| TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES | ||||||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||||||
| (dollars in thousands) | ||||||||||||||
| June 30, | March 31, | December 31, | ||||||||||||
| 2014 | 2014 | 2013 | ||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||
| A S S E T S | ||||||||||||||
| CURRENT ASSETS | ||||||||||||||
|
Cash and designated short-term interest bearing deposits |
$ | 192,220 | $ | 182,831 | $ | 122,871 | ||||||||
| Trade accounts receivable | 106,569 | 82,679 | 80,316 | |||||||||||
| Other receivables | 8,450 | 12,928 | 10,943 | |||||||||||
| Inventories | 83,689 | 94,453 | 64,804 | |||||||||||
| Other current assets | 38,305 | 60,279 | 11,480 | |||||||||||
| Total current assets | 429,233 | 433,170 | 290,414 | |||||||||||
| LONG-TERM INVESTMENTS | 14,386 | 14,132 | 14,494 | |||||||||||
| PROPERTY AND EQUIPMENT, NET | 485,177 | 483,525 | 350,039 | |||||||||||
| INTANGIBLE ASSETS, NET | 49,603 | 26,868 | 32,393 | |||||||||||
| GOODWILL | 7,000 | 7,000 | 7,000 | |||||||||||
| OTHER ASSETS, NET | 10,847 | 10,909 | 11,547 | |||||||||||
| TOTAL ASSETS | $ | 996,246 | $ | 975,604 | $ | 705,887 | ||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||
| CURRENT LIABILITIES | ||||||||||||||
| Short term debt | $ | 97,128 | $ | 46,364 | $ | 36,441 | ||||||||
| Trade accounts payable | 100,456 | 73,604 | 66,358 | |||||||||||
| Deferred revenue | 3,752 | 1,372 | 3,166 | |||||||||||
|
Employee related liabilities, including Nishiwaki retirement allowance |
80,423 | 80,356 | 25,957 | |||||||||||
| Deferred tax | -- | 17,006 | -- | |||||||||||
| Other current liabilities | 26,548 | 27,895 | 7,994 | |||||||||||
| Total current liabilities | 308,307 | 246,597 | 139,916 | |||||||||||
| LONG-TERM DEBT | 339,436 | 386,761 | 316,885 | |||||||||||
| LONG-TERM CUSTOMERS' ADVANCES | 6,572 | 6,924 | 7,187 | |||||||||||
|
EMPLOYEE RELATED LIABILITIES |
16,406 | 15,706 | 65,337 | |||||||||||
| DEFERRED TAX LIABILITY | 100,135 | 73,262 | 13,611 | |||||||||||
| OTHER LONG-TERM LIABILITIES | 33,925 | 39,244 | 21,703 | |||||||||||
| Total liabilities | 804,781 | 768,494 | 564,639 | |||||||||||
| TOTAL EQUITY | 191,465 | 207,110 | 141,248 | |||||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 996,246 | $ | 975,604 | $ | 705,887 | ||||||||
| TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES | |||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | |||||||||||||||||||||||
| (dollars in thousands, except per share data) | |||||||||||||||||||||||
| Six months ended | Three months ended | ||||||||||||||||||||||
| June 30, |
June 30, |
||||||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||
| GAAP | GAAP | GAAP | GAAP | ||||||||||||||||||||
| REVENUES | $ | 366,725 | $ | 237,883 | $ | 234,072 | $ | 125,236 | |||||||||||||||
| COST OF REVENUES | 355,750 | 223,086 | 227,347 | 113,014 | |||||||||||||||||||
|
GROSS PROFIT |
10,975 | 14,797 | 6,725 | 12,222 | |||||||||||||||||||
| OPERATING COSTS AND EXPENSES | |||||||||||||||||||||||
| Research and development | 21,605 | 16,891 | 14,162 | 7,396 | |||||||||||||||||||
| Marketing, general and administrative | 27,343 | 20,987 | 16,527 | 10,942 | |||||||||||||||||||
| Nishiwaki Fab restructuring costs and impairment | 75,728 | -- | 4,269 | -- | |||||||||||||||||||
| Amortization related to a lease agreement early termination | -- | 3,732 | -- | 1,866 | |||||||||||||||||||
| Merger related costs | 1,229 | -- | -- | -- | |||||||||||||||||||
| 125,905 | 41,610 | 34,958 | 20,204 | ||||||||||||||||||||
|
OPERATING LOSS |
