, 2006, as amended, and any subsequent filings of quarterly reports on Form 10-Q). For these forward-looking statements, we claim the protection of the safe harbor for forward-looking statements in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

PART I

ITEM 1. Business

The information included in Item 1 in the Original Filing has not been updated for information or events occurring after the date of the Original Filing and has not been updated to reflect the passage of time since the date of the Original Filing. See “Explanatory Note Regarding Restatement” above for details of the restatement, which we refer to as the Explanatory Note. Events occurring after the date of the Original Filing or other disclosures necessary to reflect subsequent events have been addressed in the company’s Quarterly Reports on Form 10-Q for the fiscal quarters ended April 30, 2006 and July 31, 2006, and reports filed with the SEC subsequent to the date of this filing, including amendments.

History and Development of the Company

We are an international, non-asset-based global integrated logistics company that provides services through a network of offices and contract logistics centers. We were incorporated in the British Virgin Islands on January 30, 1995 under the International Business Companies Act as an international business company and operate under the British Virgin Islands legislation governing corporations. The address and telephone number of our registered office are 9 Columbus Centre, Pelican Drive, Road Town, Tortola, British Virgin Islands and (284) 494-4567, respectively. Our registered agent is Midocean Management and Trust Services (BVI) Limited, 9 Columbus Centre, Pelican Drive, Road Town, Tortola, British Virgin Islands. We can also be reached through UTi, Services, Inc., 19500 Rancho Way, Suite 116, Rancho Dominguez, CA 90220 USA.

We formed our current business from a base of three freight forwarders which we acquired between 1993 and 1995. Currently, we operate a global network of freight forwarding and domestic road transportation offices in 285 cities and we have over 130 logistics centers under management, in a total of 62 countries. In addition, we serve our customers in 78 additional countries through approximately 151 independent agent-owned offices, of which 131 offices are exclusive agents and 20 are non-exclusive agents. Our business is managed from nine principal support offices in Amsterdam, Frankfurt, Hong Kong, Johannesburg, London and Sydney and in the United States in Los Angeles, California, Columbia, South Carolina and Portland, Oregon.

Industry

The global integrated logistics industry consists of air and ocean freight forwarding, contract logistics, distribution, inbound logistics, truckload brokerage, warehousing and supply chain management. We believe that companies in our industry must be able to provide their customers with integrated, global supply chain solutions. Among the factors that we believe are impacting our industry are the outsourcing of supply chain activities, increased global trade and sourcing, increased demand for time definite delivery of goods, and the need for advanced information technology systems that facilitate real-time access to shipment data, customer reporting and transaction analysis. Furthermore, as supply chain management becomes more complicated, we believe companies are increasingly seeking full service solutions from a single or limited number of partners that are familiar with their requirements, processes and procedures and that can provide services globally. We believe it is becoming increasingly difficult for smaller regional competitors or providers with a more limited service or information technology offering to compete, which we expect to result in further industry consolidation.

We seek to use our global network, proprietary information technology systems, relationships with transportation providers and expertise in outsourced logistics services to improve our customers’ visibility into their supply chains while reducing their logistics costs.

Acquisitions

As a key part of our growth strategy, we continuously evaluate acquisition opportunities in all the markets in which we operate as we seek to continue expanding our service offerings. During the year ended January 31, 2006, we completed several acquisitions of companies and businesses, including Concentrek, Inc., Maertens International N.V. and Perfect Logistics Co., Ltd. In March 2006, we acquired Market Industries Ltd. These acquisitions, along with our other acquisitions over the past five years, have had, and will have, a significant effect on the comparability of our operating results over the respective prior periods. Historically, we have financed acquisitions with a combination of cash from operations and borrowings. We may borrow additional money in the future to finance acquisitions. From time to time we enter into non-binding letters of intent with potential acquisition targets and we are often in various stages of due diligence and preliminary negotiations with respect to those potential acquisition targets. Readers are urged to read carefully all cautionary statements contained in this Form 10-K/A, including, without limitation, those contained under the heading, “Risk Factors,” contained in Item 1A of the company’s Original Filing (together with any additions and changes thereto contained in our Form 10-Q for the quarters ended April 30, 2006 and July 31, 2006 and any subsequent filings of quarterly reports on Form 10-Q, including amendments) relating to acquisitions.

During our fiscal year ended January 31, 2006, effective October 1, 2005, we acquired 100% of the issued and outstanding shares of Concentrek, Inc., which we refer to as Concentrek, a third-party provider of transportation management and other supply chain solutions headquartered in Grand Rapids, Michigan. Effective July 1, 2005, we acquired the business and net assets of Maertens International N.V., which we refer to as Maertens, a Belgium company involved in the national and international transportation and storage of art, antiques and other valuables. Effective June 1, 2005, we acquired 100% of the issued and outstanding shares of Perfect Logistics Co., Ltd., which we refer to as Perfect Logistics, a third-party contract logistics provider and customs broker headquartered in Taiwan. Also, effective May 1, 2005, we acquired the assets and ongoing contract logistics business of a small transportation management provider in New Zealand and it acquired the remaining outstanding shares of Ilanga Freight (Pty) Ltd., which we refer to as Ilanga, a South African company, of which we had already owned 50%, and UTi Egypt Limited, of which we had already owned 55%. Effective May 31, 2005, we acquired the remaining 49% minority shareholder interest in UTi Eilat Overseas Ltd., our Israeli subsidiary. Effective December 29, 2005, the company acquired 100% of the outstanding shares of Logica GmbH and Logica Services GmbH, which we collectively refer to as Logica.

On January 25, 2002, we completed the acquisition of Grupo SLi and Union, SLi, which we refer to collectively as SLi, a warehousing and logistics services provider headquartered in Madrid, Spain with offices throughout Spain and Portugal. We acquired SLi for an initial cash payment of approximately $14.0 million. In addition to the initial payment, the terms of the acquisition agreement provide for an earn-out arrangement consisting of four additional payments, based in part, upon the performance of SLi in each of the fiscal years in the period from 2003 through 2006. We have satisfied our obligations in relation to each of the fiscal years ended January 31, 2003 through

2005 resulting in additional cash payments of $34.0 million and the issuance of 626,901 shares for total additional consideration of $49.1 million, which includes $30.3 million made in June of 2005, consisting of a $15.1 million cash payment and the issuance of 626,901 shares of common stock valued at $15.1 million. The final earn-out period ended on January 31, 2006 and we made the final payment in September 2006. A portion of the earn-out arrangement represents costs of the acquisition while a portion represents a compensatory arrangement for the services of certain of the selling shareholders of SLi, performed subsequent to the acquisition date, which we refer to as the SLi Share-based Compensation Arrangement. See Note 12, “Share-based Compensation” and Note 19, “Restatement of Previously Issued Financial Statements”, to the Consolidated Financial Statements.

During December 2005, we made the first of two earn-out payments to the sellers of Unigistix Inc., which we refer to as Unigistix, and during April 2005, we made the first of four earn-out payments to the sellers of ET Logistics, S.L., which we refer to as ET Logistics.

Subsequent to January 31, 2006, effective March 7, 2006, we acquired 100% of the issued and outstanding shares of Market Industries, Ltd. and its subsidiaries, branded under the trade name Market Transport Services, which we refer to as Market Transport. Market Transport is a third-party provider of logistics services and multi-modal transportation capacity solutions specializing in truck brokerage headquartered in Portland, Oregon.

Additional information regarding our acquisitions is set forth in Note 2, “Acquisitions,” in the notes to our restated consolidated financial statements included in this annual report and in Part II, Item 7 of this report appearing under the caption, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which are incorporated herein by reference.

Organizational Structure

UTi Worldwide Inc. is a holding company and all of our operations are conducted through subsidiaries. Our subsidiaries, along with their countries of incorporation and our ownership interests, are included in Exhibit 21, included with this report. The proportion of voting power that we hold for each subsidiary is equivalent to our percentage ownership.

Business Overview

Through our supply chain planning and optimization services, we assist our clients in designing and implementing solutions that improve the predictability and visibility and reduce the overall costs of their supply chains. Our primary services include air and ocean freight forwarding, contract logistics, customs brokerage, distribution, inbound logistics, truckload brokerage and other supply chain management services, including consulting, the coordination of purchase orders and customized management services.

	•		Air and Ocean Freight Forwarding. As a freight forwarder, we conduct business as an indirect carrier for our customers or occasionally as an authorized agent for an airline or ocean carrier. We typically act as an indirect carrier with respect to shipments of freight unless the volume of freight to be shipped over a particular route is not large enough to warrant consolidating such freight with other shipments. In such situations, we usually forward the freight as an agent of the direct carrier. Except for a domestic delivery service which includes forwarding shipments by air or expedited ground transportation within South Africa, we primarily handle international shipments and do not provide for domestic shipments unless they occur as part of an international shipment. We consider our domestic delivery service within South Africa part of our airfreight services.
			We do not own or operate aircraft or vessels and, consequently, contract with commercial carriers to arrange for the shipment of cargo. We arrange for, and in many cases provide, pick-up and delivery service between the carrier and the location of the shipper or recipient. Our domestic delivery service in South Africa uses predominantly outsourced resources to provide pick-up and delivery services between the location of the shipper or recipient and the local distribution center.

			When we act as an authorized agent for an airline or ocean carrier, we arrange for the transportation of individual shipments to the airline or ocean carrier. As compensation for arranging for the shipments, the airline or ocean carrier pays us a commission. If we provide the customer with ancillary services, such as the preparation of export documentation, we receive an additional fee.
			Airfreight forwarding services accounted for approximately 43%, 45% and 48% of our consolidated gross revenues for the years ended January 31, 2006, 2005 and 2004, respectively (which we refer to as fiscal 2006, 2005 and 2004, respectively), and approximately 30%, 33% and 33% of our fiscal 2006, 2005 and 2004 consolidated net revenues, respectively. Ocean freight forwarding services accounted for approximately 30%, 30% and 24% of our fiscal 2006, 2005 and 2004 consolidated gross revenues, respectively, and approximately 12%, 13% and 13% of our fiscal 2006, 2005 and 2004 consolidated net revenues, respectively.
	•		Contract Logistics. Our contract logistics services primarily relate to the value-added warehousing and distribution of goods and materials in order to meet customers’ inventory needs and production or distribution schedules. Our distribution services include receiving, deconsolidation and decontainerization, sorting, put away, consolidation, assembly, cargo loading and unloading, assembly of freight and protective packaging, storage and distribution. Our outsourced services include inspection services, quality centers and manufacturing support.
			In June 2005, we acquired Perfect Logistics, a third-party contract logistics provider and customs broker headquartered in Taiwan, which increased our contract logistics capabilities and customer base in our Asia Pacific region.
			Contract logistics services accounted for approximately 16%, 14% and 15% of our fiscal 2006, 2005 and 2004 consolidated gross revenues, respectively, and approximately 39%, 33% and 32% of our fiscal 2006, 2005 and 2004 consolidated net revenues, respectively.
	•		Customs Brokerage. As part of our integrated logistics services, we provide customs brokerage services in the United States (U.S.) and most of the other countries in which we operate. Within each country, the rules and regulations vary, along with the level of expertise that is required to perform the customs brokerage services. We provide customs brokerage services in connection with a majority of the shipments which we handle as both an airfreight and ocean freight forwarder. We also provide customs brokerage services in connection with shipments forwarded by our competitors. In addition, other companies may provide customs brokerage services in connection with the shipments which we forward.
			As part of our customs brokerage services, we prepare and file formal documentation required for clearance through customs agencies, obtain customs bonds, facilitate the payment of import duties on behalf of the importer, arrange for payment of collect freight charges, assist with determining and obtaining the best commodity classifications for shipments and perform other related services. We determine our fees for our customs brokerage services based on the volume of business transactions for a particular customer, and the type, number and complexity of services provided.
			Customs brokerage services accounted for approximately 3%, 3% and 5% of our fiscal 2006, 2005 and 2004 consolidated gross revenues, respectively, and approximately 8%, 10% and 11% of our fiscal 2006, 2005 and 2004 consolidated net revenues, respectively.
	•		Other Supply Chain Management Services. We also provide a range of other supply chain management services, such as domestic road transportation, truck brokerage, warehousing services, consulting, order management, planning and optimization services, outsourced management services, developing specialized customer-specific supply chain solutions, and customized distribution and inventory management services. We receive fees for the other supply chain management services that we perform.
			In October 2005, we acquired Concentrek, a third-party provider of transportation management and other supply chain solutions and subsequent to fiscal year 2006, we acquired Market Transport, a third-party logistics services and multi-modal transportation capacity solutions specializing in truck brokerage. These acquisitions are expected to increase our gross and net revenues for our other supply chain management services in the future as compared to our historic results.

			Following our acquisition of Market Transport, we now offer a range of services in North America of domestic transportation services, including dedicated transportation and truckload brokerage through an asset-light business model, which features a network of agents, broker affiliates, owner-operators and selected company-owned assets.
			Other supply chain management services accounted for approximately 8% of each of our fiscal 2006, 2005 and 2004 consolidated gross revenues, and approximately 11% of each of our fiscal 2006, 2005 and 2004 consolidated net revenues.

Financial Information about Services and Geographic Segments

Additional information regarding our operations by geographic segment and gross revenue and net revenue attributable to our principal services is set forth in Note 17, “Segment Reporting” in our consolidated financial statements included in this annual report and in Part II, Item 7 of this report appearing under the caption, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which are incorporated herein by reference.

We conduct a majority of our business outside of the U.S. and we anticipate that revenue from foreign operations will continue to account for a significant amount of our future revenue. Our global operations are directly related to and are dependent upon the volume of international trade and are subject to various factors, risks and uncertainties, including those included in Part I, Item 1A of our Original Filing appearing under the caption, “Risk Factors.”

Seasonality

Historically, our operating results have been subject to seasonal trends when measured on a quarterly basis. Our first and fourth fiscal quarters are traditionally weaker compared with our other fiscal quarters. This trend is dependent on numerous factors, including the markets in which we operate, holiday seasons, climate, economic conditions and numerous other factors. A substantial portion of our revenue is derived from customers in industries whose shipping patterns are tied closely to consumer demand or are based on just-in-time production schedules. We cannot accurately predict the timing of these factors, nor can we accurately estimate the impact of any particular factor, and thus we can give no assurance that these historical seasonal patterns will continue in future periods.

Sales and Marketing

To market our services, we produce customized supply chain solutions that provide the logistics services our clients require. We use our planning and optimization systems to identify the needs of our customers and to develop supply chain solutions tailored to our customers’ industry-specific requirements. In this way, we attempt to become our customers’ primary logistics partner for supply chain services, thereby increasing the range and volume of transactions and services provided to our clients. For fiscal 2006, no single customer accounted for more than 3% of our gross revenue.

We market our services through an organization consisting of approximately 580 full-time salespersons who receive assistance from our senior management and regional and local managers. Our four principal geographic regions are Europe, the Americas, Asia Pacific and Africa, and each regional manager is responsible for the financial performance of his or her region. In connection with our sales process and in order to serve the needs of our clients, some of which desire only our freight forwarding and contract logistics services and for others who desire a wider variety of our supply chain solutions services, our sales force is divided into two specialized sales groups. One of these sales groups focuses primarily on marketing individually our air and ocean freight forwarding, contract logistics and customs brokerage services and the other group focuses on marketing all our supply chain solutions services.

In addition, Market Transport markets our truck brokerage services primarily through 130 independent affiliate offices located in 34 states in the U.S. and in three Canadian provinces. Independent affiliates are trained by Market Transport at our Medford, Oregon facility where they are trained on customer service skills and the use of Market Transport Services propriety freight brokerage software. Independent affiliates receive commissions from Market Transports based on the independent affiliate’s net revenues.

Our sales and marketing efforts are directed at both global and local customers. Our global solutions sales and marketing teams focus their efforts on obtaining and developing large volume global accounts with multiple shipping locations which require comprehensive solutions. These accounts typically impose numerous requirements on their providers, such as electronic data interchange, Internet-based tracking and monitoring systems, proof of delivery capabilities, customized shipping reports and a global network of offices.

