U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
June 27, 2007
XYRATEX LTD
(Registrant’s name)
Langstone Road
Havant
PO9 ISA
(Address of Principal Executive Offices)
Indicate by check mark whether the registrant files annual reports under cover of Form 20-F or Form 40-F.
|
Form 20-F x Form 40-F o |
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
|
Yes o No x |
For Immediate Release
Xyratex Ltd Announces Results for the Second Quarter Fiscal Year 2007
Q2 Revenues $213.0 million
Havant, UK – June 27, 2007 – Xyratex Ltd (Nasdaq: XRTX), a leading provider of enterprise class data storage subsystems and storage process technology, today announced results for the second fiscal quarter ended May 31, 2007. Revenues for the second quarter were $213.0 million, a decrease of 26.3% compared to revenues of $288.9 million for the same period last year.
For the second quarter, GAAP net income was $2.0 million, or $0.07 per diluted share, compared to GAAP net income of $24.6 million, or $0.83 per diluted share, in the same period last year. Non-GAAP net income decreased 80% to $5.1 million, or a diluted earnings per share of $0.17, compared to non-GAAP net income of $25.5 million, or $0.86 per diluted share, in the same quarter a year ago (1).
Gross profit margin in the second quarter was 17%, compared to 21.5% in the same period last year, primarily due to business mix.
Revenues from sales of our Networked Storage Solutions products were $169.2 million as compared to $153.7 million in the same quarter a year ago, an increase of 10%. Gross profit margin in the Networked Storage Solutions business was 14.4% as compared to 13.3% a year ago. Revenues from sales of our Storage Infrastructure products were $43.9 million as compared to $135.1 million in the same quarter a year ago, a decrease of 67.5%. Gross profit margin in the Storage Infrastructure business was 28% as compared to 30.9% a year ago.
“Our second quarter results were in-line with our expectations, and reflect the period of significantly reduced spending from our largest Storage Infrastructure customer as it continues to integrate capital equipment acquired as a result of its recent acquisition. We did a good job of executing to our strategic plans and customer expectations. I am
encouraged with regard to our continued progress in expanding our customer base as well as our efforts in accessing new markets for our capital equipment,” said Steve Barber, CEO of Xyratex. “Despite some challenging customer requirements, I am confident that the fundamentals of the markets we serve continue to remain good and believe we continue to improve on our competitive and technology position.”
Business Highlights
· We announced that our new HS-1235E storage system was honored with the spring Intel® Server & Storage Innovation Award, presented at the semi-annual Intel Developer Forum (IDF) to recognize technological advancements and innovation. The HS-1235E storage system is based on a third-generation Xyratex design and tightly couples the latest in storage, server and processing technologies. Intel will offer the HS-1235E as part of their next generation SSR212MC2 and SSR212MC2R Storage Servers.
· We demonstrated our new F5404E 4Gb FC-SAS/SATA RAID nearline storage system at Storage Networking World in the Spring. The F5404E is aimed at applications requiring large-capacity and low-cost disk storage.
· We secured new design wins with CorData, Dallmeier, Intel, MIC Associates, NEC, and Open Storage Solutions as well as a number of other Tier 2 and 3 customers.
· We secured orders for automation products supporting the photovoltaic solar industry in excess of $5m and have commenced customer factory installations.
Business Outlook
The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. These statements do not include the potential impact of any future acquisitions or divestitures.
· Revenue in the third quarter of 2007 is projected to be in the range $221 to $241 million.
· Fully diluted earnings per share is anticipated to be between $0.04 and $0.17 on a
GAAP basis in the third quarter. On a non-GAAP basis, fully diluted earnings per share is anticipated to be between $0.16 and $0.29. Non-GAAP earnings per share excludes non-cash equity compensation, amortization of intangible assets, certain non-recurring items and related taxation expense. In the third quarter GAAP net income is expected to be reduced by $0.03 per share as a result of a reduction in taxation rates in the United Kingdom.
Conference Call/Webcast Information
Xyratex quarterly results conference call will be broadcast live via the internet at www.xyratex.com/investors on Wednesday, June 27, 2007 at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time. You can also access the conference call by dialing +1 (866) 383-7989 in the United States and +1 (617) 597-5328 outside of the United States, passcode 69480095. The press release will be posted to the company web site www.xyratex.com.
A replay will be
available through July 4, 2007 following the live
call by dialing +1 (888) 286-8010 in the United States and
+1 (617) 801-6888 outside the United States, replay code 11738451.
