TowerJazz (NASDAQ: TSEM & TASE: TSEM) reported today its
results for the full year and for the fourth quarter ended December
31, 2018.
Highlights of the Full Year
2018:
- Revenues of $1.3 billion resulting in EBITDA of $362
million, net profit of $136 million and basic earnings per
share of $1.35;
- Cash generated from operations of $313 million with $170
million investments in property and equipment, resulting in free
cash flow of $143 million;
- Further strengthened the balance sheet and financial position
during the year:
- Record shareholders’ equity reaching $1.2 billion;
- Received upgraded S&P rating from “ilA+ stable” to “ilAA-
stable”.
Highlights of the Fourth Quarter of
2018:
- Revenues of $334 million, up $11 million as compared with
the third quarter of 2018;
- Sequential increase in net profit and basic earnings per share
to $38 million and $0.37, respectively, from $34 million and $0.34,
respectively;
- Cash generated from operations of $91 million with $49
million invested in property and equipment, resulting in free
cash flow of $43 million.
Business OutlookTowerJazz
expects revenues for the first quarter of 2019 to be $310 million,
with an upward or downward range of 5%.
Mr. Russell Ellwanger, Chief Executive
Officer of TowerJazz, commented, “We are
pleased with our fourth quarter sequential revenue and margins’
growth, in the face of multiple recent market financial releases
citing near-term macroeconomic concerns, resulting in a
semiconductor market that is tightly controlling inventories. We
enter 2019 with certain geo-economic headwinds but remain confident
in our value creation thesis. In each of our focused areas, we have
had recent strong customer wins, namely advanced infrastructure, 5G
enabling switches, breakthrough power management efficiency, and
unrivaled industrial and medical image sensors figure-of-merit.
These market segments are strategic and solid mid- to long-term
growth drivers. The powerful aforementioned parallel activities of
our different business units, driven by worldwide impassioned human
capability, and strengthened by our growing financial resources,
will undoubtedly create notable milestones throughout the
year.”
Ellwanger updated: “We continue to progress with
our TPSCo partnership, aligned on a first contract extension of 3
years for the next phase of TPSCo, beginning the second quarter of
2019. We expect similar loading as present run rate, with some
changes to the pricing tables, resulting in some revenue reduction
from our partner. This is expected to be mitigated by core business
revenue growth, mainly 300mm which is presently ramping, strong
efficiencies, and TPSCo specific cost reduction activities,
enabling margins’ growth.”
Full Year Results
OverviewRevenues for 2018 were $1.3 billion compared to
$1.39 billion in 2017. Gross and operating profits for 2018 were
$293 million and $155 million, respectively, as compared to $354
million and $220 million, respectively, in 2017. EBITDA for 2018
was $362 million, representing 28% EBITDA margin.
Net profit for 2018 was $136 million,
representing $1.35 basic earnings per share and $1.32 diluted
earnings per share, as compared to $298 million net profit, or
$3.08 basic earnings per share and $2.90 diluted earnings per share
in 2017. Net profit for 2017 included $82 million income tax
benefit resulted from Israeli deferred tax asset realization
following valuation allowance release and $13 million income tax
benefit related to U.S. tax reform.
During 2018, debt was reduced by $98 million,
resulting in an annual financing expenses savings of $7 million,
and included:
- Full conversion of short-term notes
in the amount of $58 million to shares, $39 million of which were
converted during the fourth quarter of 2018.The notes conversion
resulted in annual cash savings of $5 million.Post conversion, the
current outstanding share count is 105 million and fully diluted
share count remains at 108 million, similar to previous
quarters;
- In July 2018, the Company early repaid $40 million loan,
initially borrowed in 2016 in relation to the acquisition of the
San Antonio fab and its ramp.
- In June 2018, TPSCo restructured
its outstanding loans originally due 2018-2020, by early repayment
of these loans and obtaining a new approximately $100 million loan
from three leading Japanese banks at improved terms and longer
duration through June 2025.
Free cash flow for 2018 was $143 million, with
$313 million cash from operations, net of $170 million investments
in fixed assets, net. The other main cash activities during 2018
were: $158 million investment in short-term deposits, marketable
securities and other investments (mainly interest-bearing bank
deposits) and $49 million of debt repaid, net of debt received,
which included mainly the early repayment of the $40 million loan
borrowed in 2016 in relation to the acquisition of the San Antonio
fab and its ramp.
Record shareholders' equity as of December 31,
2018 was $1.24 billion, as compared to $1.03 billion as of December
31, 2017.
