United States
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

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

000-31869
(Commission File Number)

UTi Worldwide Inc.

(Exact name of Registrant as Specified in its Charter)

British Virgin Islands (State or Other Jurisdiction of Incorporation or Organization)		N/A (IRS Employer Identification Number)
9 Columbus Centre, Pelican Drive Road Town, Tortola British Virgin Islands		c/o UTi, Services, Inc. 100 Oceangate, Suite 1500 Long Beach, CA 90802 USA

(Addresses of Principal Executive Offices)

562.552.9400
(Registrant’s Telephone Number, Including Area Code)

N/A
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

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

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o		Smaller reporting company 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

At June 6, 2011, the number of shares outstanding of the issuer’s ordinary shares was 102,650,083.

 

 

UTi Worldwide Inc.

Report on Form 10-Q
For the Quarter Ended April 30, 2011

Table of Contents

PART I. Financial Information			2
Item 1. Financial Statements (unaudited)			2
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			26
Item 3. Quantitative and Qualitative Disclosures about Market Risk			41
Item 4. Controls and Procedures			42
PART II. Other Information			43
Item 1. Legal Proceedings			43
Item 1A. Risk Factors			44
Item 6. Exhibits			46
Signatures			47
Exhibit Index			48
Exhibit 31.1
Exhibit 31.2
Exhibit 32
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT

Part I. Financial Information

Item 1.		Financial Statements

Consolidated Statements of Income
For the three months ended April 30, 2011 and 2010
(in thousands, except share and per share amounts)

		Three months ended April 30,
		2011				2010
		Unaudited
Revenues		$	1,198,705			$	1,055,156
Purchased transportation costs			788,128				689,408
Staff costs			233,345				207,001
Depreciation			12,441				11,412
Amortization of intangible assets			3,455				3,344
Severance and restructuring charges			4,849				—
Other operating expenses			137,694				125,039
Operating income			18,793				18,952
Interest income			4,228				2,559
Interest expense			(8,452	)			(6,678	)
Other income, net			176				844
Pretax income			14,745				15,677
Provision for income taxes			4,235				4,936
Net income			10,510				10,741
Net income attributable to noncontrolling interests			1,767				667
Net income attributable to UTi Worldwide Inc.		$	8,743			$	10,074
Basic earnings per common share attributable to UTi Worldwide Inc. common shareholders		$	0.09			$	0.10
Diluted earnings per common share attributable to UTi Worldwide Inc. common shareholders		$	0.08			$	0.10
Number of weighted average common shares outstanding used for per share calculations
Basic shares			102,110,811				100,071,923
Diluted shares			104,015,880				101,528,328

See accompanying notes to the consolidated financial statements.

Consolidated Balance Sheets
As of April 30, 2011 and January 31, 2011
(in thousands, except share amounts)

		April 30,				January 31,
		2011				2011
		(Unaudited)
ASSETS
Cash and cash equivalents		$	304,997			$	326,795
Trade receivables (net of allowance for doubtful accounts of $15,099 and $13,676 as of April 30, 2011 and January 31, 2011, respectively)			1,027,723				879,842
Deferred income taxes			22,238				20,400
Other current assets			141,874				131,295
Total current assets			1,496,832				1,358,332
Property, plant and equipment (net of accumulated depreciation of $227,602 and $206,584 as of April 30, 2011 and January 31, 2011, respectively)			205,014				175,700
Goodwill			438,610				423,974
Other intangible assets, net			98,912				91,604
Investments			1,159				1,102
Deferred income taxes			31,093				29,526
Other non-current assets			36,293				32,467
Total assets		$	2,307,913			$	2,112,705
LIABILITIES & EQUITY
Bank lines of credit		$	198,910			$	170,732
Short-term borrowings			7,724				7,238
Current portion of long-term borrowings			43,448				34,232
Current portion of capital lease obligations			16,673				16,232
Trade payables and other accrued liabilities			907,755				822,887
Income taxes payable			8,819				8,521
Deferred income taxes			3,976				3,881
Total current liabilities			1,187,305				1,063,723
Long-term borrowings, excluding current portion			72,160				61,230
Capital lease obligations, excluding current portion			19,179				19,158
Deferred income taxes			31,047				30,487
Other non-current liabilities			39,377				37,943
Commitments and contingencies
UTi Worldwide Inc. shareholders’ equity:
Common stock — ordinary shares of no par value: 102,579,346 and 101,972,483 shares issued and outstanding as of April 30, 2011 and January 31, 2011, respectively			489,193				484,884
Retained earnings			446,050				437,307
Accumulated other comprehensive income/(loss)			7,879				(35,116	)
Total UTi Worldwide Inc. shareholders’ equity			943,122				887,075
Noncontrolling interests			15,723				13,089
Total equity			958,845				900,164
Total liabilities and equity		$	2,307,913			$	2,112,705

See accompanying notes to the consolidated financial statements.

Consolidated Statements of Cash Flows
For the three months ended April 30, 2011 and 2010
(in thousands)

		Three months ended
		April 30,
		2011				2010
		(Unaudited)
OPERATING ACTIVITIES:
Net income		$	10,510			$	10,741
Adjustments to reconcile net income to net cash used in operating activities:
Share-based compensation costs			3,698				1,683
Depreciation			12,441				11,412
Amortization of intangible assets			3,455				3,344
Amortization of debt issuance costs			782				713
Deferred income taxes			(1,717	)			(859	)
Uncertain tax positions			168				145
Excess tax benefit from share-based compensation			(398	)			(251	)
Loss on disposal of property, plant and equipment			54				32
Provision for doubtful accounts			1,089				730
Other			398				239
Changes in operating assets and liabilities:
Increase in trade receivables			(94,581	)			(82,511	)
(Increase)/decrease in other assets			(5,308	)			2,465
Increase in trade payables			35,348				24,961
Decrease in accrued liabilities and other liabilities			(9,572	)			(1,324	)
Net cash used in operating activities			(43,633	)			(28,480	)
INVESTING ACTIVITIES:
Purchases of property, plant and equipment			(3,935	)			(5,064	)
Proceeds from disposal of property, plant and equipment			906				488
Purchases of software and other intangible assets			(5,153	)			(587	)
Net increase in other non-current assets			(1,620	)			(781	)
Other			(4	)			(95	)
Net cash used in investing activities			(9,806	)			(6,039	)
FINANCING ACTIVITIES:
Borrowings from bank lines of credit			28,873				1,420
Repayments of bank lines of credit			(20,177	)			(3,797	)
Net borrowings under revolving lines of credit			9,139				25,634
Net increase in short-term borrowings			57				963
Proceeds from issuance of long-term borrowings			198				55
Repayment of long-term borrowings			(1,787	)			(300	)
Repayment of capital lease obligations			(4,373	)			(7,086	)
Contingent consideration paid			(26	)			—
Acquisition of noncontrolling interest			(1,168	)			—
Dividends paid to noncontrolling interests			(157	)			(34	)
Net proceeds from issuance of ordinary shares			1,334				3,189
Excess tax benefit from share-based compensation			398				251
Net cash provided by financing activities			12,311				20,295
Effect of foreign exchange rate changes on cash and cash equivalents			19,330				4,161
Net decrease in cash and cash equivalents			(21,798	)			(10,063	)
Cash and cash equivalents at beginning of period			326,795				350,784
Cash and cash equivalents at end of period		$	304,997			$	340,721

See accompanying notes to the consolidated financial statements.

