United States
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

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

For the quarterly period ended July 31, 2004

or

o	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the transition period from __________ to __________

000-31869
(Commission File Number)

UTi Worldwide Inc.

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

19443 Laurel Park Road, Suite 111, Rancho Dominguez, CA 90220 USA
(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.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

At August 31, 2004, the number of shares outstanding of the issuer’s ordinary shares was 30,801,464.

UTi Worldwide Inc.

Report on Form 10-Q
For the Quarter Ended July 31, 2004

Table of Contents

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Part I. Financial Information

Item 1. Financial Statements

Condensed Consolidated Income Statements
For the three and six months ended July 31, 2004 and 2003
(in thousands, except share and per share amounts)

See accompanying notes to condensed consolidated financial statements.

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Condensed Consolidated Balance Sheets
As of July 31, 2004 and January 31, 2004
(in thousands, except share amounts)

See accompanying notes to condensed consolidated financial statements.

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Condensed Consolidated Statements of Cash Flows
For the six months ended July 31, 2004 and 2003
(in thousands)

See accompanying notes to condensed consolidated financial statements.

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Notes to the Condensed Consolidated Financial Statements
For the three and six months ended July 31, 2004 and 2003 (Unaudited)

NOTE 1. Presentation of Financial Statements

The accompanying unaudited condensed consolidated financial statements include the accounts of UTi Worldwide Inc. and its subsidiaries (UTi or the Company). These financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial information. They do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Operating results for the three and six months ended July 31, 2004 are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, 2005 or any other future periods.

The balance sheet at January 31, 2004 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended January 31, 2004 on file with the Securities and Exchange Commission.

All dollar amounts in the notes are presented in thousands except for share and per share data.

Acquisitions

Effective June 1, 2004, the Company acquired 100% of the issued and outstanding shares of International Healthcare Distributors (Pty.) Limited (IHD), through a partnership it formed, of which the Company currently owns 100%. The Company expects to sell 25.1% of the partnership to one or more South African black economic empowerment organizations before January 31, 2005 at fair market value which the Company expects will approximate net book value. The purchase price for IHD was $38,354 in cash. The final purchase price allocation has not yet been determined. IHD provides logistics and warehousing support and distribution services of pharmaceutical products throughout southern Africa directly to end dispensers as well as to wholesalers. The following table summarizes the preliminary estimated fair value of the assets acquired and liabilities assumed at the date of acquisition.

Effective February 1, 2004, the Company acquired 100% of the issued and outstanding shares of ET Logistics, S.L. (ET Logistics) and ILEX Consulting, S.L. (ILEX). In addition to the initial cash purchase price for ET Logistics, there are three contingent earn-out payments which will be calculated based on a multiple of the acquired operation’s future earnings for the years ending January 31, 2005, 2006 and 2007. The Company also acquired the remaining 50% of the issued and outstanding shares of Chilltrac (Pty.) Limited and 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 July 28, 2004, the Company acquired the remaining 27% and 40% of the issued and outstanding shares of UTi (Taiwan) Limited and UTi Tasimacilik Limited, the Company’s Turkish subsidiary, respectively.

Effective May 1, 2003 and July 1, 2003, the Company acquired 100% of the issued and outstanding shares of IndAir Carriers (Pvt.) Ltd. and 50% of the issued and outstanding shares of Kite Logistics (Pty.) Limited (Kite), respectively.

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The following table shows the supplemental pro forma information as though the Company’s acquisitions had occurred February 1, 2003.

Pro Forma Information – Stock Options

As of July 31, 2004, the Company had five stock-based employee and one non-employee director compensation plans which are accounted for using the intrinsic value method under the recognition and measurement principles of Accounting Principle Board Opinion No. 25, Accounting for Stock Issued to Employees, and its related interpretations (APB No. 25). Compensation cost is recorded in net income only for stock options that have an exercise price below the market value of the underlying common stock on the date of grant. As required by Statement of Financial Accounting Standards (SFAS) No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure – an amendment of FASB Statement No. 123, the following table shows the estimated effect on net income and earnings per share as if the Company had applied the fair value recognition provision of SFAS No. 123, Accounting for Stock-Based Compensation, to all stock options.

