高塔半導體 (TSEM) 2012 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by.

Welcome to the TowerJazz first-quarter 2012 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 May 17, 2012.

Joining us today are Mr. Russell Ellwanger, TowerJazz's CEO, and Mr. Oren Shirazi, CFO.

I would now like to turn the conference over to Ms. Knight led by Noit Levi, Director of Investor Relations and Public Communications.

Ms. Levi, please go ahead.

Thank you, and welcome to TowerJazz financial results conference call for the first quarter of 2012.

Joining us today are Mr. Russell Ellwanger, TowerJazz CEO, and Mr. Oren Shirazi, CFO.

Russell will open the call, followed by Oren with a discussion of our results in the first quarter of 2012.

After management's prepared remarks, we will open up the call to 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 Forms 20-F, F-4, F-4, and 6-K filed with the Securities and Exchange Commission as well as filing with the Israeli 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, Mr. Russell Ellwanger.

Russell, please go ahead.

Thank you, Noit, and welcome to all of you to our first quarter of 2012 results conference call.

Our growing capacity sends a clear message to all our current as well as our potential customers that we are well-positioned to meet any and all of their growing needs for their foreseeable future.

That, combined with a strong and growing technical portfolio, has enabled us to grow our business and market share strongly over the last year.

We reported Q1 revenues of $168 million, growing 39% year-over-year, well ahead of our industry peer performance.

The strong growth continued to cement our position as the number one specialty foundry in the world.

As stated in previous conference calls, we have a very strong customer funnel.

To demonstrate this, I'll talk to the increase in the number of masks that entered into our factories in Q1.

Each prototype that comes into the factory has a defined amount of layers, and the layer mask count defines to a certain extent the complexity of the product flow, which is also related to price.

The mask tape-out is the last stage of the customer design win cycle that, upon successful prototype, enables the volume manufacturing growth.

The mask sets that enter the fab today is the incremental revenue growth for one year from today, with the typical two to three-year lifetime.

If we compare the Company new masks for Q1 of 2012 versus Q1 of 2011, it is up 26%, with each of the three factories having a record high for Q1 against the same quarter of any subsequent year.

This excludes Nishiwaki, Japan, for which we have no foundry baseline for the previous years.

2009 was the first year where we fully rebuilt and rebranded ourselves after the merger with Jazz Technologies in 2008 as a specialty analog foundry.

Comparing Q1 2012 to Q1 2009, there is an 86% increase in mask layers entering the fabs, showing consistent growth and a very strong realization of design win activities.

The Nishiwaki factory has met or exceeded all of our forecasted metrics since the acquisition, and we already can see the same trend happening throughout 2012.

We continue to convert the fab from an IDM DRAM factory to our specialty flows, and our efforts remain on target.

Nishiwaki greatly expands our geographic reach and distribution capabilities, enables us to take advantage of increased inter-fab efficiencies in manufacturing.

The 2 point increase in gross margin, Q1 2012 versus Q4 2011, is primarily due to such efficiencies.

We now have four facilities distributed across the globe from west to east.

We believe a strong local technical presence, which is readily had in analog manufacturing sites, is the key to customer relationships and trust.

We now have such technical cores in Asia, USA, and Europe.

That being said, the Nishiwaki site has, and we believe will continue to, enable significant growth throughout the Asia regions.

We now have 40 active engagements in Korea.

This has been enabled due to the proximity of the Nishiwaki fab, as well as due to an extremely strong sales and technical support team in Korea itself under the leadership of Michael Song.

In Japan directly, three Tier 1 integrated device-makers are now actively qualifying our flows in the Nishiwaki factory with production targeted for the first half of 2013.

One of these Tier 1 IDMs is doing multiple transfer projects.

Having requested the local Japanese presence to be the technical interface, another Japanese IDM is in advanced stages of qualification in Migdal Haemek.

And they're a pre-way for engagements with multiples of other Japanese customers for manufacturing in either Nishiwaki, Migdal Haemek, or Newport Beach.

Given our significantly growing business in the Korea region, we recently announced our Technical Global Symposium in Seoul, Korea on June 21, prior to the US and Japan TGS events later on in the year.

We attend this Symposium to further strengthen our visibility among Korean semiconductor companies, research institution and academics, and to provide an increased awareness of our broad range of process technologies and design enablement technologies.

Also important, as well as highlighting our latest technological advancements, our presentations will highlight our 2012 theme being the pursuit of excellence to our customers, including concrete actions that benefit them directly as customers.