In April 2018, the Company and its series G
bonds received an upgraded rating from Ma’alot (an Israeli rating
company which is fully owned by S&P Global Ratings). Its
previous rating was ilA+ with a stable horizon and the new upgraded
rating is ilAA-, with a stable horizon.
Fourth Quarter Results
OverviewRevenues for the fourth quarter of 2018 were $334
million, $11 million higher than in the prior quarter and compared
to $358 million in the fourth quarter of 2017.
Gross and operating profits for the fourth
quarter of 2018 were $76 million and $40 million, respectively, as
compared to $73 million and $39 million, respectively, in the third
quarter of 2018 and as compared to $89 million and $54 million,
respectively, in the fourth quarter of 2017.
EBITDA for the fourth quarter of 2018 was $93
million, representing a 28% EBITDA margin, compared with $89
million in the prior quarter and $107 million for the fourth
quarter of 2017.
Net profit for the fourth quarter of 2018 was
$38 million, or $0.37 basic earnings per share, as compared to net
profit of $34 million or $0.34 basic earnings per share in the
third quarter of 2018 and $147 million, or $1.50 basic earnings per
share in the fourth quarter of 2017. Net profit for the fourth
quarter of 2017 included $82 million income tax benefit resulted
from Israeli deferred tax asset realization following valuation
allowance release and $13 million income tax benefit related to
U.S. tax reform.
Free cash flow for the fourth quarter of 2018
was $43 million, with $91 million cash flow from operations and $49
million investments in fixed assets, net. During the fourth quarter
of 2018, $123 million were invested in deposits, marketable
securities and other investments, net (mainly interest-bearing bank
deposits).
Teleconference and
WebcastTowerJazz will host an investor conference call
today, Tuesday, February 19, 2019, at 10:00 a.m. Eastern time (9:00
a.m. Central time, 8:00 a.m. Mountain time, 7:00 a.m. Pacific time
and 5:00 p.m. Israel time) to discuss the Company’s financial
results for the fourth quarter and full year 2018 and its
outlook.
This call will be webcast and can be accessed
via TowerJazz’s website at www.towerjazz.com , or by calling
1-888-668-9141 (U.S. Toll-Free), 03-918-0609 (Israel),
+972-3-918-0609 (International). For those who are not
available to listen to the live broadcast, the call will be
archived on TowerJazz’s website for 90 days.
The Company presents its financial statements in
accordance with U.S. GAAP. The financial information included
in the tables below includes unaudited condensed financial data.
Some of the financial information in this release, which we
describe in this release as “adjusted” financial measures, is
non-GAAP financial measures as defined in Regulation G and related
reporting requirements promulgated by the Securities and Exchange
Commission as they apply to our Company. These adjusted financial
measures are calculated excluding one or more of the following: (1)
amortization of acquired intangible assets; (2) compensation
expenses in respect of equity grants to directors, officers and
employees; (3) income tax benefit resulted from Israeli deferred
tax asset realization following valuation allowance release; and
(4) income tax benefit related to U.S. tax reform. These adjusted
financial measures should be evaluated in conjunction with, and are
not a substitute for, GAAP financial measures. The tables also
present the GAAP financial measures, which are most comparable to
the adjusted financial measures, as well as a reconciliation
between the adjusted financial measures and the comparable GAAP
financial measures. As used and/ or presented in this release, as
well as calculated in the tables herein, the term Earnings Before
Interest Tax Depreciation and Amortization (EBITDA) consists of net
profit in accordance with GAAP, excluding financing and other
expense, net, taxes, non-controlling interest, depreciation and
amortization expense and stock-based compensation expense. EBITDA
is reconciled in the tables below from GAAP operating profit.
