TowerJazz (NASDAQ:TSEM) (TASE:TSEM) reported today its results for
the third quarter and the first nine months ended September 30,
2017.
Highlights:
- Record revenues of $355 million, up 9% year over year
- $55 million net profit, representing basic EPS of $0.56
- Record cash from operations of $104 million, up 20% year over
year
- Record free cash flow of $62 million, 2X year over year
- Fourth quarter mid-range guidance of $358 million o
Yielding full year revenues of $1.39 billion o Representing
annual year over year growth of 11% with 20% organic growth.
CEO CommentaryMr.
Russell Ellwanger, Chief Executive Officer of TowerJazz,
commented, “Our third quarter of 2017 top and
bottom line growth, with incremental net profit outpacing revenue
growth, demonstrates continued value creation to our customers and
shareholders. In the past few months, we announced two of multiple
on-going initiatives in China, as well as a variety of important
global automotive activities, including offerings, partnerships and
1st-tier customer relationships. This, combined with other
customer partnered roadmap developments, including several
disruptive technologies, further entrench and broaden our
capabilities within the analog space, strengthening our competitive
advantage, cementing our position as the leading analog specialty
foundry.”
Third Quarter Results
OverviewRevenues for the third quarter of 2017 were a
record $355 million, reflecting 9% growth as compared to $326
million in the third quarter of 2016.
Gross and operating profits for the third
quarter of 2017 were $89 million and $55 million, respectively, as
compared to $81 million and $49 million, respectively, in the third
quarter of 2016.
EBITDA for the third quarter of 2017 was a
record $109 million, or 31% EBITDA margin, as compared to $97
million in the third quarter of 2016.
Net profit for the third quarter of 2017 was $55
million, as compared to $51 million in the third quarter of 2016.
Basic earnings per share for the quarter was $0.56 and diluted
earnings per share was $0.54, as compared to $0.58 and $0.52,
respectively, in the third quarter of 2016. On an adjusted basis,
net profit for the third quarter of 2017 was at a record of $61
million, a 24% increase as compared to $49 million in the third
quarter of 2016.
As our TPSCo foundry business and revenue
continues to grow, we reached a profitability level entailing
royalties to TowerJazz and Panasonic. This results in a higher cost
of revenue, proportionally yielding a lower gross margin; creating
a lower tax expense and lower non-controlling interest, which in
turn generates greater net profit, cash and free cash flow. This is
seen in the 55% incremental net profit margin increase as compared
to the second quarter of 2017.
Free cash flow for the quarter was a record of
$62 million, with a record $104 million cash flow from operations
and $42 million investments in fixed assets, net. Free cash flow
for the quarter included $18 million net cash received from Tacoma
with respect to the new 8-inch fabrication facility in Nanjing,
China. The other main cash activities during the third
quarter of 2017 were $16 million debt repayments and $50 million
investment in marketable securities.
Cash (including marketable securities), net of
gross debt, as of September 30, 2017, totaled to a record of $195
million as compared to net cash of $37 million as of December 31,
2016.
Shareholders' equity as of September 30, 2017
was a record of $874 million, as compared to $683 million as of
December 31, 2016.
First Nine Months of 2017 Results
OverviewRevenues for the first nine months of 2017 were at
a record of $1.03 billion, reflecting 13% growth as compared to
$909 million for the first nine months of 2016. Year over year
organic growth, excluding the Panasonic and Maxim long-term
committed contracts, was 27%.
Gross and operating profit for the first nine
months of 2017 were at a record of $265 million and $165 million,
respectively, an increase as compared to $215 million and $120
million, respectively, in the first nine months of 2016.
EBITDA for the first nine months of 2017 totaled
to a record of $318 million, or 31% EBITDA margin, representing 22%
increase as compared with $261 million, or 29% EBITDA margin, for
the first nine months of 2016.
Net profit for the first nine months of 2017 was
$151 million, or $1.57 in basic earnings per share and $1.49
diluted earnings per share. Net profit for the first nine months of
2016 was $156 million, or $1.81 basic earnings per share, and
included $51 million net gain from the acquisition of the San
Antonio fab, $6.5 million income tax benefit in relation to
Nishiwaki closure occurred in 2014 and $7 million non-cash
financing expenses relating to the Israeli banks’ loans early
repayment.
Free cash flow for the first nine months of 2017
was a record of $147 million, with a record $270 million cash flow
from operations and $123 million investments in fixed assets, net.
