EZchip Announces Third Quarter 2014 Results

About EZchip
EZchip is a fabless semiconductor company that provides high-performance processing solutions for a wide range of applications for the carrier, cloud and data center networks. EZchip's broad portfolio of solutions scales from a few to hundreds of Gigabits-per-second, and includes network processors, multi-core processors, intelligent network adapters, high-performance appliances and a comprehensive software ecosystem. EZchip's processing solutions excel at providing great flexibility and high performance coupled with superior integration and power efficiency. 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 based on its current knowledge. 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 (including in-house customer developed 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, the consummation of the Tilera acquisition 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 27, 2014 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


Nine Months Ended



September
30,


June 30,

 


September
30,


September
30,


September
30,



2014


2014


2013


2014


2013












Revenues


$ 19,241


$ 22,102


$ 18,804


$ 61,631


$ 50,753

Cost of revenues


3,367


4,300


2,926


11,455


8,342

Gross profit


15,874


17,802


15,878


50,176


42,411












Operating expenses:











Research and development, net


7,953


7,394


6,527


22,449


18,892

Selling, general and administrative


4,060


4,478


3,310


12,310


9,836

Total operating expenses


12,013


11,872


9,837


34,759


28,728












Operating income


3,861


5,930


6,041


15,417


13,683

Financial income, net


338


284


487


1,082


1,502

Net income


$ 4,199


$ 6,214


$ 6,528


$ 16,499


$ 15,185












Net income per share:











Basic


$ 0.14


$ 0.21


$ 0.23


$ 0.57


$ 0.53

Diluted


$ 0.14


$ 0.21


$ 0.22


$ 0.56


$ 0.52

Weighted average shares used in per
share calculation:











Basic


29,297,876


29,157,533


28,717,575


29,145,777


28,562,581

Diluted


29,657,471


29,473,870


29,151,003


29,620,204


29,092,293












 

 

EZchip Semiconductor Ltd.
Reconciliation of GAAP to Non-GAAP Measures
(U.S. Dollars in thousands, except per share amounts)
(Unaudited)   




Three Months Ended


Nine Months Ended



Sept. 30,


June 30,


Sept. 30,


Sept. 30,


Sept. 30,



2014


2014


2013


2014


2013












GAAP gross profit


$ 15,874


$ 17,802


$ 15,878


$ 50,176


$ 42,411

Stock-based compensation


75


76


73


225


219

Non-GAAP gross profit


$ 15,949


$ 17,878


$ 15,951


$ 50,401


$ 42,630












GAAP gross profit as percentage of
revenues


82.5%


80.5%


84.4%


81.4%


83.6%

Non-GAAP gross profit as percentage of revenues


82.9%


80.9%


84.8%


81.8%


84.0%























GAAP operating expenses


$ 12,013


$ 11,872


$ 9,837


$ 34,759


$ 28,728

Stock-based compensation:











Research and development


(2,360)


(2,421)


(2,044)


(7,048)


(5,918)

Selling, general and administrative


(1,590)


(1,652)


(1,425)


(4,826)


(4,150)

Acquisition related costs











Selling, general and administrative


(320)


(660)


--


(980)


--












Non-GAAP operating expenses


$ 7,743


$ 7,139


$ 6,368


$ 21,905


$ 18,660























GAAP operating income


$ 3,861


$ 5,930


$ 6,041


$ 15,417


$ 13,683












Non-GAAP operating income


$ 8,206


$ 10,739


$ 9,583


$ 28,496


$ 23,970












GAAP net income


$ 4,199


$ 6,214


$ 6,528


$ 16,499


$ 15,185

Stock-based compensation


4,025


4,149


3,542


12,099


10,287

Acquisition related costs


320


660


--


980


--












Non-GAAP net income


$ 8,544


$ 11,023


$ 10,070


$ 29,578


$ 25,472












Non-GAAP net income per share -
Diluted


$ 0.28


$ 0.36


$ 0.33


$ 0.96


$ 0.85

Non-GAAP weighted average shares
- Diluted*


30,784,673


30,774,136


30,164,874


30,678,851


30,032,150


* 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)









