HAVANT, UK, Jan. 5, 2012 /PRNewswire/ -- Xyratex Ltd
(Nasdaq: XRTX), a leading provider of enterprise class data storage
subsystems and hard disk drive capital equipment, today announced
results for the fourth quarter and fiscal year ended November 30, 2011. Revenues for the fourth
quarter were $387.6 million, a
decrease of 2.3% compared to revenues of $396.8 million for the same period last year.
For the fourth quarter, GAAP net income was $18.5 million, or $0.65 per diluted share, compared to GAAP net
income of $32.3 million, or
$1.02 per diluted share, in the same
period last year. Non-GAAP net income was $20.8 million, or a diluted earnings per share of
$0.73, compared to non-GAAP net
income of $21.9 million, or
$0.69 per diluted share, in the same
quarter a year ago(1).
Gross profit margin in the fourth quarter was 17.7%, compared to
16.1% in the same period last year and 16.7% in the prior quarter.
The change from the prior quarter was primarily due to a higher
gross margin for Storage Infrastructure (SI) products.
Revenues from sales of our Networked Storage Solutions (NSS)
products were $352.6 million in the
fourth quarter as compared to $326.8
million in the same quarter a year ago, an increase of 8%.
Gross profit margin for NSS products in the fourth quarter was
17.7% as compared to 13.3% in the same quarter a year ago due to
favorable changes in customer and product mix. Revenues from sales
of our SI products in the fourth quarter were $35 million as compared to $70 million in the same quarter a year ago, a
decrease of 50%. Gross profit margin in the SI business in the
fourth quarter was 18.0% as compared to 29.7% in the same quarter a
year ago, primarily due to the decrease in revenues relative to
fixed costs.
Revenues for fiscal year 2011 were $1,448.5 million, a decrease of 9.6% compared to
revenues of $1,601.9 million for
fiscal year 2010. Revenues from sales of our NSS products were
$1,324.5 million for the year as
compared to $1,258.9 million in
fiscal 2010, an increase of 5.2%. Revenues from sales of our SI
products in fiscal 2011 were $123.9
million as compared to $342.9
million in 2010, a decrease of 63.9%. Gross profit margin
for fiscal 2011 was 15.3% compared to 17.5% in the previous year.
The decrease in gross profit margin from the prior year was
primarily due to the decrease in SI revenues, partially offset by
increased gross margins for NSS products related to favorable
changes in customer and product mix.
GAAP net income for fiscal 2011 was $28.3
million, or $0.92 per diluted
share, compared to GAAP net income of $139.4
million, or $4.46 per diluted
share, for fiscal 2010. Non-GAAP net income for fiscal 2011
decreased to $39.0 million, or
$1.27 per diluted share, compared to
non-GAAP net income of $135.7
million, or $4.34 per diluted
share, for fiscal 2010(1).
During the quarter, the Company repurchased 986,707 of its
common shares at a total cost of $8.4
million. For the full fiscal year, the Company repurchased a
total of 3,601,903 shares, representing 11.6% of issued and
outstanding shares as of February 28,
2011, at a total cost of $32.3
million. The shares were repurchased under the previously
announced share repurchase plan. Also, the Company announced its
second dividend in the quarter. The cash dividend was set at
$0.055 a share. The Company's cash
balance was $132.6 million at the end
of the fiscal year, an increase of $41.8
million during the 2011 fiscal year.
"Overall, I am pleased with our results for the fiscal year. Our
NSS business had a very good year as a result of good execution and
a more diverse customer base. The Enterprise Storage market is
strong, and we did a very good job in meeting the technology
requirements and demands of our customer base. Our SI business
results reflect the many challenges that affected the wider Hard
Disk Drive industry in 2011, including reduced capital expenditures
resulting from delays in regulatory approvals for the two
acquisitions by Seagate and Western Digital, the two natural
disasters in Japan and
Thailand, and increased
competition. As a result of the reduction in capital expenditures
by our customers, we took decisive cost reduction actions in the SI
business to better align our cost structure with our business
expectations," said Steve Barber,
CEO of Xyratex. "Looking forward, I believe we are well positioned
to capitalize on the many business opportunities that we have been
working on, including our entry into the High Performance Computing
storage market. We believe that this, together with cost
realignment within the business, provides us with a good
opportunity to improve our profitability and continue our cash
generation."
Business Outlook
The following statements are based on current expectations.
These statements are forward-looking, and actual results may differ
materially. Our forecast ranges are wider than normal due to the
uncertainty surrounding disk drive availability following the
recent flooding in Thailand.
- Revenue in the first quarter of fiscal 2012 is projected to be
in the range of $275 million to $355
million.