EBITDA is not a required GAAP financial measure and may not be
comparable to a similarly titled measure employed by other
companies. EBITDA and the adjusted financial information presented
herein should not be considered in isolation or as a substitute for
operating profit, net profit or loss, cash flows provided by
operating, investing and financing activities, per share data or
other profit or cash flow statement data prepared in accordance
with GAAP. The term Net Cash, as used and/ or presented in this
release, is comprised of cash, cash equivalents, short-term
deposits and marketable securities (in the amounts of $641 million
and $560 million as of December 31, 2018 and December 31, 2017,
respectively) less the outstanding principal amount of bank loans
(in the amounts of $100 million and $138 million as of December 31,
2018 and December 31, 2017, respectively), the outstanding
principal amount of capital leases (in the amounts of $47 million
and $16 million as of December 31, 2018 and December 31, 2017,
respectively) and the outstanding principal amount of debentures
(in the amount of $122 million and $180 million as of December 31,
2018 and December 31, 2017, respectively). The term Net Cash is not
a required GAAP financial measure, may not be comparable to a
similarly titled measure employed by other companies and should not
be considered in isolation or as a substitute for cash, debt,
operating profit, net profit or loss, cash flows provided by
operating, investing and financing activities, per share data or
other profit or cash flow statement data prepared in accordance
with GAAP. In addition, the term Free Cash Flow, as used and/ or
presented in this release, is calculated to be cash from operating
activities (in the amounts of $91 million and $85 million for the
three months periods ended December 31, 2018 and December 31, 2017,
respectively and in the amounts of $313 million and $356 million
for the years ended December 31, 2018 and December 31, 2017,
respectively) less cash for investments in property and equipment,
net (in the amounts of $49 million and $41 million for the three
months periods ended December 31, 2018 and December 31, 2017,
respectively and in the amounts of $170 million and $165 million
for the years ended December 31, 2018 and December 31, 2017,
respectively). The term Free Cash Flow is not a required GAAP
financial measure, may not be comparable to a similarly titled
measure employed by other companies and should not be considered in
isolation or as a substitute for operating profit, net profit or
loss, cash flows provided by operating, investing and financing
activities, per share data or other profit or cash flow statement
data prepared in accordance with GAAP.
About TowerJazzTower
Semiconductor Ltd. (NASDAQ: TSEM, TASE: TSEM) and its subsidiaries
operate collectively under the brand name TowerJazz, the global
specialty foundry leader. TowerJazz manufactures next-generation
integrated circuits (ICs) in growing markets such as consumer,
industrial, automotive, medical and aerospace and defense.
TowerJazz’s advanced technology is comprised of a broad range of
customizable process platforms such as: SiGe, BiCMOS,
mixed-signal/CMOS, RF CMOS, CMOS image sensor, integrated power
management (BCD and 700V), and MEMS. TowerJazz also provides
world-class design enablement for a quick and accurate design cycle
as well as Transfer Optimization and development Process Services
(TOPS) to IDMs and fabless companies that need to expand capacity.
To provide multi-fab sourcing and extended capacity for its
customers, TowerJazz operates two manufacturing facilities in
Israel (150mm and 200mm), two in the U.S. (200mm) and three
facilities in Japan (two 200mm and one 300mm). For more
information, please visit www.towerjazz.com.
CONTACTS: Noit Levy-Karoubi | TowerJazz | +972
4 604 7066 | Noit.levi@towerjazz.comGK Investor Relations | Gavriel
Frohwein, (646) 688 3559 | towerjazz@gkir.com
This press release includes forward-looking
statements, which are subject to risks and uncertainties. Actual
results may vary from those projected or implied by such
forward-looking statements and you should not place any undue
reliance on such forward-looking statements. Potential risks and
uncertainties include, without limitation, risks and uncertainties
associated with: (i) demand in our customers’ end markets; (ii)
over demand for our foundry services and/or products that exceeds
our capacity; (iii) maintaining existing customers and attracting
additional customers, (iv) high utilization and its effect on cycle
time, yield and on schedule delivery which may cause customers to
transfer their product(s) to other fabs, (v) operating results
fluctuate from quarter to quarter making it difficult to predict
future performance, (vi) impact of our debt and other liabilities