The requirements imposed by our large volume global accounts often limit the competition for these accounts to large freight forwarders, third-party logistics providers and integrated carriers with global operations. Our global solutions sales and marketing teams also target companies operating in specific industries with unique supply chain requirements, such as the pharmaceutical, retail, apparel, chemical, automotive and high technology electronics industries.

Our local sales and marketing teams focus on selling to and servicing smaller- and medium-sized customers who primarily are interested in selected services, such as freight forwarding, contract logistics and customs brokerage. These two sales and marketing teams may work together on larger accounts.

During our initial review of a customer’s requirements, we determine the current status of the customer’s supply chain process. We analyze the supply chain requirements of our customer and determine improvements through modification or re-engineering. After discussing with the customer the various supply chain solutions which could be implemented for them, we implement the desired solutions.

Competition

Competition within the freight forwarding, logistics and supply chain management industries is intense. We compete primarily with a relatively small number of international firms that have the worldwide capabilities to provide the breadth of services that we offer. We also encounter competition from regional and local third-party logistics providers, integrated transportation companies that operate their own aircraft, cargo sales agents and brokers, surface freight forwarders and carriers, airlines, associations of shippers organized to consolidate their members’ shipments to obtain lower freight rates, and Internet-based freight exchanges. In addition, computer information and consulting firms which traditionally operated outside of the supply chain management industry have been expanding the scope of their services to include supply chain related activities so that they may service the supply chain needs of their existing customers and offer their information systems services to new customers. We believe it is becoming increasingly difficult for smaller regional competitors or providers with a more limited service or information technology offering to compete, which we expect to result in further industry consolidation.

Following the acquisition of Market Transport, we have expanded our presence in the competitive and fragmented domestic transportation services business in North America. With respect to the services provided in this niche, we compete primarily with truckload carriers, intermodal transportation service providers, less-than-truckload carriers, railroads and third party broker carriers. We compete in this niche primarily on the basis of service, efficiency and freight rates.

Generally, we believe that companies in our industry must be able to provide their customers with integrated, global supply chain solutions. Among the factors that we believe are impacting our industry are the outsourcing of supply chain activities, increased global trade and sourcing, increased demand for time definite delivery of goods, and the need for advanced information technology systems that facilitate real-time access to shipment data, customer reporting and transaction analysis. Furthermore, as supply chain management becomes more complicated, we believe companies are increasingly seeking full service solutions from a single or limited number of partners that are familiar with their requirements, processes and procedures and that can provide services globally.

We seek to compete in our industry by using our global network, proprietary information technology systems, relationships with transportation providers and expertise in outsourced logistics services to improve our customers’ visibility into their supply chains while reducing their logistics costs.

Information Technology Systems

Our eMpower suite of supply chain technology systems is based on an open architecture design. eMpower facilitates the online operations of our supply chain activities, allows our offices and agents to link to our supply chain visibility system and offers our customers real-time, web-based access to detailed levels of inventory product and shipment data, customized reporting and analysis and easy integration with their technology systems. eMpower⁵, our next generation of eMpower provides pilot customers with a customizable web portal, along with powerful supply chain visibility tools for managing their integrated end-to-end supply chains, whether at rest or in motion, at the order, stock keeping unit (SKU) or item level.

Within eMpower are various supply chain information systems, including the following:

	•		uOp, which is used by our offices and agents as a local operating system for air and ocean freight import and export documentation, customs brokerage and accounting functions that feed shipment and other customer data into our global information systems;
	•		uOrder, which assists our clients with order management;
	•		uTrac, which provides our clients with supply chain visibility, enabling them to track shipments of goods and materials,
	•		uWarehouse, which enables our clients to track the location and status of goods and materials; it is a warehouse management system package provided by SSA Global™ and integrated into eMpower;
	•		uClear, which provides visibility into customs clearance transactions for our customers;
	•		uAnalyze, which assists us and our clients with isolating the factors causing variability in transit times;
	•		uReport, which provides clients with customized reports;
	•		uConnect, which enables the electronic transfer of data (EDI) between our systems and those of our clients and also integrates our internal applications;
	•		uPlan, which is a suite of selected planning and optimization software developed by i2 Technologies;
	•		uDistribute, which enables tracking of goods and materials within domestic distribution networks; and
	•		uShip, which enables clients to initiate shipping transactions and alert these directly to our origin offices.

In addition to our various supply chain information systems, our information system also includes Enterprise Information Portal, which enables the online interaction and collaboration between internal business entities and facilitates the integration of corporate acquisitions.

Intellectual Property

We have applied for federal trademark or service mark registration of the marks UTi and Inzalo. The mark UTi has been or is currently being registered in selected foreign countries. Our application for the name and mark UTi has been opposed in the U.S. Patent and Trademark Office, and our request for reconsideration and rehearing in connection with the matter was denied. Our request for reconsideration and rehearing in connection with this matter was denied by the USPTO and we filed an appeal regarding the decision in the United States Court of Appeals for the District of Columbia. No assurance can be given that our appeal will be successful. We have no patents nor have we filed any patent applications. While we may seek further trademarks or service marks and perhaps patents on inventions or processes in the future, we believe our success depends primarily on factors such as the skills and abilities of our personnel rather than on any trademarks, patents or other registrations we may obtain.

Government Regulation

Our airfreight forwarding business in the U.S. is subject to regulation, as an indirect air carrier, under the Federal Aviation Act by the Department of Transportation, although airfreight forwarders are exempted from most of this Act’s requirements by the applicable regulations. Our airfreight forwarding business in the U.S. is also subject to regulation by the Transportation Security Administration. Our indirect air carrier status is registered and in compliance with the Indirect Air Carrier Standard Security Program Change 3 mandated by Department of Homeland Security regulations. To facilitate compliance with “known shipper” requirements, we are part of a national database which helps delineate shipper status for security purposes. Our foreign airfreight forwarding operations are subject to similar regulation by the regulatory authorities of the respective foreign jurisdictions. The airfreight forwarding industry is subject to regulatory and legislative changes that can affect the economics of the industry by requiring changes in operating practices or influencing the demand for, and the costs of providing, services to customers.

The Federal Maritime Commission regulates our ocean freight forwarding and non-vessel operating common carrier operations to and from the U.S. The Federal Maritime Commission licenses intermediaries (combined ocean freight forwarders and non-vessel operating common carrier operators). Indirect ocean carriers are subject to Federal Maritime Commission regulation, under this Commission’s tariff publication 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. For ocean shipments not originating or terminating in the U.S., the applicable regulations and licensing requirements typically are less stringent than those that originate or terminate in the U.S.

We are licensed as a customs broker by the U.S. Customs and Border Protection of the Department of Homeland Security (CBP) in United States’ customs districts in which we do business. All U.S. customs brokers are required to maintain prescribed records and are subject to periodic audits by the CBP. As a certified and validated party under the self-policing Customs-Trade Partnership Against Terrorism (C-TPAT), we are also subject to compliance with security regulations within the trade environment that are enforced by the CBP. We are also subject to regulations under the Container Security Initiative, which is administered by the CBP. Since February 1, 2003, we have been submitting manifests automatically to U.S. Customs from foreign ports 24 hours in advance of vessel departure. Our foreign customs brokerage operations are licensed in and subject to the regulations of their respective countries.

We must comply with export regulations of the U.S. Department of State, including the International Traffic in Arms Regulations, the U.S. Department of Commerce and the CBP regarding what commodities are shipped to what destination, to what end-user and for what end-use, as well as statistical reporting requirements.

Some portions of our warehouse operations require authorizations and bonds by the U.S. Department of the Treasury and approvals by the CBP. We are subject to various federal and state environmental, work safety and hazardous materials regulations at our owned and leased warehouse facilities. Our foreign warehouse operations are subject to the regulations of their respective countries.

Certain of our U.S. trucking and truck brokerage operations are subject to regulation by the Federal Motor Carrier Safety Administration (the FMCSA), which is an agency of the U.S. Department of Transportation, and by various state agencies. The FMCSA has broad regulatory powers with respect to activities such as motor carrier operations, practices and insurance. Interstate motor carrier operations are subject to safety requirements prescribed by the FMCSA. Subject to federal and state regulation, we may transport most types of freight to and from any point in the United States. The trucking industry is subject to possible regulatory and legislative changes (such as the possibility of more stringent environmental, safety or security regulations or limits on vehicle weight and size) that may affect the economics of the industry by requiring changes in operating practices or the cost of providing truckload services.

We are subject to a broad range of foreign and domestic environmental and workplace health and safety requirements, including those governing discharges to air and water and the handling and disposal of solid and hazardous wastes. In the course of our operations, we may be asked to store, transport or arrange for the storage or transportation of substances defined as hazardous under applicable laws. If a release of hazardous substances occurs on or from our facilities or while being transported by us or our subcontracted carrier, we may be required to participate in, or have liability for, the remedy of such release. In such case, we also may be subject to claims for personal injury and natural resource damages.

Although our current operations have not been significantly affected by compliance with, or liability arising under, these environmental, health and safety laws, we cannot predict what impact future environmental, health and safety regulations might have on our business.

We believe that we are in substantial compliance with applicable material regulations and that the costs of regulatory compliance have not had a material adverse impact on our operations to date. However, our failure to comply with the applicable regulations or to maintain required permits or licenses could result in substantial fines or revocation of our operating permits or licenses. We cannot predict the degree or cost of future regulations on our business. If we fail to comply with applicable governmental regulations, we could be subject to substantial fines or revocation of our permits and licenses.

Employees

At January 31, 2006, we employed a total of 16,245 persons. A breakdown of our employees by region is as follows:

Europe			2,731
Americas			5,815
Asia Pacific			2,553
Africa			5,030
Corporate			116
Total			16,245

In March 2006, our number of employees increased by approximately 600 employees due to the acquisition of Market Transport.

Approximately 1,850 of our employees are subject to collective bargaining arrangements in several countries, but primarily in South Africa, which are renegotiated annually. We believe our employee relations to be generally good.

Executive Officers and Other Senior Managers of Registrant

Our executive officers are as follows:

Name		Age				Position
Roger I. MacFarlane			61			Chief Executive Officer and Director
Matthys J. Wessels			60			Vice Chairman of the Board of Directors, Chief Executive Officer — African Region and Director
Alan C. Draper			53			Executive Vice President, President — Asia Pacific Region and Director
John S. Hextall			49			Executive Vice President — Global Leader of Client Solutions and Delivery
Gene Ochi			56			Executive Vice President — Global Leader of Client Solutions Development
Lawrence R. Samuels			49			Senior Vice President — Finance, Chief Financial Officer and Secretary
Linda C. Bennett			55			Senior Vice President and Chief Information Officer
Michael K. O’Toole			61			Vice President — Global Forwarding Operations

Roger I. MacFarlane has served as our Chief Executive Officer since May 2000 and has been a director since our formation in 1995. From 1995 to April 2000, Mr. MacFarlane served as our Chief Executive Officer of the Americas Region and was responsible for overseeing our operations in North and South America. From 1993 to 1995, Mr. MacFarlane served as the Chief Executive Officer of the Americas Division of one of our predecessor corporations, and was responsible for overseeing its operations in North and South America. From 1987 to 1993, Mr. MacFarlane served in various executive capacities, including Joint Chief Executive for BAX Global, an international freight forwarder and a subsidiary of Deutsche Bahn AG, a German company. From 1983 to 1987, Mr. MacFarlane served as a director and held various executive positions, including Chief Executive Officer, for WTC International N.V., an international freight forwarder that was acquired by BAX Global in 1987. Mr. MacFarlane received a Bachelor of Arts degree and an L.L.B. degree from the University of Cape Town.

Matthys J. Wessels was appointed Vice Chairman of the Board of Directors in May 2004. Prior to that, Mr. Wessels served as our Chairman of the Board of Directors from January 1999 until May 2004 and has been our Chief Executive Officer — African Region and a director since our formation in 1995. Mr. Wessels served as our Chief Executive Officer from 1998 to April 2000. From 1987 until January 2006, Mr. Wessels served as Chairman of United Service Technologies Limited, which we refer to as Uniserv, a company which was publicly listed on the JSE Securities Exchange South Africa until December 2004. From 1984 to 1987, Mr. Wessels served in various executive capacities for WTC International N.V. When the South African interests of WTC International N.V. were separated from its other operations in 1987, Mr. Wessels continued as the Chief Executive Officer of the South African operations until these operations were combined with Uniserv later that year. Mr. Wessels received a Bachelor of Science degree from the University of Natal and an M.B.A. from the University of Cape Town.

Alan C. Draper has served as our President — Asia Pacific Region since January 1996, an Executive Vice President since May 2000 and a director since our formation in 1995. From 1993 to 1996, Mr. Draper served as the Senior Vice President Finance of one of our predecessor corporations. From 1990 to 1994, Mr. Draper served as President of Transtec Ocean Express Company, an international ocean freight forwarding company, which was also one of our predecessors. From 1987 to 1990, Mr. Draper served as the Managing Director of BAX Global (UK) and was responsible for its activities in Europe. From 1983 to 1987, Mr. Draper served in various executive capacities for WTC International N.V. Mr. Draper, as a Rhodes Scholar, graduated with a Masters of Philosophy from Oxford University and an Alpha Beta pass. Mr. Draper received a Bachelor of Commerce degree from the University of Natal and is a qualified chartered accountant in South Africa. On March 29, 2006, Mr. Draper announced his plans to retire from his executive and director positions with the company effective June 30, 2006.

John S. Hextall was appointed as Executive Vice President — Global Leader of Client Solutions and Delivery in March 2006. Prior to that, Mr. Hextall served as President of our Europe Region since May 2001. In June 2004, the duties of President of the Americas Region for Freight Forwarding were added to Mr. Hextall’s responsibilities.

From March 2000 to May 2001, Mr. Hextall served as Managing Director Atlantic Region. From 1997 to 2000, Mr. Hextall served as the Managing Director of UTi Worldwide (U.K.) Ltd., one of our subsidiaries. From 1993 to 1997, Mr. Hextall served as the Managing Director of UTi Belgium N.V., one of our subsidiaries. Mr. Hextall received a Bachelor of Science Combined Honours degree in Transport Planning & Operations from the University of Aston, Birmingham, United Kingdom.

Gene Ochi was appointed as Executive Vice President — Global Leader of Client Solutions Development in March 2006. Prior to that, Mr. Ochi served as our Senior Vice President — Marketing and Global Growth since 1998. From 1993 to 1998, Mr. Ochi served as the Regional Vice President, Western U.S.A., of UTi, United States, Inc., one of our subsidiaries. From 1989 to 1992, Mr. Ochi served as the Senior Vice President of Marketing of BAX Global. From 1982 to 1989, Mr. Ochi served in various executive capacities for Flying Tigers, a cargo airline. From 1979 to 1982, Mr. Ochi served as the Vice President of Marketing for WTC Air Freight. Mr. Ochi received a Bachelor of Science degree from the University of Utah and an M.B.A. from the University of Southern California.

Lawrence R. Samuels has served as our Senior Vice President — Finance and Secretary since 1996 and Chief Financial Officer since May 2000. Mr. Samuels also serves as our principal financial officer and our principal accounting officer. From 1993 to 1995, Mr. Samuels served as the Financial Director of, and from 1987 to 1993 as the Financial Manager of, Pyramid Freight (Proprietary) Ltd., one of our subsidiaries in South Africa. From 1984 to 1987, Mr. Samuels served as the Financial Manager of Sun Couriers, an express courier operation in South Africa. From 1982 to 1984, Mr. Samuels served as the Financial Manager for Adfreight (Pty) Ltd., an express courier operation in South Africa, which was merged into Sun Couriers in 1984. Mr. Samuels received a Bachelor of Commerce degree from the University of the Witwatersrand and is a qualified chartered accountant in South Africa.

Linda C. Bennett has served as our Senior Vice President and Chief Information Officer since April 2000. From August 1995 to February 2000, Ms. Bennett served as the Director, Information Technology and later as the Vice President, Information Technology for Pinkerton’s, Inc., a security guard, consulting, investigation and security system integration company. Ms. Bennett received a Bachelor of Arts degree from Pepperdine University and an M.B.A. from the Andersen School of Management at the University of California, Los Angeles.

