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<SEC-DOCUMENT>0001178913-06-002122.txt : 20061116
<SEC-HEADER>0001178913-06-002122.hdr.sgml : 20061116
<ACCEPTANCE-DATETIME>20061116093620
ACCESSION NUMBER:		0001178913-06-002122
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20061116
FILED AS OF DATE:		20061116
DATE AS OF CHANGE:		20061116

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			SILICOM LTD
		CENTRAL INDEX KEY:			0000916793
		STANDARD INDUSTRIAL CLASSIFICATION:	COMPUTER COMMUNICATIONS EQUIPMENT [3576]
		IRS NUMBER:				000000000
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		6-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-23288
		FILM NUMBER:		061221728

	BUSINESS ADDRESS:	
		STREET 1:		08 HANAGAR ST
		CITY:			KFAR-SAVA ISRAEL
		STATE:			L3
		ZIP:			44000
		BUSINESS PHONE:		97297644555

	MAIL ADDRESS:	
		STREET 1:		P.O.BOX 2164
		CITY:			KFAR-SAVA
		STATE:			L3
		ZIP:			44000
</SEC-HEADER>
<DOCUMENT>
<TYPE>6-K
<SEQUENCE>1
<FILENAME>zk63118.htm
<TEXT>
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     <!-- Control Number: 63118                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    Silicom Ltd                                                      -->
     <!-- Project Name:   6-K                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=4>UNITED STATES </font><Br>
<Font Face="Times New Roman, Times, Serif" Size=4>SECURITIES AND EXCHANGE COMMISSION </font><Br>
<Font Face="Times New Roman, Times, Serif" Size=2>WASHINGTON, D.C. 20549 </font></h1>

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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=4>FORM 6-K </font></h1>


<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE="3"><B>REPORT OF FOREIGN PRIVATE ISSUER
<Br>PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
<Br>THE SECURITIES EXCHANGE ACT OF 1934</B> </FONT>
</P>

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<P Align=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>For the month of
November, 2006</I></B> </FONT> </p>

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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>Commission File
number: 000-23288 </font></h1>

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<p Align=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="5"><B>SILICOM LTD.</B> </FONT><Br>
<Font Face="Times New Roman, Times, Serif" Size=2>(Translation of Registrant&#146;s name into English) </font></p>

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<p Align=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>8 Hanagar Street, Kfar
Sava, Israel 44000</B> </FONT> <Br>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2">(Address of Principal
Executive Offices) </FONT> </p>

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<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Indicate by check mark whether the registrant files or will file annual
<Br>reports under cover Form 20-F or Form 40-F.
</FONT></P>

<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Form 20-F <FONT size="3" face="Wingdings">x
</font> Form 40-F <FONT size="3" face="Wingdings">o
</font></FONT></P>


<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Indicate by check mark if the registrant is submitting the Form 6-K in paper as <Br>permitted by
Regulation S-T Rule 101(b)(1): ___
</FONT></P>

<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Indicate by check mark if the registrant is submitting the Form 6-K in paper as <Br>permitted by
Regulation S-T Rule 101(b)(7): ___
</FONT></P>

<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Indicate by check mark whether by furnishing the information contained in this <Br>Form, the
registrant is also thereby furnishing the information to the Commission <Br>pursuant to Rule 12g3-2(b)
under the Securities Exchange Act of 1934.
</FONT></P>

<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Yes <FONT size="3" face="Wingdings">o
</font> No <FONT size="3" face="Wingdings">x
</font></FONT></P>



<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>If "Yes" is marked, indicate below the file number assigned to the registrant in connection <Br>with Rule
12g3-2(b):
</FONT></P>
<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>82:_______.</FONT></P>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SilicomLtd.
(the &#147;Registrant&#148;) will hold its Annual and Extraordinary General Meeting of
Shareholders on December 21, 2006 at 10:00 a.m. (Israel time) at the Registrant&#146;s
offices at 8 Hanagar Street, Kfar Sava 44000, Israel. In connection with the meeting, on
or about November 9, 2006, the Registrant published a Notice of Annual and Extraordinary
General Meeting, and on or about November 16, 2006 the Registrant mailed to shareholders
a Proxy Statement, a Proxy Card and the Consolidated Balance Sheet and Profit and Loss
Statement of the Registrant for the year ended December 31, 2005. Attached hereto as
Exhibits 1, 2, 3 and 4 are, the Notice of Annual and Extraordinary General Meeting, Proxy
Statement, Proxy Card and Consolidated Balance Sheet and Profit and Loss Statement
respectively.  </font></p>



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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Form 6-K is being incorporated by reference in all effective registration statements
filed by the Registrant under the Securities Act of 1933.  </font></p>

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<P Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>SIGNATURES </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized. </font></p>

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<td Width=10%><Font Face="Times New Roman, Times, Serif" Size=2></font></td>
<td Width=50%><Font Face="Times New Roman, Times, Serif" Size=2><U>SILICOM LTD.</u><Br>(Registrant)<Br>
<br>By: /s/ Eran Gilad<br>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<br>
Eran Gilad<br>Chief Financial Officer</font></td>
</tr>
</table>
<br>



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<P Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Date: November 16, 2006 </font></p>

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<TYPE>EX-99
<SEQUENCE>2
<FILENAME>exhibit_1.htm
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     <!-- Control Number: 63118                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    Silicom Ltd                                                      -->
     <!-- Project Name:   6-K                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
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<H1 Align="Right"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>EXHIBIT 1</U> </FONT> </h1>


