FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
For the month of February 2003
TOWER SEMICONDUCTOR LTD.
(Translation of registrant's name into English)
P.O. Box 619, Migdal Haemek, Israel 10556
(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 24, 2003, we announced our financial results for the fourth
quarter and the fiscal year ended December 31, 2002. Our press release
announcing the results and certain other recent developments is attached as
Exhibit 1 hereto.
On February 25, 2003, we announced the hiring of Harold A. Blomquist as
senior vice president of Tower Semiconductor Ltd. and chief executive officer of
Tower Semiconductor USA, our U.S. subsidiary. Our press release is attached as
Exhibit 2 hereto.
This Form 6-K is being incorporated by reference in 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: February 25, 2003 By: /s/ Rafael M. Levin
-------------------------------------
Name: Rafael M. Levin
Title: Co-Chief Executive Officer
Exhibit 1
NEWS RELEASE
TOWER SEMICONDUCTOR LTD. ANNOUNCES FOURTH QUARTER AND YEAR 2002 RESULTS
|X| Fab 2 Partners Agree to Advance Final Payments as part of 2003
financing package
|X| Company continues to advance Fab 2, plans to increase fab capacity to
approximately 10K wafers per month by the beginning of 2004
|X| Cash Flow from Fab 1 Operations Improves Further
MIGDAL HAEMEK, Israel-- February 24, 2003-- Tower Semiconductor Ltd. (NASDAQ:
TSEM; TASE: TSEM) today announced results for the year and fourth quarter ended
December 31, 2002.
Sales for the fourth quarter of 2002 were $15.6 million (including $4.0 million
from a previously announced technology-related agreement for Fab 2), as compared
with $16.2 million in the preceding quarter (including $4.0 million from a
previously announced technology-related agreement for Fab 2) and as compared
with $8.8 million in the fourth quarter of 2001. For the fourth quarter of 2002,
the company reported a loss of $13.6 million, or $0.33 per share, including
non-capitalized Fab 2 expenses (net) of $10.8 million. This is compared to a
loss of $14.5 million, or $0.48 per share, including non-capitalized Fab 2
expenses (net) of $11.7 million, for the third quarter of 2002 and compared with
a loss of $9.3 million, or $0.41 per share, including non-capitalized Fab 2
expenses (net) of $4.5 million, for the fourth quarter of 2001.
Sales for the year ended December 31, 2002 were $51.8 million (including $8.1
million from a previously announced technology-related agreement for Fab 2),
compared with sales of $52.4 million for the year ended December 31, 2001. For
the 12 months ended December 31, 2002, the company reported a loss of $51.4
million, or $1.63 per share, including non-capitalized Fab 2 expenses (net) of
$37.0 million, compared with a loss of $38.5 million, or $1.92 per share,
including non-capitalized Fab 2 expenses (net) of $14.0 million, for the year
ended December 31, 2001.
"During the year 2002 we achieved our goal of bringing Fab 2 online," said Dr.
Yoav Nissan-Cohen, co-CEO of Tower. "We are currently providing prototypes to
our customers using our 0.18 micron CMOS process, as well as initial samples of
products based on our mircoFLASH(R) technology. During 2003, we plan to increase
our installed production capacity in Fab 2 from the current 2,000 wafers per
month to approximately 10,000 wafer starts per month by the beginning of 2004."
In addition to the completion of Fab 2's construction, the company continued to
enhance its capabilities on other areas. The transfer of 0.18-micron process
technology from Toshiba was completed. For 0.13-micron technology, a transfer
and development agreement was signed with Motorola, and the project continues to
move forward. In the design support area, Tower now offers its customers leading
-More-
TOWER SEMICONDUCTOR LTD. ANNOUNCES FOURTH QUARTER AND YEAR 2002 RESULTS
Page 2 of 4
design cores, complete set of standard cell libraries, memory compilers and
analog blocks. Also last year, Tower raised approximately $150 million in Fab 2
equity financing. Of that amount, $89 million came from commitments previously
made by Tower's wafer and equity partners and $61 million was obtained through
the sale of debentures and equity to public and private investors. During 2002,
Tower's banks provided $142 million of financing for the project and have
further provided an additional $30 million in February of this year. The company
was also able to achieve a significant cost reduction in the Fab 2 project,
which is now estimated at approximately $100 million below the original plan.
"We expect the momentum of last year's accomplishments, combined with the
relentless pursuit of new business opportunities, will help us to achieve even
greater success in 2003," commented Dr. Nissan-Cohen. "In January 2003 we hired
Harold Blomquist, a very senior and seasoned semiconductor professional as
Senior VP for Business Operations of Tower and CEO of Tower-USA. Mr. Blomquist
brings to Tower broad experience in semiconductor marketing, sales and business
development, and we are confident that his contribution will significantly
enhance our future success."
