Mellanox Technologies, Ltd. Schedules Release of Q3 2010 Financial Results and Conference Call for Oct. 20, 2010

SUNNYVALE, CA. and YOKNEAM, ISRAEL – Oct. 4, 2010 – Mellanox® Technologies, Ltd. (NASDAQ: MLNX; TASE: MLNX), a leading supplier of end-to-end connectivity solutions for servers and storage systems, today announced that it will release financial results for its third quarter 2010 after the close of market on Wednesday, Oct. 20, 2010.

Following the release, Mellanox will conduct a conference call at 2:00 p.m. Pacific Time (5:00 p.m. Eastern). To listen to the call, dial 973-409-9610 approximately ten minutes prior to the start time.

Mellanox will also conduct a conference call on Thursday, Oct. 21st at 9 a.m. Israel Time to discuss the company’s third quarter 2010 financial results in Hebrew. To listen to the call, dial +972-3-9180609 approximately 10 minutes prior to the start of the call.

The Mellanox financial results conference calls will be available via a live webcast on the investor relations section of the Mellanox website at http://ir.mellanox.com. Access the web site 15 minutes prior to the start of the call to download and install any necessary audio software. An archived webcast replay will be available on the Mellanox web site for 12 months.

About Mellanox
Mellanox Technologies is a leading supplier of end-to-end connectivity solutions for servers and storage that optimize data center performance. Mellanox products deliver market-leading bandwidth, performance, scalability, power conservation and cost-effectiveness while converging multiple legacy network technologies into one future-proof solution. For the best in performance and scalability, Mellanox is the choice for Fortune 500 data centers and the world’s most powerful supercomputers. Founded in 1999, Mellanox Technologies is headquartered in Sunnyvale, California and Yokneam, Israel. For more information, visit Mellanox at www.mellanox.com.

Mellanox, BridgeX, ConnectX, InfiniBlast, InfiniBridge, InfiniHost, InfiniRISC, InfiniScale, InfiniPCI, PhyX and Virtual Protocol Interconnect are registered trademarks of Mellanox Technologies, Ltd. CORE-Direct, and FabricIT are trademarks of Mellanox Technologies, Ltd. All other trademarks are property of their respective owners.

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Mellanox Technologies, Ltd.
Condensed Consolidated Statements of Operations
(in thousands, except per share data, unaudited)
Three Months Ended
March 31,
2011 2010
Total revenues $ 55,057 $ 36,210
Cost of revenues 19,165 9,023
Gross profit 35,892 27,187
Operating expenses:
Research and development 20,394 12,277
Sales and marketing 8,722 5,013
General and administrative 8,445 2,636
Total operating expenses 37,561 19,926
Income (loss) from operations (1,669 ) 7,261
Other income, net 48 113
Income (loss) before taxes (1,621 ) 7,374
Provision for taxes on income (3 ) (2,136 )
Net income (loss) $ (1,624 ) $ 5,238
Net income (loss) per share — basic $ (0.05 ) $ 0.16
Net income (loss) per share — diluted $ (0.05 ) $ 0.15
Shares used in computing income per share:
Basic 34,490 32,960
Diluted 34,490 34,759
Mellanox Technologies, Ltd.
Reconciliation of Non-GAAP Adjustments
(in thousands, except per share data and percentages, unaudited)
Three Months Ended
March 31,
2011 2010

Reconciliation of GAAP net income (loss) to non-GAAP:

GAAP net income (loss) $ (1,624 ) $ 5,238
Adjustments:
Share-based compensation expense:
Cost of revenues 144 90
Research and development 2,353 1,893
Sales and marketing 1,019 643
General and administrative 762 762
Total share-based compensation expense: 4,278 3,388
Acquisition related charges:
Amortization of acquired intangibles:
Cost of revenue 1,851
Sales and marketing 254
Total amortization of acquired intangibles 2,105
Other acquisition related charges
General and administrative 4,394
Deferred taxes in Israel 1,767
Non-GAAP net income $ 9,153 $ 10,393

Reconciliation of GAAP gross profit to non-GAAP:

Revenues $ 55,057 $ 36,210
GAAP gross profit 35,892 27,187
GAAP gross margin 65.2 % 75.1 %
Share-based compensation expense 144 90
Acquisition related charges 1,851
Non-GAAP gross profit $ 37,887 $ 27,277
Non-GAAP gross margin 68.8 % 75.3 %

Reconciliation of GAAP operating expenses to non-GAAP:

GAAP operating expenses $ 37,561 $ 19,926
Share-based compensation expense (4,134 ) (3,298 )
Acquisition related charges (4,648 )
Non-GAAP operating expenses $ 28,779 $ 16,628

Reconciliation of GAAP income (loss) from operations to non-GAAP:

GAAP income (loss) from operations $ (1,669 ) $ 7,261
Share-based compensation expense 4,278 3,388
Acquisition related charges 6,499
Non-GAAP income from operations $ 9,108 $ 10,649
Mellanox Technologies, Ltd.
Reconciliation of Non-GAAP Adjustments
(in thousands, except per share data and percentages, unaudited)
Three Months Ended
March 31,
2011 2010
Shares used in computing GAAP basic earnings per share 34,490 32,960
Adjustments:
Impact from weighted outstanding shares* 274 321
Shares used in computing non-GAAP basic earnings per share 34,764 33,281
Shares used in computing GAAP diluted earnings per share 34,490 34,759
Adjustments:
Impact from weighted outstanding shares* 274 321
Effect of dilutive securities under GAAP** (1,799 )
Total options vested and exercisable 3,304 2,319
Shares used in computing non-GAAP diluted earnings per share 38,068 35,600
GAAP diluted net income (loss) per share $ (0.05 ) $ 0.15
Adjustments:
Share-based compensation expense 0.12 0.10
Amortization of acquired intangibles 0.06 0.00
Other acquisition related charges 0.13 0.00
Deferred taxes in Israel 0.00 0.05
Effect of dilutive securities under GAAP** 0.00 0.01
Total options vested and exercisable (0.02 ) (0.02 )
Non-GAAP diluted income per share $ 0.24 $ 0.29

* Under GAAP, shares used in computing income per share are adjusted for the amount of time they are outstanding during the period. The number of shares used in computing income per share has been adjusted to a non-GAAP measure as if those ordinary shares were outstanding during the entire period to provide a comparable share number in future quarters.

** This adjustment adds back the GAAP effect of additional ordinary shares that would have been outstanding if the dilutive potential common shares from stock options had been issued under the Treasury method.

Mellanox Technologies, Ltd.
Condensed Consolidated Balance Sheets
(in thousands, unaudited)
March 31, December 31,
2011 2010
ASSETS
Current assets:
Cash and cash equivalents $ 54,496 $ 107,994
Short-term investments 33,701 141,959
Restricted cash 5,148 3,353
Accounts receivable, net 35,452 19,893
Inventories 15,289 11,717
Deferred taxes 810 616
Prepaid expenses and other 7,805 3,871
Total current assets 152,701 289,403
Property and equipment, net 22,057 15,490
Severance assets 9,274 5,792
Intangible assets, net 34,487 290
Goodwill 132,885
Deferred taxes 954 1,422
Other long-term assets 4,669 3,358
Total assets $ 357,027 $ 315,755
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 15,893 $ 6,526
Other accrued liabilities 24,378 15,885
Deferred revenue 4,088 1,051
Capital lease obligations, current 316 316
Total current liabilities 44,675 23,778
Accrued severance 12,110 7,355
Deferred revenue 2,028 563
Capital lease obligations 79 158
Other long-term obligations 3,219 2,211
Total liabilities 62,111 34,065
Shareholders’ equity
Ordinary shares 142 141
Additional paid-in capital 279,963 265,481
Accumulated other comprehensive income 1,321 954
Retained earnings 13,490 15,114
Total shareholders’ equity 294,916 281,690
Total liabilities and shareholders’ equity $ 357,027 $ 315,755
Mellanox Technologies, Ltd.
Condensed Consolidated Statement of Cash Flows
(in thousands, unaudited)
Three Months Ended March 31,
2011 2010
Cash flows from operating activities:
Net income (loss) $ (1,624 ) $ 5,238
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 3,918 1,089
Deferred income taxes 450 1,767
Share-based compensation expense 4,278 3,388
Gain on sale of investments (77 ) (153 )
Changes in assets and liabilities:
Accounts receivable, net (3,136 ) (1,704 )
Inventories 1,027 (3,228 )
Prepaid expenses and other assets (1,586 ) 1,092
Accounts payable 6,826 897
Accrued liabilities and other payables 3,545 (292 )
Net cash provided by operating activities 13,621 8,094
Cash flows from investing activities:
Acquisition of Voltaire, Ltd., net of cash acquired of $3,961 (203,704 )
Purchase of severance-related insurance policies (201 ) (185 )
Purchases of short-term investments (22 ) (74,250 )
Proceeds from sale of short-term investments 135,196 56,567
Proceeds from maturities of short-term investments 18,687
Purchase of property and equipment (2,211 ) (3,674 )
Net cash used in investing activities (70,942 ) (2,855 )
Cash flows from financing activities:
Principal payments on capital lease obligations (79 ) (251 )
Proceeds from issuance of common stock to employees 3,902 3,046
Excess tax benefit from share-based compensation 271
Net cash provided by financing activities 3,823 3,066
Net increase (decrease) in cash and cash equivalents (53,498 ) 8,305
Cash and cash equivalents at beginning of period 107,994 43,640
Cash and cash equivalents at end of period $ 54,496 $ 51,945

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