6-K 1 zk1312630.htm 6-K zk1312630.htm


SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
F O R M 6-K
 
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR
15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
 
For the month of February 2013
 
EZCHIP SEMICONDUCTOR LTD.
(Name of Registrant)
 
1 Hatamar Street, P.O.B. 527, Yokneam 20692, ISRAEL
(Address of Principal Executive Office)
 
        Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
 
Form 20-F x Form 40-F o
 
        Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o
 
        Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o
 
        Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
 
Yes o No x
 
        If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-_____________
 
This Form 6-K is being incorporated by reference into the Registrant’s Form F-3 Registration Statements File Nos. 333-163353 and 333-164332 and Form S-8 Registration Statements File Nos. 333-134593, 333-148932, 333-148933. 333-164330, 333-164331, 333-170900, 333-170901 and 333-179491.   
 
 
 

 
 
SIGNATURES
 
        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
   
EZCHIP SEMICONDUCTOR LTD.
(Registrant)
 
By: /s/ Dror Israel
——————————————
Dror Israel
Chief Financial Officer
 
Date: February 13, 2013
 
 
2

 
 
EZCHIP LOGO
EZchip Semiconductor Ltd.
1 Hatamar Street, P.O. Box 527, Yokneam 20692, Israel
Phone: (972) 4-959-6666; Fax: (972) 4-959-4166
Email: info@ezchip.com; Web: www.ezchip.com
 
Contact:
Ehud Helft / Kenny Green
CCG Investor Relations
ezchip@ccgisrael.com
Tel: (US) 1 646 201 9246

FOR IMMEDIATE RELEASE

EZCHIP ANNOUNCES FOURTH QUARTER AND
FULL YEAR 2012 RESULTS

Yokneam, Israel, February 13, 2013 – 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, 2012. 

Fourth Quarter and Full Year 2012 Highlights:
 
 
·
Annual revenues for 2012 of $54.7 million
 
 
·
Fourth quarter revenues of $15.2 million
 
 
·
Fourth quarter gross margin reached 83.2% on a GAAP basis and 83.7% on a non-GAAP basis
 
 
·
Net income, on a GAAP basis, was $15.7 million for 2012 and $4.8 million for the fourth quarter
 
 
·
Net income, on a non-GAAP basis, was $27.1 million for 2012 (49% of revenues) and $7.8 million for the fourth quarter (51% of revenues)
 
 
·
Non-GAAP operating cash flow of $29.2 million for 2012 and $7.1 million for the fourth quarter
 
 
·
Net cash at end of 2012 was $168.0 million
 
Fourth Quarter 2012 Results:

Total revenues in the fourth quarter of 2012 were $15.2 million, an increase of 7% compared to $14.3 million in the fourth quarter of 2011, and an increase of 64% compared to $9.3 million in the third quarter of 2012.
 
Net income, on a GAAP basis, for the fourth quarter of 2012 was $4.8 million, or $0.17 per share (diluted), compared to net loss of $6.0 million, which included a one-time charge due to early repayment of $9.9 million to the Israeli Office of Chief Scientist (OCS), or $0.22 per share, in the fourth quarter of 2011, and net income of $0.1 million, or $0.00 per share (diluted), in the third quarter of 2012.

Net income, on a non-GAAP basis, for the fourth quarter of 2012 was $7.8 million, or $0.26 per share (diluted), compared to non-GAAP net income of $6.3 million, or $0.22 per share (diluted), in the fourth quarter of 2011, and non-GAAP net income of $3.1 million, or $0.10 per share (diluted), in the third quarter of 2012.

 
3

 
 
EZCHIP LOGO
EZchip Semiconductor Ltd.
1 Hatamar Street, P.O. Box 527, Yokneam 20692, Israel
Phone: (972) 4-959-6666; Fax: (972) 4-959-4166
Email: info@ezchip.com; Web: www.ezchip.com
 
Full Year 2012 Results:

Total revenues for the year ended December 31, 2012 were $54.7 million, a year-over-year decrease of 14% compared to $63.5 million in 2011.

Net income on a GAAP basis for 2012 was $15.7 million, or $0.54 per share (diluted), compared to net income of $7.9 million, or $0.28 per share (diluted), in 2011.

Net income on a non-GAAP basis for 2012 was $27.1 million or $0.92 per share (diluted), compared with non-GAAP net income of $31.0 million, or $1.09 per share (diluted), in 2011.