The new facility is currently expected to begin limited volume production in the
second quarter of 2003. Although the Fab 2 building, tooling, testing and
initial prototyping capability were completed on time and under budget, Tower
has adjusted the rate of its Fab 2 ramp to reflect the ongoing softness in the
market and world economy.
"We expect production orders to increase during the second half of 2003," added
Nissan-Cohen. "Initially, most of these orders will come from our wafer
partners, and later from other customers which are currently in initial
prototyping phases. We are very encouraged by recent market forecasts which
predict a strengthening market in the second half of 2003 and during 2004."
"In 2002 Fab 1 returned to generating positive cash flow," continued
Nissan-Cohen. "Among the contributing factors to Fab 1's improved results were
rigorous cost reduction efforts and the growth in image sensors products.
Beginning in the middle of 2002, Tower utilized its 0.5-micron process
technology to manufacture the 14-megapixel CMOS image sensor, which is being
used in the new Kodak 35mm professional digital camera, the DCS Pro 14 N Digital
SLR. Although we are encouraged by the performance of Fab 1, we currently expect
Fab 1 sales to remain flat for the first quarter, with increased sales in the
second half of 2003, as orders for new CMOS image sensors products increase and
new business is generated"
On the financial side, Tower's major shareholders, have now agreed to advance a
substantial portion of the fifth and final Fab 2 milestone payments prior to the
contractually committed date. This amendment to the investors' investment
agreements is subject to the approval of Tower's shareholders, Tower's banks and
other regulatory bodies.
TOWER SEMICONDUCTOR LTD. ANNOUNCES FOURTH QUARTER AND YEAR 2002 RESULTS
Page 3 of 4
Under the terms of the amended fifth milestone payment agreements, Tower's major
shareholders, SanDisk Corporation (Nasdaq:SNDK), Alliance Semiconductor
(Nasdaq:ALSC), Macronix International (Nasdaq:MXICY), and the Israel Corporation
Technologies (ICTech), will pay $24.2 million in the aggregate following final
approval of these arrangements, which the company expects to occur in March
2003. No earlier than August 2003, the partners will pay the remainder of the
fifth milestone payment if Tower raises an aggregate of $22 million, which Tower
must do before the end of 2003.
For the $24.2 being funded in the coming month, the partners will be issued
ordinary shares based on a $2.983 per-share price. For the remainder, the
partners will be issued ordinary shares based on the price per share at which
Tower raises additional funds. Tower has also agreed to allow its wafer partners
to convert up to an aggregate of $13.2 million unutilized wafer credits which
they may have as of December 31, 2005 into Tower shares based on the shares
market price at that time. If the wafer partners exercise this right and are
issued more than 5% in the aggregate of Tower's shares at that time, Tower will
then offer all of its other shareholders rights to purchase its shares at the
same price per share.
"This agreement reflects the continuous support of our partners and investors'
in Fab 2," noted Dr. Nissan-Cohen. "The agreement has been structured to be
responsive to the arrangements we are currently negotiating with our banks to
defer certain upcoming capacity milestones and obligations that require raising
additional financing, and which will significantly improve our immediate cash
position. Furthermore, our partners will complete their investments under the
Fab 2 investment agreements without Tower needing to raise funds from new wafer
partners in 2003 and regardless when we achieve the fifth milestone. This will
allow us to raise additional funds in better market conditions."
"It is important to note that our partners' support is expressed not only
through their consistency in fulfilling their financial obligations, but also
through their willingness to advance payments when necessary, invest an
additional $20 million in 2002 above their contractually committed investments
and their continuous operational work with our teams on several different
production projects for Fab 2."
Tower will host a conference call to discuss these results on Monday, February
24, 2003 at 7:30 a.m. Eastern time / 14:30 Israel time. To participate, call
1-800-915-4836 (U.S. toll-free number) or 1-973-317-5319 (international) and
mention ID code: 286732. Callers in Israel are invited to call local
03-925-5910. The conference call also will be webcast live at
www.companyboardroom.com and at www.towersemi.com and will be available
thereafter on both Web sites for replay for 90 days, starting at 2:00 p.m.
Eastern time on the day of the call.
microFLASH(R) is a registered trademark of Tower Semiconductor Ltd. NROM is a
trademark of Saifun Semiconductor Ltd.
TOWER SEMICONDUCTOR LTD. ANNOUNCES FOURTH QUARTER AND YEAR 2002 RESULTS
Page 4 of 4
About Tower Semiconductor Ltd.