<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>SILICOM LTD.
<Br>NOTICE OF ANNUAL AND EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS
<Br>DECEMBER 21, 2006</B> </FONT>
</P>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notice
is hereby given that an Annual and Extraordinary General Meeting (the
&#147;<B>Meeting</b>&#148;) of Shareholders of Silicom Ltd. (the
&#147;<B>Company</b>&#148;) will be held at the offices of the Company at 8 Hanagar
Street, Kfar Sava 44000, Israel, on December 21, 2006, at 10.00 a.m., Israel time. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company is a Dual Company, as such term is defined in the Israeli Companies Regulations
(Accommodations for Public Companies Traded on Stock Markets Outside of Israel) &#150;
2000. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Meeting is being called for the following purposes: </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;1. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
consider and act upon a resolution to elect Messrs. Avi Eizenman, Yehuda
          Zisapel and Yeshayahu (&#145;Shaike&#146;) Orbach to hold office as directors
          until the next annual general meeting of shareholders and until their
successors           have been duly elected and qualified.  </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;2. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
consider and act upon a resolution to approve the renewal of the insurance
          policy for the coverage of the directors and officers of the Company.  </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;3. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
consider and act upon a resolution to approve an increase in the salary of,           and
the grant of a bonus to, Yeshayahu (&#145;Shaike&#146;) Orbach, the           Company&#146;s
Chief Executive Officer.  </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;4. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
consider and act upon a resolution to approve the grant of a bonus to Avi
          Eizenman, the Chairman of the Company&#146;s Board of Directors.  </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;5. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
consider and act upon a resolution to approve the appointment of Somekh
          Chaikin, Certified Public Accountants (Isr.), a member of KPMG International,
as           the independent public accountants of the Company for the period commencing
          January 1, 2006 and until the next annual shareholders meeting, and to
authorize           the audit committee of the Board of Directors to fix the remuneration
of such           auditors in accordance with the volume and nature of their services.  </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;6. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
receive management&#146;s report on the business of the Company for the year
          ended December 31, 2005.  </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Approval
of resolutions numbered one, three, four and five requires the affirmative vote of
shareholders present in person or by proxy and holding Ordinary Shares of the Company
nominal value New Israeli Shekels 0.01 each (&#147;<B>Ordinary Shares</b>&#148;) amounting
in the aggregate to at least a majority of the votes actually cast by shareholders with
respect to such resolutions. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Approval
of resolution number two requires the affirmative vote of shareholders present in person
or by proxy and holding Ordinary Shares amounting in the aggregate to at least a majority
of the votes actually cast with respect to each of such resolutions, provided that if the
total number of Ordinary Shares voted against any such resolution by shareholders of the
Company that do not have a Personal Interest&#148; (as such term is defined in the Israeli
Companies Law &#150; 1999) in the resolution exceeds one per cent (1%) of the aggregate
voting rights in the Company, such majority must include the affirmative vote of at least
one-third of the votes actually cast with respect to such resolution by shareholders of
the Company present in person or by proxy at the Meeting that do not have a Personal
Interest. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company will be filing a Form 6-K with the SEC and the Israel Securities Authority, on or
around November 16, 2006, which will be accompanied by a Proxy Statement detailing the
matters to be presented for approval at the Meeting. You may request a copy of any of the
above referenced documents, as well as a copy of the Company&#146;s audited financial
statements for the year ended December 31, 2005, free of charge, by contacting the offices
of the Company at 8 Hanagar Street, Kfar Sava 44000, Israel (telephone number:
972-9-764-4555, facsimile number: 972-9-765-1977). Once it has been filed, the Form 6-K
and the Proxy Statement may also be obtained through from the following sources: </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;(a) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SEC&#146;s
EDGAR system at http://www.sec.gov/edgar/searchedgar/webusers.htm by           searching
for such recent filings of the Company;  </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;(b) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Israel Securities Authority website at http://www.magna.isa.gov.il; and  </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;(c) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Tel Aviv Stock Exchange website at http://www.maya.tase.co.il.  </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
within half an hour from the time the meeting is convened a quorum is not present, the
meeting shall stand adjourned until December 28, 2006 at 10:00 a.m. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholders
of record at the close of business on November 13, 2006 will be entitled to vote at the
Meeting or any postponements or adjournments thereof. Shareholders who do not expect to
attend the meeting in person are requested to mark, date, sign and mail the proxy attached
to the Proxy Statement as promptly as possible. In the event that proxies are sent
directly to the Company, they must be received at least 24 hours prior to the commencement
of the Meeting in order for the proxy to be qualified to participate in the Meeting.
Shareholders who hold shares of the Company through members of the Tel Aviv Stock Exchange
and who wish to participate in the Meeting, in person or by proxy, are required to deliver
proof of ownership to the Company, in accordance with the Israeli Companies Regulations
(Proof of Ownership of a Share For Purposes of Voting at General Meetings) &#150; 2000.
Such shareholders wishing to vote by proxy are requested to attach their proof of
ownership to the aforementioned proxy. </font></p>

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<td Width=40%><Font Face="Times New Roman, Times, Serif" Size=2><Br><Br><Br><Br><Br><Br><Br>Date: November 9, 2006</font></td>
<td Width=10%><Font Face="Times New Roman, Times, Serif" Size=2></font></td>
<td Width=50%><FONT FACE="Times New Roman, Times, Serif" SIZE="2">By Order of the Board of Directors<Br><Br><B>SILICOM LTD.</B><Br><Br>/s/ Shaike Orbach<Br><Br>Yeshayahu (`Shaike') Orbach<Br>President and Chief Executive Officer </FONT></td>

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<FILENAME>exhibit_2.htm
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     <!-- Control Number: 63118                                                            -->
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     <!-- Client Name:    Silicom Ltd                                                      -->
     <!-- Project Name:   6-K                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
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<H1 Align="Right"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>EXHIBIT 2</B></U> </FONT> </h1>


<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE="4"><B>PROXY STATEMENT</B> </FONT></P>



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<FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>SILICOM LTD.
<Br>8 Hanagar St.
<Br>Kfar Sava
<Br>Israel</B> </FONT>
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<Br>







<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>ANNUAL AND EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS
<Br>December 21, 2006</B> </FONT>
</P>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
enclosed proxy is being solicited by the board of directors (the &#147;<B>Board</b>&#148;)
of Silicom Ltd. (the <B>&#147;Company</b>&#148;) for use at the Company&#146;s Annual and
Extraordinary General Meeting of Shareholders (the &#147;<B>Meeting</b>&#148;) to be held
on December 21, 2006, or at any adjournment thereof. Upon the receipt of a properly
executed proxy in the form enclosed, the persons named as proxies therein will vote the
ordinary shares, par value New Israeli Shekels (&#147;NIS&#148;) 0.01 each, of the Company
(the &#147;<B>Ordinary Shares</b>&#148;) covered thereby in accordance with the directions
of the shareholders executing the proxy. In the absence of such instructions, the Ordinary
Shares represented thereby will be voted in accordance with the recommendations of the
Company&#146;s management. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Proxy solicited hereby may be revoked at any time prior to its exercise, by means of a
written notice delivered to the Company, by substitution of a new proxy bearing a later
date or by a request for the return of the proxy at the Meeting. The Company expects to
solicit proxies by mail on or about November 16, 2006. Directors, officers and employees
of the Company may also solicit proxies by telephone, facsimile and personal interview. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company will bear the cost of the preparation and mailing of its proxy materials and the
solicitation of proxies. Copies of solicitation materials will be furnished to brokerage
firms, nominees, fiduciaries and other custodians for forwarding to their principals, and
the reasonable fees and expenses of such forwarding agents will be borne by the Company.
Only holders of record of Ordinary Shares at the close of business on November 13, 2006
are entitled to vote at, the Meeting. At November 13, 2006, 5,213,600 Ordinary Shares were
outstanding and entitled to vote (the &#147;<B>Outstanding Ordinary Shares</b>&#148;).
Each Ordinary Share is entitled to one vote on each matter to be voted at the Meeting. The
Company&#146;s Articles of Association do not permit cumulative voting for the election of
directors or for any other purpose. Two shareholders present, personally or by proxy,
holding at least fifty one per cent (51%) of the Outstanding Ordinary Shares, shall
constitute a quorum for the Meeting. If within half an hour from the time the meeting is
convened a quorum is not present, the meeting shall stand adjourned until December 28,
2006 at 10:00 a.m. If a quorum is not present at the second meeting within half an hour
from the time appointed for the meeting, any two or more shareholders present personally
or by proxy shall be deemed a quorum, and shall be entitled to deliberate and to resolve
in respect of the matters for which the meeting was convened. Abstentions and broker
non-votes are counted as Ordinary Shares present for the purpose of determining a quorum. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Approval
of resolutions numbered one, three, four and five stated in this proxy statement and to be
proposed at the Meeting requires the affirmative vote of shareholders present in person or
by proxy and holding Ordinary Shares amounting in the aggregate to at least a majority of
the votes actually cast by shareholders with respect to such resolutions (hereinafter an
&#147;<B>Ordinary Majority</b>&#148;). </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Approval
of resolution number two stated in this proxy statement requires the affirmative vote of
shareholders present in person or by proxy and holding Ordinary Shares amounting in the
aggregate to at least a majority of the votes actually cast with respect to each of such
resolutions, provided that if the total number of Ordinary Shares voted against any such
resolution by shareholders of the Company that do not have a &#147;personal interest&#148;
(as such term is defined below) (a &#147;<B>Personal Interest</b>&#148;) in the resolution
exceeds one per cent (1%) of the aggregate voting rights in the Company, such majority
must include the affirmative vote of at least one-third of the votes actually cast with
respect to such resolution by shareholders of the Company present in person or by proxy at
the Meeting that do not have a Personal Interest (hereinafter an <B>&#147;Ordinary
One-Third Disinterested Shareholder Majority</b>&#148;). </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
this purpose, &#147;personal interest&#148; is defined as: (1) a shareholder&#146;s
personal interest in the approval of an act or a transaction of the Company, including (i)
the personal interest of any of his or her relatives (which includes for these purposes
any members of his/her immediate family or the spouse of any such members of his or her
immediate family); and (ii) a personal interest of a body corporate in which a shareholder
or any of his/her aforementioned relatives serves as a director or the chief executive
officer, owns at least 5% of its issued share capital or its voting rights or has the
right to appoint a director or chief executive officer, but (2) excludes a personal
interest arising solely from the fact of holding shares in the Company or in a body
corporate. </font></p>