Cash, cash equivalents, marketable securities and deposits as of December 31, 2012, totaled $168.0 million, compared to $160.1 million as of September 30, 2012 and compared to $126.8 million as of December 31, 2011. Cash generated from operations was $7.1 million for the fourth quarter and $29.2 million for the year, cash used in investing activities was $0.2 million for the fourth quarter and $1.5 million for the year, cash provided by financing activities (resulting from the exercise of options) was $1.0 million for the fourth quarter and $12.9 million for the year and an additional $0.6 million increase resulted from unrealized gains in marketable securities during 2012.

Eli Fruchter, CEO of EZchip, commented, “2012 was another transition year for EZchip. First, we completed the transition to Cisco becoming our largest customer, with all revenues being royalty-based, thereby increasing our gross margins to 84% and maintaining our outstanding 49% net margin in line with the net margin we achieved in 2010 and 2011. Second, we transitioned to NP-4, which surpassed the NP-3 run rate in its first full production year, and became our largest revenue generator. Finally, we laid the foundation for the NPS line of network processors for smart networks that will target both next-generation edge routers and data centers, and we believe could double our total available market.

“Of our five major NP-4 customers, two are in production and two entered production at the end of the third quarter and have placed initial production orders. The fifth customer, Huawei, is also expected to enter production in the first quarter; however, it has not yet placed any production orders and we believe Huawei may proceed to offer a lower-end in-house solution in parallel to the high-end NP-4 solution.

“Looking ahead, we believe that high-end NPUs, such as the NP-4, are required for high-end edge routers to be competitive. Therefore, based on the success of our customer products in the marketplace and the level of carriers’ investment in Internet infrastructure, we believe NP-4 can significantly increase our revenues in the next few years. As for this year, we expect year-over-year growth in both Q1 and 2013, also when compared with 2011. ”
 
 
4

 
 
EZCHIP LOGO
EZchip Semiconductor Ltd.
1 Hatamar Street, P.O. Box 527, Yokneam 20692, Israel
Phone: (972) 4-959-6666; Fax: (972) 4-959-4166
Email: info@ezchip.com; Web: www.ezchip.com
 
Conference Call
 
The Company will be hosting a conference call later today, February 13, 2013, 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 the live webcast, please access the investor relations section of the Company’s web site at: http://www.ezchip.com/investor_relations.htm, at least 10 minutes before the conference call commences. If you would like to ask a question on the call, please contact the investor relations team for the telephone dial in numbers.

For those unable to listen to the live webcast, a replay of the webcast 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 believes are the principal indicators of the operating and financial performance of its business. The non-GAAP financial measures exclude the effects of stock-based compensation expenses recorded in accordance with FASB ASC 718, amortization of intangible assets, one-time charge due to early repayment of OCS grants and taxes on income.  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 solutions that scale from a few to hundreds of Gigabits-per-second. EZchip's network processors provide great flexibility and high performance coupled with superior integration and power efficiency for a wide range of applications in carrier, cloud and data center network equipment.  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 29, 2012 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.
 
 
5

 
 
EZCHIP LOGO
EZchip Semiconductor Ltd.
1 Hatamar Street, P.O. Box 527, Yokneam 20692, Israel
Phone: (972) 4-959-6666; Fax: (972) 4-959-4166
Email: info@ezchip.com; Web: www.ezchip.com
 
EZchip Semiconductor Ltd.
Condensed Consolidated Statements of Operations
(U.S. Dollars in thousands, except per share amounts)
(Unaudited)
 
   
Three Months Ended
   
Twelve Months Ended
 
   
December 31,
   
September 30,
   
December 31,
   
December 31,
   
December 31,
 
   
2012
   
2012
   
2011
   
2012
   
2011
 
                               
Revenues
  $ 15,207     $ 9,287     $ 14,269     $ 54,707     $ 63,457  
Cost of revenues
    2,555       1,497       3,386       9,118       14,409  
Amortization of purchased technology
    --       --       --       --       597  
Repayment of OCS grants
    --       --       9,938       --       9,938  
Gross profit
    12,652       7,790       945       45,589       38,513  
                                         
Operating expenses:
                                       
                                         
Research and development, net
    5,180       5,182       4,352       19,736       16,695  
Selling, general and administrative
    3,220       3,047       3,097       12,634       12,059  
Total operating expenses
    8,400       8,229       7,449       32,370       28,754  
                                         
Operating income (loss)
    4,252       (439 )     (6,504 )     13,219       9,759  
Financial income, net
    587       566       551       2,432       1,713  
Income (loss) before taxes
    4,839       127       (5,953 )     15,651       11,472  
                                         
Taxes on income
    --       --       --       --       (3,530 )
                                         
Net income (loss)
  $ 4,839     $ 127     $ (5,953 )   $ 15,651     $ 7,942  
                                         
Net income (loss) per share:
                                       
