Blowout Quarter & Best-Ever Year Take Silicom to Whole New Level: $25M Sales & $0.94 EPS for Q4, $73M Sales & $2.45 EPS for 2013 Business Wire KFAR SAVA, Israel -- January 23, 2014 Silicom Ltd. (NASDAQ:SILC) (TASE:SILC), an industry-leading provider of high-performance networking and data infrastructure solutions, today reported all-time-record financial results for the fourth quarter and full year ended December 31, 2013. Financial Results Q4 2013: Revenues for the fourth quarter increased by 52% to a record $25.4 million from $16.7 million in the fourth quarter of 2012. On a GAAP basis, net income for the period totalled a record $6.7 million, or $0.91 per diluted share ($0.94 per basic share), a 120% increase compared with $3.0 million, or $0.43 per diluted share ($0.44 per basic share), for the fourth quarter of 2012. On a non-GAAP basis (as described and reconciled below), net income totalled a record $6.8 million, or $0.94 per diluted share ($0.96 per basic share), a 100% increase compared with $3.4 million, or $0.49 per diluted and basic share, for the fourth quarter of 2012. This represents a record net margin of 27%. Full Year 2013: Revenues for 2013 increased by 50% to a record $73.3 million from $48.7 million in 2012. On a GAAP basis, net income for the year totalled a record $17.1 million, or $2.36 per diluted share ($2.40 per basic share), up 73% compared with $9.9 million, or $1.42 per diluted and basic share, for 2012. On a non-GAAP basis (as described and reconciled below), net income for the year totalled a record $17.8 million, or $2.45 per diluted share ($2.50 per basic share), a 68% increase compared with $10.6 million, or $1.52 per diluted share ($1.53 per basic share), for 2012. This represents a record net margin of 24.2%. Comments of Management Commenting on the results, Shaike Orbach, Silicom’s President and CEO, said, “Q4 was a breakthrough quarter that capped off our best year on record, demonstrating the power of the ‘Silicom Formula for Growth’ to drive our sales, profits and margins to ever higher levels.” Mr. Orbach continued, “Our record of growing the Company by 50% quarter after quarter confirms our ability to create essential products for some of IT’s hottest Big-Data-driven markets, including SDN, virtualization and cloud computing. With over 90 OEM customers, including most of the market leaders, we have become the ‘de facto’ standard for OEMs in these sectors, all of whom are looking for a performance boost and an ‘edge’ for their server-based offerings. “For example, during the quarter we launched an innovative offload product line based on the Intel® Communications Chipset, a solution that addresses one of the virtualized data center’s major pain points and that is already under evaluation by several key virtualized cloud market players. In addition, we achieved our first major Design Win with a leading storage virtualization player, positioning Silicom as a one-stop-shop provider for virtualized data centers with a comprehensive offering for this exploding market. We believe these developments indicate the potential scale of our Cloud business model and its power to become one of Silicom’s major new growth drivers.” Mr. Orbach concluded, “With continued success in the markets that have driven us to this point and exciting new markets ahead, we believe Silicom is positioned for continued faster-than-market growth. We consider our Q4 and 2013 results a validation of our strong positive momentum and the growth opportunities before us. With a firm base, significant growth engines, a healthy pipeline of opportunities and new market trends working in our favor, we are on track with our plans to continue scaling the business.” ## Conference Call Details Silicom’s Management will host an interactive conference today, January 23^rd, at 9am Eastern Time (6am Pacific Time, 4pm Israel Time) to review and discuss the results. To participate, please call one of the following teleconferencing numbers. Please begin placing your calls at least 10 minutes before the conference call commences. If you are unable to connect using the toll-free numbers, try the international dial-in number. US: 1 888 6689141 UK: 0 800-917-5108 ISRAEL: 03-918-0609 INTERNATIONAL: +972 3-918-0609 At: 9:00am Eastern Time, 6:00am Pacific Time, 4:00pm Israel Time For those unable to listen to the live call, a replay of the call will be available for three months from the day after the call under the investor relations section of Silicom’s website. ## About Silicom Silicom Ltd. is an industry-leading provider of high-performance networking and data infrastructure solutions. Designed primarily to increase data center efficiency, Silicom’s solutions dramatically improve the throughput and availability of networking appliances and other server-based systems. Silicom’s products are used by a large and growing base of OEM customers, many of whom are market leaders, as performance-boosting solutions for their offerings in the Application Delivery, WAN Optimization, Security and other mission-critical segments within the fast-growing virtualization, cloud computing and big data markets. Silicom’s product portfolio includes multi-port 1/10 Gigabit Ethernet server adapters, Intelligent Bypass solutions, Encryption accelerators and a variety of innovative Smart adapters. These products are available for incorporation directly into our OEM customers' systems, or provided as part of Silicom’s patented SETAC (Server To Appliance Converter), a unique approach to the provision of high quality standard platforms with modular front connectivity. For more information, please visit: www.silicom.co.il. Non-GAAP Financial Measures This release, including the financial tables below, presents other financial information that may be considered "non-GAAP financial measures" under Regulation G and related reporting requirements promulgated by the Securities and Exchange Commission as they apply to our company. These non-GAAP financial measures exclude compensation expenses in respect of options granted to directors, officers and employees, one-time costs related to an aborted acquisition, as well as amortization of intangible assets. Non-GAAP financial measures should be evaluated in conjunction with, and are not a substitute for, GAAP financial measures. The tables also present the GAAP financial measures, which are most comparable to the non-GAAP financial measures as well as reconciliation between the non-GAAP financial measures and the most comparable GAAP financial measures. The non-GAAP financial information presented herein should not be considered in isolation from or as a substitute for operating income, net income or per share data prepared in accordance with GAAP. Statements in this press release which are not historical data are forward-looking statements which involve known and unknown risks, uncertainties, or other factors not under the Company's control, which may cause actual results, performance, or achievements of the Company to be materially different from the results, performance, or other expectations implied by these forward-looking statements. These factors include, but are not limited to, those detailed in the Company's periodic filings with the Securities and Exchange Commission. The Company disclaims any duty to update such statements. -- FINANCIAL TABLES FOLLOW – Silicom Ltd. Consolidated Balance Sheets (US$ thousands) December 31, December 31, 2013 2012 Assets Current assets Cash and cash equivalents $12,997 $13,306 Short-term bank deposits 3,000 2,527 Marketable securities 14,871 12,583 Accounts receivables: Trade, net 14,866 12,391 Accounts receivables: Other 2,460 2,234 Inventories 28,778 14,795 Deferred tax assets 274 47 Total current assets 77,246 57,883 Marketable securities 24,370 28,469 Assets held for employees’ severance benefits 1,543 1,377 Deferred tax assets 439 114 Property, plant and equipment, net 1,479 1,190 Intangible assets, net 180 - Total assets $105,257 $89,033 Liabilities and shareholders' equity Current liabilities Trade accounts payable $6,814 $7,875 Other accounts payable 5,134 3,914 and accrued expenses Total current liabilities 11,948 11,789 Liability for employees’ 2,618 2,278 severance benefits Total liabilities 14,566 14,067 Shareholders' equity Ordinary shares and additional paid-in 38,647 36,086 capital Treasury shares (38) (38) Retained earnings 52,082 38,918 Total Shareholders' 90,691 74,966 equity Total liabilities and $105,257 $89,033 shareholders' equity Silicom Ltd. Consolidated Statements of Operations (US$ thousands, except for share and per share data) Three-month period Twelve-month period ended December 31, ended December 31, 2013 2012 2013 2012 Sales $25,353 $16,693 $73,298 $48,729 Cost of sales 15,267 10,407 43,865 28,849 Gross profit 10,086 6,286 29,433 19,880 Research and development 1,571 1,290 5,465 4,401 expenses Selling and marketing expenses 1,101 1,002 3,818 3,081 General and administrative 709 805 2,572 2,369 expenses Total operating expenses 3,381 3,097 11,855 9,851 Operating income 6,705 3,189 17,578 10,029 Financial income, net 124 128 404 752 Income before income taxes 6,829 3,317 17,982 10,781 Income taxes 164 286 905 910 Net income $6,665 $3,031 $17,077 $9,871 Basic income per ordinary share $0.94 $0.44 $2.40 $1.42 (US$) Weighted average number of ordinary shares used to compute basic income per 7,119 6,947 7,103 6,934 share (in thousands) Diluted income per ordinary $0.91 $0.43 $2.36 $1.42 share (US$) Weighted average number of ordinary shares used to compute diluted income per 7,289 7,006 7,246 6,968 share (in thousands) Silicom Ltd. Reconciliation of Non-GAAP Financial Results (US$ thousands, except for share and per share data) Three-month period Twelve-month period ended December 31, ended December 31, 2013 2012 2013 2012 GAAP gross profit $10,086 $6,286 $29,433 $19,880 (1) Share-based 26 28 103 45 compensation (*) Non-GAAP gross profit $10,112 $6,314 $29,536 $19,925 GAAP operating income $6,705 $3,189 $17,578 $10,029 (1) Share-based compensation (*) 166 224 668 544 (2) Aborted acquisition - 165 - 165 related expenses 17 - 20 - (3) Amortization of intangible assets Non-GAAP operating income $6,888 $3,578 $18,266 $10,738 GAAP net income $6,665 $3,031 $17,077 $9,871 (1) Share-based compensation (*) 166 224 668 544 (2) Aborted acquisition - 165 - 165 related expenses 17 - 20 - (3) Amortization of intangible assets Non-GAAP net income $6,848 $3,420 $17,765 $10,580 GAAP basic income per $0.94 $0.44 $2.40 $1.42 ordinary share (US$) (1) Share-based compensation (*) 0.02 0.03 0.10 0.08 (2) Aborted acquisition - 0.02 - 0.03 related expenses - - - - (3) Amortization of intangible assets Non-GAAP basic income per $0.96 $0.49 $2.50 $1.53 ordinary share (US$) GAAP diluted income per ordinary share (US$) $0.91 $0.43 $2.36 $1.42 (1) Share-based compensation (*) 0.03 0.03 0.09 0.08 (2) Aborted acquisition - 0.03 - 0.02 related expenses - - - - (3) Amortization of intangible assets Non-GAAP diluted income $0.94 $0.49 $2.45 $1.52 per ordinary share (US$) (*) Adjustments related to share-based compensation expenses according to ASC topic 718 (SFAS 123 (R)) Contact: Company Contact: Eran Gilad, Tel: +972-9-764-4555 CFO Silicom Ltd. E-mail: email@example.com or Investor relations contact: Kenny Green / Ehud Helft Tel: +1 646 201 9246 CCG Israel Investor Relations E-mail : firstname.lastname@example.org
Blowout Quarter & Best-Ever Year Take Silicom to Whole New Level: $25M Sales & $0.94 EPS for Q4, $73M Sales & $2.45 EPS for
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