<p align=center>
<font size=2></font></p>
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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>PRINCIPAL SHAREHOLDERS </font></h1>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table sets forth, as of November 13, 2006, the number of Ordinary Shares,
including options to purchase Ordinary Shares exercisable within 60 days, owned by (i) all
shareholders known to the Company to own more than five per cent (5%) of the
Company&#146;s Ordinary Shares and (ii) all directors and officers as a group: </font></p>





<TABLE CELLPADDING=2 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <Th Align="Left"><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Name and Address</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Number of<BR>Shares Owned</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Percent of Shares</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1>&nbsp;</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<Tr Valign="Bottom" Bgcolor="#CCEEFF">
     <Td Width="50%" Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Yehuda Zisapel</FONT></TD>
     <Td Width="25%" Align="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>827,586</FONT></TD>
     <Td Width="25%" Align="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>15.63%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Zohar Zisapel</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>673,723</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>12.92%</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#CCEEFF">
     <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Sussman Robert Mark</FONT></TD>
     <Td Align="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>531,400</FONT></TD>
     <Td Align="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10.19%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>All directors and officers as a group</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,110,901 &nbsp;</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>20.31%</FONT></TD></TR>
</TABLE>
<Br>

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<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>PROPOSAL I</B> </FONT></P>

<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>ELECTION OF DIRECTORS</B> </FONT></P>



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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
management of the Company has selected the persons named below for election as directors
to serve for a period of one year and until their respective successors are duly elected
and shall qualify. In the absence of instructions to the contrary, the persons named in
the enclosed proxy will vote the Ordinary Shares represented thereby &#147;FOR&#148; the
election of the nominees listed below. If any of these nominees is unable to serve, the
persons named in the proxy shall vote the Ordinary Shares for the election of such other
nominees as management may propose. The Company&#146;s Articles of Association specify
that the number of directors may be determined from time to time by the general meeting of
the shareholders of the Company. The following nominees who are currently directors of the
Company have advised the Company that they will continue to serve as directors if
re-elected. The following table provides certain relevant information concerning the
nominees, including their principal occupation during the past five years. </font></p>


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<Table Width=100% Cellpadding=0 Cellspacing=0 Border=0>
<tr Valign=TOP>
<td Width=25%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><U>Nominee</U></B> </FONT> </td>
<td Width=5%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><U>Age</U></B> </FONT> </td>
<Td Width="70%" Align="Center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><U>Principal Occupation</U></B> </FONT> </td>
</tr>
</table>
<br>

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<Table Width=100% Cellpadding=0 Cellspacing=0 Border=0>
<tr Valign=TOP>
<td Width=25%><Font Face="Times New Roman, Times, Serif" Size=2>Yehuda Zisapel </font></td>
<td Width=5%><Font Face="Times New Roman, Times, Serif" Size=2>63 </font></td>
<td Width=70%><Font Face="Times New Roman, Times, Serif" Size=2>
              Mr. Zisapel is a co-founder of the Company and has served as a Director
since                                 its inception in 1987 and served as a Chairman of
the Board from 1999 until                                 March 2001. Mr. Zisapel is also
a founder and a director of Rad Data                                 Communications Ltd.,
Bynet Data Communications Ltd. and its subsidiaries and
                                other companies in the Rad Group. In 1966 and 1968, Mr.
Zisapel received a B.Sc.                                 and a M.Sc. degree,
respectively, in Electrical Engineering from the Technion.
                                In 1975, Mr. Zisapel received an M.B.A. from Tel Aviv
University. </font></td>
</tr>
</table>
<br>

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<td Width=25%><Font Face="Times New Roman, Times, Serif" Size=2>Avi Eizenman </font></td>
<td Width=5%><Font Face="Times New Roman, Times, Serif" Size=2>49</font></td>
<td Width=70%><Font Face="Times New Roman, Times, Serif" Size=2>
                 Mr. Eizenman is a co-founder of the Company and served as its
President and                                 Chief Executive Officer, as well as
Director since its inception in 1987. Mr.                                 Eizenman
stepped down as Chief Executive Officer on April 1, 2001, and became
                                Chairman of the Board on that date.  Mr. Eizenman served
as head of the ASIC                                 department at Scitex Ltd. in 1986.
From 1979 until 1985, Mr. Eizenman held                                 various
positions, including project manager, ASIC specialist and engineer, with
                                the Electronic Research &amp; Development Department of the
Israeli Ministry of                                 Defense. Mr. Eizenman holds a B.Sc.
degree, with honors, in Electrical                                 Engineering from the
Technion, and an M.B.A. from Tel Aviv University. </font></td>
</tr>
</table>
<br>

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<td Width=25%><Font Face="Times New Roman, Times, Serif" Size=2>Yeshayahu (`Shaike') Orbach </font></td>
<td Width=5%><Font Face="Times New Roman, Times, Serif" Size=2>55</font></td>
<td Width=70%><Font Face="Times New Roman, Times, Serif" Size=2>
         Mr. Orbach was appointed President and Chief Executive Officer in April 2001
and                           has served as our Director since December 2001. Prior to
that, for a period of                                 four and a half years, Mr. Orbach
served as the President and Chief Executive                                 Officer of
Opgal Ltd. a high-tech subsidiary of Raphael and El-Op corporations.
                                Previously, he was General Manager of Edusoft, an Israeli
company the shares of                                 which were traded on the NASDAQ
National Market, and Managing Director of Tecsys                                 Ltd. Mr.
Orbach holds a B.Sc degree in Mechanical Engineering from the Technion. </font></td>
</tr>
</table>
<br>


