Xyratex Ltd Announces Results for the Fourth Quarter and Fiscal Year 2012

  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,
bdriver@xyratex.com
 
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