高塔半導體 (TSEM) 2009 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by.

Welcome to the Tower Semiconductor Fourth Quarter and Year End 2009 Results Conference Call.

All participants are currently present in a listen-only mode.

Following management's prepared statements, instructions will be given for the question-and-answer session.

(Operator Instructions).

As a reminder, this conference is being recorded February 24th, 2010.

Joining us today are Mr.

Russell Ellwanger, Tower's CEO, and Mr.

Oren Shirazi, CFO.

I would like to turn the call over to Noit Levi, Director of Investor Relations and Public Communications.

Ms.

Levi, please go ahead.

Thank you and welcome Tower Semiconductor's Financial Results Conference Call for the fourth quarter and fiscal year 2009.

Joining us today are Mr.

Russell Ellwanger, TowerJazz CEO, and Mr.

Oren Shirazi, TowerJazz CFO.

Russell will begin with remarks about the quarter and year highlights followed by Oren with an analysis of our fourth quarter and full year financial results.

After management's prepared remarks, we will begin the question-and-answer session.

Before we begin, I would like to remind you that some statements made during this call may be forward-looking and are subject to uncertainties and risk factors that could cause actual results to be different from those currently expected.

These uncertainties and risk factors are fully disclosed in our Form 20-F, F-4, F-3, and 6-K filed with the Securities and Exchange Commission as well as filings with the Israel Securities Authority.

They are also available on our website.

TowerJazz assumes no obligation to update any such forward-looking statements.

Now, I'd like to turn the call to our CEO, Russell Ellwanger.

Russell, please go ahead.

Thank you, Noit, and thank you all for attending the call.

In the past months, we presented at several investor conferences and have had numerous interactions with analysts, shareholders, and potential shareholders.

There is a general and specific excitement over our accomplishments, how we singularly in the foundry landscape were able to grow revenue double digit in 2009 and vastly improved the bottom line EBITDA and that we could target a mid double-digit growth for 2010.

But there was as well a strong query regarding how we can, with fabrication sites that do not contain leading edge technology or equipment, maintain sustainable growth against those several foundries which do invest multibillions of dollars each year to either stay in front of or chase the waves of digital technology nodes.

Hence, I'll begin this call today by defining our business model and how we as a special analog foundry may maintain long-term differentiation and growth within a framework of low capital investment and high return on assets.

I'll then review our 2009 major accomplishments and specifically how it firmly places us in position of specialty foundry leader as verified by our Q4 results.

I'll end by discussing our Q1 guidance as well as our major targets for 2010 as a whole.

Oren will present detailed Q4 financial results and yearly 2009 financial results.

We'll then open the call for questions and I'll provide a summary statement to conclude the call.

So, with your indulgence, I'll describe our business focus.

Semiconductor innovations improves either one, our ability to process information in a given square inch of silicon through digital transistor scaling and new software algorithms.

This is the focus of business models of the large digital foundries and requires continual, very large investments.

Or two, our ability to communicate sense, power, hear, see, display information through specialty semiconductor development.

This is our model and the value is an innovation within existing leading edge technology nodes.

TowerJazz pursues this with excellence.

For the digital scaling, plain vanilla CMOS foundry business, large foundries, TSMC, UMC, and now probably GlobalFoundries, are the main players.

They possess deeply scaled down technologies and are able to satisfy most market demands in the field of pure logic products.

Being a second source to the plain vanilla CMOS may help us to utilize the fab capacity, but it is hardly a good long-term business.

Besides the need of extremely high investments to launch the shrunk technologies of 65 nanometer and below, being a second source limits the wafer price margins and thus possible profits.

The alternatives are the special semiconductor markets, which some refer to as niche markets where innovative device solutions introduced into a moderately scaled down CMOS core are of great demand.

This extends the use of 0.18, 0.13 micron technologies in the fields where enhanced functionality is dominant over the incentive to shrink the lateral geometry to enable price decrease and/or where reliability verified a mature, older technologies is critical such as automotive, space, military, and certain medical applications and the like.

In today's semiconductor market, the choice of niches comes down to power management, PM technologies, RF CMOS, mixed-signal technologies, and CMOS with different embedded sensors such as CMOS image sensors, both visible and x-ray, biological sensing arrays, et cetera.

And silicon on ship technologies qualified for enhanced stability to external influences, availability of high voltage transistors, high polar devices, low cost embedded memories such as our 5 volt Y-Flash, and special backend elements -- thick metals, decoupling, high density, MIM capacitors, et cetera -- are the distinguishers of the TowerJazz PM technologies.

The RF CMOS and silicon germanium by CMOS TowerJazz technologies allow operations at frequencies up to 300 gigahertz and include zero costs embedded MVM, our own 3.3-volt Y-Flash and C-Flash as additional special features.

Transfer of corresponding products to more advanced technology nodes than 0.18 micron and 0.13 micron, in many cases faces design problems related to power consumption.

TowerJazz CMOS image sensors, fabricated by its stitching technology, compete in the field of large-size x-ray matrices where the scaling of the core CMOS technology is minimally important, while low dark current and noises are critical.

Special applications are supported by radiation-hard micro flash, 0.18 micron embedded memory technology featuring enhanced reliability, security, and radiation hardness.

Gordon Moore of Intel fame predicted that the number of transistors that can be placed in an integrated circuit will double every two years.

This is commonly known as Moore's Law and relies upon transistor scaling.

But in the business of a specialty foundry, there is more than Moore.

We are the leaders in specialty semiconductor technology and as such drive innovation that does not rely solely on transistor scaling, but on engineering solutions to the problems of interfacing digital systems to the real world through a vast array of special semiconductors such as wireless RF, high voltage and analog, imaging, and other sensors and communication chips.

Innovation and special semiconductors is fundamentally different than innovation in the digital world since it does not rely on a predictable scaling of the transistor as driven by Moore's Law, but rather on a deep understanding of the problems faced in each unique application, coupled with great bursts of creativity that enables breakthrough solutions to these problems by engineering inside the silicon rather than simply scaling the silicon device.

This is where the excitement resides and why our name of TowerJazz is demonstrative of the jazzy work environment we have throughout the Company.

So, now to the year in review.

As you all know, 2009 began with the strongest non-supply demand related worldwide semi and foundry downturns in the past decade.

We had completed a very strategic merger with Jazz Technologies at the end of Q3 2008, which enabled us to enter the downturn with the ability to focus on activities for growth rather than cost cutting for survival.

Fast forwarding the year, we finished 2009 with fourth quarter revenue for the first time breaking the $100 million mark, the highest quarterly EBITDA in the Company history, and the best ever cash position since the initial IPO in 1994, and the first time of GAAP-gross profit since 2000.

Additionally, as of the first week of 2009, we had a new Chairman of the Board, Mr.