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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
shareholders of the Company will requested to adopt the following resolution at the
Meeting: </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>
RESOLVED, to elect Avi Eizenman and Yehuda Zisapel as directors of the Company for the
coming year until the next annual meeting of the Company&#146;s shareholders and to elect
Yeshayahu (&#145;Shaike&#146;) Orbach, as a director of the Company for the coming year
until the next annual meeting of the Company&#146;s shareholders, subject to his continued
employment as President and Chief Executive Officer of the Company.</b> </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Election
of Avi Eizenman, Yehuda Zisapel and Yeshayahu (&#145;Shaike&#146;) Orbach as directors
requires the affirmative vote of an Ordinary Majority (as defined in this proxy
statement). </font></p>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>The
Board expresses no recommendation as to the vote on the above resolution.</I></B> </FONT> </p>




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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>PROPOSAL II </font></h1>

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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>RENEWAL OF INSURANCE
POLICY FOR THE COMPANY&#146;S DIRECTORS AND OFFICERS </font></h1>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
order to induce individuals to serve as directors and/or officers of the Company, it is
critical that the Company maintain adequate directors and officers insurance
(&#147;<B>D&amp;O Insurance</b>&#148;). Therefore, the Company, with the approval of its
shareholders, previously procured liability insurance for its directors and officers to
provide for coverage of up to $4 million. Such a D&amp;O Insurance policy was procured by
the Company as of February 1, 2004 from the Genesis Insurance Company, was renewed as of
February 1, 2005, and remained in effect until January 31, 2006. The D&amp;O Insurance
policy was renewed by the Company as of February 1, 2006 and will remain in effect until
January 31, 2007. The renewed policy bears an annual premium of $50,000. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to the Companies Law -1999 (the &#147;<B>Companies Law</b>&#148;), the terms of
compensation of members of the Board, including the purchase of D&amp;O Insurance, require
the approval of the audit committee of the Board (the &#147;<B>Audit Committee</b>&#148;),
the Board and the shareholders of the Company. The Company&#146;s Audit Committee and its
Board have ratified the Company&#146;s renewal of the D&amp;O Insurance policy to provide
for coverage of up to $4 million for the period commencing February 1, 2006 until January
31, 2007. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
shareholders of the Company will be requested to adopt the following resolution at the
Meeting:  </font></p>


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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>RESOLVED,
that the renewal of Directors and Officers Insurance as previously procured from the
Genesis Insurance Company, providing for coverage of up to $4,000,000, and any further
extensions, renewals and increases of such policy, from time to time, as the Audit
Committee and the Board of Directors deem necessary, are hereby ratified and approved.</b> </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
above insurance policy provides coverage for directors of the Company who are also
&#147;controlling shareholders&#148; (as such term is defined the Companies Law).
Therefore, the ratification of the renewal of the insurance policy constitutes a
transaction with a controlling member pursuant to the Companies Law, which requires
approval by an Ordinary One-Third Disinterested Shareholder Majority (as defined in this
proxy statement). </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Each
shareholder voting at the Meeting or prior thereto by means of the accompanying proxy card
is requested to notify us if he or she has a Personal Interest (as defined in this proxy
statement) in connection with this Proposal II as a condition for his or her vote to be
counted with respect to this Proposal II. If any shareholder casting a vote in connection
hereto does not notify us if he or she has a personal interest with respect to this
Proposal II, his or her vote with respect to this Proposal II will be disqualified.</b> </font></p>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>The
Board expresses no recommendation as to the vote on the above resolution.</I></B> </FONT> </p>



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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>PROPOSAL III </font></h1>

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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>APPROVING GRANT OF
BONUS AND SALARY INCREASE TO CHIEF EXECUTIVE OFFICER </font></h1>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to the Companies Law, the terms of compensation of members of the Board, including with
respect to the terms of such members&#146; employment in other positions in the Company,
require approval by each of the Audit Committee, the Board and shareholders of the
Company, in such order. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Following
the approval by the Audit Committee and the Board (with the exception of Shaike Orbach who
did not participate in the vote, as required by the Companies Law), the shareholders of
the Company are being asked to approve: (i) the grant of a bonus in the amount of NIS
150,000 (the equivalent of approximately $35,000) (&#147;<B>Shaike&#146;s Bonus</b>&#148;)
to Shaike Orbach, the Company&#146;s Chief Executive Officer, who is also a member of the
Board; and (ii) an increase in Shaike Orbach&#146;s monthly salary, whereby following such
increase Shaike Orbach&#146;s monthly salary shall be NIS 52,000 (the equivalent of
approximately $12,000). </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
shareholders of the Company will be requested to adopt the following resolution at the
Meeting: </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>RESOLVED,
to approve the grant of a bonus in the amount of NIS 150,000, to the Company&#146;s Chief
Executive Officer, Yeshayahu (&#145;Shaike&#146;) Orbach and an increase in his salary,
such that Shaike Orbach&#146;s monthly salary shall be NIS 52,000.</b> </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Approval
of the grant of Shaike&#146;s Bonus and the increase in his salary require the vote of an
Ordinary Majority (as defined in this proxy statement). </font></p>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>The
Board, with the exception of Shaike Orbach who expresses no recommendation as to the vote
on the above resolution, recommends that the shareholders vote &#147;FOR&#148; the
approval of the grant of Shaike&#146;s Bonus and the increase in his salary.</I></B> </FONT> </p>


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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>PROPOSAL IV </font></h1>

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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>APPROVING GRANT OF
BONUS TO CHAIRMAN OF THE BOARD </font></h1>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to the Companies Law, the terms of compensation of members of the Board require approval
by each of the Audit Committee, the Board and shareholders of the Company, in such order. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Following
the approval by the Audit Committee and the Board (with the exception of Avi Eizenman who
did not participate in the vote, as required by the Companies Law), the shareholders of
the Company are being asked to approve the grant of a bonus in the amount of NIS 150,000
(the equivalent of approximately $35,000) (&#147;<B>Avi&#146;s Bonus</b>&#148;) to Avi
Eizenman, Chairman the Company&#146;s Board. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
shareholders of the Company will be requested to adopt the following resolution at the
Meeting: </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>RESOLVED,
to approve the grant of a bonus in the amount of NIS 150,000, to the Chairman of the
Company&#146;s Board of Directors, Avi Eizenman.</b> </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Approval
of the grant of Avi&#146;s Bonus requires the vote of an Ordinary Majority (as defined in
this proxy statement). </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>The
Board, with the exception of Avi Eizenman who expresses no recommendation as to the vote
on the above resolution, recommends that the shareholders vote &#147;FOR&#148; the
approval of the grant of Avi&#146;s Bonus</i>.</b> </font></p>

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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>PROPOSAL V </font></h1>

