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
 
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