(1) Non-GAAP net income and diluted earnings per share excludes (a) amortization of intangible assets, (b) equity compensation expense, (c) specified non-recurring items, such as income from sale of a product line, and (d) the related tax effects. 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 whilst recognizing that they have material limitations and that they should only be referred to with reference to the corresponding GAAP measure.
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, is outside the control of management during the period in which the expense is incurred and in addition has not been measured consistently as a result of the implementation of FAS 123R; (c) the income from the sale of the product line is non-recurring and does not form part of the Company’s core operations; (d) the exclusion of the related tax effects of excluding items (a) to (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.
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 compete successfully in the competitive and rapidly changing marketplace in which we operate, failure to retain key employees, cancellation or delay of projects and adverse general economic conditions in the United States and internationally. 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 storage process technology. The company designs and manufactures enabling technology that provides OEM and disk drive manufacturer customers with data storage products to support high-performance storage and data communication networks. Xyratex has over 20 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.
Contacts:
Xyratex Investor
Relations
Brad Driver
Tel: +1 (408) 325-7260
Email: bdriver@us.xyratex.com
Website: www.xyratex.com
XYRATEX LTD
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
Three Months Ended, |
|
Six Months Ended |
|
||||||||
|
|
|
May 31, |
|
May 31, |
|
May 31, |
|
May 31, |
|
||||
|
|
|
2007 |
|
2006 |
|
2007 |
|
2006 |
|
||||
|
|
|
(US dollars in thousands, except per share amounts) |
|
||||||||||
|
Revenues: |
|
|
|
|
|
|
|
|
|
||||
|
Networked Storage Solutions |
|
$ |
169,155 |
|
$ |
153,738 |
|
$ |
332,770 |
|
$ |
282,568 |
|
|
Storage Infrastructure |
|
43,870 |
|
135,144 |
|
116,661 |
|
196,831 |
|
||||
|
Total revenues |
|
213,025 |
|
288,882 |
|
449,431 |
|
479,399 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Cost of revenues |
|
176,804 |
|
226,853 |
|
368,175 |
|
379,801 |
|
||||
|
Gross profit: |
|
|
|
|
|
|
|
|
|
||||
|
Networked Storage Solutions |
|
24,275 |
|
20,504 |
|
46,561 |
|
40,015 |
|
||||
|
Storage Infrastructure |
|
12,273 |
|
41,778 |
|
35,267 |
|
59,944 |
|
||||
|
Equity compensation |
|
(327 |
) |
(253 |
) |
(572 |
|
(361 |
) |
||||
|
Total gross profit |
|
36,221 |
|
62,029 |
|
81,256 |
|
99,598 |
|
||||
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
||||
|
Research and development |
|
19,209 |
|
19,402 |
|
38,002 |
|
35,864 |
|
||||
|
Selling, general and administrative |
|
14,584 |
|
15,955 |
|
29,384 |
|
28,818 |
|
||||
|
Amortization of intangible assets |
|
1,651 |
|
1,185 |
|
3,302 |
|
2,375 |
|
||||
|
Total operating expenses |
|
35,444 |
|
36,542 |
|
70,688 |
|
67,057 |
|
||||
|
Operating income |
|
777 |
|
25,487 |
|
10,568 |
|
32,541 |
|
||||
|
Other income |
|
— |
|
1,965 |
|
890 |
|
1,965 |
|
||||
|
Interest income, net |
|
774 |
|
233 |
|
1,429 |
|
438 |
|
||||
|
Income before income taxes |
|
1,551 |
|
27,685 |
|
12,887 |
|
34,944 |
|
||||
|
(Benefit) provision for income taxes |
|
(450 |
) |
3,109 |
|
771 |
|
3,931 |
|
||||
|
Net income |
|
$ |
2,001 |
|
$ |
24,576 |
|
$ |
12,116 |
|
$ |
31,013 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net earnings per share: |
|
|
|
|
