OREANDA-NEWS. TowerJazz (NASDAQ:TSEM) (TASE:TSEM) today reports results for the fourth quarter and full year of 2016 ended December 31, 2016.

Highlights of the Full Year 2016

  • Record revenues of $1.25 billion, up 30% year over year;
  • Record EBITDA of $367 million, up 48% year over year;
  • Record net profit of $204 million, as compared to a net loss of $30 million for the full year of 2015;
  • Record cash from operations of $327 million and record free cash flow of $118 million, resulting in record cash balance and record shareholders’ equity.

Highlights of the Fourth Quarter of 2016 and First Quarter of 2017 Guidance

  • Record revenues of $340 million, up 34% year over year;
  • Record gross profit of $88 million, up 36% year over year;
  • Record operating profit of $55 million, up 61% year over year;
  • Record EBITDA of $105 million, up 39% year over year;
  • Net profit of $48 million, up 119% year over year;
  • Cash from operations of $82 million and record free cash flow of $39 million;
  • First quarter revenue guidance with mid-range of $330 million, up 19% year over year; targeting growth throughout the year.  

Chairman and CEO End of Year Commentary
Mr. Russell Ellwanger, Chief Executive Officer of TowerJazz, commented, “2016 was on all fronts, business, financial, operational and technological, the best year TowerJazz has posted. The year began with a successful acquisition of the San Antonio facility, increasing our capacity and operational flexibility, and ended achieving our stated target in the fourth quarter of $100 million annualized third party revenue at TPSCo.”

Continued Mr. Ellwanger, “Entering 2017, we focus on utilizing the capacity of the acquired Panasonic and Maxim fabs to meet the increasing customers’ demand within our strong advanced analog offerings. Present customer forecast indicates growth throughout the year with each quarter being significantly higher year over year. We are excited with our business and financial position that allows us to capitalize upon new initiatives to continue value creation.”

Mr. Amir Elstein, Chairman of the TowerJazz Board of Directors, summarized: “2016, as a record year, is a strong validation of the business models and the executions behind becoming the worldwide leading specialty analog foundry. The board and I wholeheartedly congratulate all the dedicated employees of TowerJazz, the management and Russell, for all their efforts, activities and accomplishments of multiple years resulting in this record year we have just completed. We very much look forward to another significant year with great achievements.”

Fourth Quarter Results Overview
Revenues for the 2016 fourth quarter were a record $340 million reflecting 34% growth as compared to the fourth quarter of 2015. Revenues were 4% higher than those of the previous quarter.

Gross profit for the fourth quarter of 2016 was $88 million, representing an increase of 36% as compared with $65 million in the fourth quarter of 2015, and an increase of 8% as compared with $81 million gross profit in the immediately preceding quarter.

Operating profit was $55 million for the fourth quarter of 2016, as compared with $34 million reported in the fourth quarter of 2015 and $49 million operating profit in the immediately preceding quarter.

Net profit for the fourth quarter of 2016 was $48 million, or $0.53 basic earnings per share, demonstrating increased sustainable GAAP net profit, as compared with $22 million or $0.28 basic earnings per share in the fourth quarter of 2015. Net profit for the third quarter of 2016 of $51 million, or $0.58 basic earnings per share, and included a non-recurring $6 million of income tax benefit related to finalization of the closure of the Japanese subsidiary that held the fab in Nishiwaki, Japan, which ceased operations in 2014.

On an adjusted basis, as described and reconciled in the tables below, adjusted net profit for the fourth quarter of 2016 was $53 million, compared with $26 million for the fourth quarter of 2015 and $49 million in the immediately preceding quarter.

EBITDA for the fourth quarter totaled $105 million. This represents a 39% increase as compared with $76 million in the fourth quarter of 2015 and a 9% sequential increase as compared with $97 million in the immediately preceding quarter.

