TowerJazz Announces Third Quarter 2019 Results

CONTACTS:
Noit Levy | TowerJazz | +972 4 604 7066 | Noit.levi@towerjazz.com
GK Investor Relations | Gavriel Frohwein, +1 (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 September 30, 2019 we are in compliance with all such covenants included in our banks’ agreements, bond G indenture and others), (x) pending litigation, (xi) new customer engagements, qualification and production ramp-up at our facilities, including TPSCo and the San Antonio facility, (xii) meeting the conditions set in the approval certificates received from the Israeli Investment Center under which we received a significant amount of grants in past years, (xiii) receipt of orders that are lower than the customer purchase commitments, (xiv) failure to receive orders currently expected, (xv) possible incurrence of additional indebtedness, (xvi) effect of global recession, unfavorable economic conditions and/or credit crisis, (xvii) our ability to accurately forecast financial performance, which is affected by limited order backlog and lengthy sales cycles, (xviii) possible situations of obsolete inventory if forecasted demand exceeds actual demand when we manufacture products before receipt of customer orders, (xix) the cyclical nature of the semiconductor industry and the resulting periodic overcapacity, fluctuations in operating results and future average selling price erosion, (xx) the execution of debt re-financing and/or fundraising to enable the service of our debt and/or other liabilities, (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) negotiation and closure of a definitive agreement in relation to fab establishment in China, as well as project implementation through required outside funding and resources and receipt of future proceeds therefrom, and (xxxvi) 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)
            
            
        September 30,  June 30,  December 31,
        2019   2019   2018
              (unaudited)   (unaudited)    
                       
A S S E T S              
                       
  CURRENT ASSETS              
    Cash and cash equivalents $ 417,636 $ 405,158 $ 385,091
    Short-term deposits     159,230   147,032   120,079
    Marketable securities     146,264   146,893   135,850
    Trade accounts receivable   123,519   123,789   153,409
    Inventories     187,902   174,806   170,778
    Other current assets     21,571   22,374   22,752
      Total current assets     1,056,122   1,020,052   987,959
                       
  LONG-TERM INVESTMENTS   36,662   36,874   35,945
                       
  PROPERTY AND EQUIPMENT, NET   703,569   707,122   657,234
                       
  INTANGIBLE ASSETS, NET   10,800   11,279   13,435
                       
  GOODWILL     7,000   7,000   7,000
                       
  DEFERRED TAX AND OTHER LONG-TERM ASSETS, NET 90,269   89,171   88,404
                       
      TOTAL ASSETS   $ 1,904,422 $ 1,871,498 $ 1,789,977
                       
                       
LIABILITIES AND SHAREHOLDERS' EQUITY            
                       
  CURRENT LIABILITIES              
    Short-term debt   $ 64,774 $ 45,173 $ 10,814
    Trade accounts payable     104,366   92,747   104,329
    Deferred revenue and customers' advances   6,539   7,975   20,711
    Other current liabilities     59,065   65,904   67,867
      Total current liabilities   234,744   211,799   203,721
                       
  LONG-TERM DEBT     254,683   275,914   256,669
                       
  LONG-TERM CUSTOMERS' ADVANCES   32,843   27,230   28,131
                       
  LONG-TERM EMPLOYEE RELATED LIABILITIES   13,818   14,295   13,898
                       
  DEFERRED TAX AND OTHER LONG-TERM LIABILITIES 45,598   47,403   51,353
                       
      TOTAL LIABILITIES   581,686   576,641   553,772
                       
      TOTAL SHAREHOLDERS' EQUITY   1,322,736   1,294,857   1,236,205
                       
        TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 1,904,422 $ 1,871,498 $ 1,789,977
                       
                       
                       
                       
                       
                       
                       
                       
          current ratio   4.50   4.82   4.85
          net current assets   821,315   808,253   784,238
                       

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