TowerJazz Announces Second Quarter 2016 Results: Record Revenue of $305 million with Year over Year Growth of 29%, Increased Margins and Net Profit

August 4, 2016 at 4:06 AM EDT

Provides Third Quarter Revenue Guidance of $325 million, 33% Year over Year Growth

MIGDAL HAEMEK, Israel, Aug. 04, 2016 (GLOBE NEWSWIRE) -- TowerJazz (NASDAQ:TSEM) (TASE:TSEM) today reported results for the second quarter of 2016 ended June 30, 2016.

Highlights

  • Record revenues for the second quarter of 2016 of $305 million, 29% year over year growth;
  • Record EBITDA of $87 million, up 48% year-over-year;
  • Net profit of $38 million with basic earnings per share of $0.45, as compared with $8 million, or $0.10 basic earnings per share, in the second quarter of last year;
    • Excluding San Antonio fab acquisition gain and banks’ early repayment impact, net profit for the second quarter of 2016 was $35 million, analogous to $25 million in the first quarter of 2016 and $8 million in the second quarter of 2015;
  • Cash from operations of $82 million  as compared to $51 million for the second quarter of 2015, with free cash flow of $27 million as compared with $12 million for the second quarter of 2015;
  • Cash and short-term deposits balance as of June 30, 2016 of $311 million as compared to $245 million as of March 31, 2016;
  • Early repayment of Israeli bank loans through issuance of unsecured straight bonds due 2020-2023 carrying 2.79% coupon enabling greater business flexibility;
  • Third quarter revenue guidance with mid-range of $325 million, representing 33% year over year growth; 11 consecutive quarters of year-over-year growth and 6 consecutive quarters of quarter over quarter growth.

CEO Commentary
Mr. Russell Ellwanger, Chief Executive Officer of TowerJazz, commented, “Our strategy to answer the major analog trends, aligned with customers that are the leaders in their respective sectors, has proven itself. Having achieved a $1.2 billion annualized revenue run rate in the second quarter of 2016 with annualized $150 million net profit, and guiding a $1.3 billion run rate for the third quarter, up 30% over the fourth quarter of 2015 achieved target of $1 billion run rate, is a substantial verification of this strategy. Our major focus remains those trends that drive the Internet of Things namely seamless connectivity, low power consumption and sensors. To address those trends, our business units serve multiple diversified and growing application segments with unique and differentiated technology offerings.”

Second Quarter Results Overview
Revenues for the second quarter of 2016 were a record of $305 million, reflecting 29% growth as compared with $236 million in the second quarter of 2015 and 10% higher than $278 million in the immediately preceding quarter.

Second quarter of 2016 gross, operating profits and margins increased as compared with the second quarter of 2015 and with the immediately preceding quarter, mainly driven by the success of our strategy for capacity growth executed in Fab 2 and Fab 3, cross qualification and offloading optimization activities, as well as TPSCo third party customers’ revenue growth.

Gross profit for the second quarter of 2016 was $73 million or 24% gross margin. This represents an increase as compared with $52 million in gross profit in the second quarter of 2015 or 22% gross margin.

Operating profit for the second quarter of 2016 was $40 million, or 13% operating margin, as compared with $22 million reported in the second quarter of 2015 with 9% operating margin.

Net profit for the second quarter of 2016 was $38 million, or $0.45 basic earnings per share. Net profit for the second quarter of 2016 included $7 million non-cash financing expenses relating to the early repayment of the Israeli banks’ loans recorded in accordance with US GAAP ASC 825 and $10 million net gain from the acquisition of the San Antonio fabrication facility by TowerJazz Texas (“TJT”), calculated in accordance with US GAAP ASC-805 “Business Combinations”. Provisional gain from the San Antonio fab acquisition, net recorded during the six months ended June 30, 2016, totaled $51 million. Net profit was $8 million in the second quarter of 2015, and $66 million in the first quarter of 2016, which included $41 million gain from the San Antonio fab acquisition.

Excluding the San Antonio fab acquisition gain and banks’ early repayment impact, net profit for the second quarter of 2016 was $35 million, analogous to $25 million in the first quarter of 2016 and $8 million in the second quarter of 2015.

EBITDA for the second quarter of 2016 totaled $87 million, representing a 29% EBITDA margin. This represents a 48% increase as compared with $59 million or 25% EBITDA margin in the second quarter of 2015 and a 12% sequential increase as compared with $78 million or 28% EBITDA margin in the immediately preceding quarter.

On an adjusted basis, as described and reconciled in the tables below, adjusted net profit for the second quarter of 2016 was $40 million, as compared with $12 million for the second quarter of 2015 and $32 million in the immediately preceding quarter.

