Voltaire Has Paid OCS $2.7 Million Royalties

Voltaire Ltd. announced that it has made an early
payment to the Office of the Chief Scientist of the Israeli Ministry of
Industry, Trade and Labor (OCS) to conclude the Company’s
participation in OCS’s sponsored research and
development grant program. Voltaire has paid the OCS approximately $2.7
million, which will be recorded in the Company’s
first quarter results as a one-time payment, and has terminated its
outstanding financial commitments to the OCS.

Under the OCS sponsored grant programs, participating companies are
required to pay the OCS royalties on the sale of products developed
through sponsored research and development. These payments are accounted
for as cost of goods sold, and, as such, by repaying the commitment up
front, will have a positive impact on the company’s
gross margin in future quarters. The company chose to terminate its
participation following a cost-benefit analysis of the program, taking
into account its accelerated revenue growth in recent quarters, strong
cash generation and internal forecasts for the coming quarters.

“We are very pleased to reach this milestone
in the company’s maturity process,”
said Ronnie Kenneth, Chairman and CEO of Voltaire. “Our
strong cash balance of close to $60 million at the end of 2007, as well
as our growth forecast for the coming year, have enabled the early
termination of our participation in the program. This decision is
expected to contribute to our gross and operating margins moving forward."

Voltaire Ltd