UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

SECURITIES EXCHANGE ACT OF 1934

 

March 29, 2012

Commission File Number: 0001284823

 


 

XYRATEX LTD

 (Translation of registrant’s name into English)

 

Langstone Road,

Havant
PO9 1SA
United Kingdom

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F: x Form 20-F  o Form 40-F

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

 

 

 



 

NEWS RELEASE

For Immediate Release

 

Xyratex Ltd Announces Results for the First Quarter Fiscal Year 2012

 

Declares Quarterly Cash Dividend

 

Havant, UK — March 29, 2012 — Xyratex Ltd (Nasdaq: XRTX), a leading provider of data storage technology, today announced results for the first fiscal quarter ended February 29, 2012. Revenues for the first quarter were $295.7 million, a decrease of 18% compared to revenues of $360.5 million for the same period last year.

 

For the first quarter, GAAP net income was $10.9 million, or $0.38 per diluted share, compared to GAAP net income of $4.7 million, or $0.15 per diluted share, in the same period last year. Non-GAAP net income was $11.4 million, or $0.40 per diluted share, compared to non-GAAP net income of $7.5 million, or $0.24 per diluted share, in the same quarter a year ago(1).

 

Gross profit margin in the first quarter was 17.9%, compared to 13.7% in the same period last year and 17.7% in the prior quarter. The increase from last year primarily reflects changes in customer mix of sales of our enterprise data storage solutions.

 

The Company declared its third dividend in the first quarter. The cash dividend was set at $0.065 per share. The Company’s cash balance amounted to $155.8 million at the end of the first quarter, an increase of $23.2 million from the prior quarter.

 

Today, the Company also announced that its Board of Directors has approved a quarterly cash dividend of $0.075 per share, which represents an increase of $0.01 per share from the prior quarter. The dividend will be payable on April 26, 2012 to shareholders of record as of the close of business on April 12, 2012. This dividend represents a quarterly payout of approximately $1.8 million in aggregate, or $7.2 million on an annualized basis.

 

“I was pleased with our first quarter results, with revenues in line with our expectations and net income at the high end of our expectations as a result of better than expected gross margins across our product ranges and lower expenditures. As we had anticipated in January, our ability to meet our enterprise data storage customers demand requirements has been slightly impacted by a limited supply of enterprise disk drives. While the situation is improving each day, we are working hard to ensure we secure as many drives as possible to meet the demand of our customers,” said Steve Barber, CEO of Xyratex. “We are extremely focused on executing with regard to all the new opportunities that we have as a result of entering into the High Performance Computing space this year with our ClusterStor product line and working closely with our HDD customers now that the acquisitions by Seagate and Western Digital have been completed. The opportunities in both industries that we serve are numerous, and I believe we are well positioned to capitalize on them through the end of the year and beyond.”

 

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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 flooding in Thailand last fall.

 

·                  Revenue in the second fiscal quarter of 2012 is projected to be in the range of $297 to $357 million.

·                  Fully diluted earnings per share is anticipated to be between $0.08 and $0.35 on a GAAP basis in the second quarter. On a non-GAAP basis, fully diluted earnings per share is anticipated to be between $0.16 and $0.43. 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, March 29, 2012.

 

The conference call can be accessed online via the company’s website www.xyratex.com/investors, or by telephone as follows:

United States

(866) 202-1971

Outside the United States 

(617) 213-8842

Passcode

70245357

 

A replay will be available via the company’s website www.xyratex.com/investors, or can be accessed by telephone through April 5, 2012 as follows:

United States

(888) 286-8010

Outside the United States 

(617) 801-6888

Passcode

68830210

 


(1) Non-GAAP net income and diluted earnings 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. 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.

 

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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 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 potential for the non-renewal of certain tax incentive arrangements in 2012. Item (d) 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 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, 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,” “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.

 

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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.