During the quarter, $113 million, net of fees was raised from the issuance of bonds, which carry a 2.79% annual coupon and are repayable in 2020-2023 (of which $2 million were held in escrow and received in July 2016 after all Israeli bank liens were released). Following this fundraising, the Company prepaid its entire $78 million outstanding Israeli bank loans.

During the second quarter of 2016, the Company generated $82 million cash from operations and invested $54 million in fixed assets, resulting in $27 million positive free cash flow. During the quarter, the Company received customer prepayments of $11 million, net, which were invested for capacity expansion equipment that are included in the $54 million investments noted above.

Cash and short-term deposits as of June 30, 2016 were $311 million, as compared with $245 million as of March 31, 2016, $206 million as of December 31, 2015 and $143 million as of June 30, 2015.

Shareholders' equity as of June 30, 2016 was $559 million, an increase of 11% as compared with $504 million as of March 31, 2016, an increase of 45% as compared with $386 million as of December 31, 2015 and an increase of 86% as compared with $300 million as of June 30, 2015.

Net debt amounted to $51 million as of June 30, 2016 as compared with net debt of $65 million as of March 31, 2016 and net debt of $105 million as of December 31, 2015.

First Half Results Overview
Revenues for the 2016 first half were a record of $583 million, reflecting 26% growth as compared with the first half of 2015.

Gross and operating profit for the first half of 2016 were $134 million and $71 million, respectively, representing 23% and 12% margins, as compared with $85 million and $24 million, or 19% and 5% margins, respectively, in the first half of 2015.

Net profit for the first half of 2016 was $104 million, or $1.22 in basic earnings per share. Net profit for the first half of 2016 includes $51 million gain from of the acquisition of San Antonio fab and $7 million non-cash financing expenses relating to the Israeli banks loans early repayment.  Net loss for the six months ended June 30, 2015 was $65 million and included $73 million non-cash finance expense associated with Bonds Series F accelerated conversion in accordance with US GAAP ASC 470-20.

EBITDA for the first half totaled $165 million, representing a 28% EBITDA margin. This represents a 50% increase as compared with $110 million, or 24% EBITDA margin, in the first half of 2015.

Business Outlook
TowerJazz expects revenues for the third quarter of 2016 ending September 30, 2016 to be $325 million, with an upward or downward range of 5%, representing approximately 33% year over year revenue growth as compared with the third quarter of 2015 and 7% growth as compared with the second quarter of 2016.

Teleconference and Webcast
TowerJazz will host an investor conference call today, August 4, 2016, 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 second quarter 2016 and its third quarter 2016 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), 03-918-0610 (Israel), +972-3-918-0610 (International).  For those who are not available to listen to the live broadcast, the call will be archived for 90 days.

The Company presents its financial statements in accordance with U.S. GAAP. Some of the financial information in this release, including in the financial tables below, which we refer to in this release as “adjusted financial measures”, are 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) gain from acquisition, net; (4) non-cash financing expenses related to bank loans early repayment and (5) other non-recurring items such as acquisition related costs and Nishiwaki Fab restructuring costs and impairment. 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 reconciliation between the adjusted financial measures and the comparable GAAP financial measures. As used in this release, the term Earnings Before Interest Tax Depreciation and Amortization (EBITDA) consists of profit or loss, according to U.S. GAAP, excluding Nishiwaki Fab restructuring costs and impairment, gain from acquisition, net, acquisition related costs, interest and other financing expenses (net), other income (expense), net, taxes, non-controlling interest, depreciation and amortization and stock based compensation expenses. 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. Net debt, as presented in this release, is comprised of the outstanding principal amount of banks’ loans (in the amounts of approximately $175 million, $245 million and $246 million as of June 30, 2016, March 31, 2016 and December 31, 2015, respectively) and the outstanding principal amount of debentures (in the amounts of approximately $187 million, $65 million and $65 million as of June 30, 2016, March 31, 2016 and December 31, 2015, respectively), less cash and short-term deposits (in the amounts of approximately $311 million, $245 million and $206 million as of June 30, 2016, March 31, 2016 and December 31, 2015, respectively).

