ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Securities registered or to be registered pursuant to Section 12(b) of the Act:
|
|
Title of Each Class
|
Name of Each Exchange on Which Registered
|
Ordinary Shares, par value New Israeli
Shekels 15.00 per share
|
NASDAQ Global Select Market
|
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
|
|
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
|
US GAAP ☒
|
International Financial Reporting Standards as issued by the International Accounting Standards Board ☐
|
Other ☐
|
5 | ||||
5 | ||||
5 | ||||
5 | ||||
28 | ||||
44 | ||||
44 | ||||
58 | ||||
80 | ||||
81 | ||||
81 | ||||
82 | ||||
101 | ||||
103 | ||||
103 | ||||
103 | ||||
103 | ||||
103 | ||||
104 | ||||
104 | ||||
104 | ||||
105 | ||||
105 | ||||
105 | ||||
105 | ||||
106 | ||||
ITEM 16H. | 106 | |||
106 | ||||
106 | ||||
106 | ||||
106 |
Year Ended December 31,
|
||||||||||||||||||||
2016
|
2015
|
2014
|
2013
|
2012
|
||||||||||||||||
(Dollars in thousands, except per share data)
|
||||||||||||||||||||
Statement of Operations Data:
|
||||||||||||||||||||
Revenues
|
$
|
1,249,634
|
$
|
960,561
|
$
|
828,008
|
$
|
505,009
|
$
|
638,831
|
||||||||||
Cost of revenues
|
946,534
|
755,196
|
764,220
|
476,900
|
560,046
|
|||||||||||||||
Gross profit
|
303,100
|
205,365
|
63,788
|
28,109
|
78,785
|
|||||||||||||||
Research and development
|
63,134
|
61,669
|
51,841
|
33,064
|
31,093
|
|||||||||||||||
Marketing, general and administrative
|
65,439
|
62,793
|
58,783
|
42,916
|
44,413
|
|||||||||||||||
Nishiwaki Fab restructuring and impairment cost (income), net
|
(627
|
)
|
(991
|
)
|
55,500
|
--
|
--
|
|||||||||||||
Acquisition related costs
|
--
|
--
|
1,229
|
--
|
5,789
|
|||||||||||||||
Amortization related to a lease agreement early termination
|
--
|
--
|
--
|
7,464
|
--
|
|||||||||||||||
Operating profit (loss)
|
175,154
|
81,894
|
(103,565
|
)
|
(55,335
|
)
|
(2,510
|
)
|
||||||||||||
Interest expense, net
|
(11,857
|
)
|
(13,179
|
)
|
(33,409
|
)
|
(32,971
|
)
|
(31,808
|
)
|
||||||||||
Other non-cash financing expense, net
|
(12,492
|
)
|
(109,930
|
)
|
(55,404
|
)
|
(27,838
|
)
|
(27,583
|
)
|
||||||||||
Gain from acquisition, net
|
50,471
|
-
|
166,404
|
--
|
--
|
|||||||||||||||
Other income (expense), net
|
9,322
|
(190
|
)
|
(140
|
)
|
(904
|
)
|
(1,042
|
)
|
|||||||||||
Income (loss) before income tax
|
210,598
|
(41,405
|
)
|
(26,114
|
)
|
(117,048
|
)
|
(62,943
|
)
|
|||||||||||
Income tax benefit (expense)
|
(1,432
|
)
|
12,278
|
24,742
|
9,388
|
(7,326
|
)
|
|||||||||||||
Net Profit (loss)
|
209,166
|
(29,127
|
)
|
(1,372
|
)
|
(107,660
|
)
|
(70,269
|
)
|
|||||||||||
Net loss (income) attributable to non controlling interest
|
(5,242
|
)
|
(520
|
)
|
5,635
|
--
|
--
|
|||||||||||||
Net Profit (loss) attributable to the Company
|
$
|
203,924
|
$
|
(29,647
|
)
|
$
|
4,263
|
$
|
(107,660
|
)
|
$
|
(70,269
|
)
|
|||||||
Basic earnings (loss) per ordinary share
|
$
|
2.33
|
$
|
(0.40
|
)
|
$
|
0.08
|
$
|
(2.72
|
)
|
$
|
(3.17
|
)
|
|||||||
Diluted earnings per ordinary share
|
$
|
2.09
|
$
|
0.07
|
||||||||||||||||
Other Financial Data:
|
||||||||||||||||||||
Depreciation and amortization, including amortization of financing expenses and accretion
|
$
|
197,756
|
$
|
256,005
|
$
|
243,362
|
$
|
164,824
|
$
|
173,585
|
As of December 31,
|
||||||||||||||||||||
2016
|
2015
|
2014
|
2013
|
2012
|
||||||||||||||||
(Dollars and share data in thousands)
|
||||||||||||||||||||
Selected Balance Sheet Data:
|
||||||||||||||||||||
Cash and cash equivalents, short-term interest-bearing deposits and designated deposits
|
$
|
389,377
|
$
|
205,575
|
$
|
187,167
|
$
|
122,871
|
$
|
133,398
|
||||||||||
Working capital
|
450,883
|
235,608
|
93,759
|
150,498
|
128,787
|
|||||||||||||||
Total assets
|
1,379,884
|
965,368
|
884,146
|
705,887
|
814,241
|
|||||||||||||||
Short-term bank debt and current maturities of loans and debentures
|
48,084
|
33,259
|
119,999
|
36,441
|
49,923
|
|||||||||||||||
Loan from banks, net of current maturities
|
133,163
|
210,538
|
159,776
|
108,739
|
94,922
|
|||||||||||||||
Debentures, net of current maturities
|
162,981
|
45,481
|
107,311
|
208,146
|
193,962
|
|||||||||||||||
Shareholders’ equity
|
682,614
|
385,586
|
195,561
|
141,248
|
220,025
|
|||||||||||||||
Number of shares outstanding as of December 31 of any year
|
92,985
|
82,058
|
58,034
|
47,870
|
22,312
|
· |
The cyclical nature of the semiconductor industry and the volatility of the markets served by our customers;
|
· |
Changes in the economic conditions of geographical regions where our customers and their markets are located;
|