on our financial position and operations, (vii) our ability to
successfully execute acquisitions, integrate them into our
business, utilize our expanded capacity and find new business,
(viii) fluctuations in cash flow, (ix) our ability to satisfy the
covenants stipulated in our agreements with our lender banks and
bondholders (as of December 31, 2018 we are in compliance with all
such covenants included in our banks’ agreements, bond G indenture
and others), (x) pending litigation, including the shareholder
class actions that were filed against the Company, certain
officers, its directors and/or its external auditor in the US and
Israel, following a short sell thesis report issued by a
short-selling focused firm, which has been dismissed and closed in
the US and is still pending in Israel; (xi) our majority stake in
TPSCo and integration of the San Antonio fabrication facility,
including new customer engagements, qualification and production
ramp-up, (xii) the closure of TJP within the scope of restructuring
our activities and business in Japan, settling any future claims or
potential claims from first parties, (xiii) meeting the conditions
set in the approval certificates received from the Israeli
Investment Center under which we received a significant amount of
grants in past years, (xiv) receipt of orders that are lower than
the customer purchase commitments, (xv) failure to receive orders
currently expected, (xvi) possible incurrence of additional
indebtedness, (xvii) effect of global recession, unfavorable
economic conditions and/or credit crisis, (xviii) our ability to
accurately forecast financial performance, which is affected by
limited order backlog and lengthy sales cycles, (xix) possible
situations of obsolete inventory if forecasted demand exceeds
actual demand when we manufacture products before receipt of
customer orders, (xx) the cyclical nature of the semiconductor
industry and the resulting periodic overcapacity, fluctuations in
operating results and future average selling price erosion, (xxi)
the execution of debt re-financing and/or fundraising to enable the
service of our debt and/or other liabilities, (xxii) operating our
facilities at high utilization rates which is critical in order to
cover a portion or all of the high level of fixed costs associated
with operating a foundry, and our debt, in order to improve our
results, (xxiii) the purchase of equipment to increase capacity,
the timely completion of the equipment installation, technology
transfer and raising the funds therefor, (xxiv) the concentration
of our business in the semiconductor industry, (xxv) product
returns, (xxvi) our ability to maintain and develop our technology
processes and services to keep pace with new technology, evolving
standards, changing customer and end-user requirements, new product
introductions and short product life cycles, (xxvii) competing
effectively, (xxviii) use of outsourced foundry services by both
fabless semiconductor companies and integrated device
manufacturers; (xxix) achieving acceptable device yields, product
performance and delivery times, (xxx) our dependence on
intellectual property rights of others, our ability to operate our
business without infringing others’ intellectual property rights
and our ability to enforce our intellectual property against
infringement, (xxxi) retention of key employees and recruitment and
retention of skilled qualified personnel, (xxxii) exposure to
inflation, currency rates (mainly the Israeli Shekel and Japanese
Yen) and interest rate fluctuations and risks associated with doing
business locally and internationally, as well fluctuations in the
market price of our traded securities, (xxxiii) issuance of
ordinary shares as a result of conversion and/or exercise of any of
our convertible securities, as well as any sale of shares by any of
our shareholders, or any market expectation thereof, which may
depress the market price of our ordinary shares and may impair our
ability to raise future capital, (xxxiv) meeting regulatory
requirements worldwide, including environmental and governmental
regulations; (xxxv) negotiation and closure of a definitive
agreement in relation to the fab establishment in China, as well as
implementation of this project through required funding and
resources and receipt of future proceeds therefrom; and (xxxvi)
business interruption due to fire and other natural disasters, the
security situation in Israel and other events beyond our control
such as power interruptions.
A more complete discussion of risks and
uncertainties that may affect the accuracy of forward-looking
statements included in this press release or which may otherwise
affect our business is included under the heading "Risk Factors" in
Tower’s most recent filings on Forms 20-F and 6-K, as were filed