Basic
  $ 0.17     $ 0.00     $ (0.22 )   $ 0.56     $ 0.30  
Diluted
  $ 0.17     $ 0.00     $ (0.22 )   $ 0.54     $ 0.28  
Weighted average shares used in per share calculation:
                                       
Basic
    28,233,299       28,119,713       27,015,478       27,981,243       26,681,749  
Diluted
    28,869,499       28,748,784       27,015,478       28,842,408       28,001,428  
 
 
6

 
 
EZCHIP LOGO
EZchip Semiconductor Ltd.
1 Hatamar Street, P.O. Box 527, Yokneam 20692, Israel
Phone: (972) 4-959-6666; Fax: (972) 4-959-4166
Email: info@ezchip.com; Web: www.ezchip.com
 
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
 
   
December 31,
   
September 30,
   
December 31,
   
December 31,
   
December 31,
 
   
2012
   
2012
   
2011
   
2012
   
2011
 
                               
GAAP gross profit
  $ 12,652     $ 7,790     $ 945     $ 45,589     $ 38,513  
Stock-based compensation
    74       73       73       298       359  
Amortization of purchased technology
    --       --       --       --       597  
Repayment of OCS grants*
    --       --       9,938       --       9,938  
                                         
Non-GAAP gross profit
  $ 12,726     $ 7,863     $ 10,956     $ 45,887     $ 49,407  
                                         
GAAP gross profit as percentage of revenues
    83.2 %     83.9 %     6.6 %     83.3 %     60.7 %
Non-GAAP gross profit as percentage of revenues
    83.7 %     84.7 %     76.8 %     83.9 %     77.9 %
                                         
GAAP operating expenses
  $ 8,400     $ 8,229     $ 7,449     $ 32,370     $ 28,754  
Stock-based compensation:
                                       
    Research and development
    (1,563 )     (1,557 )     (1,094 )     (6,026 )     (4,446 )
    Selling, general and administrative
    (1,265 )     (1,249 )     (1,051 )     (4,874 )     (3,801 )
Amortization of intangible assets
                                       
    Selling, general and administrative
    (51 )     (51 )     (95 )     (204 )     (380 )
                                         
Non-GAAP operating expenses
  $ 5,521     $ 5,372     $ 5,209     $ 21,266     $ 20,127  
                                         
GAAP operating income (loss)
  $ 4,252     $ (439 )   $ (6,504 )   $ 13,219     $ 9,759  
                                         
Non-GAAP operating income
  $ 7,205     $ 2,491     $ 5,747     $ 24,621     $ 29,280  
                                         
GAAP net income (loss)
  $ 4,839     $ 127     $ (5,953 )   $ 15,651     $ 7,942  
Stock-based compensation
    2,902       2,879       2,218       11,198       8,606  
Amortization of purchased intangible assets
    51       51       95       204       977  
Repayment of OCS grants*
    --       --       9,938       --       9,938  
Taxes on income**
    --       --       --       --       3,530  
                                         
Non-GAAP net income
  $ 7,792     $ 3,057     $ 6,298     $ 27,053     $ 30,993  
                                         
Non-GAAP net income per share - Diluted
  $ 0.26     $ 0.10     $ 0.22     $ 0.92     $ 1.09  
Non-GAAP weighted average shares - Diluted***
    29,634,765       29,588,230       28,605,559       29,473,851       28,432,175  
 
*
During December 2011 we made a one-time early payment of $9.9 million to the Israeli Office of Chief Scientist, representing the full balance of the contingent liability related to the NP-4 and NPA grants received. Upon making this payment, we have eliminated all future royalty obligations related to our anticipated NP-4 and NPA revenues and saved the associated future interest payments related to such obligations. This amount was excluded from the non-GAAP statements of operations as it represents future royalty obligations.
**
Taxes on income represent the non-cash utilization of a deferred tax asset with respect to the Company's estimate of its accumulated taxable income in accordance with FASB ASC 740. During 2011, EZchip Technologies, the Company's main subsidiary completed the utilization of the deferred tax asset, and started to enjoy the ten year period of exemption from Israeli corporate taxes due to benefits provided pursuant to its Israeli approved and privileged enterprise programs.
***
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.
 
