TowerJazz (NASDAQ:TSEM) (TASE:TSEM) reported today its results for
the fourth quarter and full year ended December 31, 2017.
Highlights of the Full Year
2017:
- Record revenues of $1.39 billion, up 11% year over year;
- Organic revenues up 23% year over year.
- Record EBITDA of $425 million, up 16% year over year;
- Record net profit of $298 million, as compared to $204
million for the full year of 2016;
- Record free cash flow of $191 million, as compared to free
cash flow of $118 million for the full year of 2016.
Highlights of the Fourth Quarter of
2017:
- Record revenues of $358 million, as compared with $340
million in the fourth quarter of 2016;
- EBITDA of $107 million and net profit of $147 million, as
compared to $105 million and $48 million in the fourth quarter of
2016, respectively;
- Free cash flow of $44 million, as compared to free cash
flow of $39 million for the fourth quarter of 2016.
CEO End of Year
CommentaryMr. Russell Ellwanger, Chief Executive
Officer of TowerJazz, commented: “2017
was the best year for the Company to date, as seen in the across
the board record financial results, as well as, and maybe more
importantly, the realization of several key strategic initiatives,
providing a palpable foundation for growth well into the next
decade. We continue, as a team, to be committed and passionate to
create value. We are confident that the strength and capabilities
of the Company - our technology offerings, long-term customer and
partner relationships, and devoted worldwide employee base, will
propel us to even greater heights.”
Full Year 2017 Financial
ResultsRevenues for 2017 were at a record of $1.39
billion, reflecting an 11% growth as compared to $1.25 billion for
the prior year. Year over year organic growth, excluding the
Panasonic and Maxim long-term committed contracts, was 23%.
Gross profit for 2017 was at a record of $354
million, an increase of 17% as compared to $303 million in the
prior year.
Operating profit for 2017 was at a record of
$220 million, an increase of 26% as compared to $175 million in
2016.
EBITDA for 2017 totaled to a record $425
million, or 31% EBITDA margin, representing a 16% increase as
compared to $367 million in 2016.
Net profit for 2017 was at a record of $298
million, representing a record of $3.08 basic earnings per share
and a record of $2.90 diluted earnings per share. Net profit for
2017 included two one-time income tax benefit items as follows: (i)
$82 million income tax benefit resulting from Israeli deferred tax
asset realization following the release of a valuation allowance,
which the Company had over the net operating loss carry forward for
tax in the Israeli parent Company, and (ii) $13 million income tax
benefit resulting from the US tax reform and the reduction in
federal income tax rate from 35% to 21%, which will reduce the
Company’s future tax payments and already caused a reduction of
certain deferred tax liabilities (net of certain deferred tax
assets).
Net profit for 2016 was $204 million,
representing $2.33 basic earnings per share and $2.09 diluted
earnings per share. Net profit for 2016 included $50 million net
gain from the San Antonio fab acquisition and $6 million income tax
benefit related to the Nishiwaki fab closure offset by $7 million
non-cash financing expense relating to the Israeli banks’ loans
early repayment.
On an adjusted basis, as described and
reconciled in the tables below, net profit for the full year of
2017 was $226 million, a 29% increase as compared to $175 million
in 2016.
Free cash flow for 2017 was a record of $191
million, with a record $356 million cash flow from operations and
$165 million investments in fixed assets, net. The other main cash
activities during the year were comprised of the following: $115
million invested in marketable securities, $31 million received
from the exercise of warrants and options and $50 million debt
repaid.
Fourth Quarter Results
OverviewRevenues for the fourth quarter of 2017 were a
record $358 million, as compared to $340 million in the fourth
quarter of 2016.
Gross and operating profits for the fourth
quarter of 2017 were $89 million and $54 million, respectively, as
compared to $88 million and $55 million, respectively, in the
fourth quarter of 2016.
EBITDA for the fourth quarter of 2017 was $107
million, or 30% EBITDA margin, as compared to $105 million in the
fourth quarter of 2016.
Net profit for the fourth quarter of 2017 was a
record of $147 million as compared to $48 million in the fourth
quarter of 2016. Basic earnings per share for the quarter was a
record $1.50 and diluted earnings per share was a record $1.40, as
compared to $0.53 and $0.49, respectively, in the fourth quarter of
2016. Net profit for the fourth quarter of 2017 included the two
one-time income tax benefit items of $82 million and $13 million,
as described above.
