FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
For the month of February 2008 (No. 1)
TOWER SEMICONDUCTOR LTD.
(Translation of registrant's name into English)
RAMAT GAVRIEL INDUSTRIAL PARK
P.O. BOX 619, MIGDAL HAEMEK, ISRAEL 23105
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [_]
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes [_] No [X]
On February 6, 2008, the Registrant announced its financial results for the
fourth quarter and fiscal year ended December 31, 2007. Attached hereto is a
copy of the press release.
Exhibit 99.1 Press release dated February 6, 2008
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TOWER SEMICONDUCTOR LTD.
Date: February 6, 2008 By: /s/ Nati Somekh Gilboa
--------------------------
Nati Somekh Gilboa
Corporate Secretary
EXHIBIT 99.1
TOWER SEMICONDUCTOR REPORTS RECORD QUARTERLY AND
ANNUAL REVENUE
INCREASED ANNUAL REVENUE BY $43.4 MILLION, REPRESENTING 23 PERCENT
YEAR-OVER-YEAR GROWTH
MIGDAL HAEMEK, Israel - February 6, 2008 - Tower Semiconductor Ltd. (NASDAQ:
TSEM, TASE: TSEM), an independent specialty foundry, today announced financial
results for the fourth quarter and full year ended December 31, 2007.
HIGHLIGHTS
o Record annual revenue of $230.9 million, representing year-over-year growth
of approximately 23 percent and two-year growth of 126 percent
o Record fourth quarter revenue of $61.6 million, representing 11 percent
growth as compared to the same period in 2006
o Achieved annual positive cash flow from operations for the first time since
Fab2 was established; recorded positive cash flow from operations for the
fifth consecutive quarter and positive EBITDA for the ninth consecutive
quarter
o Commenced execution of its Fab2 capacity ramp-up plan targeted at beyond
30,000 wafers-per-month
o Formed Partnership with CMT Medical Technologies to develop and sell flat
panel x-ray detectors for medical applications with a targeted market of
over $500 million per year
o Executing cost reduction initiatives and efficiency measures, which will
result in a decrease of more than $20 million in 2008 operating expenses
Revenue for the fourth quarter of 2007 was $61.6 million, representing an
increase of 11 percent when compared to revenue of $55.5 million in the fourth
quarter of 2006 and an increase of 9 percent compared to $56.6 million in the
third quarter of 2007. For the full year of 2007 revenue increased by $43.4
million to $230.9 million as compared to $187.4 million in 2006 and $102 million
in 2005, representing an increase of 23 percent and 126 percent, respectively.
Fourth quarter 2007 non-GAAP gross profit and operating profit, as described and
reconciled below, totaled $23 million and $14 million, respectively, which
represent 37 percent gross margin and 23 percent operating margin. Calculated in
accordance with GAAP, net loss for the fourth quarter was $25.3 million, or
$0.20 per share, an improvement of $11 million as compared to $36.3 million, or
$0.38 per share, for the same period in 2006. For the full year of 2007,
non-GAAP gross and operating profit, as described and reconciled below, were
$83.5 million and $48.9 million, respectively, which represent 36 percent gross
margin and 21 percent operating margin. Calculated in accordance with GAAP, net
loss for the year improved by $33.7 million against a revenue increase of $43.4
million, which represents 78 percent incremental net margin.
"Our record revenue performance during the fourth quarter not only surpassed the
$60 million milestone for the first time, but also exceeded the semiconductor
industry's average growth rate in regards to both quarterly and annual sales,"
commented Russell Ellwanger, Chief Executive Officer of Tower Semiconductor,
Ltd. "Furthermore, during the quarter we formed a partnership with CMT Medical
Technologies for the development of flat panel X-ray detectors, targeting a
market of over $500 million a year. This relationship, based upon Tower's
proprietary image sensor device and process technologies, represents a new
business model for Tower that will generate revenue through both the production
of high value, single die 8 inch wafers as well as through sharing the profits
of the end product."
Ellwanger also commented, "During 2007, we built upon the 84 percent revenue
growth recorded in 2006 by growing revenue an additional 23 percent, achieving
annual positive cash flow from operations results for the first time since Fab2
was established, as well as significantly improving the bottom line. In
addition, we laid the foundation for future growth by securing the equipment
necessary to expand capacity in Fab2 to beyond 30,000 wafer starts per month,
while improving operational efficiencies to enable $20 million in cost
reductions in 2008, and also securing several significant customers agreements
and partnerships that we expect will positively impact our financial results in
2008 and beyond."
