|TOWER SEMICONDUCTOR LTD filed this Form 20-F on 04/10/2017|
This loan agreement contains customary terms, conditions and covenants, as well as customary events of default. TJT’s obligations pursuant to the loan agreement are not guaranteed by Tower or any of its affiliates. As of December 31, 2016, TPSCo was in compliance with the financial covenants thereunder.
Acquisition of a Manufacturing Facility in the U.S.
In February 2016, Tower completed the acquisition of a fabrication facility in San Antonio, Texas from Maxim. The acquisition was done through a new indirectly wholly owned subsidiary of Tower, TJT. The purchase price was $40 million payable through the issuance of approximately 3.3 million ordinary shares of Tower.
In addition, Tower and Maxim entered into a long term 15 year manufacturing agreement, pursuant to which Maxim is committed to buy products from TJT in quantities that will facilitate a gradual ramp of third-party products by TJT. For further details regarding the acquisition and the purchase price allocation, see Note 3B to our consolidated financial statements for the year ended December 31, 2016.
Tower Israeli Shelf Prospectus
In May 2016, Tower published an Israeli shelf prospectus pursuant to which Tower may, for a period of two years, issue the securities described in the prospectus to the public in Israel by means of shelf offering reports, subject to the terms set out in the shelf prospectus. Under said shelf prospectus, Tower issued Series G Debentures in June 2016 . For additional information regarding the Series G Debentures see Item "5B. Liquidity and Capital Resources – Debentures Series G."
C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES
Our research and development activities are related primarily to our manufacturing process by way of improvements, upgrades and development for our use in manufacturing of our customers products and have been sponsored and funded by us with some participation by the Israeli government. Our research and development expenses for the years ended December 31, 2016, 2015 and 2014 were $63.1 million, $61.7million and $51.8 million net of government participation of $0.5 million, $0.6 million and $0.6 million respectively.
For a description of our research & development policies and our patents and licenses, see “Item 4. Information on the Company-4.B. Business Overview”.
D. TREND INFORMATION
The Company operates as a specialty foundry in the semiconductor industry. The semiconductor industry is historically characterized as highly cyclical, both seasonally and over the long term. Over time the market fluctuates, cycling through periods of weak demand, production excess capacity, excess inventory and price pressure, and periods of strong demand, full capacity utilization, and product shortages, commanding higher selling prices.