Amir Elstein.

Amir has silicon in his veins, having started as an Intel engineer, developing into an Intel business and operational executive, and then being an executive director, deputy CEO at Teva Pharmaceutical, responsible for worldwide operations and worldwide business development.

His background has allowed Amir to bring incremental value, add strategic thought into the company and strategic process to the Board and he has become a wonderful partner to me.

We indeed leave 2009 a very different company than we entered into it.

Just to demonstrate our progress, fourth quarter 2008, the first quarter post merger, was approximately $78 million in revenue with an EBITDA of approximately $3 million.

The activities of the past year allowed us to grow the Q4 '09 revenue by an incremental $22 million that almost entirely dropped into EBITDA profit.

For the year, we realized over 300 design wins, which were split between our different business units with 86 in advanced RF, 44 in image sensors, 48 in power management, 58 in aerospace and defense, and 30 in TOPS.

All of these design wins falling within our specialty model and represent 86% of our total design win.

In terms of technology, core CMOS realized 42 design wins, representing 14% of our total design wins.

To enable our strategy of being a full solution provider for our customers, we continue to manufacture a small percentage of core CMOS for their complementary chip needs.

In 2005, when Oren Shirazi and I first began working together at Tower, the product mix was less than 30% specialty and 70% CMOS.

We finished 2009 at 80% specialty by revenue and 20% CMOS.

2005 was a $90 million annual wafer revenue.

Hence, over this time period, we shifted from 30% specialty to 80% specialty or in dollars, considering 2005's $90 million, from about $26 million of specialty revenues to about $250 million in specialty revenue in 2009.

All of this incremental $220 million of course comes at a higher revenue margin with very great customer stickiness.

To talk about our specific business units, our RF business continues to grow rapidly with strong revenue momentum in the areas of radio transceivers for cell phones, digital TV tuners for set top boxes, and large screen TVs, and high speed networking components.

Among these markets, the TV tuner space has seen the strongest momentum in new design wins in 2009.

This is where silicon germanium and RF CMOS technologies and the accurate corresponding models provide a shorter time to market with better power and noise advantage over competing solutions.

In 2009, we announced several new products from a sampling of our customers.

These included Xceive for a tuner built in our 0.18 micron silicon germanium adopted by LG for LCD and plasma TVs, SWID for a tuner in our 0.35 micron silicon germanium process targeting set top boxes and satellite receivers, and Entropic Communications for a tuner built in our 0.18 micron RF CMOS process.

In addition to these established markets, we are seeing strong design win momentum in emerging applications where silicon germanium and specialty silicon solutions are providing a lower-cost alternative to [Galian Marcinide Ics].

These applications include the front-end module of the cell phone, which is typically comprised of the controller, the power amplifier, and antenna switch and filters.

Within this module, TowerJazz has stayed the leading silicon foundry with an estimated market share of over 50% of the silicon IC content, together with our two largest customers, Skyworks and RFMD.

In the area of power amplifiers, in 2009 we announced a new technology, our Deep-Silicon-Via process, which is a less expensive method of improving efficiency of cell phone power amplifiers relative to the use of a throughway for Via, which is done in Galian Marcinide.

This advancement, among others, has led to a number of design wins such as the one announced with VT Silicon, who selected TowerJazz for the manufacturer of the world's first fully integrated 4G RF Front-End IC.

At the high performance end through 2009, we continue to see strength in optical, physical layer components such as TIA, Serdes, and laser drivers, where we hold a strong market share.

We estimate the market share to be more than 25% for applications of data rates greater than 10 gigabits per second and higher.

We are increasingly winning new designs in emerging high frequency applications such as automotive radar and phased array radar.

In the area of phased array radar, for example, together with University of California San Diego, we announced a single chip phased array Ku-band 15 gigahertz radar build in our silicon germanium technology, which replaces eight Galian Marcinide components.

In the area of satellite communications, we announced a silicon germanium design with phaser solutions for phased array antenna used to link broadband satellite service to moving trains.

To facilitate the transition from Galian Marcinide to silicon germanium in these high frequency applications, we also announced a partnership with Agilent Technologies and released a silicon germanium design kit in their popular ADS platform often used by Galian Marcinide designers which will now be able to design with the same tools into our silicon germanium technology.

Within the company, capacity technical optimizations, we have gained great traction in having transferred the silicon germanium 0.13 micron process to Migdal Haemek to take advantage of Migdal Haemek's backend copper capability in building a fully differentiated next generation silicon germanium process.

We've received our first design win here, which targets greater than $20 million per year revenue and have four other active opportunities with a total customer pull of above $130 million per year.

In the aerospace and defense business, our USA division saw an excess of 40% year-over-year revenue growth in 2009, aside from one particular large customer from which we have seen a decline in orders due to reduced defense replenishment needs of their certain application at the current time.

The strong growth in new business if fueled by design wins such as those announced in the fourth quarter with General Dynamics for a large dye manufacturing program, and NASA through [ADSANTEC] for Serdes IC, destined for a lunar mission.

Earlier in 2009, we announced the availability of a direct shuttle program where US aerospace and defense companies can have access to onshore fabrication of all of our popular technologies, including 200 gigahertz silicon germanium, RF CMOS, and SOI through a low-cost prototyping program run directly with the factory without an intermediate aggregator as is typical with other US foundries.

Looking at the power management business unit, 2009 was a very intense year for TowerJazz in this arena.

As we have previously discussed, in the past three years we have developed a very cost effective power management platform based on 0.18 micron technology node.

The acquisition of Jazz in September 2008 gave a major boost for management plans since Jazz already had a qualified Tower platform running in production on 0.5 micron and 0.35 micron nodes and like Tower, had developed a cost-effective platform at 0.25 and 0.18 micron technology.

It was therefore quite obvious that combining the 2.18 platforms into one, taking the best part of each would provide the best of breed power platform and indeed, in the past year, we have integrated the two platforms into one and have subsequently seen tremendous traction in the form of design wins and agreements for development and production with major customers.

The TowerJazz 0.18 power platform is a very cost effective one.

It consists of the basic [SL 35 PM 5.0] platform with LDMOS devices supporting voltages of up to 60 volts with very competitive Rdson values having only 20 photo layers for three metals.

In addition, it contains a fully scalable LDMOS device that provides the designer with the exact high voltage transistor he needs with very accurate models.

A most unique and powerful addition to this platform is our internally invented non-volatile solution called Y-Flash which was recently announced.

This solution is unique in the industry since it has a very small cell size -- three microns square -- more than an order of magnitude smaller than any other solution in the industry with a zero mass gather, thus capable of true support of digital power management.

For digital power management, the addition of only five photo mass allows the use of a full 0.18 micron platform that includes all the rich digital analog IPs of TowerJazz as well as third party IPs.