The other main cash activities during the first nine months of 2017
were comprised of the following: $28 million received from the
exercise of warrants and options; $33 million debt repayments; a
positive $4 million due to the effect of the Japanese Yen exchange
rate on the cash balance; $4 million TPSCo dividend to Panasonic
and a $50 million investment in marketable securities.
Business OutlookTowerJazz
expects revenues for the fourth quarter of 2017 ending December 31,
2017 to be $358 million, with an upward or downward range of 5%,
representing annual year over year growth of 11% with 20% organic
growth.
Teleconference and Webcast
TowerJazz will host an investor conference call today, November 7,
2017, 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 third quarter 2017
and its outlook.
This call will be webcast and can be accessed
via TowerJazz’s website at www.towerjazz.com, or by calling:
1-888-407-2553 (U.S. Toll-Free), 03-918-0610 (Israel),
+972-3-918-0610 (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 and (3) income tax benefit in relation to Nishiwaki
closure. 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 gain from acquisition, net, interest and
other financing expense, net, other income, net, taxes,
non-controlling interest, depreciation and amortization expense,
stock based compensation expense, acquisition related costs and
Nishiwaki Fab restructuring and impairment cost (income), net.
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 $530 million
and $389 million as of September 30, 2017 and December 31, 2016,
respectively) less the outstanding principal amount of bank loans
(in the amounts of $155 million and $166 million as of September
30, 2017 and December 31, 2016, respectively) and the outstanding
principal amount of debentures (in the amounts of $180 million and
$186 million as of September 30, 2017 and December 31, 2016,
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
$104 million, $84 million and $86 million for the three months
periods ended September 30, 2017, June 30, 2017 and September 30,
2016, respectively) less cash for investments in property and
equipment, net (in the amounts of $42 million, $41 million and $55
million for the three months periods ended September 30, 2017, June
30, 2017 and September 30, 2016, 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 TowerJazz
Tower 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 September 30, 2017 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 our acquisition of the San Antonio fabrication facility
by TowerJazz Texas (“TJT”), 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 third
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) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
|
|
|
|
|
|
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
A S S E T S |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
|
|
Cash, cash equivalents and short-term
deposits |
$ |
480,407 |
$ |
389,377 |
|
|
|
Marketable securities |
|
|
49,738 |
|
-- |
|
|
|
Trade accounts receivable |
|
150,039 |
|
141,048 |
|
|
|
Inventories |
|
|
143,300 |
|
137,532 |
|
|
|
Other current assets |
|
|
21,465 |
|
30,041 |
|
|
|
|
Total current assets |
|
|
844,949 |
|
697,998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
LONG-TERM INVESTMENTS |
|
27,091 |
|
25,624 |
|
|
|
|
|
|
|
|
|
|
|
|
|
PROPERTY AND EQUIPMENT, NET |
|
633,107 |
|
616,686 |
|
|
|
|
|
|
|
|
|
|
|
|
|
INTANGIBLE ASSETS, NET |
|
21,627 |
|
28,129 |
|
|
|
|
|
|
|
|
|
|
|
|
|
GOODWILL |
|
|
7,000 |
|
7,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER ASSETS, NET |
|
|
18,484 |
|
4,447 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
$ |
1,552,258 |
$ |
1,379,884 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
Short-term debt |
|
$ |
45,664 |
$ |
48,084 |
|
|
|
Trade accounts payable |
|
|
109,385 |
|
99,262 |
|
|
|
Deferred revenue and customers' advances |
|
26,454 |
|
26,169 |
|
|
|
Other current liabilities |
|
|
64,259 |
|
73,600 |
|
|
|
|
Total current liabilities |
|
|
245,762 |
|
247,115 |
|
|
|
|
|
|
|
|
|
|
|
|
|
LONG-TERM DEBT |
|
|
295,485 |
|
296,144 |
|
|
|
|
|
|
|
|
|
|
|
|
|