Notes to the Consolidated Financial Statements
For the three months ended April 30, 2011 and 2010 (Unaudited)

NOTE 1. Presentation of Financial Statements

Basis of Presentation. In the opinion of management, the accompanying unaudited consolidated financial statements of UTi Worldwide Inc. and its subsidiaries (the Company, we, us, or UTi) contain all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the consolidated balance sheets as of April 30, 2011 and January 31, 2011, the consolidated statements of income for the three months ended April 30, 2011 and 2010 and the consolidated statements of cash flows for the three months ended April 30, 2011 and 2010. These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial information and the instructions to Rule 10-01 of Regulation S-X of the Securities and Exchange Commission (SEC). Accordingly, they have been condensed and do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The results of operations for the three months ended April 30, 2011 are not necessarily indicative of the results of operations that may be expected for the fiscal year ending January 31, 2012 or any other future periods. These consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2011.

All amounts in the notes to the consolidated financial statements are presented in thousands except for share and per share data.

Income Taxes. Under the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 270, Interim Reporting, and ASC 740, Income Taxes, the Company is required to adjust its effective tax rate for each quarter to be consistent with its estimated annual effective tax rate. Jurisdictions with a projected loss where no tax benefit can be recognized are excluded from the calculation of the estimated annual effective tax rate. Applying the provisions of ASC 270 and ASC 740 could result in a higher or lower effective tax rate during a particular quarter, based upon the mix and timing of actual earnings versus annual projections.

The Company records a provision for estimated additional tax and interest and penalties that may result from tax authorities disputing uncertain tax positions taken at the largest amount that is greater than 50% likely of being realized. The Company recognizes accrued interest and penalties related to uncertain tax positions in interest and other expense, respectively. For further information, see Note 12, “Uncertain Tax Positions.”

Segment Reporting. The Company’s reportable business segments are (i) Freight Forwarding and (ii) Contract Logistics and Distribution. The Freight Forwarding segment includes airfreight forwarding, ocean freight forwarding, customs brokerage and other related services. The Contract Logistics and Distribution segment includes all operations providing contract logistics, distribution and other related services. Certain corporate costs, enterprise-led costs, and various holding company expenses within the group structure are presented separately.

Foreign Currency Translation. Included in other income, net, are net gains on foreign exchange of $176 and $1,033, for the three months ended April 30, 2011 and 2010, respectively.

Concentration of Credit Risks and Other. The Company maintains its primary cash accounts with established banking institutions around the world. The Company estimates that approximately $274,152 of these deposits were not insured by the Federal Deposit Insurance Corporation (FDIC) or similar entities outside of the United States (U.S.) as of April 30, 2011.

Call and Put Options. In connection with the Company’s activities in Israel, options were granted providing the Company with the right to call the minority partner’s shares of a subsidiary under certain circumstances, and also providing the minority partner with the right to call the Company’s shares of the subsidiary in the event the Company does not exercise its right, under certain circumstances, to call the minority partner’s shares. The Company records assets and liabilities which represent the difference between the estimated strike price and the estimated fair value of the attributable subsidiary equity, if the call options become exercisable. The amounts included in other non-current assets were $98 and $388 and the amounts included in other non-current liabilities were $128 and $649 at April 30, 2011 and January 31, 2011, respectively.

In connection with the Company’s activities in Indonesia, options were granted providing the Company with the right to call a minority partner’s shares of a subsidiary under certain circumstances. The Company records assets and liabilities which represent the difference between the estimated strike price and estimated fair value of the attributable subsidiary equity. The amounts included in other non-current assets were $1,780 at April 30, 2011. This amount was not material at January 31, 2011.

Pharma Property Development Agreements. During the first quarter of fiscal 2012, the Company entered into various agreements providing for the development of a logistics facility to be used in the Company’s pharmaceutical distribution business in South Africa. In addition to a property development agreement, the Company signed an agreement to purchase the property at the conclusion of the development at the project’s total cost, which cost includes interest on the financing for the project, subject to certain conditions being met, including among other items, the property having been registerable for transfer and having been ready for beneficial occupation as described under the development agreement. In addition to the other documents for the transaction, the Company also entered into a lease agreement for the property and facility following the conclusion of its development, should the property not be saleable to the Company at that time. Together these agreements are referred to as the Pharma Property Development Agreements. As of April 30, 2011, included in both property, plant and equipment, and long-term borrowings, is $20,619 under this arrangement. The amount included in long-term borrowings represents an obligation to the developer under the agreement. The Company currently estimates that its total capital commitments under this arrangement will be approximately $45,000, excluding warehouse-related equipment, and that the property development activities will be conducted over a several year period.

Fair Values of Financial Instruments. The estimated fair value of financial instruments has been determined using available market information and other appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop estimates of fair value. Therefore, the estimates are not necessarily indicative of the amounts that could be realized or would be paid in a current market exchange. The effect of using different market assumptions and estimation methodologies may be material to the estimated fair value amounts.

The Company’s principal financial instruments are cash and cash equivalents, trade receivables, bank lines of credit, short-term borrowings, trade payables and other accrued liabilities, long-term borrowings, call and put options, forward contracts and other derivative instruments. With the exception of the Company’s senior unsecured guaranteed notes and the call and put options, the carrying values of these financial instruments approximate fair values either because of the short maturities of these instruments, or because the interest rates are based upon variable reference rates. As of April 30, 2011 and January 31, 2011, the fair value of the Company’s 6.31% senior unsecured guaranteed notes was $33,607 and $33,971, respectively, compared to a book value of $33,335, respectively, for each of these periods. As discussed further in Note 11, “Borrowings” on July 9, 2009, the Company issued $55,000 of senior unsecured guaranteed notes bearing an interest rate of 8.06%. As of April 30, 2011 and January 31, 2011, the fair value of these notes was $60,078 and $60,721, respectively, compared to a book value of $55,000 for each of these periods. The call and put options are recorded at their estimated fair value. For further information, see Note 1, “Call and Put Options.”

