Ladies and gentlemen, thank you for standing by. Welcome to the TowerJazz First Quarter 2014 Results Conference Call. (Operator Instructions) As a reminder, this conference is being recorded, May 15, 2014. 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. Noit Levi, Director of Investor Relations and Public Communications. Ms. Levi, please go ahead.

Thank you. 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-3 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 our Q1 2014 quarterly release. I’ll begin with the Q1 financial highlights focusing on a few major achievements which of course Oren Shirazi, our CFO will later provide a detailed financial summary of. To begin with, revenues were $132.7 million. EBITDA, $27.1 million and we realized a GAAP net profit of $39 million. The $132.7 million revenue is an 18% increase as compared with the 112.6 in the quarter of 2013 against the pure plate foundry market weighted average growth of 10%. And very significant, if we eliminate the Micron revenue from the Q1 2013 and from the Q1 2014, the organic growth was 27%. The EBITDA was $27 million, 21% of revenues, substantial increase as compared to the $15 million or 30% of revenues in Q1 2013. The GAAP net profit of $39 million for which Oren will provide much more detail, I wanted to very importantly note that this is a result of the very high value created by our majority stake in the TowerJazz Panasonic Semiconductor Company. This value can drive over $600 million of strong annual revenues into the company. Cash closing balance was $183 million, compared with $123 million as of Q4 2013. I wanted to talk a little bit about customer and market vectors. If we look at Q1 2014, our top five customers, and compared the revenue of those top five customers in Q1 2013, there was a 48% growth with only two customers exceeding 4%, the biggest one being 12%. If we look at the top 10 customers of Q1 2014, and compare that to Q1 2013, there was a 59% growth. We forecast continuous growth throughout the year and these 10 customers are well represented by all five business units. I wanted then to talk…

Thank you, Russell. Welcome everyone and thank you for joining us today. I will start by providing our P&L results highlights for the first quarter of 2014, then discuss our balance sheet. I will also give details regarding the implications if the Panasonic transaction and business and structuring in Japan on our balance sheet and P&L line item. Firstly it is important to note that excluding all those one time effects from the Panasonic transaction and the business’s structure in Japan, we had a good quarter on an organic basis in which we increased our revenue year-over-year by $20 million, increased our EBITDA by $13 million and improved our balance sheet ratio and P&L margins as I will detail. Our revenues for the quarter were $133 million, $20 million higher than $113 million in the first quarter of 2013, an increase of 18% overall which includes an organic growth rate, which excludes the Micron long-term contract revenue of 27%. We recorded net profit for the first quarter of 2014 amounting to $39 million, which included three one-time elements. A, $150 million in onetime net acquisition gains derived from the increased value of the TowerJazz Panasonic Semiconductor Company which we named TPSC, which is the new company established in Japan. This net gain is mainly as a result of an appreciation to fair market value of the equipment of the three fabs acquired in Japan, which was done in accordance with GAAP and based on a third party appraisal opinion and this amount is net after deferred tax liability accrual. We also -- B, we also reported a onetime noncash allowance of $71 million resulting from our decision to fill the Nishiwaki fab operation in Japan, reflecting mainly noncash fixed asset impairment. This $71 million allowance includes all expected adjustments to…

Thank you, Oren. Before we open up the call for the Q&A session, I would like now to add the general and legal statement to our results in regards to statements made and to be made during this call. Please note that the first quarter of 2014 financial results has been prepared in accordance with U.S. GAAP and the financial tables in today’s earning release includes 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 these results represented financial data which is reconciled as indicated by the footnote below the table on a non-GAAP basis after deducting one, depreciation and amortization. Two, compensation expenses in respect to options, grants. And three, finance expenses net other than interested accrued such that’s non-GAAP financial expenses net include only interest accrued during the reported period. Non-GAAP financial measures should be evaluated in conjunction with and are not a substitute for a GAAP financial measures. The table also contains the comparable GAAP financial measures to the non-GAAP financial measure, as well as the reconciliation between the non GAAP financial measures and the most comparable GAAP financial measures. EBITDA is presented is defined in our quarterly financial release. EBITDA is not required GAAP financial measure and may not be comparable to a similarly title 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, net income or loss, cash flows provided by operating, investing and financing activities, per share data 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. I would now like to turn the call over to the operator. Operator?

Thank you. (Operator Instructions) the first question is from Cody Acree of Ascendiant Capital. Please go ahead.

Thanks for taking my questions and congrats on the progress. Oren, could you help us with gross margin expectations for the June quarter and how you would expect those to track through rest of the year?