· |
Inventory and supply chain management of our customers;
|
· |
The loss of a key customer, postponement of an order from a key customer or the rescheduling or cancellation of large orders;
|
· |
The occurrence of accounts receivable write-offs, failure of a key customer to pay accounts receivable in a timely manner or the financial condition of our customers;
|
· |
The occurrence of an unexpected event, such as environmental events or industrial accidents such as fire or explosions, electricity outage or misprocess, affecting the manufacturing process and our ability to recover the lost or damaged products and provide quality and timely production to our customers without charging them significant additional costs;
|
· |
Completing capacity expansions and recruitment of personnel in a timely manner to address product demands by our customers;
|
· |
Mergers and acquisitions in the semiconductor industry and their effect on our market share;
|
· |
Our ability to satisfy our customers’ demand for quality and timely production;
|
· |
The timing and volume of orders relative to our available production capacity;
|
· |
Our ability to obtain raw materials and equipment on a timely and cost-effective basis;
|
· |
Price erosion in the industry and our ability to negotiate prices with our current customers and new customers;
|
· |
Our susceptibility to intellectual property rights’ disputes;
|
· |
Our dependency on export licenses and other permits required for our operations and the sale of our products;
|
· |
Our ability to maintain existing partners and to enter into new partnerships and technology and supply alliances on mutually beneficial terms;
|
· |
Interest, price index and currency rate fluctuations that were not hedged;
|
· |
Technological changes and short product life cycles;
|
· |
Timing for the design and qualification of new products;
|
· |
The possibility that integrated device manufacturers continue to design and manufacture integrated circuits in their own fabrication facilities or that in certain periods or under certain circumstances such as low demand, they will choose to manufacture their products in their facilities instead of manufacturing products at external foundries; and
|
· |
Changes in accounting rules affecting our results.
|
· |
limiting our ability to fulfill our debt obligations and other liabilities;
|
· |
requiring the use of a substantial portion of our cash to service our indebtedness rather than investing our cash to fund our strategic growth opportunities and plans, working capital and capital expenditures;
|
· |
increasing our vulnerability to adverse economic and industry conditions;
|
· |
limiting our ability to obtain additional financing;
|
· |
limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we compete;
|
· |
placing us at a competitive disadvantage with respect to less leveraged competitors and competitors that have better access to capital resources;
|
· |
volatility in our non-cash financing expenses due to increases in the fair value of our debt obligations;
|
· |
fluctuations of the payable amounts in USD of TPSCo loans or other expenses which are denominated in JPY;
|
· |
enforcement by the lenders of their liens against our respective assets, as applicable, at the occurrence of an event of default.
|
· |
We may fail to identify acquisitions that would enable us to execute our business strategy.
|
· |
Other foundries may bid against us to acquire potential targets. This competition may result in decreased availability of, or increased prices for, suitable acquisition candidates.
|
· |
We may not be able to obtain the necessary regulatory approvals, or we may not be able to obtain the necessary approvals from our lenders, and as a result, or for other reasons, we may fail to consummate certain acquisitions.
|
· |
Potential acquisitions and integration require the dedication of substantial management effort, time and resources which may divert management’s attention, focus and resources from our existing business operations or other strategic opportunities, which may have a negative adverse effect on our business.
|
· |
We may fail to integrate acquisitions successfully in accordance with our business strategy, achieve anticipated benefits depending in part on successfully consolidating functions and integrating operations, procedures and personnel in a timely and efficient manner, expected synergies, attract sufficient business to newly acquired facilities in a timely manner or realize the anticipated growth opportunities from integrating an acquired business into our existing business.