Michael K. O’Toole has served as Vice President — Global Forwarding Operations since September 2004. From May 2000 to September 2004, Mr. O’Toole served as our Vice President — Predictable Performance. From 1995 until 2000, Mr. O’Toole served in various positions within UTi, United States, Inc., including Western Regional Vice President from 1998 to 2000. From 1994 to 1995, Mr. O’Toole served as Regional Vice President of Circle International. From 1986 until 1993, Mr. O’Toole served as Vice President of Burlington Air Express. Mr. O’Toole received a Bachelor of Science degree in Economics from Portland State University.

Our other senior managers are as follows:

Name		Age				Position
Gordon C. Abbey			53			Executive Vice President; Managing Director UTi Africa International Region
David Cheng			61			President of Greater China
Brian R. J. Dangerfield			47			President of Solutions Delivery — Asia Pacific
Carlos Escario Pascual			44			President Client Solutions — Europe, Middle East and North Africa (EMENA) Region
William T. Gates			58			Vice President; Chief Executive Officer — UTi Integrated Logistics, Inc.
Walter R. Mapham			58			Vice President; Director Strategic Services — Africa
Glenn Mills			53			President of Client Solutions — Asia Pacific Region
Graham Somerville			51			Vice President; Managing Director UTi Africa – IHD Division
Christopher Dale			46			Chief Operating Officer — UTi, United States, Inc.

Available Information

Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports are available without charge through our website, http://www.go2uti.com, as soon as reasonably practicable after they are filed or furnished electronically with the SEC. We are providing the address to our Internet site solely for the information of investors. We do not intend the address to be an active link and the contents of our website are not incorporated into this report.

PART II

ITEM 6. Selected Financial Data

The following selected consolidated financial data should be read in conjunction with the restated consolidated financial statements and related notes thereto and Part II, Item 7 of this report appearing under the caption, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other financial data included elsewhere in this report.

The historical results are not necessarily indicative of the operating results to be expected in the future. All financial information presented has been prepared in U.S. dollars and in accordance with accounting principles generally accepted in the United States (U.S. GAAP).

		(Restated)
		Year ended January 31,
		2006 (7)				2005 (7)				2004 (7)				2003 (8)				2002 (8)
		(in thousands, except per share amounts)
INCOME STATEMENT DATA:
Gross revenue (1) (3)		$	2,785,575			$	2,259,793			$	1,502,875			$	1,170,060			$	889,786
Freight consolidation costs (1) (2)			1,819,171				1,486,012				906,734				765,270				585,227
Net revenues (2):
Airfreight forwarding			290,993				253,289				198,822				157,493				142,312
Ocean freight forwarding			118,346				98,877				75,131				66,554				58,633
Customs brokerage			78,503				75,352				65,532				61,105				54,034
Contract logistics (3)			370,714				257,141				192,969				79,517				14,957
Other			107,848				89,122				63,687				40,121				34,623
Total net revenues			966,404				773,781				596,141				404,790				304,559
Staff costs (4)			547,233				430,026				337,705				210,697				156,005
Depreciation and amortization			23,052				19,453				14,806				11,174				9,411
Amortization of intangible assets (5)			5,082				1,980				663				214				5,323
Other operating expenses			292,269				258,952				201,763				143,356				103,958
Operating income (5)			98,768				63,370				41,204				39,349				29,862
Net income (5)		$	55,198			$	35,006			$	26,457			$	23,739			$	19,195
Basic earnings per ordinary share (5) (6)		$	0.59			$	0.38			$	0.29			$	0.31			$	0.25
Diluted earnings per ordinary share (5) (6)		$	0.56			$	0.37			$	0.28			$	0.30			$	0.25
Cash dividends declared per ordinary share		$	0.05			$	0.038			$	0.032			$	0.025			$	0.025
Number of weighted average shares used for per share calculations (6):
Basic shares			94,147				92,203				90,875				77,796				75,700
Diluted shares			98,042				95,705				94,440				79,513				76,506
BALANCE SHEET DATA (8):
Goodwill			291,549				262,783				157,110				131,264				90,849
Total assets (6)			1,221,538				1,057,532				712,079				641,518				419,380
Long-term liabilities			55,125				65,911				31,999				24,503				23,724
Total shareholders equity			497,199				417,783				362,015				318,405				179,890

ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The information included in Item 7 in the Original Filing has not been updated for information or events occurring after the date of the Original Filing and has not been updated to reflect the passage of time since the date of the Original Filing. See “Explanatory Note Regarding Restatement” above for details of the restatement, which we refer to as the Explanatory Note. Events occurring after the date of the Original Filing or other disclosures necessary to reflect subsequent events have been addressed in the company’s Quarterly Reports on Form 10-Q for the fiscal quarters ended April 30, 2006 and July 31, 2006, and reports filed with the SEC subsequent to the date of this filing, including amendments.

Restatement of Previously Issued Financial Statements

We have reviewed our accounting for an earn-out arrangement arising from our January 25, 2002 acquisition of SLi. Specifically, we reviewed the application of Financial Accounting Standards Board (FASB) Statement No. 141, Business Combinations (SFAS No. 141), and Emerging Issues Task Force Issue No. 95-8, Accounting for Contingent Consideration Paid to the Shareholders of an Acquired Enterprise in a Purchase Business Combination (EITF No. 95-8) to the SLi transaction, including the earn-out arrangement. We have concluded a revision to our prior accounting for the earn-out arrangement is necessary, which we refer to as the Earn-out Arrangement Adjustment.

We have concluded that a portion of the earn-out arrangement represents costs of the acquisition while a portion of the earn-out arrangement represents a compensatory arrangement for the services of certain of the selling shareholders of SLi, performed subsequent to the acquisition date. For fiscal years through January 31, 2006 the resulting compensation arrangement is accounted for under Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB No. 25), and FASB Interpretation No. 28, Accounting for Stock Appreciation Rights and Other Variable Stock Option or Award Plans, an interpretation of APB Opinions No. 15 and 25 (FIN No. 28). Beginning with our 2007 fiscal year and the adoption of FASB Statement No. 123R, Share-Based Payment (SFAS No. 123R) the resulting compensation arrangement was accounted for under SFAS No. 123R through the quarter ended October 31, 2006 wherein the final contingent payment was made.

As a result of the foregoing, we have restated our historical consolidated balance sheets as of January 31, 2006 and January 31, 2005 and our consolidated income statement, cash flows and shareholders’ equity for the years ended January 31, 2006, 2005, and 2004 from the amounts previously reported.

As a result of the Earn-out Arrangement Adjustment, we reduced pretax income by $32.5 million, $32.3 million and $18.0 million for the years ended January 31, 2006, 2005 and 2004, respectively.

The Earn-out Arrangement Adjustment reflects the recognition of compensation expense during the periods in which services were rendered by certain of the SLi selling shareholders. In connection with the recording of compensation expense we recorded an offsetting entry to accrued liabilities. Upon settlement of our obligation under the arrangement, we recorded an entry to cash or common stock for cash settled and share settled payments, respectively, with an offsetting entry to accrued liabilities. The Earn-out Arrangement Adjustment had no impact on cash and cash equivalents but resulted in reclassification of a portion of the earn-out arrangement from cash flows used in investing activities to cash flows provided by operating activities.

In addition to the Earn-out Arrangement Adjustment discussed above, the restatement includes adjustments for the correction of errors previously identified, which were immaterial, individually and in the aggregate, to previously issued financial statements. As the Earn-out Arrangement Adjustment required restatement, we are also correcting these Other Adjustments and recording them in the proper periods.

While no single item included in the Other Adjustments is material, the following adjustments represent the largest items contained in Other Adjustments. Each of the following adjustments, net of income taxes, relate to fiscal 2006.

	•		We recorded a reduction of $0.68 million in other long term liabilities related to the decrease in fair value of a minority interest put option related to International Health Distributors (Pty) Ltd, with an offsetting entry to other operating expenses.
	•		We recorded a reserve of $0.59 million associated with a contingent tax provision in accordance with SFAS 5.
	•		We recorded a reduction of $0.80 million to depreciation expense with an offsetting entry to property, plant and equipment to reflect assets at their appropriate carrying value.

The following table sets forth a reconciliation of previously reported and restated net income and retained earnings as of the dates and for the periods shown (in thousands).

		Net Income												Retained
		Year ended January 31,												Earnings
														January 31,
		2006				2005				2004				2003
Previously reported		$	88,424			$	67,529			$	44,771			$	63,973
Adjustments:
Earn-out Arrangement Adjustment			(32,481	)			(32,261	)			(18,035	)			(5,797	)
Other Adjustments			(745	)			(262	)			(279	)			280
Total adjustments			(33,226	)			(32,523	)			(18,314	)			(5,517	)
Restated		$	55,198			$	35,006			$	26,457			$	58,456

The accounting error giving rise to the restatements described above will not result in additional or different payments being made to the selling shareholders of SLi. As of the date of this filing, we have satisfied all payment obligations under the SLi acquisition agreement. Additionally, the accounting error and related restatements are not expected to have any impact on our fiscal 2007 fourth quarter or any period thereafter.

The impact on the Consolidated Income Statements, as a result of the aforementioned adjustments, is as follows (in thousands).

		Year ended January 31,
		2006								2005								2004
		As previously				As				As previously				As				As previously				As
		reported				restated				reported				restated				reported				restated
Staff costs		$	514,752			$	547,233			$	397,765			$	430,026			$	318,727			$	337,705
Depreciation and amortization			21,952				23,052				19,453				19,453				14,806				14,806
Amortization of intangible assets			4,690				5,082				1,980				1,980				663				663
Other operating expenses			292,946				292,269				259,132				258,952				202,874				201,763
Operating income			132,064				98,768				95,451				63,370				59,071				41,204
(Losses)/gains on foreign exchange			(303	)			(303	)			973				973				(341	)			(542	)
Pretax income			127,892				94,596				95,950				63,869				59,771				41,703
Provision for income taxes			35,255				35,185				25,698				26,140				13,403				13,649
Income before minority interest			92,637				59,411				70,252				37,729				46,368				28,054
Net income			88,424				55,198				67,529				35,006				44,771				26,457
Basic earnings per share		$	0.94			$	0.59			$	0.73			$	0.38			$	0.49			$	0.29
Diluted earnings per share		$	0.90			$	0.56			$	0.71			$	0.37			$	0.47			$	0.28

The impact on the Consolidated Balance Sheets, as a result of the aforementioned adjustments, is presented below (in thousands).

		January 31,
		2006								2005
		As previously				As				As previously				As
		reported				restated				reported				restated
ASSETS
Property, plant and equipment, net		$	80,443			$	79,342			$	71,190			$	71,190
Goodwill			326,959				291,549				251,093				262,783
Other intangible assets, net			42,412				42,020				42,682				42,682
Deferred income tax assets			4,027				3,704				1,104				2,279
Total assets			1,258,764				1,221,538				1,044,667				1,057,532

		January 31,
		2006								2005
		As previously				As				As previously				As
		reported				restated				reported				restated
LIABILITIES & SHAREHOLDERS’ EQUITY
Trade payables and other accrued liabilities			465,100				519,011				413,003				439,645
Income taxes payable			22,904				23,498				18,533				18,533
Total current liabilities			595,505				650,010				531,184				557,826
Deferred income tax liabilities			11,593				11,181				19,607				19,607
Other			4,960				8,977				136				30,047
Minority interests			25,219				19,204				3,293				16,012
Shareholders’ equity:
Common stock			368,159				368,159				329,098				329,098
Deferred compensation related to restricted share units			(8,324	)			(8,324	)			(3,193	)			(3,193	)
Retained earnings			253,573				163,993				169,821				113,467
Accumulated other comprehensive loss			(26,888	)			(26,629	)			(21,536	)			(21,589	)
Total shareholders’ equity			586,520				497,199				474,190				417,783
Total liabilities and shareholders’ equity			1,258,764				1,221,538				1,044,667				1,057,532

The impact on the Consolidated Statements of Cash Flows, as a result of the aforementioned adjustments, is presented below (in thousands).

		Year ended January 31,
		2006								2005								2004
		As previously				As				As previously				As				As previously				As
		reported				restated				reported				restated				reported				restated
OPERATING ACTIVITIES:
Net income		$	88,424			$	55,198			$	67,529			$	35,006			$	44,771			$	26,457
Share-based compensation cost			5,163				37,643				576				32,837				798				19,705
Depreciation and amortization			21,952				23,052				19,453				19,453				14,806				14,806
Amortization of intangible assets			4,690				5,082				1,980				1,980				663				663
Deferred income taxes			(3,154	)			(2,831	)			1,440				265				847				847
Increase/(decrease) in other current liabilities			24,227				9,827				24,586				16,560				1,030				(1,735	)
Net cash provided in operating activities			130,990				117,659				71,399				61,936				65,858				63,686
INVESTING ACTIVITIES:
Acquisitions and contingent earn-out payments			(53,168	)			(39,837	)			(118,179	)			(108,716	)			(30,288	)			(28,116	)
Net cash used in investing activities			(69,965	)			(56,634	)			(136,466	)			(127,003	)			(50,380	)			(48,208	)

Introduction

This management’s discussion and analysis of financial condition and results of operations is intended to provide investors with an understanding of our financial condition, changes in financial condition and results of operations.

We will discuss and provide our analysis in the following order:

	•		Overview
	•		Discussion of Operating Results
	•		Liquidity and Capital Resources
	•		Off-Balance Sheet Arrangements
	•		Impact of Inflation
	•		Critical Accounting Policies and Use of Estimates

Overview

We are an international, non-asset-based global integrated logistics company that provides air and ocean freight forwarding, contract logistics, customs clearances, distribution, inbound logistics, truckload brokerage and other supply chain management services. Our business operates in four geographic segments comprised of Europe, the Americas, Asia Pacific and Africa and in each of these geographic segments our principal sources of income include airfreight forwarding, ocean freight forwarding, customs brokerage, contract logistics and other supply chain management services.

Our recent growth in gross revenue and net revenue for the years ended January 31, 2006 and January 31, 2005, compared to the respective prior year period, resulted from growth which we attribute to the growth of our existing operations, our acquisitions made during the year and generally favorable exchange rates as compared to the U.S. dollar. The growth in our existing operations is attributable to serving new clients as well as the increase in business from existing clients, which we collectively refer to as organic growth.

A significant portion of our expenses is variable and adjusts to reflect the level of our business activities. Other than transportation costs, staff costs are our single largest variable expense and are less flexible in the near term as we must staff to meet uncertain future demand.

In February 2002, we initiated a five-year strategic operating plan which we named NextLeap. NextLeap is our plan designed to help us transition from being a global freight forwarding operator to a global integrated logistics provider offering our customers a comprehensive and integrated range of services across the entire supply chain. NextLeap is a process of expanding and integrating our relationship with our customers and increasing the range of services we offer and provide for our clients through acquisitions and other ways, and thus cannot be measured in terms of “percentage implemented.” Under NextLeap, we are undertaking various efforts to attempt to increase our clients and revenue, improve our operating margins, and train and develop our employees. As of January 31, 2006, we have completed 16 of the 20 quarters covered by NextLeap. We face numerous challenges in trying to achieve our objectives under this strategic plan, including challenges involving attempts to leverage clients’ relationships, improve margins, integrate acquisitions and improve our systems. We also face challenges developing, training and recruiting personnel. This strategic operating plan requires that we successfully manage our operations and growth which we may not be able to do as well as we anticipate. In addition, we have begun the process of developing our next long-term strategic operating plan and there can be no guarantee that we will be successful in developing or implementing our next long term plan. Our industry is extremely competitive and our business is subject to numerous factors beyond our control. We may not be able to successfully implement NextLeap or our next long-term strategic operating plan, and no assurances can be given that our efforts associated with these strategic operating plans will result in increased revenues, improved margins or profitability. If we are not able to increase our revenues and improve our operating margins in the future, our results of operations could be adversely affected.

Effect of Foreign Currency Translation on Comparison of Results

Our reporting currency is the U.S. dollar. However, due to our global operations, we conduct and will continue to conduct business in currencies other than our reporting currency. The conversion of these currencies into our reporting currency for reporting purposes will be affected by movements in these currencies against the U.S. dollar. A depreciation of these currencies against the U.S. dollar would result in lower gross and net revenues reported; however, as applicable costs are also converted from these currencies, costs would also be lower. Similarly, the opposite effect will occur if these currencies appreciate against the U.S. dollar. Additionally, the assets and liabilities of our international operations are denominated in each country’s local currency. As such, when the values of those assets and liabilities are translated into U.S. dollars, foreign currency exchange rates may adversely impact the net book value of our assets. We cannot predict the effects of foreign currency exchange rate fluctuations on our future operating results.