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NOTE 2. Recent Accounting Pronouncements

In January 2003, the FASB issued FASB Interpretation No. 46, Consolidation of Variable Interest Entities (FIN No. 46). FIN No. 46 clarifies the application of Accounting Research Bulletin No. 51, Consolidated Financial Statements, to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. In December 2003, the FASB revised FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities [FIN No. 46(R)]. FIN No. 46(R) replaces FIN No. 46 in its entirety. FIN No. 46(R) exempts certain entities from its requirements and clarifies certain complexities arising during the initial implementation of FIN No. 46. This revised interpretation is effective for reporting periods that end after March 15, 2004. The Company adopted the provisions of FIN No. 46 as February 1, 2004 and such adoption did not have a material impact on its consolidated financial position or results of operations.

In December 2003, the FASB issued SFAS No. 132 (revised 2003), Employers’ Disclosures about Pensions and Other Postretirement Benefits (SFAS No. 132). SFAS No. 132 retains the existing disclosure requirements for pensions and other postretirement benefits and requires additional disclosures for pension and other postretirement benefit plan assets, obligations and net costs in financial statements. In addition, SFAS No. 132 requires disclosures of certain plan information on a quarterly basis in interim financial statements. This statement is effective for fiscal years ending after December 15, 2003. As required by the statement, the Company included the interim-period disclosures in its financial reports for its year beginning February 1, 2004.

NOTE 3. Earnings per Share

This calculation excludes the 98,338 and 383,910 ordinary shares held in the incentive trusts for the Union-Transport Share Incentive Plan and for the Executive Share Plan as of July 31, 2004 and 2003, respectively. In May 2004, 246,329 ordinary shares held in the incentive trusts were returned to the Company and cancelled in connection with the Long-Term Incentive Plan as approved by the Company’s shareholders in February 2004.

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NOTE 4. Other Comprehensive Income

     NOTE 5. Segment Information

     The Company operates, and is managed, in four geographic segments comprised of Europe, the Americas, Asia Pacific and Africa, which offer similar products and services. 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.

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

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The following table shows the gross and net revenues attributable to the Company’s principal services.

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NOTE 6. Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill by reportable segment for the six months ended July 31, 2004 are as follows:

In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, the Company completed the required annual impairment test during the current quarter. No impairment was recognized based on the results of the annual goodwill impairment test.

The amortizable intangible assets as of July 31, 2004 relate primarily to the estimated fair value of the customer contracts and customer relationships acquired primarily with Standard Corporation and IHD. The final purchase price allocation for IHD has not yet been determined. The carrying values of amortizable intangible assets as of July 31, 2004 and January 31, 2004, are as follows:

Amortization expense totaled $249 and $430 for the three and six months ended July 31, 2004, respectively, and $158 and $306 for the three and six months ended July 31, 2003, respectively. The following table shows the expected amortization expense for these intangible assets for each of the next five fiscal years ended January 31.

In addition to the amortizable intangible assets, the Company also has $6,037 of unamortizable intangible assets as of July 31, 2004 related to trademarks acquired with IHD.

NOTE 7. Supplemental Cash Flow Information

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

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UTi is a holding company and so 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 its bank credit facilities. 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 the subsidiaries pay a distribution tax on all dividends paid. In addition, the amount of dividends that UTi’s subsidiary in Zimbabwe may pay is limited each year by the cumulative amount that the board of directors of such subsidiary has declared as dividends out of each year’s earnings.

NOTE 8. Contingencies

The Company is subject to legal proceedings and claims, which arise in the ordinary course of its business.

