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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, 2020 we are in compliance with all such covenants included in our banks’ agreements, bond G indenture and others), (x) pending litigation, (xi) new customer engagements, qualification and production ramp-up at our facilities, including TPSCo and the San Antonio facility, (xii) 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, (xiii) receipt of orders that are lower than the customer purchase commitments, (xiv) failure to receive orders currently expected, (xv) possible incurrence of additional indebtedness, (xvi) effect of global recession, unfavorable economic conditions and/or credit crisis, (xvii) our ability to accurately forecast financial performance, which is affected by limited order backlog and lengthy sales cycles, (xviii) possible situations of obsolete inventory if forecasted demand exceeds actual demand when we manufacture products before receipt of customer orders, (xix) the cyclical nature of the semiconductor industry and the resulting periodic overcapacity, fluctuations in operating results and future average selling price erosion, (xx) the execution of debt re-financing and/or fundraising to enable the service of our debt and/or other liabilities and/or for strategic opportunities and the possible unavailability of such financing and/ or the availability of such financing in unfavorable terms , (xxi) 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, (xxii) the purchase of equipment to increase capacity, the timely completion of the equipment installation, technology transfer and raising the funds therefor, (xxiii) the concentration of our business in the semiconductor industry, (xxiv) product returns, (xxv) 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, (xxvi) competing effectively, (xxvii) use of outsourced foundry services by both fabless semiconductor companies and integrated device manufacturers; (xxviii) achieving acceptable device yields, product performance and delivery times, (xxix) 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, (xxx) our fab3 landlord’s construction project adjacent to our fabrication facility, including possible temporary reductions or interruptions in the supply of utilities and/ or fab manufacturing, as well as claims that our noise abatement efforts are not adequate under the terms of the amended lease; (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) potential engagement for fab establishment, joint venture and/or capital lease transactions for capacity enhancement in advanced technologies, (xxxvi) potential effect on TPSCo and the Company due to the sale of PSCS (a company holding 49% of TPSCo) by Panasonic to Nuvoton, (xxxvii) industry and market impact due to the coronavirus and its potential impact on our business, operational continuity, supply chain, revenue and profitability; (xxxviii) potential security, cyber and privacy breaches, including the recently announced security incident, and (xxxix) business interruption due to fire and other natural disasters, the security situation in Israel and other events beyond our control such as power interruptions.

 

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TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES

		September 30,				June 30,				December 31,
		2020				2020				2019
A S S E T S
CURRENT ASSETS
Cash and cash equivalents		$	207,704			$	258,793			$	355,561
Short-term deposits			313,029				269,263				215,609
Marketable securities			183,946				195,886				176,070
Trade accounts receivable			118,111				128,401				126,966
Inventories			204,933				210,129				192,256
Other current assets			30,379				28,158				22,019
Total current assets			1,058,102				1,090,630				1,088,481
LONG-TERM INVESTMENTS			41,303				41,219				40,085
PROPERTY AND EQUIPMENT, NET			780,596				765,895				681,939
GOODWILL AND INTANGIBLE ASSETS, NET			15,806				16,298				17,281
DEFERRED TAX AND OTHER LONG-TERM ASSETS, NET			88,878				91,834				105,047
TOTAL ASSETS		$	1,984,685			$	2,005,876			$	1,932,833
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt		$	86,717			$	79,668			$	65,932
Trade accounts payable			104,354				154,517				119,199
Deferred revenue and customers' advances			9,660				8,455				10,322
Other current liabilities			58,098				68,192				57,603
Total current liabilities			258,829				310,832				253,056
LONG-TERM DEBT			229,266				219,764				245,821
LONG-TERM CUSTOMERS' ADVANCES			25,780				27,570				28,196
LONG-TERM EMPLOYEE RELATED LIABILITIES			16,717				14,970				13,285
DEFERRED TAX AND OTHER LONG-TERM LIABILITIES			40,536				40,596				45,752
TOTAL LIABILITIES			571,128				613,732				586,110
TOTAL SHAREHOLDERS' EQUITY			1,413,557				1,392,144				1,346,723
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	1,984,685			$	2,005,876			$	1,932,833

 

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,				June 30,				September 30,
		2020				2020				2019
REVENUES		$	310,212			$	310,090			$	312,122
COST OF REVENUES			256,751				252,385				253,841
GROSS PROFIT			53,461				57,705				58,281
OPERATING COSTS AND EXPENSES:
Research and development			19,569				19,424				18,722
Marketing, general and administrative			14,803				16,154				16,840
			34,372				35,578				35,562
OPERATING PROFIT			19,089				22,127				22,719
FINANCING AND OTHER INCOME (EXPENSE), NET			(565	)			1,831				(426	)
PROFIT BEFORE INCOME TAX			18,524				23,958				22,293
INCOME TAX BENEFIT (EXPENSE), NET			(2,798	)			(2,484	)			61
NET PROFIT			15,726				21,474				22,354
Net income attributable to non-controlling interest			(528	)			(2,422	)			(166	)
NET PROFIT ATTRIBUTABLE TO THE COMPANY		$	15,198			$	19,052			$	22,188
BASIC EARNINGS PER SHARE		$	0.14			$	0.18			$	0.21
Weighted average number of shares			107,475				106,956				106,644
DILUTED EARNINGS PER SHARE		$	0.14			$	0.18			$	0.21
Weighted average number of shares			108,500				108,277				107,601
RECONCILIATION FROM GAAP NET PROFIT TO ADJUSTED NET PROFIT:
GAAP NET PROFIT		$	15,198			$	19,052			$	22,188
Stock based compensation			3,460				3,795				3,775
Amortization of acquired intangible assets			490				493				492
ADJUSTED NET PROFIT		$	19,148			$	23,340			$	26,455
ADJUSTED BASIC AND DILUTED EARNINGS PER SHARE		$	0.18			$	0.22			$	0.25

		N i n e     m o n t h s     e n d e d
		September 30,
		2020				2019
REVENUES		$	920,473			$	928,293
COST OF REVENUES			756,764				753,454
GROSS PROFIT			163,709				174,839
OPERATING COSTS AND EXPENSES:
Research and development			58,407				56,702
Marketing, general and administrative			47,648				50,319
			106,055				107,021
OPERATING PROFIT			57,654				67,818
FINANCING AND OTHER INCOME (EXPENSE), NET			(847	)			1,247
PROFIT BEFORE INCOME TAX			56,807				69,065
INCOME TAX EXPENSE, NET			(3,576	)			(588	)
NET PROFIT			53,231				68,477
Net loss (income) attributable to non-controlling interest			(1,961	)			864
NET PROFIT ATTRIBUTABLE TO THE COMPANY		$	51,270			$	69,341
BASIC EARNINGS PER SHARE		$	0.48			$	0.65
Weighted average number of shares			107,083				106,103
DILUTED EARNINGS PER SHARE		$	0.47			$	0.65
Weighted average number of shares			108,311				107,252
RECONCILIATION FROM GAAP NET PROFIT TO ADJUSTED NET PROFIT:
GAAP NET PROFIT		$	51,270			$	69,341
Stock based compensation			11,798				11,482
Amortization of acquired intangible assets			1,293				2,627
ADJUSTED NET PROFIT		$	64,361			$	83,450
ADJUSTED EARNINGS PER SHARE:
Basic		$	0.60			$	0.79
Diluted		$	0.59			$	0.78