Document and Entity Information
Document and Entity Information | 6 Months Ended |
Jun. 30, 2019 | |
Document and Entity Information [Abstract] | |
Document Type | 6-K |
Amendment Flag | false |
Document Period End Date | Jun. 30, 2019 |
Entity Registrant Name | TOWER SEMICONDUCTOR LTD |
Entity Central Index Key | 0000928876 |
Document Fiscal Year Focus | 2019 |
Document Fiscal Period Focus | Q2 |
Current Fiscal Year End Date | --12-31 |
CONDENSED INTERIM CONSOLIDATED
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 405,158 | $ 385,091 |
Short-term interest-bearing deposits | 147,032 | 120,079 |
Marketable securities | 146,893 | 135,850 |
Trade accounts receivable | 123,789 | 153,409 |
Inventories | 174,806 | 170,778 |
Other current assets | 22,374 | 22,752 |
Total current assets | 1,020,052 | 987,959 |
LONG-TERM INVESTMENTS | 36,874 | 35,945 |
PROPERTY AND EQUIPMENT, NET | 707,122 | 657,234 |
INTANGIBLE ASSETS, NET | 11,279 | 13,435 |
GOODWILL | 7,000 | 7,000 |
DEFERRED TAX AND OTHER LONG-TERM ASSETS, NET | 89,171 | 88,404 |
TOTAL ASSETS | 1,871,498 | 1,789,977 |
CURRENT LIABILITIES | ||
Current maturities of leases and debentures | 45,173 | 10,814 |
Trade accounts payable | 92,747 | 104,329 |
Deferred revenue and customers' advances | 7,975 | 20,711 |
Employee related liabilities | 57,540 | 50,750 |
Other current liabilities | 8,364 | 17,117 |
Total current liabilities | 211,799 | 203,721 |
LONG-TERM DEBT | ||
Debentures | 109,079 | 120,170 |
Other long-term debt | 166,835 | 136,499 |
LONG-TERM CUSTOMERS' ADVANCES | 27,230 | 28,131 |
EMPLOYEE RELATED LIABILITIES | 14,295 | 13,898 |
DEFERRED TAX LIABILITY | 46,434 | 50,401 |
OTHER LONG-TERM LIABILITIES | 969 | 952 |
TOTAL LIABILITIES | 576,641 | 553,772 |
THE COMPANY'S SHAREHOLDERS' EQUITY | 1,301,122 | 1,242,966 |
Non-controlling interest | (6,265) | (6,761) |
TOTAL SHAREHOLDERS' EQUITY | 1,294,857 | 1,236,205 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 1,871,498 | $ 1,789,977 |
CONDENSED INTERIM CONSOLIDATE_2
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||||
REVENUES | $ 306,064 | $ 335,138 | $ 616,171 | $ 647,848 |
COST OF REVENUES | 252,657 | 256,610 | 499,613 | 503,155 |
GROSS PROFIT | 53,407 | 78,528 | 116,558 | 144,693 |
OPERATING COSTS AND EXPENSES: | ||||
Research and development | 18,812 | 18,173 | 37,980 | 36,439 |
Marketing, general and administrative | 16,838 | 16,115 | 33,479 | 32,109 |
TOTAL OPERATING COSTS AND EXPENSES | 35,650 | 34,288 | 71,459 | 68,548 |
OPERATING PROFIT | 17,757 | 44,240 | 45,099 | 76,145 |
FINANCING AND OTHER INCOME (EXPENSE), NET | 947 | (5,453) | 1,672 | (9,222) |
PROFIT BEFORE INCOME TAX | 18,704 | 38,787 | 46,771 | 66,923 |
INCOME TAX BENEFIT (EXPENSE), NET | 1,018 | (2,778) | (649) | (3,733) |
NET PROFIT | 19,722 | 36,009 | 46,122 | 63,190 |
Net loss attributable to non-controlling interest | 1,214 | 1,733 | 1,030 | 670 |
NET PROFIT ATTRIBUTABLE TO THE COMPANY | $ 20,936 | $ 37,742 | $ 47,152 | $ 63,860 |
BASIC EARNINGS PER ORDINARY SHARE: | ||||
Earnings per share | $ 0.20 | $ 0.38 | $ 0.45 | $ 0.65 |
Weighted average number of ordinary shares outstanding | 106,321 | 98,888 | 105,829 | 98,693 |
DILUTED EARNINGS PER ORDINARY SHARE: | ||||
Earnings per share | $ 0.20 | $ 0.37 | $ 0.44 | $ 0.63 |
Net profit used for diluted earnings per share | $ 20,936 | $ 37,742 | $ 47,152 | $ 63,860 |
Weighted average number of ordinary shares outstanding used for diluted earnings per share | 107,178 | 101,066 | 107,078 | 101,090 |
CONDENSED INTERIM CONSOLIDATE_3
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net profit | $ 19,722 | $ 36,009 | $ 46,122 | $ 63,190 |
Other comprehensive income, net of tax: | ||||
Foreign currency translation adjustment | 4,323 | (5,689) | 2,672 | 2,301 |
Change in employees plan assets and benefit obligations, net of taxes | 172 | (217) | 115 | (435) |
Unrealized gain (loss) on derivatives | (431) | 117 | 1,639 | (814) |
Comprehensive income | 23,786 | 30,220 | 50,548 | 64,242 |
Comprehensive loss (income) attributable to non-controlling interest | (939) | 4,768 | (496) | (576) |
Comprehensive income attributable to the Company | $ 22,847 | $ 34,988 | $ 50,052 | $ 63,666 |
CONDENSED INTERIM STATEMENT OF
CONDENSED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) - 6 months ended Jun. 30, 2019 - 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, 2018 | $ 418,492 | $ 1,380,396 | $ 20,758 | $ 93,226 | $ (672) | $ (22,716) | $ (637,446) | $ (9,072) | $ (6,761) | $ 1,236,205 | |