|
· |
We may not be able to retain experienced management and skilled employees from the businesses we acquire and, if we cannot retain such personnel, we may not be able to attract new skilled employees and experienced management to replace them.
|
· |
We may purchase a company with excessive unknown contingent liabilities, including, among others, patent infringement or product liability.
|
· |
We may not be able to obtain sufficient financing which could limit our ability to engage in certain acquisitions.
|
· |
The amount or terms of financing actually required before and after acquisition may vary from our expectations.
|
· |
fluctuations in the level of revenues from our operating activities;
|
· |
fluctuations in the collection of receivables;
|
· |
iming and size of payables;
|
· |
the timing and size of capital expenditures;
|
· |
the net impact of JPY/ USD fluctuations on our JPY income and JPY expenses;
|
· |
the repayment schedules of our debt service obligations;
|
· |
our ability to fulfill our obligations and meet performance milestones under our agreements;
|
· |
fluctuations in the LIBOR or TIBOR (Tokyo Interbank Offered Rate) rates which apply to our banks’ loans; and
|
· |
fluctuations in the USD to NIS exchange rate.
|
· |
rapid technological developments;
|
· |
evolving industry standards;
|
· |
changes in customer and product end user requirements;
|
· |
frequent new product introductions and enhancements; and
|
· |
short product life cycles with declining prices as products mature.
|
· |
greater manufacturing capacity and /or availability of same;
|
· |
a more diverse and established customer base;
|
· |
greater financial, sales, marketing, distribution and other resources;
|
· |
governmental funding or support;
|
· |
a better cost structure; and/or
|
· |
better operational performance, including cycle time and yields.
|
· |
difficulties in upgrading or expanding existing facilities;
|
· |
unexpected breakdowns in our manufacturing equipment and/or related facility systems;
|
· |
unexpected events, such as an electricity outage or misprocess, affecting the manufacturing process;
|
· |
difficulties in changing or upgrading our process technologies;
|
· |
raw material shortages or impurities;
|
· |
delays in delivery or shortages of spare parts; and
|
· |
difficulties in maintenance and upgrade of our equipment.
|
· |
negotiating cross-license agreements;
|
· |
acquiring licenses to the allegedly infringed patents, which may not be available on commercially reasonable terms, if at all;
|
· |
discontinuing use of certain process technologies, architectures, or designs, which could cause us to stop manufacturing certain integrated circuits if we are unable to design around the allegedly infringed patents;
|
· |
litigating the matter in court, incurring substantial legal fees and paying substantial monetary damages in the event we lose; or
|
· |
developing non-infringing technologies, which may not be feasible.
|
· |
JPY fluctuations against the USD, see above risk factor “Our exposure to currency exchange and interest rate fluctuations may impact our costs and financial results”;
|
· |
the burden and cost of compliance with foreign government regulation, as well as compliance with a variety of foreign laws and potential new legislation under the Trump administration;
|
· |
general geopolitical risks, such as political and economic instability, international terrorism, potential hostilities and changes in diplomatic and trade relationships;
|
· |
natural disasters affecting the countries in which we conduct our business;
|
· |
imposition of regulatory requirements, tariffs, import and export restrictions and other trade barriers and restrictions, including the timing and availability of export licenses and permits;
|
· |
adverse foreign and international tax rules and regulations, such as withholding taxes deducted from amounts due to us may not be refunded to us by the tax authorities since we are not entitled to foreign tax credit in Israel;
|
· |
weak protection of our intellectual property rights in certain foreign countries;
|
· |
delays in product shipments due to local customs’ restrictions;
|
· |
laws and business practices favoring local companies;
|
· |
difficulties in collecting accounts receivable; and
|
· |
difficulties and costs of staffing and managing foreign operations.
|
· |
technical evaluation;
|
· |
product design to our specifications, including integration of third party intellectual property;
|
· |
photomask - design and third party photomask manufacturing;
|
· |
silicon prototyping;
|
· |
assembly and test;
|
· |
validation and qualification; and
|
· |
production.
|
Year ended December 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
United States
|
49
|
%
|
44
|
%
|
45
|
%
|
||||||
Japan
|
36
|
%
|
41
|
%
|
40
|
%
|
||||||
Asia, excluding Japan
|
12
|
%
|
11
|
%
|
11
|
%
|
||||||
Europe
|
3
|
%
|
4
|
%
|
4
|
%
|
||||||
Total
|
100
|
%
|
100
|
%
|
100
|
%
|
· |
technology offering and future roadmap;
|
· |
product performance;
|
· |
system level technical expertise;
|
· |
research and development capabilities;
|
· |
access to intellectual property;
|
· |
customer technical support;
|
· |
design services;
|
· |
product development kits (PDKs);
|
· |
manufacturing operational performance;
|
· |
quality systems;
|
· |
product quality;
|
· |
manufacturing yields;
|
· |
customer support and service;
|
· |
pricing;
|
· |
management expertise;
|
· |
strategic customer relationships;
|
· |
capacity availability; and
|
· |
stability and reliability of supply.