Before moving into our business units update, I'd like to talk about our initiative in India.

We remain very excited with this business opportunity to expand our presence in the Indian market, through the initiative by the Indian government, which we press released last quarter.

As previously announced, we are engaged with a very strong consortium, which includes a leading Indian infrastructure company, JT Group, with which we signed a binding MOU, as well as another major well-known global technology leader.

Together, we submitted a bid to the government to build and operate a 300 millimeter wafer facility.

The initiative enables us to build a long-term roadmap towards a 300 millimeter wafer size, 90 nanometer analog technologies, and companionships in the deep submicron technologies, but it will also give us a major revenue stream during the portion of fab buildout and fab operation.

We believe that we are in a great position to win this bid, as the consortium is very strong, and TowerJazz has an impeccable reputation in India, based on previous successful government fab project win and execution.

TowerJazz is the only semiconductor manufacturer with direct experience in building, as well as transferring and qualifying technology in a fab in India.

The Indian government expressed its goal to get a final decision in that regards by the end of this year and is moving the bid process forward.

However, as you know, we cannot predict the outcome of the government's election.

We cannot give any assurance that we will win this bid, but we will, of course, keep you updated as there are new developments.

Now I'd like to update you with regard to our business units.

In the Mixed Signal CMOS business unit, we continue to serve a growing number of customers and various technologies, including advanced notes of 0.152 micron and 0.13 micron processes.

We have recently increased our offering qualification level and improved infrastructure for automotive customers, and enabled automotive products manufacturing in all our sites.

We are transferring the 0.18 micron technology platform to the fab in Nishiwaki.

This will allow Japanese and Far East customers to receive local foundry service of advanced and cost-competitive offerings for 0.18 micron, and subsequent shrink nodes, as well as the essential platform which will be used for our specialty products.

In addition, this process platform will provide a common flow for multiple fab sourcing, a strong solution for high-volume manufacturing.

In our Power Management business unit, we have started a large volume ramp of Class-D audio power management chips with one of our leading Korean customers.

The product's end customer is one of the largest Korean semiconductor companies, and the chip is being used in our LED TV line, for which we are the sole source for this product.

In addition, one of our leading US customers started ramping a load switch power management device for several of the largest companies in the area of PC and tablets.

We're also in the final stages of a joint development of power management technology for plasma display drivers with one of the major Korean TV makers.

And we expect to start volume manufacturing by the end of this year.

On the 700 volt front, we have numerous designs for LED lighting coming from the leading LED companies at final qualification stages.

And in parallel, we continue the development of our 700 volt highside platform with Samsung for power [amber] applications, and we expect to start production by the end of this year.

With regard to our CMOS Image Sensor business unit, we announced the development of our TS 11S process at the conference in London.

This is a very aggressive development and we expect to offer it to customers in Q4 of this year.

This technology will provide feature sizes of 110 nanometer within the pixel, while providing a standard 0.16 micron shrink node for the periphery.

In addition, the offering will include a local interconnect layer that will not add to the optical stack height, and a recessed process in the pixel array to allow very low optical stack height.

This technology will allow our high-end customers to move to the next generation products, while preserving all their IPs developed on our existing 0.18 micron platform.

In addition, our backside illumination program is moving along very well, and we'll be in a position to offer it to customers by the end of this year.

We see growth in all fronts with many of our leading customers, especially in dental X-ray markets, where we recently won new customers and projects, and the high-end cinematography and video market, and the industrial market, with numerous new products ramping to production.

In RF, high precision analog, we continue to see strong traction for our industry-leading silicon germanium RF CMOS technology in communication products ranging from handsets to infrastructure.

In addition, we are experiencing a very strong surge in design wins on our newest SOI CMOS platform addressing antenna switch and antennas tuning applications.

This last area is a new market for silicon-based technology, traditionally having been served by pHEM gallium arsenide technologies, and promises to fuel growth of our RF HPA business unit for the coming years.

In addition to SOI, our silicon germanium business is seeing strong traction both for our industry-leading high-performance technology and optical networking, automotive radar, GPS receiver applications, but also on our most mature technologies in emerging markets.

This quarter, we also saw a strong ramp of new handset transceivers for the lower-end 2.5G models.

To briefly discuss our outlook for the coming quarter, while there still remains global macroeconomic uncertainty, particularly in Europe, we foresee a growing orders and strength in the second-half of this year, and we continue to prepare operationally for that scenario.

For the second quarter directly, we provided a revenue guidance of between $163 million to $173 million, with a mid-range guidance representing 20% revenue growth compared to Q2 2011, and flat to the previous quarter.