with the Securities and Exchange Commission (the “SEC”) and the
Israel Securities Authority. Future results may differ materially
from those previously reported. The Company does not intend to
update, and expressly disclaims any obligation to update, the
information contained in this release.
(Financial tables follow)
TOWER SEMICONDUCTOR LTD. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
December 31, |
|
|
|
|
|
|
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
A S
S E T S |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
385,091 |
$ |
445,961 |
|
|
Short-term deposits |
|
|
120,079 |
|
-- |
|
|
Marketable securities |
|
|
135,850 |
|
113,874 |
|
|
Trade accounts receivable |
|
153,409 |
|
149,666 |
|
|
Inventories |
|
|
170,778 |
|
143,315 |
|
|
Other current assets |
|
|
22,752 |
|
21,516 |
|
|
|
Total current assets |
|
|
987,959 |
|
874,332 |
|
|
|
|
|
|
|
|
|
|
|
LONG-TERM INVESTMENTS |
|
35,945 |
|
26,073 |
|
|
|
|
|
|
|
|
|
|
|
PROPERTY AND EQUIPMENT, NET |
|
657,234 |
|
635,124 |
|
|
|
|
|
|
|
|
|
|
|
INTANGIBLE ASSETS, NET |
|
13,435 |
|
19,841 |
|
|
|
|
|
|
|
|
|
|
|
GOODWILL |
|
|
7,000 |
|
7,000 |
|
|
|
|
|
|
|
|
|
|
|
DEFERRED TAX AND OTHER LONG-TERM ASSETS, NET |
|
88,404 |
|
111,269 |
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
$ |
1,789,977 |
$ |
1,673,639 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
Short-term debt |
|
$ |
10,814 |
$ |
105,958 |
|
|
Trade accounts payable |
|
|
104,329 |
|
115,347 |
|
|
Deferred revenue and customers' advances |
|
20,711 |
|
14,338 |
|
|
Other current liabilities |
|
|
67,867 |
|
66,730 |
|
|
|
Total current liabilities |
|
|
203,721 |
|
302,373 |
|
|
|
|
|
|
|
|
|
|
|
LONG-TERM DEBT |
|
|
256,669 |
|
228,723 |
|
|
|
|
|
|
|
|
|
|
|
LONG-TERM CUSTOMERS' ADVANCES |
|
28,131 |
|
31,908 |
|
|
|
|
|
|
|
|
|
|
|
LONG-TERM EMPLOYEE RELATED LIABILITIES |
|
13,898 |
|
14,662 |
|
|
|
|
|
|
|
|
|
|
|
DEFERRED TAX AND OTHER LONG-TERM
LIABILITIES |
|
51,353 |
|
66,267 |
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
|
553,772 |
|
643,933 |
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL SHAREHOLDERS' EQUITY |
|
1,236,205 |
|
1,029,706 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
$ |
1,789,977 |
$ |
1,673,639 |
|
|
|
|
|
|
|
|
|
|
TOWER SEMICONDUCTOR LTD. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED) |
(dollars and share count in thousands, except
per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T h r e e m o n t h s e n d e
d |
|
|
|
|
|
|
|
|
|
|
December 31, |
|
September 30, |
|
December 31, |
|
|
|
|
|
|
|
|
|
|
2018 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES |
|
|
$ |
333,590 |
|
$ |
322,596 |
|
$ |
357,614 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF REVENUES |
|
|
257,957 |
|
|
249,975 |
|
|
268,256 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
|
|
75,633 |
|
|
72,621 |
|
|
89,358 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING COSTS AND EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
18,378 |
|
|
18,236 |
|
|
18,370 |
|
|
|
|
Marketing, general and administrative |
|
17,016 |
|
|
15,826 |
|
|
16,502 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,394 |
|
|
34,062 |
|
|
34,872 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING PROFIT |
|
40,239 |
|
|
38,559 |
|
|
54,486 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING AND OTHER EXPENSE, NET |
|
(3,907 |
) |
|
(2,497 |
) |
|
(7,080 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE INCOME TAX |
|
36,332 |
|
|
36,062 |
|
|
47,406 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX BENEFIT (EXPENSE), NET |
|
183 |
|
|
(2,388 |
) |
|
101,236 |
|
(a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE NON CONTROLLING INTEREST |
|
36,515 |
|
|
33,674 |
|
|
148,642 |
|
(a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON
CONTROLLING INTEREST |
|
1,558 |
|
|
(28 |
) |
|
(1,431 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
PROFIT |
|
$ |
38,073 |
|
$ |
33,646 |
|
$ |
147,211 |
|
(a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC EARNINGS PER SHARE |
$ |
0.37 |
|
$ |
0.34 |
|
$ |
1.50 |
|
(a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares |
|
103,997 |
|
|
100,158 |
|
|
98,312 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED EARNINGS PER SHARE |
$ |
0.36 |
|
$ |
0.33 |
|
$ |
1.40 |
|
(a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
profit used for diluted earnings per share |
$ |
38,073 |
|
$ |
33,646 |
|
$ |
149,502 |
|
(a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares |
|
105,776 |
|
|
102,083 |
|
|
106,776 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Three months ended December 31, 2017 included $82,370
Israeli deferred tax asset realization following valuation
allowance release and $12,970 income tax benefit related to U.S.