- Fully diluted earnings (loss) per share is anticipated to be
between $(0.02) and $0.32 on a GAAP
basis in the first quarter. On a non-GAAP basis, fully diluted
earnings per share is anticipated to be between $0.07 and $0.41. Non-GAAP earnings per share
excludes amortization of intangible assets, equity compensation
expense, specified non-recurring items and related taxation
expense.
Conference Call/Webcast 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 5, 2012.
The conference call can be accessed online via the company's
website www.xyratex.com/investors, or by telephone as follows:
United
States
|
(800)
561-2693
|
Outside
the United States
|
(617)
614-3523
|
Passcode
|
64545968
|
A replay will be available via the company's website
www.xyratex.com/investors, or can be accessed by telephone through
January 12, 2012 as follows:
United
States
|
(888)
286-8010
|
Outside
the United States
|
(617)
801-6888
|
Passcode
|
87022751
|
(1) Non-GAAP net income and diluted earnings per share exclude
(a) amortization and impairment of intangible assets, (b) equity
compensation expense, (c) specified non-recurring items, such as
the release of the valuation allowance against a deferred tax asset
and the reduction in acquisition deferred consideration, (d) the
tax effects related to (a) through (c), and (e) 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 and
diluted earnings per share to GAAP net income and GAAP diluted
earnings per share is included in a table immediately following the
condensed consolidated statements of cash flow below.
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 release of the valuation allowance against a deferred tax asset
and the reduction in acquisition deferred consideration are
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 and (e) 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 that 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 fully diluted
earnings (loss) per share data (on a GAAP and non-GAAP basis) for
the first quarter of fiscal year 2012. 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 compete successfully in the competitive and rapidly changing
marketplace in which we operate, failure to retain key employees,
changes in our customers' volume requirements, cancellation or
delay of projects, adverse general economic conditions in
the United States and
internationally, 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," "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 enterprise class data storage
subsystems and hard disk drive capital equipment. The company
designs and manufactures enabling technology that provides OEM and
disk drive manufacturers with data storage products to support
high-performance storage and data communication networks. Xyratex
has over 25 years of experience in research and development
relating to disk drives, storage systems and high-speed
communication protocols.
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 Europe,
the United States and South East Asia.
For more information, visit www.xyratex.com.
XYRATEX
LTD
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended,
|
|
Year
Ended,
|
|
|
|
|
|
|
November 30,
|
|
November 30,
|
|
November 30,
|
|
November 30,
|
|
|
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
|
|
|
(US
dollars in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
Networked
Storage Solutions
|
|
|
$
352,578
|
|
$
326,808
|
|
$
1,324,547
|
|
$
1,258,940
|
|
Storage
Infrastructure
|
|
|
35,015
|
|
69,974
|
|
123,929
|
|
342,943
|
Total
revenues
|
|
|
|
387,593
|
|
396,782
|
|
1,448,476
|
|
1,601,883
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
|
|
|
318,993
|
|
333,032
|
|
1,226,404
|
|
1,322,115
|
Gross
profit:
|
|
|
|
|
|
|
|
|
|
|
|
Networked
Storage Solutions
|
|
|
62,467
|
|
43,438
|
|
212,654
|
|
166,882
|
|
Storage
Infrastructure
|
|
|
6,295
|
|
20,789
|
|
10,242
|
|
114,427
|
|
Equity
compensation
|
|
|
(162)
|
|
(477)
|
|
(824)
|
|
(1,541)
|
Total
gross profit
|
|
|
|
68,600
