TOWER SEMICONDUCTOR LTD
false 0000928876 Q2 --12-31


FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

For the month of August 2020 No.3

Commission File Number 000-24790

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 if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____


On August 5, 2020, the Registrant issued unaudited condensed interim consolidated financial statements as of June 30, 2020, and for the six and three month’s periods then ended. Attached hereto are the following exhibits.

 

Exhibit 99.1

Registrant’s consolidated financial statements as of June 30, 2020 and the report thereon dated August 5, 2020 of Brightman Almagor Zohar & Co.

Exhibit 99.2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Form 6-K, including all exhibits hereto, is hereby incorporated by reference into all effective registration statements filed by us under the Securities Act of 1933.


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 5, 2020

By:

/s/ Nati Somekh

Name:

Nati Somekh

Title:

Corporate Secretary



TOWER SEMICONDUCTOR LTD
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Exhibit 99.1

TOWER SEMICONDUCTOR LTD.

AND SUBSIDIARIES

UNAUDITED CONDENSED INTERIM

CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2020


TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES

INDEX TO UNAUDITED CONDENSED INTERIM

CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2020

Page

BALANCE SHEETS

F-2

STATEMENTS OF OPERATIONS

F-3

STATEMENTS OF COMPREHENSIVE INCOME

F-4

STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

F-5

STATEMENTS OF CASH FLOWS

F-6 - F-7

NOTES TO FINANCIAL STATEMENTS

F-8


TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES

CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(dollars and shares in thousands)

As of

As of

June 30,

December 31,

2020

2019

 

A S S E T S

 

CURRENT ASSETS

Cash and cash equivalents

$

258,793

$

355,561

Short-term interest-bearing deposits

269,263

215,609

Marketable securities

195,886

176,070

Trade accounts receivable

128,401

126,966

Inventories

210,129

192,256

Other current assets

28,158

22,019

Total current assets

1,090,630

1,088,481

 

LONG-TERM INVESTMENTS

41,219

40,085

 

PROPERTY AND EQUIPMENT, NET

765,895

681,939

 

GOODWILL AND INTANGIBLE ASSETS, NET

16,298

17,281

 

DEFERRED TAX AND OTHER LONG-TERM ASSETS, NET

91,834

105,047

 

TOTAL ASSETS

$

2,005,876

$

1,932,833

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

CURRENT LIABILITIES

Current maturities of long-term debt

$

79,668

$

65,932

Trade accounts payable

154,517

119,199

Deferred revenue and customers' advances

8,455

10,322

Employee related liabilities

59,079

50,302

Other current liabilities

9,113

7,301

Total current liabilities

310,832

253,056

 

LONG-TERM DEBT

219,764

245,821

 

LONG-TERM CUSTOMERS' ADVANCES

27,570

28,196

 

EMPLOYEE RELATED LIABILITIES

14,970

13,285

 

DEFERRED TAX LIABILITY

40,075

45,238

 

OTHER LONG-TERM LIABILITIES

521

514

 

TOTAL LIABILITIES

613,732

586,110

 

THE COMPANY'S SHAREHOLDERS' EQUITY

1,398,009

1,354,547

Non-controlling interest

(5,865

)

(7,824

)

TOTAL SHAREHOLDERS' EQUITY

1,392,144

1,346,723

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

2,005,876

$

1,932,833

See notes to consolidated financial statements.

F - 2


TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

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

Six months ended

Three months ended

June 30,

June 30,

2020

2019

2020

2019

 

REVENUES

$

610,261

$

616,171

$

310,090

$

306,064

 

COST OF REVENUES

500,013

499,613

252,385

252,657

 

GROSS PROFIT

110,248

116,558

57,705

53,407

 

OPERATING COSTS AND EXPENSES:

 

Research and development

38,838

37,980

19,424

18,812

Marketing, general and administrative

32,845

33,479

16,154

16,838

 

71,683

71,459

35,578

35,650

 

OPERATING PROFIT

38,565

45,099

22,127

17,757

 

FINANCING AND OTHER INCOME (EXPENSE), NET

(282

)

1,672

1,831

947

 

PROFIT BEFORE INCOME TAX

38,283

46,771

23,958

18,704

 

INCOME TAX BENEFIT (EXPENSE), NET

(778

)

(649

)