Tower Semiconductor Ltd. is a pure-play independent wafer foundry established in
1993. The company manufactures integrated circuits with geometries ranging from
1.0 to 0.18 microns; it also provides complementary manufacturing services and
design support. In addition to digital CMOS process technology, Tower offers
advanced non-volatile memory solutions, mixed-signal 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
microns and can produce up to 20,000 150mm wafers per month. Fab 2 features
0.18-micron and below process technologies, including foundry-standard
technology, and will offer full production capacity of 33,000 200mm wafers per
month. The Tower Web site is located at 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) obtaining
required approvals of the shareholders of the Company and regulatory
authorities, to the amendment to the Fab 2 investment agreements, (ii) raising
$22 million before the end of 2003, which is a condition to our major
shareholders payment of the remaining portion of the fifth milestone, (iii)
conditions in the market for foundry manufacturing services and in the market
for semiconductor products generally, (iv) obtaining additional business from
new and existing customers, (v) obtaining additional financing for the Fab 2
project from wafer partners and/or equity partners and/or other sources, (vi)
any failure by Tower to raise additional funding by the deadlines set forth in
its agreement with its banks and/or a failure by Tower to reach an agreement
with its banks to extend the deadlines to raise additional financing in 2003
and/or failure by Tower to get the approval of its banks to the amendment to the
investment agreements, which would result in an event of default of Tower's loan
agreement, in which event the banks would have the right to call the loans and
exercise its liens against Tower's assets, (vii) a declaration of default by
Tower's wafer partners, financial investors and the Investment Center of the
State of Israel should Tower's banks call the loans, (viii) satisfaction of all
other conditions under the agreements with the Fab 2 equity and wafer partners,
the Israeli Investment Center and Tower's banks, (ix) completing the
construction of a new wafer manufacturing facility, (x) successful completion of
the development and/or transfer of advanced CMOS process technologies to be
utilized in Tower's existing facility and in Fab 2, (xi) market acceptance and
competitiveness of the products to be manufactured by Tower for customers using
these technologies, (xii) ramp-up of production at Fab 2 and (xiii) if we fail
to meet certain sales levels and other conditions, we may lose our exclusive
foundry license with Saifun. A more complete discussion of risks and
uncertainties that may affect the accuracy of these statements, and Tower's
business generally, is included in our most recent Registration Statement on
Form F-2, as filed with the Securities and Exchange Commission.
# # #
PR Agency Contact Investor Relations Contact Corporate Contact
Julie Lass Sheldon Lutch Tamar Cohen
Loomis Group Fusion IR & Communications Tower Semiconductor Ltd.
+1 (713) 526 3737 +1 (212) 268 1816 +972-4650-6998
lassj@loomisgroup.com sheldon@fusionir.com pr@towersemi.com
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share data and per share data)
As of December 31,
---------------------------------
2002 2001
--------------- --------------
A S S E T S
CURRENT ASSETS
Cash and cash equivalents $ 7,857 $ 19,610
Short-term interest-bearing deposits 10,500 10,044
Cash and short-term interest-bearing deposits
designated for investments relating to Fab 2 51,338 3,548
Trade accounts receivable (net of allowance for
doubtful accounts of $155 and $215, respectively) 7,456 3,321
Other receivables 21,322 21,250
Inventories 10,201 8,428
Other current assets 1,407 1,219
----------- ----------
Total current assets 110,081 67,420
........... ..........
LONG-TERM INVESTMENTS
Long-term interest-bearing deposits
designated for investments relating to Fab 2 11,893 --
Other long-term investments 6,000 6,000
----------- ----------
17,893 6,000
........... ..........
PROPERTY AND EQUIPMENT, NET 493,074 340,724
........... ..........
OTHER ASSETS 95,213 57,910
........... ..........
----------- ----------
TOTAL ASSETS $ 716,261 $ 472,054
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt $ 4,000 $ 14,000
Trade accounts payable 76,083 64,484
Other current liabilities 8,071 5,271
----------- ----------
Total current liabilities 88,154 83,755
LONG-TERM DEBT 253,000 115,000
CONVERTIBLE DEBENTURES 24,121 --
OTHER LONG-TERM LIABILITIES 5,406 2,584
LONG-TERM LIABILITY IN RESPECT
OF CUSTOMERS' ADVANCES 47,246 17,910
----------- ----------
Total liabilities 417,927 219,249
........... ..........