Cash and short term deposits on December 31, 2016 were $389 million as compared to $363 million as of September 30, 2016. The main cash activities during the fourth quarter of 2016 were comprised of the following: $82 million cash generated from operating activities; $11 million received from the exercise of warrants and options; investments of $43 million in fixed assets, net; $6 million debt repayments and $17 million effect of the Japanese Yen exchange rate on cash balance.

Full Year 2016 Financial Results
Revenues for 2016 were a record $1.25 billion reflecting 30% growth as compared to 2015 revenues of $961 million.

Gross profit for 2016 was $303 million. This represents an increase of 48% as compared with $205 million in 2015. Operating profit was $175 million in 2016, as compared with $82 million in 2015.

Net profit for 2016 was $204 million, or $2.33 basic earnings per share, demonstrating increased net profit, as compared with net loss of $30 million or $0.40 basic loss per share in 2015. Net profit for 2016 included $50 million gain, net, from the San Antonio acquisition and $6 million income tax benefit related to the closure finalization of the Nishiwaki Japanese subsidiary, which were partially offset by $7 million non-cash financing expenses relating to the Israeli banks’ loans early repayment. Net loss for 2015 included $81 million non-cash financing expense associated with Series F Bonds accelerated conversion done in 2015, $18 million income tax benefit resulting from the expiration of statute of limitations and Japanese income tax rate reduction.

On an adjusted basis, as described and reconciled in the tables below, adjusted net profit for 2016 was $175 million, compared with $49 million for 2015, representing a $126 million increased adjusted net profit derived from the $289 million higher revenues.

EBITDA for the year was $367 million. This represents a 48% increase as compared with $248 million in 2015, or $119 million increased EBITDA derived from the $289 million higher revenues.

Cash and short term deposits on December 31, 2016 were $389 million as compared to $206 million on December 31, 2015. The main cash activities during 2016 were comprised of the following: $327 million cash generated from operating activities; $39 million received from the exercise of warrants and options; $37 million debt received, net of debt principal payments; and investments of $210 million in fixed assets, net.

Shareholders' equity as of December 31, 2016 was a record of $683 million, 77% higher than $386 million as of December 31, 2015. Net cash as of December 31, 2016 totaled $37 million as compared to net debt of $105 million as of December 31, 2015.

Business Outlook
TowerJazz expects revenues for the first quarter of 2017 ending March 31, 2017 to be $330 million with an upward or downward range of 5%, representing approximately 19% year over year revenue growth as compared to the first quarter of 2016.

Teleconference and Webcast
TowerJazz will host an investor conference call today, February 13, 2017, 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 fourth quarter and full year 2016 and its first quarter 2017 outlook.

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 technologies, including the most advanced image sensor technologies. For more information, please visit www.towerjazz.com or www.tpsemico.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 December 31, 2016 we are in compliance with all such covenants included in our banks’ agreements, bond G indenture and others), (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 debt re-financing and/or fundraising to enable the service of our debt and/or 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 therefor, (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
(dollars in thousands)
                       
                       
              December 31,   September 30,   December 31,
              2016   2016   2015
                       
A S S E T S              
                       
  CURRENT ASSETS              
    Cash and short term deposits $ 389,377 $ 362,833 $ 205,575
    Trade accounts receivable   141,048   128,979   110,065
    Inventories     137,532   143,090   105,681
    Other current assets     30,041   32,851   25,406
      Total current assets     697,998   667,753   446,727
                       
  LONG-TERM INVESTMENTS   25,624   24,616   11,737
                       
  PROPERTY AND EQUIPMENT, NET   616,686   643,046   459,533
                       
  INTANGIBLE ASSETS, NET   28,129   32,687   34,468
                       
  GOODWILL     7,000   7,000   7,000
                       
  OTHER ASSETS, NET     4,447   4,535   5,903
                       
        TOTAL ASSETS   $ 1,379,884 $ 1,379,637 $ 965,368
                       
                       
LIABILITIES AND SHAREHOLDERS' EQUITY            
                       
  CURRENT LIABILITIES              
    Short term debt    $ 48,084 $ 41,646 $ 33,259
    Trade accounts payable     99,262   105,745   91,773
    Deferred revenue and customers' advances   26,169   25,878   23,373
    Other current liabilities     73,600   81,248   62,714
      Total current liabilities     247,115   254,517   211,119
                       
