Silicom Q2 Revenues up 14% to $17.9M; Operating Profit up 17% to $4.3M

  Silicom Q2 Revenues up 14% to $17.9M; Operating Profit up 17% to $4.3M  Business Wire  KFAR SAVA, Israel -- July 22, 2014  Silicom Ltd. (NASDAQ:SILC) (TASE:SILC), an industry-leading provider of high-performance server/appliances networking solutions, today reported its financial results for the second quarter and first half ended June 30, 2014.  Financial Results  Q2 2014: Revenues for the second quarter increased by 14% to $17.9 million from $15.7 million in the second quarter of 2013.  On a GAAP basis, operating income for the quarter increased by 12% to $3.9 million compared with $3.5 million in the second quarter of 2013. Net income for the quarter totalled $3.3 million, or $0.45 per diluted share ($0.46 per basic share), compared with $3.3 million, or $0.45 per diluted share ($0.46 per basic share), in the second quarter of 2013.  On a non-GAAP basis (as described and reconciled below), operating income for the quarter increased by 17% to $4.3 million compared with $3.6 million in the second quarter of 2013. Net income increased by 7% to $3.7 million, or $0.50 per diluted share ($0.51 per basic share), compared with $3.5 million, or $0.48 per diluted share ($0.49 per basic share), in the second quarter of 2013.  H1 2014: Revenues for the first half of 2014 increased by 20% to $36.9 million from $30.7 million in the first half of 2013.  On a GAAP basis, operating income for the period increased by 25% to $8.5 million compared with $6.8 million in the first six months of 2013. Net income increased by 15% to $7.4 million, or $1.00 per diluted share ($1.03 per basic share), compared with $6.4 million, or $0.89 per diluted share ($0.90 per basic share), in the first half of 2013.  On a non-GAAP basis (as described and reconciled below), operating income for the period increased by 27% to $9.0 million compared with $7.1 million in the first six months of 2013. Net income increased by 17% to $7.9 million, or $1.07 per diluted share ($1.10 per basic share), compared with $6.7 million, or $0.93 per diluted share ($0.95 per basic share), in the first six months of 2013.  Comments of Management  Commenting on the results, Shaike Orbach, President and CEO, said, “We have reported solid year-over-year growth for both the quarter and the first half of 2014, however softer demand in Q2 resulted in a 6% sequential revenue decline compared with the first quarter of 2014. While these challenges may remain with us for the short term, we continue to believe in the long-term power of our growth engines: especially our more than 100 existing customers, many of whom are industry leaders, our proven portfolio of mission-critical products, and our impressive roadmap of innovative new product lines that give us entry into high-potential new opportunities. As such, we continue implementing our proven strategy for building our business and pursuing our goals.”                                        ##  Conference Call Silicom’s Management will host an interactive conference today, July 22^nd, at 9am Eastern Time (6am Pacific Time, 4pm Israel Time) to review and discuss its second quarter 2014 results and guidance for the full year 2014.  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, 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.  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 and RSUs 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.                                        ##  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  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)                                                                                                                June 30,    December 31,                                                2014        2013                                                                 Assets                                                                 Current assets Cash and cash equivalents                      $ 15,525    $   12,997 Short-term bank deposits                         -             3,000 Marketable securities                            15,094        14,871 Accounts receivables: Trade, net                 14,553        14,866 Accounts receivables: Other                      1,690         2,460 Inventories                                      28,239        28,778 Deferred tax assets                             506          274 Total current assets                             75,607        77,246                                                                 Marketable securities                            23,731        24,370 Assets held for employees’ severance benefits    1,584         1,543 Deferred tax assets                              432           439 Property, plant and equipment, net               2,258         1,479 Intangible assets, net                          147          180                                                                 Total assets                                   $ 103,759   $   105,257                                                                 Liabilities and shareholders' equity                                                                 Current liabilities Trade accounts payable                         $ 3,569     $   6,814 Other accounts payable and accrued expenses     5,346        5,134 Total current liabilities                        8,915         11,948                                                                 Liability for employees’ severance benefits     2,694        2,618                                                                 Total liabilities                               11,609       14,566                                                                 Shareholders' equity Ordinary shares and additional paid-in capital   39,914        38,647 Treasury shares                                  (38)          (38) Retained earnings                               52,274       52,082 Total shareholders' equity                      92,150       90,691                                                                 