Description of Services & Revenue Recognition

Airfreight Forwarding. When we act as an airfreight forwarder, we conduct business as an indirect carrier or occasionally as an authorized agent for the airline which carries the shipment. In both cases, gross revenue and applicable costs are recognized at the time the freight departs the terminal of origin.

When we act as an indirect air carrier, we procure shipments from a large number of customers, consolidate shipments bound for a particular destination from a common place of origin, determine the routing over which the consolidated shipment will move, and purchase cargo space from airlines on a volume basis. As an indirect air carrier, our gross revenue includes the rate charged to the client for the movement of the shipment on the airline, plus the fees we charge for our other ancillary services such as preparing shipment-related documentation and materials handling related services. Airfreight forwarding gross revenue includes expedited movement by ground transportation and our domestic delivery service in South Africa.

When we act as an indirect air carrier, our net revenue is the differential between the rates charged to us by the airlines and, where applicable, expedited ground transport operators, and the rates we charge our customers plus the fees we receive for our other services. Therefore, our net revenue is influenced by our ability to charge our customers a rate which is higher than the rate we obtain from the airlines, but which is also lower than the rate the customers could otherwise obtain directly from the airlines.

When we act as an authorized agent for the airline which carries the actual shipment, our gross revenue is primarily derived from commissions received from the airline plus fees for the ancillary services we provide, such as preparing shipment-related documentation and materials handling related services. Our gross revenue does not include airline transportation costs when we act as an authorized agent. Accordingly, our gross revenue and net revenue are not materially different in this situation.

Ocean Freight Forwarding. When we act as an ocean freight forwarder, we conduct business as an indirect ocean carrier or occasionally as an authorized agent for the ocean carrier which carries the shipment. Our gross revenue and net revenue from ocean freight forwarding and related costs are recognized the same way that our gross revenue and net revenue from airfreight forwarding and related costs are recognized.

When we act as an indirect ocean carrier or non-vessel operating common carrier, we contract with ocean shipping lines to obtain transportation for a fixed number of containers between various points in a specified time period at an agreed upon rate. We then solicit freight from customers to fill the containers and consolidate the freight bound for a particular destination from a common shipping point. As in the case when we act as an indirect airfreight forwarder, our gross revenue in this situation includes the rate charged to the customer for the movement of the shipment on the ocean carrier plus our fees for the other services we provide which are related to the movement of goods such as preparing shipment-related documentation. Our net revenue is determined by the differential between the rates charged to us by the carriers and the rates we charge our customers along with the fees we receive for our other ancillary services.

When we act as an authorized agent for an ocean carrier, our gross revenue is generated from the commission we receive from the carrier plus the fees we charge for the ancillary services we provide. Our gross revenue does not include transportation costs when we act as an authorized agent for an ocean carrier. Under these circumstances, our gross revenue and net revenue are not materially different.

Customs Brokerage. We provide customs clearance and brokerage services with respect to the majority of the shipments we handle as a freight forwarder. We also provide customs brokerage services for shipments handled by our competitors. These services include assisting with and performing regulatory compliance functions in international trade.

Customs brokerage gross revenue is recognized when the necessary documentation for customs clearance has been completed. This gross revenue is generated by the fees we charge for providing customs brokerage services, as well as the fees we charge for the disbursements made on behalf of a customer. These disbursements, which typically include customs duties and taxes, are excluded from our calculations of gross revenue since they represent disbursements made on behalf of customers. Typically, disbursements are included in our accounts receivable and are several times larger than the amount of customs brokerage gross revenue generated.

Contract Logistics. Our contract logistics services primarily relate to our value-added warehousing services and distribution of goods and materials in order to meet customers’ inventory needs and production or distribution schedules. Our distribution services include receiving, deconsolidation and decontainerization, sorting, put away, consolidation, assembly, cargo loading and unloading, assembly of freight and protective packaging, storage and distribution. Our outsourced services include inspection services, quality centers and manufacturing support.

Contract logistics gross revenue is recognized when the service has been provided to third parties in the ordinary course of business and net revenue excludes transportation costs incurred in providing contract logistics services. We have expanded our contract logistics services with our acquisitions of Perfect Logistics in fiscal 2006, IHD and Unigistix in fiscal 2005, UTi Integrated Logistics in fiscal 2003 and SLi in fiscal 2002.

Other Supply Chain Management Services. We also provide a range of other supply chain management services, such as domestic road transportation, truckload brokerage, warehousing services, consulting, order management, planning and optimization services, outsourced distribution services, developing specialized customer-specific supply chain solutions, and customized distribution and inventory management services.

Our gross revenue in these capacities includes commissions and fees earned by us and are recognized upon performance. We have expanded our range of other supply chain management services with our acquisitions of Concentrek in fiscal 2006 and Market Transport in March 2006.

Acquisitions

As a key part of our growth strategy, we continuously evaluate acquisition opportunities in all the markets in which we operate as we seek to continue expanding our service offerings. During the year ended January 31, 2006, we completed several acquisitions of companies and businesses, including Concentrek, Maertens and Perfect Logistics. In March 2006, we acquired Market Transport. These acquisitions, along with our other acquisitions over the past five years, have had a significant effect on the comparability of our operating results, increasing gross revenues, net revenues and expenses, over the respective prior periods and to subsequent years, depending on the date of acquisition (i.e., acquisitions made on February 1, the first day of our fiscal year, will only affect a comparison with the prior year’s results). The results of acquired businesses are included in our consolidated financial statements from the dates of their respective acquisitions. We consider the operating results of an acquired company during the first twelve months following the date of its acquisition to be an “acquisition impact” or a “benefit from acquisitions.” Thereafter, we consider the growth in an acquired company’s results to be organic growth. Historically, we have financed acquisitions with a combination of cash from operations and borrowed money. We may borrow additional money in the future to finance acquisitions. From time to time we enter into non-binding letters of intent with potential acquisition targets and we are often in various stages of due diligence and preliminary negotiations with respect to those potential acquisition targets.

We cannot assure you that we will be able to consummate acquisitions in the future on terms acceptable to us, or at all, in which case our rate of growth may be negatively impacted. We may not be successful in integrating the companies we have acquired, or we acquire in the future, and may not achieve expected cost savings on the anticipated timeframe, if at all. Future acquisitions are accompanied by the risk that the liabilities of such acquired company may not be adequately reflected in the historical financial statements of such company and the risk that such historical financial statements may be based on assumptions that are incorrect or inconsistent with our assumptions. To the extent we make additional acquisitions in the future, the risks associated with our acquisition strategy will be exacerbated. Readers are urged to read carefully all cautionary statements contained in this
Form 10-K/A relating to acquisitions, including, without limitation, those contained under the heading “Risk Factors”, contained in Item 1A of our Original Filing (together with any additions and changes thereto contained in our Form 10-Q for the quarters ended April 30, 2006 and July 31, 2006 and any subsequent filings of quarterly reports on Form 10-Q).

Effective October 1, 2005, we acquired 100% of the issued and outstanding shares of Concentrek, a third-party contract logistics provider of transportation management and other supply chain solutions headquartered in Grand Rapids, Michigan, for an initial cash payment of $9.6 million, which includes the repayment of debt of $6.9 million. In addition, there is a guaranteed minimum future earn-out payment of $1.2 million due in March 2007. The terms of the acquisition agreement also provide for a net working capital adjustment and four additional earn-out payments up to a maximum of $7.5 million, based on the future performance of Concentrek over each of the four twelve-month periods ending January 31, 2010, inclusive of the guaranteed minimum of $1.2 million due in March 2007. The final purchase price allocation has not yet been finalized.

Effective June 1, 2005, we acquired 100% of the issued and outstanding shares of Perfect Logistics, a third-party contract logistics provider and customs broker headquartered in Taiwan. The initial purchase price was approximately $13.8 million in cash. In addition to the initial payment, the terms of the acquisition agreement provide for four additional payments of up to a maximum U.S. dollar equivalent of approximately $5.6 million in total, based on the future performance of Perfect Logistics over each of the four twelve-month periods ending May 31, 2009.

We made several smaller acquisitions in fiscal 2006. Effective July 1, 2005, we acquired the business and net assets of Maertens, a Belgium company involved in the national and international transportation and storage of art, antiques and other valuables for a total purchase price of approximately $1.1 million in cash. In addition, effective May 1, 2005, we acquired the assets and ongoing contract logistics business of a small transportation management provider in New Zealand and effective December 29, 2005 and we acquired 100% of the outstanding shares of Logica, which provides contract logistics services, for $1.2 million. We acquired the remaining outstanding shares of Ilanga, a South African company, of which we had already owned 50%, and UTi Egypt Limited, of which we had already owned 55%. Effective May 31, 2005, we acquired the remaining 49% minority shareholder interest in UTi Eilat Overseas Ltd., our Israeli subsidiary.

On January 25, 2002, we completed the acquisition of Grupo SLi and Union, SLi, which we refer to collectively as SLi, a warehousing and logistics services provider headquartered in Madrid, Spain with offices throughout Spain and Portugal. We acquired SLi for an initial cash payment of approximately $14.0 million. In addition to the initial payment, the terms of the acquisition agreement provide for an earn-out arrangement consisting of four additional payments, based in part, upon the performance of SLi in each of the fiscal years in the period from 2003 through 2006. We have satisfied our obligations in relation to each of the fiscal years 2003 through 2005 resulting in additional cash payments of $34.0 million and the issuance of 626,901 shares valued at $15.1 million for total consideration of $63.1 million. Of the total consideration $30.3 million was made in June of 2005, consisting of a $15.1 million cash payment and the issuance of 626,901 shares of common stock valued at $15.1 million. The final earn-out period ended on January 31, 2006 and we made the final payment in September 2006. A portion of the earn-out arrangement represents costs of the acquisition while a portion represents a compensatory arrangement for the services of certain of the selling shareholders of SLi, performed subsequent to the acquisition date. See Note 12, “Share-based Compensation” and Note 19, “Restatement of Previously Issued Financial Statements”, to the consolidated financial statements.

During fiscal 2005 we also made a number of acquisitions. Effective October 12, 2004, we acquired 100% of the issued and outstanding shares of Unigistix, a Canadian corporation which serves customers in the telecommunications, apparel, pharmaceuticals and healthcare sectors with integrated e-commerce-based logistics solutions. The initial purchase price was approximately $76.6 million in cash, not including the working

capital adjustment and earn-out payments. In addition to the initial payment, the terms of the acquisition agreement provide for a working capital adjustment and two additional payments of up to approximately $6.0 million Canadian dollars (equivalent to approximately $5.2 million as of January 31, 2006) contingent upon the anticipated future growth of Unigistix over each of the two twelve-month periods ending October 31, 2006. During December 2005, we paid the first of two earn-out payments to the sellers of Unigistix, which consisted of a cash payment of approximately $4.0 million. During fiscal 2006, we also made a working capital adjustment payment of approximately $1.2 million.

Effective June 1, 2004, we acquired 100% of the issued and outstanding shares of IHD, a South African corporation. The purchase price of IHD was approximately $38.6 million in cash. Effective November 1, 2004, we contributed IHD for a 74.9% share of a partnership formed with a South African black economic empowerment organization (BEE). In connection with the acquisition of IHD and the formation of the partnership, we recorded a minority interest liability of $12.7 million with an offsetting entry to goodwill. Additionally we granted a put option to the BEE providing a right to put their 25.1% share of the partnership to us in 2010. The put option was recorded at fair value and resulted in an entry to increase goodwill with an offsetting entry accrued liabilities. As of January 31, 2006, we have accrued $4.0 million representing the fair value of the put option. IHD provides logistics and warehousing support and distribution services of pharmaceutical products throughout southern Africa directly to end dispensers as well as to wholesalers.

Effective February 1, 2004, we acquired 100% of the issued and outstanding shares of ET Logistics and ILEX Consulting, S.L., both of which are Spanish corporations which provide logistics services. In addition to the initial cash purchase price for ET Logistics, the acquisition agreement provided for four contingent earn-out payments which will be calculated based on a multiple of the acquired operation’s future earnings for each of the four fiscal years in the period ending January 31, 2008 in accordance with the modified purchase agreement dated November 3, 2004. During fiscal 2006, we paid the first of four earn-out payments to the sellers of ET Logistics, which consisted of a cash payment of approximately $1.0 million. We also acquired an additional 14% of the issued and outstanding shares of PT Union Trans Internusa (Indonesia) as of February 1, 2004.

Effective June 1, 2004 and October 28, 2004, we acquired the remaining 27% and 40% of the issued and outstanding shares of UTi (Taiwan) Limited and UTi Tasimacilik Limited, our Turkish subsidiary, respectively.

In fiscal 2004, effective May 1, 2003 and July 1, 2003, we acquired 100% of the issued and outstanding shares of IndAir Carriers (Pvt) Ltd. (IndAir), an Indian corporation, and 50% of the issued and outstanding shares of Kite Logistics (Pty) Limited (Kite), a South African corporation, respectively. Since IHD owns the remaining 50% issued and outstanding shares of Kite, we acquired those remaining shares effective June 1, 2004 with our acquisition of IHD. Effectively 25.1% of Kite was sold on November 1, 2004 in conjunction with the contribution of IHD into a partnership, as discussed above.

Subsequent to fiscal 2006, effective March 7, 2006, we acquired Market Transport, a privately held provider of third-party logistics services and multi-modal transportation capacity solutions specializing in truck brokerage, for approximately $197.1 million in cash. The initial purchase price is subject to certain closing, working capital and tax-related adjustments. The acquisition of Market Transport was funded by a combination of our cash reserves and the proceeds of a $150.0 million senior secured six month term credit facility. The final purchase price allocation for this acquisition has not yet been finalized.

Reorganization of South African Operations

In fiscal 2005, we executed the documentation for a transaction designed to qualify our South African operations as black empowered under legislation enacted in South Africa. The transaction did not impact our IHD operations. Pursuant to this transaction, our subsidiary Pyramid Freight (Proprietary) Limited (which we refer to as Pyramid Freight) sold most of its South African operations to a newly-formed corporation called UTi South Africa (Proprietary) Limited (which we refer to as UTiSA). UTiSA also assumed liabilities associated with the transferred businesses.

The businesses were transferred to UTiSA in exchange for an interest-bearing obligation pursuant to which UTiSA owes Pyramid Freight the principal sum of 680.0 million South African rand (equivalent to $111.7 million as of January 31, 2006). Under the terms of this loan, the outstanding balance bears interest at an effective annual

rate of 14.5%. Three months prior to the fifth anniversary of the loan, the parties are to meet to negotiate the terms of repayment of the outstanding principal on the loan. If the parties are unable to agree on the terms of repayment, the outstanding principal and any remaining accrued and unpaid interest thereon are repayable in full on demand. UTiSA has the right to prepay the loan without penalty.

UTiSA was formed for the purpose of this transaction and approximately 75% of its outstanding share capital is held by Pyramid Freight with the remaining approximately 25% held by the UTi Empowerment Trust, a trust registered in South Africa (which we refer to as the Empowerment Trust). The Empowerment Trust was established to provide broad-based educational benefits to UTi’s staff in South Africa and their dependants. The transaction allows the Empowerment Trust to, in substance, share in approximately 25% of the future net income of UTi’s current South Africa operations (excluding IHD) above fiscal 2005 net income levels.

The Empowerment Trust and Pyramid Freight also entered into a shareholders agreement which provides for the method of appointing directors by the parties and contains other provisions concerning board and shareholder meetings, preemptive rights, rights of first refusal and other matters.

Discussion of Operating Results

The following discussion of our operating results explains material changes in our consolidated results of operations for fiscal 2006 and fiscal 2005 compared to the respective prior year. The discussion should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this report. This discussion contains forward-looking statements, the accuracy of which involves risks and uncertainties, and our actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including, but not limited to, all cautionary statements contained elsewhere in this report. Readers are also urged to read carefully all cautionary statements, including, without limitation, those contained under the heading, “Risk Factors,” contained in Item 1A of the company’s Original Filing which was originally filed with the SEC on April 17, 2006 (together with any additions and changes thereto contained in our Form 10-Q for the quarters ended April 30, 2006 and July 31, 2006 and any subsequent filings of quarterly reports on Form 10-Q, including amendments). We disclaim any obligation to update information contained in any forward-looking statement. Our consolidated financial statements attached to this report, have been prepared in U.S. dollars and in accordance with U.S. GAAP. For a description of the restatement related to SLi, see the Explanatory Note and Note 19.