  LONG-TERM DEBT     296,144   330,526   256,019
                       
  LONG-TERM CUSTOMERS' ADVANCES   41,874   36,547   21,102
                       
  EMPLOYEE RELATED LIABILITIES   14,176   14,169   14,189
                       
  DEFERRED TAX LIABILITY   97,961   107,843   77,353
                       
      TOTAL LIABILITIES     697,270   743,602   579,782
                       
      TOTAL SHAREHOLDERS' EQUITY   682,614   636,035   385,586
                       
        TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,379,884 $ 1,379,637 $ 965,368
                       
   
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(dollars and share count in thousands, except per share data)  
                             
                             
                  Three months ended  
                  December 31,   September 30,   December 31,  
                  2016     2016     2015    
                             
  REVENUES     $ 340,379   $ 326,209   $ 254,602    
                             
  COST OF REVENUES     252,648     244,915     190,072    
                             
      GROSS PROFIT     87,731     81,294     64,530    
                             
  OPERATING COSTS AND EXPENSES:              
                             
    Research and development   16,320     15,547     15,704    
    Marketing, general and administrative   16,209     16,787     15,478    
    Nishiwaki Fab restructuring and impairment cost (income), net     --        --      (991 )  
                             
                  32,529     32,334     30,191    
                             
                             
      OPERATING PROFIT   55,202     48,960     34,339    
                             
  INTEREST EXPENSE, NET   (2,230 )   (3,272 )   (2,366 )  
                             
  OTHER NON CASH FINANCING INCOME (EXPENSE), NET   1,215     (2,210 )   (12,751 ) (a)
                             
  OTHER INCOME (EXPENSE), NET   (948 )   5,081     70    
                             
      PROFIT BEFORE INCOME TAX   53,239     48,559     19,292    
                             
  INCOME TAX BENEFIT (EXPENSE)   (986 )   3,459   (b) 4,779   (b)
                             
      PROFIT BEFORE NON CONTROLLING INTEREST    52,253     52,018     24,071    
                             
  NON CONTROLLING INTEREST   (3,972 )   (805 )   (1,992 )  
                             
      NET PROFIT   $ 48,281   $ 51,213   $ 22,079    
                             
                             
  BASIC EARNINGS PER SHARE $ 0.53   $ 0.58   $ 0.28    
                             
  Weighted average number of shares     91,235       87,821       79,607    
                             
                             
  DILUTED EARNINGS PER SHARE $ 0.49   $ 0.52   $ 0.25    
                             
  Net profit used for diluted earnings per share $ 50,397   $ 53,318   $ 22,079    
                             
  Weighted average number of shares   103,613     101,805     88,970    
                             
                             
(a) Three months ended December 31, 2015 included $6,998 of non-cash financing expense due to bonds series F accelerated conversion.
(b)  Three months ended September 30, 2016 included $6,472 income tax benefit due to TJP legal entity closure following Nishiwaki Fab cessation of operation announced in 2014; three months ended December 31, 2015 included $6,389 income tax benefit due to Japanese income tax rate reduction.
                             