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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>APPOINTING INDEPENDENT
PUBLIC ACCOUNTANTS </font></h1>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
audit committee and the Board of Directors have authorized the appointment of the
accounting firm of Somekh Chaikin, Certified Public Accountants (Isr.), a member of KPMG
International, as the independent certified public accountants of the Company for the
period commencing January 1, 2006 and until the next annual shareholders meeting. The
Board of Directors believes that the selection of Somekh Chaikin as independent
accountants is appropriate and in the best interests of the Company and its shareholders.
Subject to the authorization of the shareholders of the Company, the audit committee of
the Board of Directors shall fix the remuneration of Somekh Chaikin in accordance with the
volume and nature of their services. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
representative of Somekh Chaikin will be invited to be present at the Meeting and the fees
paid to Somekh Chaikin for its audit services and non-audit services shall be reported to
the shareholders of the Company at the Meeting. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
shareholders of the Company are requested to adopt the following resolution: </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>RESOLVED,
to ratify the appointment of Somekh Chaikin as the independent public accountants of the
Company for the period commencing January 1, 2006 and until the next annual shareholders
meeting, and to authorize the audit committee of the Board of Directors to fix the
remuneration of such auditors in accordance with the volume and nature of their services.</b> </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
appointment of Somekh Chaikin requires the affirmative vote of an Ordinary Majority (as
defined in this proxy statement). </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>The
Board of Directors unanimously recommends that the shareholders vote &#147;FOR&#148; the
appointment of Somekh Chaikin as the independent public accountants of the
Company</i></b><I>.</i> </font></p>

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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>REVIEW OF THE
COMPANY&#146;S BALANCE SHEET AS OF DECEMBER 31, 2005 </font><Br>
<Font Face="Times New Roman, Times, Serif" Size=2>AND THE CONSOLIDATED
STATEMENT OF INCOME FOR THE YEAR THEN ENDED </font></h1>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At
the Meeting, shareholders will have an opportunity to review, ask questions and comment on
the Company&#146;s Consolidated Balance Sheet as of December 31, 2005 and the Consolidated
Statement of Income for the year then ended. You may request a copy of the Company&#146;s
audited financial statements for the fiscal year ended December 31, 2005. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management
is not aware of any other matters to be presented at the Meeting. If, however, any other
matters should properly come before the Meeting or any adjournment thereof, the proxy
confers discretionary authority with respect to acting thereon, and the persons named in
the enclosed proxy will vote on such matters in accordance with their best judgment. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Your
vote is important!</b> Shareholders are urged to complete and return their proxies
promptly in order to, among other things, ensure action by a quorum and to avoid the
expense of additional solicitation. If the accompanying proxy is properly executed and
returned in time for voting, and a choice is specified, the shares represented thereby
will be voted as indicated thereon. If no specification is made, the proxy will be voted
in favor of each of the proposals described in this Proxy Statement. In the event that
proxies are sent directly to the Company, they must be received at least 24 hours prior to
the commencement of the Meeting in order for the proxy to be qualified to participate in
the Meeting. Shareholders who hold shares of the Company through members of the Tel Aviv
Stock Exchange and who wish to participate in the Meeting, in person or by proxy, are
required to deliver proof of ownership to the Company, in accordance with the Israeli
Companies Regulations (Proof of Ownership of a Share For Purposes of Voting at General
Meetings) &#150; 2000. Such shareholders wishing to vote by proxy are requested to attach
their proof of ownership to the enclosed proxy. <B>Proxies and all other applicable
materials should be sent to the offices of the Company at 8 Hanagar Street, Kfar Sava
44000, Israel (telephone number: 972-9-764-4555, facsimile number: 972-9-765-1977)</b>. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition to the accompanying proxy card, please find enclosed a copy of the Consolidated
Balance Sheet and Profit and Loss Statement of the Company for the year ended December 31,
2005. </font></p>

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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>ADDITIONAL INFORMATION </font></h1>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
are subject to the informational requirements of the Securities Exchange Act of 1934, as
amended (the &#147;<B>Exchange Act</b>&#148;), as applicable to foreign private issuers.
Accordingly, we file reports and other information with the SEC. Shareholders may read and
copy any document we file at the SEC&#146;s public reference rooms at 450 Fifth Street,
N.W., Washington, D.C. 20549. Shareholders can call the SEC at 1-800-SEC-0330 for further
information on using the public reference room. In addition, similar information
concerning us can be inspected and copied at the offices of the National Association of
Securities Dealers, Inc., 9513 Key West Avenue, Rockville, Maryland 20850 USA. All
documents which we will file on the SEC&#146;s EDGAR system will be available for
retrieval on the SEC&#146;s website at http://www.sec.gov. As a Dual Company (as defined
in the Israeli Companies Regulations (Accommodations for Public Companies Traded on Stock
Markets Outside of Israel) &#150; 2000) we also file reports with the Israel Securities
Authority. Such reports can be viewed on the Israel Securities Authority website at
http://www.magna.isa.gov.il and the the Tel Aviv Stock Exchange website at
http://www.maya.tase.co.il. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing
certain disclosure and procedural requirements for proxy solicitations. Also, our
officers, directors and principal shareholders are exempt from the reporting and
&#147;short-swing&#148; profit recovery provisions contained in Section 16 of the Exchange
Act and the rules thereunder, with respect to their purchases and sales of securities. In
addition, we are not required under the Exchange Act to file periodic reports and
financial statements with the SEC as frequently or as promptly as United States companies
whose securities are registered under the Exchange Act. </font></p>

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<td Width=10%><Font Face="Times New Roman, Times, Serif" Size=2></font></td>
<Td Width="50%" Align="Center">
<FONT FACE="Times New Roman, Times, Serif" SIZE="2">By Order of the Board of Directors
<Br><Br><B>SILICOM LTD.
</B><Br><Br>/s/ Shaike Orbach
<Br><Br>Yeshayahu (`Shaike') Orbach
<Br>PRESIDENT AND CHIEF EXECUTIVE OFFICER </FONT>
</td>
</tr>
</table>
<br>






<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Kfar Sava, Israel
<Br>Date: November 16, 2006
</FONT></P>

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<TYPE>EX-99
<SEQUENCE>4
<FILENAME>exhibit_3.htm
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     <!-- Control Number: 63118                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    Silicom Ltd                                                      -->
     <!-- Project Name:   6-K                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
     <TITLE>6-K</TITLE>
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<H1 Align="Right"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>EXHIBIT 3</B></U> </FONT> </h1>


<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED HEREIN.
<Br>IF NO DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED "FOR" THE PROPOSALS HEREIN.</B> </FONT>
</P>

<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE="3"><B>Please mark your vote as in this example</B> </FONT> <FONT FACE="Wingdings" SIZE="3">x </FONT>
</P>