(2,484

)

1,018

 

NET PROFIT

37,505

46,122

21,474

19,722

 

Net loss (income) attributable to non-controlling interest

(1,433

)

1,030

(2,422

)

1,214

 

NET PROFIT ATTRIBUTABLE TO THE COMPANY

$

36,072

$

47,152

$

19,052

$

20,936

 

BASIC EARNINGS PER ORDINARY SHARE:

 

Earnings per share

$

0.34

$

0.45

$

0.18

$

0.20

 

Weighted average number of ordinary shares outstanding

106,885

105,829

106,956

106,321

 

DILUTED EARNINGS PER ORDINARY SHARE:

 

Earnings per share

$

0.33

$

0.44

$

0.18

$

0.20

 

Net profit used for diluted earnings per share

$

36,072

$

47,152

$

19,052

$

20,936

 

Weighted average number of ordinary shares outstanding used for diluted earnings per share

108,213

107,078

108,277

107,178

See notes to consolidated financial statements.

F - 3


TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(dollars in thousands)

Six months ended

Three months ended

June 30,

June 30,

2020

2019

2020

2019

 

Net profit

$

37,505

$

46,122

$

21,474

$

19,722

 

Other comprehensive income, net of tax:

 

Foreign currency translation adjustment

(124

)

2,672

556

4,323

 

Change in employees plan assets and benefit obligations, net of taxes

(130

)

115

(65

)

172

 

Unrealized gain (loss) on derivatives

(1,473

)

1,639

4,662

(431

)

 

Comprehensive income

35,778

50,548

26,627

23,786

 

Comprehensive income attributable to non-controlling interest

(1,959

)

(496

)

(3,091)

(939

)

 

Comprehensive income attributable to the Company

$

33,819

$

50,052

$

23,536

$

22,847

See notes to consolidated financial statements.

F - 4


TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES

CONDENSED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)

(dollars and share data in thousands)

THE COMPANY'S SHAREHOLDERS' EQUITY

Ordinary

shares

issued

Ordinary

shares

amount

Additional

paid-in

capital

Capital

notes

Unearned compensation

Accumulated other comprehensive income

Foreign currency translation adjustments

Accumulated deficit

Treasury stock

Comprehensive income

Non

controlling

interest

Total

 

BALANCE AS OF JANUARY 1, 2020

106,895

$

426,111

$

1,395,376

$

--

$

107,774

$

1,906

$

(20,150

)

$

(547,398

)

$

(9,072

)

$

(7,824

)

$

1,346,723

 

Changes during the period:

 

Exercise of options and RSUs

454

1,952

(647

)

1,305

Employee stock-based compensation

8,338

8,338

Other comprehensive income:

Profit

36,072

$

36,072

1,433

37,505

Foreign currency translation adjustments

(650

)

(650

)

526

(124

)

Change in employees plan assets and benefit obligations

(130

)

(130

)

(130

)

Unrealized loss on derivatives

(1,473

)

(1,473

)

(1,473

)

Comprehensive income

$

33,819

 

BALANCE AS OF JUNE 30, 2020

107,349

$

428,063

$

1,394,729

$

--

$

116,112

$

303

$

(20,800

)

$

(511,326

)

$

(9,072

)

$

(5,865

)

$

1,392,144

 

OUTSTANDING SHARES, NET OF TREASURY STOCK AS OF JUNE 30, 2020

107,262

See notes to consolidated financial statements.

F - 5


TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(dollars in thousands)

Six months ended

June 30,

CASH FLOWS - OPERATING ACTIVITIES

2020

2019

 

Net profit

$

37,505

$

46,122

 

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

117,299

104,867

Effect of exchange rate differences on debentures

(910

)

6,205

Other income, net

(890

)

(445

)

Changes in assets and liabilities:

Trade accounts receivable

(1,296

)

31,271

Other current assets

5,122

(5,755

)

Inventories

(17,380

)

(3,017

)

Trade accounts payable

(12,950

)

(15,204

)

Deferred revenue and customers' advances

(2,498

)

(13,649

)

Employee related liabilities and other current liabilities

10,729

(1,846

)

Long-term employee related liabilities

2,078

39

Deferred tax, net and other long-term liabilities

(1,870

)

(1,564

)

Net cash provided by operating activities

134,939

147,024

 