The Company is involved in litigation in Italy and England related to cases filed in 2000 with Enrico Furgada, 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 of the former ultimate owner as a consultant. The suits seek monetary damages, including compensation for termination of the owner’s consulting agreement. The Company has brought counter-claims for monetary damages in relation to warranty claims under the purchase agreement. Proceedings to recover amounts owing by the former ultimate owner and other entities owned by him, to third parties have been instituted against the Company. It is alleged that Per Transport SpA guaranteed certain obligations of these other entities owned by the former ultimate owner. The Company believes that these alleged guarantees are the responsibility of the former ultimate owner. These alleged guarantees were made prior to its acquisition, were not disclosed to the Company during its acquisition negotiations nor were they disclosed in the audited statutory financial statements of Per Transport SpA. Civil and criminal proceedings have also been instituted against the former ultimate owner in relation to these alleged guarantees. The total of all such actual and potential claims is approximately $15.7 million, based on exchange rates as of July 31, 2004. The Company believes that it has adequate defenses in relation to these claims in relation to these proceedings.

The Company is one of seven defendants named in a lawsuit filed on July 30, 2001 in the United States Bankruptcy Court for the Southern District of New York. The plaintiff, the committee of unsecured creditors of FMI Forwarding (formerly known as Intermaritime Forwarding), alleges under a theory of fraudulent conveyance that the Company paid inadequate consideration for certain assets of Intermaritime Forwarding and also alleges that the Company is liable for debts of FMI Forwarding on a successor liability theory. The plaintiff seeks recovery in an amount up to $4.6 million.

The Company is one of approximately 83 defendants named in two class action lawsuits which were originally filed on September 19, 1995 and subsequently consolidated in the District Court of Brazaria County, Texas (23rd Judicial District) where it is alleged that various defendants sold chemicals that were utilized in the 1992 Gulf War by the Iraqi army which caused personal injuries to U.S. armed services personnel and their families, including birth defects. The lawsuits were brought on behalf of the military personnel who served in the 1992 Gulf War and their families and the plaintiffs are seeking in excess of $1 billion in damages. To date, the plaintiffs have not obtained class certification. The Company believes it is a defendant in the suit because an entity that sold the Company assets in 1993 is a defendant. The Company believes it will prevail in this matter because the alleged actions giving rise to the claims occurred prior to the Company’s purchase of the assets. The Company further believes that it will ultimately prevail in this matter since it never manufactured chemicals and the plaintiffs have been unable to thus far produce evidence that the Company acted as a freight forwarder for cargo that included chemicals used by the Iraqi army.

On August 19, 2003 in the District Court of Dallas County, Texas, UTi was named as one of the defendants in a wrongful death suit filed by the survivors of an automobile accident caused by the toppling of an ocean container from the chassis of a truck (Sim et. al. versus Sharpless et. al.). The truck was under the control of the steamship

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line at the time of the accident. The case is being defended by outside counsel appointed by our general liability insurance carrier. The plaintiffs are claiming non-specific but exemplary damages in excess of $4 million.

In the opinion of management, the amount of ultimate liability with respect to these actions will not materially affect the results of operations, financial position or liquidity of the Company. In accordance with SFAS No. 5, Accounting for Contingencies, the Company has not accrued for a loss contingency relating to the disclosed legal proceedings because it believes that, although unfavorable outcomes in the proceedings may be reasonably possible, they are not considered by management to be probable or reasonably estimable.

NOTE 9. Retirement Benefit Plans

The Company operates defined benefit plans for qualifying employees in certain countries. Under these plans employees are entitled to retirement benefits as a certain percentage of the employee’s final salary on attainment of the qualifying retirement age. No other post-retirement benefits are provided.

The net periodic pension expense for the Company’s defined benefit plans consists of:

For the six months ended July 31, 2004, $455 of contributions have been made by the Company to its pension plans. The Company presently anticipates contributing an additional $455 to fund its pension plans during the six-month period ending January 31, 2005, for a fiscal year total of $910.

NOTE 10. Subsequent Events

In August 2004, the Company reached an agreement in principal which will qualify its South African operations as black empowered under recently enacted legislation in South Africa. The transaction involves a reorganization of the Company’s South African operations (excluding IHD) and the transfer of such operations to a newly formed entity in exchange for an interest bearing promissory note. In connection with the transaction, approximately 25% of the equity interests of the newly formed entity will be sold at net book value to a black empowerment trust with the Company retaining the remaining approximately 75% equity interest in the entity. The transaction is structured to permit the empowerment trust to share in approximately 25% of the future income after taxes of the Company’s current South African operations (excluding IHD) above current net income levels. Final documentation for the transaction is in the process of being completed.