|
C. |
ORGANIZATIONAL STRUCTURE
|
Year ended December 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Statement of Operations Data:
|
||||||||||||
Revenues
|
100
|
%
|
100
|
%
|
100
|
%
|
||||||
Cost of revenues
|
75.7
|
78.6
|
92.3
|
|||||||||
Gross Profit
|
24.3
|
21.4
|
7.7
|
|||||||||
Research and development expense
|
5.1
|
6.4
|
6.3
|
|||||||||
Marketing, general and administrative expense
|
5.2
|
6.5
|
7.1
|
|||||||||
Nishiwaki Fab restructuring and impairment cost (income), net
|
(0.1
|
)
|
(0.1
|
)
|
6.7
|
|||||||
Acquisition related costs
|
--
|
--
|
0.1
|
|||||||||
Operating profit (loss)
|
14.1
|
8.6
|
(12.5
|
)
|
||||||||
Interest expense, net
|
(0.9
|
)
|
(1.4
|
)
|
(4.0
|
)
|
||||||
Other financing expense, net
|
(1.0
|
)
|
(11.4
|
)
|
(6.7
|
)
|
||||||
Gain from acquisition, net
|
4.0
|
--
|
20.1
|
|||||||||
Other income, net
|
0.7
|
--
|
--
|
|||||||||
Profit (loss) before tax
|
16.9
|
(4.2
|
)
|
(3.1
|
)
|
|||||||
Income tax benefit (expense)
|
(0.1
|
)
|
1.3
|
2.9
|
||||||||
Net profit (loss)
|
16.8
|
(2.9
|
)
|
(0.2
|
)
|
|||||||
Net loss (income) attributable to non-controlling interest
|
(0.4
|
)
|
(0.1
|
)
|
0.7
|
|||||||
Net profit (loss) attributable to the Company
|
16.4
|
%
|
(3.0
|
)%
|
0.5
|
%
|
Payment Due
|
||||||||||||||||||||||||||||
Total
|
Less than
1 year
|
2 Years
|
3 Years
|
4 Years
|
5 Years
|
After 5
years |
||||||||||||||||||||||
(in thousands of dollars)
|
||||||||||||||||||||||||||||
Contractual Obligations
|
||||||||||||||||||||||||||||
Short term liabilities (mainly trade accounts payable) (1)
|
163,423
|
163,423
|
--
|
--
|
--
|
--
|
--
|
|||||||||||||||||||||
Loans (2)
|
187,105
|
45,948
|
51,225
|
44,984
|
33,230
|
11,718
|
--
|
|||||||||||||||||||||
Debentures (3)
|
214,212
|
16,790
|
66,367
|
3,396
|
37,687
|
36,716
|
53,256
|
|||||||||||||||||||||
Operating leases
|
45,353
|
17,106
|
16,654
|
6,256
|
2,430
|
2,430
|
477
|
|||||||||||||||||||||
Equipment purchase agreements (4)
|
19,424
|
19,424
|
--
|
--
|
--
|
--
|
--
|
|||||||||||||||||||||
Other long-term liabilities
|
13,406
|
743
|
845
|
925
|
1,009
|
1,066
|
8,818
|
|||||||||||||||||||||
Other Purchase obligations
|
16,931
|
11,544
|
3,074
|
2,313
|
--
|
--
|
--
|
|||||||||||||||||||||
Total contractual obligations
|
659,854
|
274,978
|
138,165
|
57,874
|
74,356
|
51,930
|
62,551
|
(1) |
Short-term liabilities include primarily our trade accounts payable for equipment, goods and services as well as payroll related commitments.
|
(2) |
Loans include principal and interest payments in accordance with the terms of the loans agreements.
|
(3) |
Debentures include total amount of principal and interest payments.
|
(4) |
Equipment purchase agreements include amounts related to ordered equipment that has not yet been received.
|
Officer
|
Senior Managements’ Name
|
Age
|
Title
|
|||
A
|
Russell C. Ellwanger
|
62
|
Chief Executive Officer and Director of Tower, and Chairman of the Board of Directors of its subsidiaries, Tower Semiconductor USA, Inc., Tower US Holdings, Inc., Jazz US Holdings, Inc., Jazz Semiconductor, Inc., TowerJazz Panasonic Semiconductor Co., Ltd. and TowerJazz Texas, Inc.