|
|
|
|
|
||||
|
Basic |
|
$ |
0.07 |
|
$ |
0.86 |
|
$ |
0.42 |
|
$ |
1.08 |
|
|
Diluted |
|
$ |
0.07 |
|
$ |
0.83 |
|
$ |
0.41 |
|
$ |
1.05 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Weighted average common shares (in thousands), used in computing net earnings per share: |
|
|
|
|
|
|
|
|
|
||||
|
Basic |
|
28,955 |
|
28,670 |
|
28,900 |
|
28,589 |
|
||||
|
Diluted |
|
29,855 |
|
29,739 |
|
29,832 |
|
29,511 |
|
||||
XYRATEX LTD
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
May 31, |
|
November 30, |
|
||
|
|
|
2007 |
|
2006 |
|
||
|
|
|
(US dollars and amounts in |
|
||||
|
|
|
thousands) |
|
||||
|
ASSETS |
|
|
|
|
|
||
|
Current assets: |
|
|
|
|
|
||
|
Cash and cash equivalents |
|
$ |
61,400 |
|
$ |
56,921 |
|
|
Accounts receivable, net |
|
101,740 |
|
105,324 |
|
||
|
Inventories |
|
81,024 |
|
93,111 |
|
||
|
Prepaid expenses |
|
3,686 |
|
2,390 |
|
||
|
Deferred income taxes |
|
2,310 |
|
2,513 |
|
||
|
Other current assets |
|
6,790 |
|
7,247 |
|
||
|
Total current assets |
|
256,950 |
|
267,506 |
|
||
|
Property, plant and equipment, net |
|
35,812 |
|
34,471 |
|
||
|
Intangible assets, net |
|
59,359 |
|
58,109 |
|
||
|
Deferred income taxes |
|
17,052 |
|
15,594 |
|
||
|
Total assets |
|
$ |
369,173 |
|
$ |
375,680 |
|
|
|
|
|
|
|
|
||
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
||
|
Current liabilities: |
|
|
|
|
|
||
|
Accounts payable |
|
$ |
80,651 |
|
$ |
84,896 |
|
|
Short-term borrowings |
|
— |
|
4,000 |
|
||
|
Employee compensation and benefits payable |
|
11,016 |
|
16,645 |
|
||
|
Deferred revenue |
|
12,217 |
|
16,303 |
|
||
|
Income taxes payable |
|
1,596 |
|
1,641 |
|
||
|
Other accrued liabilities |
|
13,101 |
|
14,701 |
|
||
|
Total current liabilities |
|
118,581 |
|
138,186 |
|
||
|
Long-term debt |
|
— |
|
3,000 |
|
||
|
Total liabilities |
|
118,581 |
|
141,186 |
|
||
|
|
|
|
|
|
|
||
|
Shareholders’ equity |
|
|
|
|
|
||
|
Common shares of Xyratex Ltd (in thousands), par
value $0.01 per share |
|
290 |
|
288 |
|
||
|
Additional paid-in capital |
|
349,958 |
|
344,686 |
|
||
|
Accumulated other comprehensive income |
|
1,482 |
|
2,774 |
|
||
|
Accumulated deficit |
|
(101,138 |
) |
(113,254 |
) |
||
|
Total shareholders’ equity |
|
250,592 |
|
234,494 |
|
||
|
Total liabilities and shareholders’ equity |
|
$ |
369,173 |
|
$ |
375,680 |
|
XYRATEX LTD
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
Six Months Ended, |
|
||||
|
|
|
May 31, |
|
May 31, |
|
||
|
|
|
2007 |
|
2006 |
|
||
|
|
|
(US dollars in thousands) |
|
||||
|
Cash flows from operating activities: |
|
|
|
|
|
||
|
Net income |
|
$ |
12,116 |
|
$ |
31,011 |
|
|
Adjustments to reconcile net income to net cash used in operating activities: |
|
|
|
|
|
||
|
Depreciation |
|
6,434 |
|
4,421 |
|
||
|
Amortization of intangible assets |
|
3,302 |
|
2,375 |
|
||
|
Non-cash equity compensation |
|
3,830 |
|
3,324 |
|
||
|
Changes in assets and liabilities, net of impact of acquisitions and divestitures |
|
|
|
|
|
||
|
Accounts receivable |
|
3,584 |
|
(30,789 |
) |
||
|
Inventories |
|
12,087 |
|
(52,036 |
) |
||
|
Prepaid expenses and other current assets |
|
(2,685 |
) |
(1,219 |
) |
||
|
Accounts payable |
|
(4,245 |
) |
43,058 |
|
||
|
Employee compensation and benefits payable |
|
(5,629 |
) |
(1,282 |
) |
||
|
Deferred revenue |
|
(4,086 |
) |
10,928 |
|
||
|
Income taxes payable |
|
(45 |
) |
185 |
|
||
|
Deferred income taxes |
|
139 |
|
4,388 |
|
||
|
Other accrued liabilities |
|
(476 |
) |
5,097 |
|
||
|
Net cash provided by operating activities |
|
24,326 |
|
19,461 |
|
||
|
|
|
|
|
|
|
||
|
Cash flows from investing activities: |
|
|
|
|
|
||
|
Investments in property, plant and equipment |
|