Recent Accounting Pronouncements

Adoption of New Accounting Standards. In October 2009, the FASB issued Accounting Standards Update (ASU) 2009-13, Multiple-Deliverable Revenue Arrangements (ASU 2009-13), which amends Codification Topic 605, Revenue Recognition. This update provides amendments to the criteria for separating deliverables, measuring and allocating arrangement consideration to one or more units of accounting. This update also establishes a selling price hierarchy for determining the selling price of a deliverable. ASU 2009-13 is effective for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. The Company’s current implementation of this standard on February 1, 2011 did not have a significant impact on its consolidated statements of operations and financial position.

Standards Issued But Not Yet Effective. Other new pronouncements issued but not effective until after April 30, 2011 are not expected to have a material impact on the Company’s consolidated financial statements.

Proposed Amendments to Current Accounting Standards. Updates to existing accounting standards and exposure drafts, such as exposure drafts related to revenue recognition, lease accounting, loss contingencies, comprehensive income and fair value measurements, that have been issued or proposed by FASB or other standards setting bodies that do not require adoption until a future date, are being evaluated by the Company to determine whether adoption will have a material impact on the Company’s consolidated financial statements.

Reclassifications

In the consolidated statements of cash flows, the Company has presented the purchases of software and other intangible assets as a separate line item within cash flow from investing activities for the three months ended April 30, 2011 and 2010. Historically, these amounts were included within the purchases of property, plant and equipment line item within investing activities. These changes did not impact cash flows from operating activities, investing activities or any other financial statement information.

NOTE 2. Acquisitions

All acquired businesses are primarily engaged in providing logistics management, including international air and ocean freight forwarding, customs brokerage, contract logistics services and transportation management services. The results of acquired businesses have been included in the Company’s consolidated financial statements from the effective dates of acquisition. The Company did not complete any acquisitions during the three months ended April 30, 2011.

NOTE 3. Earnings per Share

Earnings per share are calculated as follows:

		Three months ended
		April 30,
		2011				2010
Amounts attributable to UTi Worldwide Inc. common shareholders:
Net income		$	8,743			$	10,074
Weighted average number of ordinary shares			102,110,811				100,071,923
Incremental shares required for diluted earnings per share related to stock options/restricted share units			1,905,069				1,456,405
Diluted weighted average number of ordinary shares			104,015,880				101,528,328
Basic earnings per common share attributable to UTi Worldwide Inc. common shareholders		$	0.09			$	0.10
Diluted earnings per common share attributable to UTi Worldwide Inc. common shareholders		$	0.08			$	0.10

Weighted-average diluted shares outstanding exclude 1,158,579 and 3,065,268 shares for the three months ended April 30, 2011 and 2010, respectively, because such shares represent stock options that have exercise prices in excess of the average market price of the Company’s common stock during the relevant period, and were therefore anti-dilutive.

NOTE 4. Equity

Certain information regarding changes in equity and noncontrolling interests are as follows:

		UTi Worldwide Inc.’s Equity
										Accumulated
										other
		Common				Retained				comprehensive				Noncontrolling
		stock				earnings				income/(loss)				interests				Total
Balance at February 1, 2011		$	484,884			$	437,307			$	(35,116	)		$	13,089			$	900,164
Employee share-based compensation plans			5,430				—				—				—				5,430
Net income			—				8,743				—				1,767				10,510
Foreign currency translation adjustment and other			—				—				42,995				1,024				44,019
Acquisition of noncontrolling interest			(1,121	)			—				—				—				(1,121	)
Distributions to noncontrolling interests			—				—				—				(157	)			(157	)
Balance at April 30, 2011		$	489,193			$	446,050			$	7,879			$	15,723			$	958,845
Balance at February 1, 2010		$	464,731			$	373,548			$	(46,904	)		$	22,907			$	814,282
Employee share-based compensation plans			5,123				—				—				—				5,123
Net income			—				10,074				—				667				10,741
Foreign currency translation adjustment and other			—				—				6,612				857				7,469
Distributions to noncontrolling interests			—				—				—				(34	)			(34	)
Balance at April 30, 2010		$	469,854			$	383,622			$	(40,292	)		$	24,397			$	837,581

Other comprehensive income is comprised of the following:

		Three months ended
		April 30,
		2011				2010
Net income		$	10,510			$	10,741
Other comprehensive income, net of tax:
Foreign currency translation adjustments and other			44,019				7,469
Comprehensive income			54,529				18,210
Comprehensive income attributable to noncontrolling interests			2,791				1,524
Comprehensive income attributable to UTi Worldwide Inc.		$	51,738			$	16,686

NOTE 5. Segment Reporting

Certain information regarding the Company’s operations by segment is summarized as follows:

		Three months ended April 30, 2011
						Contract
						Logistics
		Freight				and
		Forwarding				Distribution				Corporate				Total
Revenues		$	829,753			$	368,952			$	—			$	1,198,705
Purchased transportation costs			645,250				142,878				—				788,128
Staff costs			109,667				116,713				6,965				233,345
Depreciation			4,388				7,394				659				12,441
Amortization of intangible assets			1,086				1,719				650				3,455
Severance and restructuring charges			1,973				2,876				—				4,849
Other operating expenses			48,664				83,756				5,274				137,694
Total operating expenses			811,028				355,336				13,548				1,179,912
Operating income/(loss)		$	18,725			$	13,616			$	(13,548	)			18,793
Interest income															4,228
Interest expense															(8,452	)
Other income, net															176
Pretax income															14,745
Provision for income taxes															4,235
Net income															10,510
Net income attributable to noncontrolling interests															1,767
Net income attributable to UTi Worldwide Inc.														$	8,743
Capital expenditures		$	5,003			$	27,142			$	2,670			$	34,815
Internally-developed software		$	—			$	141			$	6,799			$	6,940
Segment assets		$	1,353,473			$	847,518			$	106,922			$	2,307,913

		Three months ended April 30, 2010
						Contract
						Logistics
		Freight				and
		Forwarding				Distribution				Corporate				Total
Revenues		$	721,774			$	333,382			$	—			$	1,055,156
Purchased transportation costs			562,335				127,073				—				689,408
Staff costs			94,390				106,977				5,634				207,001
Depreciation			3,832				7,228				352				11,412
Amortization of intangible assets			1,030				2,314				—				3,344
Other operating expenses			46,370				73,024				5,645				125,039
Total operating expenses			707,957				316,616				11,631				1,036,204
Operating income/(loss)		$	13,817			$	16,766			$	(11,631	)			18,952
Interest income															2,559
Interest expense															(6,678	)
Other income, net															844
Pretax income															15,677
Provision for income taxes															4,936
Net income															10,741
Net income attributable to noncontrolling interests															667
Net income attributable to UTi Worldwide Inc.														$	10,074
Capital expenditures		$	3,734			$	2,960			$	4,070			$	10,764
Internally-developed software		$	—			$	—			$	587			$	587
Segment assets		$	1,134,381			$	765,284			$	117,151			$	2,016,816

For segment reporting purposes by geographic region, airfreight and ocean freight forwarding revenues for the movement of goods is attributed to the country where the shipment originates. Revenues for all other services, including contract logistics services, are attributed to the country where the services are performed.

