Exhibit 99.1

TOWER SEMICONDUCTOR LIMITED

AND SUBSIDIARIES
 

UNAUDITED CONDENSED INTERIM
CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2023

 

TOWER SEMICONDUCTOR LIMITED AND SUBSIDARIES

INDEX TO UNAUDITED CONDENSED INTERIM

CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2023

	Page
BALANCE SHEETS	F-2
STATEMENTS OF OPERATIONS	F-3
STATEMENTS OF COMPREHENSIVE INCOME	F-4
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY	F-5
STATEMENTS OF CASH FLOWS	F-6 - F-7
NOTES TO FINANCIAL STATEMENTS	F-8 - F-9

TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES

CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(dollars in thousands)

		As of
		June 30,				December 31,
		2023				2022
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	318,195			$	340,759
Short-term deposits			419,528				495,359
Marketable securities (*)			175,872				169,694
Trade accounts receivable			163,293				152,935
Inventories			330,819				302,108
Other current assets			32,396				34,319
Total current assets			1,440,103				1,495,174
LONG-TERM INVESTMENTS			8,829				8,796
PROPERTY AND EQUIPMENT, NET			1,018,636				962,258
GOODWILL AND OTHER INTANGIBLE ASSETS, NET			13,049				14,031
DEFERRED TAX AND OTHER LONG-TERM ASSETS, NET			53,459				67,349
TOTAL ASSETS		$	2,534,076			$	2,547,608
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt		$	41,300			$	62,275
Trade accounts payable			154,507				150,930
Deferred revenue and customers' advances			22,402				38,911
Employee related liabilities			58,399				58,920
Other current liabilities			25,231				76,352
Total current liabilities			301,839				387,388
LONG-TERM DEBT			178,865				210,069
LONG-TERM CUSTOMERS' ADVANCES			31,209				40,893
EMPLOYEE RELATED LIABILITIES			8,349				7,711
DEFERRED TAX AND OTHER LONG-TERM LIABILITIES			2,709				13,006
TOTAL LIABILITIES			522,971				659,067
TOTAL SHAREHOLDERS' EQUITY			2,011,105				1,888,541
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	2,534,076			$	2,547,608

(*) Marketable securities are available-for-sale securities; the amortized cost of such marketable securities of $184,974 and $181,247 as of June 30, 2023 and December 31, 2022, respectively, is presented net of an immaterial allowance for credit losses.

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 June 30,								Three months ended June 30,
		2023				2022				2023				2022
REVENUES		$	712,802			$	847,300			$	357,191			$	426,168
COST OF REVENUES			530,568				630,229				270,674				313,728
GROSS PROFIT			182,234				217,071				86,517				112,440
OPERATING COSTS AND EXPENSES:
Research and development			38,783				40,799				19,452				20,481
Marketing, general and administrative			36,016				42,538				17,387				21,285
Restructuring gain from sale of machinery and equipment, net			(50,282	)			-				(1,952	)			-
Restructuring expense			17,776				-				1,101				-
			42,293				83,337				35,988				41,766
OPERATING PROFIT			139,941				133,734				50,529				70,674
FINANCING AND OTHER INCOME (EXPENSE), NET			10,921				(10,295	)			3,924				(8,162	)
PROFIT BEFORE INCOME TAX			150,862				123,439				54,453				62,512
INCOME TAX EXPENSE, NET			(20,788	)			(9,492	)			(5,747	)			(4,339	)
NET PROFIT			130,074				113,947				48,706				58,173
Net loss (income) attributable to non-controlling interest			(7,482	)			(1,837	)			2,484				(96	)
NET PROFIT ATTRIBUTABLE TO THE COMPANY		$	122,592			$	112,110			$	51,190			$	58,077
BASIC EARNINGS PER SHARE
Earnings per share		$	1.11			$	1.03			$	0.46			$	0.53
Weighted average number of shares			110,025				109,037				110,088				109,138
DILUTED EARNINGS PER ORDINARY SHARE:
Earnings per share		$	1.10			$	1.01			$	0.46			$	0.53
Net profit used for diluted earnings per share			122,592			$	112,110				51,190			$	58,077
Weighted average number of ordinary shares outstanding
used for diluted earnings per share			111,153				110,561				111,234				110,561

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 June 30,								Three months ended June 30,
		2023				2022				2023				2022
Net profit		$	130,074			$	113,947			$	48,706			$	58,173
Other comprehensive income, net of tax:
Foreign currency translation adjustment			(12,818	)			(25,206	)			(11,904	)			(16,921	)
Change in employees plan assets and benefit obligations, net of taxes			185				(20	)			93				(10	)
Unrealized loss on derivatives			(2,727	)			(14,922	)			(1,964	)			(8,151	)
Comprehensive income			114,714				73,799				34,931				33,091
Comprehensive loss (income) attributable to non-controlling interest			(7,482	)			(1,837	)			2,484				(96	)
Comprehensive income attributable to the Company		$	107,232			$	71,962			$	37,415			$	32,995

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
																		Accumulated				Foreign
		Ordinary				Ordinary				Additional								other				currency				Accumulated												Non
		shares				shares				paid-in				Unearned				comprehensive				translation				profit				Treasury				Comprehensive				controlling
		issued				amount				capital				compensation				loss				adjustments				(deficit)				stock				income				interest				Total
BALANCE AS OF JANUARY 1, 2023			110,041			$	440,150			$	1,384,398			$	174,121			$	(2,040	)		$	(45,497	)		$	(50,879	)		$	(9,072	)						$	(2,640	)		$	1,888,541
Changes during the period:
Proceeds from an investment in a subsidiary																																							1,960				1,960
Exercise of options and RSUs			169				697				(697	)																															-
Employee stock-based compensation															13,495																												13,495
Other comprehensive income:
Profit																											122,592							$	122,592				7,482				130,074
Foreign currency translation adjustments																							(12,818	)											(12,818	)			(7,605	)			(20,423	)
Change in employees plan assets and benefit obligations																			185																185								185
Unrealized loss on derivatives																			(2,727	)															(2,727	)							(2,727	)
Comprehensive income																																		$	107,232
BALANCE AS OF JUNE 30, 2023			110,210			$	440,847			$	1,383,701			$	187,616			$	(4,582	)		$	(58,315	)		$	71,713			$	(9,072	)						$	(803	)		$	2,011,105
OUTSTANDING SHARES, NET OF TREASURY STOCK AS OF JUNE 30, 2023			110,123

