Silicom Reports Financial Results for Q1 2009

Silicom Ltd. (NASDAQ:SILC)(TASE:SILC) today reported its financial results for the first quarter ended March 31, 2009.

Revenues for the first quarter of 2009 were $5.0 million compared with $7.7 million for the first quarter of 2008. Net income for the quarter was $0.9 million, or $0.13 per share (basic and diluted), compared with $1.7 million, or $0.26 per share (basic and diluted), for the first quarter of 2008.

As of March 31, 2009, the Company’s cash, cash equivalents and marketable securities totaled $40.1 million, an increase of $0.9 million compared with December 31, 2008.

Commenting on the results, Shaike Orbach, President and CEO, said, “In the face of economic headwinds, we are pleased to have been able to deliver good bottom line performance and to generate additional cash of nearly $1 million, an achievement that demonstrates the efficiency of our operations and the attractiveness of our business model. The reduction in our sales is due entirely to today’s difficult market environment - especially the decision of two of our ‘10% customers’ to cut their inventories dramatically, leading them to reduce the volume of ongoing purchase orders in the short term as they draw down existing stocks. The fact that we have been able to compensate partially through sales to other customers confirms the importance of our large and diverse customer base, a key asset which remains intact despite today’s macro environment. The combination of this solid customer base, the long-term potential of our largest customers and our significant cash reserves represents a steady platform from which we are weathering the downturn and continuing to move forward.”

Conference Call Details:

Silicom’s Management will host an interactive conference today, April 27^th, at 9am EDT (6am Pacific Time, 4pm Israel Time) to review and discuss the results. To participate, please call one of the following numbers approximately 10 minutes before that time.

US: 1 866 345 5855 (toll free)
UK: 0 800 404 8418 (toll free)
ISRAEL: 03 918 0609 (not toll free)
INTERNATIONAL: +972 3 918 0609 (not toll free)

The call will also be broadcast live over the web, through a link accessible from Silicom’s website prior to the call. For those unable to listen to the live call, a replay of the call will be available for three months from the day after the call under the investor relations section of Silicom’s website, at: www.silicom.co.il

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About Silicom

Silicom Ltd. is an industry-leading provider of high-performance server/appliances networking solutions. The Company's flagship products include a variety of multi-port Gigabit Ethernet, copper and fiber-optic, server adapters and innovative BYPASS adapters designed to increase throughput and availability of server-based systems, WAN Optimization and security appliances and other mission-critical gateway applications. For more information, please visit: www.silicom.co.il.

Statements in this press release which are not historical data are forward-looking statements which involve known and unknown risks, uncertainties, or other factors not under the Company's control, which may cause actual results, performance, or achievements of the Company to be materially different from the results, performance, or other expectations implied by these forward-looking statements. These factors include, but are not limited to, those detailed in the Company's periodic filings with the Securities and Exchange Commission. The Company disclaims any duty to update such statements.

-- FINANCIAL TABLES FOLLOW --

Silicom Ltd. Consolidated
Statements of Income

(US$ thousands, except for share and per share data)

		Three-month period
		ended March 31
		2009		2008
Sales		$5,018		$7,703
Cost of sales		3,078		4,445
Gross profit		1,940		3,258
Research and development costs		637		857
Selling and marketing expenses		379		544
General and administrative expenses		275		409
Total operating expenses		1,291		1,810
Operating income		649		1,448
Financial income, net		344		247
Income before income taxes		993		1,695
Income tax expense (benefit)		126		(41)
Net income		$867		$1,736
Basic income per ordinary share		$0.13		$0.26
Weighted average number of ordinary shares used to compute basic income per share (in thousands)		6,694		6,663
Diluted income per ordinary share		$0.13		$0.26
Weighted average number of ordinary shares used to compute diluted income per share (in thousands)		6,791		6,800

Silicom Ltd. Consolidated Balance Sheets
(US$ thousands)

		March 31, 2009		December 31, 2008
Assets
Current assets
Cash and cash equivalents		$19,440		$14,568
Marketable securities		9,822		8,426
Accounts receivables: Trade, net		4,415		4,849
Accounts receivables: Other		294		353
Inventories		5,371		5,269
Deferred tax assets		181		210
Total current assets		39,523		33,675
Marketable securities		10,799		16,204
Assets held for employees’ severance benefits		962		1,066
Deferred tax assets		214		234
Property, plant and equipment, net		742		795
Total assets		$52,240		$51,974

		March 31, 2009		December 31, 2008
Liabilities and shareholder's equity
Current liabilities
Trade accounts payable		$2,026		$2,681
Other accounts payable and accrued expenses		2,120		2,054
Total current liabilities		4,146		4,735
Liability for employees’ severance benefits		1,785		1,905
Total liabilities		5,931		6,640
Shareholders' equity
Ordinary shares and additional paid-in capital		33,210		33,102
Treasury shares		(38)		(38)
Retained earnings		13,137		12,270
Total Shareholders' equity		46,309		45,334
Total liabilities and shareholders equity		$52,240		$51,974