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

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

June 30,

2014

2014

2013

2014

2013

GAAP gross profit

$ 17,802

$ 16,500

$ 14,178

$ 34,302

$ 26,533

Stock-based compensation

76

74

73

150

146

Non-GAAP gross profit

$ 17,878

$ 16,574

$ 14,251

$ 34,452

$ 26,679

GAAP gross profit as percentage of
revenues

80.5%

81.3%

85.1%

80.9%

83.0%

Non-GAAP gross profit as
percentage of revenues

80.9%

81.7%

85.6%

81.3%

83.5%

GAAP operating expenses

$ 11,872

$ 10,874

$ 9,536

$ 22,746

$ 18,891

Stock-based compensation:

      Research and development

(2,421)

(2,267)

(2,049)

(4,688)

(3,874)

      Selling, general and administrative

(1,652)

(1,584)

(1,398)

(3,236)

(2,725)

Acquisition related costs

      Selling, general and administrative

(660)

--

--

(660)

--

Non-GAAP operating expenses

$ 7,139

$ 7,023

$ 6,089

$ 14,162

$ 12,292

GAAP operating income

$ 5,930

$ 5,626

$ 4,642

$ 11,556

$ 7,642

Non-GAAP operating income

$ 10,739

$ 9,551

$ 8,162

$ 20,290

$ 14,387

GAAP net income

$ 6,214

$ 6,086

$ 5,147

$ 12,300

$ 8,657

Stock-based compensation

4,149

3,925

3,520

8,074

6,745

Acquisition related costs

660

--

--

660

--

Non-GAAP net income

$ 11,023

$ 10,011

$ 8,667

$ 21,034

$ 15,402

Non-GAAP net income per share -
Diluted

$ 0.36

$ 0.33

$ 0.29

$ 0.69

$ 0.51

Non-GAAP weighted average shares
- Diluted*

30,774,136

30,507,804

30,086,653

30,637,994

29,965,981

* 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.