Xyratex Ltd. Announces Results for the Fourth Quarter and Fiscal Year 2007

Business Wire, Jan 8, 2008

Q4 Revenues $248.0 million, up 2.9% Year over Year Fiscal Year 2007 Revenues $931.6 million, down 5.3% Year over Year Board Authorizes Stock Repurchase Plan

HAVANT, England -- Xyratex Ltd. (Nasdaq: XRTX), a leading provider of enterprise class data storage subsystems and storage process technology, today announced results for the fourth quarter and fiscal year ended November 30, 2007. Revenues for the fourth quarter were $248.0 million, an increase of 2.9% compared to revenues of $241.1 million for the same period last year.

For the fourth quarter, GAAP net income was $11.7 million, or $0.39 per diluted share compared to GAAP net income of $9.4 million in the same period last year. Non-GAAP net income increased 20.5% to $13.1 million, or a diluted earnings per share of $0.44, compared to non-GAAP net income of $10.9 million, or $0.37 per diluted share, in the same quarter a year ago(1).

Gross profit margin in the fourth quarter was 18.5%, compared to 17.4% in the same period last year and 17.9% in the prior quarter.

Revenues from sales of our Networked Storage Solutions (NSS) products were $187.2 million in the fourth quarter as compared to $167.6 million in the same quarter a year ago, an increase of 11.7%. Gross profit margin in the Networked Storage Solutions business was 15.0% as compared to 13.0% a year ago. Revenues from sales of our Storage Infrastructure (SI) products were $60.8 million as compared to $73.5 million in the same quarter a year ago, a decrease of 17.3%. Gross profit margin in the Storage Infrastructure business was 29.7% as compared to 27.9% a year ago.

Revenues for fiscal year 2007 were $931.6 million, a decrease of 5.3%, compared to revenues of $983.6 million for fiscal year 2006. Revenues from sales of our NSS products were $694.0 million for the year as compared to $598.8 in 2006, an increase of 15.9%. Revenues from sales of our SI products were $237.6 million as compared to $384.9 million in 2006, a decrease of 38.3%.

GAAP net income for fiscal year 2007 was $28.1 million or $0.94 per diluted share compared to a GAAP net income of $58.2 million for fiscal year 2006. Non-GAAP net income for fiscal year 2007 decreased 42.3% to $37.5 million, or a diluted earnings per share of $1.26, compared to non-GAAP net income of $64.9 million, or $2.19 per diluted share, for fiscal year 2006.

"I am pleased with our performance for the 2007 Fiscal Year given the challenges we anticipated at the beginning of the year and duly experienced. And while we weren't immune from constrained capital expenditure in the Hard Drive Industry, our competitive differentiation and business fundamentals in both of our businesses remain strong," said Steve Barber, CEO of Xyratex. "The results for the year support our strong position in the industries we serve and our ongoing effort and focus in expanding our partnerships with our existing customers and in developing partnerships with new customers. We are confident that the fundamentals within the markets we serve are positive and that our technology and strong execution will benefit us over the longer term."

Stock Repurchase Plan

The Board of Directors has recently authorized a stock repurchase plan. According to the terms of the plan, the Company may repurchase up to $30 million of its outstanding common stock following the cessation of the current black-out period on January 11, 2008. As of November 30, 2007, Xyratex had 29.9 million shares outstanding.

Stock repurchase transactions authorized under the plan will occur from time to time in the open market, through block trades or otherwise. Management and the Board of Directors will exercise discretion with respect to the timing and amount of any shares repurchased, based on their evaluation of a variety of factors, including current market conditions. Repurchases may be commenced or suspended at any time without prior notice. Additionally, Xyratex may initiate repurchases under a Rule 10b5-1 plan, which would permit shares to be repurchased when the Company would otherwise be precluded from doing so under insider-trading laws. The repurchase program will be funded using the Company's available cash resources, and it is intended that the repurchase program will be Rule 10b-18 compliant.

Business Highlights

* We announced an OEM agreement with NetApp to develop and supply general disk arrays for a variety of NetApp products. This agreement builds on the successful implementation of disk arrays currently provided by Xyratex to NetApp and incorporated within NetApp's industry leading storage hardware platforms.

* We announced our new OneStor Extensible Storage Platform (ESP) and announced the first in a series of scalable offerings that will be available for storage and server OEMs. OneStor is a modular, standards-based architecture designed to meet diverse needs combining storage density, intelligent platform management, power efficiency and the industry's most versatile storage system design.

* We secured new design wins with ONStor Inc., BlueArc Corp., transtec AG, VMETRO Inc. and EDI Technology Inc. in China.