SHAREHOLDERS' EQUITY
Ordinary shares, NIS 1 par value - authorized
70,000,000 shares; issued 44,735,532 and
26,297,102 shares, respectively 11,294 7,448
Additional paid-in capital 400,808 307,865
Shareholder receivables and unearned compensation (53) (195)
Accumulated deficit (104,643) (53,241)
----------- ----------
307,406 261,877
Treasury stock, at cost - 1,300,000 shares (9,072) (9,072)
----------- ----------
Total shareholders' equity 298,334 252,805
........... ..........
----------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 716,261 $ 472,054
=========== ==========
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,
------------------------ ------------------------
2002 2001 2002 2001
---------- --------- --------- ----------
SALES (1) $ 51,801 $ 52,372 $ 15,572 $ 8,833
COST OF SALES (2) 67,022 76,733 17,066 14,607
---------- --------- --------- ----------
GROSS LOSS (15,221) (24,361) (1,494) (5,774)
.......... ......... ......... ..........
OPERATING COSTS AND EXPENSES
Research and development (3) 17,031 9,556 6,847 2,713
Marketing, general and administrative (4) 17,091 14,489 5,284 3,226
---------- --------- --------- ----------
34,122 24,045 12,131 5,939
.......... ......... ......... ..........
---------- --------- --------- ----------
OPERATING LOSS (49,343) (48,406) (13,625) (11,713)
FINANCING INCOME (EXPENSE), NET (5) (2,104) 1,465 (4) (401)
OTHER INCOME, NET 45 8,419 45 2,843
---------- --------- --------- ----------
LOSS FOR THE PERIOD $ (51,402) $ (38,522) $ (13,584) $ (9,271)
========== ========= ========= ==========
BASIC LOSS PER ORDINARY SHARE
Loss per share (6) $ (1.63) $ (1.92) $ (0.33) $ (0.41)
========== ========= ========= ==========
(1)Sales for the year and for the three months ended December 31, 2002
includes $8.1M and $4.0M of revenue relating to Fab2, respectively [$0
for the year and three months ended December 31, 2001]
(2)Cost of sales for the year and for the three months ended December 31,
2002 includes $15.6M and $4.1M of non-capitalized expenses relating to
Fab2, respectively [$3.8M and $0.4M in the year and three months ended
December 31, 2001, respectively].
(3)Research and development expenses for the year and for the three months
ended December 31, 2002 include $15.9M and $6.6M of non-capitalized
expenses relating to Fab2, respectively [$5.5M and $2.4M in the year and
three months ended December 31, 2001, respectively].
(4)Marketing, general and administrative expenses for the year and for the
three months ended December 31, 2002 include $12.0M and $4.1M of
non-capitalized expenses relating to Fab2, respectively [$6.8M and $1.6M
in the year and three months ended December 31, 2001, respectively].
(5)Financing income (expense), net for the year and for the three months
ended December 31, 2002 includes financing expense of $1.5M and $0 of
non-capitalized expenses, net relating to Fab2, respectively [$2.1M
income, net and $(0.2)M expense, net in the year and three months ended
December 31, 2001, respectively].
(6)Basic and diluted loss per share in accordance with U.S. GAAP would be
$(1.63) and $(0.33) for the year and three months ended December 31, 2002
[$(1.95) and $(0.41) in the year and three months ended December 31,
2001, respectively].
Exhibit 2
---------
NEWS RELEASE
TOWER SEMICONDUCTOR HIRES SENIOR-LEVEL
EXECUTIVE TO BROADEN GLOBAL POSITION
MIGDAL HAEMEK, Israel and SAN JOSE, Calif. - February 25, 2003 - Tower
Semiconductor Ltd. (NASDAQ: TSEM; TASE: TSEM) has hired Harold A. Blomquist as
senior vice president of Tower Semiconductor Ltd. and chief executive officer of
Tower Semiconductor USA, the company's U.S. subsidiary.
Blomquist has been given a broad mandate to enhance Tower's global market
presence and marketing and sales activities. To fulfill this mission, he will
direct the company's business development activities on a global basis from the
company's headquarters in Israel and from the headquarters of its American
subsidiary in San Jose, Calif.
Dr. Yoav Nissan-Cohen, co-CEO of Tower, said, "Tower has stepped up its efforts
to build a leadership position in the global semiconductor industry. This
includes more fully utilizing Fab 2's capacity and planning for a third fab to
keep Tower on the leading edge of technology and innovation. Having led emerging
and established semiconductor companies to success, Harold brings the
capabilities and expertise that will help Tower to attain these goals, and we
welcome him to the team."
