NOTE 12: EMPLOYEE RELATED LIABILITIES

A. Employee Termination Benefits

Israeli law, labor agreements and corporate policy determine the obligations of Tower to make severance payments to dismissed Israeli employees and to Israeli employees leaving employment under certain circumstances. Generally, the liability for severance pay benefits, as determined by Israeli law, is based upon length of service and the employee’s monthly salary. This liability is primarily covered by regular deposits made each month by Tower into recognized severance and pension funds and by insurance policies maintained by Tower, based on the employee’s salary for the relevant month.

Tower implements a labor agreement with regard to most of its Israeli employees, according to which monthly deposits into recognized severance and pension funds or insurance policies release it from any additional severance obligation in excess of the balance in such accounts to such Israeli employees and, therefore, Tower incurs no liability or asset with respect to such severance obligations and deposits. Any net severance amount is released on the employee’s termination date. Payments relating to Israeli employee termination benefits were $5,716, $5,752 and $6,269 for 2024, 2023 and 2022, respectively.

TPSCo established a Defined Contribution Retirement Plan (the “DC Plan”) for its employees through which TPSCo contributes approximately 8% of employee base salary to the DC Plan. Such contribution releases the employer from further obligation to any payments upon termination of employment. The contribution is remitted either to third party benefit funds based on employee preference, or directly, to those employees who elected not to enroll in the DC Plan. Total payments under the DC Plan in 2024, 2023 and 2022 amounted to $3,853, $4,266 and $4,838 respectively.

B. TSNB Employee Benefit Plans

The following information provides the changes in 2024, 2023 and 2022 periodic expenses and benefit obligations due to the bargaining agreement signed between TSNB and its collective bargaining unit employees.

Post-Retirement Medical Plan

The components of the net periodic benefit cost and other amounts recognized in other comprehensive income for post-retirement medical plan expense are as follows as of December 31, 2024, 2023 and 2022:

Details	2024			2023			2022
Net periodic benefit cost:
Service cost	$	2		$	2		$	4
Interest cost		65			71			57
Amortization of prior service costs		-			-			-
Amortization of net (gain) loss		(272	)		(282	)		(157	)
Total net periodic benefit cost	$	(205	)	$	(209	)	$	(96	)
Other changes in plan assets and benefits obligations recognized in other comprehensive income:
Prior service cost for the period	$	-		$	-		$	-
Net (gain) loss for the period		(149	)		(195	)		(515	)
Amortization of prior service costs		-			-			-
Amortization of net gain (loss)		272			282			157
Total recognized in other comprehensive income	$	123		$	87		$	(358	)
Total recognized in net periodic benefit cost and other comprehensive income	$	(82	)	$	(122	)	$	(454	)
Weighted average assumptions used:
Discount rate		5.00	%		5.10	%		3.00	%
Expected return on plan assets		N/A			N/A			N/A
Rate of compensation increases		N/A			N/A			N/A
Assumed health care cost trend rates:
Health care cost trend rate assumed for current year (pre-65/post-65 Medicare Advantage)		8.20%/11.00	%		7.30%/9.25	%		6.00%/8.50	%
Health care cost trend rate assumed for current year (pre-65/post-65 Non-Medicare Advantage)		8.20%/8.70	%		7.30%/8.30	%		6.00%/6.40	%
Ultimate rate (pre-65/post-65)		4.50%/4.50	%		4.50%/4.50	%		4.50%/4.50	%
Year the ultimate rate is reached (pre-65/post-65)		2033/2033			2031/2031			2031/2031
Measurement date	December 31, 2024			December 31, 2023			December 31, 2022

The components of the change in benefit obligation, change in plan assets and funded status for post-retirement medical plan are as follows as of the years ended December 31, 2024, 2023 and 2022:

Details	2024			2023			2022
Change in medical plan related benefit obligation:
Medical plan related benefit obligation at beginning of period	$	1,319		$	1,454		$	1,912
Service cost		2			2			4
Interest cost		65			71			57
Benefits paid		(2	)		(13	)		(4	)
Change in medical plan provisions		-			-			-
Actuarial (gain) loss, net		(149	)		(195	)		(515	)
Benefit medical plan related obligation end of period	$	1,235		$	1,319		$	1,454
Change in plan assets:
Fair value of plan assets at beginning of period	$	-		$	-		$	-
Employer contribution		2			13			4
Benefits paid		(2	)		(13	)		(4	)
Fair value of plan assets at end of period	$	-		$	-		$	-
Medical plan related net funding	$	(1,235	)	$	(1,319	)	$	(1,454	)

As of December 31, 2024, 2023 and 2022:

Details	2024			2023			2022
Amounts recognized in statement of financial position:
Current liabilities	$	(56	)	$	(50	)	$	(59	)
Non-current liabilities		(1,179	)		(1,269	)		(1,395	)
Net amount recognized	$	(1,235	)	$	(1,319	)	$	(1,454	)
Weighted average assumptions used:
Discount rate		5.70	%		5.00	%		5.10	%
Rate of compensation increases		N/A			N/A			N/A
Assumed health care cost trend rates:
Health care cost trend rate assumed for next year (pre-65/post-65 Medicare Advantage)		8.60%/11.50	%		8.20%/11.00	%		7.30%/9.25	%
Health care cost trend rate assumed for next year (pre-65/post-65 Non-Medicare Advantage)		8.60%/9.90	%		8.20%/8.70	%		7.30%/8.30	%
Ultimate rate (pre-65/post-65 Medicare Advantage)		4.50%/4.50	%		4.50%/4.50	%		4.50%/4.50	%
Ultimate rate (pre-65/post-65 Non-Medicare Advantage)		4.50%/4.50	%		4.50%/4.50	%		4.50%/4.50	%
Year the ultimate rate is reached (pre-65/post-65 Medicare Advantage)		2034/2035			2033/2034			2031/2031
Year the ultimate rate is reached (pre-65/post-65 Non-Medicare Advantage)		2034/2034			2033/2033			2031/2031

The following benefit payments are expected to be paid in each of the next five fiscal years and in the aggregate for the five fiscal years thereafter:

Fiscal Year	Other Benefits
2025	$	56
2026		65
2027		75
2028		80
2029		87
2030 - 2034	$	438

Description of Significant Gains and Losses in Obligations:

For the fiscal year ended December 31, 2024, the benefit obligation summed to a net actuarial gain mainly due to the discount rate increase compared to the prior year. For the fiscal year ended December 31, 2023, the benefit obligation summed to a net actuarial gain due to a significant reduction in retirees receiving medical coverage.

TSNB Pension Plan

TSNB has a pension plan that provides monthly pension payments to eligible employees upon retirement. The pension benefits are based on years of service and specified benefit amounts. TSNB uses a December 31 measurement date each year. TSNB’s funding policy is to make contributions that satisfy at least the minimum required contribution for IRS qualified plans.

The components of the change in benefit obligation, the change in plan assets and funded status for TSNB’s pension plan for the years ended December 31, 2024, 2023 and 2022 are as follows:

Details	2024			2023			2022
Net periodic benefit cost:
Interest cost	$	868		$	891		$	627
Expected return on plan assets		(1,075	)		(1,034	)		(778	)
Expected administrative expenses		200			200			200
Amortization of prior service costs		3			3			3
Amortization of net loss (gain)		91			123			-
Total net periodic benefit cost	$	87		$	183		$	52
Other changes in plan assets and benefits obligations recognized in other comprehensive income:
Prior service cost for the period	$	-		$	-		$	-
Net loss (gain) for the period		(192	)		346			1,545
Amortization of prior service costs		(3	)		(3	)		(3	)
Amortization of net gain (loss)		(91	)		(123	)		-
Total recognized in other comprehensive income	$	(286	)	$	220		$	1,542
Total recognized in net periodic benefit cost (gain) and other comprehensive income	$	(199	)	$	403		$	1,594
Weighted average assumptions used:
Discount rate		4.90	%		5.10	%		2.90	%
Expected return on plan assets		5.60	%		5.60	%		3.10	%
Rate of compensation increases		N/A			N/A			N/A