To allow for a true system-on-chip or one-chip solution for digital power management, there is need for larger non-volatile memory modules for code storage that will not require additional mass in order to keep the solution cost effective.

Our Y-Flash is the winning solution for such applications and enabled us to acquire Intersil as a customer for the 0.18 micron power management platform.

This is truly a major win for Tower with an easy potential of over 100,000 wafers per year for TowerJazz just from this platform.

Our platform has also seen significant traction in Korea since we opened our Korean sales and application office at the beginning of the year.

Since then, we have won contracts and design wins on our power management platforms with the largest fabless company in Korea as well as with CNS that specializes in power management devices for automotive applications, additionally with Dongwoon and with many others, most of them having LG and Samsung as their end customers.

Our target markets in Korea are mainly LED drivers and LCD power management ICs for the very fast growing LCD flat panel screen market, motor drivers for office -- that is printers and scanners -- and automotive applications and LED lighting, an area expected to be the fastest growing IC market due to the green initiatives supported by government drives.

This market requires the 700-volt platform to support AC to DC 240-volt conversion.

For the latter application, last year we signed an agreement with two Korean companies, GrandTech and SemiHow, for process development and IC design on the 700-volt platform.

We are very happy to say that we are exceeding our goals and already introduced the first devices of 700 volts.

We therefore expect to see products in qualification by the end of this year.

We expect multiple hundreds of millions of revenue dollars by 2010 from the Korean power management market.

We believe that TowerJazz is now considered by all as one of the two leading foundries in the power management area.

With the addition of the 700-volt platform, we expect to become the single leading foundry.

This sits very well into TowerJazz's overall goal of being the leading specialty foundry worldwide by being number one at each and every of the specialty applications that we've chosen to excel at.

Looking at CMOS image sensor, our activities in this area in 2009 have been intensive and fruitful.

We have continued our joint development program with our lead customer in the high-end cinematography camera area, ramping two different products into production and developing a very high end, full framed product using our patented stitching technology.

This product aims to be ramped to production towards the second half of 2010.

Pixel developed in this activity have leading performance and the cameras using them are truly breakthrough products in their industry.

We continued our investment in the development of high-end, high-margin sensors, introducing new technologies such as Via Wave Guides to funnel the light into the pixels and prevent shading that we hope to be in production in the second half of the year.

We also see much potential from the recently announced agreement with Soitec, the leading supplier of silicon on insulator wafers, on developing marketing and sale of backside illuminated sensors and we already see tremendous interest from our customers.

Backside illuminated sensors are expected to be prototyped early next year.

On the medical front during 2009, we developed together with Medigus, an Israeli medical company, the smallest camera in the world for disposable endoscopic applications.

The sensor size is only 0.7 millimeter by 0.7 millimeter, the size of a grain of salt.

It has only four wiring pads.

The disposable endoscopic camera application is very exciting since the market size becomes very large as the number of medical endoscopic procedures continues to grow.

And Medigus already recently announced its first contract with a medical equipment company for these cameras.

This is potentially a great, very high margin revenue stream for TowerJazz going strong -- going forward.

The joint venture with CMT for medical CMOS-based flat panels based on large sensors, as large as five by six inch, one dye per wafer, is moving well and the first prototype of a full detector silicon scintillator electronic board software mechanical casing based on such silicon sensors is due next month in customer prototyping quantities with several customers already lined up for its use in their systems.

The acquisition of CMT last year by [Talles], a large French conglomerate gave a strong boost of support to this project and strengthened the partnership.

We expect the JV to start production of commercial detectors by the end of the year.

In general, we see a continuous growth in the medical and dental CMOS-based sensor market and TowerJazz continues to maintain its leadership in this area from both the technology and market share standpoint.

We had solid growth last year which continues into this year in large sensors for x-ray applications using our patented stitching technology and low noise pixels on 0.18 micron eight-inch wafer platform.

Looking at the transfer optimization and process services business group, what we call TOPS, throughout 2009 our strategy has been to focus on both higher volume deals and joint development deals.

Within each of our three factories, we won high volume deals.

We won process transfers with high wafers for Fab 1 with new generations of Siliconix wafers, in Fab 2 with new generations of international rectifier wafers, and in Fab 3 with a very large IDM whose name has not yet been press released.

We continue to grow the transfer optimization business in all our fabs by winning new technology and product transfers.

Process transfers into our Fab 3 with this leading IDM is in the last stages of qualification.

We won a joint development deal with Crocus to develop and manufacture MRAM, so magnetic memory technology.

We also established and initiated new activities in the MEMS market with several wins with exciting new companies with differentiated technologies and applications.

We won a very big deal of process transfer from Tower to an Asian entity to provide know-how, training, and turnkey manufacturing solutions.

As previously mentioned, we expect the deal will realize revenues of around $130 million for 2010-2011 and -- two-thirds for this year, one-third for 2011.

We see this win as a notable achievement and acknowledgement of our strong capabilities.

The project is progressing well with the first two money transfers having occurred.

In addition to the substantial deal size, we see significant potential that this deal can lead to additional follow-on opportunities in itself with this single customer and through new customers.

And as previously mentioned, this project definitely strengthens our traction in Asia, who we believe will be instrumental in enabling us to grow an additional Asian customer base.

For this group, looking ahead in 2010, we must continue to focus on the execution of all the new projects while continually looking at new business model opportunities within a differentiated capability of transfer optimization.

Everything we do has a core around design enablement.

We're recognized for our industry leading design enablement -- that includes models, tools, and services which gives our customers a significant competitive market advantage with first-time design success.

Within that first success comes optimal performance and shortest time to market at reduced cost.

Our extensive design enablement infrastructure provides an environment optimized for analog and RF designs, which include silicon verified and highly scalable device models, robust physical design tools for upfront design optimization.

Our powerful and efficient tools enable unprecedented accuracy and device models and our unparalleled customer support at every stage of the design flow ensures confidence in designs at near zero risk.

TowerJazz design enablement goes beyond the tools with a unique and highly skilled design center.

TowerJazz design center offers customers the dimension of design services directly from spec sheet, through manufacturing, through fully tested devices, and is recognized as one of the best analog houses in Israel.

A few days ago we announced accelerated plans for additional capacity based on current and forecasted customer demand.

In Fab 2, located in Israel, we intend to increase our capacity by approximately 30,000 wafers per year.

In our facility located in Newport Beach, California we intend to increase capacity by 36,000 wafers per year to enable the fab to accommodate substantial increases in demand, necessitating more than 100% utilization.

This increased capacity will require around $15 million in [CapEx] expenditures, resulting in an increase of approximately 66,000 wafers per year, yet will grow our revenue potential by $45 million.