Geographic Segment Operating Results

We manage our business through four geographic segments comprised of Europe, the Americas, Asia Pacific and Africa, which offer similar products and services. Each geographic segment is managed regionally by executives who are directly accountable to and maintain regular contact with our Chief Executive Officer to discuss operating activities, financial results, forecasts and plans for each geographic region.

For segment reporting purposes by geographic region, airfreight and ocean freight forwarding gross revenues for the movement of goods is attributed to the country where the shipment originates. Gross revenues, as well as net revenues, for all other services are attributed to the country where the services are performed. Net revenues for airfreight and ocean freight forwarding related to the movement of the goods are prorated between the country of origin and the destination country, based on a standard formula. Our gross and net revenues and operating income by operating segment for the fiscal years ended January 31, 2006 and 2005, along with the dollar amount of the changes and the percentage changes between the time periods shown, are set forth in the following tables (in thousands).

		Year ended January 31,
		2006												2005
		Gross				Net				Operating				Gross				Net				Operating
		revenue				revenue				income				revenue				revenue				income
Europe		$	693,661			$	209,165			$	3,148			$	582,428			$	176,425			$	(4,938	)
Americas			698,222				373,859				32,692				562,853				286,760				22,414
Asia Pacific			854,717				136,358				42,679				681,532				109,159				34,991
Africa			538,975				247,022				45,152				432,980				201,437				30,200
Corporate			—				—				(24,903	)			—				—				(19,297	)
Total		$	2,785,575			$	966,404			$	98,768			$	2,259,793			$	773,781			$	63,370

		Change to year ended January 31, 2006
		from year ended January 31, 2005
		Amount												Percentage
		Gross				Net				Operating				Gross				Net				Operating
		revenue				revenue				income				revenue				revenue				income
Europe		$	111,233			$	32,740			$	8,086				19	%			19	%			(164	)%
Americas			135,369				87,099				10,278				24				30				46
Asia Pacific			173,185				27,199				7,688				25				25				22
Africa			105,995				45,585				14,952				24				23				50
Corporate			—				—				(5,606	)			—				—				(29	)
Total		$	525,782			$	192,623			$	35,398				23	%			25	%			56	%

		Year ended January 31,
		2005												2004
		Gross				Net				Operating				Gross				Net				Operating
		revenue				revenue				income				revenue				revenue				income
Europe		$	582,428			$	176,425			$	(4,938	)		$	424,457			$	129,404			$	6,734
Americas			562,853				286,760				22,414				449,381				252,378				15,889
Asia Pacific			681,532				109,159				34,991				430,376				86,489				25,755
Africa			432,980				201,437				30,200				198,661				127,870				17,788
Corporate			—				—				(19,297	)			—				—				(11,494	)
Total		$	2,259,793			$	773,781			$	63,370			$	1,502,875			$	596,141			$	41,204

		Change to year ended January 31, 2005
		from year ended January 31, 2004
		Amount												Percentage
		Gross				Net				Operating				Gross				Net				Operating
		revenue				revenue				income				revenue				revenue				income
Europe		$	157,971			$	47,021			$	1,796				37	%			36	%			27	%
Americas			113,472				34,382				6,525				25				14				41
Asia Pacific			251,156				22,670				9,236				58				26				36
Africa			234,319				73,567				12,412				118				58				70
Corporate			—				—				(7,803	)			—				—				(68	)
Total		$	756,918			$	177,640			$	22,166				50	%			30	%			54	%

All of our regions reported improvements in gross and net revenues as well as in operating income for fiscal 2006 when compared to fiscal 2005.

Our Europe region showed improvements in gross and net revenues for fiscal 2006 versus fiscal 2005 primarily due to organic growth in airfreight forwarding revenues, which were driven primarily by higher shipment volumes in our Spanish operations during fiscal 2006 compared to fiscal 2005 and to increases in our contract logistics gross and net revenues during fiscal 2006 compared to fiscal 2005. The impact of exchange rates on our gross and net revenues for our Europe region as compared to the U.S. dollar in fiscal 2006 when compared to fiscal 2005 was estimated to be less than 2%. The fluctuation in our Europe region’s operating income is primarily attributable to the recognition of additional staff costs related to the SLi Earn-out Arrangement Adjustment.

The increase in gross and net revenues in the Americas region for fiscal 2006 as compared to fiscal 2005 was due primarily to higher gross and net revenues from our contract logistics services, resulting from both an increase in business due to organic growth and to the impact of our Unigistix and Concentrek acquisitions, which were completed in October 2004 and October 2005, respectively. During fiscal 2006, our Americas’ gross and net revenues also benefited from increased ocean freight forwarding gross and net revenues when compared to the corresponding prior year periods. These increases in ocean freight forwarding gross and net revenues were primarily driven by increased volumes in the region for fiscal 2006 when compared to the prior year as we intentionally sought to grow our ocean freight forwarding business. Additionally, our acquisition of Concentrek in October 2005 contributed to the increase in gross and net revenues in the Americas region for fiscal 2006 as compared to fiscal 2005. Our percentage increase in operating income in the Americas’ region for fiscal 2006 versus fiscal 2005 was higher than our percentage increase in net revenues during the same period as we were successful in holding the increases in operating costs to a lower rate of growth than our growth in net revenues. We expect our gross and net revenues in the Americas region to increase in the year ending January 31, 2007 (which we refer to as fiscal 2007) compared to fiscal 2006 due to our recent acquisition of Market Transport in March 2006.

Gross and net revenues in our Asia Pacific region increased during fiscal 2006 when compared to fiscal 2005 primarily due to organic growth, resulting from higher overall export shipment volumes especially out of China and Hong Kong. Additionally, our acquisition of Perfect Logistics in June 2005 contributed to the increase in gross and net revenues in our Asia Pacific region for fiscal 2006 as compared to fiscal 2005. At the operating income line, Asia Pacific continued to be our region with the highest operating profit margin, calculated by dividing operating income for the region by net revenues for the region, reporting 31% for fiscal 2006. The higher operating profit margin in this region resulted primarily from having a lower cost structure than our other regions.

The increases in gross and net revenues during fiscal 2006 when compared to fiscal 2005 for our Africa region resulted primarily from organic growth in all of our service lines due to increased levels of business. Contract logistics gross and net revenues for fiscal 2006 compared to fiscal 2005 also benefited from the contributions from our IHD acquisition, which was completed in June 2004. The impact of exchange rates on our gross and net revenues for this region as compared to the U.S. dollar in fiscal 2006 when compared to fiscal 2005 was estimated to be less than 1%. Our Africa region’s operating income for fiscal 2006 grew at faster rates than our growth rates for net revenues for fiscal 2006 in this region because we focused on improving our operating profit margin, calculated by dividing operating income for the region by net revenues for the region, by increasing revenues while holding costs in check so that they increase at a slower rate than net revenues.

Because of the integrated nature of our business, with global customers being served by more than one of our geographic regions and with at least two regions often operating together to carry out our freight forwarding services, we also analyze our revenues by type of service in addition to looking at our results by geographic regions.

By service line, our total increase of $525.8 million, or 23%, in gross revenue in fiscal 2006 over fiscal 2005 was due to increases in airfreight forwarding of $196.4 million, ocean freight forwarding of $153.4 million, contract logistics of $131.5 million, other revenue of $41.1 million and customs brokerage of $3.4 million.

We estimate that organic growth accounted for approximately $454.1 million of the aggregate increases in gross revenue for fiscal 2006 versus fiscal 2005, while the balance of the growth for the period was comprised of the impact of acquisitions and to a lesser degree, the impact of favorable exchange rates as compared to the U.S. dollar.

We believe that net revenue is a better measure than gross revenue of the importance to us of our various services since our gross revenue for our services as an indirect air and ocean carrier includes the carriers’ charges to us for carriage of the shipment. When we act as an indirect air and ocean carrier, our net revenue is determined by the differential between the rates charged to us by the carrier and the rates we charge our customers plus the fees we receive for our ancillary services. Net revenue derived from freight forwarding generally is shared between the points of origin and destination. Our gross revenue in our other capacities includes only commissions and fees earned by us and is substantially the same as our net revenue.

The following table shows our net revenues and our operating expenses for the periods presented, expressed as a percentage of total net revenues.

		Year ended January 31,
		2006				2005				2004
Net revenues:
Airfreight forwarding			30	%			33	%			33	%
Ocean freight forwarding			12				13				13
Customs brokerage			8				10				11
Contract logistics			39				33				32
Other			11				11				11
Total net revenues			100				100				100
Operating expenses:
Staff costs			57				56				57
Depreciation and amortization			2				3				2
Amortization of intangible assets			1				*				*
Other operating expenses			30				33				34
Operating income			10				8				7
Interest income			1				1				1
Interest expense			(1	)			(1	)			(1	)
(Losses)/gains on foreign exchange			*				*				*
Pretax income			10				8				7
Provision for income taxes			4				3				2
Minority interests			*				*				*
Net income			6	%			5	%			5	%

Year Ended January 31, 2006 Compared to Year Ended January 31, 2005

Net revenue increased $192.6 million, or 25%, to $966.4 million for fiscal 2006 compared to $773.8 million for fiscal 2005. Our net revenue increase resulted primarily from organic growth from operations in all our geographic regions totaling approximately $149.2 million, contributions from our acquisitions made during the current year as well as from IHD and Unigistix, which were acquired during fiscal 2005, and the impact of generally favorable exchange rates as compared to the U.S. dollar during fiscal 2006 when compared to fiscal 2005. On a constant currency basis when we translate our fiscal 2006 results using currency exchange rates in effect for fiscal 2005, we estimate that acquisitions and favorable exchange rates accounted for approximately $40.1 million and $3.3 million, respectively, of the net revenue increase for fiscal 2006 versus fiscal 2005.

Airfreight forwarding net revenue increased $37.7 million, or 15%, to $291.0 million for fiscal 2006 compared to $253.3 million for the prior year. This increase primarily resulted from organic growth in all of our regions which totaled approximately $36.8 million and from the impact of favorable exchange rates as compared to the U.S. dollar in fiscal 2006 when compared to fiscal 2005. Our organic growth resulted primarily from higher airfreight shipment volumes in our Asia Pacific and Europe regions, which resulted in higher airfreight forwarding net revenue during fiscal 2006 when compared to fiscal 2005.

Ocean freight forwarding net revenue increased $19.4 million, or 20%, to $118.3 million for fiscal 2006 compared to $98.9 million for fiscal 2005. This increase was due primarily to organic growth in all of our regions, but particularly noticeable in the Asia Pacific, Africa and Americas regions, resulting from higher ocean freight shipment volumes during fiscal 2006 when compared to fiscal 2005.

Customs brokerage net revenue increased $3.1 million, or 4%, to $78.5 million for fiscal 2006 compared to $75.4 million for the prior year. Customs brokerage net revenue increased primarily as a result of organic growth in our Africa and Europe regions.

Contract logistics net revenue increased $113.6 million, or 44%, to $370.7 million for fiscal 2006 compared to $257.1 million for fiscal 2005. This increase resulted primarily from organic growth in all our regions, but particularly noticeable in the Americas region, which was driven primarily by new business. The increase is also attributable to the impact of our acquisitions, including Perfect Logistics which we acquired in fiscal 2006 and IHD and Unigistix which were acquired in fiscal 2005. We estimate that about one-third of the increase in contract logistics net revenue for fiscal 2006 was due to the impact of these acquisitions.

Other net revenue, which includes revenue from our other supply chain management services including transportation management and outsourced distribution services, increased $18.7 million, or 21%, to $107.8 million for fiscal 2006 compared to $89.1 million for fiscal 2005. This increase was primarily due to organic growth in our Americas and Africa regions, as well as the impact of our acquisitions of Concentrek and Maertens in the fiscal 2006. We expect our other net revenue to increase in fiscal 2007 compared to fiscal 2006 due to our recent acquisition of Market Transport in March 2006.

Staff costs increased $117.2 million, or 27%, to $547.2 million for fiscal 2006 from $430.0 million for the prior year, primarily as a result of increased resources to accommodate the increase in business activity and the addition of personnel in connection with our acquisitions of Perfect Logistics and Concentrek in fiscal 2006 and IHD and Unigistix in fiscal 2005, which we estimated were responsible for approximately 13% of the total increase. Additionally, we added several experienced people with strong customer relationships to our sales team during fiscal 2006 and we are currently still recruiting additional salespeople. These experienced new hires are included in the staff costs for fiscal 2006 from their date of hire and will add to staff costs going forward. Furthermore, we have incurred additional staff costs due to changes made in our Brazilian management team in fiscal 2006. Share-based compensation expense increased by approximately $4.8 million in fiscal 2006 compared to fiscal 2005 primarily as a result of restricted stock units issued to directors, officers and employees under our share-based compensation plans. This increase in the expense relates to retention awards issued in the later part of fiscal 2005. Share-based compensation expense of $32.5 million in fiscal 2006 and $32.3 million in fiscal 2005 relating to the SLi Share-based Compensation Arrangement is included in staff cost. We expect share-based compensation expense, excluding the impact of the SLi Share-based Compensation Arrangement, to increase to approximately $12.9 million in fiscal 2007 due to the adoption of SFAS No. 123 (revised 2004), Share-Based Payment, as follows: in the first quarter ending April 30, 2006 approximately $4.9 million, approximately $2.7 million for each of the second and third quarters and approximately $2.6 million in the last quarter of fiscal 2007. We also expect staff costs to increase in fiscal 2007 due to the increase in specialized staff required for our 4asONE key initiative, which is the migration of our operational freight forwarding systems into a single operating platform and which will eventually encompass all of our operational systems. Total staff costs expressed as a percentage of net revenues increased to 57% in fiscal 2006 from 56% in fiscal 2005.

Depreciation and amortization expense increased by $3.6 million, or 19%, to $23.1 million for fiscal 2006 over fiscal 2005 primarily due to capital spending during fiscal 2006, along with the impact of our acquisitions, and to a lesser degree, the impact of exchange rates as compared to the generally weakening U.S. dollar during fiscal 2006 as compared to fiscal 2005.

Amortization of intangible assets expenses is expected to increase in fiscal 2007. Our recent acquisition of Market Transport, in March 2006, is expected to increase amortization of intangible assets expenses by approximately $4.0 million in fiscal 2007 from fiscal 2006, based on our preliminary purchase price allocation.

Other operating expenses increased by $33.3 million, or 13%, to $292.3 million in fiscal 2006 compared to $259.0 million for fiscal 2005. These expenses increased primarily because of the increased costs associated with the higher volumes and organic growth experienced by the company and secondarily from the additional operating costs incurred by our acquisitions which we made during fiscal 2006 as well as the IHD and Unigistix acquisitions. Approximately $9.8 million of the increase was due to the impact of our acquisitions. Included in other operating expenses for fiscal 2006 are facilities and communications costs of $103.0 million compared to $83.8 million of such costs for fiscal 2005, representing an increase of 23%. Facilities and communications costs increased primarily as a result of the addition of new locations, including locations acquired with our acquisitions, in fiscal 2006 as compared to fiscal 2005. The balance of the other operating expenses is comprised of selling, general and administrative costs. For fiscal 2006, selling, general and administrative costs increased 8% to $189.2 million compared to $175.2 million for fiscal 2005. The increase in selling, general and administrative costs was primarily a result of the increased level of business activity, and, to a lesser degree, the impact of our acquisitions, including IHD and Unigistix. As we manage our business, we continue to focus on our other operating expense line items. In this regard, we set ourselves specific cost budgets and manage to these budgets by seeking to limit or even possibly reduce expenditures where possible in specific line items to offset both planned and unplanned increases in others. For example, the increases in fiscal 2006 in other operating expenses described above were partially offset by reducing, when compared to fiscal 2005, our provision for bad debts as a result of our bad debt experience and continued improvement in our accounts receivable management. When expressed as a percentage of net revenue, other operating expenses decreased to 30% for fiscal 2006 from 33% for fiscal 2005 due to our efforts in holding increases in operating costs to a lower rate of growth than our growth in net revenues. In our experience, our contract logistics operations typically incur a lower ratio of other operating expenses compared to net revenues than our other service lines, and if this service line increases as a percentage of our aggregate net revenues, we currently anticipate that other operating expenses expressed as a percentage of net revenues to decrease.

