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

March 31,

December 31,

March 31,

2014

2013

2013

GAAP gross profit

$      16,500

$      16,417

$      12,355

Stock-based compensation

74

73

73

Non-GAAP gross profit

$      16,574

$      16,490

$      12,428

GAAP gross profit as percentage of revenues

81.3%

81.7%

80.8%

Non-GAAP gross profit as percentage of revenues

81.7%

82.1%

81.3%

GAAP operating expenses

$     10,874

$      10,450

$       9,355

Stock-based compensation:

Research and development

(2,267)

(2,045)

(1,825)

Selling, general and administrative

(1,584)

(1,515)

(1,327)

Non-GAAP operating expenses

$       7,023

$        6,890

$       6,203

GAAP operating income

$       5,626

$        5,967

$       3,000

Non-GAAP operating income

$       9,551

$        9,600

$       6,225

GAAP net income

$       6,086

$        6,513

$       3,510

Stock-based compensation

3,925

3,633

3,225

Non-GAAP net income

$     10,011

$      10,146

$       6,735

Non-GAAP net income per share - Diluted

$        0.33

$          0.34

$        0.23

Non-GAAP weighted average shares - Diluted*

30,507,804

30,213,501

29,868,370

* 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.