CASH FLOWS - INVESTING ACTIVITIES

 

Investments in property and equipment, net

(125,444

)

(85,445

)

Investments in deposits, marketable securities and other assets, net

(78,786

)

(33,825

)

Net cash used in investing activities

(204,230

)

(119,270

)

 

CASH FLOWS - FINANCING ACTIVITIES

 

Exercise of options

1,214

397

Principal payments on account of capital lease obligation

(10,443

)

(10,549

)

Debentures repayment

(18,754

)

--

Net cash used in financing activities

(27,983

)

(10,152

)

 

EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGE

506

2,465

 

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

(96,768

)

20,067

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD

355,561

385,091

 

CASH AND CASH EQUIVALENTS - END OF PERIOD

$

258,793

$

405,158

See notes to consolidated financial statements.

F - 6


TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(dollars in thousands)

Six months ended

June 30,

2020

2019

 

NON-CASH ACTIVITIES:

 

Investments in property and equipment

$

71,967

$

35,529

Conversion of notes into share capital

$

--

$

20,758

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

 

Cash received during the period from interest, net

$

2,028

$

1,226

Cash paid during the period for income taxes, net

$

2,149

$

10,178

See notes to consolidated financial statements.

F - 7


TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED

FINANCIAL STATEMENTS AS OF JUNE 30, 2020

(dollars in thousands, except per share data)

NOTE 1 - GENERAL

Basis for Presentation

The unaudited condensed interim consolidated financial statements of Tower Semiconductor Ltd. (“Tower”) as of June 30, 2020 include the financial statements of Tower and (i) its wholly-owned subsidiary Tower US Holdings Inc., the sole owner of: (1) Tower Semiconductor US Tech Holdings, Inc. (formerly named “Jazz US Holdings Inc.”) and its wholly-owned subsidiary, Tower Semiconductor Newport Beach, Inc. (formerly named “Jazz Semiconductor, Inc.”) and (2) Tower Semiconductor San Antonio, Inc. (formerly named “TowerJazz Texas Inc.”), and (ii) its 51% owned subsidiary, Tower Partners Semiconductor Co., Ltd. (formerly named “TowerJazz Panasonic Semiconductor Co. Ltd.”) (“TPSCo”). Tower and its subsidiaries are collectively referred to as the “Company”.

The Company’s unaudited condensed interim consolidated financial statements are presented after elimination of inter-company transactions and balances and are presented in accordance with U.S. generally accepted accounting principles (“US GAAP”).

The unaudited condensed interim consolidated financial statements of the Company should be read in conjunction with the audited consolidated financial statements of the Company as of December 31, 2019 and for the year then ended, including the notes thereto.

In the opinion of the Company's management, the unaudited condensed interim consolidated financial statements include all adjustments necessary for a fair presentation of the Company’s financial position as of the dates presented and results of operations for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the results to be expected on a full-year basis.

NOTE 2 - INITIAL ADOPTION OF NEW STANDARDS

In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes - Simplifying the Accounting for Income Taxes” (“Topic 740”). The ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The ASU also clarifies and amends existing guidance to improve consistent application among reporting entities. The guidance will be effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.

NOTE 3 - RECENT DEVELOPMENTS

In November 2019, Panasonic Corporation announced it will sell its fully-owned subsidiary, Panasonic Semiconductor Solution Co., Ltd (“PSCS”), which holds 49% in TPSCo, to Nuvoton Technology Corporation, a Taiwan-based semiconductor company, which is an affiliate of Winbond Electronics Corporation. The transaction is subject to regulatory and / or other approvals and has not yet closed.

In May 2020, the Company received approval of its shelf prospectus filed in Israel, to serve as a platform for future possible issuance of securities. No decision has been made to date with respect to any specific type of securities to be

issued or its timing, if any.

F - 8




Exhibit 99.2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
 
CONDITION AND RESULTS OF OPERATIONS
 
The information contained in this section should be read in conjunction with (1) our unaudited condensed interim consolidated financial statements as of June 30, 2020 and for the six months then ended and related notes included in this report and (2) our audited consolidated financial statements and related notes included in our Annual Report on Form 20-F for the year ended December 31, 2019 and the other information contained in such annual report, particularly the information in Item 5 - “Operating and Financial Review and Prospects”. Our financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“US GAAP”).