(7,775 |
) |
(10,985 |
) |
||
|
Acquisition of intangible assets |
|
(4,855 |
) |
— |
|
||
|
Acquisition of business, net of cash received |
|
(1,661 |
) |
(3,185 |
) |
||
|
Net cash used in investing activities |
|
(14,291 |
) |
(14,170 |
) |
||
|
|
|
|
|
|
|
||
|
Cash flows from financing activities: |
|
|
|
|
|
||
|
Payments of long-term borrowings |
|
(7,000 |
) |
(2,000 |
) |
||
|
Proceeds from issuance of shares |
|
1,444 |
|
2,825 |
|
||
|
Net cash provided by (used in) financing activities |
|
(5,556 |
) |
825 |
|
||
|
Change in cash and cash equivalents |
|
4,479 |
|
6,116 |
|
||
|
Cash and cash equivalents at beginning of period |
|
56,921 |
|
41,240 |
|
||
|
Cash and cash equivalents at end of period |
|
$ |
61,400 |
|
$ |
47,356 |
|
|
|
|
(0 |
) |
|
|
||
XYRATEX LTD
SUPPLEMENTAL INFORMATION
|
|
|
Three Months Ended |
|
Six Months Ended |
|
||||||||
|
|
|
May 31, |
|
May 31, |
|
May 31, |
|
May 31, |
|
||||
|
|
|
2007 |
|
2006 |
|
2007 |
|
2006 |
|
||||
|
|
|
(US dollars in thousands, except |
|
(US dollars in thousands, except |
|
||||||||
|
Summary Reconciliation Of GAAP Net Income To Non-GAAP Net Income |
|
|
|
|
|
|
|
|
|
||||
|
GAAP net income |
|
$ |
2,001 |
|
$ |
24,576 |
|
$ |
12,116 |
|
$ |
31,013 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Amortization of intangible assets |
|
1,651 |
|
1,185 |
|
3,302 |
|
2,375 |
|
||||
|
Equity compensation |
|
2,170 |
|
1,955 |
|
3,830 |
|
3,324 |
|
||||
|
Other income |
|
— |
|
(1,965 |
) |
(890 |
) |
(1,965 |
) |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Tax effect of non-GAAP adjustments |
|
(718 |
) |
(255 |
) |
(1,392 |
) |
(953 |
) |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Non-GAAP net income |
|
$ |
5,104 |
|
$ |
25,496 |
|
$ |
16,966 |
|
$ |
33,794 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Summary Reconciliation Of Diluted GAAP Earnings Per Share To Diluted Non-GAAP Earnings Per Share |
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Diluted GAAP earnings per share |
|
$ |
0.07 |
|
$ |
0.83 |
|
$ |
0.41 |
|
$ |
1.05 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Amortization of intangible assets |
|
0.06 |
|
0.04 |
|
0.11 |
|
0.08 |
|
||||
|
Equity compensation |
|
0.07 |
|
0.07 |
|
0.13 |
|
0.11 |
|
||||
|
Other income |
|
— |
|
(0.07 |
) |
(0.03 |
) |
(0.07 |
) |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Tax effect of non-GAAP adjustments |
|
(0.02 |
) |
(0.01 |
) |
(0.05 |
) |
(0.03 |
) |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Diluted non-GAAP earnings per share |
|
$ |
0.17 |
|
$ |
0.86 |
|
$ |
0.57 |
|
$ |
1.15 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Summary Of Equity Compensation |
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Cost of revenues |
|
327 |
|
253 |
|
572 |
|
361 |
|
||||
|
Research and development |
|
655 |
|
534 |
|
1,146 |
|
819 |
|
||||
|
Selling, general and administrative |
|
1,188 |
|
1,168 |
|
2,112 |
|
2,144 |
|
||||
|
|
|
|
|
|
|
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Total equity compensation |
|
2,170 |
|
1,955 |
|
3,830 |
|
3,324 |
|
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Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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XYRATEX LTD |
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(Registrant) |
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By: |
/s/ Richard Pearce |
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Name: Richard Pearce |
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Title: Chief Financial Officer |
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Date: 27 June 2007 |
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