The following table shows the revenues attributable to the Company’s geographic regions, EMENA (which is comprised of Europe, Middle East and North Africa), the Americas, Asia Pacific and Africa:

		Three months ended April 30,
		2011												2010
						Contract												Contract
						Logistics												Logistics
		Freight				and								Freight				and
		Forwarding				Distribution								Forwarding				Distribution
		Revenue				Revenue				Total				Revenue				Revenue				Total
EMENA		$	273,831			$	56,471			$	330,302			$	230,394			$	65,194			$	295,588
Americas			176,057				202,725				378,782				150,100				173,304				323,404
Asia Pacific			257,588				13,046				270,634				255,062				9,187				264,249
Africa			122,277				96,710				218,987				86,218				85,697				171,915
Total		$	829,753			$	368,952			$	1,198,705			$	721,774			$	333,382			$	1,055,156

The following table shows revenues and purchased transportation costs attributable to the Company’s principal services:

		Three months ended
		April 30,
		2011				2010
Revenues:
Airfreight forwarding		$	439,029			$	367,692
Ocean freight forwarding			281,578				271,832
Customs brokerage			30,253				25,435
Contract logistics			198,979				177,010
Distribution			129,353				117,374
Other			119,513				95,813
Total		$	1,198,705			$	1,055,156
Purchased transportation costs:
Airfreight forwarding		$	350,177			$	293,542
Ocean freight forwarding			234,235				227,186
Customs brokerage			1,554				1,570
Contract logistics			45,153				35,723
Distribution			87,859				79,117
Other			69,150				52,270
Total		$	788,128			$	689,408

NOTE 6. Goodwill and Other Intangible Assets

Goodwill. The changes in the carrying amount of goodwill by reportable segment for the three months ended April 30, 2011 are as follows:

						Contract
						Logistics
		Freight				and
		Forwarding				Distribution				Total
Balance at February 1, 2011		$	174,287			$	249,687			$	423,974
Foreign currency translation			8,826				5,810				14,636
Balance at April 30, 2011		$	183,113			$	255,497			$	438,610

In accordance with ASC 350, Intangibles — Goodwill and Other, the Company reviews goodwill and other intangible assets for impairment annually at the end of the second quarter of each fiscal year, or more often if events or circumstances indicate that impairment may have occurred. In addition to the testing above, management considers whether certain impairment indicators are present in assessing whether the carrying value of goodwill and other intangible assets may be impaired. No impairment was recognized during the three months ended April 30, 2011 and the year ended January 31, 2011. The Company’s accumulated goodwill impairment charge since its adoption of ASC 350 was $100,494 at April 30, 2011 and January 31, 2011.

Other Intangible Assets. Amortizable intangible assets at April 30, 2011 and January 31, 2011 relate primarily to the estimated fair values of customer relationships acquired with respect to certain acquisitions and software applications internally-developed by the Company for internal use. The carrying values of amortizable intangible assets at April 30, 2011 and January 31, 2011 were as follows:

		Gross								Net				Weighted
		carrying				Accumulated				carrying				average/life
		Value				amortization				value				years
As of April 30, 2011:
Customer relationships		$	113,329			$	(54,170	)		$	59,159				9.5
Internally-developed software			39,531				(2,263	)			37,268				4.7
Non-compete agreements			898				(712	)			186				4.7
Other			5,295				(3,920	)			1,375				3.8
Total		$	159,053			$	(61,065	)		$	97,988
As of January 31, 2011:
Customer relationships		$	106,530			$	(48,330	)		$	58,200				9.5
Internally-developed software			32,146				(1,404	)			30,742				4.6
Non-compete agreements			3,348				(3,119	)			229				3.0
Other			5,031				(3,518	)			1,513				3.8
Total		$	147,055			$	(56,371	)		$	90,684

Amortization expense totaled $3,455 and $3,344 for the three months ended April 30, 2011 and 2010, respectively. The following table shows the expected amortization expense for these intangible assets for the current fiscal year and each of the next four fiscal years ending January 31:

2012		$	16,854
2013			20,759
2014			18,693
2015			15,476
2016			12,911

In addition to the amortizable intangible assets, the Company also had $924 and $920 of intangible assets not subject to amortization at April 30, 2011 and January 31, 2011, respectively, related primarily to acquired trade names.

NOTE 7. Supplemental Cash Flow Information

The following table shows the supplemental cash flow information and supplemental non-cash investing and financing activities:

		Three months ended
		April 30,
		2011				2010
Net cash paid for:
Interest		$	9,896			$	6,635
Income taxes			8,104				3,991
Non-cash activities:
Capital lease obligations incurred to acquire assets			3,688				5,113
Long-term obligations incurred to acquire assets pursuant to the Pharma Property Development Agreements			20,619				—

UTi is a holding company which relies on dividends or advances from its subsidiaries to meet its financial obligations and to pay dividends on its ordinary shares. The ability of UTi’s subsidiaries to pay dividends to the Company and UTi’s ability to receive distributions is subject to applicable local law and other restrictions including, but not limited to, applicable tax laws and limitations contained in some of the Company’s bank credit facilities and in the note purchase agreements for the Company’s outstanding senior notes. Such laws and restrictions could limit the payment of dividends and distributions to the Company which would restrict UTi’s ability to continue operations. In general, UTi’s subsidiaries cannot pay dividends in excess of their retained earnings and most countries require that the subsidiaries pay a distribution tax on all dividends paid. In addition, the amount of dividends that UTi’s subsidiaries could declare may be limited in certain countries by exchange controls. Total net assets which may not be transferred to the Company in the form of loans, advances, or cash dividends by the Company’s subsidiaries without the consent of a third party, were less than 10% of the Company’s consolidated total net assets as of the end of the most recent fiscal year.

NOTE 8. Contingencies

In connection with ASC 450, Contingencies, the Company has not accrued for a loss contingency relating to any of the investigations and legal proceedings disclosed below because we believe that, although unfavorable outcomes in the investigations or proceedings may be reasonably possible, they are not considered by our management to be probable or reasonably estimable.