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,
		2023				2022
CASH FLOWS - OPERATING ACTIVITIES
Net profit for the period		$	130,074			$	113,947
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			125,966				137,787
Effect of exchange rate differences and fair value adjustment			2,176				946
Other expense, net			666				1,907
Changes in assets and liabilities:
Trade accounts receivable			(13,828	)			(31,603	)
Other current assets			976				10,519
Inventories			(41,105	)			(28,958	)
Trade accounts payable			19,830				53,010
Deferred revenue and customers' advances			(26,193	)			(10,646	)
Employee related liabilities and other current liabilities			(50,533	)			26,077
Long-term employee related liabilities			638				357
Deferred tax, net and other long-term liabilities			(446	)			1,325
Net cash provided by operating activities			148,221				274,668
CASH FLOWS - INVESTING ACTIVITIES
Investments in property and equipment, net			(194,678	)			(130,217	)
Investments in marketable securities and other assets, net			66,809				(94,745	)
Net cash used in investing activities			(127,869	)			(224,962	)
CASH FLOWS - FINANCING ACTIVITIES
Proceeds from an investment in a subsidiary			1,932				-
Exercise of options, net			-				44
Principal payments on account of capital lease obligation			(20,396	)			(17,778	)
Debentures repayment			(18,493	)			(20,972	)
Net cash used in financing activities			(36,957	)			(38,706	)
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGE			(5,959	)			(10,753	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			(22,564	)			247
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD			340,759				210,930
CASH AND CASH EQUIVALENTS - END OF PERIOD		$	318,195			$	211,177

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,
		2023				2022
NON-CASH ACTIVITIES:
Investments in property and equipment		$	156,465			$	82,526
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash received during the period from interest, net of interest paid		$	10,785			$	1,495
Cash paid for income taxes, net during the period		$	6,916			$	8,718

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, 2023
(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” or “the Company”) as of June 30, 2023 include the financial statements of Tower and (i) its wholly-owned subsidiary Tower US Holdings Inc., the sole owner of: (1) Tower Semiconductor NPB Holdings, Inc. and its wholly-owned subsidiary, Tower Semiconductor Newport Beach, Inc. and (2) Tower Semiconductor San Antonio, Inc. (ii) its 51% owned subsidiary, Tower Partners Semiconductor Co., Ltd. (“TPSCo”) and (iii) its wholly-owned subsidiary, Tower Semiconductor Italy S.r.l. (“TSIT”). 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, 2022 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

During the period there was no initial adoption of new accounting standards.

F - 8

TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED

FINANCIAL STATEMENTS AS OF JUNE 30, 2023

(dollars in thousands, except per share data)

NOTE 3      -  SUBSEQUENT EVENTS

In July 2023, the Company’s affiliates, including TPSCo, extended their existing capital lease lines with JA Mitsui Leasing, Ltd., described in Note 11D to the Company’s annual financial statements as of December 31, 2022, whereby the availability period of such lines was extended to June 2024 with an updated remaining amount available for future utilization, totaling up to approximately JPY 6.5 billion (approximately $45,000 as of July 1, 2023). The lease agreements’ terms did not change and contain annual interest rates of approximately 2%.

On July 3, 2023, the Company's shareholders approved the following RSU awards to the CEO and members of the Board of Directors of the Company under the Company’s 2013 Plan:

(i) 75.8 thousand time-vested RSUs and 125.1 thousand performance RSUs (“PSUs”) subject also to time-vesting, to the CEO, with 33% of such RSUs and PSUs to vest at the end of each year for 3 years following the grant date for a total compensation value of approximately $7,500. The grant also includes a provision requiring the CEO to own, commencing May 2024, ordinary shares of the Company at a minimum value that equals at least three times his annual base salary as of May 2024 (the “Minimum Holding”). The CEO has until May 2024 to accumulate the Minimum Holding (whether by conversion of RSUs to ordinary shares or by purchase of ordinary shares), and during such period, until he accumulates the Minimum Holding, he must retain at least 20% of the vested time-based RSUs granted to him on or after May 2019;

(ii) 8.0 thousand time-vested RSUs to the chairman of the Board of Directors (“the Chairman”) for a total compensation value of $300, to vest 33% at the end of each year following the grant date; and

(iii) 3.3 thousand time-vested RSUs to each of the seven members of the Board of Directors then serving (other than to the Chairman and the CEO), for an aggregate compensation value of $875, vesting over a two-year period, with 50% vesting at the first anniversary of the date of grant and 50% on the second anniversary of the date of grant.

The Chairman and the members of the Board will have to own, commencing July 2025, ordinary shares of the Company at a minimum value that equals at least 50% of their annual cash compensation (the “BOD Minimum Holding”). The Chairman and the members of the Board have until July 2025 to accumulate the BOD Minimum Holding (whether by conversion of RSUs to ordinary shares or by purchase of ordinary shares), and during such period, until they accumulate the BOD Minimum Holding, they must retain at least 20% of the vested time-based RSUs granted to them on or after July 2020.

F - 9