We actually estimate that we will see a full return on this investment in only two quarters.

The additional equipment will obviously increase our wafer output, enabling a higher revenue base.

But as well some tools are specifically directed to continue to grow our competitiveness within high value segments of the specialty foundry arena.

This mode of quick ramp based upon an identified customer need is a win-win, demonstrating our dedication to enabling customer success, fostering long-term strategic relations with customers, while keeping shareholder value strongly in mind.

Finally, I would like to introduce our guidance for the first quarter of 2010.

We expect the first quarter revenue to jump up between $111 million to $115 million, mid-range sequential growth of approximately 13% quarter-over-quarter and 95% year-over-year.

Our strong guidance is well ahead of the industry's expected growth, which has been guided to be flat to several percent down and is built on the basis of many new customer engagements as well as multiple new projects that are already in our funnel.

For 2010 as a whole, we seek sequential increases during each quarter and we aim to surpass $500 million in revenues in 2010 and within that to achieve a 32% EBITDA model.

Based upon our guidance, you can see we remain confident with regard to the coming quarters.

We are now in the best position we have ever been in, in almost every aspect, enabling us to take advantage and capitalize on all the opportunities coming our way.

Finally, I was honored to collect the Israeli High Tech CEO of the Year award for breakthrough performance.

It's a great honor for both TowerJazz and myself to be recognized by the high tech forum of the Israeli management center and to receive this award.

It's a tribute to the capabilities and accomplishments of not just the CEO, but also the TowerJazz management and the entire team.

It has truly been and continues to be my honor and pleasure to work among you.

I'd now like to hand over the time to our CFO, Oren Shirazi.

Please?

Thanks, Russell, and hello, everyone.

I will begin by discussing the financial results and balance sheet for the fourth quarter and then proceed to discussing Tower's full years result.

The fourth quarter was another successful quarter, ending a fantastic year for Tower on multiple points.

We achieved in Q4 all-time record cash from operations of $29 million, all-time record EBITDA of $23 million, all-time record revenue of $100.6 million, and gross profit for the first time since year 2000, as well as ending 2009 with an excellent cash position with $82 million of cash on hand.

I will review now these financial achievements.

We entered the year with a very strong cash balance of $82 million, the best cash position we had since right after our IPO in the '90s.

That cash balance helps us in strengthening our balance sheet and achieving strong current ratio of 1.73.

This strong cash balance was enabled also through $33 million of funds we raised in the last quarter from sophisticated financial institutionals who believe in our future and trajectory.

Hence, invested in Tower's equity, it's very good terms for us, the price close to the market price and without any debt vehicles our company.

In regard to the definite bonds liabilities, there is no debt principle that is maturing before the later part of 2011.

Further, our balance sheet includes a 10% holding in HHNEC, a Chinese foundry which is an affiliate of the Japanese NEC, which represents under GAAP at $17 million.

We believe this has much greater fair value than the value at which is currently recorded under GAAP in our balance sheet.

In addition to that, we do not present under GAAP in our balance sheet our [NOS], totaling greater than $1 billion in Israel, which are net losses that are carried forward for tax purposes without any limitation of time.

Moving to the P&L, revenue was at all-time record for the fourth quarter, reaching $100.6 million, coming in above the mid-range guidance of our previously increased quarterly guidance.

This represents an increase of 26% over the previous quarter results and 30% over last year's fourth quarter results.

EBITDA for the fourth quarter of 2009 was $23 million, an all-time record, and 11x the $2 million reported in the fourth quarter of 2008.

Our $21 million EBITDA increase against a $23 million revenue increase is due to the cumulative positive effect of higher revenue and significant cost reductions, partially enabled by the Jazz merger.

Non-GAAP operating profit grew by 79% over the prior quarter to $23 million and significantly improved when compared to the fourth quarter of 2008.

This represents an operating margin of 23% in the current quarter compared with 2% in the fourth quarter of 2008 and 16% in previous quarters.

Looking at our operational expenses as a percentage of revenue is another evidence of the continuous improvement in our margins.

Operating expenses in the fourth quarter of 2009 were 17% of revenue as compared to 20% in the same quarter of 2008.

Looking solely at the M&S and G&A expenses as a percentage of revenues shows even better improvement in our margins.

M&S and G&A together were 10% of revenue as compared to 14% in the same quarter of '08.

On a GAAP basis, we achieved gross profit for the first time during the past 10 years with $6.5 million and we expect to continue this trend with improved margins and this is another evidence of our improved margins and successful cost reduction efforts.

On a GAAP basis, our net loss was $31 million.

However, including financing expenses of $19 million, resulting mainly from a significant increase in the market and fair value of our trade level securities which are partially accounted for as mark-to-market under GAAP and represent a non-cash expense.

Excluding financing expenses, we had a GAAP loss of $13 million.

We further achieved in Q4 '09 a very strong $29 million positive cash flow from operating activities, which is $27 million better than Q4 '08.

Now, moving to our full year 2009 results.

Despite being a very challenging year for our industry, we recorded a strong increase in our top line and EBITDA bottom line, which is a significant achievement when compared to the rest of our industry.

Our full year 2009 revenues reached a record [$199 million].

This represents an increase of 19% over last year's result, far ahead of the industry which was basically down as compared to last year.

In terms of guidance, we expect first quarter 2010 revenues to be between $110 million and $115 million, which is about 94% year-over-year growth and 12% quarter-over-quarter, despite seasonality causing other foundries to report basically flat quarter-over-quarter.

Our strong guidance is built on the basis of many new customer engagements as well as multiple new projects that are already in our finals.

We have seen a substantial increase in the level of orders from many of our customers and we are also commencing the mass production of a number of new products.

Based on our guidance, you can see we remain confident with regard to the coming quarters and we are now in the best position we have ever been in from financial point of view, enabling us to take advantage and capitalize on the opportunities coming our way.

I would like now to transfer the call to Nati Somekh Gilboa, our Senior VP and Chief Legal Officer and Corporate Secretary.

Nati?

Thank you, Oren.

Now, I'd like to the general and legal statements for our results in regards to statements made and to be made during this call.

As applied in this call, the term earnings before interest, tax, depreciation, and amortization consists of loss according to US GAAP, excluding interest and financing expenses net, tax, depreciation, and amortization and thought-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.

Please note that the fourth quarter 2009 financial results have been prepared in accordance with US GAAP and the financial statements in today's earnings release include financial information that may be considered non-GAAP financial measures under Regulation G and related reporting requirements as established by the Securities and Exchange Commission as they apply to our company.

Namely, this release also presented financial data, which is reconciled as indicated by the footnotes below the tables on a non-GAAP basis after deducting depreciation and amortization, compensation expenses in respect to option grants, write-off of in-process research and development, and finance expenses net other than interest paid such that non-GAAP financial expenses net include only interest paid during the reported period.