 
7

 
 
EZCHIP LOGO
EZchip Semiconductor Ltd.
1 Hatamar Street, P.O. Box 527, Yokneam 20692, Israel
Phone: (972) 4-959-6666; Fax: (972) 4-959-4166
Email: info@ezchip.com; Web: www.ezchip.com
 
EZchip Semiconductor Ltd.
Condensed Consolidated Balance Sheet
(U.S. Dollars in thousands)
 
             
   
December 31,
   
December 31,
 
   
2012
   
2011
 
   
(Unaudited)
   
(Audited)
 
ASSETS
           
CURRENT ASSETS:
           
Cash, cash equivalents, marketable securities and deposits
  $ 167,968     $ 126,770  
Trade receivables, net
    4,813       8,655  
Other receivables
    4,305       1,837  
Inventories
    4,523       5,788  
Total current assets
    181,609       143,050  
                 
NON CURRENT ASSETS:
               
Severance pay fund
    6,066       5,215  
Long term investment and others
    358       337  
Total non current assets
    6,424       5,552  
                 
PROPERTY AND EQUIPMENT, NET
    1,285       828  
                 
INTANGIBLE ASSETS, NET
    1,000       1,205  
                 
GOODWILL
    96,276       96,276  
                 
TOTAL ASSETS
  $ 286,594     $ 246,911  
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
CURRENT LIABILITIES:
               
Trade payables
  $ 571     $ 2,319  
Other payables and accrued expenses
    5,401       6,352  
Total current liabilities
    5,972       8,671  
                 
ACCRUED SEVERANCE PAY
    6,977       6,081  
                 
SHAREHOLDERS’ EQUITY:
               
Share capital
    161       155  
Additional paid-in capital
    312,723       288,641  
Accumulated other comprehensive income (loss)
    787       (960 )
Accumulated deficit
    (40,026 )     (55,677 )
Total shareholders’ equity
    273,645       232,159  
                 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
  $ 286,594     $ 246,911  
 
 
8

 
 
EZCHIP LOGO
EZchip Semiconductor Ltd.
1 Hatamar Street, P.O. Box 527, Yokneam 20692, Israel
Phone: (972) 4-959-6666; Fax: (972) 4-959-4166
Email: info@ezchip.com; Web: www.ezchip.com
 
EZchip Semiconductor Ltd.
Selected Condensed Consolidated Cash Flow Data on a Non-GAAP Basis
(U.S. Dollars in thousands)
(Unaudited)
 
   
Three Months Ended
   
Twelve Months Ended
 
   
December 31,
   
September 30,
   
December 31,
   
December 31,
   
December 31,
 
   
2012
   
2012
   
2011
   
2012
   
2011
 
                               
Cash flows from operating activities:
                             
Net income (loss)
  $ 4,839     $ 127     $ (5,953 )   $ 15,651     $ 7,942  
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
                                       
Repayment of OCS grants*
    --       --       9,938       --       9,938  
Depreciation and amortization
    183       178       163       661       1,227  
Decrease (increase) in trade and other receivables, net
    (1,878 )     2,991       1,113       1,870       (621 )
Decrease (increase) in inventory
    948       521       259       1,265       (1,266 )
Decrease in deferred tax asset
    --       --       --       --       3,513  
Increase (decrease) in trade payables and other accrued liabilities, net
    138       (585 )     1,213       (1,400 )     (494 )
Stock-based compensation
    2,902       2,879       2,218       11,198       8,606  
                                         
Net cash provided by operating activities
    7,132       6,111       8,951       29,245       28,845  
                                         
Cash flows from investing activities:
                                       
Purchase of property and equipment
    (239 )     (95 )     (97 )     (1,008 )     (411 )
Purchase of technology
    --       --       (500 )     (500 )     (500 )
                                         
Net cash used in investing activities
    (239 )     (95 )     (597 )     (1,508 )     (911 )
                                         
Cash flows from financing activities:
                                       
Proceeds from exercise of options
    1,027       96       711       12,890       8,082  
                                         
Net cash provided by financing activities
    1,027       96       711       12,890       8,082  
                                         
Repayment of OCS grants*
    --       --       (9,938 )     --       (9,938 )
Unrealized gain (loss) on marketable securities, net
    (33 )     205       6       571       (618 )
                                         
Increase (decrease) in cash, cash equivalents, marketable securities and deposits
    7,887       6,317       (867 )     41,198       25,460  
                                         
Cash, cash equivalents, marketable securities and deposits at the beginning of the period
    160,081       153,764       127,637       126,770       101,310  
                                         
Cash, cash equivalents, marketable securities and deposits at the end of the period
  $  167,968     $  160,081     $  126,770     $  167,968     $  126,770  
 
During December 2011 we made a one-time early payment of $9.9 million to the Israeli Office of Chief Scientist, representing the full balance of the contingent liability related to the NP-4 and NPA grants received. Upon making this payment, we have eliminated all future royalty obligations related to our anticipated NP-4 and NPA revenues and saved the associated future interest payments related to such obligations. This amount was excluded from the non-GAAP operating cash flow as it represents future royalty obligations.
 
9