|
|||
B
|
Oren Shirazi
|
47
|
Chief Financial Officer, Senior Vice President of Finance
|
|||
C
|
Dr. Itzhak Edrei
|
57
|
President
|
|||
D
|
Rafi Mor
|
53
|
Chief Operating Officer
|
|||
E
|
Nati Somekh
|
42
|
Senior Vice President, Chief Legal Officer and Corporate Secretary
|
|||
F
|
Yossi Netzer
|
53
|
Senior Vice President of Corporate Planning
|
|||
G
|
Dalit Dahan
|
48
|
Senior Vice President of Human Resources and IT
|
|||
H
|
Ilan Rabinovich
|
60
|
Senior Vice President of Quality and Reliability
|
|||
I
|
Dr. Marco Racanelli
|
50
|
Newport Beach Site Manager and Senior Vice President and General Manager of RF/High Performance Analog Business Group, General Manager of US Aerospace & Defense Business Unit
|
|||
J
|
Guy Eristoff
|
54
|
Chief Executive Officer of TowerJazz Panasonic Semiconductor Company (TPSCo)
|
|||
K
|
Gary Saunders
|
56
|
General Manager of Tower Semiconductor USA (TSU) and Senior Vice President of Sales
|
|||
L
|
Dr. Avi Strum
|
55
|
Senior Vice President and General Manager of the CMOS Image Sensor Business Unit
|
|||
M
|
Zmira Shternfeld-Lavie
|
51
|
Senior Vice President and General Manager of Transfer, Optimization and Development Process Services Business Unit (TOPS) and Head of Process Engineering R&D
|
Directors’ Name*
|
Age
|
Title
|
||||
N
|
Amir Elstein
|
61
|
Chairman of the Board
|
|||
O
|
Kalman Kaufman
|
71
|
Director
|
|||
P
|
Alex Kornhauser
|
70
|
Director
|
|||
Q
|
Dana Gross
|
49
|
Director
|
|||
R
|
Ilan Flato
|
60
|
Director
|
|||
S
|
Rami Guzman
|
78
|
Director
|
|||
T
|
Yoav Z. Chelouche
|
63
|
Director
|
|||
U
|
Rony Ross
|
67
|
Director
|
|||
V
|
Iris Avner
|
52
|
Director
|
Guy Eristoff was appointed Chief Executive Officer of TowerJazz Panasonic Semiconductor Company Ltd. (TPSCo) at the time of its foundation in April 2014. Previously, he served as Vice President, Global Operational Excellence at Tower Semiconductor Ltd. Prior to this, he served in various positions in the semiconductor industry such as Director of 200mm Fabs Core Engineering at Global-Foundries (Technology Development, Marketing, Industrial Engineering & Central Engineering) for the 200mm Business Unit, (5 fabs), General Manager, Singapore and Asia Region at Intevac, Thin Films Section Manager, Thin Films Module Manager and Process Integration Deputy Director at Chartered Semiconductor and Process/Hardware Engineer and Field Service Manager at Applied Materials. Mr. Eristoff received his B.S. degree in Physics from Rensselaer Polytechnic Institute, (RPI) Troy New York.
|
Gary Saunders has served as Senior Vice President Worldwide Sales and General Manager of Tower Semiconductor USA (TSU) since 2015. Prior to TowerJazz, he spent five years at Cypress Semiconductor, most recently as Senior Vice President of Worldwide Sales. Previously, he served in executive positions at Spansion, including Corporate Vice President, Worldwide Wireless Sales and Market Development. Prior to Spansion, Mr. Saunders was employed by Fairchild Semiconductor International, National Semiconductor Corporation, and Texas Instruments in various management positions. Mr. Saunders received a B.S. in Computer Science, Magna Cum Laude from Union College, NY and completed the American Electronics Association Program for management of high technology companies at Stanford University Executive Institute, Stanford, CA.
|
Dr. Avi Strum serves as our Senior Vice President and General Manager of the CMOS Image Sensor Business Unit. Previously, Dr. Strum was Vice President and General Manager of the Specialty Business Unit, Vice President of Europe Sales, Head of the Design Center in Netanya and Device and Integration Department Manager. Prior to joining Tower, Dr. Strum served as the President and COO of TransChip Inc. and from 1996 to 2001, he served in various positions with Intel Corp., both in Israel and the US. From 1990 to 1996, he was the R&D Manager of SCD and was in charge of all the Infrared Detectors development in SCD. Dr. Strum received his Ph.D. and B.Sc. in Electrical Engineering from the Technion - Israel Institute of Technology in 1990 and 1985 respectively.
|
Zmira Shternfeld-Lavie serves as our Senior Vice President and General Manager of Transfer, Optimization and Development Process Services Business Unit (TOPS) and Head of Process Engineering R&D. Ms. Lavie has over 25 years’ experience with silicon processing technologies, fabrication management and research and development. She joined the R&D Group as Thin Film Section Manager when it was established in 1996. In her current position, she is also leading the R&D Process Group, MEMS and manages the process transfer activity. Previously, Ms. Lavie served at National Semiconductor as Thin Film Process Engineer. She has expertise in thin films metallization and process integration and has several patents within this area. Ms. Lavie received a B.Sc. in Chemical Engineering from the Technion - Israel Institute of Technology.