LONG-TERM CUSTOMERS' ADVANCES |
|
37,674 |
|
41,874 |
|
|
|
|
|
|
|
|
|
|
|
|
|
LONG-TERM EMPLOYEE RELATED LIABILITIES |
|
14,170 |
|
14,176 |
|
|
|
|
|
|
|
|
|
|
|
|
|
DEFERRED TAX LIABILITY AND OTHER LONG-TERM
LIABILITIES |
85,380 |
|
97,961 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
|
678,471 |
|
697,270 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL SHAREHOLDERS' EQUITY |
|
873,787 |
|
682,614 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY |
$ |
1,552,258 |
$ |
1,379,884 |
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
September 30, |
|
September 30, |
|
June 30, |
|
|
|
|
|
|
|
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES |
|
|
$ |
354,557 |
|
$ |
326,209 |
|
$ |
345,059 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF REVENUES |
|
|
265,439 |
|
|
244,915 |
|
|
253,998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
|
|
89,118 |
|
|
81,294 |
|
|
91,061 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING COSTS AND EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
17,094 |
|
|
15,547 |
|
|
16,432 |
|
|
|
|
Marketing, general and administrative |
|
16,822 |
|
|
16,787 |
|
|
17,238 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,916 |
|
|
32,334 |
|
|
33,670 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING PROFIT |
|
55,202 |
|
|
48,960 |
|
|
57,391 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST EXPENSE, NET |
|
(1,776 |
) |
|
(3,272 |
) |
|
(2,070 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER FINANCING EXPENSE, NET |
|
(2,266 |
) |
|
(2,210 |
) |
|
(1,053 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE), NET |
|
(253 |
) |
|
5,081 |
|
|
142 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE INCOME TAX |
|
50,907 |
|
|
48,559 |
|
|
54,410 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX BENEFIT (EXPENSE) |
|
3,334 |
|
|
3,459 |
|
|
(2,683 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE NON CONTROLLING
INTEREST |
|
54,241 |
|
|
52,018 |
|
|
51,727 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON
CONTROLLING INTEREST |
|
1,033 |
|
|
(805 |
) |
|
(1,710 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET PROFIT |
|
$ |
55,274 |
|
$ |
51,213 |
|
$ |
50,017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC EARNINGS PER SHARE |
$ |
0.56 |
|
$ |
0.58 |
|
$ |
0.52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares |
|
97,947 |
|
|
87,821 |
|
|
96,365 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED EARNINGS PER SHARE |
$ |
0.54 |
|
$ |
0.52 |
|
$ |
0.49 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit used for diluted earnings per
share |
$ |
57,519 |
|
$ |
53,318 |
|
$ |
52,217 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares |
|
106,384 |
|
|
101,805 |
|
|
105,648 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOWER SEMICONDUCTOR LTD. AND
SUBSIDIARIES |
|
|
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED) |
|
|
(dollars and share count in thousands, except
per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended |
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES |
|
|
$ |
1,029,696 |
|
$ |
909,255 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF REVENUES |
|
|
764,749 |
|
|
693,886 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
|
|
264,947 |
|
|
215,369 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING COSTS AND EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
49,294 |
|
|
46,814 |
|
|
|
|
|
Marketing, general and administrative |
|
50,297 |
|
|
49,230 |
|
|
|
|
|
Nishiwaki Fab restructuring and impairment cost (income),
net |
|
-- |
|
|
(627 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
99,591 |
|
|
95,417 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING PROFIT |
|
165,356 |
|
|
119,952 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST EXPENSE, NET |
|
(6,057 |
) |
|
(9,627 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER FINANCING EXPENSE, NET |
|
(5,337 |
) |
|
(13,707 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAIN FROM ACQUISITION,
NET |
|
-- |
|
|
51,298 |
|
(a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME, NET |
|
|
400 |
|
|
