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

 

January 13, 2014

 

Commission File Number: 001-35766

 


 

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 Fourth Quarter and Fiscal Year 2013

 

Havant, UK — January 13, 2014 — Xyratex Ltd (Nasdaq: XRTX), a leading provider of data storage technology, today announced results for the fourth fiscal quarter and fiscal year ended November 30, 2013.

 

Revenues for the fourth quarter were $185.3 million, a decrease of 30.2% compared to revenues of $265.4 million for the same period in the prior year. Revenues for fiscal year 2013 were $814 million, a decrease of 29.7% compared to revenues of $1,159 million for fiscal year 2012. These year over year declines were principally related to the continued reduction in revenue from NetApp with the current program coming to an end in our current quarter as previously announced.

 

Gross profit margin in the fourth quarter was 22.2%, compared to 14.5% in the same period in the prior year and 20.9% in the prior quarter. Gross profit margin for fiscal year 2013 was 21% compared to 16.9% in the previous year. The increases from last year reflect a favorable variation in customer and product mix in our Enterprise Data Storage Solutions product segment as well as improved margins for newer products in our Capital Equipment segment.

 

For the fourth quarter of fiscal 2013, GAAP net loss was $21.4 million, or $0.78 per share, compared to a GAAP net loss of $7.9 million, or $0.29 per share, in the same period in the prior year. Non-GAAP net loss was $0.8 million, or $0.03 per share, compared to a non-GAAP net loss of $6.4 million, or $0.24 per share, in the same quarter a year ago(1).

 

GAAP net loss for fiscal year 2013 was $21.2 million, or $0.77 per share, compared to GAAP net income of $17.7 million, or $0.63 per diluted share, for fiscal year 2012. Non-GAAP net income for fiscal year 2013 decreased to $4.2 million, or $0.15 per diluted share, compared to $24.6 million, or $0.87 per diluted share, for fiscal year 2012.

 

Included in both the 2013 fiscal fourth quarter and full year GAAP results, but excluded from the non-GAAP results, is a non-cash valuation allowance against the deferred tax asset of $19.2 million. This valuation allowance relates primarily to UK tax losses which have been recorded as a result of certain tax concessions in the UK and the tax structure of the overall Xyratex Ltd group. This valuation allowance does not indicate in itself that the overall Xyratex Ltd group will not be profitable in future fiscal periods.

 

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 quarter. The dividend will be payable on February 17, 2014 to shareholders of record as of the close of business on February 4, 2014. This dividend represents a quarterly payout of approximately $2.1 million in aggregate, or $8.4 million on an annualized basis.

 

2



 

Business Outlook and Conference Call

 

Given the Company’s announcement on December 23, 2013 that it has entered into a definitive agreement to be acquired by Seagate Technology plc, the Company is not providing an outlook for its fiscal 2014 first quarter and will not be hosting a conference call to discuss its results.

 


(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), (d) the tax expense resulting from recording a valuation allowance against the UK deferred tax asset, (e) the tax expense resulting from a reduction in the deferred tax asset caused by a fall in UK tax rates prior to the recording of a valuation allowance and (f) the recognition of a Malaysia deferred tax asset in the first quarter of fiscal 2012. A reconciliation of non-GAAP net income (loss) and diluted earnings (loss) per share to GAAP net income and GAAP diluted earnings (loss) per share is included in a table immediately following the condensed consolidated statements of cash flows.

 

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; (d) and (e) the recording of a valuation allowance against the UK deferred tax asset and the impact of the reduction in UK tax rates are non-cash and not comparable across periods or with other companies; and (f) 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

 

3



 

Safe Harbor Statement

 

This press release contains forward-looking statements. These statements relate to future events or our future financial performance. 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. 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,” “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.

 

4



 

Contact:

 

Vice President of Investor Relations

Brad Driver

Tel: +1 (510) 687-5260

Email: bdriver@xyratex.com

Website: www.xyratex.com

 

5



 

XYRATEX LTD

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

Three Months Ended,

 

Year Ended,

 

 

 

November 30,

 

November 30,

 

November 30,

 

November 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

(US dollars in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

185,254

 

$

265,446

 

$

814,318

 

$

1,158,898

 

Cost of revenues

 

144,139

 

226,941

 

643,237

 

963,062

 

Gross profit

 

41,115

 

38,505

 

171,081

 

195,836

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Research and development

 

24,296

 

26,436

 

98,101

 

103,667

 

Selling, general and administrative

 

18,333

 

17,507

 

69,466

 

68,432

 