Non-GAAP financial measures should be evaluated in conjunction with and are not a substitute for GAAP financial measures.

The tables also contain the comparable GAAP financial measures to the non-GAAP financial measures as well as the reconciliation between the non-GAAP financial measures and the most comparable GAAP financial measures.

Further, the non-GAAP financial information presented herein 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 and is not necessarily consistent with the non-GAAP data presented in previous filings.

The pro forma consolidated operational indicators and result is an aggregation of Tower and Jazz's operational results for periods before the merger date, which was September 19th, 2008.

Following the merger with Jazz, the amounts presented in our financial reports and in today's release include Jazz's results commencing September 19th, 2008.

The balance sheet as of September 30th, 2009 and December 31st, 2008 includes Jazz's balances as of such dates.

We will now open the call for the question-and-answer session.

Operator?

Thank you.

(Operator Instructions).

The first question is from Jay Srivatsa of Chardan Capital Markets.

Please go ahead.

Yes, thanks for taking my questions.

Congratulations on a strong quarter.

I wanted to ask you questions on gross margin profile.

Clearly, you had good improvements in the margins.

Going ahead, looking ahead, how do you expect your margin profile to be as you look into the rest of 2010?

Basically, the best in the industry report gross margins of about 45% and this is our target for when we are 85%, 90% fully utilized.

We cannot, of course, comment if we will reach this level in Q3, Q4, or a quarter after.

So -- but our target is to reach 45% like the best in the industry and we are on the way to there.

All right.

Maybe you can share a little bit of insight into your plans for acquisition.

There were some comments made about how you're looking at that.

Can you give us some color on what areas you're trying to beef up in terms of acquisition and how do you hope to fund it?

Very good question.

We obviously have just invested some for CapEx expansion.

If we look at the fact that we've announced in 2009 310 design wins, those design wins won't -- especially the latter half of 2009, will not come into volume manufacturing until -- they will start to do small level manufacturing the end of 2010 and then in 2011 is where the ramp of most of those products will start and they'll reach entitlement levels, so to speak or their stable levels in the latter part of 2011.

So, we're definitely out of capacity to meet all of the growth that we have within our basic activities that we've done to date.

Now that being said, we have gray space in Migdal Haemek that we can still grow and invest and meet that capacity or we can look at other areas in the world that has already infrastructure where we might be able to, in acquiring a facility that has capacity, as well enter into a new strategic relationship with an end user that might want to divest themselves of that capacity.

As we mentioned in the beginning, our model being that of heavy analog, leading edge technology, but the leading edge, and you have many IDMs that are focused fully on digital technology, some of the factories that would be located, let's say, in the United States, might not have great value at this point for some of the lead IDMs, but could have extremely good value for us.

So, that's the type of model or one of the models that we're seriously looking at is the acquisition of existing capacity that would have with it some loading agreement at the onset, but incremental capacity on top of that for which we can use to grow our business.

And we certainly have the demand to do so.

Now to be fully transparent, I mean, we're in active discussion with at least one such entity at present and will it close, will it not close, that we'll see.

But we're in active discussion presently with one such opportunity.

All right.

And in terms of how you hope to fund the acquisition?

Such acquisitions we'd be looking at, we would, as far as out-of-pocket cash, be not looking at anything more than a couple of tens of millions from anything that's out of pocket.

And that would be pretty much the height of where we'd go after.

But there's many ways to have a win-win with such a company.

By taking over such a factory, the selling entity might have a minimized closure cost for which the asset value is decreased because of what they would have on a closure cost versus a transfer in which we would take over the factory and they would then have a stable volume for a period of time while they needed the volume.

As well, not looking at out-of-pocket cash, as long as you're going to have somewhat of a volume agreement -- and I'm not saying that this will be the case or not be the case with the activity we're looking at right now or in discussion with right now, but there's always the ability to fund through a wafer discount over time.

If you're -- have a supply agreement to the entity that you're buying from.

But as far as out-of-pocket cash at this point, we'd really not be looking at anything more than a couple of tens of millions.

Now, obviously though, I mean, we are in a good cash position as we said in the beginning.

Our cash balance is strong and we only see that growing over the next quarters.

But it's for this type of activity that we're looking at.

As we said in the beginning, our model is really low capital investment, high return on asset.

All right.

Speaking of cash, you had a pretty good improvement in your cash position, but your debt increase as well.

Maybe you can try to address for us where do you see your debt levels being in the next few quarters and how you hope to lower it?

Well, we ended 2009 with $82 million of cash and if you rely on statements made by Russell in the Needham Conference and other segments made in the press release earlier today about $500 million target.

And it was mentioned in the past that, by Russell in the Needham Conference, that $500 million, without relating to what year, that $500 million we expect 32% EBITDA margin.

So, 32% EBITDA margin over $500 million is $160 million EBITDA a year.

Reduced from that interest CapEx, it's still more than $100 million a year of free cash flow generation from the company.

So, add this $100 million a year to the $82 million we finished 2009, this gives you very nice amounts of cash to be able to serve the debt.

Now, another indicator or multiple that you can use is if we have a $106 million EBITDA based on this theoretical calculation, so usually in the industry, a ratio of debt to EBITDA of 4 is reasonable.

And in our case, the ratio of debt to EBITDA, it is 4.40 or 4.30 to 1.60.

This is like less than 3.

So, a debt ratio of less than 3 against industry average or fall, so I think our debt service ratios are very good.

So basically, this is the answer about the debt.

All right.

Last question and I'll step off the queue here.

You had a pretty massive increase in outstanding shares.

What should we be modeling for as you look at 2010 in terms of first quarter outstanding shares and for the full year?

Excuse me?

I did not understand the being of that question.

I said there was quite a bit of increase in terms of outstanding shares, diluted shares, share count for Q4.

The question is what should we be modeling for in terms of your Q1 outstanding shares and what do you expect to finish 2010 with?

Yes, the only reason for the increase in Q4 was that we, like I mentioned, we did some fund raising.

It was mainly in September of 2009.

So, those shares that we issued in September '09, mainly for the sophisticated investors in the insurance we did with [Clark] and Yorkville, so it was -- in September, it was not counted in the Q3 EPS or share count data because it was only done in the end of Q3.

However, for Q4, they were relevant and that's why you'll see an increase from, I think, $175 million to $195 million share count and I think you can assume that $195 million plus the recent investment that was done brought it to $199 million and you can assume this $199 million number remaining flat as we have $82 million of cash in hand and with this $100 million net cash flow that we hope to -- we target to manufacture.

There is no reason to assume that we will call another fund raising anytime.

So and anyway, there is not a plan for that at the moment.