tax reform. |
|
|
TOWER SEMICONDUCTOR LTD. AND
SUBSIDIARIES |
|
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
|
(dollars and share count in thousands, except
per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended |
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
|
|
|
|
|
|
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES |
|
|
$ |
1,304,034 |
|
$ |
1,387,310 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF REVENUES |
|
|
1,011,087 |
|
|
1,033,005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
|
|
292,947 |
|
|
354,305 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING COSTS AND EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
73,053 |
|
|
67,664 |
|
|
|
|
Marketing, general and administrative |
|
64,951 |
|
|
66,799 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
138,004 |
|
|
134,463 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING PROFIT |
|
154,943 |
|
|
219,842 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING AND OTHER EXPENSE, NET |
|
(15,626 |
) |
|
(18,074 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE INCOME TAX |
|
139,317 |
|
|
201,768 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX BENEFIT (EXPENSE), NET |
|
(5,938 |
) |
|
99,888 |
|
(a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE NON CONTROLLING INTEREST |
|
133,379 |
|
|
301,656 |
|
(a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON
CONTROLLING INTEREST |
|
2,200 |
|
|
(3,645 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
PROFIT |
|
$ |
135,579 |
|
$ |
298,011 |
|
(a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC EARNINGS PER SHARE |
$ |
1.35 |
|
$ |
3.08 |
|
(a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares |
|
100,399 |
|
|
96,647 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED EARNINGS PER SHARE |
$ |
1.32 |
|
$ |
2.90 |
|
(a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
profit used for diluted earnings per share |
$ |
135,579 |
|
$ |
306,905 |
|
(a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares |
|
102,517 |
|
|
105,947 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Year ended December 31, 2017 included $82,370 tax benefit
resulted from Israeli deferred tax asset realization following
valuation allowance release and $12,970 income tax benefit related
to U.S. tax reform. |
TOWER SEMICONDUCTOR LTD. AND
SUBSIDIARIES |
RECONCILIATION OF CERTAIN FINANCIAL DATA
(UNAUDITED) |
(dollars and share count in thousands, except
per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T h r e e m o n t h s e n d e
d |
|
|
|
|
|
|
|
|
December 31, |
|
September 30, |
|
December 31, |
|
|
|
|
|
|
|
|
2018 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION FROM GAAP NET PROFIT TO ADJUSTED NET
PROFIT: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP NET PROFIT |
|
$ |
38,073 |
$ |
33,646 |
$ |
147,211 |
|
|
|
Stock based compensation |
|
3,906 |
|
2,710 |
|
3,481 |
|
|
|
Amortization of acquired intangible assets |
|
1,614 |
|
1,627 |
|
1,564 |
|
|
|
Income tax benefit resulted from Israeli deferred tax asset
realization following valuation allowance release |
|
-- |
|
-- |
|
(82,370 |
) |
|
|
Income tax benefit related to U.S. tax reform |
|
-- |
|
-- |
|
(12,970 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED NET PROFIT |
$ |
43,593 |
$ |
37,983 |
$ |
56,916 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED EARNINGS PER SHARE: |
|
|
|
|
|
|
|
|
Basic |
|
|
$ |
0.42 |
$ |
0.38 |
$ |
0.58 |
|
|
|
Diluted |
|
|
$ |
0.41 |
$ |
0.37 |
$ |
0.55 |
|
|
|
Fully diluted |
|
$ |
0.41 |
$ |
0.37 |
$ |
0.55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED NET PROFIT USED TO CALCULATE PER SHARE
DATA: |
|
|
|
|
|
|
Basic |
|
|
$ |
43,593 |
$ |
37,983 |
$ |
56,916 |
|
|
|
Diluted |
|
|
$ |
43,593 |
$ |
37,983 |
$ |
59,207 |
|
|
|
Fully diluted |
|
$ |
44,663 |
$ |
40,149 |
$ |
59,207 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NUMBER OF SHARES AND OTHER SECURITIES USED TO CALCULATE PER
SHARE DATA: |
|
|
|
|
Basic |
|
|
|
103,997 |
|
100,158 |
|
98,312 |
|
|
|
Diluted |
|
|
|
105,776 |
|
102,083 |
|
106,776 |
|
|
|
Fully diluted |
|
|
108,268 |
|
108,146 |
|
