EZchip Announces Second Quarter 2013 Results PR Newswire YOKNEAM, Israel, Aug. 7, 2013 YOKNEAM, Israel, Aug. 7, 2013 /PRNewswire/ --EZchip Semiconductor Ltd. (NASDAQ: EZCH), a leader in Ethernet network processors, today announced its results for the second quarter ended June 30, 2013. Second Quarter 2013 Highlights: oSecond quarter revenues of $16.7 million oGross margin reached 85.1% on a GAAP basis and 85.6% on a non-GAAP basis oNet income, on a GAAP basis, was $5.1 million (31% of revenues) oNet income, on a non-GAAP basis, was $8.7 million (52% of revenues) oOperating cash flow of $7.5 million oNet cash at end of quarter was $181.9 million Second Quarter 2013 Results: Total revenues in the second quarter of 2013 were $16.7 million, an increase of 5% compared to $15.8 million in the second quarter of 2012, and an increase of 9% compared to $15.3 million in the first quarter of 2013. Net income, on a GAAP basis, for the second quarter of 2013 was $5.1 million, or $0.18 per share (diluted), compared to net income of $5.6 million, or $0.19 per share (diluted), in the second quarter of 2012, and net income of $3.5 million, or $0.12 per share (diluted), in the first quarter of 2013. Net income, on a non-GAAP basis, for the second quarter of 2013 was $8.7 million, or $0.29 per share (diluted), compared to non-GAAP net income of $8.4 million, or $0.29 per share (diluted), in the second quarter of 2012, and non-GAAP net income of $6.7 million, or $0.23 per share (diluted), in the first quarter of 2013. Cash, cash equivalents, marketable securities and deposits as of June30, 2013, totaled $181.9 million, compared to $174.3 million as of March 31, 2013. Cash generated from operations was $7.5 million, cash used in investing activities was $0.3 million, cash provided by financing activities (resulting from the exercise of options) was $0.8 million and a decrease of $0.4 million resulted from cash adjustment of marketable securities, net. First Six Months 2013 Results Total revenues for the six months ended June 30, 2013 were $31.9 million, a year-over-year increase of 6% compared to $30.2 million for the six months ended June30, 2012. Net income on a GAAP basis for the six months ended June 30, 2013 was $8.7 million, or $0.30 per share (diluted), compared to net income of $10.7 million, or $0.37 per share (diluted), for the six months ended June 30, 2012. Net income on a non-GAAP basis for the six months ended June30, 2013 was $15.4 million or $0.51 per share (diluted), compared with non-GAAP net income of $16.2 million, or $0.55 per share (diluted), for the six months ended June30, 2012. Eli Fruchter, CEO of EZchip, commented, "We are pleased to report that samples of the NP-5 network processor have arrived and are now being tested in our labs. We expect to move the NP-5 to production next year and believe that substantially all NP-4 customers will adopt the NP-5 for their next generation platforms. With the forecasted growth in edge routing, the recent improvement in carriers' capex and the significant platforms that are projected to use the NP-4 and NP-5, we expect our customers will sell their platforms successfully, grow their market share and continue to drive growth for us in the coming years. "During the quarter we continued to receive strong customer feedback on the NPS, our Network Processor for Smart networks, and believe that the NPS will expand our target markets to include SDN (Software Define Networks) and NFV (Network Function Virtualization) as those technologies mature. NPS was designed to perform data plane processing at extremely high speeds, separate from general purpose CPUs that are used for the control plane, a design that perfectly matches the SDN and NFV network architectures." Conference Call The Company will be hosting a conference call later today, August 7, 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. EZchip Semiconductor Ltd. Condensed Consolidated Statements of Operations (U.S. Dollars in thousands, except per share amounts) (Unaudited) Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, June 30, 2013 2013 2012 2013 2012 Revenues $ 16,653 $ 15,296 $ 15,798 $ 31,949 $ 30,213 Cost of revenues 2,475 2,941 2,887 5,416 5,066 Gross profit 14,178 12,355 12,911 26,533 25,147 Operating expenses: Research and 6,267 6,098 4,840 12,365 9,374 development, net Selling, general 3,269 3,257 3,200 6,526 6,367 and administrative Total operating 9,536 9,355 8,040 18,891 15,741 expenses Operating income 4,642 3,000 4,871 7,642 9,406 Financial income, 505 510 682 1,015 1,279 net Net income $ 5,147 $ 3,510 $ 5,553 $ 8,657 $ 10,685 Net income per share: Basic $ 0.18 $ 0.12 $ 0.20 $ 0.30 $ 0.38 Diluted $ 0.18 $ 0.12 $ 0.19 $ 0.30 $ 0.37 Weighted average