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EZchip Announces First Quarter 2013 Results



                 EZchip Announces First Quarter 2013 Results

PR Newswire

YOKNEAM, Israel, May 8, 2013

YOKNEAM, Israel, May 8, 2013 /PRNewswire/ -- EZchip Semiconductor Ltd.
(NASDAQ: EZCH), a leader in Ethernet network processors, today announced its
results for the first quarter ended March 31, 2013.

First Quarter 2013 Highlights:

  o First quarter revenues of $15.3 million
  o Gross margin reached 80.8% on a GAAP basis and 81.3% on a non-GAAP basis
  o Net income, on a GAAP basis, was $3.5 million (23% of revenues)
  o Net income, on a non-GAAP basis, was $6.7 million (44% of revenues)
  o Non-GAAP operating cash flow of $6.8 million
  o Net cash at end of quarter was $174.3 million 

First Quarter 2013 Results:

Total revenues in the first quarter of 2013 were $15.3 million, an increase of
6% compared to $14.4 million in the first quarter of 2012, and an increase of
1% compared to $15.2 million in the fourth quarter of 2012.

Net income, on a GAAP basis, for the first quarter of 2013 was $3.5 million,
or $0.12 per share (diluted), compared to net income of $5.1 million, or $0.18
per share (diluted), in the first quarter of 2012, and net income of $4.8
million, or $0.17 per share (diluted), in the fourth quarter of 2012.

Net income, on a non-GAAP basis, for the first quarter of 2013 was $6.7
million, or $0.23 per share (diluted), compared to non-GAAP net income of $7.8
million, or $0.27 per share (diluted), in the first quarter of 2012, and
non-GAAP net income of $7.8 million, or $0.26 per share (diluted), in the
fourth quarter of 2012.

Cash, cash equivalents, marketable securities and deposits as of March 31,
2013, totaled $174.3 million, compared to $168.0 million as of December 31,
2012. Cash generated from operations was $6.8 million, cash used in investing
activities was $0.5 million, and cash provided by financing activities
(resulting from the exercise of options) was $0.05 million.

Eli Fruchter, CEO of EZchip, commented, "We are pleased to report that all our
NP-4 customers are now in production and have begun placing production orders.
Additional platforms are in final development stages and we believe that by
the end of the year substantially all NP-4 based platforms at all customers
will be in production. NP-4 revenues are ramping and are now at a run rate
that exceeds the NP-3 by far and we believe the ramping will continue to
increase significantly in the next few years.

We are also excited to report that NP-5 taped out last month after two years
of extensive development. This is a major milestone for the company. We expect
samples in June and are on target to move the NP-5 to production next year and
believe that substantially all NP-4 customers will adopt the NP-5.

During the quarter we continued to get strong customer feedback on the NPS,
our Network Processor for Smart networks, which our customers report will be a
game changer. There is strong interest from both carrier and data center
customers to use the NPS in their next generation platforms and we believe
that we will sign a selected number of tier one customers before the part
samples. We have selected TSMC's 28nm process for the NPS and we intend to
sell the NPS directly to all customers, thereby shifting from the business
model we applied for the NP-3, NP-4 and NP-5 where we used a royalty-based
model for a certain customer."

Conference Call
The Company will be hosting a conference call later today, May 8, 2013, at
10:00am ET, 7:00am PT, 3:00pm UK time and 5:00pm Israel time. On the call,
management will review and discuss the results, and will be available to
answer investor questions.

To participate through the live webcast, please access the investor relations
section of the Company's web site
at: http://www.ezchip.com/investor_relations.htm, at least 10 minutes before
the conference call commences. If you would like to ask a question on the
call, please contact the investor relations team for the telephone dial in
numbers.

For those unable to listen to the live webcast, a replay of the webcast will
be available the day after the call under the 'Investor Relations' section of
the website.