Yes, thank you. So basically we did not yet announce the official date that we will fill the operation in Nishiwaki. Following that date, of course we will have significant improvement. Recent we didn’t get enough, because we don’t yet receive the final date, timing of the orders from the customer. So we’re trying of course to do the best we can. But we announced that from the quarter after we cease the operations, actually we will be able to save $130 million annual run rate which will improve the margins. Of course the Panasonic transaction does not have any negative margin or something like that so we just should be in incremental upside. And until then for Q2, you should actually look at the Q1. And if you look at Q1 margins and extrapolate to Q2 you just need to exclude the three one item – the three one-time item which I mentioned the $150 million of Panasonic the $71 million of Nishiwaki and $7 million net of the bond. Cody Acree – Ascendiant Capital Markets: So, Oren, just to be clear, you are saying that the Panasonic gross margin is net neutral to the corporate average?

No. I did not say, I did not indicate anything about the -- because we don’t give this internal information about the exact amount of margin or exact percentage of margin of the Panasonic incremental contribution. I just said that it is not negative. Cody Acree – Ascendiant Capital Markets: Okay, thank you. And on the OpEx side, can you also kind of help us work through that through the year? For the June quarter, obviously, you will have some Panasonic expenses coming in and then how you expect those to trend and track through the year.

What? Sorry, I did not understand the question. Cody Acree – Ascendiant Capital Markets: Sorry. On the spending side, on the operating expenses, can you just help us with the June quarter and then how those track through the year?

Again for Q2 2014, the margins are expected to be the same like Q1 2014, because – I mean not the same. The same if you exclude those three onetime items and then you should add the margins are expected from Panasonic and we obviously did not discuss that publicly. Cody Acree – Ascendiant Capital Markets: No, I'm sorry. I guess what I was trying to get to is your R&D and your G&A (inaudible) for the year.

Okay. In regards to the SG&A, sorry the line is not so good here. So in regards to the SG&A, expected to be about the same level. It could be a very slight increase during Q2, Q3 because of the inclusion of Panasonic. On the other hand there will be a reduction from the quarter that we will cease operations of Nishiwaki. We did not announce which quarter is that, but if you assume it is Q3 so from Q4, if you assume it is Q2 so from Q3, okay? But from that point in time there will be a reduction because of the stopping to include the Nishiwaki cost. Cody Acree – Ascendiant Capital Markets: Then with the $130 million you expect in savings, if you look at it from a cash flow standpoint, do you expect that to flow -- how much of that really flows through the earnings, or is there a portion of that that you expect to be redeployed into other investments?

No. We don’t expect anything of that to deploy to the other investments. Of course when you reduce the $130 million of cost, also we will have a reduction of the Micron revenue because that contract is expiring in that public domain that in June 2. So in the 2nd of June, so still again like I said in the beginning we did not announce and not necessarily that we want to announce because it is a Micron deal until when exactly. They will continue to order although contract expires -- the committed contract expires in June 2. But from the time that the orders will stop and will cease operations, there will be a reduction in revenue and a reduction in the variable costs that are associated with that revenue and this $130 million fixed cost. So for illustration point of view, if Micron revenue are X, the value of the cost associated with that should be between a third to a half of this X and then on top of that you have the $130 million fixed cost reduction. Cody Acree – Ascendiant Capital Markets: And then lastly -- thanks for taking this many questions. But on the CapEx side, what does that look like for the remainder of the year and maybe into 2015 as you look at the available capacity you have at Panasonic?

So it’s basically the same answer like the answer about the SG&A. It’s related to all the fixed costs and also the CapEx that you asked. So basically for Q2 and until the moment we will cease operation in Nishiwaki, you should expect a slight increase in the CapEx because of the fact that we are including now, consolidating in full Panasonic venture. And from the moment, like you mentioned like 2015 for sure, and also in 2014 and the end of 2014 from whenever we will cease the operations, you will see actually a reduction in the CapEx of Nishiwaki and overall CapEx after those two transactions. So CapEx in 2015 should be not too high, not higher or lower in a significant manner than the CapEx run rate which existed so far.

The next question is from Jay Srivatsa of Chardan Capital Markets. Jay Srivatsa – Chardan Capital Markets: Thanks for taking my questions and congrats on achieving GAAP profitability. Russell, when you look at the JV beyond the Panasonic business, are you sensing that there will be more opportunities from other Japanese or Asian customers as you look at setting up the fab going forward?

