EZchip Semiconductor Ltd.

Reconciliation of GAAP to Non-GAAP Measures

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

(Unaudited)

Three Months Ended

Nine Months Ended

Sept. 30,

June 30,

Sept. 30,

Sept. 30,

Sept. 30,

2013

2013

2012

2013

2012

GAAP gross profit

$ 15,878

$ 14,178

$ 7,790

$ 42,411

$ 32,937

Stock-based compensation

73

73

73

219

224

Non-GAAP gross profit

$ 15,951

$ 14,251

$ 7,863

$ 42,630

$ 33,161

GAAP gross profit as percentage of revenues

84.4%

85.1%

83.9%

83.6%

83.4%

Non-GAAP gross profit as percentage of revenues

84.8%

85.6%

84.7%

84.0%

84.0%

GAAP operating expenses

$ 9,837

$ 9,536

$ 8,229

$ 28,728

$ 23,970

Stock-based compensation:

Research and development

(2,044)

(2,049)

(1,557)

(5,918)

(4,463)

Selling, general and administrative

(1,425)

(1,398)

(1,249)

(4,150)

(3,609)

Amortization of intangible assets

Selling, general and administrative

--

--

(51)

--

(153)

Non-GAAP operating expenses

$ 6,368

$ 6,089

$ 5,372

$ 18,660

$ 15,745

GAAP operating income (loss)

$ 6,041

$ 4,642

$ (439)

$ 13,683

$ 8,967

Non-GAAP operating income

$ 9,583

$ 8,162

$ 2,491

$ 23,970

$ 17,416

GAAP net income

$ 6,528

$ 5,147

$ 127

$ 15,185

$ 10,812

Stock-based compensation

3,542

3,520

2,879

10,287

8,296

Amortization of purchased intangible assets

--

--

51

--

153

Non-GAAP net income

$ 10,070

$ 8,667

$ 3,057

$ 25,472

$ 19,261

Non-GAAP net income per share - Diluted

$ 0.33

$ 0.29

$ 0.10

$ 0.85

$ 0.65

Non-GAAP weighted average shares - Diluted*

30,164,874

30,086,653

29,588,230

30,032,150

29,421,692

* 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.