On an adjusted basis, as described and
reconciled in the tables below, net profit for the fourth quarter
of 2017 was $60 million, as compared to $53 million in the fourth
quarter of 2016.
Free cash flow for the fourth quarter of 2017
was $44 million, with $85 million cash flow from operations and $41
million investments in fixed assets, net. The other main cash
activities during the fourth quarter of 2017 were $65 million
invested in marketable securities, $17 million debt repaid and $3
million received for the exercise of warrants and options.
Cash (including short-term marketable
securities), net of gross debt as of December 31, 2017, totaled to
a record of $226 million, as compared to net cash of $37 million as
of December 31, 2016.
In February 2018, Wells Fargo and Jazz
Semiconductor, the US wholly-owned subsidiary of the Company,
signed a 5-year extension of the existing credit line agreement,
which has been originally set to mature in December 2018, under
which Jazz Semiconductor will be able to drawdown up to $70 million
through 2023. Any such drawdown will bear an interest rate ranging
from Libor + 1.25% to Libor + 1.75%. As of December 31, 2017, and
the date hereof, there were no loans drawdown under this credit
line.
Shareholders' equity as of December 31, 2017 was
a record of $1.03 billion, as compared to $683 million as of
December 31, 2016.
Business OutlookTowerJazz
expects revenues for the first quarter of 2018 ending March 31,
2018 to be $325 million, with an upward or downward range of 5%, in
line with present industry seasonality, and forecasts growth
throughout the year.
Teleconference and Webcast
TowerJazz will host an investor conference call today, February 22,
2018, 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 of
2017, for fiscal year 2017 and its outlook.
This call will be webcast and can be accessed
via TowerJazz’s website at www.towerjazz.com, or by calling:
1-888-668-9141 (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) financing costs resulted from banks loans early
repayment, (4) gain from acquisition, net, (5) non-recurring items
related to long-term investments, (6) income tax benefit resulted
from Israeli deferred tax asset realization following valuation
allowance release; (7) income tax benefit related to U.S. tax
reform;(8) income tax benefit related to Nishiwaki closure; and (9)
acquisition related costs. 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 short-term marketable securities (in the amounts of
$560 million and $389 million as of December 31, 2017 and December
31, 2016, respectively) less the outstanding principal amount of
bank loans (in the amounts of $138 million and $166 million as of
December 31, 2017 and December 31, 2016, respectively), the
outstanding principal amount of capital leases (in the amounts of
$16 million as of December 31, 2017) and the outstanding principal
amount of debentures including the related hedging effect (in the
amounts of $180 million and $186 million as of December 31, 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 $356 million and $327 million for the
years ended December 31, 2017 and December 31, 2016, respectively
and in the amounts of $85 million and $82 million for the three
months periods ended December 31, 2017 and December 31, 2016,
respectively) less cash for investments in property and equipment,
net (in the amounts of $165 million and $209 million for the years
ended December 31, 2017 and December 31, 2016, respectively and in
the amounts of $41 million and $43 million for the three months
periods ended December 31, 2017 and December 31, 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 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, 2017 we are in compliance with all
such covenants included in our banks’ agreements, bond G indenture
and others), (x) obtaining new customer engagements, products
qualification and production ramp-up of the TPSCo facilities and
our San Antonio facility, (xi) the closure of TJP within the scope
of restructuring our activities and business in Japan, settling any
future claims or potential claims, (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, (xiii) 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, (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; (xxiii) 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) retention of key employees and recruitment and
retention of skilled qualified personnel, (xxxi) 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, (xxxii) 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, (xxxiii) meeting regulatory requirements
worldwide, including environmental and governmental regulations;
(xxxiv) negotiation and closure of definitive agreements in
relation to the fab establishment in China, as well as
implementation of this project and licensing of technologies,
subject to obtaining required funding and receipt of payment
milestones, qualification and ramp of process flows and products to
enable mass production for customers and attain revenue to levels
that would cover the facility’s fixed costs; 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. We note that the risk disclosure included in
previous releases related to the shareholder class action pending
in Israel has been removed as a result of the Israeli court
decision in February 2018 granting the Company's motion to dismiss
the action in its entirety.