shares used in per share calculation: Basic 28,571,954 28,394,665 28,042,283 28,483,800 27,783,834 Diluted 28,917,717 28,881,145 28,823,804 28,946,460 28,700,836 EZchip Semiconductor Ltd. Reconciliation of GAAP to Non-GAAP Measures (U.S. Dollars in thousands, except per share amounts) (Unaudited) Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, June 30, 2013 2013 2012 2013 2012 GAAP gross profit $ 14,178 $ 12,355 $ 12,911 $ 26,533 $ 25,147 Stock-based 73 73 74 146 151 compensation Non-GAAP gross $ 14,251 $ 12,428 $ 12,985 $ 26,679 $ 25,298 profit GAAP gross profit as percentage of 85.1% 80.8% 81.7% 83.0% 83.2% revenues Non-GAAP gross profit as percentage of 85.6% 81.3% 82.2% 83.5% 83.7% revenues GAAP operating $ 9,536 $ 9,355 $ 8,040 $ 18,891 $ 15,741 expenses Stock-based compensation: Research and (2,049) (1,825) (1,545) (3,874) (2,906) development Selling, general and (1,398) (1,327) (1,216) (2,725) (2,360) administrative Amortization of intangible assets Selling, general and -- -- (51) -- (102) administrative Non-GAAP operating $ 6,089 $ 6,203 $ 5,228 $ 12,292 $ 10,373 expenses GAAP operating $ 4,642 $ 3,000 $ 4,871 $ 7,642 $ 9,406 income Non-GAAP $ 8,162 $ 6,225 $ 7,757 $ 14,387 $ 14,925 operating income GAAP net income $ 5,147 $ 3,510 $ 5,553 $ 8,657 $ 10,685 Stock-based 3,520 3,225 2,835 6,745 5,417 compensation Amortization of purchased -- -- 51 -- 102 intangible assets Non-GAAP net $ 8,667 $ 6,735 $ 8,439 $ 15,402 $ 16,204 income Non-GAAP net income per share $ 0.29 $ 0.23 $ 0.29 $ 0.51 $ 0.55 - Diluted Non-GAAP weighted average shares 30,086,653 29,868,370 29,540,537 29,965,981 29,343,540 - 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) June 30, December 31, 2013 2012 (Unaudited) (Audited) ASSETS CURRENT ASSETS: Cash, cash equivalents, marketable securities and $ 181,875 $ 167,968 deposits Trade receivables, net 4,893 4,813 Other receivables 4,812 4,305 Inventories 5,875 4,523 Total current assets 197,455 181,609 NON CURRENT ASSETS: Severance pay fund 6,670 6,066 Long term investment and others 367 358 Total non current assets 7,037 6,424 PROPERTY AND EQUIPMENT, NET 2,307 1,285 INTANGIBLE ASSETS, NET 1,131 1,000 GOODWILL 96,276 96,276 TOTAL ASSETS $ 304,206 $ 286,594 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Trade payables $ 1,356 $ 571 Other payables and accrued expenses 5,543 5,401 Total current liabilities 6,899 5,972 ACCRUED SEVERANCE PAY 7,546 6,977 SHAREHOLDERS' EQUITY: Share capital 163 161 Additional paid-in capital 320,368 312,723 Accumulated other comprehensive income 599 787 Accumulated deficit (31,369) (40,026) Total shareholders' equity 289,761 273,645 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 304,206 $ 286,594 EZchip Semiconductor Ltd. Selected Condensed Consolidated Cash Flow Data on a Non-GAAP basis (U.S. Dollars in thousands) (Unaudited) Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, June 30, 2013 2013 2012 2013 2012 Cash flows from operating activities: Net income $ 5,147 $ 3,510 $ 5,553 $ 8,657 $ 10,685 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and 129 155 157 284 300 amortization Decrease (increase) in trade and other receivables, net 859 (1,000) 174 (141) 1,002 Decrease (increase) in (725) (627) 974 (1,352) (204) inventory Increase (decrease) in trade payables and other accrued liabilities, net (1,480) 1,666 (490) 186 (953) Stock-based compensation 3,520 3,225 2,835 6,745 5,417 Net cash provided by 7,450 6,929 9,203 14,379 16,247 operating activities Cash flows from investing activities: Purchase of property and (255) (345) (338) (600) (674) equipment Purchase of technology -- (131) (500) (131) (500) Net cash used in (255) (476) (838) (731) (1,174) investing activities Cash flows from financing activities: Proceeds from exercise 780 54 352 834 11,767 of options Net cash provided by 780 54 352 834 11,767 financing activities Cash adjustment of marketable securities, (388) (187) (177) (575) 154 net* Increase in cash, cash equivalents, marketable 7,587 6,320 8,540 13,907 26,994 securities and deposits Cash, cash equivalents, marketable securities and deposits at the 174,288 167,968 145,224 167,968 126,770 beginning of the period Cash, cash equivalents, marketable securities and deposits at the end of the period $ 181,875 $ 174,288 $ 153,764 $ 181,875 $ 153,764 * Including unrealized gain (loss) on marketable securities, accumulated interest accretion and amortization of discount and premium on marketable securities. Contact: Ehud Helft / Kenny Green CCG Investor Relations firstname.lastname@example.org Tel: (US) 1 646 201 9246 SOURCE EZchip Semiconductor Ltd. Website: http://www.ezchip.com
EZchip Announces Second Quarter 2013 Results
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