Results of Operations
 
The following table sets forth certain statement of operations data as a percentage of total revenues for the periods indicated:
 
   
Six months ended
June 30,
 
   
2020
   
2019
 
Revenues          
   
100
%
   
100
%
Cost of revenues          
   
81.9
     
81.1
 
Gross profit          
   
18.1
     
18.9
 
Research and development expense          
   
6.4
     
6.2
 
Marketing, general and administrative expense          
   
5.4
     
5.4
 
Operating profit          
   
6.3
     
7.3
 
Financing and other income (expense), net          
   
0.0
     
0.3
 
Profit before income tax          
   
6.3
     
7.6
 
Income tax expense, net          
   
(0.1
)
   
(0.1
)
Net profit          
   
6.2
     
7.5
 
Net loss (income) attributable to the non-controlling interest
   
(0.2
)
   
0.2
 
Net profit attributable to the company          
   
6.0
%
   
7.7
%
 
The following table sets forth certain statement of operations data for the periods indicated (in thousands):
 
   
Six months ended
June 30,
 
   
2020
   
2019
 
Revenues          
 
$
610,261
   
$
616,171
 
Cost of revenues          
   
500,013
     
499,613
 
Gross profit          
   
110,248
     
116,558
 
Research and development expense          
   
38,838
     
37,980
 
Marketing, general and administrative expense          
   
32,845
     
33,479
 
Operating profit          
   
38,565
     
45,099
 
Financing and other income (expense), net          
   
(282
)
   
1,672
 
Profit before income tax          
   
38,283
     
46,771
 
Income tax expense, net          
   
(778
)
   
(649
)
Net profit          
   
37,505
     
46,122
 
Net loss (income) attributable to the non-controlling interest
   
(1,433
)
   
1,030
 
Net profit attributable to the company          
 
$
36,072
   
$
47,152
 
 

Six months ended June 30, 2020 compared to six months ended June 30, 2019
 
Revenues. Revenues for the six months ended June 30, 2020 were $610.3 million, as compared to $616.2 million for the six months ended June 30, 2019. The $5.9 million revenue reduction is attributed mainly to our amended  contract signed with Panasonic Semiconductor Solutions Co., Ltd (“PSCS”) in March 2019, according to which,  PSCS continues to utilize TPSCo’s manufacturing facilities in Japan for its semiconductor business under a new structure with lower prices, effective from April 2019.
 
Cost of Revenues. Cost of revenues for the six months ended June 30, 2020 amounted to $500.0 million as compared to $499.6 million for the six months ended June 30, 2019. There is no decline in the cost of goods sold despite the $5.9 million lower revenues since (i) the above referenced PSCS revenue reduction was not derived from lower quantity of products sold but from lower selling prices; and (ii) a large portion of our cost is fixed.
 
Gross Profit. Gross profit for the six months ended June 30, 2020 amounted to $110.2 million as compared to $116.6 million for the six months ended June 30, 2019. The $6.3 million decrease in gross profit resulted mainly from the $5.9 million revenue reduction described above and the small $0.4 million increase in cost of revenues, as described above.
 
Research and Development. Research and development expense for the six months ended June 30, 2020, amounted to $38.8 million as compared to $38.0 million in the six months ended June 30, 2019. The insignificant change in research and development expense reflects our continuing focus on enhancing our mid-term and long-term products’ funnel, technology capabilities and future design wins.
 
Marketing, General and Administrative. Marketing, general and administrative expense for the six months ended June 30, 2020 amounted to $32.8 million, a decrease of $0.6 million as compared to $33.5 million recorded in the six months ended June 30, 2019, reflecting 5.4% of revenues in both periods.
 
Operating Profit. Operating profit for the six months ended June 30, 2020 amounted to $38.6 million as compared to $45.1 million for the six months ended June 30, 2019. The $6.5 million decrease in operating profit resulted mainly from the $6.3 million reduction in gross profit described above.
 
Financing and Other Income (Expense), Net. Financing and other expense, net for the six months ended June 30, 2020 amounted to $0.3 million as compared to financing and other income, net of $1.7 million for the six months ended June 30, 2019. During the six months ended June 30, 2020 interest income was lower due to the reduced interest rates and yields we were able to get on our deposits and marketable securities.
 