Our interest income relates primarily to interest earned on our cash deposits, while our interest expense consists primarily of interest on our credit facilities and capital lease obligations. Interest income and interest expense increased in fiscal 2006 as compared to fiscal 2005 by $0.8 million, or 20%, and $4.2 million, or 92%, respectively. Our interest income increased primarily as a result of higher interest rates. Our interest expense increased primarily due to higher levels of borrowings and higher interest rates in fiscal 2006 compared to fiscal 2005 resulting from cash being used for our acquisitions made during the current fiscal year, as well as the earn-out payment made in our second quarter of fiscal 2006 for SLi, and to an increase in our capital lease obligations in fiscal 2006 versus fiscal 2005.

We anticipate our interest income to decrease in fiscal 2007 due to our expected utilization of our cash resources primarily in respect of contingent earn-out payments and our recent acquisition of Market Transport. We also expect our interest expense to increase in fiscal 2007 due to the interest expense associated with the addition of a new $150.0 million senior, secured term loan credit facility we obtained in connection with our recent acquisition of Market Transport in March 2006. We are seeking to replace the $150.0 million senior, secure term loan credit facility with an alternative long-term debt financing of up to $200.0 million, which we expect to further increase our interest expense in fiscal 2007 compared to fiscal 2006.

Our effective income tax rate of 37% in fiscal 2006 was lower than the effective income tax rate of 41% in the prior year. As previously discussed, we recorded $32.5 million in fiscal 2006 and $32.3 million in fiscal 2005 of compensation expense associated with the SLi Share-based Compensation Arrangement, with no associated tax benefit. As such, the company’s effective tax rate increased in fiscal 2006 primarily due to the impact of the SLi Share-based Compensation Arrangement. Additionally, our overall effective tax rate is also impacted by the geographic composition of our worldwide earnings.

Minority interests increased, causing net income to decrease, by $1.5 million, or 55%, to $4.2 million in fiscal 2006 as compared to fiscal 2005 primarily due to the minority interests in the income of our South African operations which arose in December 2004 when those operations were reorganized. We expect this trend to continue into fiscal 2007.

Net income increased by $20.2 million, or 58%, to $55.2 million in fiscal 2006 as compared to the prior year for the reasons listed above.

Year Ended January 31, 2005 Compared to Year Ended January 31, 2004

Net revenue increased $177.7 million, or 30%, to $773.8 million for fiscal 2005 compared to $596.1 million for fiscal 2004. Overall, our net revenue benefited from organic growth from all our operations, from the impact of acquisitions made during fiscal 2005 as well as from favorable exchange rates as compared to the U.S. dollar. On a constant currency basis when we translate our fiscal 2005 results using currency exchange rates in effect for fiscal 2004, we estimate that acquisitions and favorable exchange rates accounted for approximately $34.0 million and $51.8 million, respectively, of the net revenue increase for fiscal 2005 versus the prior fiscal year.

Airfreight forwarding net revenue increased $54.5 million, or 27%, to $253.3 million for fiscal 2005 compared to $198.8 million for the prior year. This increase primarily resulted from organic growth in all regions and favorable exchange rates as compared to the U.S. dollar in fiscal 2005 when compared to fiscal 2004, mostly in our Africa and Europe regions, due to changes in the South African rand and the euro, respectively, compared to the U.S. dollar. Airfreight volumes increased in all regions, although the benefit of this increase was offset by the higher carrier costs, resulting in lower airfreight yields overall in fiscal 2005 when compared to fiscal 2004. We experienced our highest volume growth for fiscal 2005 in Asia and Africa.

Ocean freight forwarding net revenue increased $23.8 million, or 32%, to $98.9 million for fiscal 2005 compared to $75.1 million for fiscal 2004. This increase was due primarily to increased volumes in fiscal 2005 versus fiscal 2004 especially in the Africa and Asia Pacific regions, which offset our decline in yields caused by price increases from ocean carriers which were typically passed through to customers at lower margins than we have historically experienced.

Customs brokerage net revenue increased $9.9 million, or 15%, to $75.4 million for fiscal 2005 compared to $65.5 million for fiscal 2004. Customs brokerage net revenue increased primarily as a result of the higher shipping volumes resulting from increased demand for our airfreight and ocean freight services.

Contract logistics net revenue increased $64.1 million, or 33%, to $257.1 million for fiscal 2005 compared to $193.0 million for the prior year. We estimate that approximately 51% of this increase for fiscal 2005 was due to the acquisitions of IHD and Unigistix during fiscal 2005.

Other net revenue, which includes revenue from our other supply chain management services including outsourced distribution services, increased $25.4 million, or 40%, to $89.1 million for fiscal 2005 compared to $63.7 million for fiscal 2004. This increase was due primarily to organic growth particularly in the Americas and Africa regions, as well as from favorable exchange rates as compared to the U.S. dollar.

Staff costs increased $92.3 million, or 27%, to $430.0 million for fiscal 2005 from $337.7 million for the prior year. Staff costs were higher in fiscal 2005 as compared to fiscal 2004 because of increased resources to accommodate the increase in business activity, an increase in reported staff costs in the Europe and Africa regions over the prior year as a result of the stronger euro and South African rand, respectively, as compared to the U.S. dollar during the year and the addition of personnel in connection with our acquisitions of IHD and Unigistix, which we estimated accounted for approximately $13.1 million of the total increase. Share-based compensation expense of $32.8 million and $19.7 million was included in staff costs in fiscal 2005 and 2004, respectively. Of these amounts, share-based compensation expense related to the SLi Share-based Compensation Arrangement was $32.3 million in fiscal 2005 compared to $18.9 million in fiscal 2004. The arrangement is classified as a liability and accordingly, the increase in expense resulted primarily froman increase in the market price of our ordinary shares from January 31, 2004 to January 31, 2005. Total staff costs expressed as a percentage of net revenues decreased to 56% in fiscal 2005 from 57% in fiscal 2004. This decrease when expressed as a percentage of net revenues was primarily related to an increase in these costs at a slower rate of growth than the increase in net revenue. Staff costs are the largest component of operating expenses and we strive to manage these costs in relation to net revenue growth.

Depreciation and amortization expense increased by $4.6 million, or 31%, for fiscal 2005 over fiscal 2004 to $19.5 million primarily due to increases in capital spending for computer equipment and fixtures and fittings during the period, along with the impact of fiscal 2005 business acquisitions and the full year impact of fiscal 2004 business acquisitions. Depreciation and amortization expense increased slightly to 3% of net revenue in fiscal 2005 as compared to 2% in the prior year when expressed as a percentage of net revenues for the periods.

Other operating expenses increased by $57.2 million, or 28%, to $259.0 million in fiscal 2005 compared to $201.8 million for fiscal 2004. Generally these expenses increased because of the increased costs associated with the higher volumes and organic growth experienced by the company, as well as an increase in reported costs in the Europe and Africa regions in fiscal 2005 over the prior year as a result of the stronger euro and South African rand, respectively, as compared to the U.S. dollar during the year. In addition, operating costs as a result of the acquisitions of IHD and Unigistix, accounted for approximately $10.0 million of the total increase in other operating expenses in fiscal 2005. Included in other operating expenses for fiscal 2005 are facilities and communications costs of $83.8 million compared to $67.7 million of such costs for the prior fiscal year. Facilities and communications costs increased primarily as a result of the addition of new locations in fiscal 2005 as compared to the prior fiscal year, including those acquired with IHD and Unigistix. The balance of the other operating expenses is comprised of selling, general and administrative costs. For fiscal 2005, selling, general and administrative costs were $175.2 million compared to $134.1 million for the same prior year period. The increase in selling, general and administrative costs was primarily a result of the increased level of business activity, the increase in reported costs in the Europe and Africa regions over the prior year as a result of the stronger euro and South African rand, respectively, as compared to the U.S. dollar during the year. In addition the acquisitions of IHD and Unigistix during the year increased other operating expenses (estimated to be $6.0 million). When expressed as a percentage of net revenue, other operating expenses decreased to 33% for fiscal 2005 from 34% for fiscal 2004.

Our interest income relates primarily to interest earned on our cash deposits, while our interest expense consists primarily of interest on our credit facilities and capital lease obligations. Both interest income and interest expense decreased in fiscal 2005 as compared to fiscal 2004 by $2.8 million, or 40%, and $1.3 million, or 21%, respectively, due to the cash used in our acquisitions and the additional working capital requirements for the increase in business activity during fiscal 2005.

The effective income tax rate increased to 41% in fiscal 2005 compared to 33% in the prior year. As previously discussed, we recorded $32.3 million in fiscal 2005 and $18.0 million in fiscal 2005 of compensation expense associated with the SLi Share-based Compensation Arrangement, with no associated tax benefit. As such, the company’s effective tax rate increased in fiscal 2006 primarily due to the impact of the SLi Share-based Compensation Arrangement. Additionally, our overall effective tax rate is also impacted by the geographic composition of our worldwide earnings.

Net income increased by $8.5 million, or 32%, to $35.0 million in fiscal 2005 as compared to the prior year for the reasons listed above.

Liquidity and Capital Resources

As of January 31, 2006, our cash and cash equivalents totaled $246.5 million, representing an increase of $68.4 million from January 31, 2005, as a result of generating a net amount of $72.3 million of cash in our operating, investing and financing activities offset by a negative impact of $3.9 million related to the effect of foreign exchange rate changes on our cash balances. Historically, we have used our internally generated net cash flow from operating activities along with the net proceeds from the issuance of ordinary shares to fund our working capital requirements, capital expenditures, acquisitions and debt service.

In fiscal 2006, we generated approximately $117.7 million in net cash from operating activities. This resulted from net income of $55.2 million plus depreciation and amortization of intangible assets totaling $28.1 million and other items totaling $41.0 million, plus an increase in trade payables and other current liabilities of $47.5 million which was offset by an increase in trade receivables and other current assets of $54.1 million. The increases in trade receivables and other current assets and trade payables and other current liabilities in fiscal 2006 were primarily due to increased levels of business in all of our geographic regions during fiscal 2006 as compared to the comparable prior year period.

During fiscal 2006, cash used for capital expenditures was approximately $17.8 million, consisting primarily of computer hardware and software and furniture, fixtures and fittings. Based on our current operations, we expect our capital expenditures to grow in line with an increase in our business operations for fiscal 2007.

During fiscal 2006, we used an aggregate of $39.8 million of cash for acquisitions and contingent earn-out payments, including $13.1 million and $9.2 million, net of cash acquired, for our acquisitions of Perfect Logistics and Concentrek, respectively. Approximately $15.1 million of cash was used for the cash portion of the earn-out payment made in connection with our acquisition of SLi and approximately $5.2 million for the first of two earn-out payments and a working capital adjustment made in connection with our acquisition of Unigistix.

Future earn-out payments may result in a significant use of cash. In the case of our acquisition of SLi, we satisfied our earn-out obligations in relation to each of the fiscal years ended January 31, 2003 through 2006 resulting in cash payments of $40.0 million and the issuance of 2,126,901 shares for total earn-out consideration of $104.0 million, which includes $41.4 million made in September of 2006, consisting of a $6.5 million cash payment and the issuance of 1.5 million shares of common stock valued at $34.9 million, which was our final earn-out payment. Future earn-out payments include three remaining contingent earn-out payments related to our acquisition of ET Logistics which will be calculated based on the future performance of the acquired operation for each of the fiscal years ending January 31, 2008. There is no contractual limit on the first earn-out payment amount for ET Logistics as it is contingent on the earnings of the acquired business. The maximum amount due to the selling shareholders of ET Logistics in the last two earn-out period, in aggregate, is 1.5 million euros (equivalent to approximately $1.9 million as of October 31, 2006). In December 2005, we made a payment of approximately $4.0 million related to the Unigistix acquisition. We are not required to pay any amounts pursuant to our one remaining contingent earn-out payment related to our acquisition of Unigistix Inc. for the twelve-month period ended October 31, 2006 as the terms for the payment under the acquisition agreement were not realized. Our acquisition of Perfect Logistics contains four earn-out payments which will be based on the acquired operation’s future earnings over each of the four twelve-month periods in the period ending May 31, 2009 and which are subject to a cumulative maximum U.S. dollar equivalent of approximately $5.6 million. In addition, we anticipate making four contingent earn-out payments, totaling at least $1.2 million and subject to a maximum of $7.5 million, related to our acquisition of Concentrek which will be calculated based on a multiple of the acquired operation’s future earnings for each of the four twelve-month periods in the period ending January 31, 2010 and four contingent earn-out payments related to our acquisition of Logica which will be calculated based on a multiple of the acquired operation’s future earnings for each of the four twelve-month periods in the period ending January 31, 2010 and which are subject to a maximum of 10.0 million euros (equivalent to approximately $12.1 million as of January 31, 2006) and offset against the initial purchase price. We anticipate that the earn-out payments would generally be funded from a combination of our current cash balances, cash generated from future operations and future debt financing.

Our financing activities during fiscal 2006 provided $11.3 million of cash, primarily due to net increased long-term borrowings of $8.2 million, which related primarily to our purchase of Perfect Logistics, plus $10.8 million of net proceeds from the issuance of ordinary shares resulting from the exercise of stock options granted to employees and directors, partially offset by dividends paid during the period of $4.7 million and repayments of capital lease obligations totaling $5.7 million. We expect to use approximately $5.7 million of cash in the second quarter of fiscal 2007 for the payment of dividends on our ordinary shares as declared by our board of directors on March 29, 2006.

In March 2006, we completed the acquisition of Market Transport for $197.1 million in cash. The acquisition was funded by a combination of our cash reserves and the proceeds from a new $150.0 million senior secured six-month term credit facility with LaSalle Bank National Association, which we refer to as LaSalle, as agent, and various other lenders. Additional information regarding this $150.0 million senior secured six-month term credit facility is discussed in this item under “Credit Facilities.”

Credit Facilities

We have various credit and guarantee facilities established in countries where such facilities are required for our business. At January 31, 2006, these facilities totaled $323.7 million and provided for borrowing capacities from approximately $0.1 million to $65.0 million totaling $209.6 million, and also provided for guarantees, which are a necessary part of our business, totaling $114.1 million. Our outstanding borrowings under these credit facilities totaled $95.2 million at January 31, 2006 and we had approximately $114.4 million of available, unused borrowing capacity under these facilities. Certain of these credit facilities have financial covenants, with which the company was in compliance as of January 31, 2006.

Due to the global nature of our business, we utilize a number of different financial institutions to provide these various facilities. Consequently, the use of a particular credit facility is normally restricted to the country in which it originated and a particular credit facility may restrict distributions by the subsidiary operating in the country. Most of our borrowings are secured by grants of security interests in accounts receivable and other assets, including pledges of stock of our subsidiaries. The interest rates on these facilities vary and ranged from 0.6% to 9.5% at January 31, 2006. These rates are generally linked to the prime lending rate in each country where we have facilities. We use our credit facilities to primarily fund our working capital needs as well as to provide for customs bonds and guarantees and forward exchange transactions. The customs bonds and guarantees relate primarily to our obligations for credit that is extended to us in the ordinary course of business by direct carriers, primarily airlines, and for duty and tax deferrals granted by governmental entities responsible for the collection of customs duties and value-added taxes. The total underlying amounts that are due and payable by us for transportation costs and governmental excises are recorded as liabilities in our financial statements. Therefore, no additional liabilities have been recorded for these guarantees in the unlikely event that the guarantor company was to be required to perform as those liabilities would be duplicative. While the majority of our borrowings are due and payable within one year, we believe we should be able to renew such facilities on commercially reasonable terms.