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.
|
TOWER SEMICONDUCTOR LTD. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
December 31, |
|
September 30, |
|
December 31, |
|
|
|
2017 |
|
2017 |
|
2016 |
|
|
|
|
|
(unaudited) |
|
|
|
A S S E T S |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
|
Cash, cash equivalents and short-term
deposits |
$ |
445,961 |
$ |
480,407 |
$ |
389,377 |
|
Marketable securities |
|
113,874 |
|
49,738 |
|
-- |
|
Trade accounts receivable |
|
149,666 |
|
150,039 |
|
141,048 |
|
Inventories |
|
143,315 |
|
143,300 |
|
137,532 |
|
Other current assets |
|
21,516 |
|
21,465 |
|
30,041 |
|
Total current assets |
|
874,332 |
|
844,949 |
|
697,998 |
|
|
|
|
|
|
|
|
|
LONG-TERM INVESTMENTS |
|
26,073 |
|
27,091 |
|
25,624 |
|
|
|
|
|
|
|
|
|
PROPERTY AND EQUIPMENT, NET |
|
635,124 |
|
633,107 |
|
616,686 |
|
|
|
|
|
|
|
|
|
INTANGIBLE ASSETS, NET |
|
19,841 |
|
21,627 |
|
28,129 |
|
|
|
|
|
|
|
|
|
GOODWILL |
|
7,000 |
|
7,000 |
|
7,000 |
|
|
|
|
|
|
|
|
|
DEFERRED TAX AND OTHER LONG-TERM ASSETS |
|
111,269 |
|
18,484 |
|
4,447 |
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
$ |
1,673,639 |
$ |
1,552,258 |
$ |
1,379,884 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
Short-term debt |
$ |
105,958 |
$ |
45,664 |
$ |
48,084 |
|
Trade accounts payable |
|
115,347 |
|
109,385 |
|
99,262 |
|
Deferred revenue and customers' advances |
|
14,338 |
|
26,454 |
|
26,169 |
|
Other current liabilities |
|
66,730 |
|
64,259 |
|
73,600 |
|
Total current liabilities |
|
302,373 |
|
245,762 |
|
247,115 |
|
|
|
|
|
|
|
|
|
LONG-TERM DEBT |
|
228,723 |
|
295,485 |
|
296,144 |
|
|
|
|
|
|
|
|
|
LONG-TERM CUSTOMERS' ADVANCES |
|
31,908 |
|
37,674 |
|
41,874 |
|
|
|
|
|
|
|
|
|
LONG-TERM EMPLOYEE RELATED LIABILITIES |
|
14,662 |
|
14,170 |
|
14,176 |
|
|
|
|
|
|
|
|
|
DEFERRED TAX LIABILITY AND OTHER LONG-TERM
LIABILITIES |
|
66,267 |
|
85,380 |
|
97,961 |
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
643,933 |
|
678,471 |
|
697,270 |
|
|
|
|
|
|
|
|
|
TOTAL SHAREHOLDERS' EQUITY |
|
1,029,706 |
|
873,787 |
|
682,614 |
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY |
$ |
1,673,639 |
$ |
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) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
December 31, |
|
|
|
September 30, |
|
|
December 31, |
|
|
|
|
2017 |
|
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES |
$ |
357,614 |
|
|
$ |
354,557 |
|
$ |
340,379 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF REVENUES |
|
268,256 |
|
|
|
265,439 |
|
|
252,648 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
|
89,358 |
|
|
|
89,118 |
|
|
87,731 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING COSTS AND EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
18,370 |
|
|
|
17,094 |
|
|
16,320 |
|
|
Marketing, general and administrative |
|
16,502 |
|
|
|
16,822 |
|
|
16,209 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,872 |
|
|
|
33,916 |
|
|
32,529 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING PROFIT |
|
54,486 |
|
|
|
55,202 |
|
|
55,202 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST EXPENSE, NET |
|
(1,783 |
) |
|
|
(1,776 |
) |
|