(114,930 | ) | (26,813 | ) | (28,233 | ) | (7,982 | ) | |||||||||||||||
| INTEREST EXPENSES, NET | (16,931 | ) | (16,332 | ) | (8,818 | ) | (8,305 | ) | |||||||||||||||
|
OTHER FINANCING EXPENSE, NET |
(32,393 | ) | (7,227 | ) | (12,276 | ) | (8,213 | ) | |||||||||||||||
|
GAIN FROM ACQUISITION |
166,404 | -- | 15,249 | -- | |||||||||||||||||||
| OTHER INCOME (EXPENSE), NET | 203 | (59 | ) | 64 | 201 | ||||||||||||||||||
| PROFIT (LOSS) BEFORE INCOME TAX | 2,353 | (50,431 | ) | (34,014 | ) | (24,299 | ) | ||||||||||||||||
|
INCOME TAX BENEFIT |
14,020 | 4,393 | 11,566 | 1,412 | |||||||||||||||||||
| PROFIT (LOSS) BEFORE NON CONTROLLING INTEREST | 16,373 | (46,038 | ) | (22,448 | ) | (22,887 | ) | ||||||||||||||||
| NON CONTROLLING INTEREST | 6,702 | -- | 6,702 | -- | |||||||||||||||||||
| NET PROFIT (LOSS) | $ | 23,075 | $ | (46,038 | ) | $ | (15,746 | ) | $ | (22,887 | ) | ||||||||||||
| BASIC EARNINGS (LOSS) PER ORDINARY SHARE | $ | 0.47 | $ | (1.44 | ) | $ | (0.31 | ) | $ | (0.59 | ) | ||||||||||||
| DILUTED EARNINGS PER ORDINARY SHARE | $ | 0.39 | |||||||||||||||||||||
| Net profit used for diluted earnings per share | $ | 23,075 | |||||||||||||||||||||
|
Weighted average number of ordinary shares outstanding - in thousands, used for diluted earnings per share |
59,815 | ||||||||||||||||||||||
| TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES | ||||||||||||||||||||||||||
| RECONCILIATION OF REPORTED GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | ||||||||||||||||||||||||||
| (dollars in thousands, except share data and per share data) | ||||||||||||||||||||||||||
| Three months ended | Three months ended | Three months ended | ||||||||||||||||||||||||
| June 30, | March 31, | June 30, | March 31, | June 30, | March 31, | |||||||||||||||||||||
| 2014 | 2014 | 2014 | 2014 | 2014 | 2014 | |||||||||||||||||||||
| non-GAAP | Adjustments (see a, b, c, d, e, below) | GAAP | ||||||||||||||||||||||||
| REVENUES | $ | 234,072 | $ | 132,653 | $ | -- | $ | -- | $ | 234,072 | $ |
132,653 |
||||||||||||||
| COST OF REVENUES | 171,672 | 88,162 | 55,675 | (a) | 40,241 | (a) | 227,347 | 128,403 | ||||||||||||||||||
| GROSS PROFIT (LOSS) | 62,400 | 44,491 | (55,675 | ) | (40,241 | ) | 6,725 | 4,250 | ||||||||||||||||||
| OPERATING COSTS AND EXPENSES | ||||||||||||||||||||||||||
| Research and development | 13,734 | 7,155 | 428 | (b) | 288 | (b) | 14,162 | 7,443 | ||||||||||||||||||
| Marketing, general and administrative | 15,556 | 9,866 | 971 | (c) | 950 | (c) | 16,527 | 10,816 | ||||||||||||||||||
| Nishiwaki Fab restructuring costs and impairment | -- | -- | 4,269 | 71,459 | 4,269 | 71,459 | ||||||||||||||||||||
| Merger related costs | -- | -- | -- | 1,229 | -- | 1,229 | ||||||||||||||||||||
| 29,290 | 17,021 | 5,668 | 73,926 | 34,958 | 90,947 | |||||||||||||||||||||
| OPERATING PROFIT (LOSS) | 33,110 | 27,470 | (61,343 | ) | (114,167 | ) | (28,233 | ) | (86,697 | ) | ||||||||||||||||
| INTEREST EXPENSES, NET | (8,818 | ) | (8,113 | ) | -- | (d) | -- | (d) | (8,818 | ) | (8,113 | ) | ||||||||||||||
| OTHER FINANCING INCOME (EXPENSE), NET | -- | -- | (12,276 | ) | (d) | (20,117 | ) | (d) | (12,276 | ) | (20,117 | ) | ||||||||||||||
|
GAIN FROM ACQUISITION |
-- | -- | 15,249 | 151,155 | 15,249 | 151,155 | ||||||||||||||||||||
| OTHER INCOME (EXPENSE), NET | 64 | 139 | -- | -- | 64 | 139 | ||||||||||||||||||||
| PROFIT (LOSS) BEFORE INCOME TAX | 24,356 | 19,496 | (58,370 | ) | 16,871 | (34,014 | ) | 36,367 | ||||||||||||||||||
| INCOME TAX BENEFIT (EXPENSE) | (66 | ) | (37 | ) | 11,632 | (e) | 2,491 | (e) | 11,566 | 2,454 | ||||||||||||||||