Effective August 5, 2004, certain of the Company’s subsidiaries in the United States entered into a senior revolving syndicated credit facility agreement with LaSalle Bank National Association as agent, and various other lenders, which provides for up to $50,000 of borrowings based on a formula of eligible accounts receivable primarily for use in the Company’s operations in the United States. The credit facility is secured by substantially all of the assets of the U.S. subsidiaries as well as a pledge of the stock of the U.S. subsidiaries. This credit facility matures in August 2007 and contains financial and other covenants and restrictions applicable to the Company’s U.S. operations and a change of control provision applicable to changes at the U.S. holding company level. This agreement limits the right of the U.S. operating company to distribute funds to holding companies.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

UTi Worldwide Inc. and its subsidiaries (which we refer to as the company or UTi) is an international, non-asset-based global integrated logistics company that provides air and ocean freight forwarding, contract logistics, distribution, customs clearances and other supply chain management services, including consulting, the coordination of purchase orders and customized management services. The company serves its customers through a worldwide network of branch offices, including exclusive agents, and contract logistics centers.

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, distribution and other supply chain management services.

Our recent growth in gross revenue and net revenue for the three- and six-month periods ended July 31, 2004 (which we refer to as the second quarter of fiscal 2005 and the first half of fiscal 2005, respectively) and July 31, 2003 (which we refer to as the second quarter of fiscal 2004 and the first half of fiscal 2004, respectively), compared to the respective prior year periods, resulted primarily from the growth of our existing operations along with favorable exchange rates as compared to the U.S. dollar and, to a lesser degree, growth which we attribute to our acquisitions.

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 staff our operations based on uncertain future demand.

In February 2002, we initiated a five-year strategic operating plan which we named NextLeap. NextLeap is our plan to move UTi Worldwide from being a global freight forwarding operator to a company that can offer 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 customers, and thus cannot be measured in terms of “percentage implemented.” Under NextLeap, we are undertaking various efforts to attempt to increase our customers and revenue, improve our operating margins, and train and develop our employees. As of July 31, 2004, we have completed ten of the twenty quarters covered by NextLeap. 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. Our business is subject to numerous factors beyond our control and we may not be able to successfully implement NextLeap and no assurances can be given that our efforts will result in increased revenues or improved margins or profitability. If we are not able to increase our revenues and improve our operating margins in the future under NextLeap, our results of operations could be adversely affected.

Effect of Foreign Currency Translation on Comparison of Results

Our reporting currency is the United States (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. The net impact on our net income is therefore somewhat mitigated. Similarly, the opposite effect will occur if these currencies appreciate against the U.S. dollar.

Acquisitions

Acquisitions affect the comparison of our results between quarters for years prior to when acquisitions are made and to the comparable quarter in subsequent years, depending on the date of acquisition (i.e., acquisitions made on February 1, the first day of the first quarter of our fiscal year will only affect a comparison with the prior year’s

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results and will not affect a comparison to the following year’s results). The results of acquired businesses are included in our consolidated financial statements from the dates of their respective acquisitions. 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.”

Effective June 1, 2004, we acquired 100% of the issued and outstanding shares of International Healthcare Distributors (Pty.) Limited (IHD), through a partnership we formed, of which the Company currently owns 100%. We expect to sell 25.1% of the partnership to a South African black economic empowerment organization before January 31, 2005 at net book value. The purchase price for IHD was $38,354 in cash. 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 June 1, 2004 and July 28, 2004, we acquired the remaining 27% and 40% of the issued and outstanding shares of UTi (Taiwan) Limited and UTi Tasimacilik Limited, our Turkey subsidiary, respectively. We also acquired the remaining 50% of the issued and outstanding shares of Chilltrac (Pty.) Limited and an additional 14% of the issued and outstanding shares of PT Union Trans Internusa (Indonesia) as of February 1, 2004.