(2,230 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER FINANCING INCOME (EXPENSE), NET |
|
(2,270 |
) |
|
|
(2,266 |
) |
|
1,215 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER EXPENSE, NET |
|
(3,027 |
) |
|
|
(253 |
) |
|
(948 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE INCOME TAX |
|
47,406 |
|
|
|
50,907 |
|
|
53,239 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX BENEFIT (EXPENSE), NET |
|
101,236 |
|
(a) |
|
3,334 |
|
|
(986 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE NON CONTROLLING
INTEREST |
|
148,642 |
|
(a) |
|
54,241 |
|
|
52,253 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON
CONTROLLING INTEREST |
|
(1,431 |
) |
|
|
1,033 |
|
|
(3,972 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
NET PROFIT |
$ |
147,211 |
|
(a) |
$ |
55,274 |
|
$ |
48,281 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC EARNINGS PER SHARE |
$ |
1.50 |
|
(a) |
$ |
0.56 |
|
$ |
0.53 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares |
|
98,312 |
|
|
|
97,947 |
|
|
91,235 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED EARNINGS PER SHARE |
$ |
1.40 |
|
(a) |
$ |
0.54 |
|
$ |
0.49 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
profit used for diluted earnings per share |
$ |
149,502 |
|
(a) |
$ |
57,519 |
|
$ |
50,397 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares |
|
106,776 |
|
|
|
106,384 |
|
|
103,613 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
REVENUES |
$ |
1,387,310 |
|
|
$ |
1,249,634 |
|
|
|
|
|
|
|
|
|
|
|
COST OF REVENUES |
|
1,033,005 |
|
|
|
946,534 |
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
|
354,305 |
|
|
|
303,100 |
|
|
|
|
|
|
|
|
|
|
|
OPERATING COSTS AND EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
67,664 |
|
|
|
63,134 |
|
|
Marketing, general and administrative |
|
66,799 |
|
|
|
65,439 |
|
|
Nishiwaki Fab restructuring and impairment cost
(income), net |
|
-- |
|
|
|
(627 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
134,463 |
|
|
|
127,946 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING PROFIT |
|
219,842 |
|
|
|
175,154 |
|
|
|
|
|
|
|
|
|
|
|
INTEREST EXPENSE, NET |
|
(7,840 |
) |
|
|
(11,857 |
) |
|
|
|
|
|
|
|
|
|
|
OTHER FINANCING EXPENSE, NET |
|
(7,607 |
) |
|
|
(12,492 |
) |
|
|
|
|
|
|
|
|
|
|
GAIN FROM ACQUISITION,
NET |
|
-- |
|
|
|
50,471 |
|
(c) |
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE), NET |
|
(2,627 |
) |
|
|
9,322 |
|
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE INCOME TAX |
|
201,768 |
|
|
|
210,598 |
|
(c) |
|
|
|
|
|
|
|
|
|
INCOME TAX BENEFIT (EXPENSE), NET |
|
99,888 |
|
(b) |
|
(1,432 |
) |
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE NON CONTROLLING
INTEREST |
|
301,656 |
|
(b) |
|
209,166 |
|
(c) |
|
|
|
|
|
|
|
|
|
NON CONTROLLING INTEREST |
|
(3,645 |
) |
|
|
(5,242 |
) |
|
|
|
|
|
|
|
|
|
|
NET PROFIT |
$ |
298,011 |
|
(b) |
$ |
203,924 |
|
(c) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC EARNINGS PER SHARE |
$ |
3.08 |
|
(b) |
$ |
2.33 |
|
(c) |
|
|
|
|
|
|
|
|
|
Weighted average number of shares |
|
96,647 |
|
|
|
87,480 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED EARNINGS PER SHARE |
$ |
2.90 |
|
(b) |
$ |
2.09 |
|
(c) |
|
|
|
|
|
|
|
|
|
Net
profit used for diluted earnings per share |