"Tower is embarking on a new phase of growth with the introduction of advanced
technologies in Fab 2," said Blomquist. "As an industry leader in CMOS image
sensors and embedded flash memory, Tower is committed to providing customers all
over the world with exceptional, specialty foundry services, a wide range of
intellectual property and other differentiated processes and services. With this
outstanding foundation, we have the opportunity to increase our global market
share. I am excited about my role in this strategy, and look forward to bringing
a new level of achievement and excellence to the company. Tower has talented and
dedicated people, and I am confident the team can make it happen."
Blomquist has more than 16 years of executive-level experience in the
semiconductor industry. Most recently, he served as president and CEO of ZMD
America, Inc. Previous to that, Blomquist held various executive positions over
an 11-year period at AMI Semiconductor, a global supplier of digital and
mixed-signal application specific integrated circuits (ASICs) and silicon
foundry services. After forming AMI subsidiaries in Germany and Japan, Blomquist
served as senior vice president of AMI. In that position, he was responsible for
AMI's worldwide business operations, leading all six P&L units of the company.
Concurrently, he held the positions of chairman and CEO of AMI GmbH in Dresden,
Germany and president and representative director of AMI Japan Co. Ltd. in
Tokyo. During his tenure at AMI, Blomquist helped to shape the company's global
business development strategy, achieving growth in annual revenue from less than
$85 million in 1990 to more than $385 million in 2000.
-MORE-
Before joining AMI, Blomquist held positions of increasing responsibility at
several semiconductor firms, including Texas Instruments, Inmos and General
Semiconductor. Blomquist received a bachelor's degree in electrical engineering
from the University of Utah, where he also majored in business management.
About Tower Semiconductor USA
Tower Semiconductor USA, a wholly owned subsidiary of Tower Semiconductor Ltd.,
handles marketing, sales and technical support for Tower's customers in the
United States. Tower USA maintains headquarters in San Jose, Calif.
About Tower Semiconductor Ltd.
Tower Semiconductor Ltd. is a pure-play independent wafer foundry established in
1993. The company manufactures integrated circuits with geometries ranging from
1.0 to 0.18 microns; it also provides complementary manufacturing services and
design support. In addition to digital CMOS process technology, Tower offers
advanced non-volatile memory solutions, mixed-signal 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
microns and can produce up to 20,000 150mm wafers per month. Fab 2 features
0.18-micron and below process technologies, including foundry-standard
technology, and will offer full production capacity of 33,000 200mm wafers per
month. The Tower Web site is located at 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) obtaining
required approvals of the shareholders of the Company and regulatory
authorities, to the amendment to the Fab 2 investment agreements, (ii) raising
$22 million before the end of 2003, which is a condition to our major
shareholders payment of the remaining portion of the fifth milestone, (iii)
conditions in the market for foundry manufacturing services and in the market
for semiconductor products generally, (iv) obtaining additional business from
new and existing customers, (v) obtaining additional financing for the Fab 2
project from wafer partners and/or equity partners and/or other sources, (vi)
any failure by Tower to raise additional funding by the deadlines set forth in
its agreement with its banks and/or a failure by Tower to reach an agreement
with its banks to extend the deadlines to raise additional financing in 2003
and/or failure by Tower to get the approval of its banks to the amendment to the
investment agreements, which would result in an event of default of Tower's loan
agreement, in which event the banks would have the right to call the loans and
exercise its liens against Tower's assets, (vii) a declaration of default by
Tower's wafer partners, financial investors and the Investment Center of the
State of Israel should Tower's banks call the loans, (viii) satisfaction of all
other conditions under the agreements with the Fab 2 equity and wafer partners,
the Israeli Investment Center and Tower's banks, (ix) completing the
construction of a new wafer manufacturing facility, (x) successful completion of
the development and/or transfer of advanced CMOS process technologies to be
utilized in Tower's existing facility and in Fab 2, (xi) market acceptance and
competitiveness of the products to be manufactured by Tower for customers using
these technologies, (xii) ramp-up of production at Fab 2 and (xiii) if we fail
to meet certain sales levels and other conditions, we may lose our exclusive
foundry license with Saifun.
A more complete discussion of risks and uncertainties that may affect the
accuracy of these statements, and Tower's business generally, is included in our
most recent Registration Statement on Form F-2, as filed with the Securities and
Exchange Commission.
###
PR Agency Contact Investor Relations Contact Corporate Contact
Julie Lass Sheldon Lutch Tamar Cohen
Loomis Group Fusion IR & Communications Tower Semiconductor Ltd.
+1 (713) 526 3737 +1 (212) 268 1816 +972-4650-6998
lassj@loomisgroup.com sheldon@fusionir.com pr@towersemi.com