EZchip Semiconductor Ltd.

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

(U.S. Dollars in thousands)

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

June 30,

2014

2014

2013

2014

2013

Cash flows from operating activities:

Net income

$ 6,214

$ 6,086

$ 5,147

$ 12,300

$ 8,657

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

Depreciation

166

168

129

334

284

Decrease (increase) in trade and other
receivables, net

(97)

(1,471)

859

(1,568)

(141)

Decrease (increase) in inventory

97

(102)

(725)

(5)

(1,352)

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

(266)

(164)

(1,480)

(430)

186

Stock-based compensation

4,149

3,925

3,520

8,074

6,745

Net cash provided by operating activities

10,263

8,442

7,450

18,705

14,379

Cash flows from investing activities:

Purchase of property and equipment

(24)

(196)

(255)

(220)

(600)

Purchase of technology

(1,067)

(1,348)

--

(2,415)

(131)

Net cash used in investing activities

(1,091)

(1,544)

(255)

(2,635)

(731)

Cash flows from financing activities:

Proceeds from exercise of options

188

216

780

404

834

Net cash provided by financing activities

188

216

780

404

834

Cash adjustment of marketable securities,
net*

(113)

(7)

(388)

(120)

(575)

Increase in cash, cash equivalents,
marketable securities and deposits

9,247

7,107

7,587

16,354

13,907

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

209,972

202,865

174,288

202,865

167,968

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

$ 219,219

$ 209,972

$ 181,875

$ 219,219

$ 181,875