 

 

Contacts:

 

Vice President of Investor Relations

Brad Driver

Tel: +1 (510) 687-5260

Email: bdriver@xyratex.com

Website: www.xyratex.com

 

5



 

XYRATEX LTD

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

Three Months Ended,

 

 

 

February 29,

 

February 28,

 

 

 

2012

 

2011

 

 

 

(US dollars in thousands, except per
share amounts)

 

 

 

 

 

 

 

Revenues

 

$

295,666

 

$

360,499

 

Cost of revenues

 

242,627

 

311,045

 

Gross profit

 

53,039

 

49,454

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

Research and development

 

24,668

 

28,255

 

Selling, general and administrative

 

16,778

 

17,448

 

Amortization of intangible assets

 

970

 

754

 

Total operating expenses

 

42,416

 

46,457

 

Operating income

 

10,623

 

2,997

 

Interest income, net

 

186

 

37

 

Income before income taxes

 

10,809

 

3,034

 

Benefit for income taxes

 

(52

)

(1,652

)

Net income

 

$

10,861

 

$

4,686

 

 

 

 

 

 

 

Net earnings per share:

 

 

 

 

 

Basic

 

$

0.39

 

$

0.15

 

Diluted

 

$

0.38

 

$

0.15

 

 

 

 

 

 

 

Weighted average common shares (in thousands), used in computing net earnings per share:

 

 

 

 

 

Basic

 

27,750

 

30,496

 

Diluted

 

28,786

 

31,761

 

 

 

 

 

 

 

Cash dividends declared per share

 

$

0.07

 

$

 

 

6



 

XYRATEX LTD

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

February 29,

 

November 30,

 

 

 

2012

 

2011

 

 

 

(US dollars and amounts in
thousands)

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

155,840

 

$

132,630

 

Accounts receivable, net

 

152,143

 

200,742

 

Inventories

 

152,452

 

164,180

 

Prepaid expenses

 

5,354

 

3,296

 

Deferred income taxes

 

10,354

 

9,020

 

Other current assets

 

4,557

 

7,016

 

Total current assets

 

480,700

 

516,884

 

Property, plant and equipment, net

 

45,273

 

45,215

 

Intangible assets, net

 

17,158

 

18,128

 

Deferred income taxes

 

12,395

 

13,476

 

Total assets

 

$

555,526

 

$

593,703

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

122,359

 

$

168,696

 

Employee compensation and benefits payable

 

21,214

 

21,786

 

Deferred revenue

 

13,193

 

7,692

 

Income taxes payable

 

707

 

43

 

Other accrued liabilities

 

16,623

 

26,312

 

Total current liabilities

 

174,096

 

224,529

 

Long-term debt

 

 

 

Total liabilities

 

174,096

 

224,529

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

Common shares (in thousands), par value $0.01 per share 70,000 authorized, 28,114 and 30,276 issued and outstanding

 

282

 

276

 

Additional paid-in capital

 

362,791

 

361,070

 

Accumulated other comprehensive income (deficit)

 

165

 

(1,337

)

Accumulated income

 

18,192

 

9,165

 

Total shareholders’ equity

 

381,430

 

369,174

 

Total liabilities and shareholders’ equity

 

$

555,526

 

$

593,703

 

 

7



 

XYRATEX LTD

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

Three Months Ended

 

 

 

February 29,

 

February 28,

 

 

 

2012

 

2011

 

 

 

(US dollars in thousands)

 

Cash flows from operating activities:

 

 

 

 

 

Net income

 

$

10,861

 

$

4,686

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Depreciation

 

4,160

 

5,319

 

Amortization of intangible assets

 

970

 

754

 

Non-cash equity compensation

 

1,713

 

2,650

 

Gain (loss) on sale of assets

 

(50

)

4

 

Deferred income taxes

 

(754

)

(2,219

)

Changes in assets and liabilities, net of impact of acquisitions and divestitures

 

 

 

 

 

Accounts receivable

 