For 2012 as a whole, we believe we will continue to grow at double-digit rate and we will continue to expect that we will exceed the industry growth.

Finally, we remain targeted to reach a $1 billion annualized quarterly run rate within the 2014 year.

So, in summary, as we have proven in the past, we are good at extracting synergies across our entire business, whether by reducing costs, sharing our R&D resources and manufacturing know-how, or providing a broad range of products and abilities to the benefit of our customers.

We are already extracting significant synergies from our new business in Japan, and we hope to do the same should and when we win the project in India.

We still have much growth potential to realize.

The cornerstone of our strategy and all of our tactics leading our day-to-day activities are focused on a close relationship with our customers wherever they are.

Our new local presence in Japan has significantly improved our potential for closer relationships in that region.

Our substantial industry outperformance over the past years is by virtue of our customers choosing to give us an ever-increasing share of their business, rather than the competitors.

And we target to continue to outperform their expectations, as we fully implement all of our activities within our pursuit of excellence mantra.

To close, today we are in our best-ever position to bring our analog specialty leadership to the next level.

Our substantially increased manufacturing scale, expanded addressable market, continued market share growth, will allow us to further cement our leadership as the number one specialty foundry.

I remain very excited with regard to our potential in 2012, 2013, and well beyond.

With that, I'll hand the call over to our CFO, Oren Shirazi.

Oren?

Thank you, Russell, and hello, everyone.

Looking at our Q1 results and achievements, you can see that we improved our margins and balance sheet as evidenced by various parameters and ratios.

We improved our current ratio, which is our current assets divided by our current liabilities from 1.16 as of December 31, 2011 to be 1.61 as of March 31, 2012.

And we improved our current assets -- our net current assets from $36 million to $125 million, with a net debt to EBITDA ratio of 2.1x based on current EBITDA run rate.

We were successful at improving our non-GAAP growth and operating margins, as well as improving our EBITDA margins over the last quarter, despite a seasonal revenue reduction of $6.6 million.

Our non-GAAP gross profit were $1 million better than -- better sequentially, reflecting an improved margins of 35% versus 33% in the previous quarter.

Our non-GAAP operating margins improved from 23% to 24%, and we maintained the 19% non-GAAP net margin.

Last week, we received further market recognition of our balance sheet strength and business plans with the signing and closing last week with GE Capital, for a new credit line for our Nishiwaki facility, after a few months of in-depth due diligence done by GE.

Moving into our balance sheet analysis, during the last six months, we made significant payments on accounts of our debt totaling approximately $150 million, most of it by redeeming short-term bonds, including the redemption during Q1 of this year of Series B of the bonds issued in 2006.

During 2012, we aim to continue to focus on strengthening and improving our balance sheet.

As I just noted, we are excited to have engaged GE Capital for a new credit line for our Nishiwaki facility of up to JPY4 billion, which is approximately $50 million.

Loans under this credit line will carry an interest of the higher of TIBOR rate or LIBOR rate plus 2.6% per annum, and will be due for repayment in 2015.

Availability under the credit line is calculated according to certain formulas set forth in the agreement, and is kept at $30 million until June 2013.

During the first quarter, we completed a long-term bond fund raising in Israel of $80 million, which was heavily oversubscribed, demonstrating the trust that the financial capital market and investment community have in our performance and long-term trusting.

As I mentioned, as of the end of the quarter, our net debt to EBITDA ratio is at a very reasonable 2.1x; a very manageable ratio, well below the ratio we had in what is now the distant past for TowerJazz.

Further, during the quarter, we increased our cash balance from [$101 million] to $158 million.

The main cash generator during the quarter was $34 million of positive cash flow from operating activities, which excludes debt-related payments, and $80 million from the long-term bond fundraising.

This was offset by $27 million in debt payments on account of principal and interest, as well as $30 million of CapEx investment during the quarter.

I will now go into the P&L.

As Russell mentioned earlier, we are happy with the results of our quarter, with revenue levels of $168 million, up 39% over last year, outperforming our industries, generally flat to down year-over-year revenue.

We also reported EBITDA of $40 million in the quarter, an improvement of $1 million as compared with the previous quarter.

On a GAAP basis, comparing the first quarter of 2012 to the prior quarter, while we saw a $6.6 million revenue reduction in Q1 2012, which was in line with our expectations for the first quarter, we were successful in improving profitability as follows.

We achieved a $1 million improvement in EBITDA, a $5 million improvement in gross profit, and $5 million growth in operating profit.