<Table Width="100%" Border="1" Cellpadding="2" Cellspacing="0" Rules="Groups">
<Tr Valign="Bottom">
     <th Width="30%"><Font Face="Times New Roman, Times, Serif" Size="1"></font></th>
     <th Width="40%"><Font Face="Times New Roman, Times, Serif" Size="1"></font></th>
     <th Width="10%"><Font Face="Times New Roman, Times, Serif" Size="1"></font></th>
     <th Width="10%"><Font Face="Times New Roman, Times, Serif" Size="1"></font></th>
     <th Width="10%"><Font Face="Times New Roman, Times, Serif" Size="1"></font></th></tr>
<Tr Valign="Top">
     <td ><Font Face="Times New Roman, Times, Serif" Size="2"></font></td>
     <td ><Font Face="Times New Roman, Times, Serif" Size="2"></font></td>
     <td ><Font Face="Times New Roman, Times, Serif" Size="2"></font></td>
     <Td Align="Center"><Font Face="Times New Roman, Times, Serif" Size="2"><Br><B>YES</b></font></td>
     <Td Align="Center"><Font Face="Times New Roman, Times, Serif" Size="2"><Br><B>NO</b></font></td></tr>
<Tr Valign="Top">
     <td><Font Face="Times New Roman, Times, Serif" Size="2">&nbsp;</font></td>
     <td><Font Face="Times New Roman, Times, Serif" Size="2"></font></td>
     <td><Font Face="Times New Roman, Times, Serif" Size="2"></font></td>
     <td><Font Face="Times New Roman, Times, Serif" Size="2"></font></td>
     <td><Font Face="Times New Roman, Times, Serif" Size="2"></font></td></tr>
<Tr Valign="Top">
     <td><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>THIS NOTICE IS VERY IMPORTANT!<Br>PLEASE READ THE DEFINITION BELOW <Br>PRIOR TO FILLING OUT THIS SECTION</B> </FONT></td>
     <td><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Please indicate whether or not you have a <U><B>PERSONAL INTEREST </B></U>(as
defined below) in the following proposal by marking an "X" in
the appropriate box (YES/NO). <B>If an X is not marked in either
column, your vote in respect of this proposal will be
<U>disqualified</U>.</B> </FONT>
</td>
     <Td Align="Center" Style="border:SOLID BLACK 0.5PT;" Valign="middle"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>PROPOSAL NO. 2</B> </FONT></td>
     <Td Align="Center" Style="border:SOLID BLACK 0.5PT;" Valign="middle"><Font Face="Times New Roman, Times, Serif" Size="2"><FONT size="3" face="Wingdings">o</font> </font></td>
     <Td Align="Center" Style="border:SOLID BLACK 0.5PT;" Valign="middle"><Font Face="Times New Roman, Times, Serif" Size="2"><FONT size="3" face="Wingdings">o</font> </font></td></tr>
<Tr Valign="Top">
     <td><Font Face="Times New Roman, Times, Serif" Size="2">&nbsp;</font></td>
     <td><Font Face="Times New Roman, Times, Serif" Size="2"></font></td>
     <td><Font Face="Times New Roman, Times, Serif" Size="2"></font></td>
     <td><Font Face="Times New Roman, Times, Serif" Size="2"></font></td>
     <td><Font Face="Times New Roman, Times, Serif" Size="2"></font></td></tr>
<Tr Valign="Top">
     <td colspan=5>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2">Under the Israeli Companies Law - 1999, a "<U><B>personal interest</B></U>" is defined as: (1) a shareholder's personal interest in the approval of an act or a
transaction of the Company, including (i) the personal interest of his or her relative (which includes for these purposes any members of his/her
immediate family or the spouses of any such members of his or her immediate family); and (ii) a personal interest of a body corporate in which a
shareholder or any of his/her aforementioned relatives serve as a director or the chief executive officer, owns at least 5% of its issued share capital
or its voting rights or has the right to appoint a director or chief executive officer, but (2) excludes a personal interest arising solely from the
fact of holding shares in the Company or in a body corporate. </FONT>
</td>
</tr>
</table>
<Br>


<table Width="100%" Border="0" Cellpadding="0" Cellspacing="0">
<Tr Valign="Bottom">
     <td Width="5%"><Font Face="Times New Roman, Times, Serif" Size="1"></font></td>
     <td Width="65%"><Font Face="Times New Roman, Times, Serif" Size="1"></font></td>
     <Td Width="10%" Align="Center"><Font Face="Times New Roman, Times, Serif" Size="2"><B>FOR</b></font></td>
     <Td Width="10%" Align="Center"><Font Face="Times New Roman, Times, Serif" Size="2"><B>AGAINST</b></font></td>
     <Td Width="10%" Align="Center"><Font Face="Times New Roman, Times, Serif" Size="2"><B>ABSTAIN</b></font></td></tr>
<Tr Valign="Top">
     <td ><Font Face="Times New Roman, Times, Serif" Size="2">&nbsp;</font></td>
     <td ><Font Face="Times New Roman, Times, Serif" Size="2"><B>PROPOSAL NO. 1:</b> ELECTION OF DIRECTORS</font></td>
     <Td Align="Center" Style="border:SOLID BLACK 0.5PT;" Valign="middle"><Font Face="Times New Roman, Times, Serif" Size="2"><FONT size="3" face="Wingdings">o</font> </font></td>
     <Td Align="Center" Style="border:SOLID BLACK 0.5PT;" Valign="middle"><Font Face="Times New Roman, Times, Serif" Size="2"><FONT size="3" face="Wingdings">o</font> </font></td>
     <Td Align="Center" Style="border:SOLID BLACK 0.5PT;" Valign="middle"><Font Face="Times New Roman, Times, Serif" Size="2"><FONT size="3" face="Wingdings">o</font> </font></td>
</tr>
<Tr>
      <Td>&nbsp; </td>
      <Td> </td>
      <Td> </td>
      <Td> </td>
      <Td> </td></tr>
<Tr Valign="Top">
     <td><Font Face="Times New Roman, Times, Serif" Size="2">&nbsp;</font></td>
     <td><Font Face="Times New Roman, Times, Serif" Size="2"><B>PROPOSAL NO. 2:</b> RENEWAL OF INSURANCE POLICY FOR THE COMPANY'S DIRECTORS AND OFFICERS</font></td>
     <Td Align="Center" Style="border:SOLID BLACK 0.5PT;" Valign="middle"><Font Face="Times New Roman, Times, Serif" Size="2"><FONT size="3" face="Wingdings">o</font> </font></td>
     <Td Align="Center" Style="border:SOLID BLACK 0.5PT;" Valign="middle"><Font Face="Times New Roman, Times, Serif" Size="2"><FONT size="3" face="Wingdings">o</font> </font></td>
     <Td Align="Center" Style="border:SOLID BLACK 0.5PT;" Valign="middle"><Font Face="Times New Roman, Times, Serif" Size="2"><FONT size="3" face="Wingdings">o</font> </font></td>
</tr>
<Tr>
      <Td>&nbsp; </td>
      <Td> </td>
      <Td> </td>
      <Td> </td>
      <Td> </td></tr>
<Tr Valign="Top">
     <td><Font Face="Times New Roman, Times, Serif" Size="2">&nbsp;</font></td>
     <td><Font Face="Times New Roman, Times, Serif" Size="2"><B>PROPOSAL NO. 3:</b> APPROVING GRANT OF BONUS AND SALARY INCREASE TO CHIEF EXECUTIVE OFFICER</font></td>
     <Td Align="Center" Style="border:SOLID BLACK 0.5PT;" Valign="middle"><Font Face="Times New Roman, Times, Serif" Size="2"><FONT size="3" face="Wingdings">o</font> </font></td>
     <Td Align="Center" Style="border:SOLID BLACK 0.5PT;" Valign="middle"><Font Face="Times New Roman, Times, Serif" Size="2"><FONT size="3" face="Wingdings">o</font> </font></td>
     <Td Align="Center" Style="border:SOLID BLACK 0.5PT;" Valign="middle"><Font Face="Times New Roman, Times, Serif" Size="2"><FONT size="3" face="Wingdings">o</font> </font></td>
</tr>
<Tr>
      <Td>&nbsp; </td>
      <Td> </td>
      <Td> </td>
      <Td> </td>
      <Td> </td></tr>
<Tr Valign="Top">
     <td><Font Face="Times New Roman, Times, Serif" Size="2">&nbsp;</font></td>
     <td><Font Face="Times New Roman, Times, Serif" Size="2"><B>PROPOSAL NO. 4:</b> APPROVING GRANT OF BONUS TO CHAIRMAN OF THE BOARD</font></td>
     <Td Align="Center" Style="border:SOLID BLACK 0.5PT;" Valign="middle"><Font Face="Times New Roman, Times, Serif" Size="2"><FONT size="3" face="Wingdings">o</font> </font></td>
     <Td Align="Center" Style="border:SOLID BLACK 0.5PT;" Valign="middle"><Font Face="Times New Roman, Times, Serif" Size="2"><FONT size="3" face="Wingdings">o</font> </font></td>
     <Td Align="Center" Style="border:SOLID BLACK 0.5PT;" Valign="middle"><Font Face="Times New Roman, Times, Serif" Size="2"><FONT size="3" face="Wingdings">o</font> </font></td>
</tr>
<Tr>
      <Td>&nbsp; </td>
      <Td> </td>
      <Td> </td>
      <Td> </td>
      <Td> </td></tr>
<Tr Valign="Top">
     <td><Font Face="Times New Roman, Times, Serif" Size="2">&nbsp;</font></td>
     <td><Font Face="Times New Roman, Times, Serif" Size="2"><B>PROPOSAL NO. 5:</b> APPOINTING INDEPENDENT PUBLIC ACCOUNTANTS</font></td>
     <Td Align="Center" Style="border:SOLID BLACK 0.5PT;" Valign="middle"><Font Face="Times New Roman, Times, Serif" Size="2"><FONT size="3" face="Wingdings">o</font> </font></td>
     <Td Align="Center" Style="border:SOLID BLACK 0.5PT;" Valign="middle"><Font Face="Times New Roman, Times, Serif" Size="2"><FONT size="3" face="Wingdings">o</font> </font></td>
     <Td Align="Center" Style="border:SOLID BLACK 0.5PT;" Valign="middle"><Font Face="Times New Roman, Times, Serif" Size="2"><FONT size="3" face="Wingdings">o</font> </font></td>
</tr>
</table>


