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Interest RatesWe had cash and cash equivalents at November 30, 2005 totaling $41.2 million. These are primarilyheld in variable interest liquidity funds and overnight deposits. In addition, at November 30, 2005 wehad short and long-term bank borrowings with variable interest rates amounting to $11.0 million. Wedo not hedge our exposure to interest rate fluctuations through the use of derivative instruments.For the year ended November 30, 2005 we had average variable rate cash and cash equivalentbalances, net of variable rate borrowings, of approximately $37.8 million. A hypothetical 1% change ininterest rates during our 2005 fiscal year would have impacted our net interest income by approximately$0.4 million.Since November 30, 2005, there has not been a material change to our market risk exposurerelated to interest rates.ITEM 12: DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIESNot applicable.PART IIITEM 13: DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIESNone.ITEM 14: MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERSAND USE OF PROCEEDSNone.ITEM 15: CONTROLS AND PROCEDURESThe Company maintains disclosure controls and procedures that are designed to ensure thatinformation required to be disclosed in the Company’s Securities Exchange Act of 1934 reports isrecorded, processed, summarized and reported within the time periods specified in the Securities andExchange Commission’s rules and forms and that such information is accumulated and communicatedto the Group’s management, including its Chief Executive and Chief Financial Officer, as appropriate,to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosurecontrols and procedures, management recognizes that any controls and procedures, no matter how welldesigned and operated, can provide only reasonable assurance of achieving the desired controlobjectives, and management is required to apply its judgment in evaluating the cost-benefit relationshipof possible controls and procedures.As required by SEC Rule 13a-15(b), the Company carried out an evaluation, under the supervisionand with the participation of the Company’s management, including the Company’s Chief Executiveand the Company’s Chief Financial Officer, of the effectiveness of the design and operation of theCompany’s disclosure controls and procedures as of the end of the period covered by this AnnualReport. Based on the foregoing, the Company’s Chief Executive and Chief Financial Officer concludedthat the Company’s disclosure controls and procedures were effective at the reasonable assurance level.There have been no significant changes in the Company’s internal controls or in other factors thatcould significantly affect the internal controls subsequent to the date the Company completed itsevaluation.82
Item 16A: Audit Committee Financial ExpertOur Board of Directors has determined Ernest Sampias as an audit committee financial expert.Item 16B: Code of EthicsThe Company has in place a Code of Business Conduct and Ethics that applies to all Directors,officers and employees, which qualifies as a code of ethics as required by recent SEC rule adoptionsunder the Sarbanes-Oxley Act of 2002. The Code of Business Conduct and Ethics applies to theCompany’s principal executive officer and principal financial officer, principal accounting officer orcontroller and other persons performing similar functions. The full text of the Code of BusinessConduct and Ethics is included as an exhibit to our Annual Report on Form 20-F for our fiscal yearended November 30, 2004 (SEC File No 000-50799 as filed with the SEC on 28 February, 2005, whichis available at www.sec.gov.Item 16C: Principal Account Fees and ServicesThe following fees were billed by our independent auditors, PricewaterhouseCoopers LLP, duringthe two years ended November 30, 2005:Year endedNovember 30,2005 2004(U.S. dollars inthousands)Audit Fees (1) ....................................................... $485 $ 388Audit-related fees (2) ................................................. — 1,679Tax fees (3) ......................................................... 450 554All other fees (4) .................................................... 8 39Total fees ......................................................... $943 $2,661(1) Represents fees for professional services related to the audit of our annual consolidated financialstatements for years ended November 30, 2005 and 2004, reviews of the financial statementsincluded in the Company’s quarterly financial press releases on Form 6-k and the statutory auditsof our subsidiaries.(2) Represents fees for professional services related to our initial public offering in 2004 and the auditof ZT Automation LLC in connection with our acquisition of the ZT Automation business.(3) Represents fees for professional services related to tax services, including tax compliance, taxadvice, tax planning and expatriate tax services.(4) In our 2005 fiscal year represents fees for professional services relating to advising on the settingup of overseas branches and advisory work related to obtaining government grants and for the2004 fiscal year represents fees for professional services related to advising on the setting up ofoverseas branches.Audit Committee pre-approval policies and proceduresWe have established a policy addressing the independence of our external auditors and theprovision of services by our external auditors. Pursuant to this policy, our external auditors may onlyprovide certain permissible audit services, audit-related services and non-audit services that have beenpre-approved by the Audit Committee. The Audit Committee has granted general pre-approval to allpermissible services to be provided by the Company’s external auditors not in excess of $200,000 in83
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XYRATEX LTDANNUAL REPORT FOR THE YE
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INTRODUCTIONWe are incorporated und
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Year Ended November 30,2005 2004 20
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The computations for the weighted a
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The markets in which we operate are
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technological capabilities. This co
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may cease production of components,
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• potentially adverse tax consequ
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We could incur substantial costs, i
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influence by voting at a meeting of
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Xyratex Ltd to the former sharehold
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In addition to the rapid growth of
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RAID controller technology is proje
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Our Competitive StrengthsDisk drive
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the storage subsystem and disk driv
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Our storage subsystems are internal
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