From time to time, claims are made against us or we may make claims against others, including in the ordinary course of our business, which could result in litigation. Claims and associated litigation are subject to inherent uncertainties and unfavorable outcomes could occur, such as monetary damages, fines, penalties or injunctions prohibiting us from engaging in certain activities. The occurrence of an unfavorable outcome in any specific period could have a material adverse affect on our consolidated results of operations for that period or future periods. As of the date of these consolidated financial statements, we are not a party to any material litigation except as described below.

Industry-Wide Anti-Trust Investigations. In 2007, in connection with the U.S. Department of Justice’s (U.S. DOJ) investigation into the pricing practices in the international freight forwarding industry, we responded to a grand jury subpoena requesting documents and the U.S. DOJ executed a search warrant on us at our offices in Long Beach, California, and served one of our subsidiaries with a subpoena requesting numerous documents and other materials. In addition to its previous request for documents regarding air freight forwarding, the U.S. DOJ also requested that we produce various documents regarding ocean freight forwarding. We believe we are a subject of the U.S. DOJ investigation.

In 2008, 2009 and 2011, we responded to requests for information issued by the European Commission (EC) requesting information and records relating to the EC’s investigation of alleged anti-competitive behavior relating to freight forwarding services in the European Union/European Economic Area. In February 2010, in connection with the EC’s ongoing investigation, the EC sent a Statement of Objections to us and a number of other freight forwarding and logistics providers. The Statement of Objections alleges infringements of European Union competition law with respect to various surcharges. We responded in writing to the EC’s Statement of Objections in April 2010. We attended a hearing in July 2010 to discuss our position with the EC officials.

In May 2009, we learned that the Brazilian Ministry of Justice was investigating possible alleged cartel activity in the international air and ocean freight forwarding market. On August 6, 2010, we received notice of an administrative proceeding from the Brazilian Ministry of Justice. The administrative proceeding initiates a proceeding against the Company, its Brazilian subsidiary and two of its employees, among many other forwarders and their employees, alleging possible anti-competitive behavior contrary to Brazilian rules on competition. The Company intends to respond to this proceeding within 30 days after the last defendant in this global proceeding has been notified.

In November 2009, one of our subsidiaries received a summons from the South African Competition Commission (“SACC”) requesting certain information and records in connection with its investigation of alleged anti-competitive behavior relating to the market for air freight forwarding services in South Africa. In January 2010, we responded to this request. On April 14, 2011, one of the Company’s subsidiaries was notified that the SACC has decided to refer a complaint against various freight forwarding companies, including such subsidiary, to the South African Competition Tribunal (the “Tribunal”) for adjudication. The Commission’s complaint stems from its previously disclosed investigation into alleged anti-competitive behavior by a number of freight forwarders and alleges infringements of South African competition law with respect to certain surcharges and fees.

We continue to receive additional requests for information, documents and interviews from various governmental agencies with respect to these investigations, and we have provided, and expect to continue to provide in the future, further responses as a result of such requests.

We (along with several other global logistics providers) have been named as a defendant in a federal antitrust class action lawsuit filed on January 3, 2008 in the U.S. District Court of the Eastern District of New York (Precision Associates, Inc., et. al. v. Panalpina World Transport (Holding) Ltd., et. al.). This lawsuit alleges that the defendants engaged in various forms of anti-competitive practices and seeks an unspecified amount of treble monetary damages and injunctive relief under U.S. antitrust laws.

We have incurred, and we expect to continue to incur, significant legal fees and other costs in connection with these governmental investigations and lawsuits. If the U.S. DOJ, the EC, the SACC or any other regulatory body concludes that we have engaged in anti-competitive behavior, we could incur significant additional legal fees and other costs, which could include fines and/or penalties, which may be material to our consolidated financial statements.

South Africa Revenue Service Matter. The Company is involved in a dispute with the South African Revenue Service where the Company makes use of “owner drivers” for the collection and delivery of cargo. The South African Revenue Service is claiming that the Company is liable for employee taxes in respect of these owner drivers. The Company has objected to this claim and, together with its legal and tax advisors, believes that the owner drivers are not “employees” and that accordingly there is no tax liability in respect of these owner drivers in terms of the South African income tax act. Historically, this matter related to the years 2002 and 2003. In March 2011, the South African Revenue Service extended the years under review to include the years 2006 and 2007. The aggregate amount claimed by the South African Revenue Service for all years under review is approximately $10,901 based on exchange rates as of April 30, 2011. The tax years 2004 and 2005 are not under assessment.

Per Transport Litigation. The Company is involved in litigation in Italy (in various cases filed in 2000 in the Court of Milan) and England (in a case filed on April 13, 2000 in the High Court of Justice, London) with the former ultimate owner of Per Transport SpA and related entities, in connection with its April 1998 acquisition of Per Transport SpA and its subsequent termination of the employment services of the former ultimate owner as a consultant. The suits seek monetary damages, including compensation for termination of the former ultimate owner’s consulting agreement. The Company has brought counter-claims for monetary damages in relation to warranty claims under the purchase agreement. The total of all such actual and potential claims, albeit duplicated in several proceedings, is approximately $14,087 based on exchange rates as of April 30, 2011. In connection with the Per Transport litigation, legal proceedings have also been brought against a former director and officer of the Company and a current employee of the Company. The Company has agreed to indemnify these individuals in connection with these proceedings.

NOTE 9. Defined Benefit Plans

The Company sponsors defined benefit plans for eligible employees in certain countries. Under these plans, employees are entitled to retirement benefits based on years of service and the employee’s final average salary on attainment of qualifying retirement age.

Net periodic benefit cost for the Company’s defined benefit plans consists of:

		Three months ended
		April 30,
		2011				2010
Service cost		$	329			$	139
Interest cost			523				462
Expected return on assets			(369	)			(309	)
Amortization of net actuarial loss			30				17
Net periodic benefit cost		$	513			$	309

For the three months ended April 30, 2011 and 2010, the Company contributed approximately $684 and $382, respectively, to its defined benefit plans.

NOTE 10. Share-Based Compensation

On June 8, 2009, the Company’s shareholders approved the 2009 Long Term Incentive Plan (2009 LTIP). The plan provides for the issuance of a variety of awards, including stock options, share appreciation rights (sometimes referred to as SARs), restricted shares, restricted share units (RSUs), deferred share units and performance awards. A total of 6,250,000 shares were originally reserved for issuance under the 2009 LTIP, subject to adjustments as provided for in the plan.

In addition to the 2009 LTIP, at April 30, 2011, the Company had stock based compensation awards outstanding under the following plans: the 2004 Long Term Incentive Plan (2004 LTIP), the 2000 Stock Option Plan, the 2000 Employee Share Purchase Plan, the 2004 Non-Employee Directors Share Incentive Plan (2004 Directors Incentive Plan) and the Non-Employee Directors Share Option Plan (Directors Option Plan).