BALANCE, SHARES at Dec. 31, 2018 | 105,066 | ||||||||||
Changes during the period: | |||||||||||
Exercise of options and RSUs | $ 1,127 | (730) | 397 | ||||||||
Exercise of options and RSUs, shares | 271 | ||||||||||
Capital notes converted into share capital | $ 4,892 | 15,866 | (20,758) | ||||||||
Capital notes converted into share capital, shares | 1,181 | ||||||||||
Employee stock-based compensation | 7,707 | 7,707 | |||||||||
Other comprehensive income: | |||||||||||
Profit | 47,152 | $ 47,152 | (1,030) | 46,122 | |||||||
Foreign currency translation adjustments | 1,146 | 1,146 | 1,526 | 2,672 | |||||||
Change in employees plan assets and benefit obligations | 115 | 115 | 115 | ||||||||
Unrealized gain on derivatives | 1,639 | 1,639 | 1,639 | ||||||||
Comprehensive income | $ 50,052 | 50,052 | |||||||||
BALANCE at Jun. 30, 2019 | $ 424,511 | $ 1,395,532 | $ 100,933 | $ 1,082 | $ (21,570) | $ (590,294) | $ (9,072) | $ (6,265) | $ 1,294,857 | ||
BALANCE, SHARES at Jun. 30, 2019 | 106,518 | ||||||||||
OUTSTANDING SHARES, NET OF TREASURY STOCK at Jun. 30, 2019 | 106,432 |
CONDENSED INTERIM CONSOLIDATE_4
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
CASH FLOWS - OPERATING ACTIVITIES | ||
Net profit | $ 46,122 | $ 63,190 |
Income and expense items not involving cash flows: | ||
Depreciation and amortization | 104,867 | 107,470 |
Effect of exchange rate differences on debentures | 6,205 | (6,537) |
Other income, net | (445) | (1,600) |
Changes in assets and liabilities: | ||
Trade accounts receivable | 31,271 | (10,262) |
Other current assets | (5,755) | 9,083 |
Inventories | (3,017) | (9,405) |
Trade accounts payable | (15,204) | 3,909 |
Deferred revenue and customers' advances | (13,649) | (6,178) |
Employee related liabilities and other current liabilities | (1,846) | 9,136 |
Long-term employee related liabilities | 39 | (194) |
Deferred tax, net and other long-term liabilities | (1,564) | (6,682) |
Net cash provided by operating activities | 147,024 | 151,930 |
CASH FLOWS - INVESTING ACTIVITIES | ||
Investments in property and equipment, net | (85,445) | (80,195) |
Investments in deposits, marketable securities and other assets, net | (33,825) | (30,451) |
Net cash used in investing activities | (119,270) | (110,646) |
CASH FLOWS - FINANCING ACTIVITIES | ||
Exercise of options | 397 | 684 |
Proceeds from loans | 99,964 | |
Loans repayment | (101,314) | |
Principal payments on account of capital lease obligation | (10,549) | (1,497) |
Net cash used in financing activities | (10,152) | (2,163) |
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGE | 2,465 | 1,798 |
INCREASE IN CASH AND CASH EQUIVALENTS | 20,067 | 40,919 |
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD | 385,091 | 445,961 |
CASH AND CASH EQUIVALENTS - END OF PERIOD | 405,158 | 486,880 |
NON-CASH ACTIVITIES: | ||
Investments in property and equipment | 35,529 | 33,493 |
Conversion of notes into share capital | 20,758 | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Cash paid (received) during the period for interest, net | (1,226) | 2,376 |
Cash paid during the period for income taxes, net | $ 10,178 | $ 2,139 |
GENERAL
GENERAL | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GENERAL | NOTE 1 - Basis for Presentation The unaudited condensed interim consolidated financial statements of Tower Semiconductor Ltd. (“Tower”) as of June 30, 2019 include the financial statements of Tower and (i) its wholly-owned subsidiary Tower US Holdings Inc., the sole owner of: (1) Jazz US Holdings Inc. and its wholly-owned subsidiary, Jazz Semiconductor, Inc. and (2) TowerJazz Texas Inc., and (ii) its 51% owned subsidiary, TowerJazz Panasonic Semiconductor Co., Ltd. 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, 2018 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. |
INITIAL ADOPTION OF NEW STANDAR
INITIAL ADOPTION OF NEW STANDARDS | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
INITIAL ADOPTION OF NEW STANDARDS | NOTE 2 - In February 2016, the FASB issued ASU 2016-02 “ Leases Targeted Improvements |
RECENT DEVELOPMENTS
RECENT DEVELOPMENTS | 6 Months Ended |
Jun. 30, 2019 | |
RECENT DEVELOPMENTS [Abstract] | |