Restructuring costs

 

857

 

4,120

 

3,672

 

4,120

 

Amortization of intangible assets

 

452

 

617

 

2,057

 

3,154

 

Total operating expenses

 

43,938

 

48,680

 

173,296

 

179,373

 

Operating income (loss)

 

(2,823

)

(10,175

)

(2,215

)

16,463

 

Interest income, net

 

50

 

176

 

257

 

799

 

Income (loss) before income taxes

 

(2,773

)

(9,999

)

(1,958

)

17,262

 

Provision (benefit) for income taxes

 

18,598

 

(2,056

)

19,253

 

(398

)

Net income (loss)

 

$

(21,371

)

$

(7,943

)

$

(21,211

)

$

17,660

 

 

 

 

 

 

 

 

 

 

 

Net earnings (loss) per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.78

)

$

(0.29

)

$

(0.77

)

$

0.64

 

Diluted

 

$

(0.78

)

$

(0.29

)

$

(0.77

)

$

0.63

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Basic

 

27,560

 

27,024

 

27,463

 

27,513

 

Diluted

 

27,560

 

27,024

 

27,463

 

28,199

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per share

 

$

0.08

 

$

0.08

 

$

2.30

 

$

0.29

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income (loss):

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(21,371

)

$

(7,943

)

$

(21,211

)

$

17,660

 

Unrealized gain (loss) on forward foreign currency contracts

 

2,746

 

696

 

438

 

1,323

 

Reclassification of loss (gain) into net income

 

438

 

167

 

822

 

877

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income (loss)

 

$

(18,187

)

$

(7,080

)

$

(19,951

)

$

19,860

 

 

6



 

XYRATEX LTD

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

November 30,

 

November 30,

 

 

 

2013

 

2012

 

 

 

(US dollars and amounts in 
thousands)

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

102,992

 

$

117,174

 

Accounts receivable, net

 

90,835

 

132,917

 

Inventories

 

132,227

 

171,605

 

Prepaid expenses

 

3,316

 

3,134

 

Deferred income taxes

 

762

 

228

 

Other current assets

 

11,612

 

7,121

 

Total current assets

 

341,744

 

432,179

 

Property, plant and equipment, net

 

41,595

 

40,194

 

Intangible assets, net

 

14,274

 

14,975

 

Deferred income taxes

 

6,583

 

23,929

 

Total assets

 

$

404,196

 

$

511,277

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

67,061

 

$

82,125

 

Employee compensation and benefits payable

 

18,896

 

17,961

 

Deferred revenue

 

4,880

 

18,521

 

Income taxes payable

 

1,649

 

369

 

Other accrued liabilities

 

16,886

 

17,767

 

Total current liabilities

 

109,372

 

136,743

 

Long-term debt

 

 

 

Total liabilities

 

$

109,372

 

$

136,743

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

Common shares (in thousands), par value $0.01 per share 70,000 authorized, 27,563 and 27,024 issued and outstanding

 

$

275

 

$

270

 

Additional paid-in capital

 

314,465

 

354,593

 

Accumulated other comprehensive income

 

2,123

 

863

 

Accumulated income (deficit)

 

(22,039

)

18,808

 

Total shareholders’ equity

 

294,824

 

374,534

 

Total liabilities and shareholders’ equity

 

$

404,196

 

$

511,277

 

 

7



 

XYRATEX LTD

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

Year Ended,

 

 

 

November 30,

 

November 30,

 

 

 

2013

 

2012

 

 

 

(US dollars in thousands)

 

Cash flows from operating activities:

 

 

 

 

 

Net income (loss)

 

$

(21,211

)

$

17,660

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

Depreciation

 

 

15,760

 

17,936

 

Amortization of intangible assets

 

 

2,057

 

3,155

 

Non-cash equity compensation

 

 

3,158

 

6,602

 

Loss on sale of assets

 

 

 

2,297

 

Deferred income taxes

 

 

16,387

 

(2,541

)

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

 

 

 

 

 

Accounts receivable

 

 

42,082

 

67,825

 

Inventories

 

 

39,378

 

(7,425

)

Prepaid expenses and other current assets

 

 

(3,701

)

1,208

 

Accounts payable

 

 

(15,064

)

(86,571

)

Employee compensation and benefits payable

 

 

935

 

(3,825

)

Deferred revenue

 

 

(13,641

)

10,829

 

Income taxes payable

 

 

1,280

 

326

 

Other accrued liabilities

 

 

(882

)

(1,743

)

Net cash provided by operating activities

 

 

66,538

 