Total liabilities and shareholders' equity     $ 103,759   $   105,257  Silicom Ltd. Consolidated Statements of Operations                                                                                                                                             (US$ thousands, except for share and per share data)                                                                                                               Three-month period    Six-month period                                      ended June 30,        ended June 30,                                      2014       2013       2014       2013 Sales                                $ 17,918   $ 15,715   $ 36,922   $ 30,745 Cost of sales                         10,730    9,414     21,996    18,415 Gross profit                          7,188     6,301     14,926    12,330                                                                          Research and development expenses      1,586      1,345      3,044      2,589 Selling and marketing expenses         1,082      864        2,062      1,713 General and administrative expenses   619       613       1,285     1,227 Total operating expenses              3,287     2,822     6,391     5,529                                                                          Operating income                       3,901      3,479      8,535      6,801                                                                          Financial income, net                 58        62        163       180 Income before income taxes             3,959      3,541      8,698      6,981 Income taxes                          632       252       1,323     589 Net income                           $ 3,327    $ 3,289    $ 7,375    $ 6,392                                                                                                                                                                                                                            Basic income per ordinary share      $ 0.46     $ 0.46     $ 1.03     $ 0.90 (US$)                                                                          Weighted average number of ordinary shares used to compute basic income   7,183     7,115     7,179     7,089 per share (in thousands)                                                                                                                                                   Diluted income per ordinary share    $ 0.45     $ 0.45     $ 1.00     $ 0.89 (US$)                                                                          Weighted average number of ordinary shares used to compute diluted        7,337     7,263     7,340     7,218 income per share (in thousands)  Silicom Ltd. Reconciliation of Non-GAAP Financial Results                                                                                                                                         (US$ thousands, except for share and per share data)                                                                                                     Three-month period        Six-month period                             ended June 30,            ended June 30,                             2014         2013         2014          2013                                                                         GAAP gross profit           $  7,188     $  6,301     $  14,926     $  12,330 (1) Share-based               35          26          59           51 compensation (*) Non-GAAP gross profit       $  7,223     $  6,327     $  14,985     $  12,381                                                                         GAAP operating income       $  3,901     $  3,479     $  8,535      $  6,801 (1) Share-based                339          167          467           332 compensation (*) (2) Amortization of           16          -           33           - intangible assets Non-GAAP operating income   $  4,256     $  3,646     $  9,035      $  7,133                                                                         GAAP net income             $  3,327     $  3,289     $  7,375      $  6,392 (1) Share-based                339          167          467           332 compensation (*) (2) Amortization of           16          -           33           - intangible assets Non-GAAP net income         $  3,682     $  3,456     $  7,875      $  6,724                                                                                                                                                 GAAP basic income per       $  0.46      $  0.46      $  1.03       $  0.90 ordinary share (US$) (1) Share-based                0.05         0.03         0.07          0.05 compensation (*) (2) Amortization of            -            -            -             - intangible assets                                                                  Non-GAAP basic income per   $  0.51      $  0.49      $  1.10       $  0.95 ordinary share (US$)                                                                                                                                                 GAAP diluted income per     $  0.45      $  0.45      $  1.00       $  0.89 ordinary share (US$) (1) Share-based                0.05         0.03         0.07          0.04 compensation (*) (2) Amortization of            -            -            -             - intangible assets                                                                  Non-GAAP diluted income per $  0.50      $  0.48      $  1.07       $  0.93 ordinary share (US$)                                                                                                                                                                                                                         (*) Adjustments related to share-based compensation expenses according to ASC topic 718 (SFAS 123 (R))  Contact:  Company Contact: Eran Gilad, CFO, Tel: +972-9-764-4555 Silicom Ltd. E-mail: erang@silicom.co.il or Investor relations contact: Kenny Green / Ehud Helft, Tel: +1 646 201 9246 GK Investor Relations E-mail : silicom@gkir.com  
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