Net loss on a GAAP basis was $3 million higher or $4 million lower, excluding financing expenses net as compared to the previous quarter.

The net financing expenses increase is a non-cash-related increase, and is mainly due to the stock price increase during the first quarter, which affected part of our securities that are valued at fair market value and created GAAP non-cash financing expenses.

On a non-GAAP basis for the quarter, we continued to be strong, with gross operating and net profit of $59 million, $40 million, and $32 million, respectively, with margins of 35%, 24%, and 19%, respectively, which are better than the previous quarter's margins of 33%, [22%], and 19%, respectively.

That ends my financial summary for the quarter.

I would like now to transfer the call back to Noit Levi.

Noit?

Thank you, Oren.

Before we'll open up the call to the Q&A session, I would like now to add the general and legal statements to our results in regards to statements made and to be made during this call.

Please note that the first quarter of 2012 financial results have been prepared in accordance with the US GAAP.

The financial tables 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 will result] represented financial data, which is reconciled as indicated by the footnotes below the tables on a non-GAAP basis, after [deducting] one, depreciation and amortization; two, compensation expenses in respect to options [done]; and three, finance expenses net other than interest accrued such that non-GAAP financial expenses net include only interest accrued during the recorded period.

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

The table also contained a 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.

EBITDA as presented is defined in our quarterly financial release.

EBITDA is not a required GAAP financial measure and may not be comparable to a similarly [type of] measure employed by other companies.

EBITDA and the non-GAAP financial information presented herein should not be considered in isolation or as a substitute for operating [income] or loss; cash flows provided by operating, investing and financing activities; per-share data or other income of cash flow statement data prepared in accordance with GAAP, and is not necessarily consistent with the non-GAAP data presented in previous filings.

I would now like to turn the call over to our Operator.

Operator?

(Operator Instructions) Jay Srivatsa, Chardan Capital Markets.

Thanks for taking my question.

Russell, there seems to be a general sense in the industry that Q1 was the bottom of the semiconductor market.

And as such, many of the fab companies, including some of your peers, have guided pretty aggressively for Q2.

Your guidance seems to point towards roughly a flat quarter.

Can you help us understand where is the disconnect?

You're absolutely correct.

We did guide flat quarter-over-quarter.

What we see is a good amount of the design wins, the tape-ins that we've talked about, are in advanced stages of qualification, but not yet ready to ramp.

Where we talk about the strength is in the consistency.

If we look at our Q1 year-over-year against the industry, I think that of the top three digital providers, deep digital that present, the average was somewhere about 9% down year-over-year.

And the specialty analog that present, we don't yet see the numbers for the number six -- no, I'm sorry, us being number five, we don't see the numbers for the number seven; but for the number six, I think that they were 20% down.

So, in our case, we were quite up year-over-year.

I think maybe the reason that we're not seeing such a huge growth in Q2 is that we didn't see the decrease that others have seen as well.

But for growth itself, the biggest strength that I can talk to is really what I stated on the amount of mask layers that have entered into the factory in Q1.

And if you look at Q1 '12, and the first quarter is not the strongest quarter for prototyping coming into factories.

But for Q1 '12 over Q1 '11 as mentioned, it was up 26%, with each of the three factories having its highest ever -- of that respective quarter for any previous year.

So we're very confident in the continued growth; very confident in where we're at, the activities that we have going.

But, as stated, some of the growth that we have, some of the activities we're doing, take a little bit longer to get qualified on any given quarter.

To look at the incremental growth percentage is maybe not such a good way for us to look at our market in the type of activities that we're doing.

Again, if you look at the analog activities that we have, they take a little bit longer to qualify, but their staying power stays very, very long.

Hence, we did not go down when everyone else went down, or maybe not going up incrementally one quarter to the next, but it's because we didn't see the downside one quarter to the next either.

Hopefully, that answered your --?

Yes.

You mentioned about being bullish in the second half.

In the past, you've talked about getting to a $800 million type of run rate by end of the year.

Is that something that you still believe would be achievable?

It's still our target.

Okay.

In terms of margins, looks like you had a nice pop in the margins in Q1 despite a sequentially lower revenue run rate.

So I guess the question is, where is the improvement in margin coming from?

Is it from utilization, product mix?

Can you help us understand that?

It's really taking it to what I stated as the efficiencies of integration, for the most part.

It comes from taking best-of-class cost efficiency from different flows.

Now, the Company has really a very, very unique position, I think.