Under the 2000 Employee Share Purchase Plan (ESPP), eligible employees may purchase shares of the Company’s stock at the end of an offering period through payroll deductions in an amount not to exceed 10% of an employee’s annual base compensation subject to an annual maximum of $25. Prior to February 1, 2011, the purchase price under the plan was set at 85% of the fair market value of the Company’s ordinary shares on the first day of each offering period. Commencing February 1, 2011, the purchase price under the plan was set at 100% of the fair market value of the Company’s ordinary shares on the last day of each offering period.

Under the 2004 Directors Incentive Plan, the Company may grant non-qualified stock options, share appreciation rights, restricted shares, RSUs and deferred share units.

Since the adoption of the 2009 LTIP, no additional awards may be made pursuant to the 2004 LTIP. In addition, the Company no longer grants awards under the 2000 Stock Option Plan and the Directors Option Plan. Vesting of these awards occurs over different periods, depending on the terms of the individual award, however expenses relating to these awards are all recognized on a straight line basis over the applicable vesting period.

Employee Share-Based Compensation Activity

A summary of share-based compensation activity applicable to employee shared-based plans for the three months ended April 30, 2011 is as follows:

		2009 LTIP
														Weighted
		Shares				Weighted				Restricted				average
		subject to				average				share				grant date
		stock options				exercise price				units				fair value
Outstanding balance at February 1, 2011			8,408			$	12.58				1,016,552			$	16.95
Granted			180,962				20.07				787,038				20.07
Exercised/vested			—				—				(205,130	)			16.98
Cancelled/forfeited			—				—				(3,595	)			13.11
Outstanding balance at April 30, 2011			189,370			$	19.74				1,594,865			$	18.49

		2004 LTIP
														Weighted
		Shares				Weighted				Restricted				average
		subject to				average				share				grant date
		stock options				exercise price				units				fair value
Outstanding balance at February 1, 2011			1,582,102			$	20.51				1,319,950			$	18.05
Exercised/vested			(53,550	)			16.32				(255,687	)			15.45
Cancelled/forfeited			—				—				(5,043	)			27.84
Outstanding balance at April 30, 2011			1,528,552			$	20.65				1,059,220			$	18.68

		2000 Stock Option Plan
		Shares				Weighted
		subject to				average
		stock options				exercise price
Outstanding balance at February 1, 2011			570,775			$	8.57
Exercised			(79,125	)			8.90
Cancelled/forfeited			—				—
Outstanding balance at April 30, 2011			491,650			$	8.57

Non-Employee Share-Based Compensation Activity. A summary of share-based compensation activity applicable to the non-employee director share-based plans for the three months ended April 30, 2011 is as follows:

		2004
		Directors Incentive Plan								Directors Option Plan
						Weighted
		Restricted				average				Shares				Weighted
		share				grant date				subject to				average
		units				fair value				stock options				fair value
Outstanding balance at February 1, 2011			39,970			$	14.01				72,000			$	10.80
Outstanding balance at April 30, 2011			39,970			$	14.01				72,000			$	10.80

In connection with its share-based compensation plans, the Company recorded approximately $3,698 and $1,683 of share-based compensation expense for the three months ended April 30, 2011 and 2010, respectively. As of April 30, 2011, the Company had approximately $29,543 of total unrecognized compensation related to share-based compensation to be expensed through April 2016.

NOTE 11. Borrowings

Bank Lines of Credit. The Company utilizes a number of financial institutions to provide it with borrowings, letters of credit, guarantees and working capital facilities. Certain of these credit facilities are used for working capital and for issuing letters of credit to support the working capital and operational needs of various subsidiaries and to support various customs bonds and guarantees and funds for general corporate purposes. In other cases, customs bonds and guarantees are issued directly by various financial institutions. In some cases, the use of these particular borrowings, letter of credit, guarantee, and working capital facilities is restricted to the country in which they originated. These particular borrowings, letter of credit, guarantee, and working capital facilities may restrict distributions by the subsidiary operating in such country.

The following table presents information about the facility limits, aggregate amounts of borrowings outstanding as well as availability for borrowings under various bank lines and letters of credit and other credit facilities as of April 30, 2011:

										South
										African												Other
		ABN/RBS				Nedbank				Facilities1				US Facility2				Spain Facility3				Facilities4				Total
Credit facility limit		$	50,000			$	61,000			$	145,383			$	25,000			$	25,000			$	147,084			$	453,467
Facility usage for bank lines of credit		$	9,233			$	57,493			$	57			$	25,000			$	24,332			$	82,795			$	198,910
Letters of credit and guarantees outstanding			42,503				6,631				81,282				—				—				53,530				183,946
Total facility Usage		$	51,736			$	64,124			$	81,339			$	25,000			$	24,332			$	136,325			$	382,856
Available, unused capacity		$	—			$	—			$	64,044			$	—			$	668			$	10,759			$	75,471
Available for cash withdrawal		$	—			$	—			$	60,503			$	—			$	668			$	10,759			$	71,930

A significant number of the Company’s subsidiaries participate in a cash pooling arrangement administered by a European-based bank, which is used to fund individual subsidiaries’ liquidity needs. The cash pooling arrangement has no stated maturity date and yields and bears interest at varying rates based on a base rate plus or minus a margin as determined by the type of currency deposited or withdrawn from the cash pool. The facility does not permit cash withdrawals in excess of cash deposits on a global basis. At April 30, 2011, cash deposits exceeded cash withdrawals. Cash deposits of $10,923 and cash withdrawals of $1,508 are included in cash and cash deposits and in bank lines of credit at April 30, 2011.

ABN/RBS Letter of Credit Agreement. On July 9, 2009, the Company and certain of its subsidiaries entered into a letter of credit facility pursuant to an agreement with ABN AMRO N.V. (ABN) and The Royal Bank of Scotland plc. (the “ABN/RBS Letter of Credit Agreement”). The ABN/RBS Letter of Credit Agreement provides for an aggregate availability of up to $50,000 in letters of credit as of April 30, 2011. As of April 30, 2011, the aggregate amount of letters of credit outstanding under this facility exceeded the facility limit by approximately $1,736 and the bank has the right, if it desires, to require collateral for such excess. The ABN/RBS Letter of Credit Agreement provided for two separate letter of credit facilities, which are referred to as the ABN Letter of Credit Facility and the RBS Letter of Credit Facility. The ABN Letter of Credit Facility matures on July 9, 2011. The RBS Letter of Credit Facility matured on December 31, 2009. The Company’s obligations under the ABN/RBS Letter of Credit Agreement are guaranteed by the Company and selected subsidiaries.