About TowerJazz
Tower Semiconductor Ltd. (NASDAQ:TSEM) (TASE:TSEM) and its fully owned U.S. subsidiaries Jazz Semiconductor, Inc. and TowerJazz Texas Inc., operate collectively under the brand name TowerJazz, the global specialty foundry leader. TowerJazz manufactures integrated circuits, offering a broad range of customizable process technologies including: SiGe, BiCMOS, mixed-signal/CMOS, RF CMOS, CMOS image sensor, integrated power management (BCD and 700V), and MEMS. TowerJazz also provides a world-class design enablement platform 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 additional facilities in Japan (two 200mm and one 300mm) through TowerJazz Panasonic Semiconductor Co. (TPSCo), established with Panasonic Corporation of which TowerJazz has the majority holding. Through TPSCo, TowerJazz provides leading edge 45nm CMOS, 65nm RF CMOS and 65nm 1.12um pixel technologies, including the most advanced image sensor technologies. For more information, please visit www.towerjazz.com or www.tpsemico.com.

CONTACTS:
Noit Levi | TowerJazz | +972 4 604 7066 | Noit.levi@towerjazz.com
Gavriel Frohwein | GK Investor Relations | (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, (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 our debt re-financing, restructuring and/or fundraising to enable the service and/or re-financing of our debt and 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 therefore, (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; and (xxxv) 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 (UNAUDITED)  
(dollars in thousands)  
                               
                               
              June 30,     March 31,     December 31,    
              2016     2016     2015    
                               
A S S E T S                      
                               
    CURRENT ASSETS                      
      Cash and short term deposits $ 311,062   $ 244,577   $ 205,575    
    Trade accounts receivable   126,839     122,918     110,065    
    Other receivables     13,993     9,363     7,376    
    Inventories     136,125     128,031     105,681    
    Other current assets     21,581     16,666     18,030    
      Total current assets     609,600     521,555     446,727    
                                   
  LONG-TERM INVESTMENTS   11,861     11,816     11,737    
                               
  PROPERTY AND EQUIPMENT, NET   625,163     582,250     459,533    
                               
  INTANGIBLE ASSETS, NET   34,807     35,601     34,468    
                               
  GOODWILL     7,000     7,000     7,000    
                               
  OTHER ASSETS, NET     4,586     4,844     5,903    
        TOTAL ASSETS   $ 1,293,017   $ 1,163,066   $ 965,368    
                               
                               
LIABILITIES AND SHAREHOLDERS' EQUITY                    
                               
  CURRENT LIABILITIES                      
    Short term debt   $ 38,174   $ 49,150   $ 33,259    
    Trade accounts payable     98,829     104,617     91,773    
    Deferred revenue and customers' advances   18,802     31,061     23,373    
    Other current liabilities     87,386     73,929     62,714    
        Total current liabilities   243,191     258,757     211,119    
                               
  LONG-TERM DEBT     320,444     259,357     256,019    
                               
  LONG-TERM CUSTOMERS' ADVANCES   48,999     28,444     21,102    
                               
  EMPLOYEE RELATED LIABILITIES   14,029     14,387     14,189    
                               
  DEFERRED TAX LIABILITY   107,585     97,754
    77,353
   
                               
      Total liabilities     734,248     658,699     579,782    
                               
  TOTAL SHAREHOLDERS' EQUITY   558,769     504,367     385,586    
        TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 1,293,017   $ 1,163,066   $ 965,368    
                               

 

 
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES
CONSOLIDATED SOURCES AND USES REPORT (UNAUDITED)
(dollars in thousands)
                   
                   
      Three months ended
      June 30,     March 31,     June 30,
        2016         2016         2015  
                   
Cash and short term deposits - beginning of period $   244,577     $   205,575     $   134,216  
                   
    Cash from operations     81,781         77,442         50,921  
  Investments in property and equipment, net     (54,323 )       (57,533 )       (38,628 )
  Exercise of warrants and options, net     360         5,881         (817 )
  Debt received (repaid)     27,444         6,746         (2,000 )
  Effect of Japanese Yen exchange rate change and others       11,223         9,029         (1,189
  TPSCo dividend to Panasonic     --         (2,563 )       --  
Cash and short term deposits - end of period $   311,062     $   244,577     $   142,503  
                   
                   
                   
      Six months ended      
      June 30,     June 30,      
        2016         2015        
                   
Cash and short term deposits - beginning of period $   205,575     $   187,167        
                   
  Cash from operations     159,223         91,211        
  Investments in property and equipment, net     (111,856 )       (66,572 )      
  Exercise of warrants and options, net     6,241         5,654        
  Debt received (repaid)     34,190         (48,683 )      
  Nishiwaki's employees retirement related payments     --         (24,907 )      
  Effect of Japanese Yen exchange rate change and others     20,252         (1,367 )       
  TPSCo dividend to Panasonic     (2,563 )       --        
Cash and short term deposits - end of period $   311,062     $   142,503        
                   