|
|
63,750
|
|
222,072
|
|
279,768
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
27,286
|
|
28,750
|
|
115,558
|
|
92,705
|
|
Selling, general and
administrative
|
|
|
14,263
|
|
17,226
|
|
66,377
|
|
60,002
|
|
Restructuring costs
|
|
|
2,750
|
|
-
|
|
2,750
|
|
-
|
|
Impairment of intangible
assets
|
|
|
2,230
|
|
-
|
|
2,230
|
|
-
|
|
Amortization of intangible
assets
|
|
|
897
|
|
694
|
|
4,176
|
|
3,669
|
|
|
Total
operating expenses
|
|
|
47,426
|
|
46,670
|
|
191,091
|
|
156,376
|
Operating
income
|
|
|
|
21,174
|
|
17,080
|
|
30,981
|
|
123,392
|
Interest
income, net
|
|
|
|
104
|
|
35
|
|
392
|
|
45
|
Income
before income taxes
|
|
|
21,278
|
|
17,115
|
|
31,373
|
|
123,437
|
Provision
(benefit) for income taxes
|
|
|
2,762
|
|
(15,140)
|
|
3,076
|
|
(15,991)
|
Net
income
|
|
|
|
$
18,516
|
|
$
32,255
|
|
$
28,297
|
|
$
139,428
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings per share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
$
0.67
|
|
$
1.07
|
|
$
0.96
|
|
$
4.63
|
|
Diluted
|
|
|
|
$
0.65
|
|
$
1.02
|
|
$
0.92
|
|
$
4.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares (in thousands), used in
|
|
|
|
|
|
|
|
|
computing
net earnings per share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
27,544
|
|
30,262
|
|
29,605
|
|
30,101
|
|
Diluted
|
|
|
|
28,505
|
|
31,703
|
|
30,631
|
|
31,270
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
dividends declared per share
|
$
0.06
|
|
$
-
|
|
$
0.11
|
|
$
-
|
XYRATEX
LTD
|
UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 30,
|
|
November 30,
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
(US
dollars and amounts in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents
|
|
|
|
|
|
|
$
132,630
|
|
$
90,842
|
|
Accounts
receivable, net
|
|
|
|
|
|
|
200,742
|
|
209,044
|
|
Inventories
|
|
|
|
|
|
|
|
164,180
|
|
195,936
|
|
Prepaid
expenses
|
|
|
|
|
|
|
|
3,296
|
|
3,154
|
|
Deferred
income taxes
|
|
|
|
|
|
|
9,020
|
|
8,204
|
|
Other
current assets
|
|
|
|
|
|
|
7,016
|
|
3,876
|
|
|
Total
current assets
|
|
|
|
|
|
|
516,884
|
|
511,056
|
|
Property,
plant and equipment, net
|
|
|
|
|
|
45,215
|
|
45,687
|
|
Intangible
assets, net
|
|
|
|
|
|
|
18,128
|
|
9,326
|
|
Deferred
income taxes
|
|
|
|
|
|
|
13,476
|
|
14,913
|
|
|
Total
assets
|
|
|
|
|
|
|
|
$
593,703
|
|
$
580,982
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
|
|
|
|
|
|
$
168,696
|
|
$
155,792
|
|
Employee
compensation and benefits payable
|
|
|
|
|
|
21,786
|
|
22,638
|
|
Deferred
revenue
|
|
|
|
|
|
|
|
7,692
|
|
17,958
|
|
Income
taxes payable
|
|
|
|
|
|
|
43
|
|
730
|
|
Other
accrued liabilities
|
|
|
|
|
|
|
26,312
|
|
16,533
|
|
|
Total
current liabilities
|
|
|
|
|
|
|
224,529
|
|
213,651
|
|
Long-term
debt
|
|
|
|
|
|
|
|
-
|
|
-
|
|
|
Total
liabilities
|
|
|
|
|
|
|
224,529
|
|
213,651
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity
|
|
|
|
|
|
|
|
|
|
|
Common
shares (in thousands), par value $0.01 per share
|
|
|
|
|
|
|
|
|
|
70,000
authorized, 27,568 and 30,276 issued and outstanding
|
|
|
|
|
276
|
|
303
|
|
Additional
paid-in capital
|
|
|
|
|
|
|
361,070
|
|
382,684
|
|
Accumulated other comprehensive income
(deficit)
|
|
|
|
|
(1,337)
|
|
496
|
|
Accumulated income (deficit)
|
|
|
|
|
|
|
9,165
|
|
(16,152)
|
|
|
Total
shareholders' equity
|
|
|
|
|
|
|
369,174
|
|
367,331
|
|
|
Total
liabilities and shareholders' equity
|
|
|
|
|
|
$
593,703
|
|
$
580,982
|
XYRATEX
LTD
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
|
|
|
November 30,
|
|
November 30,
|
|
|
|
2011
|
|
2010
|
|
|
|
(US dollars in
thousands)
|
Cash
flows from operating activities:
|
|
|
|
Net
income
|
$
28,297
|
|
$
139,428
|
Adjustments to reconcile net income to net
cash
|
|
|
|
|
provided
by operating activities:
|
|
|
|
Depreciation
|
19,405
|
|
18,436
|
Amortization of intangible assets
|
4,176
|
|
3,669
|
Impairment
of intangible assets
|
2,230
|
|
-
|
Non-cash
equity compensation
|
7,127
|
|
9,654
|
Loss on
sale of assets
|
1,299
|
|
796