|
1. |
To recommend to the Board of Directors as to a compensation policy for officers, as well as to recommend, once every three years to extend the compensation policy subject to receipt of the required corporate approvals;
|
2. |
To recommend to the Board of Directors as to any updates to the compensation policy which may be required;
|
3. |
To review the implementation of the compensation policy by the Company;
|
4. |
To approve transactions relating to terms of office and employment of certain Company office holders, which require the approval of the Compensation Committee pursuant to the Companies Law; and
|
5. |
To exempt, under certain circumstances, a transaction relating to terms of office and employment from the requirement of approval of the shareholders meeting.
|
a. |
advancement of the goals of the Company, its working plan and its long term policy;
|
b. |
the creation of proper incentives for the office holders while taking into consideration, inter alia, the Company’s risk management policies;
|
c. |
the Company’s size and nature of its operations;
|
d. |
with respect to compensation paid to officers which includes variable components - the contributions of the relevant office holders in achieving the goals of the Company and profit in the long term in light of their positions;
|
e. |
the education, skills, expertise and achievements of the relevant office holders;
|
f. |
the role of the office holders, areas of their responsibilities and their previous agreements regarding salary; and
|
g. |
the correlation of the proposed compensation with the compensation of other employees of the Company, and the effect of such differences in compensation on the employment relations in the company.
|
(i) |
the majority of the votes includes at least a majority of all the votes of shareholders who are non-controlling shareholders of the company or who do not have a personal interest in the compensation policy and participating in the vote; abstentions shall not be included in the total of the votes of the aforesaid shareholders; or
|
(ii) |
the total of opposing votes from among the shareholders described in subsection (i) above does not exceed 2% of all the voting rights in the company.
|
· |
the educational background, professional experience and achievements of the officer or director;
|
· |
the officer or director's position, responsibilities and prior salary and compensation arrangements;
|
· |
compensation data for comparably situated executives at peer companies, including companies in the industry and/or geographic market;
|
· |
data of other senior executives of the Company;
|
· |
macroeconomic environment;
|
· |
Company's own performance;
|
· |
the officer or director's expected contribution to the Company’s future growth and profitability;
|
· |
global competition and environment in which the Company operates and recruits employees;
|
· |
the relationship between the compensation paid to the officer or director and the average and median compensation of the Company’s employees and contractors, as well as whether such variation has an effect on employment relations; and
|
· |
any other requirements prescribed by applicable law from time to time.
|
o |
To align the interests of the officers and directors of the Company with those of Tower and its shareholders in order to enhance shareholder value;
|
o |
To provide the officers and directors with a structured compensation package, including competitive salaries and performance-based cash and equity incentive programs;
|
o |
To maintain and increase the level of motivation and ambition;
|
o |
To provide appropriate awards for superior individual and corporate performance;
|
o |
To improve the business results and increase income and profitability over time; and
|
o |
To support the implementation of the Company's business strategy.
|
· |
Base salary;
|
· |
Benefits and perquisites;
|
· |
Performance-based cash bonuses;
|
· |
Equity based compensation; and
|
· |
Retirement, termination and other arrangements.
|
·
|
An annual fee which shall be capped at up to $60,000.
|
·
|
Per meeting fee shall be capped at up to $2,000.
|
·
|
Reasonable travel expenses.
|
· |
an employment relationship;
|
· |
a business or professional relationship maintained on a regular basis;
|
· |
control; and
|
· |
service as an office holder.
|
· |
the majority of shares voted at the meeting, including more than one-half of the shares held by non-controlling and disinterested shareholders that voted at the meeting, vote in favor of election of the director; or
|
· |
the total number of shares held by non-controlling and disinterested shareholders that voted against the election of the director does not exceed two percent of the aggregate voting rights in the company.
|
· |
The company's shares are listed on a foreign securities exchange which is referenced in Section 5A(c) of the Regulations, which includes, among others, the New York Stock Exchange (NYSE); NASDAQ Global Select Market; and NASDAQ Global Market;
|
· |
The Company does not have a controlling shareholder; and
|
· |
The Company complies with the requirements of the foreign securities laws and stock exchange regulations relating to appointment of independent directors and composition of audit and compensation committees as applicable to companies which are incorporated under the laws of such foreign countries.
|
As of December 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Process and product engineering, R&D and design
|
1,015
|
948
|
931
|
|||||||||
Manufacturing and operations
|
3,895
|
3,118
|
2,654
|
|||||||||
Manufacturing support
|
370
|
317
|
343
|
|||||||||
Sales and marketing, finance & administration
|
272
|
250
|
225
|
|||||||||
Total
|
5,552
|
4,633
|
4,153
|
Identity of Person or Group
|
Percent of
Class(1) |
Percent of Class
(Diluted)(2) |
||||||
Senvest Management, LLC (3)
|
7.90
|
%
|
7.04
|
%
|
(1) |
Assumes the holder’s beneficial ownership of all Tower ordinary shares and all securities that the holder has a right to purchase within 60 days. Also assumes that no other exercisable or convertible securities held by other shareholders has been exercised or converted into shares of the Company.