 

   
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)  
(dollars and share count in thousands, except per share data)  
                                 
                                 
                  Three months ended  
                  June 30,     March 31,     June 30,  
                    2016         2016         2015    
                  GAAP     GAAP     GAAP  
                                 
  REVENUES     $   305,003     $   278,043     $   235,561    
                                   
  COST OF REVENUES       232,275         216,696         183,101    
                                   
      GROSS PROFIT       72,728         61,347         52,460    
                                 
  OPERATING COSTS AND EXPENSES                  
                                 
    Research and development     16,030         15,237         15,148    
    Marketing, general and administrative     16,520         15,923         15,806    
    Nishiwaki Fab restructuring costs and impairment, net     --         (627 )       --    
                                 
                    32,550         30,533         30,954    
                                 
      OPERATING PROFIT      40,178         30,814         21,506    
                                 
  INTEREST EXPENSE, NET     (2,997 )       (3,358 )       (3,613 )  
                                 
  OTHER NON CASH FINANCING EXPENSE, NET     (7,528 )       (3,969 )       (7,271 )  
                                 
  GAIN FROM ACQUISITION, NET      10,158         41,140         --    
                                 
  OTHER INCOME (EXPENSE), NET     4,362         --         (4 )  
                                 
      PROFIT BEFORE INCOME TAX     44,173         64,627         10,618    
                                 
  INCOME TAX EXPENSE     (3,826 )       (79 )       (2,468 )  
      PROFIT BEFORE NON CONTROLLING INTEREST      40,347         64,548         8,150    
                                 
  NON CONTROLLING INTEREST     (1,861 )       1,396         (363 )  
      NET PROFIT    $   38,486     $   65,944     $   7,787    
                                 
                                 
  BASIC EARNINGS PER ORDINARY SHARE $   0.45     $   0.78     $   0.10    
                                 
  Weighted average number of ordinary shares outstanding       86,300           84,521           76,696    
                                 
                                 
  DILUTED EARNINGS PER ORDINARY SHARE $   0.40     $   0.69     $   0.09    
                                 
  Net profit used for diluted earnings per share $   40,556     $   68,002     $   7,787    
                                 
  Weighted average number of ordinary shares outstanding -                    
    used for diluted earnings per share     100,163         98,777         87,558    
                                 

 

   
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)  
(dollars and share count in thousands, except per share data)  
                           
                           
                  Six months ended  
                  June 30,  
                    2016         2015    
                  GAAP     GAAP  
                           
  REVENUES     $   583,046     $   461,778    
                           
  COST OF REVENUES       448,971         376,326    
                           
      GROSS PROFIT       134,075         85,452    
                           
  OPERATING COSTS AND EXPENSES            
                           
    Research and development     31,267         29,985    
    Marketing, general and administrative     32,443         31,967    
    Nishiwaki Fab restructuring costs and impairment, net     (627 )       --    
                           
                    63,083         61,952    
                           
        OPERATING PROFIT      70,992         23,500    
                           
  INTEREST EXPENSE, NET     (6,355 )       (7,246 )  
                           
  OTHER NON CASH FINANCING EXPENSE, NET     (11,497 )       (91,867 )  (a)
                           
  GAIN FROM ACQUISITION, NET      51,298         --    
                           
  OTHER INCOME (EXPENSE), NET     4,362         (13 )  
                           
      PROFIT (LOSS) BEFORE INCOME TAX     108,800         (75,626 )  
                           
  INCOME TAX BENEFIT (EXPENSE)     (3,905 )       8,426    
      PROFIT (LOSS) BEFORE NON CONTROLLING INTEREST      104,895         (67,200 )  
                           
  NON CONTROLLING INTEREST     (465 )       1,923    
      NET PROFIT (LOSS) $   104,430     $   (65,277 )  
                           
                           
  BASIC EARNINGS (LOSS) PER ORDINARY SHARE $   1.22     $   (0.93 )  
                           
  Weighted average number of ordinary shares outstanding       85,410           70,175    
                           
                           
  DILUTED EARNINGS PER ORDINARY SHARE $   1.09          
                           
  Net profit used for diluted earnings per share $   108,556          
                           
  Weighted average number of ordinary shares outstanding -            
    used for diluted earnings per share     99,546          
                           
                           
(a) Included $73,121 associated with Bonds Series F accelerated conversion in the six months ended June 30, 2015 in accordance with US GAAP ASC 470-20.
               