107,721 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA CALCULATION: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP OPERATING PROFIT |
$ |
40,239 |
$ |
38,559 |
$ |
54,486 |
|
|
|
Depreciation of fixed assets |
|
46,950 |
|
46,172 |
|
47,741 |
|
|
|
Stock based compensation |
|
3,906 |
|
2,710 |
|
3,481 |
|
|
|
Amortization of acquired intangible assets |
|
1,614 |
|
1,627 |
|
1,564 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
|
$ |
92,709 |
$ |
89,068 |
$ |
107,272 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOWER SEMICONDUCTOR LTD. AND
SUBSIDIARIES |
RECONCILIATION OF CERTAIN FINANCIAL DATA
(UNAUDITED) |
(dollars and share count in thousands, except
per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended |
|
|
|
|
|
|
|
|
December 31, |
|
|
|
|
|
|
|
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION FROM GAAP NET PROFIT TO ADJUSTED NET
PROFIT: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP NET PROFIT |
|
$ |
135,579 |
$ |
298,011 |
|
|
|
Stock based compensation |
|
|
12,661 |
|
11,648 |
|
|
|
Amortization of acquired intangible assets |
|
|
6,554 |
|
8,307 |
|
|
|
Income tax benefit resulted from Israeli deferred tax asset
realization following valuation allowance release |
|
|
-- |
|
(82,370 |
) |
|
|
Income tax benefit related to U.S. tax reform |
|
|
-- |
|
(12,970 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED NET PROFIT |
|
$ |
154,794 |
$ |
222,626 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED EARNINGS PER SHARE: |
|
|
|
|
|
|
|
Basic |
|
|
$ |
1.54 |
$ |
2.30 |
|
|
|
Diluted |
|
|
$ |
1.51 |
$ |
2.19 |
|
|
|
Fully diluted |
|
$ |
1.51 |
$ |
2.15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED NET PROFIT USED TO CALCULATE PER SHARE
DATA: |
|
|
|
|
|
|
|
Basic |
|
|
$ |
154,794 |
$ |
222,626 |
|
|
|
Diluted |
|
|
$ |
154,794 |
$ |
231,520 |
|
|
|
Fully diluted |
|
$ |
163,194 |
$ |
231,520 |
|
|
|
|
|
|
|
|
|
|
|
|
|
NUMBER OF SHARES AND OTHER SECURITIES USED TO CALCULATE PER
SHARE DATA: |
|
|
|
|
|
|
|
Basic |
|
|
|
100,399 |
|
96,647 |
|
|
|
Diluted |
|
|
|
102,517 |
|
105,947 |
|
|
|
Fully diluted |
|
|
108,268 |
|
107,721 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA CALCULATION: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP OPERATING PROFIT |
|
$ |
154,943 |
$ |
219,842 |
|
|
|
Depreciation of fixed assets |
|
|
187,460 |
|
185,464 |
|
|
|
Stock based compensation |
|
|
12,661 |
|
11,648 |
|
|
|
Amortization of acquired intangible assets |
|
|
6,554 |
|
8,307 |
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
|
$ |
361,618 |
$ |
425,261 |
|
|
|
|
|
|
|
|
|
|
|
|
TOWER SEMICONDUCTOR LTD. AND
SUBSIDIARIES |
|
CONSOLIDATED SOURCES AND USES REPORT
(UNAUDITED) |
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T h r e e m o n t h s e n d e
d |
|
|
|
|
December 31, |
|
December 31, |
|
|
|
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS - BEGINNING OF
PERIOD |
$ |
464,446 |
|
$ |
480,407 |
|
|
|
|
|
|
|
|
|
|
Net cash
provided by operating activities |
|
91,496 |
|
|
85,285 |
|
|
|
Investments in
property and equipment, net |
|
(48,654 |
) |
|
(41,349 |
) |
|
|
Exercise of
options, net |
|
9 |
|
|
3,278 |
|
|
|
Investments in
short-term deposits, marketable securities and other assets,
net |
|
(123,126 |
) |
|
(64,867 |
) |
|
|
Debt repaid,
net |
|
(2,924 |
) |
|
(16,863 |
) |
|
|
Effect of
Japanese Yen exchange rate change over cash balance |
|
3,844 |
|
|
70 |
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS - END OF PERIOD |
$ |
385,091 |
|
$ |
445,961 |
|
|
|
|
|
|
|
|
|
FREE CASH FLOW |
$ |
42,843 |
|
$ |
43,936 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Y e a r e n d e d |
|
|
|
|
December 31, |
|
December 31, |
|
|
|
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
CASH AND SHORT-TERM DEPOSITS - BEGINNING OF
PERIOD |
$ |
445,961 |
|
$ |
389,377 |
|
|
|
|
|
|
|
|
|
|
Net cash
provided by operating activities |
|
312,897 |
|
|
355,635 |
|
(b) |
|
Investments in
property and equipment, net |
|
(169,741 |
) |
|
(164,717 |
) |
|
|
Exercise of
warrants and options, net |
|
714 |
|
|
31,315 |
|
|
|
Investments in
short-term deposits, marketable securities and other assets,
net |
|
(158,476 |