Effective February 1, 2004, we acquired 100% of the issued and outstanding shares of ET Logistics, S.L. (ET Logistics) and ILEX Consulting, S.L. (ILEX). In addition to the initial cash purchase price for ET Logistics, there are three contingent earn-out payments which will be calculated based on a multiple of the acquired operation’s future earnings for the years ending January 31, 2005, 2006 and 2007.

Effective May 1, 2003 and July 1, 2003, we acquired 100% of the issued and outstanding shares of IndAir Carriers (Pvt.) Ltd. and 50% of the issued and outstanding shares of Kite Logistics (Pty.) Limited (Kite), respectively.

Reorganization of South African Operations

The government of South Africa and the South African business community have recently undertaken a number of significant steps designed to involve historically disadvantaged South Africans in the ownership and management of South African businesses and to achieve broad-based black empowerment in the South African economy. In January 2004, the South African government enacted legislation requiring business enterprises to develop empowerment plans and to report on their compliance with those plans. In August 2004, we reached an agreement in principal which will qualify our South African operations as black empowered. The transaction, which does not impact our IHD operations, involves a reorganization of our South African operations (excluding IHD) and the transfer of such operations to a newly formed entity in exchange for an interest bearing promissory note. In connection with the transaction, approximately 25% of the equity interests of the newly formed entity will be sold at net book value to a black empowerment trust with our retaining the remaining approximately 75% equity interest in the entity. The transaction is structured to permit the empowerment trust to share in approximately 25% of the future income after taxes of our current South African operations (excluding IHD) above current net income levels and, as such, we would expect our future minority interests and net income to be affected by this transaction. While the transaction structure was designed to minimize potential dilution to our consolidated earnings in the 2005 fiscal year, it is possible that this transaction may result in unexpected dilution to our consolidated earnings in the current fiscal year and dilution to our consolidated earnings in future fiscal years. Final documentation for the transaction is in the process of being completed.

Seasonality

Historically, our operating results have been subject to seasonal trends when measured on a quarterly basis. Our first quarter is traditionally weaker compared with the other fiscal quarters, which we believe is in keeping with the trends of the operating results of other supply chain service providers. This trend is dependent on numerous factors, including the markets in which we operate, holiday seasons, consumer demand and economic conditions.

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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.

Forward-Looking Statements

Except for historical information contained herein, this quarterly report on Form 10-Q 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 are included with respect to, but are not limited to, the company’s current business plan, strategy, strategic operating plan, discussion of its growth strategies and NextLeap, its global network and expanding capabilities in contract logistics. These forward-looking statements are 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, including increased competition, integration risks associated with acquisitions, the effects of changes in foreign exchange rates, uncertainties and risks associated with the company’s operations in South Africa, general economic, political and market conditions, including those in Africa, Asia and Europe; 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. The company’s actual results or outcomes may differ materially from those anticipated. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

In assessing forward-looking statements contained herein, readers are urged to read carefully all cautionary statements contained in this Form 10-Q, including, without limitation, those contained under the heading, “Factors That May Affect Future Results and Other Cautionary Statements,” contained in this Form 10-Q and in our other filings with the Securities and Exchange Commission. 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.

Discussion of Results

The following discussion of our operating results explains material changes in our consolidated results of operations for the second quarter and first half of fiscal 2005 compared to the second quarter and first half of fiscal 2004. The discussion should be read in conjunction with the condensed consolidated financial statements and related notes included elsewhere in this report and our audited consolidated financial statements and notes thereto for the year ended January 31 2004, which are included in our annual report on Form 10-K for the year ended January 31, 2004, on file with the Securities and Exchange Commission. Our condensed consolidated financial statements included in this report, have been prepared in U.S. dollars and in accordance with accounting principles generally accepted in the United States (U.S. GAAP).

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.

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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 three and six months ended July 31, 2004 and 2003, along with the dollar amount of the changes and the percentage changes between quarters, are set forth in the following tables (in thousands):