Ellwanger concluded, "In the fourth quarter of 2007, we achieved another record
in revenue and wafer shipments. In the midst of an uncertain global economy, our
customer demand has remained strong, and we expect our first quarter of 2008 to
be in line with normal seasonality. We anticipate that our 2008 first quarter
revenue will range between $57 million and $62 million, representing a 3 to 11
percent increase from the $55.6 million in the first quarter of 2007.
Furthermore, we anticipate continued growth in 2008 as we install, qualify and
release for production our current 0.13 micron capacity ramp."
TRANSITION TO U.S. GAAP
Beginning with the fourth quarter of 2007, the Company elected to present its
financial statements in accordance with U.S. GAAP. The change was made as a
result of Israel Accounting Standard 29, which stipulates that Israeli public
companies that previously reported their financial results based on Israeli GAAP
must begin reporting their financial results in accordance with International
Financial Reporting Standards (IFRS) for periods beginning on or after January
1, 2008. However, Israeli public companies that are also listed on NASDAQ are
allowed to report utilizing U.S. GAAP rather than IFRS.
The Company elected to use U.S. GAAP to increase transparency and comparability
of the Company's financial reports and facilitate research and analysis by
shareholders, analysts and other participants in the U.S. capital markets. All
historical amounts presented in this release, including the financial tables
below, were recast to reflect the application of U.S. GAAP.
FOURTH QUARTER AND YEAR END 2007 FINANCIAL RESULTS CONFERENCE CALL AND WEB CAST
Tower will host a conference call to discuss these results today, February 6,
2008, at 10:00 a.m. Eastern Time (ET) / 5:00 p.m. Israel time. To participate,
please call: 1-888-668-9141 (U.S. toll-free number) or 972-3-918-0609
(international) and mention ID code: TOWER. Callers in Israel are invited to
call locally by dialing 03-918-0609. The conference call will also be Web cast
live at http://www.earnings.com and at www.towersemi.com and will be available
thereafter on both Web sites for replay for 90 days, starting at approximately 2
p.m. ET on the day of the call.
As used in this release, the term Earnings Before Interest Tax Depreciation and
Amortization (EBITDA) consists of loss, according to U.S. GAAP, excluding
interest and financing expenses (net), tax, depreciation and amortization and
stock based compensation expenses. EBITDA is not a required GAAP financial
measure and may not be comparable to a similarly titled measure employed by
other companies. EBITDA should not be considered in isolation or as a substitute
for operating income, net income or loss, cash flows provided by operating,
investing and financing activities, or other income or cash flow statement data
prepared in accordance with GAAP.
This release, including the financial tables below, presents other financial
information that may be considered "non-GAAP financial measures" under
Regulation G and related reporting requirements promulgated by the Securities
and Exchange Commission as they apply to our company. These non-GAAP financial
measures exclude (1) depreciation and amortization expenses and (2) compensation
expenses in respect of options granted to directors, officers and employees.
Non-GAAP financial measures should be evaluated in conjunction with, and are not
a substitute for, GAAP financial measures. The tables also present the GAAP
financial measures, which are most comparable to the non-GAAP financial measures
as well a reconciliation between the non-GAAP financial measures and the most
comparable GAAP financial measures. The non-GAAP financial information presented
herein should not be considered in isolation from or as a substitute for
operating income, net income or loss, cash flows provided by operating,
investing and financing activities, or other income or cash flow statement data
prepared in accordance with GAAP.
ABOUT TOWER SEMICONDUCTOR LTD.
Tower Semiconductor Ltd. (NASDAQ: TSEM, TASE: TSEM) is an independent specialty
foundry that delivers customized solutions in a variety of advanced CMOS
technologies, including digital CMOS, mixed-signal and RF (radio frequency)
CMOS, CMOS image sensors, power management devices, and embedded non-volatile
memory solutions. Tower's customer orientation is complemented by its
uncompromising attention to quality and service. Its specialized processes and
engineering expertise provides highly flexible, customized manufacturing
solutions to fulfill the increasing variety of customer needs worldwide.
Offering two world-class manufacturing facilities with standard and specialized
process technologies ranging from 1.0- to 0.13-micron, Tower Semiconductor
provides exceptional design support and technical services to help customers
sustain long-term, reliable product performance, while delivering on-time and
on-budget results. More information can be found at http://www.towersemi.com.
