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Xyratex Ltd Announces Results for the First Quarter Fiscal Year 2013

     Xyratex Ltd Announces Results for the First Quarter Fiscal Year 2013  PR Newswire  HAVANT, United Kingdom, April 4, 2013  HAVANT, United Kingdom, April 4, 2013 /PRNewswire/ --Xyratex Ltd (Nasdaq: XRTX), a leading provider of data storage technology, today announced results for the first fiscal quarter ended February 28, 2013. Revenues for the first quarter were $195.6 million, a decrease of 34% compared to revenues of $295.7 million for the same period in the prior year.  For the first quarter, GAAP net loss was $5.1 million, or $0.19 per share, compared to GAAP net income of $10.9 million, or $0.38 per diluted share, in the same period last year. Non-GAAP net loss was $3.6 million, or $0.13 per share, compared to non-GAAP net income of $11.4 million, or $0.40 per diluted share, in the same quarter a year ago^(1).  Gross profit margin in the first quarter was 18.9%, compared to 17.9% in the same period last year and 14.5% in the prior quarter. The increase from the prior quarter primarily reflects variation in product and customer mix in both our Enterprise Data Storage Solutions and Capital Equipment business segments.  During the first quarter, the Company declared and paid a one-time special dividend and accelerated its quarterly dividend, paying both in December 2012 at a total cost of $56.3 million. The Company's cash balance amounted to $92.8 million at the end of the first quarter compared to $117.2 million at the end of the prior quarter.  Today, the Company also announced that its Board of Directors has approved a quarterly cash dividend of $0.075 per share, unchanged from the prior quarterly dividend. The dividend will be payable on May 2, 2013 to shareholders of record as of the close of business on April 18, 2013. This dividend represents a quarterly payout of approximately $2.1 million in aggregate, or $8.4 million on an annualized basis.  "We had a solid first quarter with revenues above our expectations. We are focused on being responsive to our customers' requirements and on improving operating efficiencies in both of our business units as we go forward in 2013," said Ernie Sampias, Interim CEO of Xyratex.  Business Outlook  The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially.^    oRevenue in the second fiscal quarter of 2013 is projected to be in the     range of $190 million to $220 million.   oFully diluted earnings per share is anticipated to be between a loss of     $0.21 and earnings of $0.03 on a GAAP basis in the second quarter. On a     non-GAAP basis, fully diluted earnings per share is anticipated to be     between a loss of $0.15 and earnings of $0.09. Non-GAAP earnings 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, April 4, 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) 510-9691 Outside the United States (617) 614-3453  Passcode                  76698487  A replay will be available via the company's website www.xyratex.com/investors, or can be accessed by telephone through April 11, 2013 as follows:  United States             (888) 286-8010 Outside the United States (617) 801-6888 Passcode                  21255596  (1) Non-GAAP net income (loss) and diluted earnings (loss) per share exclude (a) amortization of intangible assets, (b) equity compensation expense, (c) the tax effects related to (a) and (b) and (d) the recognition of a Malaysia deferred tax asset in the first quarter of fiscal 2012. Reconciliations of non-GAAP net income (loss) and diluted earnings (loss) per share to GAAP net income (loss) and diluted earnings (loss) per share are included in tables 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 us 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 exclusion of the related tax effects of excluding items (a) and (b) is necessary to show the effect on net income (loss) of the change in tax expense that would have been recorded if these items had not been incurred and (d) 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.  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 fully diluted earnings (loss) per share data (on a GAAP and non-GAAP basis) for the second 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. 001-35766). 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.      XYRATEX LTD UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                                                      Three Months Ended,                                                      February 28,   February                                                                     29,                                                      2013           2012                                                      (US dollars in thousands,                                                      except per share amounts) Revenues                                             $ 195,597      $ 295,666 Cost of revenues                                    158,663        242,627 Gross profit                                         36,934         53,039 Operating expenses:         Research and development                   24,409         24,668         Selling, general and administrative        17,798         16,778         Amortization of intangible assets          492            970                      Total operating expenses       42,699         42,416 Operating income (loss)                              (5,765)        10,623 Interest income, net                               80             186 Income (loss) before income taxes                   (5,685)        10,809 Provision (benefit) for income taxes                 (550)          (52) Net income (loss)                                    $ (5,135)      $ 10,861 Net earnings (loss) per share:         Basic                                        $ (0.19)       $ 0.39         Diluted                                      $ (0.19)       $ 0.38 Weighted average common shares (in thousands), used in computing net earnings (loss) per share:         Basic                                        27,202         27,750         Diluted                                      27,202         28,786 Cash dividends declared per share                    $ 2.08         $ 0.07 Comprehensive income (loss): Net income (loss)                                    $ (5,135)      $ 10,861 Unrealized gain (loss) on forward foreign currency   (2,231)        1,080 contract Reclassification of loss (gain) into net income      (235)          422 (loss) Total comprehensive income (loss)                    $ (7,601)      $ 12,363      XYRATEX LTD UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS                                                     February 28,  November 30,                                                     2013          2012                                                     (US dollars and amounts in                                                     thousands) ASSETS Current assets:  Cash and cash equivalents                          $ 