Use of Non-GAAP Financial Information
In addition to disclosing financial results calculated in accordance with
United States generally accepted accounting principles (GAAP), this release of
operating results also contains non-GAAP financial measures, which EZchip
believes are the principal indicators of the operating and financial
performance of its business. The non-GAAP financial measures exclude the
effects of stock-based compensation expenses recorded in accordance with FASB
ASC 718 and amortization of intangible assets. Management believes the
non-GAAP financial measures provided are useful to investors' understanding
and assessment of the Company's on-going core operations and prospects for the
future, as the charges eliminated are not part of the day-to-day business or
reflective of the core operational activities of the Company.  Management uses
these non-GAAP financial measures as a basis for strategic decisions,
forecasting future results and evaluating the Company's current performance. 
However, such measures should not be considered in isolation or as substitutes
for results prepared in accordance with GAAP.  Reconciliation of the non-GAAP
measures to the most comparable GAAP measures are provided in the schedules
attached to this release.

About EZchip
EZchip is a fabless semiconductor company that provides Ethernet network
processors for networking equipment. EZchip provides solutions that scale from
a few to hundreds of Gigabits-per-second. EZchip's network processors provide
great flexibility and high performance coupled with superior integration and
power efficiency for a wide range of applications in carrier, cloud and data
center network equipment.  For more information on our company, visit the web
site at http://www.ezchip.com.

This press release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended.  Forward-looking statements are
statements that are not historical facts and may include financial projections
and estimates and their underlying assumptions, statements regarding plans,
objectives and expectations with respect to future operations, products and
services, and statements regarding future performance.  These statements are
only predictions based on EZchip's current expectations and projections about
future events.  There are important factors that could cause EZchip's actual
results, level of activity, performance or achievements to differ materially
from the results, level of activity, performance or achievements expressed or
implied by the forward-looking statements.  Those factors include, but are not
limited to, the impact of general economic conditions, competitive products,
product demand and market acceptance risks, customer order cancellations,
reliance on key strategic alliances, fluctuations in operating results, delays
in development of highly-complex products and other factors indicated in
EZchip's filings with the Securities and Exchange Commission (SEC).  For more
details, refer to EZchip's SEC filings and the amendments thereto, including
its Annual Report on Form 20-F filed on March 21, 2013 and its Current Reports
on Form 6-K. EZchip undertakes no obligation to update forward-looking
statements to reflect subsequent occurring events or circumstances, or to
changes in our expectations, except as may be required by law.

-- tables to follow --

EZchip Semiconductor Ltd.

Condensed Consolidated Statements of Operations

(U.S. Dollars in thousands, except per share amounts)

(Unaudited)
                               Three Months Ended
                             March 31,        December 31,     March 31,
                             2013             2012             2012
Revenues                     $      15,296    $      15,207    $     14,415
Cost of revenues             2,941            2,555            2,179
                             12,355           12,652           12,236
Gross profit
                                                                
Operating expenses:
Research and development,    6,098            5,180            4,534
net
Selling, general and         3,257            3,220            3,167
administrative
Total operating expenses     9,355            8,400            7,701
                             3,000            4,252            4,535
Operating income
                                                                
Financial income, net        510              587              597
Net income                   $        3,510   $        4,839   $      5,132
Net income per share:
Basic                        $          0.12  $          0.17  $        0.19
Diluted                      $          0.12  $          0.17  $        0.18
Weighted average shares
used in per share
calculation:
                             28,394,665       28,233,299       27,525,386
Basic
                                                                
                             28,881,145       28,869,499       28,517,609
Diluted
                                                                

 

EZchip Semiconductor Ltd.

Reconciliation of GAAP to Non-GAAP Measures

(U.S. Dollars in thousands, except per share amounts)

(Unaudited)
                           Three Months Ended
                           March 31,        December 31,     March 31,
                           2013             2012             2012
GAAP gross profit          $       12,355   $      12,652    $      12,236
Stock-based compensation   73               74               77
Non-GAAP gross profit      $      12,428    $      12,726    $      12,313
GAAP gross profit as       80.8%            83.2%            84.9%
percentage of revenues
Non-GAAP gross profit as   81.3%            83.7%            85.4%
percentage of revenues
GAAP operating expenses    $        9,355   $        8,400   $        7,701
Stock-based compensation:
    Research and           (1,825)          (1,563)          (1,361)
development
    Selling, general and   (1,327)          (1,265)          (1,144)
administrative
Amortization of
intangible assets
    Selling, general and   --               (51)             (51)
administrative
Non-GAAP operating         $        6,203   $        5,521   $        5,145
expenses
GAAP operating income      $        3,000   $        4,252   $         4,535
Non-GAAP operating income  $        6,225   $        7,205   $         7,168
GAAP net income            $        3,510   $        4,839   $         5,132
Stock-based compensation   3,225            2,902            2,582
Amortization of purchased  --               51               51
intangible assets
Non-GAAP net income        $        6,735   $        7,792   $         7,765
Non-GAAP net income per    $          0.23  $          0.26  $          
share - Diluted                                              0.27
Non-GAAP weighted average  29,868,370       29,634,765       29,144,661
shares - Diluted*