) |
|
(114,736 |
) |
|
|
Debt repaid,
net |
|
(48,849 |
) |
|
(50,255 |
) |
|
|
Effect of
Japanese Yen exchange rate change over cash balance |
|
2,585 |
|
|
3,720 |
|
|
|
TPSCo dividend
to Panasonic |
|
-- |
|
|
(4,378 |
) |
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS - END OF PERIOD |
$ |
385,091 |
|
$ |
445,961 |
|
|
|
|
|
|
|
|
|
FREE CASH FLOW |
$ |
143,156 |
|
$ |
190,918 |
|
(b) |
|
|
|
|
|
|
|
(b) |
Net
cash provided by operating activities for the year ended December
31, 2017 included $18,000 received from Tacoma as announced on
August 21, 2017. |
|
TOWER SEMICONDUCTOR LTD. AND
SUBSIDIARIES |
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
|
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended |
|
|
Three months ended |
|
|
|
|
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
|
|
|
|
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
(unaudited) |
CASH FLOWS - OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit for the period |
$ |
133,379 |
|
$ |
301,656 |
|
$ |
36,515 |
|
$ |
148,642 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net profit for the
period |
|
|
|
|
|
|
|
|
to net cash provided by operating
activities: |
|
|
|
|
|
|
|
|
|
|
Income and expense items not involving cash
flows: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
214,391 |
|
|
208,411 |
|
|
54,157 |
|
|
51,310 |
|
|
|
|
Effect of indexation, translation and fair value
measurement on debt |
|
(9,791 |
) |
|
12,865 |
|
|
(4,042 |
) |
|
2,281 |
|
|
|
|
Other expense, net |
|
2,442 |
|
|
2,627 |
|
|
4,006 |
|
|
3,027 |
|
|
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Trade accounts receivable |
|
(3,096 |
) |
|
(6,564 |
) |
|
10,933 |
|
|
788 |
|
|
|
|
Other
assets |
|
|
|
|
11,260 |
|
|
|
(8,321 |
) |
|
|
3,096 |
|
|
|
445 |
|
|
|
|
Inventories |
|
(26,344 |
) |
|
(4,277 |
) |
|
(9,702 |
) |
|
92 |
|
|
|
|
Trade accounts payable |
|
(3,562 |
) |
|
(8,649 |
) |
|
(4,783 |
) |
|
(2,786 |
) |
|
|
|
Deferred revenue and customers' advances |
|
2,625 |
|
|
(21,803 |
) |
|
8,768 |
|
|
(17,882 |
) |
|
|
|
Other current liabilities |
|
(867 |
) |
|
(8,219 |
) |
|
(7,239 |
) |
|
1,765 |
|
|
|
|
Long-term employee related liabilities |
|
(795 |
) |
|
(3,247 |
) |
|
(361 |
) |
|
(2,482 |
) |
|
|
|
Deferred tax, net and other long-term
liabilities |
|
(6,745 |
) |
|
(108,844 |
) |
|
148 |
|
|
(99,915 |
) |
|
|
|
Net cash provided by operating activities |
|
312,897 |
|
|
355,635 |
|
(b) |
91,496 |
|
|
85,285 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS - INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
Investments in property and equipment,
net |
|
(169,741 |
) |
|
(164,717 |
) |
|
(48,654 |
) |
|
(41,349 |
) |
Investments in deposits, marketable securities and
other assets, net |
|
(158,476 |
) |
|
(114,736 |
) |
|
(123,126 |
) |
|
(64,867 |
) |
|
|
|
Net cash used in investing activities |
|
(328,217 |
) |
|
(279,453 |
) |
|
(171,780 |
) |
|
(106,216 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS - FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt repaid, net |
|
(48,849 |
) |
|
(50,255 |
) |
|
(2,924 |
) |
|
(16,863 |
) |
Exercise of warrants and options, net |
|
714 |
|
|
31,315 |
|
|
9 |
|
|
3,278 |
|
Dividend paid to Panasonic |
|
|
-- |
|
|
|
(4,378 |
) |
|
|
-- |
|
|
|
-- |
|
|
|
|
Net cash used in financing activities |
|
(48,135 |
) |
|
(23,318 |
) |
|
(2,915 |
) |
|
(13,585 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE
CHANGE |
|
2,585 |
|
|
3,720 |
|
|
3,844 |
|
|
70 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS |
|
|
(60,870 |
) |
|
|
56,584 |
|
|
|
(79,355 |
) |
|
|
(34,446 |
) |
CASH AND CASH EQUIVALENTS - BEGINNING OF
PERIOD |
|
|
445,961 |
|
|
|
389,377 |
|
|
464,446 |
|
|
|
480,407 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS - END OF PERIOD |
$ |
385,091 |
|
$ |
445,961 |
|
$ |
385,091 |
|
$ |
445,961 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) Net cash provided by
operating activities for the year ended December 31, 2017 included
$18,000 received from Tacoma as announced on August 21,
2017. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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