Definitely, the answer is yes. We have already Asian customers that we are engaging with. One specifically that’s at I believe very end stages of signing a contract and others that we’re engaged with in Asia. In Japan I think the answer is yes as well. There’s one company in Japan already that is very desirous to go into the TowerJazz Panasonic Company and the activity has not yet began, but has expressed desire that was not previously for that flow working with the company. As mentioned before, we did not have necessarily a very difficult [inaudible 00:01:54] to move into the Nishiwaki factory. There’s always the latency. There’s a lot of noise in the line. There’s always the latency from the time that you’ve started engagement until the time that you ramp, until the time that you reach volume. And then over the past month when we saw that the contract was getting very strong with Panasonic to -- there’s somebody on the line that’s very, very loud. At any rate we stopped trying to bring new customers and stopped moving even the existing customers with new activities when we thought that there was a chance that we would stop the operations there. But that being said, the name of Panasonic itself is so strong and so reputable that whatever initial barrier there is to develop a relationship and to develop the trust with a Japanese company and it’s very, very trust based business there, I think that that barrier will be greatly reduced through the fact of that this is still more or less half owned by Panasonic. And that the operations have been a Panasonic factory, the manpower for the most part on the operational side is the Panasonic workforce augmented a bit by TowerJazz workforce. So…

If it will become a worldwide trend, that I couldn’t say. Do I think that there’s more opportunities for such activities in Japan? I definitely do. It’s not just that I believe that there’s more opportunities in Japan. We’ve actually been approached for another opportunity in Japan that at this point is maybe too early for us to want to get involved in as we have this present venture to work on and make successful. So the fact that we were approached certainly there’s others that see the model that we did with Panasonic who’s truly been a phenomenal partner in this. And I think that it can make very good sense for them. But for the rest of the world, I really don’t know. I couldn’t say. Jay Srivatsa – Chardan Capital Markets: Okay. And then last question for me on the India opportunity. Could you give us an update on where things are and what is the next step in terms of progression in that project?

Sure. As we stated in the March timeframe, there were cabinet minutes that two consortia were given a letter of intent from the government. Our consortia is one of those, which is JP, IBM and ourselves. We’re now in the process of responding to the LOI. According to the cabinet minutes, as they had been published, they were going to then award financial contracts within this year, I believe in the third quarter from the way that it was published. However, there is a new government coming in place and how much the previous cabinet’s minutes are binding for the new cabinet, that I really can’t express. But from everything that we see, it’s moving forward and we’re responding to the LOI. So from where we sit everything is progressing. Jay Srivatsa – Chardan Capital Markets: Okay, last question for me. Oren, on the net income, given some of the costs that you expect to incur in the next quarter, is it realistic to expect that you would be able to achieve GAAP profitability one more time? Or do you expect that to be able to -- do you expect to be able to see that later in the year again?

So we do not give forecast for net profit and we can voice a lot of things. One of them increasing the revenue, the other, all kinds of things affecting the cost and expenses and financing expenses and all that. We can always say what we have said before, that after we cease operations of Nishiwaki -- before we cease operations in Nishiwaki we are bound to the previous model and everybody can calculate the net profit excluding the Panasonic and Nishiwaki one-time items in the profit and loss. And after that, we’ll have our benefit. But we’re not in a position to guide these benefits together with the forecast the revenues increase when will it be converted into bottom line of net profit.

There are no further questions at this time. Mr. Ellwanger, would you like to make your concluding statement?

Definitely. Thank you. So as always I think those that participate in the call or those that will later listen to the call for the interest you have in the company. I believe that where we’re at now is a very pivotal point in the company, maybe one of the most exciting that we’ve been in in years. We’ve moved our run rate from the $500 million to $650 million to presently a run rate of upwards of $900 million, with an existing capacity capability that can bring the revenues of the company to $1.2 billion. And that becomes our target. That becomes our challenge. That becomes our activity now to take the capacity that we have within the existing TowerJazz facilities to continue this organic growth trajectory that we’ve had to come to full utilization of our specialty products and the trajectory is very strong in all the factories right now. And then through this TowerJazz-Panasonic venture, to move forward to continue to grow the revenue there from beyond the circa $400 million from the Panasonic revenues and grow it to well above $600 million and achieve this $1.2 billion run rate. The trajectories in the company right now show us in the fourth quarter of this year really being extremely high utilization through all the three Fab 1, Fab 2, Fab 3 TowerJazz facilities and actually increasing capacity in two of the facilities, that being Fab 2 with Migdal Haemek and Fab 3 in Newport Beach. And the customer traction presently shows that we’ll be able to grow the foundry portion, the available 50% capacity of the three factories of the TowerJazz-Panasonic semi-company over the next years. From the first contract that we have where the customer has already started the transfer, the IDM transfer into one of…

Thank you. This concludes the TowerJazz First Quarter 2014 Results Conference Call. Thank you for your participation. You may go ahead and disconnect.