Income Tax Expense, Net. Income tax expense, net for the six months ended June 30, 2020 amounted to $0.8 million, a small increase of $0.2 million as compared to $0.6 million in the six months ended June 30, 2019, reflecting mainly an increase in profitability in TPSCo (Japan), which is a higher tax region.
 
Net profit. Net profit for the six months ended June 30, 2020 amounted to $37.5 million as compared to a net profit of $46.1 million for the six months ended June 30, 2019.  The decrease in net profit in the amount of $8.6 million was mainly due to the decrease of $6.5 million in operating profit as described above and the $2.0 million increase in financing expense, net as described above.
 
Net loss (income) attributable to the non-controlling interest. Net loss (income) attributable to the non-controlling interest for the six months ended June 30, 2020 amounted to $1.4 million expense as compared to an income of $1.0 million in the six months ended June 30, 2019, reflecting mainly an increase in TPSCo’s profitability, of which we hold 51%.
 
Net Profit attributable to the company. Net profit attributable to the company for the six months ended June 30, 2020 amounted to $36.1 million as compared to a net profit of $47.2 million for the six months ended June 30, 2019.  The decrease in net profit in the amount of $11.1 million was mainly due to the decrease of $6.5 million in operating profit, $2.0 million increase in financing expense, net, and $2.5 million higher income attributable to non-controlling interest, as described above.
 
For details with regards to risks associated with the Covid-19 pandemic and/or risks that may result from the pandemic, see our disclosure under ITEM 3 in our Form 20-F filed on April 30, 2020.
 

Impact of Currency Fluctuations
 
 The Company currently operates in three different regions: Japan, the United States and Israel. The functional currency of our entities in the United States and Israel is the US dollar (“USD”). The functional currency of our subsidiary in Japan is the Japanese Yen (“JPY”). Our expenses and costs are denominated mainly in USD, JPY and New Israeli Shekels (“NIS”), revenues are denominated mainly in USD and JPY and our cash from operations, investing and financing activities are denominated mainly in USD, JPY and NIS. Therefore, the Company is exposed to the risk of currency exchange rate fluctuations in Israel and Japan.
 
The USD cost of our operations in Israel is influenced by changes in the USD to NIS exchange rate, with respect to costs that are denominated in NIS. During the six months ended June 30, 2020, the USD appreciated against the NIS by 0.3%, as compared to 4.9% depreciation during the six months ended June 30, 2019.
 
The fluctuation of USD against the NIS can affect our results of operations as it relates to the entity in Israel. Appreciation of the NIS has the effect of increasing the cost, in USD terms, of some of the purchases and labor costs that are denominated in NIS, which may lead to erosion in the profit margins. The Company uses foreign currency cylinder transactions to hedge a portion of this currency exposure to be contained within a pre-defined fixed range. In addition, the Company executed swap-hedging transactions to hedge the exposure to the fluctuation of USD against the NIS to the extent it relates to non-convertible Series G debentures, which are denominated in NIS.
 
The majority of TPSCo revenues are denominated in JPY and the majority of TPSCo expenses are in JPY, which limits the exposure to fluctuations of the USD / JPY exchange rate on TPSCo’s results of operations. In order to mitigate a portion of the net exposure to the USD / JPY exchange rate, the Company has engaged in cylinder hedging transactions to contain the currency’s fluctuation within a pre-defined fixed range.
 
During the six months ended June 30, 2020, the USD depreciated against the JPY by 0.7%, as compared to 2.0% depreciation during the six months ended June 30, 2019. The net effect of USD depreciation against the JPY on TPSCo’s assets and liabilities denominated in JPY is presented in the Cumulative Translation Adjustment (“CTA”) as part of Other Comprehensive Income (“OCI”) in the balance sheet.
 
Liquidity and Capital Resources
 
As of June 30, 2020, the Company had an aggregate amount of $258.8 million in cash and cash equivalents, as compared to $355.6 million as of December 31, 2019. The main cash activities during the six months ended June 30, 2020 were: $134.9 million net cash provided by operating activities; $125.4 million invested in property and equipment, net; $78.8 million invested in short-term deposits, marketable securities and other assets, net and $29.2 million debt repaid.
 
