SEC Filings

6-K
TOWER SEMICONDUCTOR LTD filed this Form 6-K on 08/03/2017
Entire Document
 

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

For the month of August 2017 No.1

TOWER SEMICONDUCTOR LTD.
(Translation of registrant's name into English)

Ramat Gavriel Industrial Park
P.O. Box 619, Migdal Haemek, Israel 2310502
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F ☒          Form 40-F ☐

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
 
Yes ☐          No ☒



 
On August 3, 2017, the Registrant announced its financial results for the six and three months ended June 30, 2017. Attached hereto is the following exhibit.
 




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
TOWER SEMICONDUCTOR LTD.
 
       
Date: August 3, 2017
By:
/s/ Nati Somekh
 
   
Name:  Nati Somekh
 
   
Title:  Corporate Secretary
 




Exhibit 99.1
 
 
TowerJazz Announces Records in Revenues,
Margins, EBITDA and Free Cash Flow for the
Second Quarter and First Half of 2017

MIGDAL HAEMEK, ISRAEL – August 3, 2017 – TowerJazz (NASDAQ & TASE: TSEM) today reported its results for the second quarter ended June 30, 2017.

Highlights of the Second Quarter of 2017
 
·
Record revenues of $345 million, up 13% year over year
·
Record gross profit of $91 million, up 25% year over year
·
Record operating profit of $57 million, up 43% year over year
·
Record EBITDA of $108 million, up 24% year over year
·
Net profit of $50 million, up 30% year over year; Basic earnings per share of $0.52 as compared with $0.45 in the second quarter of 2016; and
·
Record free cash flow of $43 million, with cash from operations of $84 million.
 
CEO Commentary
 
Mr. Russell Ellwanger, Chief Executive Officer of TowerJazz, commented, “Our second quarter of 2017 presented again strong and incremental business and financial performance, having achieved 26% year over year organic revenue growth resulting in an annual net profit run rate of $200 million. We remain focused and attentive to the needs of our broad customer base, working to provide full circle value creation built upon our market leading specialty technology offerings, and hence guide further growth for our third quarter of 2017.”



Second Quarter Results Overview
 
Revenues for the second quarter of 2017 were a record $345 million, reflecting 13% growth as compared to $305 million in the second quarter of 2016. For the second quarter of 2017, our organic growth, excluding Panasonic and Maxim long term committed contracts, was 26% as compared to the second quarter of 2016.
 
Gross profit for the second quarter of 2017 was a record $91 million, an increase of 25% as compared to $73 million in the second quarter of 2016. Operating profit was a record $57 million for the second quarter of 2017, demonstrating an increase of 43%, as compared to $40 million reported in the second quarter of 2016.
 
EBITDA for the second quarter of 2017 was a record $108 million, at a margin of 31%, as compared to $87 million, at a margin of 29%, in the second quarter of 2016.
 
Net profit for the second quarter of 2017 was $50 million, a 30% increase as compared to $38 million in the second quarter of 2016, resulting in net margin of 14.5% vs. 12.6%, respectively; $0.52 basic earnings per share vs. $0.45, respectively; and $0.49 diluted earnings per share vs. $0.40, respectively. Net profit for the second quarter of 2016 included $10 million net gain from the acquisition of the San Antonio fabrication facility and $7 million financing cost resulted from the early repayment of the Israeli banks’ loans.
 
Free cash flow for the quarter was a record of $43 million, with $84 million positive cash flow from operations and $41 million investments in fixed assets, net. The other main cash activities during the second quarter of 2017 were comprised of the following: $14 million received from the exercise of warrants and options and $6 million debt repayments. Cash, cash equivalents and short term deposits as of June 30, 2017 were at a record of $484 million with $341 million of debt outstanding principal amount. Net cash (cash and short-term deposits less debt par value) as of June 30, 2017, totaled to a record of $143 million as compared to net cash of $86 million as of March 31, 2017 and $37 million as of December 31, 2016.
 
Shareholders' equity as of June 30, 2017 was a record of $814 million, as compared to $746 million as of March 31, 2017 and to $683 million as of December 31, 2016.
 