9,443 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE INCOME TAX |
|
154,362 |
|
|
157,359 |
|
(a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX EXPENSE |
|
(1,348 |
) |
|
(446 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE NON CONTROLLING
INTEREST |
|
153,014 |
|
|
156,913 |
|
(a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON
CONTROLLING INTEREST |
|
(2,214 |
) |
|
(1,270 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET PROFIT |
|
$ |
150,800 |
|
$ |
155,643 |
|
(a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC EARNINGS PER SHARE |
$ |
1.57 |
|
$ |
1.81 |
|
(a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares |
|
96,085 |
|
|
86,220 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED EARNINGS PER SHARE |
$ |
1.49 |
|
$ |
1.61 |
|
(a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit used for diluted earnings per
share |
$ |
157,403 |
|
$ |
161,875 |
|
(a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares |
|
105,664 |
|
|
100,460 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Nine months ended September 30, 2016 included $51,298 gain
from San-Antonio fab acquisition from Maxim. |
|
TOWER SEMICONDUCTOR LTD. AND
SUBSIDIARIES |
|
UNAUDITED RECONCILIATION OF CERTAIN FINANCIAL
DATA |
|
(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 |
|
|
|
|
|
|
|
|
|
September 30, |
|
September 30, |
|
June 30, |
|
|
|
|
|
|
|
|
|
2017 |
|
2016 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION FROM GAAP NET PROFIT TO ADJUSTED NET
PROFIT: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP NET PROFIT |
|
$ |
55,274 |
$ |
51,213 |
|
$ |
50,017 |
|
|
|
Stock based
compensation |
|
|
3,750 |
|
2,337 |
|
|
2,319 |
|
|
|
Amortization of acquired intangible
assets |
|
|
2,161 |
|
2,367 |
|
|
2,246 |
|
|
|
Income tax benefit in relation to Nishiwaki
closure |
|
|
-- |
|
(6,472 |
) |
|
-- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED NET PROFIT |
|
$ |
61,185 |
$ |
49,445 |
|
$ |
54,582 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED NET PROFIT PER
SHARE: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
$ |
0.62 |
$ |
0.56 |
|
$ |
0.57 |
|
|
|
Diluted |
|
|
$ |
0.60 |
$ |
0.51 |
|
$ |
0.54 |
|
|
|
Fully diluted |
|
$ |
0.59 |
$ |
0.48 |
|
$ |
0.53 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED NET PROFIT USED TO CALCULATE PER SHARE
DATA: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
$ |
61,185 |
$ |
49,445 |
|
$ |
54,582 |
|
|
|
Diluted |
|
|
$ |
63,430 |
$ |
51,550 |
|
$ |
56,782 |
|
|
|
Fully diluted |
|
$ |
63,430 |
$ |
51,550 |
|
$ |
56,782 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NUMBER OF SHARES AND OTHER SECURITIES USED TO CALCULATE
PER SHARE DATA: |
|
|
|
|
|
|
|
Basic |
|
|
|
97,947 |
|
87,821 |
|
|
96,365 |
|
|
|
Diluted |
|
|
|
106,384 |
|
101,805 |
|
|
105,648 |
|
|
|
Fully diluted |
|
|
107,729 |
|
107,147 |
|
|
107,375 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA CALCULATION: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP OPERATING PROFIT |
|
$ |
55,202 |
$ |
48,960 |
|
$ |
57,391 |
|
|
|
|
Depreciation of fixed
assets |
|
|
47,544 |
|
43,110 |
|
|
46,360 |
|
|
|
|
Stock based compensation |
|
|
3,750 |
|
2,337 |
|
|
2,319 |
|
|
|
|
Amortization of acquired intangible
assets |
|
|
2,161 |
|
2,367 |
|
|
2,246 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
|
$ |
108,657 |
$ |
96,774 |
|
$ |
108,316 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOWER SEMICONDUCTOR LTD. AND
SUBSIDIARIES |
CONSOLIDATED SOURCES AND USES REPORTS
(UNAUDITED) |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T h r e e
m o n t h s e n d e
d |
|
|
|
September 30, |
|
|
September 30, |
|
June 30, |
|
|
|
2017 |
|
|
|
2016 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
Cash and short-term deposits - beginning of
period |
$ |
483,603 |
|
|
$ |
311,062 |
|
$ |
432,113 |
|
|
|
|
|
|
|
|
|
|
|
Cash from
operations |
|
103,916 |
|
(b) |
|
86,410 |
|
|
84,294 |
|
|
Investments in
property and equipment, net |
|
(41,708 |
) |
|
|
(54,896 |
) |
|
(41,312 |
) |
|
Exercise of
warrants and options, net |
|
1,027 |
|
|
|
21,918 |
|
|
14,254 |
|
|
Debt received
(repaid), net |
|
(15,932 |
) |
|
|