FORWARD LOOKING STATEMENT
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. Potential risks and uncertainties include,
without limitation, risks and uncertainties associated with: (i) the completion
of the equipment installation, technology transfer and ramp-up of production in
Fab 2 and raising the funds therefore, (ii) the cyclical nature of the
semiconductor industry and the resulting periodic overcapacity, fluctuations in
operating results, future average selling price erosion, (iii) having sufficient
funds to satisfy our short-term and long-term debt obligations and other
liabilities, (iv) operating our facilities at high utilization rates which is
critical in order to defray the high level of fixed costs associated with
operating a foundry and reduce our losses, (v) our ability to satisfy the
covenants stipulated in our amended credit facility agreement, (vi) our ability
to capitalize on increases in demand for foundry services, (vii) meeting the
conditions to receive Israeli government grants and tax benefits approved for
Fab2, the possibility of the government requiring us to repay all or a portion
of the grants already received and obtaining the approval of the Israeli
Investment Center for a new expansion program, (viii) our ability to accurately
forecast financial performance, which is affected by limited order backlog and
lengthy sales cycles, (ix) maintaining existing customers and attracting
additional customers, (x) not receiving orders from our wafer partners and
customers, which can result in excess capacity, (xi) our dependence on a
relatively small number of products for a significant portion of our revenue,
(xii) product returns, (xiii) 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, (xiv) competing effectively, (xv) our large amount of debt
and our ability to repay our short-term and long-term debt on a timely basis,
(xvi) achieving acceptable device yields, product performance and delivery
times, (xvii) our ability to manufacture products on a timely basis and to
purchase the equipment to increase Fab2 capacity beyond 24,000 wafers per month
and timely installation thereof, (xviii) our dependence on intellectual property
rights of others and our ability to operate our business without infringing
others' intellectual property rights, (xix) exposure to inflation, currency
exchange and interest rate fluctuations and risks associated with doing business
internationally and in Israel and (xx) business interruption due to fire, the
security situation in Israel and other events beyond our control.
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 our most recent filings on Forms 20-F, F-3 and 6-K, as were filed with the
Securities and Exchange Commission 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.
Contact:
Tower Semiconductor
Noit Levi, +972 4 604 7066
noitle@towersemi.com
or:
Shelton Group
Ryan Bright, (972) 239-5119 ext. 159
rbright@sheltongroup.com
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
DECEMBER 31, DECEMBER 31,
-------- --------
2007 2006
-------- --------
A S S E T S
CURRENT ASSETS
CASH, CASH EQUIVALENTS AND DEPOSITS $ 44,536 $ 40,940
TRADE ACCOUNTS RECEIVABLE 44,977 31,498
OTHER RECEIVABLES 4,748 5,425
INVENTORIES 27,806 34,763
OTHER CURRENT ASSETS 1,580 1,473
-------- --------
TOTAL CURRENT ASSETS 123,647 114,099
-------- --------
LONG-TERM INVESTMENTS 15,093 15,325
-------- --------
PROPERTY AND EQUIPMENT, NET 502,287 532,798
-------- --------
INTANGIBLE ASSETS, NET 34,711 44,981
-------- --------
OTHER ASSETS, NET 11,044 6,929
======== ========
TOTAL ASSETS $686,782 $714,132
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
CURRENT MATURITIES OF CONVERTIBLE DEBENTURES $ 7,887 $ 6,902
TRADE ACCOUNTS PAYABLE 49,025 55,128
OTHER CURRENT LIABILITIES 20,024 22,096
-------- --------
TOTAL CURRENT LIABILITIES 76,936 84,126
LONG-TERM DEBT FROM BANKS 379,314 432,430
DEBENTURES 117,460 83,863
LONG-TERM CUSTOMERS' ADVANCES 27,983 46,042
OTHER LONG-TERM LIABILITIES 40,380 28,155
-------- --------
TOTAL LIABILITIES 642,073 674,616
-------- --------
SHAREHOLDERS' EQUITY 44,709 39,516
======== ========
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $686,782 $714,132
======== ========
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA AND PER SHARE DATA)
