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Financial Flexibility at Silicom

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Financial Flexibility at Silicom

By Ken Nagy, CFA

On March18, 2013, Silicom Ltd (NasdaqGM:), the provider of high-performance server and appliances networking solutions, reported that its Board of Directors declared a cash dividend in the amount of US $0.55 per share.

The January 2013 decision to implement a dividend policy was in reverence to its fiscal 2012 financial results, the Company’s cash balance and Silicom’s visibility for continued accelerated growth.

The company’s cash, cash equivalents, bank deposits and marketable securities totaled $56.9 million or $8.12 per outstanding share as of December 31, 2012, which is a sequential improvement of nearly $2 million from September 30, 2012.

Likewise, this was Silicom’s highest ever cash level which demonstrates to both its existing customers as well as new potential customers that the Company can meet all their needs and provide them with support over the long term.

The improvement of assets provides the Company with a substantial level of working capital and financial flexibility, placing Silicom in a position of strength and stability, enabling the Company to continue to invest in its business as well as take advantage of opportunities as they arise.

The dividend represents an aggregate distribution of approximately US $3.9 million and will be payable on April 17, 2013 to all shareholders of record at the close of the NASDAQ Global Market on April 4, 2013.

Management believes its momentum will continue to be driven by the perfect fit between its strategy and products, and the critical short- and long-term needs of the Networking and Data Infrastructure Industry.

With strong demand for all of the Company’s product line, exciting strategic wins with some of the industry’s most important players and an extensive pipeline of potential sales, we believe that Silicom has never been better positioned and remain very optimistic with regard to the Company’s future potential.

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