Nedbank Letter of Credit Agreement. On July 9, 2009, the Company and certain of its subsidiaries also entered into a letter of credit facility pursuant to an agreement (the “Nedbank Letter of Credit Agreement”) with Nedbank Limited, acting through its London Branch. On July 23, 2010, UTi Worldwide Inc. (UTi) and certain of its subsidiaries as guarantors (collectively with UTi, the Obligors) entered into an amendment to the Nedbank Letter of Credit Agreement which amendment, among other things increased the aggregate availability under the Nedbank Letter of Credit Agreement by $25,000, from $36,000 to $61,000. As of April 30, 2011, the aggregate amount of letters of credit outstanding under this facility exceeded the facility limit by approximately $3,124 and the bank has the right, if it desires, to require collateral for such excess. In addition, the amendment provided that in no event shall any letter of credit issued after July 23, 2010 under the Nedbank Letter of Credit Agreement have an expiration date later than July 9, 2011 unless otherwise agreed to by Nedbank. The Nedbank Letter of Credit Agreement matures on July 9, 2011. The Company’s obligations under the Nedbank Letter of Credit Agreement are guaranteed by the Company and selected subsidiaries.

Together, the Company refers to the ABN/RBS Letter of Credit Agreement and the Nedbank Letter of Credit Agreement as the “Letter of Credit Agreements”. Pursuant to the terms of the Letter of Credit Agreements, the Company is charged fees relating to, among other things, the issuance of letters of credit, the aggregate amount of letters of credit outstanding, and the unused portions of these facilities, all at the rates specified in the applicable agreement.

South African Facilities Agreement. On July 9, 2009, certain of the Company’s subsidiaries operating in South Africa entered into a South African credit facility pursuant to an agreement (the “South African Facilities Agreement”) with Nedbank Limited, acting through its Corporate Banking Division. The South African Facilities Agreement provides for a 650,000 South African rand revolving credit facility, which is comprised of a 400,000 South African rand working capital facility and a 250,000 South African rand letter of credit, guarantee and forward exchange contract facility. The South African Facilities Agreement also provides the Company’s South African operations with a 150,000 South African rand revolving asset-based finance facility. The obligations of the Company’s subsidiaries under the South African Facilities Agreement are guaranteed by selected subsidiaries registered in South Africa. In addition, certain of the Company’s operating assets in South Africa, and the rights and interests of the South African branch of one of our subsidiaries in various intercompany loans made to a South African subsidiary and to a South African partnership, are pledged as collateral under the South African Facilities Agreement. A portion of the availability under the South African Facilities Agreement expires in July 2012 and the remainder expires in July 2014.

Overdrafts under the South African working capital facility bear interest at a rate per annum equal to Nedbank’s publicly quoted prime rate minus 1%. The per annum interest rate payable in respect of foreign currency accounts is generally at the London Interbank Offered Rate (LIBOR), or with respect to a foreign currency account in euro, the Euro Interbank Offered Rate (EURIBOR), plus the lender’s cost of funds (to the extent greater than LIBOR or EURIBOR, as applicable), plus 3%. Instruments issued under the letter of credit, guarantee and forward exchange contract facility bear interest at a rate to be agreed upon in writing by the Company’s subsidiaries party to the South African Facilities Agreement and Nedbank.

In addition to the facilities described above, the South African entities have obtained customs bonds to support their customs and duties obligations to the South African customs authorities. These customs bonds are issued by South African registered insurance companies. As of April 30, 2011 the value of these contingent liabilities was $46,972.

During the second quarter ended July 31, 2010, the Company entered into a number of new credit facilities with aggregate borrowing credit facility limits of approximately $65,000. Such facilities include those entered into by the Company’s subsidiaries in the U.S. and Spain as well as a borrowing by the parent company, UTi Worldwide, Inc. and generally expire on various dates in calendar 2011 and bear interest at rates determined based on certain benchmark interest rates plus a margin as specified in the underlying agreements. Total borrowings outstanding under such facilities totaled approximately $64,332 at April 30, 2011.

Cash Pooling Arrangements. A significant number of our subsidiaries participate in a cash pooling arrangement which is used by us to fund liquidity needs of the subsidiaries. The cash pooling arrangement has no stated maturity date and yields and bears interest at varying rates. The facility does not permit aggregate outstanding withdrawals by our subsidiaries under the arrangement to exceed the aggregate amount of cash deposits by our subsidiaries in the arrangement at any one time, as determined on a global basis. At April 30, 2011, cash deposits exceeded cash withdrawals. Under this arrangement, cash withdrawals of $1,508 are included in bank lines of credit and cash deposits of $10,923 are included in cash and cash equivalents on our balance sheet at April 30, 2011.

In addition to the credit, letter of credit, and guarantee facilities provided under the Letter of Credit Agreements and the South African Facilities Agreement, the Company utilizes a number of other financial institutions to provide it with incremental letter of credit, guarantee and working capital capacity, certain of which are working capital and credit facilities, and certain of which are customs bonds and guarantees which are issued by various financial institutions. In some cases, the use of these particular letter of credit, guarantee and working capital facilities are restricted to the country in which they originated. These particular letter of credit, guarantee, and working capital facilities may restrict distributions by the subsidiary operating in the country.

Short-term Borrowings. The Company also has a number of short-term borrowings issued by various parties, not covered under the facilities listed above. The total of such bank borrowings at April 30, 2011 and January 31, 2011 was $7,724, and $7,238 respectively. Included in short-term borrowings is a loan from a shipping services company of $4,417 and $4,042 as of April 30, 2011 and January 31, 2011, respectively.

The maximum and average borrowings against bank lines of credit during first quarter of fiscal 2012 were $306,608 and $262,408, respectively. The maximum and average borrowings against bank lines of credit during first quarter of fiscal 2011 were $195,268 and $151,917, respectively.

Long-term Borrowings. The following table presents information about the aggregate amount of the Company’s indebtedness pursuant to its outstanding senior unsecured guaranteed notes as of April 30, 2011:

		2006 Note				2009 Note
		Purchase				Purchase				Other
		Agreement				Agreement				Borrowings				Total
Current portion of long-term borrowings		$	33,335			$	9,167			$	946			$	43,448
Long-term borrowings, excluding current portion			—				45,833				26,327				72,160
Total		$	33,335			$	55,000			$	27,273			$	115,608

2009 Note Purchase Agreement. On July 9, 2009, the Company issued $55,000 of senior unsecured guaranteed notes (the “2009 Senior Notes”) under a note purchase agreement (the “2009 Note Purchase Agreement”), entered into among UTi, certain of its subsidiaries as guarantors and the purchasers named therein. The 2009 Senior Notes bear interest at a rate of 8.06% per annum, payable semi-annually, on the 9th day of February and August. The Company is required to repay approximately $9,167, or such lesser principal amount as shall then be outstanding, on February 9, 2012 and each February 9th and August 9th thereafter up to and including August 9, 2014. The 2009 Senior Notes mature on August 9, 2014. The Company’s obligations under the 2009 Senior Notes and the 2009 Note Purchase Agreement are guaranteed by the Company and selected subsidiaries. As of April 30, 2011, the principal amount outstanding under the 2009 Senior Notes was $55,000, of which $45,833 is included in long-term bank borrowings on our balance sheet.

