Download Annual Report, 2.44 MB - Xyratex

XYRATEX LTDNOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)(U.S. dollars and amounts in thousands, except per share data, unless otherwise stated)10. Ordinary Shares and Stock Option plans (Continued)2,576 class C ordinary shares were issued to employees during January and February 2004, whichwere subject to employment restrictions which lapsed as a result of the exchange of these shares forXyratex Ltd common shares on June 29, 2004. The Company granted rights to 2,280 of these shares tocertain directors and senior management during the year ended November 30, 2003.802 Xyratex Group Limited class A preferred ordinary shares were issued to employees anddirectors during the year ended November 30, 2004. Of these, 270 vest over a period of four years and307 were issued in connection with the exercise of rights which were granted to certain directors andsenior management during the year ended November 30, 2003.11. Employee benefit trustsThe Company has a variable interest in an employee benefit trust (the ‘‘Trust’’) which was formedin 1994 by Havant International Holdings Limited (HIHL), a predecessor holding company, for thebenefit of current and former employees and to facilitate obligations under HIHL’s stock option plans.Following the demerger of the Company’s business from HIHL in 2000 (see Note 17), the Trust holdsshares of the Company and has held shares in Havant International Limited (HIL), another businessdemerged from HIHL in 2000. Assets held by the Trust are used to compensate current and formeremployees of both the Company and HIL. The Company is not the primary beneficiary of the Trustbecause it does not absorb expected losses of the Trust, nor does it receive expected residual returns ofthe Trust. As of November 30, 2005 and 2004, the Trust held 1,163 and 2,586 common shares,respectively.Transactions between the Trust and employees of the Company, such as the granting of shares,options over shares, or cash bonuses paid to employees, have been accounted for in accordance withAPB 25, and any resulting compensation expense has been pushed down into these financial statementswith an offsetting entry to additional paid in capital. Grants and other activity related to equity basedcompensation awards given to employees are included in the share option and award activity inNote 10. During the years ended November 30, 2004 and 2003, the Trust granted share options toemployees of the Company totaling 120 and 3 respectively.The Trust pays administrative fees to the Company of $9 per year and paid part of a companybonus of $144 in the year ended November 30, 2005.The Company set up a new employee benefit trust in June 2004. This trust holds 148 commonshares in Xyratex Ltd, included in unissued shares at November 30, 2005. Shares held by this trust willbe used to satisfy the exercise of share options by employees of the Company during the year endedNovember 30, 2005.12. Short-term Borrowings and Long-term DebtAs of November 30, 2005, the Company has credit facilities with a major U.K. financial institution(the ‘‘Bank’’) under which it has the remaining $11,000 of a term loan of $19,000, a revolving creditfacility of up to $10,000 and an overdraft facility of up to $15,000. The term loan was taken out inconnection with the Company’s acquisition of its own shares as part of the private equity investment(Note 1). This loan was taken out in September 2003 and is repayable in equal quarterly installmentsover five years. No amounts are outstanding at November 30, 2005 under the revolving credit orF-34