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<P><Font Face="Times New Roman, Times, Serif" Size=2>The undersigned hereby acknowledges
receipt of the Notice of the Annual and Extraordinary General Meeting, revokes any proxy
or proxies heretofore given to vote upon or act with respect to the undersigned&#146;s
shares and hereby ratifies and confirms all that the proxies, their substitutes, or any
of them, may lawfully do by virtue hereof.  </font></p>

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<Td Width="33%" Align="Center"><Font Face="Times New Roman, Times, Serif" Size=2>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<br>
(NAME OF SHAREHOLDER)</font></td>
<Td Width="34%" Align="Center"><Font Face="Times New Roman, Times, Serif" Size=2>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<br>
(SIGNATURE OF SHAREHOLDER) </font></td>
<Td Width="33%" Align="Center"><Font Face="Times New Roman, Times, Serif" Size=2>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<br>
(DATE)</font></td>
</tr>
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<br>

<p align=center>
<font size=2></font></p>
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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=3>SILICOM LTD. </font></h1>

<!-- MARKER FORMAT-SHEET="Head Minor Center Bold-TNR" FSL="Workstation" -->
<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>Annual and
Extraordinary General Meeting of Shareholders to be held on December 21, 2006 </font></h1>

<!-- MARKER FORMAT-SHEET="Head Minor Center-TNR" FSL="Workstation" -->
<P Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>THIS PROXY IS SOLICITED
ON BEHALF OF MANAGEMENT </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
undersigned shareholder of Silicom Ltd. (the &#147;Company&#148;) hereby appoints Eran
Gilad, the true and lawful attorney, agent and proxy of the undersigned, to vote, as
designated below, all of the Ordinary Shares of the Company which the undersigned is
entitled in any capacity to vote at the Annual and Extraordinary General Meeting of
Shareholders of the Company, to be held at the corporate offices of the Company at 8
Hanager Street, Kfar Sava 44000, Israel on December 21, 2006, at 10:00 a.m., (local
time), and all adjournments and postponements thereof.  </font></p>


<!-- MARKER FORMAT-SHEET="Head Minor Center-TNR" FSL="Workstation" -->
<P Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>(CONTINUED AND TO BE
SIGNED ON REVERSE SIDE) </font></p>

<p align=center>
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>5
<FILENAME>exhibit_4.htm
<TEXT>

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     <!-- Created by EDGAR Ease Plus (EDGAR Ease+) -->
     <!-- Project:        \\Backup\office\EDGAR Filing\Silicom Ltd\63118\a63118.eep        -->
     <!-- Control Number: 63118                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    Silicom Ltd                                                      -->
     <!-- Project Name:   6-K                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
     <TITLE>6-K</TITLE>
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<H1 Align="Right"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>EXHIBIT 4</B></U> </FONT> </h1>


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     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Silicom Ltd. and its Consolidated Subsidiary</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Consolidated Balance Sheets at December 31</B> </FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><HR SIZE=1 NOSHADE WIDTH=100% ALIGN=LEFT></TD></TR>
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<BR>