|
Deferred
income taxes
|
1,438
|
|
(16,443)
|
Changes in
assets and liabilities, net of impact of acquisitions and
divestitures
|
|
|
|
|
Accounts
receivable
|
8,753
|
|
(84,004)
|
|
Inventories
|
31,846
|
|
(86,917)
|
|
Prepaid
expenses and other current assets
|
(3,971)
|
|
487
|
|
Accounts
payable
|
15,162
|
|
59,178
|
|
Employee
compensation and benefits payable
|
(852)
|
|
14,058
|
|
Deferred
revenue
|
(10,266)
|
|
6,649
|
|
Income
taxes payable
|
(687)
|
|
(1,283)
|
|
Other
accrued liabilities
|
2,975
|
|
(4,052)
|
|
|
Net cash
provided by operating activities
|
106,932
|
|
59,656
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
Investments in property, plant and
equipment
|
(20,232)
|
|
(20,328)
|
|
Acquisition of intangible assets
|
(4,700)
|
|
-
|
|
Acquisition of businesses
|
(7,433)
|
|
(4,908)
|
|
|
Net cash
used in investing activities
|
(32,365)
|
|
(25,236)
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
Proceeds
from issuance of shares
|
3,344
|
|
2,113
|
|
Repurchase
of shares
|
(32,290)
|
|
-
|
|
Dividends
to shareholders
|
(1,459)
|
|
-
|
|
Increase
(decrease) in book overdraft
|
(2,374)
|
|
2,374
|
|
|
Net cash
provided by (used in) financing activities
|
(32,779)
|
|
4,487
|
Change in
cash and cash equivalents
|
41,788
|
|
38,907
|
Cash and
cash equivalents at beginning of period
|
90,842
|
|
51,935
|
Cash and
cash equivalents at end of period
|
$
132,630
|
|
$
90,842
|
|
|
|
|
|
|
XYRATEX
LTD
|
SUPPLEMENTAL INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
Year
Ended
|
|
|
|
|
|
|
|
|
November 30,
|
|
November 30,
|
|
November 30,
|
|
November 30,
|
Summary
Reconciliation Of GAAP Net Income To Non-GAAP Net
Income
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
(US
dollars in thousands, except per share amounts)
|
|
(US
dollars in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net
income
|
$18,516
|
|
$32,255
|
|
$28,297
|
|
$139,428
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
897
|
|
694
|
|
4,176
|
|
3,669
|
|
Equity
compensation
|
859
|
|
2,922
|
|
7,127
|
|
9,654
|
|
Reduction
in acquisition deferred consideration
|
(676)
|
|
-
|
|
(676)
|
|
-
|
|
Impairment
of intangible assets
|
2,230
|
|
-
|
|
2,230
|
|
-
|
|
Tax effect
of above non-GAAP adjustments
|
(1,074)
|
|
-
|
|
(3,214)
|
|
-
|
|
Effect of
change in tax rates
|
-
|
|
-
|
|
1,044
|
|
-
|
|
Deferred
tax on equity compensation
|
-
|
|
(93)
|
|
-
|
|
(3,241)
|
|
Release of
deferred tax valuation allowance
|
-
|
|
(13,845)
|
|
-
|
|
(13,845)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
net income
|
|
|
|
|
$20,752
|
|
$21,933
|
|
$38,984
|
|
$135,665
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary
Reconciliation Of Diluted GAAP Earnings Per Share To Diluted
Non-GAAP Earnings Per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
GAAP earnings per share
|
$
0.65
|
|
$
1.02
|
|
$
0.92
|
|
$
4.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
0.03
|
|
0.02
|
|
0.14
|
|
0.12
|
|
Equity
compensation
|
0.03
|
|
0.09
|
|
0.23
|
|
0.31
|
|
Reduction
in acquisition deferred consideration
|
(0.02)
|
|
-
|
|
(0.02)
|
|
-
|
|
Impairment
of intangible assets
|
0.08
|
|
-
|
|
0.07
|
|
-
|
|
Tax effect
of above non-GAAP adjustments
|
(0.04)
|
|
-
|
|
(0.10)
|
|
-
|
|
Effect of
change in tax rates
|
-
|
|
-
|
|
0.03
|
|
-
|
|
Deferred
tax on equity compensation
|
-
|
|
(0.00)
|
|
-
|
|
(0.10)
|
|
Release of
deferred tax valuation allowance
|
-
|
|
(0.44)
|
|
-
|
|
(0.44)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
non-GAAP earnings per share
|
$0.73
|
|
$0.69
|
|
$1.27
|
|
$4.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary
Of Equity Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
$162
|
|
$477
|
|
$824
|
|
$1,541
|
|
Research
and development
|
290
|
|
962
|
|
2,534
|
|
3,107
|
|
Selling,
general and administrative
|
407
|
|
1,483
|
|
3,769
|
|
5,006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
equity compensation
|
$859
|
|
$2,922
|
|
$7,127
|
|
$9,654
|
SOURCE Xyratex Ltd