RECENT DEVELOPMENTS | NOTE 3 - A. TPSCo new agreements In March 2019, the Company, Panasonic Semiconductor Solutions (“PSCS”) and TPSCo signed three-year agreements, extending its previous agreements with Panasonic Semiconductor Solutions (PSCS) effective as of April 1, 2019. Under the agreements, among others, PSCS will continue to utilize TPSCo’s three manufacturing facilities in Japan for its semiconductor business. TPSCo’s wafer loading level from PSCS are expected to remain similar, with a new pricing structure, resulting in revenue reductions of approximately $20,000 per quarter. B. Equity Grants to CEO and Directors In June 25, 2019, the Company's shareholders approved the grant of the following Restricted Stock Units (“RSUs”) to the Company's CEO and members of the Board of Directors under the Company’s 2013 Share Incentive Plan: (i) 128,797 time vested RSUs and 128,798 performance based RSUs to the CEO, which RSUs will vest linearly over a three-year period, 33% at the end of each year of the 3 years following the grant date for a compensation value of $3,900; in this regard, the Company has adopted stock ownership guidelines whereby the CEO will be required to own a minimum value that equals at least 3 times of his annual base salary in ordinary shares of the Company and the CEO has 5 years from May 2019 to accumulate said minimum, during which the CEO must retain at least 20% of the vested time-based RSUs that are granted to him from May 2019 and such RSUs that may be granted to him in the future until the guideline is met; (ii) 19,815 time vested RSUs to the chairman of the Board of Directors (“the Chairman”) for a total compensation value of $300, to vest linearly over a three-year period, 33% at the end of each year of the 3 years following the grant date; and (iii) 4,953 time vested RSUs to each of the 8 members of the Board of Directors (other than the Chairman and the CEO), for an aggregate compensation value of $600, with 50% vesting on the first anniversary from the date of grant and 50% on the second anniversary of the date of grant. |
GENERAL (Details)
GENERAL (Details) | Jun. 30, 2019 |
TowerJazz Panasonic Semiconductor Co., Ltd [Member] | |
Business Acquisition [Line Items] | |
Percentage of subsidiary owned | 51.00% |
INITIAL ADOPTION OF NEW STAND_2
INITIAL ADOPTION OF NEW STANDARDS (Details) $ in Thousands | Jun. 30, 2019USD ($) |
Accounting Changes and Error Corrections [Abstract] | |
Lease assets and liabilities | $ 36,000 |
RECENT DEVELOPMENTS (TPSCo new
RECENT DEVELOPMENTS (TPSCo new agreements) (Details) $ in Thousands | Jun. 30, 2019USD ($) |
Recent Developments [Line Items] | |
Estimated quarterly revenue reductions from change in pricing structure | $ 20,000 |
RECENT DEVELOPMENTS (Equity Gra
RECENT DEVELOPMENTS (Equity Grants to CEO and Directors) (Details) - 2013 Plan [Member] - USD ($) $ in Thousands | 1 Months Ended | |
Jun. 25, 2019 | May 31, 2019 | |
Performance based RSUs [Member] | ||
Recent Developments [Line Items] | ||
Compensation cost | $ 3,900 | |
Chief Executive Officer [Member] | Time Vested Restricted Shares Units [Member] | ||
Recent Developments [Line Items] | ||
Non-option equity awards granted | 128,797 | |
Vesting period | 5 years | |
Vesting percentage | 20.00% | |
Chief Executive Officer [Member] | Time Vested Restricted Shares Units [Member] | Minimum [Member] | ||
Recent Developments [Line Items] | ||
Vesting period | 5 years | |
Vesting percentage | 20.00% | |
Chief Executive Officer [Member] | Performance based RSUs [Member] | ||
Recent Developments [Line Items] | ||
Non-option equity awards granted | 128,798 | |
Vesting period | 3 years | |
Vesting percentage | 33.00% | |
Chairman of the Board of Directors [Member] | Time Vested Restricted Shares Units [Member] | ||
Recent Developments [Line Items] | ||
Non-option equity awards granted | 19,815 | |
Vesting period | 3 years | |
Vesting percentage | 33.00% | |
Compensation cost | $ 300 | |
Members of Board of Directors [Member] | Time Vested Restricted Shares Units [Member] | ||
Recent Developments [Line Items] | ||
Non-option equity awards granted | 4,953 | |
Compensation cost | $ 600 | |
Members of Board of Directors [Member] | Time Vested Restricted Shares Units [Member] | First anniversary [Member] | ||
Recent Developments [Line Items] | ||
Vesting percentage | 50.00% | |
Members of Board of Directors [Member] | Time Vested Restricted Shares Units [Member] | Second anniversary [Member] | ||
Recent Developments [Line Items] | ||
Vesting percentage | 50.00% |