FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
For the month of November 2006 No. 5
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 November 7, 2006, the Registrant announced its financial results for the
three and nine month periods ended September 30, 2006. Attached hereto the press
release.
This Form 6-K is being incorporated by reference into all effective
registration statements filed by us under the Securities Act of 1933.
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: November 7, 2006 By: /s/ Nati Somekh Gilboa
--------------------------
Nati Somekh Gilboa
Corporate Secretary
TOWER SEMICONDUCTOR ANNOUNCES RECORD SALES
OF $51.5M FOR THIRD QUARTER 2006
THIRD SEQUENTIAL QUARTER OF RECORD SALES, A 2.5 TIMES YEAR TO YEAR
INCREASE Q3'06 VS Q3'05 WITH FURTHER GROWTH GUIDED FOR Q4'06
MIGDAL HAEMEK, Israel - November 7, 2006 - Tower Semiconductor Ltd. (NASDAQ:
TSEM; TASE: TSEM), a pure-play independent specialty foundry, today announced
third quarter 2006 results.
HIGHLIGHTS:
o Achieved record sales of $51.5 million, a 2.5X year to year increase,
as compared with third quarter 2005
o Achieved fourth consecutive quarter of positive EBITDA and EBITDA
growth
o Announced expansion of 0.13-micron manufacturing capacity with volume
production purchase commitment by SanDisk Corporation
o Signed long-term foundry agreement with International Rectifier for
volume manufacturing
o Selected by Atheros Communications to produce its latest RF on
standard digital CMOS, wireless LAN 802.11g chip
o Announced image sensor volume agreement with SuperPix, Tower's first
volume agreement in China.
The Company reported total sales of $51.5 million, representing a 2.5 times
increase as compared with the $20.6 million reported in the third quarter of
2005 and an increase of 15% over the $44.6 million reported in the second
quarter of 2006. The 2006 third quarter net income was $39.5 million, or $0.46
per share, which included a one-time gain of $80.1 million, resulting from the
recently announced closing of the bank restructuring deal, and depreciation and
amortization expenses of $38.2 million. Loss for the third quarter of 2006,
excluding the above described one-time gain of $80.1 million, would have been
$40.6 million, or ($0.48) per shares, including depreciation and amortization
expenses of $38.2 million, as compared with loss for the third quarter of 2005
which was $55.4 million, or ($0.83) per share, including $36.9 million
depreciation and amortization expenses.
"We continue to execute on our business plan, as represented by achieving a
significant milestone of higher than $50 million in quarterly sales", said
Russell Ellwanger, chief executive officer, Tower Semiconductor. "We are
encouraged that our business model and diversified customer base has enabled us
to guide for continued growth for the fourth quarter of 2006. Building upon the
several major agreements signed and announced during the third quarter, we are
optimistic about further growth throughout 2007."
BUSINESS OUTLOOK:
Tower expects continued growth in the fourth quarter of 2006 and forecasts sales
of $53 to $57 million.
THIRD QUARTER 2006 FINANCIAL RESULTS CONFERENCE CALL AND WEB CAST
Tower will host a conference call to discuss these results on Tuesday, November
7, 2006, at 11:00 a.m. Eastern Daylight Time / 6 p.m. Israel time. To
participate, please call: 1-866-527-8676 (U.S. toll-free number) or
972-3-918-0609 (international) and mention ID code: TOWER. Callers in Israel are
invited to call locally 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 websites for replay for 90 days, starting at 2:00 p.m.
Eastern Daylight Time on the day of the call.
----------
As used in this release, the term EBITDA consists of loss, according to GAAP
(Generally Accepted Accounting Principles), excluding interest and financing
expenses (net), tax and depreciation and amortization 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.
----------
ABOUT TOWER SEMICONDUCTOR LTD.
Tower Semiconductor Ltd. is a pure-play independent specialty wafer foundry
established in 1993. The company manufactures integrated circuits with
geometries ranging from 1.0 to 0.13-micron; it also provides complementary
technical services and design support. In addition to digital CMOS process
technology, Tower offers advanced non-volatile memory solutions, mixed-signal &
RF-CMOS, and CMOS image-sensor technologies. To provide world-class customer
service, the company maintains two manufacturing facilities: Fab 1 has process
technologies from 1.0 to 0.35 micron and can produce up to 16,000 150mm wafers
per month. Fab 2 features 0.18 and 0.13-micron, standard and specialized process
technologies, and has the current capacity of up to 15,000 200mm wafers per
month. Tower's Web site is located at http://www.towersemi.com.
CONTACT:
Tower Semiconductor
Ilanit Vudinsky, +972 4 650 6434
ilanitvu@towersemi.com
SAFE HARBOR
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, (ii) having sufficient funds to operate the company in the short-term and
raising the funds required to implement the current ramp up plan and complete
Fab 2, (iii) the cyclical nature of the semiconductor industry and the resulting
periodic overcapacity, fluctuations in operating results, future average selling
price erosion that may be more severe than our expectations, (iv) operating our
facilities at satisfactory utilization rates which is critical in order to cover
the high level of fixed costs associated with operating a foundry, (v) our
ability to satisfy certain of the covenants stipulated in our amended 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 Fab 2 and obtaining the approval of the Israeli
Investment Center for a new expansion program, (viii) attracting additional
customers, (ix) not receiving orders from our wafer partners, customers and
technology providers, (x) failing to maintain and develop our technology
processes and services, (xi) competing effectively, (xii) our large amount of
debt and our ability to repay our debt on a timely basis, (xiii) achieving
acceptable device yields, product performance and delivery times, (xiv) the
timely development, internal qualification and customer acceptance of new
processes and products and (xv) business interruption due to terror attacks,
including the current effect of the military situation, earthquakes, and other
acts of God.