Short-term and long-term debt presented in the balance sheet as of June 30, 2020, included bank loans, debentures, operating leases and capital leases amounted to $79.7 million and $219.8 million, respectively. As of June 30, 2020, the aggregate principal amount of debentures was $115.7 million and its carrying amount in the balance sheet was $113.5 million, of which $37.8 million was presented as a short-term liability.
 

v3.20.2
Document and Entity Information
6 Months Ended
Jun. 30, 2020
Document and Entity Information [Abstract]  
Entity Central Index Key 0000928876
Current Fiscal Year End Date --12-31
Document Fiscal Year Focus 2020
Document Fiscal Period Focus Q2
Amendment Flag false
Document Type 6-K
Document Period End Date Jun. 30, 2020
Entity Registrant Name TOWER SEMICONDUCTOR LTD
Entity Address, Address Line One Ramat Gavriel Industrial Park
Entity Address, Address Line Two P.O. Box 619
Entity Address, City or Town Migdal Haemek
Entity Address, Postal Zip Code 2310502
v3.20.2
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
CURRENT ASSETS    
Cash and cash equivalents $ 258,793 $ 355,561
Short-term interest-bearing deposits 269,263 215,609
Marketable securities 195,886 176,070
Trade accounts receivable 128,401 126,966
Inventories 210,129 192,256
Other current assets 28,158 22,019
Total current assets 1,090,630 1,088,481
LONG-TERM INVESTMENTS 41,219 40,085
PROPERTY AND EQUIPMENT, NET 765,895 681,939
GOODWILL AND INTANGIBLE ASSETS, NET 16,298 17,281
DEFERRED TAX AND OTHER LONG-TERM ASSETS, NET 91,834 105,047
TOTAL ASSETS 2,005,876 1,932,833
CURRENT LIABILITIES    
Current maturities of long-term debt 79,668 65,932
Trade accounts payable 154,517 119,199
Deferred revenue and customers' advances 8,455 10,322
Employee related liabilities 59,079 50,302
Other current liabilities 9,113 7,301
Total current liabilities 310,832 253,056
LONG-TERM DEBT 219,764 245,821
LONG-TERM CUSTOMERS' ADVANCES 27,570 28,196
EMPLOYEE RELATED LIABILITIES 14,970 13,285
DEFERRED TAX LIABILITY 40,075 45,238
OTHER LONG-TERM LIABILITIES 521 514
TOTAL LIABILITIES 613,732 586,110
THE COMPANY'S SHAREHOLDERS' EQUITY 1,398,009 1,354,547
Non-controlling interest (5,865) (7,824)
TOTAL SHAREHOLDERS' EQUITY 1,392,144 1,346,723
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,005,876 $ 1,932,833
v3.20.2
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Income Statement [Abstract]        
REVENUES $ 310,090 $ 306,064 $ 610,261 $ 616,171
COST OF REVENUES 252,385 252,657 500,013 499,613
GROSS PROFIT 57,705 53,407 110,248 116,558
OPERATING COSTS AND EXPENSES:        
Research and development 19,424 18,812 38,838 37,980
Marketing, general and administrative 16,154 16,838 32,845 33,479
TOTAL OPERATING COSTS AND EXPENSES 35,578 35,650 71,683 71,459
OPERATING PROFIT 22,127 17,757 38,565 45,099
FINANCING AND OTHER INCOME (EXPENSE), NET 1,831 947 (282) 1,672
PROFIT BEFORE INCOME TAX 23,958 18,704 38,283 46,771
INCOME TAX BENEFIT (EXPENSE), NET (2,484) 1,018 (778) (649)
NET PROFIT 21,474 19,722 37,505 46,122
Net loss attributable to non-controlling interest (2,422) 1,214 (1,433) 1,030
NET PROFIT ATTRIBUTABLE TO THE COMPANY $ 19,052 $ 20,936 $ 36,072 $ 47,152
BASIC EARNINGS PER ORDINARY SHARE:        
Earnings per share $ 0.18 $ 0.20 $ 0.34 $ 0.45
Weighted average number of ordinary shares outstanding 106,956 106,321 106,885 105,829
DILUTED EARNINGS PER ORDINARY SHARE:        
Earnings per share $ 0.18 $ 0.20 $ 0.33 $ 0.44
Net profit used for diluted earnings per share $ 19,052 $ 20,936 $ 36,072 $ 47,152
Weighted average number of ordinary shares outstanding used for diluted earnings per share 108,277 107,178 108,213 107,078
v3.20.2
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Statement of Comprehensive Income [Abstract]        
Net profit $ 21,474 $ 19,722 $ 37,505 $ 46,122
Other comprehensive income, net of tax:        