Israel has a history of knowledge from National Semiconductor, and then quite a bit of organically gained knowledge, process transfer from free scale, process transfer from Toshiba -- for the 0.18, it was Toshiba; for the 0.13, it was Freescale.

So there was quite a bit of learnings as to taking the best-of-breed capability.

When we acquired Jazz, Jazz had the history from Rockwell Conexant.

So, a very different culture -- certain things that were done much better there; some things that were maybe done better here.

And then with the acquisition of Nishiwaki, that had really two different regimes of history.

One was Texas Instruments, the other being Micron.

And in each of these cases, then, to take from the learnings and to continue to integrate the best-of-class capability, both in efficiency, meaning the reduction of chemicals or gases for any given processing step; the ability to maximize the output of any given processing tool; and to make a flow more efficient and simple, that's the rationalization that we're always going after.

Actually, even toward that end, we just hired someone externally, a fairly high level in a different foundry, whose role is worldwide efficiency, reporting into our head of Operations.

And that being the fact that now with three different sites and so many different learnings, I mean, three different geographic sites, four different factories, the ability and the rationalization of quickly bringing in the best-of-class across the board becomes very critical.

So I think we've done a good job till now.

That was the bulk of the 2 point improvement in the margin.

And we target to be able to do much better and continue the path, but to do better as time goes forward.

Okay.

Last question for me in terms of your balance sheet.

Last year, you guys did a great job in reducing a lot of your debt load.

But this year, it looks like you're taking on some more debt earlier in the quarter, and looks like it's happening to some credit lines from GE.

Can you help us understand what the objectives of the recent raise and the credit line is?

Yes.

The credit line, you know, that externally, we have three sites, each managed as a separate entity.

So although, like Russell mentioned, we enjoy all the fruits of integration and everything, we always like to keep also those entities.

And for the Japan entity that we just acquired, it had no credit line and no borrowing availability for its local activities.

And with that GE Capital Japan contract, we have actually access to funds, if we want, when we want and when we need, of up to $30 million by June next year, and then it goes to $50 million [in just] credit line.

Not necessarily we will draw down and, obviously, any drawdown is subject to many formulas.

But it's very nice to have options to borrow money at a very good interest rate of LIBOR plus 2.6% once you need [or want].

And it's unconnected to the other items.

The other items which you mentioned, with the bonds, we actually prepaid, like I mentioned in my part of the script, we prepaid -- we paid $150 million just in the last two quarters for debt payments.

And this was actually for bonds that were -- that matured, that will need to be redeemed.

But those bonds were mostly convertible to shares since the stock price was below [110], this was not converted into shares at [110] and was a not dilutive event.

But on the other hand, we needed to pay this $150 million, not necessarily that we believe a year ago that we would need to pay that.

So we were thinking it will be in the money.

So we just replenished with this $80 million of new bonds, long-term bonds, that were issued, which just 50% is actually half-refinanced those $150 million that were paid, and the other is just -- we just reduced the debt and don't intend to scale it back.

Okay.

Thank you.

Andrew Uerkwitz, Oppenheimer.

Hey guys, it was a good quarter.

Could you -- a couple of housekeeping questions.

Could you kind of -- and one non-housekeeping -- could you talk about the trends in utilization you've seen in the -- from the first quarter, and then -- and through this first month of the second quarter?

And then secondly, can you remind me how the Micron deal works?

I think -- remind me, just kind of go over -- I think there was guaranteed utilization or guaranteed payments there.

Then how that [slowly] phased out.

So could you kind of remind me there?

Sure.

So our utilization numbers, in reporting them, one has to take into account that we're continually growing capacity.

But the utilization was plus/minus around 70%.

The load is going up in really all of our factories at this point.

So we see increased load now.

We do have very nice indications of an increase in the industry in the third and fourth quarter.

But the utilization rates, I think, back-of-envelope, one would take it about 70% throughout the Company.

As far as the Micron deal, the contract is a three-year take-or-pay agreement, meaning that they have a certain amount of volume that they must take at any given quarter.

Either the wafer is purchased or money is remitted if the wafers aren't taken.

They have a right for an increase amount above the minimal take-or-pay agreement.

And we have to guarantee that they can have that upside.

Even with the upside, there is a free portion of the factory that we would have for ourselves.

For the first 18 months, that agreement in and of itself would allow us to have the factory at a cash positive situation, according to the malls that we had used.

Now, I believe that we've expressed before -- I know we've expressed before that we've outdone those models.

And then for the second 18 months, the utilization is decreasing and it would be necessary to bring on additional business into the factories, in order to maintain positive cash from the factory.

