Xyratex Ltd Announces Results for the Fourth Quarter and Fiscal Year 2012 PR Newswire HAVANT, United Kingdom, Jan. 10, 2013 HAVANT, United Kingdom, Jan. 10, 2013 /PRNewswire/ --Xyratex Ltd (Nasdaq: XRTX), a leading provider of data storage technology, today announced results for the fourth quarter and fiscal year ended November 30, 2012. Revenues for the fourth quarter were $265.4 million, a decrease of 31.5% compared to revenues of $387.6 million for the same period in the prior year. For the fourth quarter of fiscal 2012, GAAP net loss was $7.9 million, or $0.29 per share, compared to GAAP net income of $18.5 million, or $0.65 per diluted share, in the same period in the prior year. Non-GAAP net loss was $6.4 million, or $0.24 per share, compared to non-GAAP net income of $20.8 million, or $0.73 per diluted share, in the same quarter a year ago^(1). Gross profit margin in the fourth quarter was 14.5%, compared to 17.7% in the same period in the prior year and 18.6% in the prior quarter. The decrease from the prior year primarily reflects a decline in gross margins for the Enterprise Data Storage Solutions products due to the effect of fixed costs relative to lower revenues. Revenues for fiscal year 2012 were $1,158.9 million, a decrease of 20% compared to revenues of $1,448.5 million for fiscal year 2011. Gross profit margin for fiscal year 2012 was 16.9% compared to 15.3% in the previous year. The increase from the prior year was primarily due to higher margins for HDD Capital Equipment products. GAAP net income for fiscal year 2012 was $17.7 million, or $0.63 per diluted share, compared to GAAP net income of $28.3 million, or $0.92 per diluted share, for fiscal year 2011. Non-GAAP net income for fiscal year 2012 decreased to $24.6 million, or $0.87 per diluted share, compared to non-GAAP net income of $39.0 million, or $1.27 per diluted share, for fiscal year 2011. On December 17, 2012, the Company declared a one-time, special cash dividend of$2.00per common share and an accelerated quarterly dividend of $0.075 per common share. These dividends, which totaled $56.1 million, were paid onDecember 31, 2012to shareholders of record as ofDecember 27, 2012. The Company did not repurchase any of its common shares under its previously announced share repurchase plan during the fourth quarter. Repurchases in the 2012 fiscal year totaled 1,199,275 common shares at a total cost of $13.6 million. The Company's cash balance amounted to $117.2 million at the end of the fiscal year, an increase of $14 million from the end of the third quarter. "Fiscal year 2012 was a challenging year for Xyratex. The macro-economic conditions certainly shifted midway through the year and both markets we serve experienced dynamic changes that caused our customers to be more cautious than our original expectations. Throughout the year we made adjustments to our business plan model to react to these unexpected changes in both the global economy as well as those specific to the markets in which we participate. I believe that we are executing well on the long-term strategy that we outlined in October and we have positive results with new customer wins and opportunities heading into fiscal year 2013. We have made significant progress in the High Performance Computing data storage market with partners such as Cray Computing, DELL and HP, and I believe we are well positioned with our unique IP to deliver greater value for our customers and partners," said Steve Barber, CEO of Xyratex. "Over the next 18 to 24 months, we have a number of new opportunities, particularly in the areas of High Performance Computing data storage and Big Data, that I believe will be positive for the company. We will continue to focus on new growth opportunities while also managing our costs and investments. I believe we are well positioned to capitalize on these opportunities." Business Outlook The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially.^ oRevenue in the first quarter of 2013 is projected to be in the range of $159 million to $189 million. oThe company anticipates recording a net loss per share of between $0.08 and $0.28 on a GAAP basis in the first quarter. On a non-GAAP basis the company anticipates recording a net loss per share of between $0.01 and $0.21 in the first quarter. Non-GAAP net loss per share excludes amortization of intangible assets, equity compensation expense, specified non-recurring items and related taxation expense. Conference Call Information The company will host a conference call to discuss its results at 1:30 p.m. PT/4:30 p.m. ET on Thursday, January 10, 2013. The conference call can be accessed online via the company's website www.xyratex.com/investors, or by telephone as follows: United States (800) 706-7745 Outside the United States (617) 614-3472 Passcode 41863387 A replay will be available via the company's website www.xyratex.com/investors, or can be accessed by telephone through January 17, 2013 as follows: United States (888) 286-8010 Outside the United States (617) 801-6888 Passcode 35785028 (1) Non-GAAP net income (loss) and diluted earnings (loss) per share exclude (a) amortization and impairment of intangible assets, (b) equity compensation expense, (c) the reduction in acquisition deferred consideration, (d) the tax effects related to (a) through (c), (e) the recognition of a Malaysia deferred tax asset in the first quarter of fiscal 2012 and (f) the tax expense resulting from a reduction in the deferred tax asset caused by a fall in U.K. tax rates. Reconciliation of non-GAAP net income (loss) and diluted earnings (loss) per share to GAAP net income (loss) and GAAP diluted earnings (loss) per share is included in a table immediately following the condensed consolidated statements of cash flow. The intention in providing these non-GAAP measures is to provide supplemental information regarding the company's operational performance while recognizing that they have material limitations and that they should only be referred to with reference to, and not considered to be a substitute for, or superior to, the corresponding GAAP measure. The financial results calculated in accordance with GAAP and reconciliations of these non-GAAP measures to the comparable GAAP measures should be carefully evaluated. The non-GAAP financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. The company believes that the provision of these non-GAAP financial measures is useful to investors and investment analysts because it enables comparison to the Company's historical operating results, those of competitors and other industry participants and also provides transparency to the measures used by management in operational and financial decision making. In relation to the specific items excluded: (a) intangible assets represent costs incurred by the acquired business prior to acquisition, are not cash costs and will not be replaced when the assets are fully amortized and therefore the exclusion of these costs provides management and investors with better visibility of the costs required to generate revenue over time; (b) equity compensation expense is non-cash in nature and is outside the control of management during the period in which the expense is incurred; (c) the reduction in acquisition deferred consideration is non-cash and not comparable across periods or with other companies, (d) the exclusion of the related tax effects of excluding items (a) through (c) is necessary to show the effect on net income of the change in tax expense that would have been recorded if these items had not been incurred; (e) the recognition of the Malaysia deferred tax asset relates to the non-renewal of certain tax incentive arrangements in 2012, is non-recurring and will reverse if the incentive arrangements are renewed; and (f) the impact of the reduction in tax rates is non-cash and not comparable across periods or with other companies due to the existence of a significant U.K. related deferred tax asset which is expected to reduce over time. Safe Harbor Statement This press release contains forward-looking statements. These statements relate to future events or our future financial performance, including our projected revenue and net loss per share data on a GAAP and non-GAAP basis for the first quarter. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Factors that might cause such a difference include our inability to retain major customers and meet the required technical and performance specifications of our products in a timely manner or at all, the cyclical nature of the markets in which we operate, changes in our customers' volume requirements, our inability to compete successfully in the competitive and rapidly changing marketplace in which we operate, deterioration in global economic conditions, diminished growth in the volume of digital information, patent infringement claims and our inability to protect our intellectual property and the impact of natural disasters. These risks and other factors include those listed under "Risk Factors" and elsewhere in our Annual Report on Form 20-F as filed with the Securities and Exchange Commission (File No. 000-50799). In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "projects," "potential," "continue," or the negative of these terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. About Xyratex Xyratex is a leading provider of data storage technology, including modular solutions for the enterprise data storage industry, and hard disk drive (HDD) capital equipment for the HDD industry. Xyratex enterprise data storage platforms provide a range of advanced, scalable data storage solutions for the Original Equipment Manufacturer and High Performance Computing communities. As the largest capital equipment supplier to the HDD industry, Xyratex enables disk drive manufacturers and their component suppliers to meet today's technology and productivity requirements. Xyratex has over 25 years of experience in research and development relating to disk drives, storage systems and manufacturing process technology. Founded in 1994 in an MBO from IBM, and with headquarters in the UK, Xyratex has an established global base with R&D and operational facilities in North America, Asia and Europe. Website: www.xyratex.com XYRATEX LTD UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended, Year Ended, November November November November 30, 30, 30, 30, 2012 2011 2012 2011 (US dollars in thousands, except per share amounts) Revenues $ 265,446 $ 387,593 $ $ 1,158,898 1,448,476 Cost of revenues 226,941 318,993 963,062 1,226,404 Gross profit 38,505 68,600 195,836 222,072 Operating expenses: Research and development 26,436 27,286 103,667 115,558 Selling, general and 17,507 14,263 68,432 66,377 administrative Restructuring costs 4,120 2,750 4,120 2,750 Impairment of intangible - 2,230 - 2,230 assets Amortization of intangible 617 897 3,154 4,176 assets Total operating 48,680 47,426 179,373 191,091 expenses Operating income (loss) (10,175) 21,174 16,463 30,981 Interest income, net 176 104 799 392 Income (loss) before income (9,999) 21,278 17,262 31,373 taxes Provision (benefit) for income (2,056) 2,762 (398) 3,076 taxes Net income (loss) $ (7,943) $ 18,516 $ 17,660 $ 28,297 Net earnings (loss) per share: Basic $ (0.29) $ 0.67 $ 0.64 $ 0.96 Diluted $ (0.29) $ 0.65 $ 0.63 $ 0.92 Weighted average common shares (in thousands), used in computing net earnings (loss) per share: Basic 27,024 27,544 27,513 29,605 Diluted 27,024 28,505 28,199 30,631 Cash dividends declared per share $ 0.08 $ 0.06 $ 0.29 $ 0.11 XYRATEX LTD UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS November 30, November 30, 2012 2011 (US dollars and amounts in thousands) ASSETS Current assets: Cash and cash equivalents $ 117,174 $ 132,630 Accounts receivable, net 132,917 200,742 Inventories 171,605 164,180 Prepaid expenses 3,134 3,296 Deferred income taxes 228 9,020 Other current assets 7,121 7,016 Total current assets 432,179 516,884 Property, plant and equipment, net 40,194 45,215 Intangible assets, net 14,975 18,128 Deferred income taxes 23,929 13,476 Total assets $ 511,277 $ 593,703 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 82,125 $ 168,696 Employee compensation and benefits payable 17,961 21,786 Deferred revenue 18,521 7,692 Income taxes payable 369 43 Other accrued liabilities 17,767 26,312 Total current liabilities 136,743 224,529 Long-term debt - - Total liabilities 136,743 224,529 Shareholders' equity Common shares (in thousands), par value $0.01 per share 70,000 authorized, 27,024 and 27,568 270 276 issued and outstanding