* In calculating diluted non-GAAP net income per share, the diluted weighted
average number of shares outstanding excludes the effects of stock-based
compensation expenses in accordance with FASB ASC 718.

 

EZchip Semiconductor Ltd.

Condensed Consolidated Balance Sheet

(U.S. Dollars in thousands)
                                               March 31,       December 31,
                                               2013            2012
                                               (Unaudited)     (Audited)
ASSETS
CURRENT ASSETS:
Cash, cash equivalents, marketable securities  $     174,288   $     167,968
and deposits
Trade receivables, net                         6,057           4,813
Other receivables                              4,325           4,305
Inventories                                    5,150           4,523
Total current assets                           189,820         181,609
NON CURRENT ASSETS:
Severance pay fund                             6,416           6,066
Long term investment and others                353             358
Total non current assets                       6,769           6,424
PROPERTY AND EQUIPMENT, NET                    1,433           1,285
INTANGIBLE ASSETS, NET                         1,131           1,000
GOODWILL                                       96,276          96,276
TOTAL ASSETS                                   $   295,429     $   286,594
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables                                 $        1,330  $          571
Other payables and accrued expenses            6,259           5,401
Total current liabilities                      7,589           5,972
ACCRUED SEVERANCE PAY                          7,334           6,977
SHAREHOLDERS'  EQUITY:
Share capital                                  161             161
Additional paid-in capital                     316,002         312,723
Accumulated other comprehensive income         859             787
Accumulated deficit                            (36,516)        (40,026)
Total shareholders' equity                     280,506         273,645
TOTAL LIABILITIES AND SHAREHOLDERS'            $   295,429     $   286,594
EQUITY

EZchip Semiconductor Ltd.

Selected Condensed Consolidated Cash Flow Data on a Non-GAAP Basis

(U.S. Dollars in thousands)

(Unaudited)
                                    Three Months Ended
                                    March 31,     December 31,  March 31,
                                    2013          2012          2012
Cash flows from operating
activities:
Net income                          $      3,510  $      4,839  $    5,132
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization       155           183           143
Decrease (increase) in trade and                                 
other receivables, net
                                    (1,174)       (1,878)       681
Decrease (increase) in inventory    (627)         948           (1,178)
Increase (decrease) in trade                                     
payables and other accrued
liabilities, net                    1,666         138           (463)
Stock-based compensation            3,225         2,902         2,582
Net cash provided by operating      6,755         7,132         6,897
activities
Cash flows from investing
activities:
Purchase of property and equipment  (345)         (239)         (336)
Purchase of technology
                                    (131)         --            --
 
Net cash used in investing          (476)         (239)         (336)
activities
Cash flows from financing
activities:
Proceeds from exercise of options   54            1,027         11,415
Net cash provided by financing      54            1,027         11,415
activities
Unrealized gain (loss) on           (13)          (33)          478
marketable securities, net
Increase in cash, cash
equivalents, marketable securities                               
and deposits
                                    6,320         7,887         18,454
 
Cash, cash equivalents, marketable                               
securities and deposits at the
beginning of the period             167,968       160,081       126,770
                                                                 

Cash, cash equivalents, marketable                               
securities and deposits at the end
of the period                       $    174,288  $    167,968  $    145,224

 

Contact:
Ehud Helft / Kenny Green
CCG Investor Relations
ezchip@ccgisrael.com
Tel: (US) 1 646 201 9246

 

SOURCE EZchip Semiconductor Ltd.

Website: http://www.ezchip.com
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