TowerJazz Reports Record Revenues for the Third Quarter of 2015 With Continued Increase in Net Profit and Margins


TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES 
RECONCILIATION OF REPORTED GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) 
(dollars in thousands, except per share data) 
  
  
    Nine months ended  Nine months ended  Nine months ended 
    September 30,  September 30,  September 30, 
    2015  2014  2015  2014  2015   2014 
    non-GAAP  Adjustments (see notes below)  GAAP 
                
REVENUES  $  705,959   $  592,719   $    --    $    --    $  705,959    $  592,719   
                
COST OF REVENUES    444,288     418,012     120,836   (a)  149,011   (a)  565,124      567,023   
                
GROSS PROFIT    261,671     174,707     (120,836 )   (149,011 )   140,835      25,696   
                         
OPERATING COSTS AND EXPENSES                              
                               
Research and development       44,573       36,300       1,392   (a)   1,163   (a)   45,965         37,463    
Marketing, general and administrative       44,090       40,434       3,225   (a)   2,824   (a)   47,315         43,258    
Nishiwaki Fab restructuring costs and impairment         --           --           --         75,728         --           75,728    
Merger related costs         --           --           --         1,229         --           1,229    
                               
        88,663       76,734       4,617       80,944       93,280         157,678    
                               
OPERATING PROFIT (LOSS)       173,008       97,973       (125,453 )     (229,955 )     47,555         (131,982 )  
                               
INTEREST EXPENSE, NET       (10,813 )     (25,592 )     --     (b)     --     (b)   (10,813 )       (25,592 )  
                               
OTHER NON CASH FINANCING EXPENSE, NET (*)         --           --         (97,179 )     (38,248 )     (97,179 )       (38,248 )  
                               
GAIN FROM ACQUISITION, NET       --           --           --         166,404         --           166,404    
                               
OTHER EXPENSE, NET       (260 )     (155 )       --           --         (260 )       (155 )  
                               
PROFIT (LOSS) BEFORE INCOME TAX       161,935       72,226       (222,632 )     (101,799 )     (60,697 ) (e)   (29,573 )  
                               
INCOME TAX BENEFIT (EXPENSE)       (2,362 )     --         9,861   (c)   24,002   (c)   7,499         24,002    
                               
PROFIT (LOSS) BEFORE NON CONTROLLING INTEREST       159,573       72,226       (212,771 )     (77,797 )     (53,198 ) (e)   (5,571 )  
                               
NON CONTROLLING INTEREST       1,472       9,210         --     (d)     --     (d)   1,472         9,210    
                               
NET PROFIT (LOSS)   $   161,045   $   81,436   $   (212,771 ) $   (77,797 ) $   (51,726 ) (e) $   3,639    
                               
                               
NON-GAAP GROSS MARGINS       37.1 %     29.5 %                    
                               
NON-GAAP OPERATING MARGINS       24.5 %     16.5 %                    
                               
NON-GAAP NET MARGINS       22.8 %     13.7 %                    
                               
                               
BASIC EARNINGS (LOSS) PER ORDINARY SHARE (**)   $   2.22   $   1.61           $   (0.71 )   $   0.07    
   
                               
(a) Includes depreciation and amortization of fixed and other assets, as well as stock based compensation costs in respect to employees and directors equity grants.  
(b) Non-GAAP interest expense, net includes only interest on an accrual basis.    
(c) Non-GAAP income tax benefit (expense) includes taxes paid during the period on a cash basis.    
(d) Non-GAAP non-controlling interest does not include any adjustments relating to the company's 51% stake in TPSCo.    
(e) The differences between the above-referenced GAAP profit (loss) results for the nine months ended September 30, 2015 as compared with the comparable period's results are mainly due to: (i) $59 million other non cash financing expenses included in the nine months ended September 30, 2015, primarily reflecting accelerated accretion resulted from the successful $164 million accelerated conversion of debentures series F (ii) $166 million gain from the acquisition of TPSCo included in the nine months ended September 30, 2014; (iii) $76 million of costs related to Nishiwaki Fab cessation of operations recorded in the nine months ended September 30, 2014; and (iv) Other items resulted in $94 million net positive impact.  
(*) Other GAAP non cash financing expense, net for the nine months ended September 30, 2015 mainly include accelerated accretion and amortization resulting from the $164 million accelerated conversion of debentures series F.  
(**) The weighted average number of ordinary shares outstanding used for basic earnings per share calculation for the nine months ended September 30, 2015 and 2014 is 72.6 million and 50.5 millions, respectively.  

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