Silicom Q1 Revenues up 26% to $19M; Operating Profit up 37% to $4.8M

  Silicom Q1 Revenues up 26% to $19M; Operating Profit up 37% to $4.8M

Business Wire

KFAR SAVA, Israel -- April 24, 2014

Silicom Ltd. (NASDAQ:SILC) (TASE:SILC), an industry-leading provider of
high-performance networking and data infrastructure solutions,  today reported
its financial results for the first quarter ended March 31, 2014.

Silicom’s revenues for the first quarter of 2014 were $19.0 million, a 26%
increase compared with $15.0 million in the first quarter of 2013.

On a GAAP basis, operating income for the quarter increased by 39% to $4.6
million, compared with $3.3 million, in the first quarter of 2013. Net income
increased by 30% to $4.0 million, or $0.55 per diluted ordinary share ($0.56
per basic share), compared with $3.1 million, or $0.43 per diluted ordinary
share ($0.44 per basic share), in the first quarter of 2013.

On a non-GAAP basis, operating income for the quarter increased by 37% to $4.8
million, compared with $3.5 million, for the first quarter of 2013. Net income
increased by 28% to $4.2 million, or $0.57 per diluted ordinary share ($0.58
per basic share), compared with $3.3 million, or $0.46 per diluted and basic
share, for the first quarter of 2013.

Comments of Management
Commenting on the results, Mr. Shaike Orbach, Silicom’s President and CEO,
said, “We are very pleased to report another quarter of solid growth and
strategic progress in line with our long-term plan for the Company’s future
development. During the quarter, all of our existing revenue streams continued
to deliver as planned, reflecting steady shipments made to many of our over
90+ OEM customers.

“In addition, we were very excited to launch the first offering of our new
SmartSilc VHIO product line, a family of totally unique solutions that we have
planned for the growing virtualized data center market segment. Incorporating
the advanced patent-pending technology that we acquired last October, the
first SmartSilc VHIO product is an OpenStack-supporting offload solution that
enables more VMs to fit onto each cluster, helping data centers boost network
performance while reducing power consumption, space and cost. Discussions
currently underway with key virtualized market players give us confidence
regarding the potential for SmartSilc VHIO to develop into an important new
revenue stream over time.”

Mr. Orbach concluded, “In addition, we have recently distributed our second
yearly dividend in line with a policy aimed at sharing our success more
directly with our shareholders. We are confident that the combination of a
strong existing platform and exciting new products for fast-growing markets
will enable us to continue creating shareholder value over the long-term.”

                                      ##

Conference Call Details

Silicom’s Management will host an interactive conference today, April 24^th,
at 9:00am Eastern Time (6:00am Pacific Time, 16:00 Israel Time). On the call,
management will review and discuss the results, and will also be available to
answer investors’ questions.

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: 1 888 668 9141

                              UK: 0 800 917 5108

                             ISRAEL: 03 918 0609

                        INTERNATIONAL: +972 3 918 0609

       At: 9:00am Eastern Time, 6:00am Pacific Time, 16:00 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, 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)
                                                          
                                                 March 31,   December 31,
                                                 2014        2013
                                                                 
Assets
                                                                 
Current assets
Cash and cash equivalents                        $ 15,663    $   12,997
Short-term bank deposits                           -             3,000
Marketable securities                              18,320        14,871
Accounts receivables: Trade, net                   16,020        14,866
Accounts receivables: Other                        2,581         2,460
Inventories                                        30,188        28,778
Deferred tax assets                               432          274
Total current assets                               83,204        77,246
                                                                 
Marketable securities                              20,912        24,370
Assets held for employees’ severance benefits      1,537         1,543
Deferred tax assets                                363           439
Property, plant and equipment, net                 1,906         1,479
Intangible assets, net                            164          180
                                                                 
Total assets                                     $ 108,086   $   105,257
                                                                 
Liabilities and shareholders' equity
                                                                 
Current liabilities
Trade accounts payable                           $ 4,846     $   6,814
Other accounts payable and accrued expenses       4,930        5,134
Total current liabilities                          9,776         11,948
                                                                 
Liability for employees’ severance benefits       2,643        2,618
                                                                 
Total liabilities                                 12,419       14,566
                                                                 
Shareholders' equity
Ordinary shares and additional paid-in capital     39,575        38,647
Treasury shares                                    (38)          (38)
Retained earnings                                 56,130       52,082
Total Shareholders' equity                        95,667       90,691
                                                                 
Total liabilities and shareholders' equity       $ 108,086   $   105,257

Silicom Ltd. Consolidated Statements of Operations
                                                         
(US$ thousands, except for share and per share data)
                                                           Three-month period
                                                           ended March 31,
                                                           2014      2013
Sales                                                      $ 19,004   $ 15,030
Cost of sales                                               11,266    9,001
Gross profit                                                7,738     6,029
Research and development expenses                            1,458      1,244
Selling and marketing expenses                               980        849
General and administrative expenses                         666       614
Total operating expenses                                    3,104     2,707
Operating income                                             4,634      3,322
Financial income, net                                       105       118
Income before income taxes                                   4,739      3,440
Income taxes                                                691       337
Net income                                                 $ 4,048    $ 3,103
Basic income per ordinary share (US$)                      $ 0.56     $ 0.44
Weighted average number of ordinary shares used to          7,176     7,063
compute basic income per share (in thousands)
Diluted income per ordinary share (US$)                    $ 0.55     $ 0.43
Weighted average number of ordinary shares used to          7,343     7,166
compute diluted income per share (in thousands)

Silicom Ltd. Reconciliation of Non-GAAP Financial Results
                                                       
(US$ thousands, except for share and per share data)
                                                                     
                                     Three-month period
                                     ended March 31,
                                     2014                     2013
                                                                     
GAAP gross profit                    $      7,738             $      6,029
(1) Share-based compensation (*)           24                      25
Non-GAAP gross profit                $      7,762             $      6,054
                                                                     
GAAP operating income                $      4,634             $      3,322
(1) Share-based compensation (*)            128                      165
(2) Amortization of intangible             17                      -
assets
Non-GAAP operating income            $      4,779             $      3,487
                                                                     
GAAP net income                      $      4,048             $      3,103
(1) Share-based compensation (*)            128                      165
(2) Amortization of intangible             17                      -
assets
Non-GAAP net income                  $      4,193             $      3,268
                                                                     
                                                                     
GAAP basic income per ordinary share $      0.56              $      0.44
(US$)
(1) Share-based compensation (*)            0.02                     0.02
(2) Amortization of intangible              -                        -
assets
                                                                  
Non-GAAP basic income per ordinary   $      0.58              $      0.46
share (US$)
                                                                     
                                                                     
GAAP diluted income per ordinary     $      0.55              $      0.43
share (US$)
(1) Share-based compensation (*)            0.02                     0.03
(2) Amortization of intangible              -                        -
assets
                                                                  
Non-GAAP diluted income per ordinary $      0.57              $      0.46
share (US$)
                                                                     
(*) Adjustments related to share-based compensation expenses according to ASC
topic 718 (SFAS 123 (R))

Contact:

Company Contact:
Eran Gilad, CFO
Silicom Ltd.
Tel: +972-9-764-4555
E-mail: erang@silicom.co.il
or
Investor relations contact:
Kenny Green / Ehud Helft
CCG Israel Investor Relations
Tel: +1 646 201 9246
E-mail : silicom@ccgisrael.com
 
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