EZchip Semiconductor Ltd.

Reconciliation of GAAP to Non-GAAP Measures

(U.S. Dollars in thousands, except per share amounts)

(Unaudited)

Three Months Ended

Twelve Months Ended

Dec. 31,

Sept. 30,

Dec. 31,

Dec. 31,

Dec. 31,

2013

2013

2012

2013

2012

GAAP gross profit

$ 16,417

$ 15,878

$ 12,652

$ 58,828

$ 45,589

Stock-based compensation

73

73

74

292

298

Non-GAAP gross profit

$ 16,490

$ 15,951

$ 12,726

$ 59,120

$ 45,887

GAAP gross profit as percentage of revenues

81.7%

84.4%

83.2%

83.0%

83.3%

Non-GAAP gross profit as percentage of revenues

82.1%

84.8%

83.7%

83.4%

83.9%

GAAP operating expenses

$ 10,450

$ 9,837

$ 8,400

$ 39,178

$ 32,370

Stock-based compensation:

     Research and development

(2,045)

(2,044)

(1,563)

(7,963)

(6,026)

     Selling, general and administrative

(1,515)

(1,425)

(1,265)

(5,665)

(4,874)

Amortization of intangible assets:

     Selling, general and administrative

--

--

(51)

--

(204)

Non-GAAP operating expenses

$ 6,890

$ 6,368

$ 5,521

$ 25,550

$ 21,266

GAAP operating income

$ 5,967

$ 6,041

$ 4,252

$ 19,650

$ 13,219

Non-GAAP operating income

$ 9,600

$ 9,583

$ 7,205

$ 33,570

$ 24,621

GAAP net income

$ 6,513

$ 6,528

$ 4,839

$ 21,698

$ 15,651

Stock-based compensation

3,633

3,542

2,902

13,920

11,198

Amortization of purchased intangible assets

--

--

51

--

204

Non-GAAP net income

$ 10,146

$ 10,070

$ 7,792

$ 35,618

$ 27,053

Non-GAAP net income per share - Diluted

$ 0.34

$ 0.33

$ 0.26

$ 1.18

$ 0.92

Non-GAAP weighted average shares - Diluted*

30,213,501

30,164,874

29,634,765

30,074,563

29,473,851

 * 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.