   
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES  
UNAUDITED RECONCILIATION OF CERTAIN FINANCIAL DATA   
(dollars and share count in thousands, except per share data)  
                           
                T h r e e  m o n t h s  e n d e d  
                December 31,   September 30,   December 31,  
                2016   2016     2015    
                           
RECONCILIATION FROM GAAP NET PROFIT TO ADJUSTED NET PROFIT:                
                           
  GAAP NET PROFIT   $ 48,281 $ 51,213   $ 22,079    
    Stock based compensation      2,381   2,337     1,975    
    Amortization of acquired intangible assets      2,777   2,367     2,374    
    Nishiwaki Fab restructuring and impairment cost (income), net       --      --      (991 )  
    Financing expense, net associated with Bonds Series F accelerated conversion        --      --      6,998    
    Income tax benefit, see (1) below       --    (6,472 )   (6,389 )  
                           
  ADJUSTED NET PROFIT   $ 53,439 $ 49,445   $ 26,046    
                           
  ADJUSTED NET PROFIT PER SHARE:                
    Basic     $ 0.59 $ 0.56   $ 0.33    
    Diluted     $ 0.54 $ 0.51   $ 0.29    
    Fully diluted, see (2) below   $ 0.52 $ 0.48   $ 0.27    
                           
  ADJUSTED NET PROFIT USED TO CALCULATE PER SHARE DATA:                
    Basic     $   53,439 $   49,445   $   26,046    
    Diluted     $   55,555 $   51,550   $   26,472    
    Fully diluted   $   55,555 $   51,550   $   28,440    
                           
  NUMBER OF SHARES AND OTHER SECURITIES USED TO CALCULATE PER SHARE DATA:          
    Basic         91,235     87,821       79,607    
    Diluted         103,613     101,805       91,086    
    Fully diluted, see (2) below       107,121     107,147       103,477    
                           
                           
EBITDA CALCULATION:                
                           
  GAAP OPERATING PROFIT    $ 55,202 $ 48,960   $ 34,339    
    Cost of revenue:                
      Depreciation of fixed assets      44,874   43,110     37,841    
      Stock based compensation     835   936     686    
      Amortization of acquired intangible assets     2,589   2,180     2,186    
    Research and development:                
      Stock based compensation     557   501     519    
    Marketing, general and administrative:                
      Stock based compensation     989   900     770    
      Amortization of acquired intangible assets     188   187     188    
    Nishiwaki Fab restructuring and impairment cost (income), net       --      --      (991 )  
                           
  EBITDA     $ 105,234 $ 96,774   $ 75,538    
                           
                           
(1 ) Three months ended September 30, 2016 included income tax benefit in relation to TJP legal entity closure following Nishiwaki Fab cessation of operation announced in 2014; three months ended December 31, 2015 included income tax benefit due to Japanese income tax rate reduction.  
(2 ) Fully diluted share count includes all issued and outstanding securities; outstanding ordinary share count as of December 31, 2016 is 92,985.  
       
     
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES    
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS    
(dollars and share count in thousands, except per share data)    
                           
                           
                  Year ended    
                  December 31,    
                  2016     2015      
                           
  REVENUES     $ 1,249,634   $ 960,561      
                           
  COST OF REVENUES     946,534     755,196      
                           
      GROSS PROFIT     303,100     205,365      
                           
  OPERATING COSTS AND EXPENSES:            
                           
    Research and development   63,134     61,669      
    Marketing, general and administrative   65,439     62,793      
    Nishiwaki Fab restructuring and impairment cost (income), net   (627 )   (991 )    
                           
                  127,946     123,471      
                           
                           
      OPERATING PROFIT   175,154     81,894      
                           
  INTEREST EXPENSE, NET   (11,857 )   (13,179 )    
                           
  OTHER NON CASH FINANCING EXPENSE, NET   (12,492 )   (109,930 ) (a)  
                           
  GAIN FROM ACQUISITION, NET    50,471       --       
                           
  OTHER INCOME (EXPENSE), NET   9,322     (190 )    
                           
      PROFIT (LOSS) BEFORE INCOME TAX   210,598     (41,405 )    
                           
  INCOME TAX BENEFIT (EXPENSE)   (1,432 ) (b) 12,278   (b)  
                           
      PROFIT (LOSS) BEFORE NON CONTROLLING INTEREST    209,166     (29,127 )    
                           
  NON CONTROLLING INTEREST   (5,242 )   (520 )    
                           