2006 Note Purchase Agreement. On July 13, 2006, the Company issued $200,000 of senior unsecured guaranteed notes (the “2006 Senior Notes” and, together with the 2009 Senior Notes, the “Senior Notes”) under a note purchase agreement (the “2006 Note Purchase Agreement”, and together with the 2009 Note Purchase Agreement, the “Note Purchase Agreements”), entered into among UTi, certain of its subsidiaries as guarantors and the purchasers named therein. The 2006 Senior Notes bear interest at a rate of 6.31% per annum, payable semi-annually, on the 13th day of each January and July. The Company is required to repay approximately $33,333, or such lesser principal amount as shall then be outstanding, on each January 13th and July 13th up to and including July 13, 2011. The 2006 Senior Notes mature on July 13, 2011. The Company’s obligations under the 2006 Senior Notes and the 2006 Note Purchase Agreement are guaranteed by the Company and selected subsidiaries. As of April 30, 2011, the principal amount outstanding under the 2006 Senior Notes was approximately $33,335 and is included in the current portion of long-term bank borrowings in the consolidated balance sheets.

The Letter of Credit Agreements, the South African Facilities Agreement, and the Note Purchase Agreements require the Company to comply with financial and other covenants and certain change of control provisions. Some of the covenants include maintaining a specified net worth, maintaining a specified ratio of total debt to consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) and minimum interest charge coverage requirements, among others. Should the Company fail to comply with these covenants and be unable to obtain any necessary amendments or waivers, all or a portion of the obligations under the Senior Notes, the Letter of Credit Agreements and the South African Facilities Agreement could become immediately due and payable and the Letter of Credit Agreements and the South African Facilities Agreement could be terminated and the credit, letter of credit, and guarantee facilities provided thereunder would no longer be available. The Company was in compliance with all the covenants set forth in the Note Purchase Agreements, the Letter of Credit Agreements and the South African Facilities Agreement as of April 30, 2011.

Furthermore, the Letter of Credit Agreements, the South African Facilities Agreement, and the Note Purchase Agreements each contain cross-default provisions with respect to other indebtedness, giving the lenders under the Letter of Credit Agreements and the South African Facilities Agreement and the note holders under the Note Purchase Agreements the right to declare a default if the Company defaults under other indebtedness in certain circumstances.

The Company intends to replace, refinance or renew its various credit, letters of credit and guarantee facilities before their applicable maturity dates. The Company is in various stages of discussions and negotiations with potential lenders with respect to replacing its facilities which come due in 2011. No assurances can be given that the Company will be able to replace, refinance or renew such facilities and indebtedness or obtain additional financing on terms which the Company considers acceptable, or at all. Changes in the credit markets could adversely affect the terms upon which the Company is able to replace, renew or refinance such facilities and obtain additional indebtedness or other replacement financing. The Company’s short-term or long-term borrowing costs and aggregate outstanding indebtedness could increase as a result of any replacement, renewal or refinancing of its credit facilities and other indebtedness and its efforts to obtain additional financing.

Pharma Property Development Agreements. In connection with the Pharma Property Development Agreements, as of April 30, 2011, the Company has included $20,619 in long-term borrowings as a result of this arrangement. Pursuant to the development agreement, $9,513 of borrowings bear interest at a rate per annum equal to Nedbank’s publicly quoted prime rate, and the remainder of the borrowings bear interest at a rate per annum equal to Nedbank’s publicly quoted prime rate minus 0.8%. Upon completion of the development agreement, the Company intends to replace the borrowings under this agreement with a long-term replacement financing.

NOTE 12. Uncertain Tax Positions

A reconciliation of the total amounts of unrecognized tax positions and interest recognized in other non-current liabilities at the beginning and end of the period is as follows:

		Uncertain
		Tax
		Positions				Interest
Balance at February 1, 2011		$	5,508			$	1,626
Interest			—				168
Foreign currency translation			244				71
Balance at April 30, 2011		$	5,752			$	1,865

The Company recognizes interest and penalties related to uncertain tax positions as interest and other expense, respectively. The total amount of unrecognized tax benefits that would favorably affect our effective tax rate if recognized was $5,488 as of April 30, 2011. Tax years 2006 through 2010 generally remain open to examination by major taxing jurisdictions in which we operate. In addition, previously filed tax returns are under review in various other countries in which we operate. However, as a result of the expiration of the statute of limitations in various jurisdictions, it is reasonably possible that the total amounts of unrecognized tax benefits as of April 30, 2011 will decrease by up to $1,568 during the next twelve months. This reduction would have a favorable impact on the Company’s provision for income taxes.

NOTE 13. Fair Value Disclosures

Fair Value Measurements on Recurring Basis. The Company measures the fair value of certain assets and liabilities on a recurring basis based upon a fair value hierarchy in accordance with ASC 820, Fair Value Measurements and Disclosures, as follows:

•

Level 1 — Quoted prices in active markets for identical assets or liabilities;

•

Level 2 — Observable market data, including quoted prices for similar assets and liabilities, and inputs other than quoted prices that are observable, such as interest rates and yield curves; and

•

Level 3 — Unobservable data reflecting the Company’s own assumptions, where there is little or no market activity for the asset or liability.

The following table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis as of April 30, 2011 and January 31, 2011 and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value:

		Fair Value Measurement at Reporting Date Using:
						Quoted Prices
						in Active				Significant
						Markets for				Other
						Identical				Observable				Significant
						Assets				Inputs				Unobservable
		Total				(Level 1)				(Level 2)				Inputs (Level 3)
Balance at April 30, 2011:
Assets
Cash and cash equivalents		$	304,997			$	304,997			$	—			$	—
Forward exchange contracts			436				—				436				—
Other			1,878				—				—				1,878
Total		$	307,311			$	304,997			$	436			$	1,878
Liabilities
Forward exchange contracts		$	233			$	—			$	233			$	—
Other			128				—				—				128
Total		$	361			$	—			$	233			$	128
Balance at January 31, 2011:
Assets
Cash and cash equivalents		$	326,795			$	326,795			$	—			$	—
Forward exchange contracts			445				—				445				—
Other			388				—				—				388
Total		$	327,628			$	326,795			$	445			$	388
Liabilities
Forward exchange contracts		$	108			$	—			$	108			$	—
Other			649				—				—				649
Total		$	757			$	—			$	108			$	649