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

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

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