FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
For the month of August 2007 (No. 2)
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 August 15, 2007, the Registrant announced its financial results for the
six and three months ended June 30, 2007. Attached hereto are the following
exhibits
Exhibit 99.1 Press release dated August 15, 2007
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: August 15, 2007 By: /s/ Nati Somekh Gilboa
--------------------------
Nati Somekh Gilboa
Corporate Secretary
EXHIBIT 99.1
TOWER SEMICONDUCTOR REPORTS 28 PERCENT YEAR-OVER-YEAR
REVENUE GROWTH IN THE SECOND QUARTER 2007 AND 40
PERCENT GROWTH IN THE FIRST HALF 2007
COMPANY RECORDS POSITIVE CASH FLOW FROM OPERATIONS AND POSITIVE EBITDA
AND ACHIEVES EIGHTH CONSECUTIVE QUARTERLY REVENUE GROWTH
MIGDAL HAEMEK, Israel - August 15, 2007 - Tower Semiconductor Ltd. (Nasdaq:
TSEM, TASE: TSEM), an independent specialty foundry, today announced second
quarter 2007 financial results.
MAJOR HIGHLIGHTS:
o Achieved record quarterly revenues of $57.1 million representing the
eighth consecutive quarter of revenue growth, representing
year-over-year growth of approximately 28 percent
o Achieved positive cash flow from operations for the third consecutive
quarter and positive EBITDA for the seventh consecutive quarter
o Achieved 40 percent revenue growth in the first half of 2007, compared
to the same period for 2006
o Plans to Further expand Fab2 capacity at a low cost model, to be
funded by the previously announced long-term bonds financing and by
credit lines from banks & Israel Corporation.
For the second quarter of 2007, the Company reported total revenues of $57.1
million, representing a 28 percent increase as compared to revenues of $44.6
million reported in the second quarter of 2006. For the first half of 2007, the
Company reported total revenues of $112.7 million, representing a 40 percent
increase when compared to revenues of $80.4 million reported in the first half
of 2006. Net loss in accordance with Generally Accepted Accounting Principles
(GAAP) for the second quarter of 2007 has improved by $9.2 million to $34.4
million, or $0.28 per share, as compared to a GAAP net loss of $43.6 million, or
$0.55 per share, for the second quarter of 2006. Non-GAAP gross profit (as
described and reconciled below) for the second quarter of 2007 was $19.2
million, representing a gross margin of 34 percent. Non-GAAP operating profit
(as described and reconciled below) for the second quarter of 2007 was $11.5
million, representing a 20 percent operating margin.
"The second quarter 2007 marked the two year anniversary of Tower's new
management team", Said Russell Ellwanger, chief executive officer of Tower
Semiconductor. "The ensuing 8 quarters demonstrated sequential Sales growth,
resulting in a 3x sales increase and a $25 million positive shift in cash flow
from operations as compared to two years ago quarterly run rate. We have
continued to run at very high utilization levels in Fab 2, and even with the
capacity ramp reaching 24,000 wafer starts per month in the third quarter of
2007, we will need to increase the capacity further to fully meet the current as
well as longer term forecasted customer demand. To this end, we have raised
moneys in, predominantly, non share diluting, long term debt vehicles, to enable
the next phase of fab 2 capacity ramp targeting acquisition of low cost, short
period of return tool sets. We have experienced a recent decrease in the Fab 1
utilization rates, which we expect will be corrected in the second half of Q4
and will remain high throughout 2008, as a function of multiple new projects
with several very large customers. We see our overall business strong and target
continued sequential growth."
BUSINESS OUTLOOK:
Tower forecasts revenue in the third quarter 2007 to be between $56 and $60
million, which will represent between 9 and 17 percent year-over-year revenue
growth.
SECOND QUARTER 2007 FINANCIAL RESULTS CONFERENCE CALL AND WEB CAST
Tower will host a conference call to discuss these results on Wednesday, August
15, 2007, at 10 a.m. Eastern Standard Time / 5 p.m. Israel time. To participate,
please call: 1-888-668-9141 (U.S. toll-free number) or 972-3-918-0687
(international) and mention ID code: TOWER. Callers in Israel are invited to
call locally by dialing 03-918-0687. 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. Eastern Standard 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.
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.