| PROFIT (LOSS) BEFORE NON CONTROLLING INTEREST | 24,290 | 19,459 | (46,738 | ) | 19,362 | (22,448 | ) | 38,821 | ||||||||||||||||||
| NON CONTROLLING INTEREST | 6,702 | -- | -- | -- | 6,702 | -- | ||||||||||||||||||||
| NET PROFIT (LOSS) | $ | 30,992 | $ | 19,459 | $ | (46,738 | ) | $ | 19,362 | $ | (15,746 | ) | $ | 38,821 | ||||||||||||
| BASIC EARNINGS (LOSS) PER ORDINARY SHARE | $ | 0.62 | $ | 0.40 | $ | (0.31 | ) | $ | 0.81 | |||||||||||||||||
|
Weighted average number of ordinary shares outstanding - in thousands |
50,146 | 48,142 | 50,146 | 48,142 | ||||||||||||||||||||||
| DILUTED EARNINGS PER ORDINARY SHARE (*) | $ | 0.41 | $ | 0.30 | ||||||||||||||||||||||
| (a) | Includes depreciation and amortization expenses in the amounts of $55,460 and $39,944 and stock based compensation expenses in the amounts of $215 and $297 for the three months ended June 30, 2014 and March 31, 2014, respectively. | |||||||||||||||||||||||||
| (b) | Includes depreciation and amortization expenses in the amounts of $203 and $29 and stock based compensation expenses in the amounts of $225 and $259 for the three months ended June 30, 2014 and March 31, 2014, respectively. | |||||||||||||||||||||||||
| (c) | Includes depreciation and amortization expenses in the amounts of $213 and $200 and stock based compensation expenses in the amounts of $758 and $750 for the three months ended June 30, 2014 and March 31, 2014, respectively. | |||||||||||||||||||||||||
| (d) | Non-GAAP interest expenses and other financing expense, net include only interest on an accrual basis; GAAP financing expense, net for the three months ended March 31, 2014 included one-time non-cash cost of $9.8 million resulted from the Jazz Notes exchange deal dated March 2014. | |||||||||||||||||||||||||
| (e) | Non-GAAP income tax expense include taxes paid during the period. | |||||||||||||||||||||||||
| (*) |
Fully diluted earnings per share calculation and presentation are not required under GAAP for the second quarter of 2014, since the company did not have net profit. Hence, fully diluted earnings per share is not different than basic earnings per share for the second quarter of 2014. Had fully diluted earnings per share calculation and presentation been required for the second quarter of 2014, the company would have added 7 million shares underlying its capital notes, 4 million shares underlying options and warrants, 11 million possible shares underlying notes series F due December 2015 (unless repayable with cash), 11 million possible shares underlying notes series F due December 2016 (unless repayable with cash) and 6 million possible shares underlying Jazz notes due December 2018 (unless repayable with cash). |
|||||||||||||||||||||||||
| TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES | |||||||||||||||||||||||||
| RECONCILIATION OF REPORTED GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | |||||||||||||||||||||||||
| (dollars in thousands, except per share data) | |||||||||||||||||||||||||
| Three months ended | Three months ended | Three months ended | |||||||||||||||||||||||
| June 30, |
June 30, |
June 30, |
|||||||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||
| non-GAAP | Adjustments (see a, b, c, d, e, f below) | GAAP | |||||||||||||||||||||||
| REVENUES | $ | 234,072 | $ | 125,236 | $ | -- | $ | -- | $ | 234,072 | $ | 125,236 | |||||||||||||
| COST OF REVENUES | 171,672 | 81,204 | 55,675 | (a) | 31,810 | (a) | 227,347 | 113,014 | |||||||||||||||||
| GROSS PROFIT | 62,400 | 44,032 | (55,675 | ) | (31,810 | ) | 6,725 | 12,222 | |||||||||||||||||