Our largest credit facility as of January 31, 2006 was a senior revolving credit facility agreement with Nedbank in South Africa (Nedbank SA), which provides for an aggregate credit facility of 480.0 million South African rands (equivalent to approximately $78.9 million as of January 31, 2006). Of this facility, approximately $41.1 million is available for overdrafts, $24.7 million is available for guarantees and standby letters of credit, $11.5 million is available for capital leases and $1.6 million is available for foreign exchange contracts. As with our Nedbank Limited facility in the United Kingdom (Nedbank UK) (discussed below) and with other facilities we have had with Nedbank in the past, this facility is available on an ongoing basis until further notice, subject to Nedbank SA’s credit review procedures and may be terminated by the bank at any time. In the event this credit facility is terminated by the bank, we would be required to seek replacement financing which could involve selling equity securities or incurring debt from another lender which may not be on terms as advantageous as those we obtained from Nedbank SA. The facility is secured by cross guarantees and indemnities of selected subsidiary companies.

Our second largest credit facility as of January 31, 2006 was a senior revolving syndicated credit facility agreement between certain of our subsidiaries in the United States and LaSalle, as agent, and various other lenders, which provides for up to $65.0 million of borrowings based on a formula of eligible accounts receivable primarily for use in our operations in the United States. The credit facility is secured by substantially all of the assets of our U.S. subsidiaries, excluding Market Transport and Concentrek, as well as a pledge of the stock of the U.S. subsidiaries, excluding Market Transport and Concentrek. This credit facility matures in August 2007 and contains financial and other covenants and restrictions applicable to our U.S. operations, excluding Market Transport and Concentrek, and a change of control provision applicable to changes at the U.S. holding company level. This agreement limits the right of the affected U.S. operating company to distribute funds to holding companies.

As of January 31, 2006, we also had a credit facility with Nedbank UK, totaling $60.0 million. We entered into this credit facility in September 2005 as a replacement for our prior credit facility with Nedbank UK which was denominated in British pounds sterling. This facility is primarily used for guarantees and standby letters of credit to secure banking facilities and for guaranteeing performance undertakings of our subsidiary companies with $6.0 million available for foreign exchange contracts. Aggregate borrowing availability under this credit facility includes a revolving short-term loan of up to $30.0 million. The facility is available on an ongoing basis until further notice, subject to Nedbank UK’s credit review procedures and may be terminated by the bank at any time. In the event this credit facility is terminated by the bank, we would be required to seek replacement financing which could involve selling equity securities or incurring debt from another lender which may not be on terms as advantageous as those we obtained from Nedbank UK. The facility is secured by cross guarantees and indemnities of selected subsidiary companies.

Effective March 7, 2006, we entered into a new $150.0 million senior, secured term loan credit facility, which we refer to as the Bridge Facility. This credit facility matures on September 7, 2006 and contains financial and other covenants. The Bridge Facility is with a syndication of various financial institutions with LaSalle as administrative agent for the lenders. We entered into the Bridge Facility to provide short-term financing for our acquisition of Market Transport. The Bridge Facility is secured by a pledge of all the shares of Market Transport and each of its subsidiaries. Our obligations under the Bridge Facility are guaranteed by us and selected subsidiaries. At our election, amounts outstanding under the Bridge Facility bear interest at (i) the greater of LaSalle’s prime rate or the overnight federal funds rate plus 0.5%, or (ii) LIBOR plus 1.25%. To repay the Bridge Facility, we are seeking replacement alternative long-term debt financing of up to $200.0 million. In addition, we are also commencing the process of proceeding with a new $250.0 million worldwide revolving credit facility which, if completed, will replace substantially all our existing borrowing capacities.

In 2004, we filed a prospectus as part of a registration statement on Form S-3 with the SEC, using a “shelf” registration process. Under this shelf process, we may sell from time to time any combination of the securities in one or more offerings up to an aggregate dollar amount of proceeds of $250.0 million. The securities described in the prospectus include, ordinary shares, class A preferred stock, class B preferred stock, debt securities, warrants to purchase ordinary shares, warrants to purchase class A preferred stock and warrants to purchase class B preferred stock. Each time we sell securities, we will provide a prospectus supplement that will contain specific information about the terms of the securities being offered and of the offering. We may offer and sell the securities pursuant to this prospectus from time to time in one or more of the following ways: through underwriters or dealers, through agents, directly to purchasers or through a combination of any of these methods of sales. Proceeds from the sale of these securities may be used for general corporate purposes, which may include repayment of indebtedness, working capital and potential business acquisitions, including potential earn-out payments related to acquisitions.

Contractual Obligations

At January 31, 2006, we had the following contractual obligations (in thousands):

		Payments Due By Period
						Less Than				1-3				4-5				After 5
		Total				1 Year				Years				Years				Years
Bank and other long-term debt obligations (1)		$	122,967			$	107,517			$	3,689			$	4,841			$	6,920
Capital lease obligations (2)			24,837				6,801				14,769				3,212				55
Operating lease obligations			216,394				60,152				79,848				47,172				29,222
Unconditional purchase obligations			5,201				5,201				—				—				—
Total		$	369,399			$	179,671			$	98,306			$	55,225			$	36,197

The amounts in the above table do not include the $150.0 million outstanding under the Bridge Facility, which we entered into in March 2006. The Bridge Facility matures on September 7, 2006.

Certain of our acquisitions include contingent consideration arrangements. Amounts due to selling shareholders under such arrangements generally are based on the operating results of the acquired entity, for a period subsequent to its acquisition. In certain instances, these agreements have contractual limits on the amounts that may be payable under the earn-out arrangement. The above table does not include contingent consideration that may be paid pursuant to any such arrangements. See discussion in this Item under the caption “Liquidity and Capital Resources.”

We believe that with our current cash position, various bank credit facilities, operating cash flows, and the replacement alternative long-term debt financing and new revolving credit facility which we currently anticipate will be available to us, we have sufficient means to meet our working capital and liquidity requirements for the foreseeable future as our operations are currently conducted.

The nature of our operations necessitates dealing in many foreign currencies and our results are subject to fluctuations due to changes in exchange rates. See Part II, item 7A “Quantitative and Qualitative Disclosures about Market Risk” in our Original Filing.”

Off-Balance Sheet Arrangements

Other than operating lease obligations, which are included in the preceding contractual obligations table, we have no material off-balance sheet arrangements.

Impact of Inflation

To date, our business has not been significantly or adversely affected by inflation. Historically, we have been generally successful in passing carrier rate increases and surcharges on to our customers by means of price increases and surcharges. Direct carrier rate increases could occur over the short- to medium-term. Due to the high degree of competition in the marketplace, these rate increases might lead to an erosion of our profit margins.

Critical Accounting Policies and Use of Estimates

Our discussion of our operating and financial review and prospects is based on our consolidated financial statements, prepared in accordance with U.S. GAAP and contained within this report. Certain amounts included in, or affecting, our financial statements and related disclosure must be estimated, requiring us to make certain assumptions with respect to values or conditions which cannot be known with certainty at the time the financial statements are prepared. Therefore, the reported amounts of our assets and liabilities, revenues and expenses and associated disclosures with respect to contingent obligations are necessarily affected by these estimates. In preparing our financial statements and related disclosures, we must use estimates in determining the economic useful lives of our assets, obligations under our employee benefit plans, provisions for uncollectible accounts receivable and various other recorded and disclosed amounts. We evaluate these estimates on an ongoing basis.

Our significant accounting polices are included in Note 1, “Summary of Significant Accounting Policies,” in the consolidated financial statements included in this report; however, we believe that certain accounting policies are more critical to our financial statement preparation process than others. These include our policies on revenue recognition, income taxes, allowance for doubtful receivables, business combinations, goodwill and other intangible assets, share-based compensation, contingencies and currency translation.

Revenue Recognition

Gross revenue represents billings on exports to customers, plus net revenue on imports, net of any billings for value added taxes, custom duties and freight insurance premiums whereby we act as an agent. Gross revenue and freight consolidation costs for airfreight and ocean freight forwarding services, including commissions earned from our services as an authorized agent for airline and ocean carriers and third-party freight insurers, are recognized at the time the freight departs the terminal of origin which is when the customer is billed. Gross customs brokerage revenue, contract logistics revenue and other revenue are recognized when we bill the customer, which for customs brokerage revenue is when the necessary documentation for customs clearance has been completed, and for contract logistics and other revenue is when the service has been provided to third parties in the ordinary course of business. Net revenue is determined by deducting freight consolidation costs from gross revenue. Freight consolidation costs are recognized at the time the freight departs the terminal of origin. Certain costs, related primarily to ancillary services, are estimated and accrued at the time the services are provided, and adjusted upon receipt of the suppliers’ final invoices.

Income Taxes

Our overall effective income tax rate is determined by the geographic composition of our worldwide taxable income, with some of our operations in countries with low effective income tax rates. Consequently our provision of tax expense on an interim basis is based on an estimate of our overall effective tax rate for the related annual period.

Deferred income taxes are accounted for using the liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of taxable income. Deferred income tax assets and liabilities are recognized for all taxable temporary differences. Deferred income taxes are calculated at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred income taxes are charged or credited to the income statement.

Deferred income tax assets are offset by valuation allowances so that the assets are recognized only to the extent that it is more likely than not that taxable income will be available against which deductible temporary differences can be utilized. We consider our historical performance, forecast taxable income and other factors when we determine the sufficiency of our valuation allowances. We believe the estimates and assumptions used to determine future taxable income to be reasonable, although they are inherently unpredictable and uncertain and actual results may differ from these estimates.

Allowance for Doubtful Receivables

We maintain an allowance for doubtful receivables based on a variety of factors and estimates. These factors include historical customer trends, general and specific economic conditions and local market conditions. We believe our estimate for doubtful receivables is based on reasonable assumptions and estimates, although they are inherently unpredictable and uncertain and actual results may differ from these estimates.

Business Combinations

The terms of our acquisitions often include contingent consideration or earn-out arrangements based upon the performance of the acquired business, subsequent to acquisition. Accordingly, we are required to make a determination as to what portion of the contingent consideration represents a cost of the acquisition and what portion, if any, represents a compensatory arrangement, based upon the terms of the arrangement. The determination of the compensatory element, if any, requires judgment and impacts the amount of compensation expense recorded as Staff Costs.

Goodwill and Other Intangible Assets

Goodwill is the difference between the purchase price of a company and the fair market value of the acquired company’s net assets. Other intangible assets, with either indefinite or definite lives, include customer relationships, trade names and non-compete agreements. Intangible assets with definite lives are being amortized using the straight-line method over their estimated lives, which currently ranges from one to seventeen years. Other intangible assets with indefinite lives, including goodwill are assessed at least annually for impairment in accordance with SFAS No. 142, Goodwill and Other Intangible Assets. We complete the required impairment test annually in the second quarter, or when certain events occur or circumstances change.

Share-Based Compensation

Under certain of our share-based compensation plans and earn-out arrangements containing an element of compensation, we do not know the number of shares that an individual employee is entitled to receive at the time of grant. In these instances, the number of shares is based upon the future performance of the Company, or in case of an earn-out arrangement, the future performance of an acquired entity. As such, we make estimates of future performance that impact the amount of compensation costs recorded throughout the performance period. These judgments directly affect the amount of compensation expense that will be recognized in the consolidated financial statements prior to the end of a performance period.

Contingencies

We are subject to a range of claims, lawsuits and administrative proceedings that arise in the ordinary course of business. Estimating liabilities and costs associated with these matters requires judgment and assessment based upon professional knowledge and experience of management and its legal counsel. Where the company is self-insured in relation to freight related exposures or employee benefits, adequate liabilities are estimated and recorded for the portion we are self-insured. When estimates of our exposure from claims or pending or threatened litigation matters meet the recognition criteria of SFAS No. 5, Accounting for Contingencies, amounts are recorded as charges to earnings. The ultimate resolution of any exposure to us may change as further facts and circumstances become known.

Currency Translation

For consolidation purposes, balance sheets of subsidiaries expressed in currencies other than U.S. dollars are translated at the rates of exchange ruling at the balance sheet date. Operating results for the fiscal year are translated using average rates of exchange for the fiscal year. Gains and losses on translation are recorded as a separate component of equity and are included in other comprehensive income or loss. Transactions in foreign currencies during the year are remeasured at rates of exchange ruling on the dates of the transactions. These gains and losses arising on remeasurement are accounted for in the income statement. Exchange differences arising on the translation of long-term structural loans to subsidiary companies are recorded as other comprehensive income or loss.

Assets and liabilities at the balance sheet date of the company’s subsidiaries expressed in currencies different to their functional currencies, are remeasured at rates of exchange ruling at the balance sheet date. The financial statements of foreign entities that report in the currency of a hyper-inflationary economy are restated in terms of the measuring unit currency at the balance sheet date before they are translated into U.S. dollars.

Stock Split

On March 7, 2006, our board of directors declared a three-for-one stock split of our ordinary shares. Shareholders of record as of the close of business on March 17, 2006 received two additional shares for each one share held on the record date with distribution of the additional shares effected on March 27, 2006. Share, per share, stock option and restricted stock unit data for all periods presented in this report on
Form 10-K/A, including the consolidated financial statements and related disclosures have been adjusted to give effect to the stock split.

Recent Accounting Pronouncements

In December 2004, the FASB issued SFAS No. 123 (revised 2004), Share-Based Payment (SFAS No. 123R). SFAS No. 123R requires all companies to record compensation cost for all share-based payments (including employee stock options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans) at fair value. This statement is effective for annual periods beginning after June 15, 2005, which, for the company, is its fiscal year beginning February 1, 2006. The statement allows companies to use the modified prospective transition method or the modified retrospective transition method to adopt the new standards. The company has selected to apply the modified prospective method in the adoption of SFAS No. 123R. The company has evaluated the requirements of SFAS No. 123R and has determined that the adoption of SFAS No. 123R will have a significant impact on the consolidated financial position, earnings per share and results of operations. The company expects compensation costs to increase to approximately $12.9 million due to the adoption of SFAS No. 123R in the initial year based on current and expected grants to be made during fiscal 2007.

In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections – a replacement of APB Opinion No. 20 and FASB Statement No. 3 (SFAS No. 154). SFAS No. 154 replaces Accounting Principles Board Opinion No. 20, Accounting Changes and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements. SFAS No. 154 requires retrospective application to prior periods’ financial statements of a change in accounting principle. This statement applies to voluntary changes and to changes required by an accounting pronouncement if the pronouncement does not include specific transition provisions. SFAS No. 154 is effective for fiscal years beginning after December 15, 2005, which, for the company, is its fiscal year beginning February 1, 2006. The company has evaluated the adoption of SFAS No. 154 and determined such adoption will not have a material impact on its consolidated financial position or results of operations.

ITEM 8. Financial Statements and Supplementary Data

Consolidated Statements and Other Financial Information

Our consolidated financial statements, along with the report of our independent registered public accounting firm thereon, are attached to this report beginning on page F-1 and are incorporated herein by reference.

ITEM 9A. Controls and Procedures

Restatement of Financial Statements

The company reviewed its accounting for an earn-out arrangement arising from its January 25, 2002 acquisition of SLi. Specifically, it reviewed the application of SFAS No. 141, Business Combinations (SFAS No. 141), and Emerging Issues Task Force (EITF) Issue No. 95-8, Accounting for Contingent Consideration Paid to the Shareholders of an Acquired Enterprise in a Purchase Business Combination (EITF No. 95-8) to the SLi transaction, including the earn-out arrangement. The company has concluded a revision to its prior accounting for the earn-out arrangement is necessary (Earn-out Arrangement Adjustment).

The company has concluded that a portion of the earn-out arrangement represents costs of the acquisition while a portion of the earn-out arrangement represents a compensatory arrangement for the services of certain of the selling shareholders of SLi, performed subsequent to the acquisition date. For fiscal years through January 31, 2006 the resulting compensation arrangement is accounted for under Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees (APB No. 25), and FASB Interpretation No. 28, Accounting for Stock Appreciation Rights and Other Variable Stock Option or Award Plans, an interpretation of APB Opinions No. 15 and 25 (FIN No. 28). Beginning with its 2007 fiscal year and the adoption of FASB Statement No. 123R, Share-Based Payment (SFAS No. 123R) the resulting compensation arrangement was accounted for under SFAS No. 123R through the quarter ended October 31, 2006 wherein the final contingent payment was made.