$ |
306,905 |
|
(b) |
$ |
212,160 |
|
(c) |
|
|
|
|
|
|
|
|
|
Weighted average number of shares |
|
105,947 |
|
|
|
101,303 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) 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. |
(c) Year ended December 31, 2016
included $50,471 net 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) |
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
December 31, |
|
September 30, |
|
December 31, |
|
|
|
2017 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
RECONCILIATION FROM GAAP NET PROFIT TO ADJUSTED NET
PROFIT: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP NET PROFIT |
$ |
147,211 |
|
$ |
55,274 |
$ |
48,281 |
|
Stock based compensation |
|
3,481 |
|
|
3,750 |
|
2,381 |
|
Amortization of acquired intangible
assets |
|
1,564 |
|
|
2,161 |
|
2,777 |
|
Non-recurring items related to long term
investments |
|
3,009 |
|
|
-- |
|
-- |
|
Income tax benefit resulted from Israeli deferred tax
asset realization following valuation allowance release as
described above |
|
(82,370 |
) |
|
-- |
|
-- |
|
Income tax benefit related to U.S. tax
reform |
|
(12,970 |
) |
|
-- |
|
-- |
|
|
|
|
|
|
|
|
|
ADJUSTED NET PROFIT |
$ |
59,925 |
|
$ |
61,185 |
$ |
53,439 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED NET PROFIT PER
SHARE: |
|
|
|
|
|
|
|
Basic |
$ |
0.61 |
|
$ |
0.62 |
$ |
0.59 |
|
Diluted |
$ |
0.58 |
|
$ |
0.60 |
$ |
0.54 |
|
Fully diluted |
$ |
0.58 |
|
$ |
0.59 |
$ |
0.52 |
|
|
|
|
|
|
|
|
|
ADJUSTED NET PROFIT USED TO CALCULATE PER SHARE
DATA: |
|
|
|
|
|
|
|
Basic |
$ |
59,925 |
|
$ |
61,185 |
$ |
53,439 |
|
Diluted |
$ |
62,216 |
|
$ |
63,430 |
$ |
55,555 |
|
Fully diluted |
$ |
62,216 |
|
$ |
63,430 |
$ |
55,555 |
|
|
|
|
|
|
|
|
|
NUMBER OF SHARES AND OTHER SECURITIES USED TO CALCULATE
PER SHARE DATA: |
|
|
|
|
|
|
|
Basic |
|
98,312 |
|
|
97,947 |
|
91,235 |
|
Diluted |
|
106,776 |
|
|
106,384 |
|
103,613 |
|
Fully diluted |
|
107,721 |
|
|
107,729 |
|
107,121 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA CALCULATION: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP OPERATING PROFIT |
$ |
54,486 |
|
$ |
55,202 |
$ |
55,202 |
|
Depreciation of fixed assets |
|
47,741 |
|
|
47,544 |
|
44,874 |
|
Stock based compensation |
|
3,481 |
|
|
3,750 |
|
2,381 |
|
Amortization of acquired intangible
assets |
|
1,564 |
|
|
2,161 |
|
2,777 |
|
|
|
|
|
|
|
|
|
EBITDA |
$ |
107,272 |
|
$ |
108,657 |
$ |
105,234 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOWER SEMICONDUCTOR LTD. AND
SUBSIDIARIES |
UNAUDITED RECONCILIATION OF CERTAIN FINANCIAL
DATA |
(dollars and share count in thousands, except
per share data) |
|
|
|
|
|
|
|
|
Year ended |
|
|
|
December 31, |
|
|
|
2017 |
|
2016 |
|
|
|
|
|
|
|
RECONCILIATION FROM GAAP NET PROFIT TO ADJUSTED NET
PROFIT: |
|
|
|
|
|
|
|
|
|
|
|
GAAP NET PROFIT |
$ |
298,011 |
|
$ |
203,924 |
|
|
Stock based compensation |
|
11,648 |
|
|
9,406 |
|
|
Amortization of acquired intangible
assets |
|
8,307 |
|
|
9,780 |
|
|
Financing cost resulted from banks loans early
repayment |
|
-- |
|
|
6,653 |
|
|
Gain from acquisition, net |
|
-- |
|
|
(50,471 |
) |
|
Non-recurring items related to long term
investments |
|
3,009 |
|
|
2,378 |
|
|
