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This press release, including our revenue guidance and other projections with respect to our business and activities, 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, (x) pending litigation, (xi) new customer engagements, qualification and production ramp-up at our facilities,(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 other fundraising activities to enable the service of our debt and/or other liabilities and/or for strategic opportunities, including to fund Agrate fab’s significant 300mm capacity investments, in addition to other previously announced capacity expansion plans , and the possible unavailability of such financing and/ or the availability of such financing on 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, including risks and uncertainties associated with Agrate fab establishment project, its qualification schedule, technology, equipment and process qualification and production facility ramp-up, customer engagements, cost structure and investment amounts and other terms, which may require additional funding to cover its significant capacity investment needs and other payments, the availability of which funding cannot be assured on favorable terms, if at all, (xxxvi) potential impact on TPSCo and the Company due to the purchase of 49% of TPSCo by NTCJ (previously named PSCS) from Panasonic, (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, (xxxix) our ability to satisfy the covenants stipulated in our agreements with the series G bondholders (as of December 31, 2021, we are in compliance with this indenture’s covenants), (xxxx) risks associated with the transaction announced on February 15, 2022, including the timely receipt of certain governmental and other regulatory approvals, the potential for regulatory authorities to require divestitures, behavioral remedies or other concessions in order to obtain their approval of the proposed transaction, the occurrence of any event, change or other circumstance that could give rise to a termination of the merger agreement, the effect of the announcement or pendency of the transaction on business relationships, operating results and business generally, delays, disruptions or increased costs due to the integration process with the acquirer, the potential that our shareholders may not approve the transaction, litigation related to or resulting from the transaction, difficulties to retain key personnel and customers, diverting management’s attention from the ongoing business operations, potential negative reactions or changes to business relationships resulting from the announcement or completion of the transaction, and (xxxxi) business interruption due to fire, earthquake and other natural disasters, the security situation in Israel, global trade “war”, COVID-19 pandemic, including its impact on global supply chain to the fabs and from the fabs, power interruptions and other events beyond our control.

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		T h r e e    m o n t h s    e n d e d
		December 31,				September 30,				December 31,
		2021				2021				2020
REVENUES		$	412,108			$	386,706			$	345,211
COST OF REVENUES			311,935				301,330				275,602
GROSS PROFIT			100,173				85,376				69,609
OPERATING COSTS AND EXPENSES:
Research and development			22,371				21,591				19,913
Marketing, general and administrative			21,939				19,620				16,317
			44,310				41,211				36,230
OPERATING PROFIT			55,863				44,165				33,379
FINANCING AND OTHER EXPENSE, NET			(372	)			(2,714	)			(1,498	)
PROFIT BEFORE INCOME TAX			55,491				41,451				31,881
INCOME TAX EXPENSE, NET			(3,614	)			(1,084	)			(1,823	)
NET PROFIT			51,877				40,367				30,058
Net loss (income) attributable to non-controlling interest			(138	)			(1,282	)			974
NET PROFIT ATTRIBUTABLE TO THE COMPANY		$	51,739			$	39,085			$	31,032
BASIC EARNINGS PER SHARE		$	0.48			$	0.36			$	0.29
Weighted average number of shares			108,768				108,354				107,762
DILUTED EARNINGS PER SHARE		$	0.47			$	0.36			$	0.28
Weighted average number of shares			110,267				109,825				108,985
RECONCILIATION FROM GAAP NET PROFIT TO ADJUSTED NET PROFIT:
GAAP NET PROFIT		$	51,739			$	39,085			$	31,032
Stock based compensation			8,815				5,452				5,190
Amortization of acquired intangible assets			506				504				365
ADJUSTED NET PROFIT		$	61,060			$	45,041			$	36,587
ADJUSTED EARNINGS PER SHARE:
Basic		$	0.56			$	0.42			$	0.34
Diluted		$	0.55			$	0.41			$	0.34

TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(dollars and share count in thousands, except per share data)

		Y e a r    e n d e d
		December 31,
		2021				2020
REVENUES		$	1,508,166			$	1,265,684
COST OF REVENUES			1,179,048				1,032,366
GROSS PROFIT			329,118				233,318
OPERATING COSTS AND EXPENSES:
Research and development			85,386				78,320
Marketing, general and administrative			77,221				63,965
			162,607				142,285
OPERATING PROFIT			166,511				91,033
FINANCING AND OTHER EXPENSE, NET			(11,412	)			(2,345	)
PROFIT BEFORE INCOME TAX			155,099				88,688
INCOME TAX EXPENSE, NET			(1,024	)			(5,399	)
NET PROFIT			154,075				83,289
Net income attributable to non-controlling interest			(4,063	)			(987	)
NET PROFIT ATTRIBUTABLE TO THE COMPANY		$	150,012			$	82,302
BASIC EARNINGS PER SHARE		$	1.39			$	0.77
Weighted average number of shares			108,279				107,254
DILUTED EARNINGS PER SHARE		$	1.37			$	0.76
Weighted average number of shares			109,798				108,480
RECONCILIATION FROM GAAP NET PROFIT TO ADJUSTED NET PROFIT:
GAAP NET PROFIT		$	150,012			$	82,302
Stock based compensation			25,144				16,988
Amortization of acquired intangible assets			1,993				1,658
ADJUSTED NET PROFIT		$	177,149			$	100,948
ADJUSTED EARNINGS PER SHARE:
Basic		$	1.64			$	0.94
Diluted		$	1.61			$	0.93