EZchip Announces Second Quarter 2013 Results

                 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
ezchip@ccgisrael.com
Tel: (US) 1 646 201 9246

SOURCE EZchip Semiconductor Ltd.

Website: http://www.ezchip.com