|
(2) |
Assumes that all currently outstanding securities to purchase ordinary shares, have been exercised by all holders.
|
(3) |
Based on schedule 13G filed by Senvest Management on February 2017, it holds approximately 7.6 million shares as of December 31, 2016.
|
NASDAQ Stock Market
|
Tel Aviv Stock Exchange
|
|||||||||||||||
High ($)
|
Low ($)
|
High (NIS)
|
Low (NIS)
|
|||||||||||||
Period
|
||||||||||||||||
March 2017
|
23.65
|
22.35
|
86.51
|
81.55
|
||||||||||||
February 2017
|
23.36
|
21.26
|
86.39
|
79.74
|
||||||||||||
January 2017
|
21.50
|
19.02
|
81.50
|
73.17
|
||||||||||||
December 2016
|
20.04
|
17.36
|
76.55
|
66.81
|
||||||||||||
November 2016
|
18.61
|
15.22
|
71.53
|
57.41
|
||||||||||||
October 2016
|
16.48
|
15.04
|
62.41
|
58.02
|
||||||||||||
First quarter 2017
|
23.65
|
19.02
|
86.51
|
73.17
|
||||||||||||
Fourth quarter 2016
|
20.04
|
15.04
|
76.55
|
57.41
|
||||||||||||
Third quarter 2016
|
16.13
|
11.74
|
60.30
|
45.68
|
||||||||||||
Second quarter 2016
|
13.59
|
11.03
|
52.40
|
40.32
|
||||||||||||
First quarter 2016
|
14.50
|
10.36
|
56.89
|
42.70
|
||||||||||||
Fourth quarter 2015
|
16.60
|
12.04
|
62.95
|
48.00
|
||||||||||||
Third quarter 2015
|
15.77
|
10.68
|
59.81
|
41.85
|
||||||||||||
Second quarter 2015
|
17.98
|
13.82
|
70.65
|
53.20
|
||||||||||||
First quarter 2015
|
18.29
|
12.41
|
73.79
|
49.90
|
||||||||||||
2016
|
20.04
|
10.36
|
76.55
|
40.32
|
||||||||||||
2015
|
18.29
|
10.68
|
73.79
|
41.85
|
||||||||||||
2014
|
14.26
|
5.44
|
56.00
|
19.20
|
||||||||||||
2013
|
8.67
|
3.85
|
32.40
|
13.40
|
||||||||||||
2012
|
15.30
|
6.75
|
57.90
|
27.58
|
· |
amendments to our Articles;
|
· |
appointment and termination of our independent auditors;
|
· |
appointment and dismissal of directors (except of external directors);
|
· |
approval of acts and transactions requiring general meeting approval under the Companies Law;
|
· |
increase or reduction of authorized share capital in accordance with the provisions of the Companies Law or the rights of shareholders or a class of shareholders;
|
· |
any merger as provided in section 320 of the Companies Law; and
|
· |
the exercise of the Board of Directors’ powers by the general meeting, if the Board of Directors is unable to exercise its powers and the exercise of any of its powers is essential for Tower’s proper management, as provided in section 52(a) of the Companies Law.
|
· |
A private placement that meets all of the following conditions:
|
o |
20 percent or more of the voting rights in the company prior to such issuance are being offered;
|
o |
The private placement will increase the relative holdings of a shareholder that holds five percent or more of the company’s outstanding share capital (assuming the exercise of all of the securities convertible into shares held by that person), or that will cause any person to become, as a result of the issuance, a holder of five percent or more of the company’s outstanding share capital; and
|
o |
All or part of the consideration for the offering is not cash or registered securities, or the private placement is not being offered at market terms.
|
· |
A private placement which results in anyone becoming a controlling shareholder.
|
· |
any amendment to the Articles;
|
· |
an increase of the company’s authorized share capital;
|
· |
a merger; or
|
· |
approval of interested party transactions that require shareholder approval.
|
· |
Code of Corporate Conduct. A code of recommended corporate governance practices has been attached to the Companies Law. In the explanatory notes to the legislation, the Knesset noted that an "adopt or disclose non-adoption" regulation would be issued by the Israeli Securities Authority with respect to such code. As of the date of this Annual Report, the Israeli Securities Authority has issued reporting instructions with respect to this code which are applicable only to publicly traded companies whose securities are traded solely on the Tel Aviv Stock Exchange and which report solely to the Israeli Securities Authority.