Foreign currency translation adjustment 556 4,323 (124) 2,672
Change in employees plan assets and benefit obligations, net of taxes (65) 172 (130) 115
Unrealized gain (loss) on derivatives 4,662 (431) (1,473) 1,639
Comprehensive income 26,627 23,786 35,778 50,548
Comprehensive income attributable to non-controlling interest (3,091) (939) (1,959) (496)
Comprehensive income attributable to the Company $ 23,536 $ 22,847 $ 33,819 $ 50,052
v3.20.2
CONDENSED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) - 6 months ended Jun. 30, 2020 - USD ($)
shares in Thousands, $ in Thousands
Ordinary shares [Member]
Additional paid-in capital [Member]
Capital notes [Member]
Unearned compensation [Member]
Accumulated other comprehensive income [Member]
Foreign currency translation adjustment [Member]
Accumulated deficit [Member]
Treasury stock [Member]
Comprehensive income [Member]
Noncontrolling interest [Member]
Total
BALANCE at Dec. 31, 2019 $ 426,111 $ 1,395,376 $ 107,774 $ 1,906 $ (20,150) $ (547,398) $ (9,072)   $ (7,824) $ 1,346,723
BALANCE, SHARES at Dec. 31, 2019 106,895                    
Changes during the period:                      
Exercise of options and RSUs $ 1,952 (647)                 1,305
Exercise of options and RSUs, shares 454                    
Employee stock-based compensation       8,338             8,338
Other comprehensive income:                      
Profit             36,072   $ 36,072 1,433 37,505
Foreign currency translation adjustments           (650)     (650) 526 (124)
Change in employees plan assets and benefit obligations         (130)       (130)   (130)
Unrealized loss on derivatives         (1,473)       (1,473)   (1,473)
Comprehensive income                 $ 33,819   33,819
BALANCE at Jun. 30, 2020 $ 428,063 $ 1,394,729 $ 116,112 $ 303 $ (20,800) $ (511,326) $ (9,072)   $ (5,865) $ 1,392,144
BALANCE, SHARES at Jun. 30, 2020 107,349                    
OUTSTANDING SHARES, NET OF TREASURY STOCK at Jun. 30, 2020 107,262                    
v3.20.2
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
CASH FLOWS - OPERATING ACTIVITIES    
Net profit $ 37,505 $ 46,122
Income and expense items not involving cash flows:    
Depreciation and amortization 117,299 104,867
Effect of exchange rate differences on debentures (910) 6,205
Other income, net (890) (445)
Changes in assets and liabilities:    
Trade accounts receivable (1,296) 31,271
Other current assets 5,122 (5,755)
Inventories (17,380) (3,017)
Trade accounts payable (12,950) (15,204)
Deferred revenue and customers' advances (2,498) (13,649)
Employee related liabilities and other current liabilities 10,729 (1,846)
Long-term employee related liabilities 2,078 39
Deferred tax, net and other long-term liabilities (1,870) (1,564)
Net cash provided by operating activities 134,939 147,024
CASH FLOWS - INVESTING ACTIVITIES    
Investments in property and equipment (125,444) (85,445)
Investments in deposits, marketable securities and other assets, net (78,786) (33,825)
Net cash used in investing activities (204,230) (119,270)
CASH FLOWS - FINANCING ACTIVITIES    
Exercise of options 1,214 397
Principal payments on account of capital lease obligation (10,443) (10,549)
Debentures repayment (18,754)
Net cash used in financing activities (27,983) (10,152)
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGE 506 2,465
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (96,768) 20,067
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 355,561 385,091
CASH AND CASH EQUIVALENTS - END OF PERIOD 258,793 405,158
NON-CASH ACTIVITIES:    
Investments in property and equipment 71,967 35,529
Conversion of notes into share capital 20,758
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:    
Cash received during the period from interest, net 2,028 (1,226)
Cash paid during the period for income taxes, net $ 2,149 $ 10,178