Okay, but you also have a lot of warrants that are in the money, right?

Most of the warrants that -- actually, there is not so much warrants in the money.

There is bonds that are in the money.

Mainly Israel traded bonds and, if you take them into account, so it's a reduction of debt, they are basically at $110 million.

So, they're in the money, so it's a reduction of debt and then it's like a wash in the calculations.

But this is $80 million of convertible debt.

Fair enough.

Thank you much.

Thank you.

The next question is from Ken Nagy of Zacks Investment Research.

Please go ahead.

Hi, everyone.

Congratulations on a strong quarter.

My question is can you explain how EBITDA increased by $21 million year-over-year on revenue of about -- it looks like $23 million?

Certainly.

So, it's two main factors in it.

As we had discussed throughout the year, when we had the merger with Jazz, we were able to take out quite a bit of contextual activity.

We didn't need twice the HR, we didn't need twice the IT, we didn't need twice the finance, twice the quality groups.

So, we were able to be judicious at moving contextual headcounts, support headcounts.

And whether it be Newport Beach or Migdal Haemek retaining the group to do the support work, that really had the better capability.

So, we took out quite a bit of cost in the company and through being a larger company, not just looking at best-of-breed contract with our suppliers, but renegotiating better contracts because of our new economy of scale, we were able to sustainably take out over $80 million of cost.

So, that's number one that, against the Q4 last year, those cost activities had not yet been done.

Now, the big part is that because of not having any activity being done against the R&D, I mean, the process engineering and the R&D in the business groups, we were able to have growth ahead of the industry, which was a very good thing.

Our Q4, Q3 was what -- 26% first in industry.

That was a 2% up.

So -- and I think the reason the rest of the industry wasn't up was just there were too many activities done to reduce costs rather than focusing on growth.

So, we were able to grow very nicely quarter-over-quarter because we kept a focus in the business groups on growing business rather than having to cut headcount there.

And the business that we grew, obviously, had to be good margin business or it wouldn't be dropping down to a 90% plus EBITDA.

Hopefully, that answers your question.

That's great.

Another question, just on the overall industry, do you see the analog IDM shifting to fabs the way digital did and this time around, is there a bit more of an opportunity for specialized fabs?

The first part of your question again, please?

Do you see analog IDMs shifting to fabs the way that digital IDMs did?

So, it's very interesting.

The analog IDMs, for the most part, I mean, the true analog IDMs, if you look at Linear for example, their fab capabilities are very, very old technology nodes -- 0.5 is, I think, the sweet spot and larger.

And maybe they have 0.35 as well, but they certainly don't have 0.18.

So, for some of the very strong pure analog foundries, they are -- I'm sorry, IDMs -- they actually need to come to foundries at this point for the advanced technology nodes.

It's -- I don't know that that answers your question or not.

Now, they still, as with very good analog capability, the 0.5 micron is still running very strong.

So, the factories that they have are still very, very well utilized.

But rather than capital investment at this point, analog factories are as well moving into foundries.

That part is true, if that's your question.

And they don't have the .18, .13 technologies for the most part.

They just have alternate capabilities within those factories.

Okay, great.

The final question.

Is the revenue production for 2010, does that assume the capacity expansion for half of 2010 or most of 2010 or right away?

The capacity expansion will come into play as of the end of the second quarter, beginning of the third quarter.

And some of that capacity expansion is certainly within the $0.5 billion target.

Okay.

But it does leave room for upside above that.

Thank you very much.

Hey, by the way, thank you very much for the note you sent.

I -- we took a look at it just briefly before the call began.

Very nice.

Great.

The next question is from Vernon Essi of Needham & Company.

Please go ahead.

Thank you very much and congratulations, Russell.

I wanted to just, on the heels of that last question, revisit the total wafer output.

So, you're discussing you're going to add 66,000 wafers per year.

Is that on top of the 750,000 goal you've already discussed?

I just want to clarify that.

Yes.

Yes, it is.

Okay.

And can you walk through sort of the utilization and how you see that progressing from the current snapshot today -- snapshot, excuse me, today versus, I guess, it looks like in Q2, Q3, how that's going to play out?

So, the Newport Beach facility is very fully utilized.

The capacity increase there is important in order to put out more wafers for certain demands that are very, very specialized to that factory.

And there is other activities happening to where certain technologies that are being run there such as the 0.13 silicon germanium and some other RF flows are being cross-qualified in Migdal Haemek for large customers that want to have flexibility and the ability to have very big upsides on -- within -- or more or less within lead time.

So -- but the Newport Beach facility is very highly utilized and by our forecast, by our funnel tools, will remain very highly utilized throughout the year.

The Migdal Haemek factories, we have the six-inch factory which is highly utilized -- not 100%, but highly utilized -- and some of the equipment investment that we're doing is going into that factory to allow more wafers of one certain flow.

That was again what we talked about with some of the tools -- don't just add capacity.

They add specialized capability.

So, there will be an increase for certain capacity there.

And in our eight-inch factory, the overall factory is right now running maybe 65% utilization.

But there's certain flows there that are constrained.

So, some of the investment that we're doing leaves those flows to allow twice the wafer output for a certain specialized flow with one particular customer and to increase flows for what we think will be coming in and being qualified over the next months.

Okay.

So, that's -- I mean, that answers a little bit of my next question which was if you gave the profile without being too specific, that $15 million in CapEx, it sounds like a decent portion of that's going to be more throughput related relative to technology.

Is that sort of how to think about that?

No, I wouldn't necessarily say that.

Basically, it's all really technology related.

The investment in Newport Beach is really against one specific flow, which is a very high volume flow, which is a very specialized flow.

So, it's -- is it throughput related?

Of course, it uses capacity, but it's for a specialized flow that it increases capacity on.

Maybe to restate --

The money coming into Migdal Haemek, though, for that it's 100% correct.

But the bulk of everything that we're spending in Migdal Haemek is through relief constraints of specialized flows that obviously increase capacity, but it's not that the fab itself is running or the eight-inch factory is running at full utilization now, but there's certain flows within it that are running at full utilization.

So, if that is what you meant, then your answer or your statement is 100% correct.

Right.

It was more or less adding on incremental capabilities that are sort of similar to what's already installed versus new capabilities.

Correct.

It's enabling the specialized flows to be run, for the most part -- that 's not correct with one tool, but one tool is enabling a brand new technology.

But the others are improving this -- the capability to do a specialized flow at a much higher volume because the flow is getting great traction.

Now, as far as the utilization model, with the capacity increase that we're talking about and the way that we're changing the operational mixes within the company, the factory in Israel will be running by model about 88% utilization in Q4, the eight-inch factory.

The six-inch factory will be in the mid-90s and the Newport Beach factory will still be somewhere low to mid-90s.