8,554 |
|
|
(5,655 |
) |
|
Effect of
Japanese Yen exchange rate change over cash balance |
|
(630 |
) |
|
|
2,336 |
|
|
(91 |
) |
|
Long-term deposits and other investments, including
marketable securities |
(49,869 |
) |
|
|
(12,551 |
) |
|
-- |
|
|
|
|
|
|
|
|
|
|
Cash and short-term deposits - end of period |
$ |
480,407 |
|
|
$ |
362,833 |
|
$ |
483,603 |
|
|
|
|
|
|
|
|
|
|
Free Cash Flow |
$ |
62,208 |
|
(b) |
$ |
31,463 |
|
$ |
42,982 |
|
|
|
|
|
|
|
|
|
|
(b) |
Cash from operations and free cash flow for the three
months ended September 30, 2017 included $18,000 received from
Tacoma as announced on August 21, 2017. |
|
|
|
|
|
|
|
|
|
TOWER SEMICONDUCTOR LTD. AND
SUBSIDIARIES |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (UNAUDITED) |
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended |
|
Three months ended |
|
|
|
|
|
|
|
|
|
September 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
|
|
|
|
|
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS - OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit for the period |
$ |
153,014 |
|
$ |
156,913 |
|
$ |
54,241 |
|
$ |
52,018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
157,101 |
|
|
145,830 |
|
|
55,014 |
|
|
49,180 |
|
|
Effect of indexation, translation and fair value
measurement on debt |
|
10,584 |
|
|
10,974 |
|
|
(1,177 |
) |
|
2,822 |
|
|
Other expense (income), net |
|
(400 |
) |
|
(9,443 |
) |
|
253 |
|
|
(5,081 |
) |
|
Gain from acquisition, net |
|
-- |
|
|
(51,298 |
) |
|
-- |
|
|
-- |
|
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
|
Trade accounts receivable |
|
(7,352 |
) |
|
(11,904 |
) |
|
361 |
|
|
(1,469 |
) |
|
Other current
assets |
|
(8,766 |
) |
|
(326 |
) |
|
2,980 |
|
|
4,328 |
|
|
Inventories |
|
(4,369 |
) |
|
(21,769 |
) |
|
(4,636 |
) |
|
(6,245 |
) |
|
Trade accounts payable |
|
(5,863 |
) |
|
12,897 |
|
|
4,795 |
|
|
2,624 |
|
|
Deferred revenue and customers' advances |
|
(3,921 |
) |
|
17,947 |
|
|
9,378 |
|
|
(5,377 |
) |
|
Other current liabilities |
|
(9,984 |
) |
|
2,303 |
|
|
(13,760 |
) |
|
(6,938 |
) |
|
Long-term employee related liabilities |
|
(765 |
) |
|
(413 |
) |
|
(274 |
) |
|
(25 |
) |
|
Deferred tax liability, net |
|
(8,929 |
) |
|
(6,078 |
) |
|
(3,259 |
) |
|
573 |
|
|
Net cash provided by operating activities |
|
270,350 |
|
(c) |
245,633 |
|
|
103,916 |
|
(c) |
86,410 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS - INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments in property and equipment,
net |
|
(123,368 |
) |
|
(166,752 |
) |
|
(41,708 |
) |
|
(54,896 |
) |
|
Long-term deposits and other investments, including
marketable securities |
|
(49,869 |
) |
|
17,049 |
|
|
(49,869 |
) |
|
(12,551 |
) |
|
Net cash used in investing activities |
|
(173,237 |
) |
|
(149,703 |
) |
|
(91,577 |
) |
|
(67,447 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS - FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt received (repaid), net |
|
(33,392 |
) |
|
42,744 |
|
|
(15,932 |
) |
|
8,554 |
|
|
Exercise of warrants and options, net |
|
28,037 |
|
|
28,159 |
|
|
1,027 |
|
|
21,918 |
|
|
Dividend payment to
Panasonic |
|
(4,378 |
) |
|
(2,563 |
) |
|
-- |
|
|
-- |
|
|
Net cash provided by (used in) financing
activities |
|
(9,733 |
) |
|
68,340 |
|
|
(14,905 |
) |
|
30,472 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE
CHANGE |
|
3,650 |
|
|
22,988 |
|
|
(630 |
) |
|
2,336 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCREASE (DECREASE) IN CASH AND
SHORT-TERM DEPOSITS |
91,030 |
|
|
187,258 |
|
|
(3,196 |
) |
|
51,771 |
|
|
CASH AND SHORT-TERM DEPOSITS -
BEGINNING OF PERIOD |
389,377 |
|
|
175,575 |
|
|
483,603 |
|
|
311,062 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND SHORT-TERM DEPOSITS - END OF
PERIOD |
$ |
480,407 |
|
$ |
362,833 |
|
$ |
480,407 |
|
$ |
362,833 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) |
Net cash provided by operating activities for the nine
months and three months periods ended September 30, 2017 included
$18,000 received from Tacoma as announced on August 21,
2017. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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