Income tax benefit resulted from Israeli deferred tax
asset realization following valuation allowance release as
described above |
|
(82,370 |
) |
|
-- |
|
|
Income tax benefit related to U.S. tax
reform |
|
(12,970 |
) |
|
-- |
|
|
Income tax benefit in relation to Nishiwaki
closure |
|
-- |
|
|
(6,472 |
) |
|
|
|
|
|
|
|
ADJUSTED NET PROFIT |
$ |
225,635 |
|
$ |
175,198 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED NET PROFIT PER SHARE: |
|
|
|
|
|
Basic |
$ |
2.33 |
|
$ |
2.00 |
|
|
Diluted |
$ |
2.21 |
|
$ |
1.81 |
|
|
Fully diluted |
$ |
2.18 |
|
$ |
1.71 |
|
|
|
|
|
|
|
|
ADJUSTED NET PROFIT USED TO CALCULATE PER SHARE
DATA: |
|
|
|
|
|
Basic |
$ |
225,635 |
|
$ |
175,198 |
|
|
Diluted |
$ |
234,529 |
|
$ |
183,434 |
|
|
Fully diluted |
$ |
234,529 |
|
$ |
183,434 |
|
|
|
|
|
|
|
|
NUMBER OF SHARES AND OTHER SECURITIES USED TO CALCULATE
PER SHARE DATA: |
|
|
|
|
|
Basic |
|
96,647 |
|
|
87,480 |
|
|
Diluted |
|
105,947 |
|
|
101,303 |
|
|
Fully diluted |
|
107,721 |
|
|
107,121 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA CALCULATION: |
|
|
|
|
|
|
|
|
|
|
|
GAAP OPERATING PROFIT |
$ |
219,842 |
|
$ |
175,154 |
|
|
Depreciation of fixed assets |
|
185,464 |
|
|
169,958 |
|
|
Stock based compensation |
|
11,648 |
|
|
9,406 |
|
|
Amortization of acquired intangible
assets |
|
8,307 |
|
|
9,780 |
|
|
Non-recurring items related to long term
investments |
|
-- |
|
|
2,378 |
|
|
|
|
|
|
|
|
EBITDA |
$ |
425,261 |
|
$ |
366,676 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOWER SEMICONDUCTOR LTD. AND
SUBSIDIARIES |
CONSOLIDATED SOURCES AND USES REPORT
(UNAUDITED) |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
December 31, |
|
|
December 31, |
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
Cash and short-term deposits - beginning of
period |
$ |
480,407 |
|
|
$ |
362,833 |
|
|
|
|
|
|
|
Cash from operations |
|
85,285 |
|
|
|
81,835 |
|
Investments in property and equipment,
net |
|
(41,349 |
) |
|
|
(42,929 |
) |
Exercise of warrants and options, net |
|
3,278 |
|
|
|
10,644 |
|
Debt repaid, net |
|
(16,863 |
) |
|
|
(5,653 |
) |
Effect of Japanese Yen exchange rate change over cash
balance |
|
70 |
|
|
|
(17,353 |
) |
Investments in marketable securities and
deposits |
|
(64,867 |
) |
|
|
-- |
|
|
|
|
|
|
|
Cash and short-term deposits - end of period |
$ |
445,961 |
|
|
$ |
389,377 |
|
|
|
|
|
|
|
Free Cash Flow |
$ |
43,936 |
|
|
$ |
38,906 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended |
|
|
December 31, |
|
|
December 31, |
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
Cash and short-term deposits - beginning of
period |
$ |
389,377 |
|
|
$ |
205,575 |
|
|
|
|
|
|
|
Cash from operations |
|
355,635 |
|
(d) |
|
327,468 |
|
Investments in property and equipment,
net |
|
(164,717 |
) |
|
|
(209,624 |
) |
Exercise of warrants and options, net |
|
31,315 |
|
|
|
38,803 |
|
Debt received (repaid), net |
|
(50,255 |
) |
|
|
37,091 |
|
Effect of Japanese Yen exchange rate change over cash
balance |
|
3,720 |
|
|
|
5,635 |
|
TPSCo dividend to Panasonic |
|
(4,378 |
) |
|
|
(2,563 |
) |
Investments in marketable securities and
deposits |
|
(114,736 |
) |
|
|
(13,008 |
) |
|
|
|
|
|
|
|
Cash and short-term deposits - end of period |
$ |
445,961 |
