EZchip Semiconductor Ltd.

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

(U.S. Dollars in thousands)

(Unaudited)

Three Months Ended

Nine Months Ended

Sept. 30,

June 30,

Sept. 30,

Sept. 30,

Sept. 30,

2013

2013

2012

2013

2012

Cash flows from operating activities:

Net income

$     6,528

$     5,147

$        127

$     15,185

$     10,812

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

Depreciation and amortization

158

129

178

442

478

Decrease (increase) in trade and other receivables, net

(2,083)

859

3,181

(2,224)

4,183

Decrease (increase) in inventory

584

(725)

521

(768)

317

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

1,605

(1,480)

(585)

1,791

(1,538)

Stock-based compensation

3,542

3,520

2,879

10,287

8,296

Net cash provided by operating activities

10,334

7,450

6,301

24,713

22,548

Cash flows from investing activities:

Purchase of property and equipment

(846)

(255)

(95)

(1,446)

(769)

Purchase of technology

(1,163)

--

--

(1,294)

(500)

Net cash used in investing activities

(2,009)

(255)

(95)

(2,740)

(1,269)

Cash flows from financing activities:

Proceeds from exercise of options

450

780

96

1,284

11,863

Net cash provided by financing activities

450

780

96

1,284

11,863

Cash adjustment of marketable securities, net*

(20)

(388)

15

(595)

169

Increase in cash, cash equivalents, marketable securities and deposits

8,755

7,587

6,317

22,662

33,311

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

181,875

174,288

153,764

167,968

126,770

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

$   190,630

$   181,875

$   160,081

$   190,630

$   160,081