Blowout Quarter & Best-Ever Year Take Silicom to Whole New Level: $25M Sales & $0.94 EPS for Q4, $73M Sales & $2.45 EPS for

  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: erang@silicom.co.il
or
Investor relations contact:
Kenny Green / Ehud Helft
Tel: +1 646 201 9246
CCG Israel Investor Relations
E-mail : silicom@ccgisrael.com
 
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