September 30,


December 31,




2014


2013




(Unaudited)


(Audited)


ASSETS






CURRENT ASSETS:






Cash, cash equivalents, marketable securities and deposits


$      223,440


$      202,865


Trade receivables, net


6,093


7,416


Other receivables


706


3,153


Inventories


4,329


5,969


Total current assets


234,568


219,403








NON CURRENT ASSETS:






Severance pay fund


7,257


7,416


Long term investment and others


10,302


364


Total non current assets


17,559


7,780








PROPERTY AND EQUIPMENT, NET


2,106


2,114








INTANGIBLE ASSETS, NET


5,242


4,127








GOODWILL


96,276


96,276








TOTAL ASSETS


$      355,751


$      329,700







LIABILITIES AND SHAREHOLDERS' EQUITY






CURRENT LIABILITIES:






Trade payables


$          792


$          3,951


Other payables and accrued expenses


7,708


7,309


Total current liabilities


8,500


11,260








ACCRUED SEVERANCE PAY


8,059


8,164








SHAREHOLDERS' EQUITY:






Share capital


167


164


Additional paid-in capital


341,001


328,003


Accumulated other comprehensive income (loss)


(147)


437


Accumulated deficit


(1,829)


(18,328)


Total shareholders' equity


339,192


310,276








TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY


$        355,751


$        329,700














 

 


EZchip Semiconductor Ltd.

Selected Condensed Consolidated Cash Flow Data on a Non-GAAP Basis

(U.S. Dollars in thousands)

(Unaudited)




Three Months Ended


Nine Months Ended



Sept. 30,


June 30,


Sept. 30,


Sept. 30,


Sept. 30,



2014


2014


2013


2014


2013

Cash flows from operating activities:











Net income


$     4,199


$     6,214


$     6,528


$     16,499


$     15,185

Adjustments to reconcile net income to net
cash provided by operating activities:











Depreciation


175


166


158


509


442

Decrease (increase) in trade and other
receivables, net


 

5,315


 

(97)


 

(2,083)


 

3,747


 

(2,224)

Decrease (increase) in inventory


1,645


97


584


1,640


(768)

Increase (decrease) in trade payables and
other accrued liabilities, net


 

(1,233)


 

(266)


 

1,605


 

(1,663)


 

1,791

Stock-based compensation

 


4,025


4,149


3,542


12,099


10,287

Net cash provided by operating activities


14,126


10,263


10,334


32,831


24,713












Cash flows from investing activities:











Purchase of property and equipment


(318)


(24)


(846)


(538)


(1,446)

Purchase of technology


--


(1,067)


(1,163)


(2,415)


(1,294)

Long term Investment and others


(10,000)


--


--


(10,000)


--

Net cash used in investing activities


(10,318)


(1,091)


(2,009)


(12,953)


(2,740)












Cash flows from financing activities:











Proceeds from exercise of options

 


498


188


450


902


1,284

Net cash provided by financing activities


498


188


450


902


1,284












Cash adjustment of marketable securities, net*


(85)


(113)


(20)


(205)


(595)












Increase in cash, cash equivalents,
marketable securities and deposits

 


 

4,221


 

9,247


 

8,755


 

20,575


 

22,662

Cash, cash equivalents, marketable securities
and deposits at the beginning of the period


 

219,219


 

209,972


 

181,875


 

202,865


 

167,968

 

Cash, cash equivalents, marketable securities
and deposits at the end of the period


 

 

$   223,440


 

 

$   219,219


 

 

$   190,630


 

 

$   223,440


 

 

$   190,630


* Including unrealized gain (loss) on marketable securities, accumulated interest accretion and amortization of discount and premium on marketable securities.

 

Contact:
Ehud Helft / Kenny Green
GK Investor & Public Relations
Email Contact
Tel: (US) 1 646 201 9246

SOURCE EZchip Semiconductor Ltd.

Contact:
EZchip Semiconductor Ltd.
Web: http://www.ezchip.com



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