|
· |
Fines. The Israeli Securities Authority shall be authorized to impose fines on any person or company performing a violation, in connection with a publicly traded company which reports to the Israeli Securities Authority, and specifically designated as a violation under the Companies Law.
|
· |
We do not supply an annual report but make our audited financial statements available to our shareholders prior to our annual general meeting.
|
· |
We currently satisfy the requirement to appoint a majority of directors who meet the definition of independence contained in the NASDAQ Listing Rules, following our determination to follow the exemption provided under the Amendment to the Relief Regulations, we are exempt from the requirement to appoint at least two external directors pursuant to the provisions of the Companies Law, and are required, under the relief provided under the Amendment to the Relief Regulations, to comply with the NASDAQ Listing Rules governing the appointment of independent directors applicable to US domestic issuers, as of November 1, 2016.
|
· |
Our Board has not adopted a policy of conducting regularly scheduled meetings at which only our independent directors are present.
|
· |
Following our determination to follow the exemption provided under the Amendment to the Relief Regulations, the composition of our compensation committee is governed by the provisions of the NASDAQ Listing Rules applicable to US domestic issuers, as set forth in the Amendment to the Relief Regulations. However, consideration and approval of compensation for our chief executive officer and other executive officers will be taken by the compensation committee, the board of directors and the shareholders as appropriate under the applicable rules under the Companies Law which may differ from those provided for in the NASDAQ Listing Rules. In accordance with the Companies Law, the compensation of directors, the chief executive officer and all other officers requires the approval of our compensation committee and board of directors, and under circumstances as detailed in this annual report, also requires the approval of our shareholders. Such compensation must either be consistent with our approved Compensation Policy or, in special circumstances, may deviate therefrom, taking into account certain considerations set forth in the Companies Law. We are required to seek shareholder approval for certain corporate actions requiring such approval under the requirements of the Companies Law, including seeking prior approval of the shareholders for the Compensation Policy and for certain office holder compensation.
|
· |
The process under which director nominees are selected, or recommended for the Board’s selection may not be in full compliance with the applicable NASDAQ Listing Rules. Our directors are elected for terms of one year or until the following annual meeting, by a general meeting of our shareholders. The nominations for director which are presented to our shareholders are generally made by our board of directors. The process under which director nominees are selected, or recommended for the Board’s selection is in compliance with the Companies Law but is not necessarily in full compliance with the NASDAQ Listing Rules.
|
· |
Israeli law does not require the adoption of and our Board of Directors has not adopted a formal written charter or board resolution addressing the nomination process and such related matters as may be required under United States federal securities laws, as required by the NASDAQ Listing Rules.
|
· |
Although we have adopted a formal written audit committee charter, there is no requirement under the Companies Law to do so and the charter as adopted may not specify all the items enumerated in the NASDAQ Listing Rule 5605(c)(1).
|
· |
Although we have adopted a formal written compensation committee charter, there is no requirement under the Companies Law to do so and the charter as adopted may not specify all the items enumerated in the NASDAQ Listing Rule 5605(d)(1).
|
· |
Following our determination to follow the exemption provided under the Amendment to the Relief Regulations, we are exempt from the requirement to appoint at least two external directors pursuant to the provisions of the Companies Law, and are required, under the relief provided under the Amendment to the Relief Regulations, to comply with the NASDAQ Listing Rules governing the composition of the audit committee, as of November 1, 2016.
|
· |
Under Israeli law, a company is entitled to determine in its articles of association the number of shareholders and percentage of holdings required for a quorum at a shareholders meeting. Our articles of association do not provide for a quorum of not less than 33 1/3% of the outstanding shares of our voting ordinary shares for meetings of our ordinary shareholders, as required by the NASDAQ Listing Rules. Our articles of association presently require a quorum consisting of two shareholders holding a combined 33% of our ordinary shares.
|
· |
We review and approve all related party transactions in accordance with the requirements and procedures for approval of interested party acts and transactions, set forth in sections 268 to 275 the Companies Law, which do not fully reflect the requirements of the NASDAQ Listing Rules.
|
· |
We seek shareholder approval for all corporate action requiring such approval, in accordance with the requirements of the Companies Law, which does not fully reflect the requirements of the NASDAQ Listing Rules.
|
· |
We do not necessarily seek shareholder approval for the establishment of, and amendments to, stock option or equity compensation plans (as set forth in NASDAQ Listing Rule 5635(c)), as such matters are not subject to shareholder approval under Israeli law. We will attempt to seek shareholder approval for our stock option or equity compensation plans (and the relevant annexes thereto) to the extent required in order to ensure they are tax qualified for our employees in the United States. However, even if such approval is not received, then the stock option or equity compensation plans will continue to be in effect, but the Company will be unable to grant options to its U.S. employees that qualify as Incentive Stock Options for U.S. federal tax purpose. Our stock option or other equity compensation plans are also available to our non-U.S. employees, and provide features necessary to comply with applicable non-U.S. tax laws.
|