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 and raising the funds therefor, (ii) 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, (iii) having sufficient funds to operate the company in
the short-term and the funding needs for its ramp-up plan, (iv) operating our
facilities at satisfactory 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 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 and customers, (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 short-term and long-term 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, (xv) the entering into and
the consummation of definitive agreements with Israel Corporation Ltd. and the
banks based on the terms of the letters of intent previously disclosed on July
16, 2007, including the receipt of corporate and/or other approvals as required
under applicable law, which, following the determination of our audit committee
and board of directors that the transactions are on market terms, in the
ordinary course of business and to our benefit, may include our shareholders
approval if we receive by the end of August 29, 2007 (Israel time) a written
request by any shareholder or shareholders who hold at least 1% of our issued
and outstanding shares to bring the terms of such transactions to a shareholders
meeting, (xvi) the entering into and the consummation of agreements to purchase
the equipment to increase Fab2 capacity beyond 24,000 wafers per month and
timely installation thereof, and (xvii) business interruption due to terror
attacks, earthquakes, other acts of God and the security situation in Israel.
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
Jim Mathias, (972) 239-5119 ext. 115
jmathias@sheltongroup.com
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
JUNE 30, DECEMBER 31,
-------- --------
2007 2006
-------- --------
(UNAUDITED)
--------
A S S E T S
CURRENT ASSETS
CASH, CASH EQUIVALENTS AND DEPOSITS $ 20,723 $ 40,940
TRADE ACCOUNTS RECEIVABLE 45,476 31,498
OTHER RECEIVABLES 2,769 5,425
INVENTORIES 37,691 34,763
OTHER CURRENT ASSETS 1,465 1,473
-------- --------
TOTAL CURRENT ASSETS 108,124 114,099
-------- --------
PROPERTY AND EQUIPMENT, NET 507,414 539,292
-------- --------
INTANGIBLE ASSETS, NET 39,482 44,981
-------- --------
OTHER ASSETS, NET 1,303 1,346
======== ========
TOTAL ASSETS $656,323 $699,718
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
CURRENT MATURITIES OF CONVERTIBLE DEBENTURES $ 6,611 $ 6,632
TRADE ACCOUNTS PAYABLE 55,922 55,128
OTHER CURRENT LIABILITIES 20,907 22,096
-------- --------
TOTAL CURRENT LIABILITIES 83,440 83,856
LONG-TERM DEBT FROM BANKS 360,689 356,947
CONVERTIBLE DEBENTURES 58,609 62,175
LONG-TERM CUSTOMERS' ADVANCES 42,070 46,042
OTHER LONG-TERM LIABILITIES 19,441 17,708
-------- --------
TOTAL LIABILITIES 564,249 566,728
-------- --------
SHAREHOLDERS' EQUITY 92,074 132,990
======== ========
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $656,323 $699,718
======== ========
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA AND PER SHARE DATA)
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------------- -------------------------------------
2007 2006 2005 2007 2006 2005
--------- --------- --------- --------- --------- ---------
GAAP GAAP GAAP GAAP GAAP GAAP
--------- --------- --------- --------- --------- ---------
REVENUES $ 112,666 $ 80,430 $ 50,375 $ 57,062 $ 44,555 $ 27,208
COST OF SALES 142,878 126,422 122,468 71,384 65,142 61,254
--------- --------- --------- --------- --------- ---------
GROSS PROFIT (LOSS) (30,212) (45,992) (72,093) (14,322) (20,587) (34,046)
--------- --------- --------- --------- --------- ---------
OPERATING COSTS AND EXPENSES
RESEARCH AND DEVELOPMENT 6,952 6,928 8,649 3,355 3,574 3,886
MARKETING, GENERAL&ADMINISTRATIVE 15,176 10,798 8,766 7,351 5,474 4,238
--------- --------- --------- --------- --------- ---------
22,128 17,726 17,415 10,706 9,048 8,124
========= ========= ========= ========= ========= =========
OPERATING PROFIT (LOSS) (52,340) (63,718) (89,508) (25,028) (29,635) (42,170)
FINANCING EXPENSE, NET (19,554) (25,575) (15,528) (9,406) (14,051) (7,353)
OTHER INCOME, NET 73 591 2,476 4 40 2,283
--------- --------- --------- --------- --------- ---------
NET LOSS FOR THE PERIOD $ (71,821) $ (88,702) $(102,560) $ (34,430) $ (43,646) $ (47,240)
========= ========= ========= ========= ========= =========
LOSS PER ORDINARY SHARE
(*) BASIC AND DILUTED LOSS PER SHARE $ (0.63) $ (1.18) $ (1.56) $ (0.28) $ (0.55) $ (0.71)
========= ========= ========= ========= ========= =========
WEIGHTED AVERAGE NUMBER OF ORDINARY
SHARES OUTSTANDING - IN THOUSANDS 113,584 75,313 65,946 122,014 78,716 66,190
========= ========= ========= ========= ========= =========
(*) BASIC AND DILUTED LOSS PER SHARE IN ACCORDANCE WITH U.S. GAAP FOR THE SIX
AND THREE MONTHS PERIODS ENDED JUNE 30, 2007 ARE $0.65 AND $0.28,
RESPECTIVELY, FOR THE SIX AND THREE MONTHS PERIODS ENDED JUNE 30, 2006 ARE
$1.16 AND $0.60, RESPECTIVELY, AND ARE THE SAME AS THE ISR. GAAP DATA FOR
THE SIX AND THREE MONTHS PERIODS ENDED JUNE 30, 2005.