25,733

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Investments in property, plant and equipment

 

 

(17,161

)

(15,212

)

Payment for acquisition of intangible assets

 

 

(1,355

)

(3,500

)

Net cash used in investing activities

 

 

(18,516

)

(18,712

)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Proceeds from issuance of shares

 

 

30

 

661

 

Repurchase of shares

 

 

 

(13,600

)

Dividends to shareholders

 

 

(62,234

)

(9,538

)

Net cash used in financing activities

 

 

(62,204

)

(22,477

)

Change in cash and cash equivalents

 

 

(14,182

)

(15,456

)

Cash and cash equivalents at beginning of period

 

 

117,174

 

132,630

 

Cash and cash equivalents at end of period

 

$

102,992

 

$

117,174

 

 

8



 

XYRATEX LTD

SUPPLEMENTAL INFORMATION

 

 

 

Three Months Ended

 

Year Ended

 

 

 

November 30,

 

November 30,

 

November 30,

 

November 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

(US dollars in thousands, except
per share amounts)

 

(US dollars in thousands, except per
share amounts)

 

 

 

 

 

 

 

 

 

 

 

Summary Reconciliation Of GAAP Net Income (Loss) To Non-GAAP Net Income (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net income (loss)

 

$

(21,371

)

$

(7,943

)

$

(21,211

)

$

17,660

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

452

 

617

 

2,057

 

3,154

 

Equity compensation

 

1,260

 

1,554

 

3,158

 

6,602

 

Tax effect of above non-GAAP adjustments

 

(342

)

(526

)

(1,095

)

(2,450

)

Valuation allowance against UK deferred tax asset

 

19,225

 

 

19,225

 

 

Effect of changes in tax rates

 

 

(134

)

2,104

 

1,105

 

Malaysia deferred tax asset recognized

 

 

 

 

(1,489

)

 

 

 

 

 

 

 

 

 

 

Non-GAAP net income (loss)

 

$

(776

)

$

(6,432

)

$

4,238

 

$

24,582

 

 

 

 

 

 

 

 

 

 

 

Summary Reconciliation Of Diluted GAAP Earnings (Loss) Per Share To Diluted Non-GAAP Earnings (Loss) Per Share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted GAAP earnings (loss) per share

 

$

(0.78

)

$

(0.29

)

$

(0.77

)

$

0.63

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

0.02

 

0.02

 

0.07

 

0.11

 

Equity compensation

 

0.05

 

0.06

 

0.11

 

0.23

 

Tax effect of above non-GAAP adjustments

 

(0.01

)

(0.02

)

(0.04

)

(0.09

)

Valuation allowance against UK deferred tax asset

 

0.70

 

 

0.70

 

 

Effect of changes in tax rates

 

 

(0.00

)

0.08

 

0.04

 

Malaysia deferred tax asset recognized

 

 

 

 

(0.05

)

 

 

 

 

 

 

 

 

 

 

Diluted non-GAAP earnings (loss) per share

 

$

(0.03

)

$

(0.24

)

$

0.15

 

$

0.87

 

 

 

 

 

 

 

 

 

 

 

Segmental Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

Enterprise Data Storage Solutions

 

$

148,323

 

$

200,135

 

$

655,184

 

$

974,043

 

HDD Capital Equipment

 

36,931

 

65,311

 

159,134

 

184,855

 

Total

 

$

185,254

 

$

265,446

 

$

814,318

 

$

1,158,898

 

 

 

 

 

 

 

 

 

 

 

Gross profit:

 

 

 

 

 

 

 

 

 

Enterprise Data Storage Solutions

 

$

29,895

 

$

28,487

 

$

122,212

 

$

155,326

 

HDD Capital Equipment

 

11,296

 

10,298

 

49,093

 

41,475

 

Equity compensation

 

(76

)

(280

)

(224

)

(965

)

Total

 

$

41,115

 

$

38,505

 

$

171,081

 

$

195,836

 

 

 

 

 

 

 

 

 

 

 

Summary Of Equity Compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues

 

$

76

 

$

280

 

$

224

 

$

965

 

Research and development

 

329

 

522

 

738

 

2,300

 

Selling, general and administrative

 

855

 

752

 

2,196

 

3,337

 

 

 

 

 

 

 

 

 

 

 

Total equity compensation

 

$

1,260

 

$

1,554

 

$

3,158

 

$

6,602

 

 

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: January 13, 2014

By:

/s/ Richard Pearce

 

 

Name: Richard Pearce

 

 

Title: Chief Financial Officer

 

10