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Press ReleaseEZCHIP CONCLUDES RECORD YEAR WITH REVENUES SURPASSING $40 MILLION
Fourth quarter revenues increase 34% year-over-year to $12.9 million; Presented substantial increase in gross profit and operating and net income; Successfully completed secondary offering
Yokneam, Israel, February 11, 2010 – EZchip Semiconductor Ltd. (NASDAQ: EZCH), a leader in Ethernet network processors, today announced its results for the fourth quarter and full year ended December 31, 2009.
Fourth Quarter and Full Year 2009 Highlights:
Fourth Quarter 2009 Results: Total revenues in the fourth quarter of 2009 were $12.9 million, an increase of 34% compared to $9.6 million in the fourth quarter of 2008, and an increase of 21% compared to $10.7 million in the third quarter of 2009.
Net income, on a GAAPbasis, for the fourth quarter of 2009 was $14.9 million, or $0.58 per share (diluted), compared to net income of $1.0 million, or $0.04 per share (diluted), in the fourth quarter of 2008, and net income of $1.8 million, or $0.07 per share (diluted), in the third quarter of 2009.
Since the Company has established a pattern of profitability, accounting rules require the Company to create a deferred tax asset based primarily on its expected future benefit from its past net operating losses, which will be utilized over time against future taxable income. Consequently, net income in the fourth quarter of 2009 included a tax benefit of $11.7 million.
Net income, on a non-GAAP basis, for the fourth quarter of 2009 was $5.5 million, or $0.22 per share (diluted), compared to non-GAAP net income of $2.6 million, or $0.10 per share (diluted), in the fourth quarter of 2008, and non-GAAP net income of $3.9 million, or $0.15 per share (diluted), in the third quarter of 2009.
Cash, cash equivalents and marketable securities as of December 31, 2009, totaled $67.2 million, compared to $60.6 million as of September 30, 2009. Cash generated from operations during the fourth quarter was $5.6 million, cash used in investing activities was $0.2 million and cash provided by financing activities was $1.2 million.
Full Year 2009 Results: Total revenues for the year ended December 31, 2009 were $40.0 million, a 19% increase compared to $33.6 million in 2008.
Net income on a GAAP basis for 2009 was $17.4 million (including a one-time tax benefit of $11.7 million), or $0.66 per share (diluted), compared to a net loss of $4.6 million, or $0.20 loss per share, in 2008.
Net income on a non-GAAP basis for 2009 was $14.0 million, or $0.54 per share (diluted), compared with non-GAAP net income of $6.8 million, or $0.27 per share (diluted), in 2008.
Eli Fruchter , CEO of EZchip commented , “2009 was a year of progress and achievement for EZchip both on the financial and business fronts, despite the very challenging macroeconomic environment. This year we further enhanced our market position, expanding our product portfolio, broadening our customer base, and driving greater revenues and profitability. Revenues for the year increased 19% year-over-year, crossing the $40 million mark, with gross margins reaching new levels contributing to record operating and net income. Consequently, we generated net cash of $19.1 million with close to $17 million in cash from operations, ending 2009 with over $67 million in cash and cash equivalents, and no debt.”
“On the business front, during 2009 we continued to make substantial progress with our next generation network processors, the NP-4 and our new NPA family of carrier access products. During the fourth quarter we successfully completed testing our NPA, while our next generation network processor, the NP-4, which we believe is one of the most advanced of its kind, sampled and is now in testing with very positive results so far.
“Looking ahead, we believe we have the product roadmap, customer base and leading market position to continue to grow our business, as products based on our processors enter the market, and our next generation processors go into production with initial revenues expected already in late 2010. Furthermore, we are constantly expanding our presence in the various Carrier Ethernet segments and we believe that we will benefit from the growth in these segments in the coming years, which will enable us to further expand and diversify our customer base. ”
Conference Call The Company will be hosting a conference call later today, February 11, 2010, at 10:00am ET, 7:00am PT, 3:00pm UK time and 5:00pm Israel time. On the call, management will review and discuss the results, and will be available to answer investor questions.
To participate through live webcast, please access the corporate website, http://www.ezchip.com, at least 10 minutes before the conference call commences.
To participate through dial-in, please call one of the following teleconferencing numbers. Please begin placing your calls at least 15 minutes before the conference call commences. If you are unable to connect using the toll-free numbers, please try the international dial-in number.
US Dial-in Number: 1 888 668 9141 UK Dial-in Number: 0 800 917 5108 International Dial-in Number ( Israel): +972 3 918 0609 Israel Dial-in Number: 03 918 0609
For those unable to listen to the live call, a replay of the call will be available the day after the call under the 'Investor Relations' section of the website.
Use of Non-GAAP Financial Information In addition to disclosing financial results calculated in accordance with United States generally accepted accounting principles (GAAP), this release of operating results also contains non-GAAP financial measures, which EZchip Semiconductor believes are the principal indicators of the operating and financial performance of its business. The n on-GAAP financial measures exclude the effects of stock-based compensation expenses recorded in accordance with ASC 718 (originally issued as SFAS 123R), amortization of intangible assets, in-process research and development charge, benefit from (provision for) taxes on income, and net loss/ (income) attributable to noncontrolling interest. Management believes the non-GAAP financial measures provided are useful to investors’ understanding and assessment of the Company's on-going core operations and prospects for the future, as the charges eliminated are not part of the day-to-day business or reflective of the core operational activities of the Company. Management uses these non-GAAP financial measures as a basis for strategic decisions, forecasting future results and evaluating the Company's current performance. However, such measures should not be considered in isolation or as substitutes for results prepared in accordance with GAAP. Reconciliation of the non-GAAP measures to the most comparable GAAP measures are provided in the schedules attached to this release.
About EZchip EZchip is a fabless semiconductor company that provides Ethernet network processors for networking equipment. EZchip provides its customers with solutions that scale from 1-Gigabit to 100-Gigabits per second with a common architecture and software across all products. EZchip's network processors provide the flexibility and integration that enable triple-play data, voice and video services in systems that make up the new Carrier Ethernet networks. Flexibility and integration make EZchip's solutions ideal for building systems for a wide range of applications in telecom networks, enterprise backbones and data centers. 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. 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, 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 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 30, 2009 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.
IR Contact: Ehud Helft / Kenny Green CCG Investor Relations Tel: (US) 1 646 797 2868 / 1 646 201 9246
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