Additional paid-in capital 354,593 361,070 Accumulated other comprehensive income 863 (1,337) (deficit) Accumulated income 18,808 9,165 Total shareholders' equity 374,534 369,174 Total liabilities and shareholders' $ 511,277 $ 593,703 equity XYRATEX LTD UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended, November 30, November 30, 2012 2011 (US dollars in thousands) Cash flows from operating activities: Net income $ 17,660 $ 28,297 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 17,936 19,405 Amortization of intangible assets 3,155 4,176 Impairment of intangible assets - 2,230 Non-cash equity compensation 6,602 7,127 Loss on sale of assets 2,297 1,299 Deferred income taxes (2,541) 1,438 Changes in assets and liabilities, net of impact of acquisitions and divestitures Accounts receivable 67,825 8,753 Inventories (7,425) 31,846 Prepaid expenses and other current assets 1,208 (3,971) Accounts payable (86,571) 15,162 Employee compensation and benefits payable (3,825) (852) Deferred revenue 10,829 (10,266) Income taxes payable 326 (687) Other accrued liabilities (1,743) 2,975 Net cash provided by operating 25,733 106,932 activities Cash flows from investing activities: Investments in property, plant and equipment (15,212) (20,232) Payment for acquisition of intangible assets (3,500) (4,700) Acquisition of business - (7,433) Net cash used in investing (18,712) (32,365) activities Cash flows from financing activities: Proceeds from issuance of shares 661 3,344 Repurchase of shares (13,600) (32,290) Dividends to shareholders (9,538) (1,459) Decrease in book overdraft - (2,374) Net cash used in financing (22,477) (32,779) activities Change in cash and cash equivalents (15,456) 41,788 Cash and cash equivalents at beginning of 132,630 90,842 period Cash and cash equivalents at end of period $ 117,174 $ 132,630 XYRATEX LTD SUPPLEMENTAL INFORMATION Three Months Ended Year Ended November 30, November November November 30, 30, 30, Summary Reconciliation Of GAAP Net Income (Loss) To Non-GAAP 2012 2011 2012 2011 Net Income (Loss) (US dollars in (US dollars in thousands, except per thousands, except per share amounts) share amounts) GAAP net income (loss) $ (7,943) $ 18,516 $ 17,660 $ 28,297 Amortization of 617 897 3,154 4,176 intangible assets Equity compensation 1,554 859 6,602 7,127 Reduction in acquisition - (676) - (676) deferred consideration Impairment of intangible - 2,230 - 2,230 assets Tax effect of above (526) (1,074) (2,450) (3,214) non-GAAP adjustments Effect of changes in tax (134) - 1,105 1,044 rates Malaysia deferred tax - - (1,489) - asset recognized Non-GAAP net income (loss) $ (6,432) $ 20,752 $ 24,582 $ 38,984 Summary Reconciliation Of Diluted GAAP Earnings (Loss) Per Share To Diluted Non-GAAP Earnings (Loss) Per Share Diluted GAAP earnings (loss) $ (0.29) $ 0.65 $ 0.63 $ 0.92 per share Amortization of 0.02 0.03 0.11 0.14 intangible assets Equity compensation 0.06 0.03 0.23 0.23 Reduction in acquisition - (0.02) - (0.02) deferred consideration Impairment of intangible - 0.08 - 0.07 assets Tax effect of above (0.02) (0.04) (0.09) (0.10) non-GAAP adjustments Effect of changes in tax (0.01) - 0.04 0.03 rates Malaysia deferred tax - - (0.05) - asset recognized Diluted non-GAAP earnings $ (0.24) $ 0.73 $ 0.87 $ 1.27 (loss) per share Segmental Information Revenues: Enterprise Data Storage $ 200,135 $ 352,578 $ 974,043 $ Solutions 1,324,547 HDD Capital Equipment 65,311 35,015 184,855 123,929 Total $ 265,446 $ 387,593 $ $ 1,158,898 1,448,476 Gross profit: Enterprise Data Storage $28,487 $62,467 $155,326 $212,654 Solutions HDD Capital Equipment 10,298 6,295 41,475 10,242 Equity compensation (280) (162) (965) (824) Total $38,505 $68,600 $195,836 $222,072 Summary Of Equity Compensation Cost of revenues $280 $162 $965 $824 Research and development 522 290 2,300 2,534 Selling, general and 752 407 3,337 3,769 administrative Total equity $1,554 $859 $6,602 $7,127 compensation SOURCE Xyratex Ltd Website: http://www.xyratex.com Contact: Brad Driver, Vice President of Investor Relations, +1-510-687-5260, email@example.com
Xyratex Ltd Announces Results for the Fourth Quarter and Fiscal Year 2012
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