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------------------------- -------------------------------------
2007 2006 2005 2007 2006 2005
--------- --------- --------- --------- --------- ---------
GAAP GAAP GAAP GAAP GAAP GAAP
--------- --------- --------- --------- --------- ---------
(UNAUDITED)
-------------------------------------
REVENUES
SALES $ 230,853 $ 187,438 $ 93,991 $ 61,618 $ 55,505 $ 31,063
REVENUES RELATED TO A JOINT
DEVELOPMENT AGREEMENT -- -- 8,000 -- -- --
--------- --------- --------- --------- --------- ---------
230,853 187,438 101,991 61,618 55,505 31,063
COST OF SALES 284,771 267,520 238,358 73,563 72,756 58,760
--------- --------- --------- --------- --------- ---------
GROSS LOSS (53,918) (80,082) (136,367) (11,945) (17,251) (27,697)
--------- --------- --------- --------- --------- ---------
OPERATING COSTS AND EXPENSES
RESEARCH AND DEVELOPMENT 13,790 15,048 16,029 3,499 3,893 3,180
MARKETING, GENERAL AND ADMINISTRATIVE 31,604 25,831 17,418 7,884 6,732 3,937
--------- --------- --------- --------- --------- ---------
45,394 40,879 33,447 11,383 10,625 7,117
========= ========= ========= ========= ========= =========
OPERATING LOSS (99,312) (120,961) (169,814) (23,328) (27,876) (34,814)
FINANCING EXPENSE, NET (34,976) (47,563) (35,651) (1,942) (8,450) (10,223)
OTHER INCOME (EXPENSE), NET 92 597 2,383 19 -- (135)
--------- --------- --------- --------- --------- ---------
LOSS FOR THE PERIOD $(134,196) $(167,927) $(203,082) $ (25,251) $ (36,326) $ (45,172)
========= ========= ========= ========= ========= =========
BASIC LOSS PER ORDINARY SHARE
LOSS PER SHARE $ (1.13) $ (2.03) $ (3.06) $ (0.20) $ (0.38) $ (0.68)
========= ========= ========= ========= ========= =========
WEIGHTED AVERAGE NUMBER OF ORDINARY
SHARES OUTSTANDING - IN THOUSANDS 118,857 82,581 66,371 124,120 94,373 66,905
========= ========= ========= ========= ========= =========
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARY
RECONCILIATION OF REPORTED GAAP TO NON-GAAP
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(dollars in thousands)
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 2007 DECEMBER 31, 2007
--------------------------------------- ---------------------------------------
DEPRECIATION, DEPRECIATION,
AMORTIZATION AMORTIZATION
AND STOCK BASED AND STOCK BASED
COMPENSATION COMPENSATION
EXPENSES (SEE EXPENSES (SEE
NON-GAAP A, B, C BELOW) GAAP NON-GAAP A, B, C BELOW) GAAP
--------- --------- --------- --------- --------- ---------
REVENUES $ 230,853 $ -- $ 230,853 $ 61,618 $ -- $ 61,618
COST OF SALES 147,380(A) 137,391 284,771 38,665(A) 34,898 73,563
--------- --------- --------- --------- --------- ---------
GROSS PROFIT (LOSS) 83,473 (137,391) (53,918) 22,953 (34,898) (11,945)
--------- --------- --------- --------- --------- ---------
OPERATING COSTS AND EXPENSES
RESEARCH AND DEVELOPMENT 10,391(B) 3,399 13,790 2,671(B) 828 3,499
MARKETING, GENERAL & ADMINISTRATIVE 24,201(C) 7,403 31,604 6,324(C) 1,560 7,884
--------- --------- --------- --------- --------- ---------
34,592 10,802 45,394 8,995 2,388 11,383
========= ========= ========= ========= ========= =========
OPERATING PROFIT (LOSS) $ 48,881 $(148,193) $ (99,312) $ 13,958 $ (37,286) $ (23,328)
========= ========= ========= ========= ========= =========
(a) Includes depreciation and amortization expenses in the amounts of $136,568
and $34,684 for the year and three months periods ended December 31, 2007,
respectively and stock based compensation expenses in the amounts of $823
and $214 for the year and three months periods ended December 31, 2007,
respectively.
(b) Includes depreciation and amortization expenses in the amounts of $2,825
and $719 for the year and three months periods ended December 31, 2007,
respectively and stock based compensation expenses in the amounts of $574
and $109 for the year and three months periods ended December 31, 2007,
respectively.
(c) Includes depreciation and amortization expenses in the amounts of $69 and
$36 for the year and three months periods ended December 31, 2007,
respectively and stock based compensation expenses in the amounts of $7,334
and $1,524 for the year and three months periods ended December 31, 2007,
respectively.