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-1, 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. We do not
intend to update, and expressly disclaim any obligation to update, the
information contained in this release.
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
SEPTEMBER 30, DECEMBER 31,
--------- ---------
2006 2005
--------- ---------
A S S E T S
CURRENT ASSETS
CASH AND CASH EQUIVALENTS $ 61,746 $ 7,337
DESIGNATED CASH AND SHORT-TERM INTEREST-BEARING DEPOSITS -- 31,661
TRADE ACCOUNTS RECEIVABLE 25,636 16,776
OTHER RECEIVABLES 12,807 9,043
INVENTORIES 38,519 24,376
OTHER CURRENT ASSETS 1,737 1,048
--------- ---------
TOTAL CURRENT ASSETS 140,445 90,241
--------- ---------
PROPERTY AND EQUIPMENT, NET 522,018 510,645
--------- ---------
OTHER ASSETS, NET 50,748 77,800
========= =========
TOTAL ASSETS $ 713,211 $ 678,686
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
CURRENT MATURITIES OF LONG-TERM DEBT $ -- $ 21,103
CURRENT MATURITIES OF CONVERTIBLE DEBENTURES 6,522 6,453
TRADE ACCOUNTS PAYABLE 59,687 59,741
OTHER CURRENT LIABILITIES 15,354 8,972
--------- ---------
TOTAL CURRENT LIABILITIES 81,563 96,269
LONG-TERM DEBT 355,138 497,000
CONVERTIBLE DEBENTURES 61,657 19,358
LONG-TERM LIABILITY IN RESPECT
OF CUSTOMERS' ADVANCES 50,004 59,621
OTHER LONG-TERM LIABILITIES 15,547 11,012
--------- ---------
TOTAL LIABILITIES 563,909 683,260
--------- ---------
CONVERTIBLE DEBENTURES -- 25,493
--------- ---------
SHAREHOLDERS' EQUITY (DEFICIT) 149,302 (30,067)
========= =========
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 713,211 $ 678,686
========= =========
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except share data and per share data)
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- --------------------------
2006 2005 2006 2005
--------- --------- --------- ---------
REVENUES
SALES $ 131,933 $ 62,928 $ 51,503 $ 20,553
REVENUES RELATED TO A JOINT DEVELOPMENT AGREEMENT -- 8,000 -- --
--------- --------- --------- ---------
131,933 70,928 51,503 20,553
COST OF SALES 194,666 179,598 68,244 57,130
--------- --------- --------- ---------
GROSS LOSS (62,733) (108,670) (16,741) (36,577)
--------- --------- --------- ---------
OPERATING COSTS AND EXPENSES
RESEARCH AND DEVELOPMENT 11,107 12,849 4,179 4,200
MARKETING, GENERAL AND ADMINISTRATIVE 18,106 13,481 7,308 4,715
--------- --------- --------- ---------
29,213 26,330 11,487 8,915
========= ========= ========= =========
OPERATING LOSS (91,946) (135,000) (28,228) (45,492)
FINANCING EXPENSE, NET (37,957) (25,428) (12,382) (9,900)
GAIN ON DEBT RESTRUCTURING 80,071 -- 80,071 --
OTHER INCOME, NET 597 2,518 6 42
--------- --------- --------- ---------
INCOME (LOSS) FOR THE PERIOD $ (49,235) $(157,910) $ 39,467 $ (55,350)
========= ========= ========= =========
BASIC EARNING (LOSS) PER ORDINARY SHARE
(*) EARNING (LOSS) PER SHARE $ (0.63) $ (2.39) $ 0.46 $ (0.83)
========= ========= ========= =========
INCOME (LOSS) USED TO COMPUTE
BASIC EARNING (LOSS) PER SHARE (49,235) (157,910) 39,467 (55,350)
========= ========= ========= =========
WEIGHTED AVERAGE NUMBER OF ORDINARY
SHARES OUTSTANDING - IN THOUSANDS 78,607 66,190 85,087 66,671
========= ========= ========= =========
DILUTED EARNING (LOSS) PER ORDINARY SHARE
(*) EARNING (LOSS) PER SHARE $ (0.63) $ (2.39) $ 0.30 $ (0.83)
========= ========= ========= =========
INCOME (LOSS) USED TO COMPUTE
DILUTED EARNING (LOSS) PER SHARE (49,235) (157,910) 41,433 (55,350)
========= ========= ========= =========
WEIGHTED AVERAGE NUMBER OF ORDINARY
SHARES OUTSTANDING - IN THOUSANDS 78,607 66,190 139,214 66,671
========= ========= ========= =========
(*) BASIC AND DILUTED LOSS PER SHARE IN ACCORDANCE WITH U.S. GAAP FOR THE NINE
AND THREE MONTHS PERIODS ENDED SEPTEMBER 30, 2006 ARE $1.67 AND $0.52,
RESPECTIVELY, AND ARE THE SAME AS THE ISR. GAAP DATA FOR THE NINE AND THREE
MONTHS PERIODS ENDED SEPTEMBER 30, 2005.