| OPERATING COSTS AND EXPENSES | |||||||||||||||||||||||||
| Research and development | 13,734 | 7,256 | 428 | (b) | 140 | (b) | 14,162 | 7,396 | |||||||||||||||||
| Marketing, general and administrative | 15,556 | 10,471 | 971 | (c) | 471 | (c) | 16,527 | 10,942 | |||||||||||||||||
| Nishiwaki Fab restructuring costs and impairment | -- | -- | 4,269 |
|
-- | 4,269 | -- | ||||||||||||||||||
| Amortization related to a lease agreement early termination | -- | -- | -- | 1,866 |
(d) |
-- | 1,866 | ||||||||||||||||||
| 29,290 | 17,727 | 5,668 | 2,477 | 34,958 | 20,204 | ||||||||||||||||||||
| OPERATING PROFIT (LOSS) | 33,110 | 26,305 | (61,343 | ) | (34,287 | ) | (28,233 | ) | (7,982 | ) | |||||||||||||||
| INTEREST EXPENSES, NET | (8,818 | ) | (8,305 | ) | -- | (e) | -- | (e) | (8,818 | ) | (8,305 | ) | |||||||||||||
| OTHER FINANCING EXPENSE, NET | -- | -- | (12,276 | ) | (e) | (8,213 | ) | (e) | (12,276 | ) | (8,213 | ) | |||||||||||||
|
GAIN FROM ACQUISITION |
-- | -- | 15,249 | -- | 15,249 | -- | |||||||||||||||||||
| OTHER INCOME, NET | 64 | 201 | -- | -- | 64 | 201 | |||||||||||||||||||
| PROFIT (LOSS) BEFORE INCOME TAX | 24,356 | 18,201 | (58,370 | ) | (42,500 | ) | (34,014 | ) | (24,299 | ) | |||||||||||||||
| INCOME TAX BENEFIT (EXPENSE) | (66 | ) | 11,632 | (f) | 1,412 | (f) | 11,566 | 1,412 | |||||||||||||||||
| PROFIT (LOSS) BEFORE NON CONTROLLING INTEREST | 24,290 | 18,201 | (46,738 | ) | (41,088 | ) | (22,448 | ) | (22,887 | ) | |||||||||||||||
| NON CONTROLLING INTEREST | 6,702 | -- | -- | -- | 6,702 | -- | |||||||||||||||||||
| NET PROFIT (LOSS) | $ | 30,992 | $ | 18,201 | $ | (46,738 | ) | $ | (41,088 | ) | $ | (15,746 | ) | $ | (22,887 | ) | |||||||||
| BASIC EARNINGS (LOSS) PER ORDINARY SHARE | $ | 0.62 | $ | 0.47 | $ | (0.31 | ) | $ | (0.59 | ) | |||||||||||||||
| (a) | Includes depreciation and amortization expenses in the amounts of $55,460 and $31,735 and stock based compensation expenses in the amounts of $215 and $75 for the three months ended June 30, 2014 and June 30, 2013, respectively. | ||||||||||||||||||||||||
| (b) | Includes depreciation and amortization expenses in the amounts of $203 and $75 and stock based compensation expenses in the amounts of $225 and $65 for the three months ended June 30, 2014 and June 30, 2013, respectively. | ||||||||||||||||||||||||
| (c) | Includes depreciation and amortization expenses in the amounts of $213 and $160 and stock based compensation expenses in the amounts of $758 and $311 for the three months ended June 30, 2014 and June 30, 2013, respectively. | ||||||||||||||||||||||||
| (d) | Non cash amortization recorded in 2013 as a result of an early termination of an office building lease contract. | ||||||||||||||||||||||||
| (e) | Non-GAAP interest expenses and other financing expense, net include only interest on an accrual basis. | ||||||||||||||||||||||||
| (f) | Non-GAAP income tax expense include taxes paid during the period. | ||||||||||||||||||||||||
| TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES | ||||||||||||||||||||||||||
| RECONCILIATION OF REPORTED GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | ||||||||||||||||||||||||||
| (dollars in thousands, except per share data) | ||||||||||||||||||||||||||
| Six months ended | Six months ended | Six months ended | ||||||||||||||||||||||||
| June 30, |
June 30, |
June 30, |
||||||||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||
| non-GAAP | Adjustments (see a, b, c, d, e, f below) | GAAP | ||||||||||||||||||||||||
| REVENUES | $ | 366,725 | $ | 237,883 | $ | -- | $ | -- | $ | 366,725 | $ | 237,883 | ||||||||||||||