As compared to the first quarter of 2017, second quarter revenues increased by $15 million, which resulted in EBITDA and net profit growth of $7 million and $5 million, respectively, representing incremental margins of 49% and 30%, respectively.


First Half Results Overview
 
Revenues for the 2017 first half were a record of $675 million, reflecting 16% growth as compared to $583 million for the first half of 2016.
 
Gross and operating profit for the first half of 2017 were a record of $176 million and $110 million, respectively, increased as compared to $134 million and $71 million, respectively, in the first half of 2016.
 
EBITDA for the first half of 2017 totaled to a record of $209 million, or 31% EBITDA margin, representing 27% increase as compared with $165 million, or 28% EBITDA margin, in the first half of 2016.
 
Net profit for the first half of 2017 was $96 million, or $1.00 in basic earnings per share. Net profit for the first half of 2016 was $104 million, or $1.22 basic earnings per share and included $51 million gain from the acquisition of San Antonio fab and $7 million non-cash financing expenses relating to the Israeli banks loans early repayment.
 
Free cash flow for the first half of 2017 was a record of $84 million, with a record $166 million positive cash flow from operations and $82 million investments in fixed assets, net. The other main cash activities during the first half of 2017 were comprised of the following: $27 million received from the exercise of warrants and options; $17 million debt repayments; a positive $4 million due to the effect of the Japanese Yen exchange rate on the cash balance; and a TPSCo dividend to Panasonic of $4 million.
 
Business Outlook
 
TowerJazz expects revenues for the third quarter of 2017 ending September 30, 2017 to be $355 million with an upward or downward range of 5%, representing 9% year over year revenue growth as compared to the third quarter of 2016.

Teleconference and Webcast
 
TowerJazz will host an investor conference call today, August 3, 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 second 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: 1-888-668-9141 (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 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) gain from acquisition, net;(4) financing cost resulted from banks loans early repayment and (5) Nishiwaki Fab restructuring and impairment cost (income), net;. 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, according to U.S. 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 the outstanding principal amount of bank loans (in the amounts of $161 million, $166 million and $166 million as of June 30, 2017, March 31, 2017 and December 31, 2016, respectively) and the outstanding principal amount of debentures (in the amounts of $180 million, $180 million and $186  million as of June 30, 2017, March 31, 2017 and December 31, 2016, respectively), less cash, cash equivalents and short-term deposits (in the amounts of $484 million, $432 million and $389 million as of June 30, 2017, March 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 as this term is defined by GAAP (in the amounts of $84 million, $82 million and $82 million for the three months periods ended June 30, 2017, March 31, 2017 and June 30, 2016, respectively) less cash for investments in property and equipment, net (in the amounts of $41 million, $40 million and $54 million for the three months periods ended June 30, 2017, March 31, 2017 and June 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.com
GK 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 June 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; 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
(dollars in thousands)
 
   
June 30,
   
March 31,
   
December 31,
 
   
2017
   
2017
   
2016
 
   
(unaudited)
   
(unaudited)
       