 

   
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES  
UNAUDITED RECONCILIATION OF ADJUSTED FINANCIAL DATA AND ADJUSTED EBITDA CALCULATION  
(dollars and share count in thousands, except per share data)  
                               
                Three months ended  
                June 30,     March 31,      June 30,  
                  2016         2016       2015  
                               
RECONCILIATION FROM GAAP NET PROFIT TO ADJUSTED NET PROFIT                    
                               
  GAAP NET PROFIT   $   38,486     $   65,944     $ 7,787  
        Stock based compensation        2,532         2,156       1,943  
    Amortization of acquired intangible assets        2,395         2,241       2,258  
    Non cash financing expense related to bank loan early repayment (1)         6,653         --         --  
    Gain from acquisition, net       (10,158 )       (41,140 )       --  
    Other non-recurring items, see (2) below       --         2,378         --  
  ADJUSTED NET PROFIT   $   39,908     $   31,579     $ 11,988  
                               
  ADJUSTED NET PROFIT PER SHARE                    
    Basic       $   0.46     $   0.37     $ 0.16  
    Diluted     $   0.42     $   0.34     $ 0.14  
    Fully diluted, see (3) below   $   0.39     $   0.31     $ 0.16  
                               
  ADJUSTED NET PROFIT USED TO CALCULATE PER SHARE DATA:                    
    Basic       $     39,908     $     31,579     $   11,988  
    Diluted     $     41,978     $     31,579     $   11,988  
    Fully diluted   $     41,978     $     33,637     $   16,531  
                               
  Number of shares and other securities used for the above calculation:                    
    Basic             86,300           84,521         76,696  
    Diluted           100,163           92,902         87,558  
    Fully diluted, see (3) below         107,056           106,865         103,577  
                               
                               
EBITDA CALCULATION:                    
                               
  GAAP OPERATING PROFIT    $   40,178     $   30,814     $ 21,506  
    Cost of revenues:                    
      Depreciation of fixed assets        41,910         40,064       32,912  
      Stock based compensation       1,160         989       540  
      Amortization of acquired intangible assets       2,207         2,053       2,070  
      Acquisition related non-recurring costs       --         3,005         --  
    Research and development:                      
      Stock based compensation       533         528       469  
    Marketing, general and administrative:
                     
      Stock based compensation       839         639       934  
      Amortization of acquired intangible assets       188         188       188  
    Nishiwaki Fab restructuring costs and impairment, net       --         (627 )       --  
  EBITDA       $   87,015     $   77,653     $ 58,619  
                               
  (1 ) In accordance with US GAAP ASC 825-10.  
  (2 ) Q1 2016 includes mainly acquisition related costs.  
  (3 ) Fully diluted share count includes all issued and outstanding securities as of end of the applicable period.  
         

 

   
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)  
(dollars in thousands)  
                         
                Three months ended  
                June 30,     March 31,  
                  2016         2016    
                         
CASH FLOWS - OPERATING ACTIVITIES            
                         
  Net profit for the period $   40,347     $   64,548    
                         
  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     48,117         48,582    
        Effect of indexation, translation and fair value measurement on debt       6,700         1,401    
        Other income, net     (4,362 )       --    
        Gain from acquisition     (10,158 )       (41,140 )  
      Changes in assets and liabilities:            
        Trade accounts receivable     (1,916 )       (8,519 )  
        Other receivables and other current assets       (5,476 )       822    
        Inventories     (6,300 )       (9,224 )  
        Trade accounts payable     130         10,145    
        Deferred revenue and customers' advances      8,294         15,030    
        Other current liabilities     11,194         (1,953 )  
        Deferred tax liability, net      (4,789 )       (2,250 )  
          Net cash provided by operating activities     81,781         77,442    
                         
CASH FLOWS - INVESTING ACTIVITIES            
                         
    Investments in property and equipment, net     (54,323 )       (57,533 )  
  Deposits and other investments, net     19,600         10,000    
          Net cash used in investing activities     (34,723 )       (47,533 )  
                         
CASH FLOWS - FINANCING ACTIVITIES            
                         
  Debt received, net of repayment     27,444         6,746    
  Exercise of warrants and options, net     360         5,881    
  Dividend payment to Panasonic      --         (2,563 )  
          Net cash provided by financing activities     27,804         10,064    
                         
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGE     11,623         9,029    
                         
INCREASE IN CASH AND CASH EQUIVALENTS      86,485         49,002    
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD      224,577         175,575    
CASH AND CASH EQUIVALENTS - END OF PERIOD     311,062         224,577    
                         
  SHORT TERM DEPOSITS     --         20,000    
CASH AND SHORT TERM DEPOSITS - END OF PERIOD  $   311,062     $   244,577    
                         

 

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