Does that answer your question, Andrew?

Yes, it's perfect.

I've always appreciated your candidness.

And then just housekeeping, a follow-on would be how the design win is looking for that capacity?

I know you have some time left to get there.

And then housekeeping for Oren -- could you remind me what the CapEx is for the rest of the year?

So I'd mentioned that we, right now, have three strong Tier 1 IDMs in Japan that are actively transferring flows into that factory.

That is a good activity -- driving into the -- sorry, had a -- driving revenue in the first half of 2013, which is when it would be needed.

We additionally have a very large customer, really one of our top three, that has a program going on with us in Japan that has kicked off, that will also be bringing in revenue there.

And we have a variety of these 40 activities in Korea that are going directly into Japan.

So I believe everything looks very strong, looks very good.

There's always the point of question -- ultimately, is the qualification on schedule?

Is there a second rev of a mask spin?

Is there a third rev required?

But things look very good.

We're not dependent on any single customer in order to fill up the delta as the Micron agreement starts to decrease.

And having several handfuls of customers, I think is a really, with active engagements, silicon engagements, it's a very strong base to be dealing off of at the moment.

I'm sorry, now I believe that that was your first question.

The second part was what?

If your -- your projected CapEx spend for the rest of the year -- housekeeping question.

So we've never given a projection on CapEx.

Oh, okay.

That's why I don't have one.

(laughter) All right, no problem.

I appreciate it.

Okay.

Phelps Hoyt, Principal.

Seems like everything's pretty much on track here.

Can you give me the -- I've got several questions here -- the actual debt balance at the end of the quarter?

The pro forma sales without Nishiwaki from the prior year?

When you expect to receive proceeds from the Japanese government regarding the Nishiwaki improvements you're making?

And then I also had CapEx guidance, but I guess -- it sounds like you're not going to give that.

But for the first quarter, the actual $30 million, was there any proceeds from grants included in -- netted out of that?

There was not any grants from that.

I'm sorry, the first part of your question was what?

Sorry, just what the actual debt balance was at the end of the quarter.

It's -- what you see in the balance sheet, you see a line of $385 million and another line of $42 million on the short-term.

So the total is $427 million.

However, this is in all kinds of rules, of GAAP rules, so it's all kinds of discount rates, so you -- and mark-to-market, so you cannot really -- from that, understand?

You can -- I can tell you the number, which is [$490 million].

This is the number of the principal amount of debt, which comprised of $250 million of bonds traded in Tel Aviv Stock Exchange, plus the $94 million of the bonds issued by Jazz in 2010, plus $130 million, which is the bank debt to [Polly Leumi].

And apart from that, we only have the Wells Fargo credit line.

From that, we [would] approximately $15 million -- one-five.

Excellent.

That's very helpful.

And then the Japanese government support for Nishiwaki?

So that has been released as up to 30% of CapEx expenditure would come back into the Company.

We have not yet purchased any capital equipment in Nishiwaki.

So we don't have anything coming in in any short-term.

We do have plans to purchase equipment in Nishiwaki as we start to ramp the logic flows.

That will happen in the third and fourth quarter.

And how long it takes, I honestly don't know how long it takes to get a reimbursement from the Japanese government.

We did get finally nice reimbursement from the Israeli government, and that took us many years (laughter), so.

Yes.

Yes, I remember that.

So, I really don't know.

I assume that it will go quickly, but I don't have a history to talk to.

Great.

Thank you very much.

There are no further questions at this time.

Mr. Ellwanger, would you like to make your concluding statement?

Yes, I would.

Thank you.

So, as always, we really thank our customers for their trust in us as a long-term partner.

Our business model really does necessitate that customers have trust in us because almost every product that we make, we're the sole source for that SKU.

That does take very strong trust.

So we appreciate that very much.

Continue to thank our investors for their belief in the management and our business model, and what we're doing in the Company; employees for being extremely capable and dedicated, and really for their passion, which has driven us to be the number one specialty foundry in the world.

I do continue to -- I too look forward to continue to update you on progress over the coming quarters, over the coming years.

In the meantime, really invite you all to visit our website, as well as to attend our Technology Global Symposium, either in Korea on June 16, upcoming in the US or in Japan.

Please visit the website.

It details very specifically what each of these conferences are.

It gives the agenda, locations.

And as investors, you'd be more than welcome to come.

It would give you more of a close feeling for what we're doing technically, and I think even a stronger feeling of the type of relationship and interaction we have with our customers.

So, again, thank you very, very much.