A S S E T S
                 
                   
CURRENT ASSETS
                 
Cash, cash equivalents and short-term deposits
 
$
483,603
   
$
432,113
   
$
389,377
 
Trade accounts receivable
   
150,731
     
133,539
     
141,048
 
Inventories
   
139,010
     
140,734
     
137,532
 
Other current assets
   
34,391
     
27,235
     
30,041
 
Total current assets
   
807,735
     
733,621
     
697,998
 
                         
LONG-TERM INVESTMENTS
   
27,291
     
26,661
     
25,624
 
                         
PROPERTY AND EQUIPMENT, NET
   
628,279
     
629,554
     
616,686
 
                         
INTANGIBLE ASSETS, NET
   
23,848
     
26,164
     
28,129
 
                         
GOODWILL
   
7,000
     
7,000
     
7,000
 
                         
OTHER ASSETS, NET
   
4,355
     
4,403
     
4,447
 
                         
TOTAL ASSETS
 
$
1,498,508
   
$
1,427,403
   
$
1,379,884
 
                         
LIABILITIES AND SHAREHOLDERS' EQUITY
                       
                         
CURRENT LIABILITIES
                       
Short-term debt
 
$
55,295
   
$
43,331
   
$
48,084
 
Trade accounts payable
   
95,328
     
104,084
     
99,262
 
Deferred revenue and customers' advances
   
25,689
     
24,945
     
26,169
 
Other current liabilities
   
78,051
     
65,469
     
73,600
 
Total current liabilities
   
254,363
     
237,829
     
247,115
 
                         
LONG-TERM DEBT
   
297,609
     
303,152
     
296,144
 
                         
LONG-TERM CUSTOMERS' ADVANCES
   
29,061
     
34,369
     
41,874
 
                         
LONG-TERM EMPLOYEE RELATED LIABILITIES
   
14,652
     
14,447
     
14,176
 
                         
DEFERRED TAX LIABILITY AND OTHER LONG-TERM LIABILITIES
   
88,808
     
91,715
     
97,961
 
                         
TOTAL LIABILITIES
   
684,493
     
681,512
     
697,270
 
                         
TOTAL SHAREHOLDERS' EQUITY
   
814,015
     
745,891
     
682,614
 
                         
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
 
$
1,498,508
   
$
1,427,403
   
$
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
   
   
June 30,
   
March 31,
   
June 30,
   
   
2017
   
2017
   
2016
   
                            
REVENUES
 
$
345,059
   
$
330,080
   
$
305,003
   
                                  
COST OF REVENUES
   
253,998
     
245,312
     
232,275
   
                                  
GROSS PROFIT
   
91,061
     
84,768
     
72,728
   
                                  
OPERATING COSTS AND EXPENSES:
                               
                                  
Research and development
   
16,432
     
15,768
     
16,030
   
Marketing, general and administrative
   
17,238
     
16,237
     
16,520
   
                                  
     
33,670
     
32,005
     
32,550
   
                                  
OPERATING PROFIT
   
57,391
     
52,763
     
40,178
   
                                  
INTEREST EXPENSE, NET
   
(2,070
)
   
(2,211
)
   
(2,997
)
 
                                  
OTHER FINANCING EXPENSE, NET
   
(1,053
)
   
(2,018
)
   
(7,528
)
(a)
                                  
GAIN FROM ACQUISITION, NET
   
--
     
--
     
10,158
 
(a)
                                  
OTHER INCOME, NET
   
142
     
511
     
4,362
   
                                  
PROFIT BEFORE INCOME TAX
   
54,410
     
49,045
     
44,173
 
(a)
                                  
INCOME TAX EXPENSE
   
(2,683
)
   
(1,999
)
   
(3,826
)
 
                                  
PROFIT BEFORE NON CONTROLLING INTEREST
   
51,727
     
47,046
     
40,347
 
(a)
                                  
NON CONTROLLING INTEREST
   
(1,710
)
   
(1,537
)
   
(1,861
)
 
                                  
NET PROFIT
 
$
50,017
   
$
45,509
   
$
38,486
 
(a)
                                  
BASIC EARNINGS PER SHARE
 
$
0.52
   
$
0.48
   
$
0.45
 
(a)
                                  
Weighted average number of shares
   
96,365
     
93,900
     
86,300
   
                                  
DILUTED EARNINGS PER SHARE
 
$
0.49
   
$
0.45
   
$
0.40
 
(a)
                                  
Net profit used for diluted earnings per share
 
$
52,217
   
$
47,666
   
$
40,556
 
(a)
                                  
Weighted average number of shares
   
105,648
     
104,915
     
100,163
   
 
(a)
Three months ended June 30, 2016 included $10,158 net gain from acquisition of TJT and $6,653 financing cost resulted from banks loans early repayment. 