| COST OF REVENUES | 259,834 | 160,151 | 95,916 | (a) | 62,935 | (a) | 355,750 | 223,086 | ||||||||||||||||||
| GROSS PROFIT | 106,891 | 77,732 | (95,916 | ) | (62,935 | ) | 10,975 | 14,797 | ||||||||||||||||||
| OPERATING COSTS AND EXPENSES | ||||||||||||||||||||||||||
| Research and development | 20,889 | 16,603 | 716 | (b) | 288 | (b) | 21,605 | 16,891 | ||||||||||||||||||
| Marketing, general and administrative | 25,422 | 19,874 | 1,921 | (c) | 1,113 | (c) | 27,343 | 20,987 | ||||||||||||||||||
| Nishiwaki Fab restructuring costs and impairment | -- | -- | 75,728 |
|
-- | 75,728 | -- | |||||||||||||||||||
| Amortization related to a lease agreement early termination | -- | -- | -- | 3,732 |
(d) |
-- | 3,732 | |||||||||||||||||||
| Merger related costs | -- | -- | 1,229 | -- | 1,229 | -- | ||||||||||||||||||||
| 46,311 | 36,477 | 79,594 | 5,133 | 125,905 | 41,610 | |||||||||||||||||||||
| OPERATING PROFIT (LOSS) | 60,580 | 41,255 | (175,510 | ) | (68,068 | ) | (114,930 | ) | (26,813 | ) | ||||||||||||||||
| INTEREST EXPENSES, NET | (16,931 | ) | (16,332 | ) | -- | (e) | -- | (e) | (16,931 | ) | (16,332 | ) | ||||||||||||||
| OTHER FINANCING EXPENSE, NET | -- | -- | (32,393 | ) | (e) | (7,227 | ) | (e) | (32,393 | ) | (7,227 | ) | ||||||||||||||
|
GAIN FROM ACQUISITION |
-- | -- | 166,404 | -- | 166,404 | -- | ||||||||||||||||||||
| OTHER INCOME (EXPENSE), NET | 203 | (59 | ) | -- | -- | 203 | (59 | ) | ||||||||||||||||||
| PROFIT (LOSS) BEFORE INCOME TAX | 43,852 | 24,864 | (41,499 | ) | (75,295 | ) | 2,353 | (50,431 | ) | |||||||||||||||||
| INCOME TAX BENEFIT (EXPENSE) | (103 | ) | (190 | ) | 14,123 | (f) | 4,583 |
(f) |
14,020 | 4,393 | ||||||||||||||||
| PROFIT (LOSS) BEFORE NON CONTROLLING INTEREST | 43,749 | 24,674 | (27,376 | ) | (70,712 | ) | 16,373 | (46,038 | ) | |||||||||||||||||
| NON CONTROLLING INTEREST | 6,702 | -- | -- | -- | 6,702 | -- | ||||||||||||||||||||
| NET PROFIT (LOSS) | $ | 50,451 | $ | 24,674 | $ | (27,376 | ) | $ | (70,712 | ) | $ | 23,075 | $ | (46,038 | ) | |||||||||||
| BASIC EARNINGS (LOSS) PER ORDINARY SHARE | $ | 1.03 | $ | 0.77 | $ | 0.47 | $ | (1.44 | ) | |||||||||||||||||
| (a) | Includes depreciation and amortization expenses in the amounts of $95,404 and $62,701 and stock based compensation expenses in the amounts of $512 and $234 for the six months ended June 30, 2014 and June 30, 2013, respectively. | |||||||||||||||||||||||||
| (b) | Includes depreciation and amortization expenses in the amounts of $232 and $105 and stock based compensation expenses in the amounts of $484 and $183 for the six months ended June 30, 2014 and June 30, 2013, respectively. | |||||||||||||||||||||||||
| (c) | Includes depreciation and amortization expenses in the amounts of $413 and $364 and stock based compensation expenses in the amounts of $1,508 and $749 for the six months ended June 30, 2014 and June 30, 2013, respectively. | |||||||||||||||||||||||||
| (d) | Non cash amortization related to an early termination of an office building lease contract. | |||||||||||||||||||||||||
| (e) | Non-GAAP interest expenses and other financing expense, net include only interest on an accrual basis; GAAP financing expense, net, includes (i) in 2014 - one-time non-cash cost of $9.8 million resulted from the Jazz Notes exchange deal dated March 2014; and (ii) in 2013 - one-time non-cash income of $6.5 million from the banks' extension contract signed in March 2013. | |||||||||||||||||||||||||
| (f) | Non-GAAP income tax expenses include taxes paid during the period | |||||||||||||||||||||||||