Okay.

And if -- in terms of talking about your sort of target technology areas, can you give us some color comparing both RF versus power?

I know it's -- to sort of make a joke here, it's like picking between two great children -- but how do you see both of those markets for you shaping up through 2010?

You're outlining, basically, a $200 million revenue delta year to year.

Where do you see more of that coming in -- power versus RF?

It's not coming in the power.

The bulk of the $200 million is not in the power.

The bulk of the $200 is coming in by RF incremental wins.

Some of it's within power.

A good portion of it is within CIS.

The power is having more than a 2x growth in 2010, but as we mentioned the power design wins -- well, as I mentioned, in general the design wins -- the major design wins of the second half of 2009 have prototype production only in 2010 and they hit their volumes in 2011, 2012.

So, the power itself is where, as stated during the script that I gave, that come the 2012 timeframe we see several hundreds of millions of dollars of revenue from the power management.

But in 2010, we see multiple projects with successful prototyping, seating end customers being qualified, and end customers getting ready for the volume orders.

Now, as we've mentioned, one of the great reasons for Korea being such a special of our power group is that in Korea, the end customer has pretty much bought off on the project before the fabless starts -- with those end customers being LG and Samsung.

And LG and Samsung's market share is already huge.

So, the traction and ability once the proto is qualified to grow quickly sits very strong within that market.

So, that's a very big reason for the focus that we have and for all of the activity happening in Korea is that it's not the same as working with a fabless company outside of Korea to where they really have to get qualified in many different people and those people have to have their end products be successful as well.

In the case of Korea with an LG or a Samsung, their end product is obviously successful.

So -- okay.

Did that answer your question?

I hope it did.

No, it did and I apologize.

I'm off a year looking -- I've seen that slide you have outlining the LG and Samsung programs for the power related technology implementations.

And then lastly, Oren, just what is your -- I don't know if you've discussed this, but your GAAP breakeven target in terms of revenue?

I'm trying to get a -- just eyeball the depreciation schedule and how that might shape up over the next couple of quarters.

Breakeven net profit levels should be at the level of about $125 million to $130 million, which we are pretty close to that, if you want the Q1 revenue guidance.

In terms of depreciation schedule, it should go down from $32 million run rate a quarter, which we are having today, to about $23 million, $25 million from the middle of this year.

And further to go down to about $16 million from Q2 of 2011.

Oh, wow.

Okay.

That's great.

Thank you.

Thank you very much.

The next question is from George Burmann of Gunn Allen Financial.

Please go ahead.

Good afternoon, good morning, gentlemen.

Great quarter, great year.

I think we're almost on a rocket ship here, right?

Thank you.

And one quick question I have.

Could you detail the -- how the $428 million are comprised?

How much of it is in term of convertible debentures and things that would just go away by being converted into the common stock?

And what bank and what interest rates you have on the remaining?

Right.

So, $80 million out of this $429 million -- or $420 million is bonds that are in the money.

So, it will go away like you say.

The remainder $340 million is comprised from $200 million Tower Israeli bandset at levels of 2.5.

And convertible bonds at Jazz level that carries the 8% annual coupon.

Also, Jazz has a small revolver of credit line facility agreement with Wells Fargo that also carries level plus 2.5.

But as I mentioned in my part at the beginning, there is no -- any principal maturing before the end of 2011.

And the $80 million convertible bonds, they would be convertible into what -- 80 million additional shares?

No, it's averaging at $115 million to $120 million, so like 60 million, 65 million shares.

But if you were trying to make an analysis, of course -- so of course, the so-called dilution is offset by the reduction in the debt of the company.

So it's like a wash.

Right.

And then, you have $200 million in notes out to the Israeli bank at LIBOR plus 2.5?

Yes.

You said?

Yes.

And then, $140 million in convertible bonds from Jazz?

$123 million.

$123 million.

What are they convertible at?

$4.00 -- $4.07.

$4.00.

And then, I also know that you have a set of warrants trading in the marketplace.

If they, looking into the future and being hopeful, if they came close to being exercised, how much money would that raise?

How many warrants are there?

Yes, this is very -- this is now -- out of the money, this is $2.78.

Yes.

So, this is warrants that were issued by Jazz, actually, three or four years ago and based -- and please do not forget that they are expiring on March 11.

So within one year, they are gone unless they are, of course, will be in the money.

So, they will bring additional $20 million cash to the company if it will be exercised.

Which -- from your dissertation, you could obviously use money especially at that price level.

Well, today we have the $82 million on hand and we expect more than $100 million a year to generate cash.

So, this $20 million is -- could be an upside, but cannot rely on that.

I mean, nobody knows.

Right.

And the $140 million convertible bonds that are from Jazz, they could either be paid off and/or be exercised should the stock reach the $4.00 level?

Right.

We have a right to pay down at 100% or I think 102% on the dollar if we want.

The -- there is the issue of these capital notes I think you have with the Israeli bank.

Is that on top of the $428 million?

Yes, this is not debt at all.

This is not redeemable or repayable.

It doesn't carry interest or whatever.

Right.

That's why you don't even show it on your financial statements, huh?

Yes, it's not that we don't show -- we show it under the shareholders equity.

It's inside the accounting shares of equity because again, it is not redeemable or repayable, so there's no way that they will get it back.

It's not like a loan.

So accountably, you have to classify it as a shareholders equity and it was down already many years ago.

Okay, okay.

I guess that's all the questions I have.

Good luck for the future.

We'll be following your progress anxiously.

Thank you very much.

Thank you.

The next question is from Brian Novelline of DRW Investments.

Please go ahead.

Hi.

Just a follow-up on that question.

Are those capital notes, those are included in the fully diluted share count?

Yes.

Okay, great.

And on leverage, what is sort of your target range?

So, if you can get it down below 3, I mean, are you -- what's sort of your range you're comfortable operating?

I think, like I mentioned, I mean, before.

The $4.00 ratio of debt to EBITDA is reasonable in the industry.

Our ratio, based on the $160 million, this is less than $3.00.

So, I think we are very comfortable with this number.

Right.

I mean, obviously, coming from a higher level before --

That's right.

I mean, if you look one year ago, two years ago, the ratio was 10 or 12.

Right, right.

So -- where today --

But you're not looking to go back to that level as sort of --

-- the best cash position we've ever been.

I mean, we never were in such a good ratio.

Right, right.

But you're not looking to go back to seven, eight times or -- in an acquisition or --

No, no, no.

Okay.

And as far as -- so you mentioned $15 million in CapEx.

What's your full year guidance for '10?

Oh, you mean guidance for CapEx?

Yes.

We don't give guidance for CapEx, but usually -- I mean, it's not supposed to be increased beyond 2009, which was $30 million a year.