 
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,
   
   
2017
   
2016
   
                    
REVENUES
 
$
675,139
   
$
583,046
   
                        
COST OF REVENUES
   
499,310
     
448,971
   
                        
GROSS PROFIT
   
175,829
     
134,075
   
                        
OPERATING COSTS AND EXPENSES:
                     
                        
Research and development
   
32,200
     
31,267
   
Marketing, general and administrative
   
33,475
     
32,443
   
Nishiwaki Fab restructuring and impairment cost (income), net
   
--
     
(627
)
 
                        
     
65,675
     
63,083
   
                        
OPERATING PROFIT
   
110,154
     
70,992
   
                        
INTEREST EXPENSE, NET
   
(4,281
)
   
(6,355
)
 
                        
OTHER FINANCING EXPENSE, NET
   
(3,071
)
   
(11,497
)
(b)
                        
GAIN FROM ACQUISITION, NET
   
--
     
51,298
 
(b)
                        
OTHER INCOME, NET
   
653
     
4,362
   
                        
PROFIT BEFORE INCOME TAX
   
103,455
     
108,800
 
(b)
                        
INCOME TAX EXPENSE
   
(4,682
)
   
(3,905
)
 
                        
PROFIT BEFORE NON CONTROLLING INTEREST
   
98,773
     
104,895
 
(b)
                        
NON CONTROLLING INTEREST
   
(3,247
)
   
(465
)
 
                        
NET PROFIT
 
$
95,526
   
$
104,430
 
(b)
                        
BASIC EARNINGS PER SHARE
 
$
1.00
   
$
1.22
 
(b)
                        
Weighted average number of shares
   
95,139
     
85,410
   
                        
DILUTED EARNINGS PER SHARE
 
$
0.95
   
$
1.09
 
(b)
                        
Net profit used for diluted earnings per share
 
$
99,883
   
$
108,556
 
(b)
                        
Weighted average number of shares
   
105,288
     
99,546
   
 
(b)
Six months ended June 30, 2016 included $51,298 net gain from acquisition of TJT and $6,653 financing cost resulted from banks loans early repayment.


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
 
   
June 30,
   
March 31,
   
June 30,
 
   
2017
   
2017
   
2016
 
                   
RECONCILIATION FROM GAAP NET PROFIT TO ADJUSTED NET PROFIT:
                 
                   
GAAP NET PROFIT
 
$
50,017
   
$
45,509
   
$
38,486
 
Stock based compensation
   
2,319
     
2,098
     
2,532
 
Amortization of acquired intangible assets
   
2,246
     
2,336
     
2,395
 
Financing cost resulted from banks loans early repayment
   
--
     
--
     
6,653
 
Gain from San Antonio acquisition, net
   
--
     
--
     
(10,158
)
                         
ADJUSTED NET PROFIT
 
$
54,582
   
$
49,943
   
$
39,908
 
                         
ADJUSTED NET PROFIT PER SHARE:
                       
Basic
 
$
0.57
   
$
0.53
   
$
0.46
 
Diluted
 
$
0.54
   
$
0.50
   
$
0.42
 
Fully diluted, see (c) below
 
$
0.53
   
$
0.49
   
$
0.39
 
                         
ADJUSTED NET PROFIT USED TO CALCULATE PER SHARE DATA:
                       
Basic
 
$
54,582
   
$
49,943
   
$
39,908
 
Diluted
 
$
56,782
   
$
52,100
   
$
41,978
 
Fully diluted
 
$
56,782
   
$
52,100
   
$
41,978
 
                         
NUMBER OF SHARES AND OTHER SECURITIES USED TO CALCULATE PER SHARE DATA:
                       
Basic
   
96,365
     
93,900
     
86,300
 
Diluted
   
105,648
     
104,915
     
100,163
 
Fully diluted, see (c) below
   
107,375
     
107,245
     
107,056
 
                         
EBITDA CALCULATION:
                       
                         
GAAP OPERATING PROFIT
 
$
57,391
   
$
52,763
   
$
40,178
 
Cost of revenue:
                       
Depreciation of fixed assets
   
46,360
     
43,819
     
41,910
 
Stock based compensation
   
587
     
678
     
1,160
 
Amortization of acquired intangible assets
   
2,058
     
2,148
     
2,207
 
Research and development:
                       
Stock based compensation
   
576
     
539
     
533
 
Marketing, general and administrative:
                       
Stock based compensation
   
1,156
     
881
     
839
 
Amortization of acquired intangible assets
   
188
     
188
     
188
 
                         
EBITDA
 
$
108,316
   
$
101,016
   
$
87,015
 
 
(c)
Fully diluted share count as of June 30, 2017 presented above includes all issued and outstanding securities; outstanding ordinary share count as of June 30, 2017 is 97,893 thousands.


TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES
CONSOLIDATED SOURCES AND USES REPORT (UNAUDITED)
(dollars in thousands)
 
   
Six months ended
   
T h r e e   m o n t h s   e n d e d
 
   
June 30,
   
June 30,
   
June 30,
   
March 31,
   
June 30,
 
   
2017
   
2016
   
2017
   
2017
   
2016
 
                               
Cash and short-term deposits - beginning of period
 
$
389,377
   
$
205,575
   
$
432,113
   
$
389,377
   
$
244,577
 
                                         
Cash from operations
   
166,434
     
159,223
     
84,294
     
82,140
     
81,781
 
Investments in property and equipment, net
   
(81,660
)
   
(111,856
)
   
(41,312
)
   
(40,348
)
   
(54,323
)
Exercise of warrants and options, net
   
27,010
     
6,241
     
14,254
     
12,756
     
360
 
Debt received (repaid), net
   
(17,460
)
   
34,190
     
(5,655
)
   
(11,805
)
   
27,444
 
Effect of Japanese Yen exchange rate change over cash balance
   
4,280
     
20,252
     
(91
)
   
4,371
     
11,223
 
TPSCo dividend to Panasonic
   
(4,378
)
   
(2,563
)
   
--
     
(4,378
)
   
--
 
                                         
Cash and short-term deposits - end of period
 
$
483,603
   
$
311,062
   
$
483,603
   
$
432,113
   
$
311,062
 
                                         
Free Cash Flow
 
$
84,774
   
$
47,367
   
$
42,982
   
$
41,792
   
$
27,458
 


TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(dollars in thousands)
 
   
Three months ended
 
   
June 30,
   
June 30,
 
   
2017
   
2016
 
             
CASH FLOWS - OPERATING ACTIVITIES
           
             
Net profit for the period
 
$
51,727
   
$
40,347
 
                 
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
   
52,389
     
48,117
 
Effect of indexation, translation and fair value measurement on debt
   
4,873
     
6,700
 
Other income, net
   
(142
)
   
(4,362
)
Gain from acquisition, net
   
--
     
(10,158
)
Changes in assets and liabilities:
               
Trade accounts receivable
   
(17,242
)
   
(1,916
)
Other current assets
   
(7,307
)
   
(5,476
)
Inventories
   
1,688
     
(6,300
)
Trade accounts payable
   
(6,530
)
   
130
 
Deferred revenue and customers' advances
   
(4,564
)
   
8,294
 
Other current liabilities
   
12,866
     
11,194
 
Long-term employee related liabilities
   
(234
)
   
(143
)
Deferred tax liability, net
   
(3,230
)
   
(4,646
)
Net cash provided by operating activities
   
84,294
     
81,781
 
                 
CASH FLOWS - INVESTING ACTIVITIES
               
                 
Investments in property and equipment, net
   
(41,312
)
   
(54,323
)
Deposits and other long-term investments, net
   
--
     
19,600
 
Net cash used in investing activities
   
(41,312
)
   
(34,723
)
                 
CASH FLOWS - FINANCING ACTIVITIES
               
                 
Debt received (repaid), net
   
(5,655
)
   
27,444
 
Exercise of warrants and options, net
   
14,254
     
360
 
Net cash provided by (used in) financing activities
   
8,599
     
27,804
 
                 
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGE
   
(91
)
   
11,623
 
                 
INCREASE IN CASH AND SHORT-TERM DEPOSITS
   
51,490
     
86,485
 
CASH AND SHORT-TERM DEPOSITS - BEGINNING OF PERIOD
   
432,113
     
224,577
 
                 
CASH AND SHORT-TERM DEPOSITS - END OF PERIOD
 
$
483,603
   
$
311,062