|
|
$ |
389,377 |
|
|
|
|
|
|
|
Free Cash Flow |
$ |
190,918 |
|
(d) |
$ |
117,844 |
|
|
|
|
|
|
|
(d) Cash from operations 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, |
|
December 31, |
|
December 31, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
(unaudited) |
|
(unaudited) |
CASH FLOWS - OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit for the period |
$ |
301,656 |
|
$ |
209,166 |
|
$ |
148,642 |
|
$ |
52,253 |
|
|
|
|
|
|
|
|
|
|
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 |
|
208,411 |
|
|
197,606 |
|
|
51,310 |
|
|
51,776 |
|
Effect of indexation, translation and fair value
measurement on debt |
|
12,865 |
|
|
8,442 |
|
|
2,281 |
|
|
(2,532 |
) |
Other expense (income), net |
|
2,627 |
|
|
(9,322 |
) |
|
3,027 |
|
|
948 |
|
Gain from acquisition, net |
|
-- |
|
|
(50,471 |
) |
|
-- |
|
|
-- |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
Trade accounts receivable |
|
(6,564 |
) |
|
(30,104 |
) |
|
788 |
|
|
(18,200 |
) |
Other current assets |
|
(8,321 |
) |
|
(265 |
) |
|
445 |
|
|
61 |
|
Inventories |
|
(4,277 |
) |
|
(22,069 |
) |
|
92 |
|
|
(300 |
) |
Trade accounts payable |
|
(8,649 |
) |
|
5,550 |
|
|
(2,786 |
) |
|
(7,347 |
) |
Deferred revenue and customers' advances |
|
(21,803 |
) |
|
23,581 |
|
|
(17,882 |
) |
|
5,634 |
|
Other current liabilities |
|
(8,219 |
) |
|
(145 |
) |
|
1,765 |
|
|
(2,448 |
) |
Long-term employee related liabilities |
|
(3,247 |
) |
|
(798 |
) |
|
(2,482 |
) |
|
(385 |
) |
Deferred tax, net |
|
(108,844 |
) |
|
(3,703 |
) |
|
(99,915 |
) |
|
2,375 |
|
Net cash provided by operating activities |
|
355,635 |
|
(d) |
327,468 |
|
|
85,285 |
|
|
81,835 |
|
|
|
|
|
|
|
|
|
|
CASH FLOWS - INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
Investments in property and equipment,
net |
|
(164,717 |
) |
|
(209,624 |
) |
|
(41,349 |
) |
|
(42,929 |
) |
Investments in marketable securities and
deposits |
|
(114,736 |
) |
|
16,992 |
|
|
(64,867 |
) |
|
-- |
|
Net cash used in investing activities |
|
(279,453 |
) |
|
(192,632 |
) |
|
(106,216 |
) |
|
(42,929 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS - FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt received (repaid), net |
|
(50,255 |
) |
|
37,091 |
|
|
(16,863 |
) |
|
(5,653 |
) |
Exercise of warrants and options, net |
|
31,315 |
|
|
38,803 |
|
|
3,278 |
|
|
10,644 |
|
Dividend payment to Panasonic |
|
(4,378 |
) |
|
(2,563 |
) |
|
-- |
|
|
-- |
|
Net cash provided by (used in) financing
activities |
|
(23,318 |
) |
|
73,331 |
|
|
(13,585 |
) |
|
4,991 |
|
|
|
|
|
|
|
|
|
|
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE
CHANGE |
|
3,720 |
|
|
5,635 |
|
|
70 |
|
|
(17,353 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCREASE (DECREASE) IN CASH AND
SHORT-TERM DEPOSITS |
|
56,584 |
|
|
213,802 |
|
|
(34,446 |
) |
|
26,544 |
|
CASH AND SHORT-TERM DEPOSITS -
BEGINNING OF PERIOD |
|
389,377 |
|
|
175,575 |
|
|
480,407 |
|
|
362,833 |
|
|
|
|
|
|
|
|
|
|
CASH AND SHORT-TERM DEPOSITS - END OF
PERIOD |
$ |
445,961 |
|
$ |
389,377 |
|
$ |
445,961 |
|
$ |
389,377 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d) 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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