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARY
RECONCILIATION OF REPORTED GAAP TO NON-GAAP
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DOLLARS IN THOUSANDS)
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30, 2007 JUNE 30, 2007
--------------------------------------- ---------------------------------------
DEPRECIATION, DEPRECIATION,
AMORTIZATION AND AMORTIZATION AND
STOCK BASED STOCK BASED
COMPENSATION COMPENSATION
EXPENSES EXPENSES
NON-GAAP (SEE A, B, C BELOW) GAAP NON-GAAP (SEE A, B, C BELOW) GAAP
--------- --------- --------- --------- --------- ---------
REVENUES $ 112,666 $ -- $ 112,666 $ 57,062 $ -- $ 57,062
COST OF SALES 72,607 70,271(A) 142,878 37,889 33,495(A) 71,384
--------- --------- --------- --------- --------- ---------
GROSS PROFIT (LOSS) 40,059 (70,271) (30,212) 19,173 (33,495) (14,322)
--------- --------- --------- --------- --------- ---------
OPERATING COSTS AND EXPENSES
RESEARCH AND DEVELOPMENT 5,227 1,725(B) 6,952 2,475 880(B) 3,355
MARKETING, GENERAL&ADMINISTRATIVE 11,468 3,708(C) 15,176 5,164 2,187(C) 7,351
--------- --------- --------- --------- --------- ---------
16,695 5,433 22,128 7,639 3,067 10,706
========= ========= ========= ========= ========= =========
OPERATING PROFIT (LOSS) $ 23,364 $ (75,704) $ (52,340) $ 11,534 $ (36,562) $ (25,028)
========= ========= ========= ========= ========= =========
(A) INCLUDES DEPRECIATION AND AMORTIZATION EXPENSES IN THE AMOUNTS OF $69,916
AND $33,295 FOR THE SIX AND THREE MONTHS ENDED JUNE 30 2007, RESPECTIVELY
AND STOCK BASED COMPENSATION EXPENSES IN THE AMOUNTS OF $355 AND $200 FOR
THE SIX AND THREE MONTHS ENDED JUNE 30 2007, RESPECTIVELY.
(B) INCLUDES DEPRECIATION AND AMORTIZATION EXPENSES IN THE AMOUNTS OF $1,427AND
$721 FOR THE SIX AND THREE MONTHS ENDED JUNE 30 2007, RESPECTIVELY AND
STOCK BASED COMPENSATION EXPENSES IN THE AMOUNTS OF $298 AND $159 FOR THE
SIX AND THREE MONTHS ENDED JUNE 30 2007, RESPECTIVELY.
(C) INCLUDES DEPRECIATION AND AMORTIZATION EXPENSES IN THE AMOUNTS OF $20 AND
$17 FOR THE SIX AND THREE MONTHS ENDED JUNE 30 2007, RESPECTIVELY AND STOCK
BASED COMPENSATION EXPENSES IN THE AMOUNTS OF $3,688 AND $2,170 FOR THE SIX
AND THREE MONTHS ENDED JUNE 30 2007, RESPECTIVELY.