But you should have --

So, $30 million?

-- like you mentioned, the $15 million, which is new CapEx that we announced.

So, total is $45 million.

$45 million.

Got it.

Okay.

And then, as far as --

CapEx again is really off of the same model as we had now to where we can see immediate demand and a two-quarter ROI.

Got it.

And as far as your NOLs, do you -- what -- do you expect to be paying taxes at kind of the same lower level or how do you see the tax rate?

Well, the NOLs is very exciting issue, actually.

In Israel, we have, for the Tower operations, we have $1 billion of loss for taxes carry forward and this is carried in Israel forever, unlike in the States.

So, this is like all the profit that we forecast from second half, like we will not pay tax for many, many years until we will reach accumulated net profit of $1 billion.

On the Jazz side, so also there is something very exciting, which is the California state tax.

California state tax you can calculate it based on the consolidated net income.

So, the Israeli side, NOLs and losses are helping to offset tax which we should have paid to the California state because of the Jazz net earnings.

So basically, the Jazz tax is zero.

Also for next -- it was zero for '09 and will be zero for 2010 also because whatever net profit Jazz has and it has net profit, will be offset by those worldwide consolidated losses of the group -- of the tax credit that the group has.

So, the only thing that remains is the federal taxes for Jazz.

So, whatever net profit Jazz will have, you may assume about 32% of tax theoretical payment.

Why I'm saying theoretical because, on the other hand, Jazz itself has NOLs carried forward.

As of the end of 2009, the number is in the range of $7 million to $10 million of benefits.

So, still also in 2010, the tax payments of Jazz will be pretty minimal.

From 2011, it will be higher numbers.

Got it.

And that is positive.

The -- so you have -- that Wells Fargo line, how -- what's the maturity on that?

September 11

September 11.

And then, how much is outstanding on that line?

$27 million.

$27 million.

But on the other hand, Jazz itself on a standalone basis has $30 million of cash, which you will be able to see soon in the 10-K that they are filing.

So, it's basically a revolver.

So basically, there is no really loan outstanding.

Right, right.

And then, but you do have, starting in '11, you have -- if you include that number plus the quarterly payments, roughly $175 million, do -- kind in the back half of '11 -- and are -- I guess, have you sort of addressed some of that?

Do you expect those bank loans to be extended?

Is there any -- have you kind of had any discussions with that regard?

So, of course, we have --

Obviously, the converted you're going to have to pay.

-- that issue all the time, but like I mentioned before with the $82 million cash on hand in the end of 2009 plus the $100 million expectation for cash flow positive, so -- and we have two years until that time.

So, on back of envelope calculation, we have more than what we need to pay.

Right.

Sure, great.

And then, just final on the HHNEC, you talked about the value there.

Is there any sense of liquidity in that stake or -- I don't know anything about that business.

So, we have an equity position there of 10%.

There's -- well known that's -- there's a possibility of a merger between Grace and HHNEC.

It's also well known that they just did a three-way announcement of a 300-millimeter facility where Grace invested a little bit of money, HHNEC invested a little bit, and the government put in a huge amount of money.

If there's a merger and the operation of the 300-millimeter facility will be done by the combined company, I think that the equity value is quite substantial.

So at this point, we have an equity stake, probably the market value of the stake right now off of HHNEC's EBITDA or revenue is maybe -- I don't know, $30 million to $60 million, $40 million to $60 million, I'm not sure, something in that range on different models.

We are not in a cash need at the moment.

So, there's a possibility of that increasing over time and at a point that it would make sense for us to divest ourselves of that, we would go ahead and do so.

If the plans that are being talked about happen, then we'll see.

And that was just -- you were just carrying that at the -- sort of the mark-to-market at the time of the merger?

No, it was valued according to accounting GAAP at the date of the merger by an external company that took it as un-liquid investment in a private Chinese company put it at $17 million and it cannot be mark-to-market.

I mean, it stayed flat unless you believe it was flat.

Of course, we believe it was more, but accountingly we cannot increase the value in the books of the $17 million.

Great.

Thank you.

Thank you.

Thank you.

Mr.

Ellwanger, would you like to make your concluding statement?

Yes.

So, as I had said in the portion of the call already, it's an extremely exciting company to be at.

The Newport Beach employee base has done an extremely good job.

The Migdal Haemek employee base, doing a great job.

The spirit in the company is tremendous.

We can see that through the attrition rate being extremely low, probably less than half that of the high tech sector.

And employees always vote by their feet.

So, we have, I think, not just extremely capable people, but extremely motivated people.

And not just the management -- my direct reports that I think are really best of class -- but the entire structure of the company.

It was such a wonderful experience at the time of receiving the CEO of the Year award, how many employees sent emails to me, not just congratulating, but stating the fact of their pride in the company and to be part of the company.

And it was really a very rewarding thing to see how much personal pride the employee base has at all levels.

So, I certainly see us growing this year.

The $500 million target will be a very, very wonderful achievement for us to achieve.

A $0.5 billion milestone.

But as mentioned, these great amounts of design wins that we had in 2009, which are continuing, obviously, into 2010, that fuels growth not just for 2010, but it fuels growth for '11, '12, '13 and we're not stopping where we're at.

So, we're focused at being the absolute number one specialty foundry in the world and everything that makes sense within these business models is really where we're targeting and what we're aiming at driving.

I'm not sure how many of you have seen the new logo of the company with TowerJazz.

We have a logo symbol of a series of globes where there's some globes that are connected with satellites around them, some that are disconnected.

But that's really our business model.

We are a specialty foundry.

The CMOS is the center of the globe, but we have many, many different technologies surrounding it.

That's its own business with local empowerment with each of the business units where they have their own R&D.

They have their own product marketing and the ability to really drive according to customer needs.

And that's a model we really believe in is to locally empower our business units, give them what they need to be successful and make sure they're staffed with the right people.

And the success is based on being very close to the customer.

So that being said, I think that we have certainly outperformed the industry.

I believe that we'll continue to outperform in 2010.

And I think that the future beyond that looks very, very bright.

As a last statement, we'd love to invite you March 15th to Laguna Beach, California.

We'll be presenting at the Roth Capital Conference.

And I'm sure there'll be a variety of one-on-ones that can be set up around the conference.

So, anyone that would like to come to listen to the talk generically or to have one-on-ones at that time, we'd be thrilled with that.

And then as well, we'll be at the UBS Conference in June.

So, please plan and we'd love to hear from you and to see you.

So again, thank you very, very much for your attendance.

It's been a long call and thank you for your desire in following the company.

Thank you.

This concludes the Tower Semiconductor Fourth Quarter and Year End 2009 Results Conference Call.

Thank you for your participation.

You may go ahead and disconnect.