      NET PROFIT (LOSS) $ 203,924   $ (29,647 )    
                           
                           
  BASIC EARNINGS (LOSS) PER SHARE $ 2.33   $ (0.40 )    
                           
  Weighted average number of shares     87,480       74,366      
                           
                           
  DILUTED EARNINGS PER SHARE $ 2.09          
                           
  Net profit used for diluted earnings per share $ 212,160          
                           
  Weighted average number of shares   101,303          
                           
                           
(a) Year ended December 31, 2015 included $80,815 of non-cash financing expense due to bonds series F accelerated conversion.  
(b)  Year ended December 31, 2016 included $6,472 of income tax benefit  in relation to TJP legal entity closure following Nishiwaki Fab cessation of operation announced in 2014; year ended December 31, 2015 included $11,153 income tax benefit resulting from expiration of statute of limitations and $6,389 income tax benefit of Japanese income tax rate reduction.  
 
                           
   
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES  
UNAUDITED RECONCILIATION OF CERTAIN FINANCIAL DATA   
(dollars and share count in thousands, except per share data)  
                       
                Year ended  
                December 31,  
                2016     2015    
                       
RECONCILIATION FROM GAAP NET PROFIT TO ADJUSTED NET PROFIT            
                       
  GAAP NET PROFIT (LOSS)   $ 203,924   $ (29,647 )  
    Stock based compensation      9,406     7,540    
    Amortization of acquired intangible assets      9,780     8,696    
    Financing expense, net associated with Bonds Series F accelerated conversion        --      80,815    
    Non cash financing expense related to bank loan early repayment     6,653       --     
    Gain from acquisition, net     (50,471 )     --     
    Other non-recurring items, see (1) below     2,378     (991 )  
    Income tax benefit, see (2) below     (6,472 )   (17,542 )  
                       
  ADJUSTED NET PROFIT   $ 175,198   $ 48,871    
                       
  ADJUSTED NET PROFIT PER SHARE:            
    Basic     $ 2.00   $ 0.66    
    Diluted     $ 1.81   $ 0.58    
    Fully diluted   $ 1.71   $ 0.63    
                       
  ADJUSTED NET PROFIT USED TO CALCULATE PER SHARE DATA:            
    Basic     $   175,198   $   48,871    
    Diluted     $   183,434   $   48,871    
    Fully diluted   $   183,434   $   65,136    
                       
  NUMBER OF SHARES AND OTHER SECURITIES USED TO CALCULATE PER SHARE DATA:      
    Basic         87,480       74,366    
    Diluted         101,303       84,902    
    Fully diluted       107,121       103,477    
                       
                       
EBITDA CALCULATION:            
                       
  GAAP OPERATING PROFIT    $ 175,154   $ 81,894    
    Cost of revenue:            
      Depreciation of fixed assets      169,958     151,221    
      Stock based compensation     3,920     2,214    
      Amortization of acquired intangible assets     9,029     7,944    
      Acquisition related non-recurring costs     3,005       --     
    Research and development:            
      Stock based compensation     2,119     1,905    
    Marketing, general and administrative:            
      Stock based compensation     3,367     3,421    
      Amortization of acquired intangible assets     751     752    
    Nishiwaki Fab restructuring and impairment cost (income), net     (627 )   (991 )  
                       
  EBITDA     $ 366,676   $ 248,360    
                       
                       
(1 ) Year ended December 31, 2016 included mainly acquisition related costs; year ended December 31, 2015 included mainly Nishiwaki Fab restructuring and impairment cost (income), net.  
(2 ) Year ended December 31, 2016 included $6,472 of income tax benefit in relation to TJP legal entity closure following Nishiwaki Fab cessation of operation announced in 2014; year ended December 31, 2015 included $11,153 income tax benefit resulting from expiration of statute of limitations and $6,389 income tax benefit due to Japanese income tax rate reduction.  
                       