48,599

 

17,660

 

Inventories

 

11,728

 

19,141

 

Prepaid expenses and other current assets

 

865

 

(5,437

)

Accounts payable

 

(46,337

)

(15,907

)

Employee compensation and benefits payable

 

(572

)

(4,274

)

Deferred revenue

 

5,501

 

(574

)

Income taxes payable

 

664

 

97

 

Other accrued liabilities

 

(3,123

)

1,539

 

Net cash provided by operating activities

 

34,225

 

23,439

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Investments in property, plant and equipment

 

(4,168

)

(7,203

)

Acquisition of intangible assets

 

(3,500

)

(1,200

)

Acquisition of business

 

 

(5,380

)

Net cash used in investing activities

 

(7,668

)

(13,783

)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Proceeds from issuance of shares

 

8

 

 

Dividends to shareholders

 

(3,355

)

 

Decrease in book overdraft

 

 

(2,374

)

Net cash used in financing activities

 

(3,347

)

(2,374

)

Change in cash and cash equivalents

 

23,210

 

7,282

 

Cash and cash equivalents at beginning of period

 

132,630

 

90,842

 

Cash and cash equivalents at end of period

 

$

155,840

 

$

98,124

 

 

8



 

XYRATEX LTD

SUPPLEMENTAL INFORMATION

 

 

 

Three Months Ended

 

 

 

February 29,

 

February 28,

 

 

 

2012

 

2011

 

 

 

(US dollars in thousands, except
per share amounts)

 

Summary Reconciliation Of GAAP Net Income To Non-GAAP Net Income

 

 

 

 

 

 

 

 

 

 

 

GAAP net income

 

$

10,861

 

$

4,686

 

 

 

 

 

 

 

Amortization of intangible assets

 

970

 

754

 

Equity compensation

 

1,713

 

2,650

 

Tax effect of above non-GAAP adjustments

 

(671

)

(587

)

Malaysia deferred tax asset recognized

 

(1,489

)

 

 

 

 

 

 

 

Non-GAAP net income

 

$

11,384

 

$

7,503

 

 

 

 

 

 

 

Summary Reconciliation Of Diluted GAAP Earnings Per Share To Diluted Non-GAAP Earnings Per Share

 

 

 

 

 

 

 

 

 

 

 

Diluted GAAP earnings per share

 

$

0.38

 

$

0.15

 

 

 

 

 

 

 

Amortization of intangible assets

 

0.03

 

0.02

 

Equity compensation

 

0.06

 

0.08

 

Tax effect of above non-GAAP adjustments

 

(0.02

)

(0.02

)

Malaysia deferred tax asset recognized

 

(0.05

)

 

 

 

 

 

 

 

Diluted non-GAAP earnings per share

 

$

0.40

 

$

0.24

 

 

 

 

 

 

 

Segmental Information

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

Enterprise Data Storage Solutions

 

$

272,069

 

$

334,186

 

HDD Capital Equipment

 

23,597

 

26,313

 

Total

 

$

295,666

 

$

360,499

 

 

 

 

 

 

 

Gross profit:

 

 

 

 

 

Enterprise Data Storage Solutions

 

$

47,113

 

$

47,347

 

HDD Capital Equipment

 

6,027

 

2,551

 

Equity compensation

 

(101

)

(444

)

Total

 

$

53,039

 

$

49,454

 

 

 

 

 

 

 

Summary Of Equity Compensation

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues

 

$

101

 

$

444

 

Research and development

 

662

 

883

 

Selling, general and administrative

 

950

 

1,323

 

 

 

 

 

 

 

Total equity compensation

 

$

1,713

 

$

2,650

 

 

9



 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

XYRATEX LTD

 

(Registrant)

 

 

 

 

 

 

Date: March 29, 2012

By:

/s/ Richard Pearce

 

 

Name: Richard Pearce

 

 

Title: Chief Financial Officer

 

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