92,823      $ 117,174  Accounts receivable, net                           98,848        132,917  Inventories                                        144,259       171,605  Prepaid expenses                                   4,158         3,134  Deferred income taxes                              205           228  Other current assets                               5,255         7,121      Total current assets                           345,548       432,179  Property, plant and equipment, net                 40,860        40,194  Intangible assets, net                             15,783        14,975  Deferred income taxes                              25,329        23,929      Total assets                                   $ 427,520     $ 511,277 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities:  Accounts payable                                   $ 72,068      $ 82,125  Employee compensation and benefits payable         15,316        17,961  Deferred revenue                                   9,227         18,521  Income taxes payable                               633           369  Other accrued liabilities                          18,082        17,767      Total current liabilities                      115,326       136,743  Long-term debt                                     -             -      Total liabilities                              $ 115,326     $ 136,743 Shareholders' equity  Common shares (in thousands), par value $0.01  per share      70,000 authorized, 27,558 and 27,024           $ 275         $ 270      issued and outstanding  Additional paid-in capital                         356,120       354,593  Accumulated other comprehensive income             (1,603)       863  (deficit)  Accumulated income (deficit)                       (42,598)      18,808      Total shareholders' equity                     312,194       374,534      Total liabilities and shareholders'            $ 427,520     $ 511,277      equity    XYRATEX LTD UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                                       Three Months Ended,                                                       February 28,  February                                                                     29,                                                       2013          2012                                                       (US dollars in                                                       thousands) Cash flows from operating activities: Net income (loss)                                     $ (5,135)     $ 10,861 Adjustments to reconcile net income (loss) to net cash    provided by operating activities: Depreciation                                          4,019         4,160 Amortization of intangible assets                     492           970 Non-cash equity compensation                          1,532         1,713 (Gain) loss on sale of assets                         -             (50) Deferred income taxes                                 (555)         (754) Changes in assets and liabilities, net of impact of acquisitions and divestitures    Accounts receivable                               34,069        48,599    Inventories                                        27,346        11,728    Prepaid expenses and other current assets          (309)         865    Accounts payable                                  (10,057)      (46,337)    Employee compensation and benefits payable         (2,645)       (572)    Deferred revenue                                   (9,294)       5,501    Income taxes payable                              264           664    Other accrued liabilities                         (1,822)       (3,123)                 Net cash provided by operating        37,905        34,225                 activities Cash flows from investing activities:    Investments in property, plant and equipment      (4,685)       (4,168)    Payment for acquisition of intangible assets       -             (3,500)    Acquisition of business                            (1,300)       -                 Net cash used in investing            (5,985)       (7,668)                 activities Cash flows from financing activities:    Proceeds from issuance of shares                   -             8    Dividends to shareholders                          (56,271)      (3,355)                 Net cash used in financing            (56,271)      (3,347)                 activities Change in cash and cash equivalents                  (24,351)      23,210 Cash and cash equivalents at beginning of period      117,174       132,630 Cash and cash equivalents at end of period            $ 92,823      $ 155,840      XYRATEX LTD SUPPLEMENTAL INFORMATION                                                Three Months Ended                                                February 28,  February 29, Summary Reconciliation Of GAAP Net Income      2013          2012 (Loss) To Non-GAAP Net Income (Loss)                                                (US dollars in thousands,                                                except per share amounts) GAAP net income (loss)                         $ (5,135)     $ 10,861      Amortization of intangible assets         492           970      Equity compensation                       1,532         1,713      Tax effect of above non-GAAP              (466)         (671)      adjustments      Malaysia deferred tax asset               -             (1,489)      recognized Non-GAAP net income (loss)                     $ (3,577)     $ 11,384 Summary Reconciliation Of Diluted GAAP Earnings (Loss) Per Share To Diluted Non-GAAP Earnings (Loss) Per Share Diluted GAAP earnings (loss) per share         $ (0.19)      $ 0.38      Amortization of intangible assets         0.02          0.03      Equity compensation                       0.06          0.06      Tax effect of above non-GAAP              (0.02)        (0.02)      adjustments      Malaysia deferred tax asset               -             (0.05)      recognized Diluted non-GAAP earnings (loss) per share     $ (0.13)      $ 0.40 Segmental Information Revenues:      Enterprise Data Storage Solutions         $ 176,546     $ 272,069      HDD Capital Equipment                     19,051        23,597      Total                                     $ 195,597     $ 295,666 Gross profit:      Enterprise Data Storage Solutions         $31,531       $47,113      HDD Capital Equipment                     5,508         6,027      Equity compensation                       (105)         (101)      Total                                     $36,934       $53,039 Summary Of Equity Compensation      Cost of revenues                          $105          $101      Research and development                  460           662      Selling, general and administrative       967           950      Total equity compensation                 $1,532        $1,713    SOURCE Xyratex Ltd  Website: http://www.xyratex.com Contact: Brad Driver, Vice President of Investor Relations, +1-510-687-5260, bdriver@xyratex.com, Website: www.xyratex.com