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<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>2005</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>2004</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Note</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>U.S. dollars<BR>
in thousands</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>U.S. dollars<BR>
in thousands</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>&nbsp;</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<Tr Valign="Bottom" Bgcolor="#CCEEFF">
     <Td Width="65%" Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Assets</B> </FONT></TD>
     <Td Width="1%" Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="4%" Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Width="7%" Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Width="7%" Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B></B> </FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Width="7%" Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr>
      <Td> &nbsp;</td>
      <Td> </td>
      <Td> </td>
      <Td> </td>
      <Td> </td>
      <Td> </td>
      <Td> </td>
      <Td> </td>
      <Td> </td>
      <Td> </td>
      <Td> </td>
      <Td> </td></tr>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Current assets</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#CCEEFF">
     <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Cash and cash equivalents</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>2,276</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,086</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Investment securities</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>-</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>519</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#CCEEFF">
     <Td Align="LEFT" colspan=10><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Receivables:</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;Trade</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>11A</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>2,395</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>741</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#CCEEFF">
     <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;Other</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>11B</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>453</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>337</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Inventories</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>11C</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>2,994</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,994</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#CCEEFF">
     <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Total current assets</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>8,118</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4,677</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Assets held for severance benefits</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>587</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>559</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#CCEEFF">
     <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Property, plant and equipment</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Cost</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>1,857</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,657</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#CCEEFF">
     <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Less - accumulated depreciation</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>1,565</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,425</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<Tr>
      <Td> &nbsp;</td>
      <Td> </td>
      <Td> </td>
      <Td> </td>
      <Td> </td>
      <Td> </td>
      <Td> </td>
      <Td> </td>
      <Td> </td>
      <Td> </td>
      <Td> </td>
      <Td> </td></tr>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Net, property and equipment</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>292</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>232</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<Tr>
      <Td> &nbsp;</td>
      <Td> </td>
      <Td> </td>
      <Td> </td>
      <Td> </td>
      <Td> </td>
      <Td> </td>
      <Td> </td>
      <Td> </td>
      <Td> </td>
      <Td> </td>
      <Td> </td></tr><Tr Valign="Bottom" Bgcolor="#CCEEFF">
     <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Other assets</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>48</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>57</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Total assets</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>9,045</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5,525</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
</TABLE>
<Br>

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<Td Width="33%" Align="Center"><Font Face="Times New Roman, Times, Serif" Size=2><Br>
<br>By: /s/ Avi Eizenman<br>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<br>
Avi Eizenman<br>Chairman of the Board of Directors</font></td>
<Td Width="34%" Align="Center"><Font Face="Times New Roman, Times, Serif" Size=2><Br>
<br>By: /s/ Shaike Orbach<br>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<br>
Shaike Orbach<br>Chief Executive Officer</font></td>
<Td Width="33%" Align="Center"><Font Face="Times New Roman, Times, Serif" Size=2><Br>
<br>By: /s/ Eran Gilad<br>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<br>
Eran Gilad<br> Chief Financial Officer</font></td>
</tr>
</table>
<br>



<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Default" -->
<P Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Kfar-Saba, Israel: April
24, 2006 </font></p>


<p align=center>
<font size=2></font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
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<TABLE BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Silicom Ltd. and its Consolidated Subsidiary</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Consolidated Balance Sheets at December 31</B> </FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><HR SIZE=1 NOSHADE WIDTH=100% ALIGN=LEFT></TD></TR>
</TABLE>
<BR>









<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>2005</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>2004</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Note</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>U.S. dollars<BR>
in thousands</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>U.S. dollars<BR>
in thousands</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>&nbsp;</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<Tr Valign="Bottom" Bgcolor="#CCEEFF">
     <Td Width="67%" Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Liabilities and shareholders' equity</B> </FONT></TD>
     <Td Width="1%" Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Width="7%" Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Width="7%" Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B></B> </FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Width="7%" Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Current liabilities</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#CCEEFF">
     <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Short-term bank credit</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>13</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>500</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Trade accounts payable</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>2,020</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,008</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#CCEEFF">
     <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Other accounts payable and accrued expenses</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>11D</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>822</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>522</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Total current liabilities</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>3,342</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,530</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#CCEEFF">
     <Td Align="LEFT" colspan=10><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Long-term liability</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Liability for employees severance benefits</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>1,031</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>957</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#CCEEFF">
     <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Total liabilities</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>4,373</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2,487</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Commitments and contingencies</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#CCEEFF">
     <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Shareholders' equity</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>9</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Ordinary shares, NIS 0.001 par value;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;authorized 10,000,000 shares;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;issued and outstanding 4,351,050 shares as of</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;December 31, 2005 and 4,213,550 as of December 31, 2004</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>14</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#CCEEFF">
     <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Additional paid in capital</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>5,950</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5,638</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Treasury shares (at cost) - 14,971 ordinary shares as at</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;December 31, 2005 and 2004</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>(38</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>)</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(38</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#CCEEFF">
     <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Retained deficit</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>9D</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>(1,254</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>)</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2,576</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Total shareholders' equity</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>4,672</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3,038</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#CCEEFF">
     <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Total liabilities and shareholders' equity</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>9,045</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5,525</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
</TABLE>
<Br>


<p align=center>
<font size=2></font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<P STYLE="page-break-after:always"></P>


<TABLE BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Silicom Ltd. and its Consolidated Subsidiary</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Consolidated Statements of Income for the Year Ended December 31,</B> </FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><HR SIZE=1 NOSHADE WIDTH=100% ALIGN=LEFT></TD></TR>
</TABLE>
<BR>










<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>2005</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>2004</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>2003</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Note</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=9><FONT FACE="Times New Roman, Times, Serif" SIZE=1>U.S. dollars in thousands<BR>
except for per share data</FONT><HR WIDTH=98% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>&nbsp;</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>&nbsp;</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<Tr Valign="Bottom" Bgcolor="#CCEEFF">
     <Td Width="59%" Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Sales</B> </FONT></TD>
     <Td Width="1%" Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Width="5%" Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>12A</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Width="7%" Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>10,876</B> </FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Width="7%" Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4,559</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Width="7%" Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3,725</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Cost of sales</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>12B</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>6,507</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2,999</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2,160</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<Tr Valign="Bottom" Bgcolor="#CCEEFF">
     <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Gross profit</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>4,369</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,560</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,565</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Research and development costs</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>12C</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#CCEEFF">
     <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Total costs</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>1,561</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,596</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,647</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Less: royalty-bearing participations, net</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8A</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>(98</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>)</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(145</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(150</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<Tr Valign="Bottom" Bgcolor="#CCEEFF">
     <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Research and development costs, net</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>1,463</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,451</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,497</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Selling, marketing, general and</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;<B>administrative expenses</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#CCEEFF">
     <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Selling and marketing expenses</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>12D</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>903</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>718</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,006</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>General and administrative expenses</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>695</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>614</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>598</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<Tr Valign="Bottom" Bgcolor="#CCEEFF">
     <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>1,598</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,332</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,604</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Operating income (loss)</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>1,308</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1,223</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1,536</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#CCEEFF">
     <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Financial (expenses) income, net</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>12E</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>14</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(17</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>27</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Net income (loss) for the year</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>1,322</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1,240</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1,509</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#CCEEFF">
     <Td Align="LEFT" colspan=13><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Income (loss) per share:</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Basic income (loss) per ordinary share</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>0.311</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(0.296</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(0.367</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#CCEEFF">
     <Td Align="LEFT" colspan=13><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Weighted average number of ordinary</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#CCEEFF">
     <Td Align="LEFT" colspan=13><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;shares used to compute basic income</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#CCEEFF">
     <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;(loss) per share (in thousands)</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>4,256</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4,190</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4,112</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Diluted income (loss) per ordinary share</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>0.303</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(0.296</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(0.367</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>)</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#CCEEFF">
     <Td Align="LEFT" colspan=13><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Weighted average number of ordinary</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#CCEEFF">
     <Td Align="LEFT" colspan=13><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;shares used to compute diluted income</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#CCEEFF">
     <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;(loss) per share (in thousands)</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>4,364</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4,190</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4,112</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
</TABLE>
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