As a result of the foregoing, the company is restating herein its historical consolidated balance sheets as of January 31, 2006 and January 31, 2005; its consolidated income statements, cash flows and shareholders’ equity for the years ended January 31, 2006, 2005, and 2004; and its selected financial data as of and for the years ended January 31, 2006, 2005, 2004, 2003, and 2002.

As a result of the Earn-out Arrangement Adjustment, we reduced pretax income by $32.5 million, $32.3 million, $18.0 million and $5.8 million for the years ended January 31, 2006, 2005, 2004 and 2003, respectively.

Management has determined that the control deficiency resulting in the Earn-out Arrangement Adjustment constituted a material weakness in the company’s internal control over financial reporting.

The company’s evaluation of the additional controls required to address the abovementioned material weakness is ongoing. As we are in the process of improving and strengthening the design and implementation of controls regarding the review and analysis of complex business combinations, the company performed additional procedures with respect to prior complex business combinations in order to prepare the consolidated financial statements in accordance with generally accepted accounting principles in the United States of America. These additional procedures included a review of the transaction documentation associated with prior acquisitions containing earn-out arrangements by personnel with adequate accounting knowledge. As a result of these additional procedures and notwithstanding management’s assessment that internal control over financial reporting was ineffective as of January 31, 2006, and the associated material weakness, the company believes that the consolidated financial statements included in this Annual Report on Form 10-K/A correctly present the financial position, results of operations and cash flows for the fiscal years covered thereby in all material respects.

Management’s Evaluation of Disclosure Controls and Procedures

In connection with this filing, under the supervision and with the participation of its Chief Executive Officer and Chief Financial Officer, the company re-evaluated its assessment of its disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (Exchange Act), as amended.

The company has identified a material weakness in internal control over financial reporting with respect to the design and implementation of controls regarding the review and analysis of complex business combinations. Specifically, with respect to the SLi acquisition, such analysis and related timely documentation of the company’s accounting determination was not performed by personnel with adequate knowledge of SFAS 141, Business Combinations, and EITF Issue No. 95-8, Accounting for Contingent Consideration Paid to the Shareholders of an Acquired Enterprise in a Purchase Business Combination. The deficiency resulted in material adjustments to the financial statements related to the interim and annual fiscal periods beginning with the fourth quarter of 2002 through January 31, 2006, and gave rise to the restatement of previously issued financial statements.

The company’s management, including its Chief Executive Officer and Chief Financial Officer, have now concluded that the company‘s disclosure controls and procedures were not effective as of January 31, 2006. This conclusion is different than the conclusion reached as a result of the evaluation of disclosure controls and procedures in connection with the Original Filing.

Changes in Internal Controls over Financial Reporting

No change in the company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) has occurred during the fourth fiscal quarter ended January 31, 2006 that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting.

PART IV

ITEM 15. Exhibits and Financial Statement Schedules

1. Financial Statements and Financial Statement Schedule

Our consolidated financial statements are attached to this report and begin on page F-1.

2. Exhibits

The following documents are filed herewith or incorporated herein by reference to the location indicated.

Exhibit		Description
10.21*		Agreement between UTi Spain, S.L. and the other parties named therein (incorporated by reference to Exhibit 10.1 to the company’s Quarterly Report on Form 10-Q, dated June 9, 2005)
12.1		Statement regarding computation of ratio of earnings to fixed charges
23		Consent of Independent Registered Public Accounting Firm
31.1		Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of Chief Executive Officer pursuant to Section 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of Chief Financial Officer pursuant to Section 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

Pursuant to the 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.

		UTi Worldwide Inc.
Date: December 18, 2006		By:		/s/ Lawrence R. Samuels
				Lawrence R. Samuels
				Senior Vice President — Finance, Chief
				Financial Officer and Secretary
				Principal Financial Officer and
				Principal Accounting Officer

UTi WORLDWIDE INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

		Page
Management’s Report on Internal Control Over Financial Reporting (As Revised)		F-2
Reports of Independent Registered Public Accounting Firm		F-3
Consolidated Income Statements for the years ended January 31, 2006, 2005 and 2004 (restated)		F-6
Consolidated Balance Sheets as of January 31, 2006 and 2005 (restated)		F-7
Consolidated Statements of Changes in Shareholders’ Equity for the years ended January 31, 2006, 2005 and 2004 (restated)		F-8
Consolidated Statements of Cash Flows for the years ended January 31, 2006, 2005 and 2004 (restated)		F-9
Notes to the Consolidated Financial Statements		F-10

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING (AS REVISED)

Our Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined under Rule 13a — 15(f) promulgated under the Exchange Act. Our system of internal control was designed to provide reasonable assurance to UTi Worldwide Inc.’s management and Board of Directors regarding the preparation and fair presentation of published financial statements.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of January 31, 2006 in connection with the original Annual Report on Form 10-K for the year then ended. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework. In Management’s Report on Internal Control Over Financial Reporting included in the original Annual Report on Form 10-K for the year ended January 31, 2006, our management concluded that the Company maintained effective internal control over financial reporting as of January 31, 2006. As a result of the material weakness described above, our management has revised its earlier assessment and has now concluded that the Company’s internal control over financial reporting was not effective as of January 31, 2006, based on the criteria in COSO.

A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Based on our re-assessment using the COSO model, we believe that as of January 31, 2006, the Company did not maintain effective controls over financial reporting.

Management has determined that a control deficiency relating to the design and implementation of controls regarding the review and analysis of complex business combinations constituted a material weakness in our internal control over financial reporting. Specifically, with respect to the SLi acquisition, such analysis and related timely documentation of the company’s accounting determination was not performed by personnel with adequate knowledge of SFAS No. 141, Business Combinations, and EITF Issue No. 95-8, Accounting for Contingent Consideration Paid to the Shareholders of an Acquired Enterprise in a Purchase Business Combination. Accordingly, management has determined that the company’s internal control over financial reporting with respect to the design and implementation of controls regarding the review and analysis of complex business combinations was ineffective as of January 31, 2006. Management is in the process of improving and strengthening the design and implementation of controls regarding the review and analysis of complex business combinations, and this will be completed in the near future.

Management’s revised assessment of the effectiveness of internal control over financial reporting as of January 31, 2006, has been audited by Deloitte & Touche LLP, the independent registered public accounting firm who also audited our consolidated financial statements as stated in their report which is included in this annual report on Form 10-K/A. Deloitte & Touche LLP has issued an attestation report, set forth below, on management’s revised assessment of the Company’s internal control over financial reporting.

Roger I. MacFarlane
Chief Executive Officer
Lawrence R. Samuels
Senior Vice President — Finance, Chief Financial Officer
April 17, 2006 (December 18, 2006 as to the effects of the material weakness described above)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of UTi Worldwide Inc.

We have audited management’s assessment, included in the accompanying Managements Report on Internal Control over Financial Reporting (as revised), that UTi Worldwide Inc. and subsidiaries (the “Company”) did not maintain effective internal control over financial reporting as of January 31, 2006, because of the effect of the material weakness identified in management’s assessment based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.

The Company did not maintain effective controls relating to the review and analysis of complex business combinations. Specifically, with respect to the SLi acquisition, such analysis and related timely documentation of the associated accounting determination was not performed by personnel with adequate knowledge of SFAS No. 141, Business Combinations, and EITF Issue No. 95-8, Accounting for Contingent Consideration Paid to the Shareholders of an Acquired Enterprise in a Purchase Business Combination, was not performed. The deficiency resulted in material adjustments to the financial statements related to the interim and annual fiscal periods, beginning with the fourth quarter of 2002 through January 31, 2006, and gave rise to the restatement of previously issued financial statements.

This material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the consolidated financial statements and financial statement schedule as of and for the year ended January 31, 2006, of the Company and this report does not affect our report on such financial statements and financial statement schedule.

In our opinion, management’s assessment that the Company did not maintain effective internal control over financial reporting as of January 31, 2006, is fairly stated, in all material respects, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Also in our opinion, because of the effect of the material weakness described above on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of January 31, 2006, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended January 31, 2006, of the Company and our report dated April 17, 2006 (December 18, 2006 as to the effects of the restatement discussed in Note 19) expressed an unqualified opinion on those financial statements and financial statement schedule and included an explanatory paragraph regarding the Company’s restatement of its financial statements for the three years ended January 31, 2006.

/s/ Deloitte & Touche LLP
Los Angeles, California
April 17, 2006 (December 18, 2006 as to the effects of the material weakness described in Management’s Report
on Internal Control Over Financial Reporting (As Revised))

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of UTi Worldwide Inc.

We have audited the accompanying consolidated balance sheets of UTi Worldwide Inc. and subsidiaries (the “Company”) as of January 31, 2006 and 2005, and the related consolidated statements of income, changes in shareholders’ equity, and cash flows for each of the three years ended January 31, 2006. Our audits also included the financial statement schedule listed in the Index on page F-1. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 present fairly, in all material respects, the financial position of UTi Worldwide Inc. and subsidiaries at January 31, 2006 and 2005, and the results of their operations and their cash flows for each of the three years in the period ended January 31, 2006, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such 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.

As discussed in Note 19, the accompanying financial statements have been restated.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company’s internal control over financial reporting as of January 31, 2006, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated April 17, 2006 (December 18, 2006 as to the effects of the material weakness described in Management’s Report on Internal Control Over Financial Reporting (As Revised)) expressed an unqualified opinion on management’s assessment of the effectiveness of the Company’s internal control over financial reporting and an adverse opinion on the effectiveness of the Company’s internal control over financial reporting.

/s/ Deloitte & Touche LLP
Los Angeles, California
April 17, 2006 (December 18, 2006 as to the effects of the restatement discussed in Note 19)

UTi WORLDWIDE INC.

		Year Ended January 31,
		2006				2005				2004
		(As Restated,				(As Restated,				(As Restated,
		See Note 19)				See Note 19)				See Note 19)
Gross revenue		$	2,785,575			$	2,259,793			$	1,502,875
Freight consolidation costs			1,819,171				1,486,012				906,734
Net revenue			966,404				773,781				596,141
Staff costs			547,233				430,026				337,705
Depreciation and amortization			23,052				19,453				14,806
Amortization of intangible assets			5,082				1,980				663
Other operating expenses			292,269				258,952				201,763
Operating income			98,768				63,370				41,204
Interest income			4,945				4,112				6,881
Interest expense			(8,814	)			(4,586	)			(5,840	)
(Losses)/gains on foreign exchange			(303	)			973				(542	)
Pretax income			94,596				63,869				41,703
Provision for income taxes			35,185				26,140				13,649
Income before minority interests			59,411				37,729				28,054
Minority interests			(4,213	)			(2,723	)			(1,597	)
Net income		$	55,198			$	35,006			$	26,457
Basic earnings per share		$	0.59			$	0.38			$	0.29
Diluted earnings per share		$	0.56			$	0.37			$	0.28
Number of weighted average shares used for per share calculations:
Basic shares			94,146,993				92,203,080				90,874,629
Diluted shares			98,042,114				95,705,328				94,439,661

See accompanying notes to the consolidated financial statements.

UTi WORLDWIDE INC.

		January 31,
		2006				2005
		(As Restated,				(As Restated,
		See Note 19)				See Note 19)
ASSETS
Cash and cash equivalents		$	246,510			$	178,132
Trade receivables (net of allowance for doubtful receivables of $14,367 and $16,687 as of January 31, 2006 and 2005, respectively)			497,990				435,223
Deferred income tax assets			8,517				10,027
Other current assets			39,172				44,509
Total current assets			792,189				667,891
Property, plant and equipment, net			79,342				71,190
Goodwill			291,549				262,783
Other intangible assets, net			42,020				42,682
Investments			1,050				587
Deferred income tax assets			3,704				2,279
Other non-current assets			11,684				10,120
Total assets		$	1,221,538			$	1,057,532
LIABILITIES & SHAREHOLDERS’ EQUITY
Bank lines of credit		$	95,177			$	92,340
Short-term borrowings			4,441				3,165
Current portion of capital lease obligations			6,189				3,465
Trade payables and other accrued liabilities			519,011				439,645
Income taxes payable			23,498				18,533
Deferred income tax liabilities			1,694				678
Total current liabilities			650,010				557,826
Long-term borrowings			13,775				5,105
Capital lease obligations			16,068				9,820
Deferred income tax liabilities			11,181				19,607
Retirement fund obligations			5,124				1,332
Other			8,977				30,047
Minority interests			19,204				16,012
Commitments and contingencies Shareholders’ equity:
Non-voting variable rate participating cumulative convertible preference shares of no par value:
Class A — authorized 50,000,000; none issued			—				—
Class B — authorized 50,000,000; none issued			—				—
Common stock — authorized 500,000,000 ordinary shares of no par value; issued and outstanding 95,208,066 and 92,929,809 shares as of January 31, 2006 and 2005, respectively			368,159				329,098
Deferred compensation related to restricted share units			(8,324	)			(3,193	)
Retained earnings			163,993				113,467
Accumulated other comprehensive loss			(26,629	)			(21,589	)
Total shareholders’ equity			497,199				417,783
Total liabilities and shareholders’ equity		$	1,221,538			$	1,057,532

See accompanying notes to the consolidated financial statements.

UTi WORLDWIDE INC.

										Deferred
										Compensation								Accumulated
										Related to								Other
		Common Stock								Restricted				Retained				Comprehensive
		Shares				Amount				Shares Units				Earnings				Income/(Loss)				Total
Balance at January 31, 2003, as previously reported			91,653,372			$	311,161			$	—			$	63,973			$	(50,965	)		$	324,169
Prior period adjustments			—				—				—				(5,517	)			(247	)			(5,764	)
Balance at January 31, 2003 (as restated — see Note 19)			91,653,372				311,161				—				58,456				(51,212	)			318,405
Comprehensive income:
Net income (as restated — see Note 19)			—				—				—				26,457				—				26,457
Foreign currency translation adjustment (as restated — see Note 19)			—				—				—				—				12,794				12,794
Total comprehensive income (as restated — see Note 19)																							39,251
Shares issued			73,869				694				—				—				—				694
Stock options exercised			1,011,915				4,920				—				—				—				4,920
Share-based compensation costs			50,286				798				—				—				—				798
Tax benefit related to exercise of stock options			—				836				—				—				—				836
Dividends			—				—				—				(2,889	)			—				(2,889	)
Balance at January 31, 2004 (as restated — see Note 19)			92,789,442				318,409				—				82,024				(38,418	)			362,015
Comprehensive income:
Net income (as restated — see Note 19)			—				—				—				35,006				—				35,006
Foreign currency translation adjustment (as restated — see Note 19)			—				—				—				—				16,829				16,829
Total comprehensive income (as restated — see Note 19)																							51,835
Shares issued			57,333				972				—				—				—				972
Shares cancelled			(738,987	)			—				—				—				—				—
Stock options exercised			822,021				4,362				—				—				—				4,362
Share-based compensation costs			—				131				445				—				—				576
Restricted share units issued, net of Cancellation			—				3,638				(3,638	)			—				—				—
Tax benefit related to exercise of stock options			—				1,586				—				—				—				1,586
Dividends			—				—				—				(3,563	)			—				(3,563	)
Balance at January 31, 2005 (as restated — see Note 19)			92,929,809				329,098				(3,193	)			113,467				(21,589	)			417,783
Comprehensive income:
Net income (as restated — see Note 19)			—				—				—				55,198				—				55,198
Minimum Pension Liability adjustment (net of tax of $938)			—				—				—				—				(2,188	)			(2,188	)
Foreign currency translation adjustment (as restated — see Note 19)			—				—				—				—				(2,852	)			(2,852	)
Total comprehensive income (as restated — see Note 19)																							50,158
Shares issued			686,073				15,526				—				—				—				15,526
Shares cancelled			(32,859	)			—				—				—				—				—
Stock options exercised			1,625,043				10,257				—				—				—				10,257
Share-based compensation costs			—				7				5,156				—				—				5,163
Restricted share units issued, net of cancellation			—				10,287				(10,287	)			—				—				—
Tax benefit related to exercise of stock options			—				2,984				—				—				—				2,984
Dividends			—				—				—				(4,672	)			—				(4,672	)
Balance at January 31, 2006 (as restated — see Note 19)			95,208,066			$	368,159			$	(8,324	)		$	163,993			$	(26,629	)		$	497,199