The components of the change in benefit obligation, change in plan assets and funded status for TSNB’s pension plan for the years ended December 31, 2024, 2023 and 2022 are as follows:

Details	2024			2023			2022
Change in benefit obligation:
Benefit obligation at beginning of period	$	18,281		$	17,436		$	22,081
Interest cost		868			891			627
Benefits paid		(963	)		(963	)		(804	)
Change in plan provisions		-			-			-
Actuarial loss (gain)		(1,152	)		917			(4,468	)
Benefit obligation end of period	$	17,034		$	18,281		$	17,436
Change in plan assets:
Fair value of plan assets at beginning of period	$	19,953		$	19,511		$	25,750
Actual return on plan assets		187			1,628			(5,211	)
Employer contribution		-			-			-
Expenses paid		(272	)		(224	)		(224	)
Benefits paid		(964	)		(962	)		(804	)
Fair value of plan assets at end of period	$	18,904		$	19,953		$	19,511
Funded Status	$	1,870		$	1,672		$	2,075
Amounts recognized in statement of financial position:
Non-current assets	$	1,870		$	1,672		$	2,075
Non-current liabilities		-			-			-
Net amount recognized	$	1,870		$	1,672		$	2,075
Weighted average assumptions used:
Discount rate		5.60	%		4.90	%		5.10	%
Rate of compensation increases		N/A			N/A			N/A

The following benefit payments are expected to be paid in each of the next five fiscal years and in the aggregate for the five fiscal years thereafter:

Fiscal Year	Other Benefits
2025	$	1,244
2026		1,285
2027		1,332
2028		1,357
2029		1,375
2030 - 2034	$	6,690

Description of Significant Gains and Losses in Obligations:

For the fiscal year ended December 31, 2024, the benefit obligation summed to a net actuarial gain primarily attributable to the discount rate increase as compared to the prior year. For the fiscal year ended December 31, 2023, the benefit obligation summed to a net actuarial loss primarily attributable to the discount rate decrease as compared to the prior year and demographic experience during the year.

The plan’s assets measured at fair value on a recurring basis consisted of the following as of December 31, 2024:

Details	Level 1		Level 2		Level 3
Investments in commingled funds	$	-	$	18,904	$	-
Total plan assets at fair value	$	-	$	18,904	$	-

The plan’s assets measured at fair value on a recurring basis consisted of the following as of December 31, 2023:

Details	Level 1		Level 2		Level 3
Investments in commingled funds	$	-	$	19,953	$	-
Total plan assets at fair value	$	-	$	19,953	$	-

TSNB’s pension plan weighted average asset allocations on December 31, 2024, by asset category are as follows:

Asset Category	December 31, 2024			Target allocation 2025
Equity securities		10	%		10	%
Debt securities		90	%		90	%
Total		100	%		100	%

TSNB’s primary policy goals regarding the plan’s assets are to (1) provide liquidity to meet the Plan benefit payments and expenses payable from the Plan, (2) offer reasonable probability of achieving growth of assets that will assist in closing the Plan’s funding gap, and (3) manage the Plan’s assets in a liability framework. Plan assets are currently invested in commingled funds with various debt and equity investment objectives. The target asset allocation for the plan assets is 90% debt, or fixed income securities, and 10% equity securities. Individual funds are evaluated periodically based on comparisons to benchmark indices and peer group funds, and investment decisions are made by TSNB in accordance with the policy goals. Actual allocation to each asset category fluctuates and may not be within the target allocation specified above due to changes in market conditions.

The estimated expected return on assets of the plan is based on assumptions derived from, among other things, the historical return on assets of the plan, the current and expected investment allocation of assets held by the plan and the current and expected future rates of return in the debt and equity markets for investments held by the plan. The obligations under the plan could differ from the obligation currently recorded, if management's estimates are not consistent with actual investment performance.