   
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES  
CONSOLIDATED SOURCES AND USES REPORT  
(dollars in thousands)  
                 
                 
      Three months ended  
      December 31,   September 30,   December 31,  
      2016     2016     2015    
                 
Cash and short term deposits - beginning of period $ 362,833    $ 311,062   $ 155,348    
                 
  Cash from operations   81,835     86,410     53,180    
  Investments in property and equipment, net   (42,929 )   (54,947 )   (58,291 )  
  Exercise of warrants and options, net   10,644     21,918     4,168    
  Debt received (repaid), net   (5,653 )   8,554     52,586    
  Effect of Japanese Yen exchange rate change over cash balance   (17,353 )   2,336     154    
  TPSCo dividend to Panasonic     --        --      (1,570 )  
  Long term deposits and investments     --      (12,500 )     --     
                 
Cash and short term deposits - end of period $ 389,377    $ 362,833   $ 205,575    
                 
                 
      Year ended      
      December 31,   December 31,      
      2016     2015        
                 
Cash and short term deposits - beginning of period $ 205,575   $ 187,167        
                 
  Cash from operations   327,468     195,213        
  Investments in property and equipment, net   (209,624 )   (165,489 )      
  Exercise of warrants and options, net   38,803     14,424        
  Debt received, net of repayment   37,091     903        
  Effect of Japanese Yen exchange rate change over cash balance   5,635     (166 )      
  TPSCo dividend to Panasonic   (2,563 )   (1,570 )      
  Long term deposits and investments    (13,008 )     --         
  Nishiwaki employees retirement related payments in connection with its operation cessation   --      (24,907 )      
                 
Cash and short term deposits - end of period $ 389,377   $ 205,575        
                 
   
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
(dollars in thousands)  
                       
                Year ended  
                December 31,  
                2016     2015    
                       
CASH FLOWS - OPERATING ACTIVITIES          
                       
Net profit (loss) for the period $ 209,166   $ (29,127 )  
                       
Adjustments to reconcile net profit (loss) for the period          
  to net cash provided by operating activities:          
  Income and expense items not involving cash flows:          
  Depreciation and amortization   197,606     168,032    
  Financing expense associated with debentures series F   150     87,973    
  Effect of indexation, translation and fair value measurement on debt   8,292     16,078    
  Other expense (income), net   (9,322 )   190    
  Gain from acquisition   (50,471 )   --     
  Changes in assets and liabilities:          
  Trade accounts receivable   (30,104 )   (11,115 )  
  Other current assets     (265 )   (14,978 )  
  Inventories   (22,069 )   (17,908 )  
  Trade accounts payable   5,550     (26,163 )  
  Deferred revenue and customers' advances    23,581     32,725    
  Other current liabilities   (145 )   8,454    
  Long-term employee related liabilities   (798 )   (2,036 )  
  Deferred tax liability, net    (3,703 )   (16,912 )  
  Nishiwaki employees related retirement payments in connection with its operation cessation         --      (24,907 )  
  Net cash provided by operating activities   327,468     170,306    
                       
CASH FLOWS - INVESTING ACTIVITIES          
                       
  Investments in property and equipment, net   (209,624 )   (165,489 )  
  Deposits and investments, net   (17,101 )   (30,000 )  
  Net cash used in investing activities   (226,725 )   (195,489 )  
                       
CASH FLOWS - FINANCING ACTIVITIES          
                       
  Debt received, net of repayment   37,091     903    
  Exercise of warrants and options, net   38,803     14,424    
  Dividend payment to Panasonic             (2,563 )   (1,570 )  
  Net cash provided by financing activities   73,331     13,757    
                       
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGE   5,635     (166 )  
                       
                       
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   179,709     (11,592 )  
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD   175,575     187,167    
                       
CASH AND CASH EQUIVALENTS - END OF PERIOD   355,284     175,575    
                       
Short-term deposits   34,093     30,000    
                       
CASH AND SHORT TERM DEPOSITS - END OF PERIOD $ 389,377   $ 205,575